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HOGG ROBINSON | Hogg Robinson Grp Final Results | RNS

TIDMHRG

26 May 2010

Hogg Robinson Group plc

('HRG', 'the Company' or 'the Group')

Preliminary Results for the year ended 31 March 2010

Strong performance delivered in line with expectations

Early signs of recovery



Summary of results



Years ended 31 March

2010 2009 Change

Revenue GBP326.8m GBP351.3m -7.0%

Underlying earnings (1)

- Operating profit GBP35.2m GBP34.6m +1.7%

- Operating profit margin 10.8% 9.8% +1.0%

- Profit before tax GBP28.4m GBP24.7m +15.0%

- Earnings per share 6.3p 4.7p +34.0%

Reported earnings

- Operating profit GBP28.0m GBP25.3m +10.7%

- Profit before tax GBP21.2m GBP15.4m +37.7%

- Earnings per share 4.4p 2.4p +83.3%

Dividend per share 1.2p 1.2p -

Net debt GBP77.5m GBP85.3m -GBP7.8m




Financial Highlights

Revenue 7.0% lower at GBP327m

- down by 11.6% at constant currency

Underlying profit before tax up 15.0% (GBP3.7m) to GBP28.4m

- underlying operating profit margin up by 1.0% to 10.8%

Underlying EPS up by 34.0% reflecting lower effective tax rate

Net debt down GBP7.8m to GBP77.5m

- net debt to underlying EBITDA (1) 1.7x (FY09: 2.0x); interest cover 13.9x
(FY09: 5.0x)

- free cash flow (2) of GBP16.2m (FY09: GBP44.0m); a return to more normal levels

- bank facilities committed to September 2011; preparations underway for
refinancing

Full-year dividend maintained at 1.2p per share; dividend cover of 5.3x (FY09:
3.9x)



Notes:

(1) Before amortisation of acquired intangibles and exceptional items

(2) Free cash flow is the change in net debt before acquisitions and disposals,
dividends and the impact of foreign exchange movements



Operational Highlights

Client activity levels are recovering

Client retention rate remains above 90%

Net new business wins and strong pipeline will help drive growth

Cost base aligned to current volumes

Europe - margin maintained despite lower travel activity; successful completion
of Nordic branch network consolidation

North America - moves into profit, reflecting full impact of cost reduction
programme; margin approaching the Group average

Sharp rise in client adoption of lower-cost technology solutions provides
improved value proposition to clients



David Radcliffe, Chief Executive of Hogg Robinson Group plc, said:



"HRG delivered a strong performance in the face of very challenging conditions
which is testimony to the resilience of the business model. We have continued
to control our cost base tightly without damaging our ability to benefit from
the upturn and by doing so delivered against expectations. Our fee-based
business model allows us to deliver first-class service and value to a
portfolio of clients who remain loyal to HRG. By focusing on excellent service
and helping clients control their travel budgets we have maintained our strong
client retention rate and secured net new wins.



"In the coming months, we anticipate an increase in travel activity from our
existing client base as businesses generally begin to benefit from any economic
recovery. Client revenues for April and May are expected to be similar to 2009
even despite the short-term closures of European airspace due to volcanic ash.
Looking further into the future, we will also see the benefit of new clients
coming on stream during the course of the year.



"While the pace and level of economic recovery remains unclear, the positive
momentum we are seeing is encouraging and, for the full year, we expect to
deliver further progress."





Contact Details



Hogg Robinson Group +44 (0)1256 312 600

David Radcliffe, Chief Executive

Julian Steadman, Group Finance Director

Angus Prentice, Head of Investor Relations

Tulchan Communications +44 (0)20 7353 4200

David Allchurch

Stephen Malthouse






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 worldwide 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.



www.hoggrobinsongroup.com





A presentation for analysts and institutional investors will be held at 0900h
BST today at Tulchan Communications, 85 Fleet Street, London EC4Y 1AE.
(Pre-registration for this event is necessary to comply with security
procedures at Tulchan Communications.) Copies of the presentation with audio
commentary from HRG's presentation team will be available at
www.hoggrobinsongroup.com by 1100h BST today or soon thereafter.





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
Plc (HRG). 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.


Chairman's Statement



The extraordinary financial crisis of the last 18 months and some tough winter
operating conditions in the Northern Hemisphere have required a demonstration
of the resilience we have assured shareholders, clients and staff that the
Company is capable of.



In extremely challenging business conditions, Hogg Robinson Group has delivered
another year of good performance. This has been achieved, not from growing
revenues, although we continue to win new clients, but from effective
management of the cost base. In practice this has meant taking tough decisions
about the organisational structure and the number of people who work in it. I
would like to pay tribute to the Executive team and staff who have made the
sacrifices necessary to preserve profitability while still delivering the
quality of service to our clients that they expect.



Results are in line with market expectations and underlying profit before tax
is well above last year. Taking into account the exceptional charge associated
with adjusting the business cost base, earnings are more than sufficient to
support our recommendation of a final dividend of 0.8p per share. Together
with the interim dividend of 0.4p per share, this maintains the payment to
shareholders at the same level as last year. We remain committed to a
progressive dividend policy and expect to increase dividends as soon as it is
prudent to do so.



Cash generation and debt levels continue to be a key area of focus for us and
whilst, as a result of management action, period end net debt is at an
acceptable level, average debt through the year is somewhat higher. We are
looking at ways to improve this. Meanwhile our existing bank facilities will
continue to provide adequate funding until they expire in September 2011.
Preparation is already underway for the renegotiation of these facilities,
which is likely to result in an increase in the cost of funds.



Shareholders will be aware that, in common with most companies, the deficit on
the Group's defined benefit pension schemes has risen substantially this year.
It reflects principally the latest investment values and interest rates at 31
March 2010 together with actuarial assumptions about longevity and inflation
over the life of the schemes. The deficit is inherently volatile. No new
members have been admitted to the UK scheme since 2003 and we monitor the
situation carefully having regard to the interests of the shareholders and
members of the schemes.



Our Chief Executive, David Radcliffe, will deal with the detail of the business
performance during the year in his Statement with further analysis in the
Operational Review and Consolidated Financial Statements. Suffice it to say,
without the decisive action taken by him and his colleagues responding to ever
changing markets, this year's results would not have been as good as they are.



For the future you can be assured your company will continue to respond to
market conditions and will place client satisfaction at the top of its agenda.
Combined with a keen attention paid to costs and margins, this should provide
the best possible result for you, the shareholders and the other stakeholders
in the business, especially our employees. The economic and business situation
has been improving, albeit at different rates in different markets and our
business clients are travelling more. This remains a highly competitive
service sector but with our best-in-class technology and highly committed
staff, Hogg Robinson Group is in very good shape to take advantage of improving
economic conditions.



My final words are to thank those who have left in the past year. Thank you
for your service and best wishes for the future. To my Board, Executive and
other colleagues, thank you for all your hard work, dedication often under
great pressure, and commitment to excellence that typifies this company.






Chief Executive's Statement



Overview

The financial year to 31 March 2010 (FY10) was as challenging as many of us
have seen. So, it is with great pride that I am able to report a set of
results that show how well the HRG team has performed. Our business model has
delivered for us at the same time as helping our clients reduce their travel
spend. Despite a 12% reduction in client travel spend and a 7% reduction in
our own revenues, we have managed our cost base to improve margins and deliver
results that were in line with expectations. As difficult as some of these
changes were, I am convinced that we now have a fitter company that is better
able to serve its clients and deliver lasting value to its staff and
shareholders.



The first half of our financial year was in many ways a continuation of what we
experienced during the last six months of the previous year as our clients
wrestled with the depth of the recession. They were increasingly willing to
change their travel policies, and often this created further opportunities for
HRG.



In the second half of the year, we saw the first signs that market conditions
could be easing, as clients in Asia Pacific began to relax travel policies.
Assuming that the global economy continues to recover, we expect a gradual
return towards pre-recession levels of travel activity to follow in Europe and
North America.



Two particular trends emerged during the year. Firstly, we saw a greater
adoption of technology solutions and, in particular, lower cost, online
self-booking tools, especially in North America. Secondly, even as clients
sought ways to reduce their overall travel expenditure they continued to demand
solutions that offered good value. We have continued to focus on delivering
first-class bespoke solutions which combine products, services and geographies
to achieve greater overall efficiencies and cost savings.



The question on most people's minds in this industry is not whether corporate
travel spending will recover but how quickly it will do so. By its very
nature, forward visibility of corporate travel bookings is relatively limited.
As a result of the decisive actions that we have taken during the past year or
so, coupled with our stable client base and new client contracts, I am
convinced that HRG is very well positioned to grow. In doing so, we are
determined to deliver value to our clients and positive returns to our
shareholders.



Financial results

Revenue of GBP326.8m was down 7.0% as reported, or down 11.6% at constant
exchange rates. Underlying operating profit, which is before the amortisation
of acquired intangibles and exceptional items, was up by 1.7% to GBP35.2m,
representing a margin improvement of 1.0% to 10.8%. These figures include a
contribution of GBP1.4m from favourable movements in exchange rates. Aided by
significantly lower net interest costs, underlying profit before tax was up by
15.0% to GBP28.4m. Underlying EPS increased by 34.0% from 4.7p to 6.3p.



After including the amortisation of acquired intangibles and exceptional items,
reported operating profit was up by 10.7% to GBP28.0m; profit before tax was up
by 37.7% to GBP21.2m; EPS increased by 83.3% from 2.4p to 4.4p.



The year-end net debt reduced by GBP7.8m to GBP77.5m and represented a healthy 1.7x
underlying EBITDA (FY09: 2.0x), with interest cover of 13.9x (FY09: 5.0x).



Our existing bank facilities are committed until September 2011. Preparations
to renew these facilities have begun, but based on current market conditions,
we expect any renewal to be more expensive than today.



The Board is recommending a final dividend of 0.8p per share to leave the
full-year dividend unchanged at 1.2p per share. Our dividend is covered 5.3x
(FY09: 3.9x) by underlying EPS. The final dividend will be paid on 2 August
2010 to shareholders on the register at the close of business on 2 July 2010.



Outlook

In the coming months, we anticipate an increase in travel activity from our
existing client base as businesses generally begin to benefit from the economic
recovery. This should be supplemented as new clients come on stream during the
course of the year. Despite the short-term closures of European airspace due
to volcanic ash, client revenues for April and May are expected to be similar
to 2009. For the full year, we expect to deliver further progress.



David Radcliffe

Chief Executive





Operational Review



Market overview

From a macro-economic perspective, data from the International Monetary Fund,
the International Air Transport Association (IATA) and STR Global all suggested
that the recession was easing as 2009 came to an end. While no one data set
correlates directly with our business, we did see a similar pattern of recovery
and the second half of our financial year was better than the first half.





Client activity

The two consistent priorities for our clients during the year were to reduce
overall travel spend while retaining excellent service and value for money.
Clearly, the pressure on airline ticket prices and hotel room rates has
delivered major savings, but there were other opportunities as clients were
increasingly prepared to change their own behaviour.



Travel spend across our global client base was down 12% compared to the prior
year (down 17% at constant exchange rates) as most clients focussed on cost
reduction. Lower volumes translated into a 7% reduction in our own revenue
(down 12% at constant exchange rates). A number of specific trends emerged,
including:



Stronger compliance - through travel authorisation processes, pre-trip
reporting tools and closer direction and control of hotel bookings comparable
to that for air travel

Improved data analysis - essential in the pursuit of savings opportunities

Stronger control of meetings management

More online and self-booking - particularly for less complex travel

Increased use of regional service centres - offering lower cost options



The recent disruptions caused by the ash emitted by Iceland's Eyjafjallajkull
volcano, which resulted in an unprecedented shutdown of European airspace,
proved once again the value that our clients place on HRG, especially in a
crisis. We estimate that about 40,000 clients' travellers were originally
stranded as a result of the disruption. We worked tirelessly to provide our
clients with alternative travel itineraries wherever possible. Clients now
better appreciate the value we give to them and relationships have been
cemented as they know they can turn to HRG when times get tough. We have
received many accolades and notes of appreciation from our clients and have
heard many incredible 'war stories' from our clients and staff on 'the front
line'. Our warmest thanks and appreciation go to our staff for the efforts,
often voluntarily, which they undertook.



As a direct result of our continuing client focus, we have enjoyed another
successful year of client retention and new business. Our client retention
rate remains above 90% and we continued to grow our client base with net new
business wins over the year.



Amongst many new clients that we welcomed during the year were Altana,
Bertelsmann, Department for International Development, Discovery
Communications, Evonik, KKR, Novartis, Scottish Enterprise Department,
Volkswagen, Wells Fargo and Wincanton. We also secured expanded contracts with
existing clients such as Abbott Laboratories, BNP Paribas, Diageo, Ericsson,
Ernst & Young, GDF Suez, Hess, HSBC, P&G, Pfizer, SGS Group and Wyeth.



Noteworthy contract renewals included Armani, BMW, Bombardier, British Energy,
CMHC, Credit Suisse, Diehl Stiftung, DuPont, GFK, GTZ, Hess, KPMG, Lloyds
Banking Group, MAN Group, National Australia Bank, Next, Nordea, Nycomed,
Province of Ontario, Roche, Schlumberger, Tesco and Vinci.



Our sales pipeline remains strong and spans a range of industries. One of our
key strengths is the breadth of our client portfolio, with no single client or
client sector accounting for a significant share of client revenue.





Corporate Travel Management



Europe

Years ended 31 March 2010 2009 Change



Revenue GBP229.6m GBP257.9m -11.0%

Operating profit GBP21.9m GBP25.0m -GBP3.1m

Underlying operating profit (1) GBP28.1m GBP32.0m -GBP3.9m

Underlying margin (1) 12.2% 12.4% -0.2%




(1) Before amortisation of acquired intangibles and exceptional items



Revenue was down by 14.2% at constant currency. Underlying operating profit
fell by GBP3.9m, despite a GBP0.9m benefit from currency movements. The overall
declines in revenue and operating profit reflect the impact of the global
recession on our clients, with travel activity and patterns impacted by a
combination of headcount reductions and travel embargoes.



Operational restructuring and cost reduction was a key focus during the second
half of the previous financial year as corporate travel activity levels
declined, and remained so in the period under review. We have reduced our
operating costs to match lower client activity whilst at the same time ensuring
service levels were maintained at high levels and not adversely impacted. We
recognised an exceptional charge of GBP3.3m for restructuring initiatives to
reduce costs in the Nordic region and the UK. Both of these initiatives are
now complete and we are beginning to see the benefit of these actions. We
continue to evaluate our network of branch offices throughout Europe,
particularly those serving SME clients in the Nordic region, as we increasingly
focus on large multinational managed clients.



Our UK business returned another steady performance in the face of challenging
conditions despite lower revenue, particularly amongst its Banking and Finance
clients. We doubled the number of our UK travel consultants working from home
during the year and this, combined with increased flexibility of telephone
call-flow switching, helped us to further develop our 'virtual' service network
and reduce our operating costs. Branch network rationalisation continues with
focus on core 'hub' and 'specialist' locations covering rail, hotel and 24/7
support.



In our German business we also reduced costs during the year in line with lower
activity levels. Year-on-year performance during the first half was made more
challenging given the benefit to prior-year results of the Euro 2008 football
championships. However, the second half showed a strong recovery with
increasing evidence of clients starting to return to pre-recession levels of
travel activity. Excellent progress was made during the year in re-shaping and
re-positioning our German operations to focus on the large managed corporate
client market. This has already been rewarded with new client wins including
Volkswagen and Evonik.





North America

Years ended 31 March 2010 2009 Change



Revenue GBP69.3m GBP67.6m +2.5%

Operating profit/(loss) GBP6.1m (GBP1.3m) +GBP7.4m

Underlying operating profit (1) GBP6.8m GBP0.7m +GBP6.1m

Underlying margin (1) 9.8% 1.0% +8.8%




(1) Before amortisation of acquired intangibles and exceptional items



Revenue was down 4.9% at constant currency. Underlying operating profit grew
by GBP6.1m, including a GBP0.6m gain from currency movements, as the benefits of
our cost reduction programme began to flow through.



The decline in travel revenue on a constant currency basis reflects the impact
of the global economic downturn on our clients, particularly during the first
half of the financial year. Online travel bookings made by clients using HRG's
booking tools rose from 29% to 41% year-on-year, providing further evidence of
the change of business mix in this highly competitive market which tends to
favour transaction fees. A general trend towards online booking necessitates
efficient systems capable of dealing with high volumes of lower price
transactions. HRG is well positioned to meet this challenge having invested in
this area a few years ago.



We have restructured our North American operations through a variety of
measures, including reducing the number of office locations, introducing more
sophisticated and flexible telephony and transaction processing systems, and
increasing the number and proportion of travel consultants working from home.
All these initiatives have contributed to the sharp rise in underlying
operating profit margin.



Our consumer business, which manages the redemption of credit card loyalty
points for several Canadian banks, performed well during the year as an
increasing number of cardholders redeemed their points for travel rewards. We
have also recently launched a new online redemption product to help drive
growth in this area.





Asia Pacific

Years ended 31 March 2010 2009 Change



Revenue GBP16.7m GBP16.0m +4.4%

Operating loss (GBP1.1m) (GBP1.0m) -GBP0.1m

Underlying operating loss (1) (GBP1.1m) (GBP1.0m) -GBP0.1m

Underlying margin (1) -6.6% -6.3% -0.3%




(1) Before amortisation of acquired intangibles and exceptional items



Revenue was down by 8.0% at constant currency.



In Australia, our largest market in the region, we completed the changes to our
management team and operational structure. We strengthened our sales teams in
the key states of New South Wales, Western Australia, Queensland and Victoria.
Our contract with the Queensland Government to provide a fully-integrated
travel management system was implemented successfully with mandated roll-out to
key departments. This is having a positive impact on this region's results as
activity levels increase.



We have seen a strong recovery amongst our Singapore-based clients with
activity levels returning to pre-recession levels. Clients in the Banking and
Finance sectors have been the first to show volume recovery. Singapore is fast
establishing itself as a key hub for client travel consolidation programmes
with experienced staff, good language skills and a pro-business environment all
acting as catalysts.



We are encouraged to note an increasing demand amongst our North American
clients for consolidated travel service offerings across the Asia Pacific
region. We are beginning to implement a multi-country service consolidation in
Singapore for one of our larger Manufacturing sector clients, having overcome
the inevitable complexities resulting from multiple language, cultures and GDS
sources.



Our joint ventures in Hong Kong and mainland China both showed similar signs of
recovery to that seen in Singapore. As associates, their results are not
included in the table above.





Spendvision

Years ended 31 March 2010 2009 Change



Revenue GBP11.2m GBP9.8m +14.3%

Operating profit GBP1.1m GBP2.6m -GBP1.5m

Underlying operating profit (1) GBP1.4m GBP2.9m -GBP1.5m

Underlying margin (1) 12.5% 29.6% -17.1%




(1) Before amortisation of acquired intangibles and exceptional items



Revenue was up 5.1% at constant currency. Underlying operating profit fell by
GBP1.5m including a GBP0.2m benefit from currency movements, following a year of
consolidation during which we increased investment in resources for product
delivery and customer support.



Spendvision is our proprietary innovator of transaction management solutions
including end-to-end expense management. Its online technology provides
semi-automated expense claims processing to employees while offering a company
enhanced control and visibility of its indirect expenses.



The Spendvision business continued to expand during the year. Spendvision
technology is now operating with clients in nearly 130 countries and the
software platform is available in 15 languages. During the year, we opened an
office in Singapore to support growth in Asia Pacific and established a joint
venture in Japan to drive the Spendvision platform into the Japanese market.
We also introduced several new technology modules during the year.



In late September 2009, we announced an exciting partnership with Visa. Work
has progressed well since then and Visa has now launched its IntelliLink Spend
Management product, a white-label version of Spendvision's platform, providing
a new global information tool which offers extensive reporting and expense
management capabilities for organisations of all sizes on a single scalable
platform, integrating with the entire suite of Visa B2B payment products. This
is being rolled out to all Visa commercial card issuing banks around the world
and is a ground-breaking development for Spendvision.





Technology

HRG is developing a number of client-facing tools, including those which not
only allow clients to book travel quickly but which also focus on visibility
and keeping track of travel spend. With constant changes by suppliers to
travel content (e.g. real-time updates to fares and seat availability), coupled
with the need for more efficient and cost effective processes, technology
continues to remain a critical factor in the travel services market. With
travel budgets tightening during the recession, companies have switched their
focus from simply 'making booking easier and faster' to 'value' and, crucially,
how technology can help them make savings. Our existing technology and new
system developments allow us to demonstrate the value proposition to our
clients and are key parts of our offering.



We continued to develop and deploy our own technology during the year. The
focal point of our efforts in this area is HRG's Universal Super Platform (USP)
upon which all our travel booking software sits, enabling clients and suppliers
to fully integrate their systems seamlessly with HRG's software. The initial
development phase in relation to USP is now complete and USP has entered
operational use. Amongst a number of benefits, USP enables us to connect to
various travel service providers, as well as to hold and compile various
required data sets. USP thereby enables access to information and inventory
from a number of sources rather than placing sole reliance on an industry
platform. As suppliers explore new and different distribution methodologies,
our independent platform is ready to interface with them.



This year saw the release of two new versions of HRG Online, our online booking
tool. These were well received by clients and enhanced our capability of
offering an independent integrated solution to our clients as required. Our
product portal i-Suite, offering clients a gateway to HRG applications and
third-party products, is now used by over 200,000 users. In addition, new
releases of HRG Reporting (online tool providing clients with relevant key data
about their travel programmes) were launched, and new products HRG Profiler
(allowing the client to install and update their own travel profiles online),
HRG TripPassTM (automatic online trip authority) and HRG Control Centre
(product administration hub) were released.



The handling, capture and delivery of data have been vital to our clients this
year in the drive to control costs. Our new reporting suite enables our
clients to view critical data online in an intuitive way with both high level
dashboards and more detailed data views. In addition to these initiatives, our
own agency point-of-sale tool went into full operational use in one of our main
business travel centres. This roll-out will continue during the current
financial year.



At the end of the year we signed a deal with a customer to supply a branded
version of our online booking tool together with access to our other corporate
travel technology which will open new revenue streams for both parties. This
transaction takes HRG's technology offering into a new arena and positions us
well as an industry provider of selected technology products.



HRG's client-centric strategy means that we will work with any product that
meets our clients' needs or has been explicitly selected by the client. We
give our clients access to the self-booking tool where this is the most
appropriate approach. Where the travel itinerary is relatively straightforward
clients continue to make bookings directly. There are examples of clients who
already make 90% of their bookings online. This allows HRG to deploy resources
in other areas whilst allowing the client to manage their travel arrangements
directly and receive additional benefits from their relationship with HRG.



We continue to improve the quality and reliability of our IT infrastructure.
During the year we signed new contracts for global IP WAN (voice and data
traffic) services and continue to roll out our strategy of virtualisation of
our service structure.



HRG is focusing on products and solutions that meet the needs of the corporate
traveller, such as mobile services, video conferencing and diary management.



We are leading the way in technology amongst the global travel management
companies.


Additional Financial Disclosure



Revenue

The revenue decrease of 7.0% is comprised of a decrease of 11.6% at constant
exchange rates offset by a 4.6% increase from favourable currency translation.



Operating expenses

Operating expenses before exceptional items decreased by 7.8% (GBP24.9m) to GBP
295.5m. Personnel costs, which represent approximately two thirds of the
total, were down by 7.2% (GBP15.0m) and other expenses were down by 8.9% (GBP9.9m).



At constant exchange rates, operating expenses before exceptional items
decreased by 12.5%, which compares to a decrease of 14.7% in the average number
of employees.



Underlying operating profit

Underlying operating profit, which is before amortisation of acquired
intangibles and exceptional items, increased by 1.7% (GBP0.6m) to GBP35.2m. This
includes a benefit of GBP1.4m from favourable currency translation. The
underlying operating profit margin, which is not impacted by currency changes,
increased from 9.8% to 10.8%.



Exceptional items

The cost of exceptional items was GBP3.3m for the year, compared to a cost of GBP
5.6m in the prior year.



The prior year includes restructuring costs of GBP6.9m, a benefit of GBP1.6m from
unutilised accruals related to acquisitions in prior years and a cost of GBP0.3m
in respect of an adjustment to goodwill in Germany associated with recognition
of additional deferred tax assets on acquisitions in earlier years. This
latter item is offset by a deferred tax credit and therefore has no impact on
net earnings for the year.



Net finance costs

Net finance costs reduced by GBP3.0m to GBP7.0m, with favourable interest rates
reducing net external interest by GBP5.2m partially offset by GBP2.0m of higher
costs relating to pension accounting under IAS 19, Employee Benefits. There
was an additional cost of GBP0.2m due to changes in exchange rates.



Net external interest costs of GBP3.2m were covered 13.9 times by EBITDA (FY09:
5.0x). The average net debt during the year was very similar to the prior
year, with typical working capital requirements being much higher than the
levels reported at the year end.



The IAS 19 pension costs, which increased to GBP3.2m for the year, are expected
to increase by a further GBP0.4m in the year to 31 March 2011.



Taxation

The tax charge for the year represents an overall effective tax rate of 33% of
the reported profit before tax, compared to an overall rate of 41% in the prior
year. The effective tax rate for the year on underlying profit before tax was
30% compared to 36% in the prior year, primarily as a result of resolving a
number of open issues with tax authorities and the ability to recognise further
deferred tax assets.



Return on capital employed

Return on capital employed is calculated by dividing underlying operating
profit plus net share of the results of associates and joint ventures by
average net assets. Average net assets are based on the 12 month ends for the
financial year and exclude net debt, pension deficits and tax provisions.
Average net assets amounted to GBP209.4m (FY09: GBP211.3m) compared with GBP165.9m at
the year end (FY09: GBP173.8m). The return for the year was 16.9% (FY09: 16.4%).



Cash flow

Free cash flow, which includes all cash flow except acquisitions and disposals,
dividends and the impact of foreign exchange movements, was GBP16.2m (FY09: GBP
44.0m), primarily due to a fall in working capital and lower external
interest. Typical working capital requirements are much higher than the levels
reported at the year end. Capital expenditure increased by GBP1.7m to GBP11.1m due
primarily to continuing investment in North America and the impact of changes
in exchange rates.



In addition to free cash flow, the other major cash flow items are related to
dividends. Dividends paid in cash to shareholders during the year were GBP1.2m
compared to GBP12.0m in the prior year. Last year, only an interim dividend was
paid in cash. Looking forward, the recommended final dividend of 0.8p per
share will cost an additional GBP2.5m in cash.



Pension obligations

The Group's pension deficits under IAS 19 have increased by GBP61.1m to GBP126.4m
before tax.



The UK scheme deficit increased by GBP64.6m to GBP115.9m. The scheme assets
increased by GBP31.7m, primarily as a result of investment performance. The
scheme liabilities increased by GBP96.3m, with a lower discount rate adding GBP
66.7m and a higher inflation rate assumption adding GBP20.8m. Annual cash
contributions amount to 15.2% of pensionable salaries plus a deficit reduction
payment of GBP6.6m per annum. The total charge against profits increased by GBP
1.2m to GBP4.2m.



The overseas schemes are primarily in Germany and Switzerland, where the
year-end deficit decreased by GBP3.5m to GBP10.5m.



At the year end, there was a deferred tax asset of GBP32.4m (FY09: GBP14.4m)
related to the UK deficit and a further GBP0.7m (FY09: GBP1.2m) related to the
overseas schemes.



Funding and net debt

The Group's principal borrowing is from a GBP220m multi-currency revolving credit
facility (RCF) that is committed until September 2011. The RCF is used for
loans, letters of credit and guarantees with interest based on LIBOR/EURIBOR
plus a margin and mandatory costs incurred by the lenders. In addition, there
are uncommitted facilities, amounting to around GBP26m at the year end, which are
used for local flexibility.



The principal banking covenants for the RCF are measured twice each year, at
the end of March and the end of September, against EBITDA. The covenants
require that net debt is less than 3.0 times EBITDA and net external interest
is covered at least 4.0 times by EBITDA. The definition of EBITDA for covenant
purposes is not materially different to the definition used in these financial
statements.



Net debt at year end reduced by GBP7.8m to GBP77.5m, which was equivalent to 1.7
times EBITDA (FY09: 2.0x). Gearing was 45% (FY09: 47%), or 99% (FY09: 64%)
including the pension deficits and related deferred tax assets.



Based on our current forecasts, the Board believes that these facilities
provide sufficient headroom. Preparation is already underway for a
renegotiation of the Group's facilities which is likely to result in an
increase in borrowing costs.



Share price

The closing mid-market price at the year end was 31.5p (FY09: 15.5p). During
the year, the price ranged from 15.75p to 39.75p per share.








Summary income statement

Years ended 31 March 2010 2009

GBPm GBPm

Revenue 326.8 351.3



EBITDA before exceptional items 44.5 42.3

Depreciation and amortisation (1) (9.3) (7.7)

Underlying operating profit 35.2 34.6

Amortisation of acquired intangibles (3.9) (3.7)

Exceptional items (3.3) (5.6)

Share of associates and joint ventures 0.2 0.1

Net finance costs (7.0) (10.0)

Profit before tax 21.2 15.4

Taxation (6.9) (6.3)

Profit for the year 14.3 9.1





Summary balance sheet

As at 31 March 2010 2009

GBPm GBPm

Goodwill and other intangible assets 253.5 258.0

Property, plant, equipment and investments 17.5 17.9

Working capital (101.2) (93.7)

Current tax liabilities (net) (8.4) (7.8)

Deferred tax assets (net) 47.2 32.2

Net debt (77.5) (85.3)

Pension liabilities (pre-tax) (126.4) (65.3)

Provisions and other items (4.0) (8.3)

Net assets 0.7 47.7





Summary cash flow statement

Years ended 31 March 2009

2010 restated

GBPm GBPm

EBITDA before exceptional items 44.5 42.3

Cash flow from exceptional items (7.0) 0.6

Working capital movements 5.7 29.2

Interest paid (2.8) (6.9)

Tax paid (5.1) (3.8)

Capital expenditure (11.1) (9.4)

Pension funding in excess of EBITDA charge (7.6) (7.2)

Other movements (0.4) (0.8)

Free cash inflow 16.2 44.0

Acquisitions and disposals (0.3) 0.1

Dividends paid to external shareholders (1.2) (12.0)

Currency translation (5.8) (6.9)

Other movements (1.1) (0.1)

Decrease in net debt 7.8 25.1




Excluding amortisation of acquired intangibles



The comparatives in the summary cash flow statement have been restated to
separately identify cash flow from exceptional items.















Hogg Robinson Group plc

Consolidated Income Statement

For the year ended 31 March 2010

Years ended 31 March




Notes 2010 2009



GBPm GBPm



Revenue 1 326.8 351.3

Operating expenses 2 (298.8) (326.0)





Operating profit 28.0 25.3



Analysed as:

Underlying
operating profit 35.2 34.6

Amortisation
of acquired intangibles 8 (3.9) (3.7)

Exceptional items 2 (3.3) (5.6)





Operating profit 28.0 25.3





Share of results
of associates
and joint ventures 0.2 0.1

Finance income 4 0.2 1.3

Finance costs 4 (7.2) (11.3)





Profit before tax 21.2 15.4

Income tax expense 5 (6.9) (6.3)





Profit for the
financial year
from continuing operations 14.3 9.1





Profit attributable to:

Equity Shareholders
of the Company 13.4 7.4

Minority interests 13 0.9 1.7





14.3 9.1







Earnings per share 6 pence pence



Basic 4.4 2.4

Diluted 4.3 2.4




Hogg Robinson Group plc

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2010




Notes Years ended 31 March

2010 2009

GBPm GBPm



Profit for the financial year 14.3 9.1





Other comprehensive income



Currency translation differences (11.8) 17.6

Actuarial loss on pension schemes 11 (66.0) (23.4)

Deferred tax movement on pension liability 18.7 5.9





Other comprehensive (loss) / income for the year, net of tax (59.1) 0.1





Total comprehensive (loss) / income for the year (44.8) 9.2





Total comprehensive (loss) / income attributable to:



Equity Shareholders of the Company (45.7) 7.5

Minority interests 13 0.9 1.7





(44.8) 9.2

















Hogg Robinson Group plc

Consolidated Balance Sheet

As at 31 March 2010 As at 31 March

Notes 2010 2009

GBPm GBPm

Non current assets

Goodwill and other intangible assets 8 253.5 258.0

Property, plant and equipment 9 14.8 15.1

Investments accounted for using the equity method 2.7 2.8

Trade and other receivables 0.1 0.2

Deferred tax assets 48.8 33.8



319.9 309.9

Current assets

Trade and other receivables 115.4 102.6

Financial assets - derivative financial instruments 0.2 -

Current tax assets 1.0 1.5

Cash and cash equivalent assets 58.8 68.5



175.4 172.6



Total assets 1 495.3 482.5



Non current liabilities

Financial liabilities - borrowings (135.1) (144.4)

Deferred tax liabilities (1.6) (1.6)

Retirement benefit obligations 11 (126.4) (65.3)

Provisions (3.5) (3.4)



(266.6) (214.7)

Current liabilities

Financial liabilities - borrowings (0.4) (8.0)

Financial liabilities - derivative financial instruments - (0.6)

Current tax liabilities (9.4) (9.3)

Trade and other payables (216.7) (196.5)

Provisions (1.5) (5.7)



(228.0) (220.1)



Total liabilities (494.6) (434.8)



Net assets 0.7 47.7





Capital and reserves attributable to Equity Shareholders

Share capital 3.1 3.1

Share premium 172.2 172.2

Other reserves 12 13.4 24.1

Retained earnings 12 (191.4) (155.2)



(2.7) 44.2

Minority interests 13 3.4 3.5



Total equity 0.7 47.7





Hogg Robinson Group plc

Consolidated Statement of Changes in Equity

As at 31 March 2010



Attributable to equity holders of the Company

Share Share Other Retained Minority Total

capital Premium reserves earnings Total Interest Equity

GBPm GBPm GBPm GBPm GBPm GBPm GBPm



Balance at 1 April 2008 3.1 171.9 5.3 (132.8) 47.5 2.5 50.0







Retained profit for the financial year - - - 7.4 7.4 1.7 9.1

Other comprehensive income:

Actuarial loss on pension schemes - - - (23.4) (23.4) - (23.4)

Deferred tax movement on pension liability - - - 5.9 5.9 - 5.9

Currency translation differences - - 17.6 - 17.6 0.1 17.7





Total comprehensive income - - 17.6 (10.1) 7.5 1.8 9.3





Transactions with owners:

Dividends - - - (12.3) (12.3) (0.8) (13.1)

Scrip dividend issued in lieu of cash dividend - 0.3 - - 0.3 - 0.3

Share-based incentives - - 1.2 - 1.2 - 1.2





Total transactions with owners - 0.3 1.2 (12.3) (10.8) (0.8) (11.6)







Balance at 1 April 2009 3.1 172.2 24.1 (155.2) 44.2 3.5 47.7







Retained profit for the financial year - - - 13.4 13.4 0.9 14.3

Other comprehensive income:

Actuarial loss on pension schemes - - - (66.0) (66.0) - (66.0)

Deferred tax movement on pension liability - - - 18.7 18.7 - 18.7

Currency translation differences - - (11.8) - (11.8) - (11.8)





Total comprehensive income - - (11.8) (33.9) (45.7) 0.9 (44.8)





Transactions with owners:

Dividends - - - (1.2) (1.2) (1.0) (2.2)

Shares purchased by Employee Benefits Trust - - - (1.1) (1.1) - (1.1)

Share-based incentives - - 1.1 - 1.1 - 1.1





Total transactions with owners - - 1.1 (2.3) (1.2) (1.0) (2.2)









Balance at 31 March 2010 3.1 172.2 13.4 (191.4) (2.7) 3.4 0.7







Hogg Robinson Group plc

Consolidated Cash Flow Statement

For the year ended 31 March 2010 Years ended 31 March

Notes 2010 2009

GBPm GBPm

Cash flows from operating activities

Cash generated from operations 14 36.2 65.2

Interest paid (3.6) (8.6)

Tax paid (5.1) (3.8)





Cash flows from operating activities - net 27.5 52.8



Cash flows from investing activities

Acquisition of subsidiaries, net of cash acquired - (0.3)

Acquisition of associates, joint ventures and other investments (0.3) -

Disposals of associates, joint ventures and other investments - 0.4

Purchase of property, plant and equipment (4.5) (5.4)

Purchase and internal development of intangible assets 8 (6.7) (4.1)

Proceeds from sale of property, plant and equipment 0.1 0.1

Interest received 0.3 1.4

Dividends received from associates and joint ventures 0.5 0.3





Cash flows from investing activities - net (10.6) (7.6)



Cash flows from financing activities

Repayment of borrowings (40.3) (34.0)

New borrowings 21.1 15.0

Cash effect of currency swaps (1.2) (3.9)

Employee Benefits Trust (1.1) -

Dividends paid to external shareholders (1.2) (12.0)

Dividends paid to minority interests (1.0) (0.8)





Cash flows from financing activities - net (23.7) (35.7)





Net (decrease) / increase in cash and cash equivalents (6.8) 9.5

Cash and cash equivalents at beginning of the year 63.3 48.5

Exchange rate effects 1.7 5.3





Cash and cash equivalents at end of the year 58.2 63.3







Cash and cash equivalent assets 58.8 68.5

Overdrafts (0.6) (5.2)





58.2 63.3



Additional Financial Information



General information and basis of preparation



The financial information which comprises the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income, the Consolidated Balance
Sheet, the Consolidated Statement of Changes in Equity and the Consolidated
Cash Flow Statement and related notes do not constitute the Company's statutory
accounts for the years ended 31 March 2010 and 2009, but is derived from those
accounts. The auditors have reported on the Group's statutory accounts for
each of the years ended 31 March 2009 and 31 March 2010. Their reports were
unqualified, did not draw attention to any matters by way of emphasis and did
not contain statements under s498(2) or (3) of Companies Act 2006 or equivalent
preceding legislation. The statutory accounts for the year ended 31 March 2009
have been delivered to the Registrar of Companies and the statutory accounts
for the year ended 31 March 2010 will be filed with the registrar in due
course.



The Consolidated Financial Statements have been prepared in compliance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union, International Financial Reporting Interpretations Committee (IFRIC)
interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The Consolidated Financial Statements have
been prepared under the historical cost convention, as modified by the use of
valuations for certain financial instruments, share-based payment incentives
and retirement benefits.



Critical accounting policies and forward-looking statements



The preparation of the IFRS financial statements requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the Consolidated Financial Statements and the reported amounts of
revenues and expenses during the year.



This Operational Review should be read in conjunction with the audited
Consolidated Financial Statements. The discussions contain forward-looking
statements that appear in a number of places and include statements regarding
HRG's intentions, beliefs or current expectations concerning, among other
things, results of operations, revenue, financial condition, liquidity, growth,
strategies, new products and the markets in which HRG operates. Readers are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties.



Non-GAAP measures



Underlying operating profit is calculated as operating profit before
amortisation of acquired intangibles and exceptional items



Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) is
calculated as operating profit before exceptional items before net finance
costs, income taxes, depreciation, amortisation and impairment.



The Directors believe that the presentation of underlying operating profit and
EBITDA enhances an investor's understanding of HRG's financial performance.
However, underlying operating profit and EBITDA should not be considered in
isolation or viewed as substitutes for retained profit, cash flow from
operations or other measures of performance as defined by IFRS. Underlying
operating profit and EBITDA as used in this announcement is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies in the method of calculation and are unaudited line
items but are derived from audited financial information. The Directors use
underlying operating profit and EBITDA to assess HRG's operating performance
and to make decisions about allocating resources among various reporting
segments.










1 Segment information



The chief operating decision maker has been identified as the Executive
Management Team, which reviews the Group's internal reporting in order to
assess performance and allocate resources. The Executive Management Team has
determined the operating segments based on these reports.



The Executive Management Team considers the business from the perspective of
two core activities, Corporate Travel Management, which is analysed into three
distinct geographic segments, and Spendvision. The Group's internal reporting
processes do not distinguish between the numerous sources of income that
comprise revenue for Corporate Travel Management. The performance of the
operating segments is assessed based on a measure of operating profit excluding
items of an exceptional nature. Interest income and expenditure and income tax
expense are not included in the result for each operating segment that is
reviewed by the Executive Management Team. Other information provided, except
as noted below, to the Executive Management Team is measured in a manner
consistent with that in the financial statements.



Total segment assets exclude cash and cash equivalent assets, current tax
assets and deferred tax assets which are managed on a central basis. These are
included as part of the reconciliation to total Consolidated Balance Sheet
assets.



Corporate Travel Management Spendvision Total

North Asia

Europe America Pacific Total

GBPm GBPm GBPm GBPm GBPm GBPm

Year ended 31 March 2010



Revenue from external customers 229.6 69.3 16.7 315.6 11.2 326.8







Underlying operating profit 28.1 6.8 (1.1) 33.8 1.4 35.2



Amortisation of acquired intangibles (2.9) (0.7) - (3.6) (0.3) (3.9)





Operating profit before exceptional items 25.2 6.1 (1.1) 30.2 1.1 31.3

Exceptional items (3.3) - - (3.3) - (3.3)





Operating profit 21.9 6.1 (1.1) 26.9 1.1 28.0







Underlying margin 12.2% 9.8% -6.6% 10.7% 12.5% 10.8%



Year ended 31 March 2009 (restated)



Revenue from external customers 257.9 67.6 16.0 341.5 9.8 351.3







Underlying operating profit 32.0 0.7 (1.0) 31.7 2.9 34.6

Amortisation of acquired intangibles (2.7) (0.7) - (3.4) (0.3) (3.7)





Operating profit before exceptional items 29.3 - (1.0) 28.3 2.6 30.9

Exceptional items (4.3) (1.3) - (5.6) - (5.6)





Operating profit 25.0 (1.3) (1.0) 22.7 2.6 25.3







Underlying margin 12.4% 1.0% -6.3% 9.3% 29.6% 9.8%






The results for the year ended 31 March 2009 have been restated to reflect
Spendvision as a separate operating segment.



External revenue from clients by geographical area (where the client is
located) is not materially different from external revenue from clients by
origin (where the Group's operations are located) disclosed above.



There is no material inter-segment revenue.



A reconciliation of operating profit to total profit before income tax expense
is provided in the Consolidated Income Statement.





Corporate Travel Management Spendvision Total

North Asia

Europe America Pacific Total

GBPm GBPm GBPm GBPm GBPm GBPm



Total segment assets

31 March 2010 272.0 95.7 12.1 379.8 6.9 386.7

31 March 2009 (restated) 275.1 87.6 11.5 374.2 4.5 378.7








The segment assets at 31 March 2009 have been restated to reflect Spendvision
as a separate operating segment.



Reportable segments' assets are reconciled to total assets as follows:



31 March 31 March

2010 2009

GBPm GBPm



Total segment assets 386.7 378.7

Cash and cash equivalent assets 58.8 68.5

Current tax assets 1.0 1.5

Deferred tax assets 48.8 33.8





495.3 482.5








Capital expenditure by geographical location:





Corporate Travel Management Spendvision Total

North Asia

Europe America Pacific Total

GBPm GBPm GBPm GBPm GBPm GBPm



Capital expenditure

31 March 2010 4.6 4.5 0.1 9.2 2.0 11.2

31 March 2009 (restated) 5.6 2.9 0.4 8.9 0.9 9.8








Capital expenditure by operating segment for the year ended 31 March 2009 has
been restated to reflect Spendvision as a separate operating segment.






2 Operating expenses
Year ended 31 March
2010 2009
GBPm GBPm

Underlying operating expenses
Staff costs (note 3) 193.6 208.6
Amortisation of other intangible assets 4.2 3.1
Depreciation of property, plant and equipment 5.1 4.6
Auditors' remuneration for audit services 1.7 1.7
Operating lease rentals - buildings 14.7 14.6
Operating lease rentals - other assets 1.8 1.9
Loss on disposal of property, plant and equipment 0.1 0.1
Currency translation differences 0.2 (0.2)
Other expenses 70.2 82.3

291.6 316.7

Amortisation of acquired intangibles:
Amortisation of client relationships 3.6 3.4
Amortisation of other acquired intangible assets 0.3 0.3

3.9 3.7

Exceptional items:
Restructuring costs:
- Staff costs (note 3) 2.6 6.6
- Other expenses 0.7 0.3
Release of unutilised accruals relating to acquisitions in prior years - (1.6)
Adjustments to goodwill on recognition of deferred tax assets - 0.3

3.3 5.6

Total operating expenses 298.8 326.0



Restructuring costs of GBP3.3m were incurred during the year (2009: GBP6.9m) and
relate to planned cost reduction programmes in Europe (2009: Europe and North
America). They are in respect of redundancy costs and onerous lease
provisions.




Certain unutilised accruals relating to acquisitions in prior years were
released in the year ended 31 March 2009.








3 Staff costs

Years ended 31 March

2010 2010 2010 2009 2009 2009

Before Before

exceptional Exceptional exceptional Exceptional

items items Total items items Total

GBPm GBPm GBPm GBPm GBPm GBPm



Salaries 163.4 - 163.4 175.0 - 175.0

Social security costs 19.0 - 19.0 21.4 - 21.4

Pension costs 8.4 - 8.4 9.9 - 9.9

Redundancy and termination costs 1.7 2.6 4.3 1.1 6.6 7.7

Share-based incentives 1.1 - 1.1 1.2 - 1.2





193.6 2.6 196.2 208.6 6.6 215.2





Pension costs comprise:

Defined benefit schemes (note 11) 2.3 - 2.3 3.4 - 3.4

Defined contribution schemes 6.1 - 6.1 6.5 - 6.5





8.4 - 8.4 9.9 - 9.9





Years ended 31 March

2010 2009

number number



Average monthly number of staff employed by the Group including Key Management 5,319 6,236






4 Finance income and finance costs



Years ended 31 March

2010 2009

GBPm GBPm



Finance income - bank interest 0.2 1.3





Interest on bank overdrafts and loans (3.4) (9.6)

Amortisation of issue costs on bank loans (0.6) (0.4)

Expected return on pension scheme assets less

interest cost on pension scheme liabilities (3.2) (1.2)

Other finance charges - (0.1)





Finance costs (7.2) (11.3)





Net finance costs (7.0) (10.0)





5 Income tax expense



Years ended 31 March

2010 2009

GBPm GBPm

Current tax:

Tax on profits of the financial year 6.1 3.8

Adjustments in respect of previous years (0.9) (0.9)





Total current tax 5.2 2.9





Deferred tax:

Origination and reversal of temporary differences 1.7 2.2

Adjustments in respect of previous years - 1.4

Adjustments to goodwill on recognition of deferred tax assets - (0.2)





Total deferred tax 1.7 3.4





Taxation charge 6.9 6.3






The tax charge is split as follows:

Years ended 31 March

2010 2009

GBPm GBPm



United Kingdom 3.6 4.7

Overseas 3.3 1.8

Adjustments to goodwill on recognition of deferred tax assets - (0.2)





Taxation charge 6.9 6.3





Years ended 31 March

2010 2009

restated

GBPm GBPm



On recurring business 8.4 8.8

Tax on amortisation of acquired intangibles (1.2) (1.1)

Exceptional items (0.3) (1.4)





Taxation charge 6.9 6.3





The analysis for the year ended 31 March 2009 has been restated to disclose the
tax effect of amortisation of acquired intangibles.






6 Earnings per share



Basic earnings per share (EPS) is calculated by dividing the earnings
attributable to Shareholders by the weighted average number of Ordinary
shares outstanding during the year, excluding those purchased by the
Company's Employee Benefits Trust.


For diluted earnings per share, the weighted average number of Ordinary
shares in issue is adjusted to assume conversion of all dilutive potential
Ordinary shares.

The following amounts have been used in the calculation of earnings per
share:



Years ended 31 March

2010 2009

GBPm GBPm

Earnings for the purposes of earnings per share:

Profit for the financial year 14.3 9.1

Less: amount attributable to minority interest (0.9) (1.7)





Total 13.4 7.4







Years ended 31 March

Weighted average number of Ordinary shares 2010 2009



in issue number number

m m



Issued (for basic EPS) 301.5 304.2

Dilutive potential Ordinary shares 9.9 4.5





For diluted EPS 311.4 308.7





The weighted average number of issued Ordinary shares is lower in the year
ended 31 March 2010 compared to the year ended 31 March 2009 due to the
impact of the shares purchased by the Employee Benefits Trust.



The Employee Benefits Trust waived its rights to dividends in respect of
4,000,000 shares purchased in the year ended 31 March 2010.




Underlying earnings per share



Underlying earnings per share is calculated on the profit attributable to
equity shareholders before amortisation of acquired intangibles and
exceptional items after charging taxation associated with those profits of GBP
19.1m (2009: GBP14.2m).


Years ended 31 March

2010 2009

GBPm GBPm



Profit before tax 21.2 15.4

Add: amortisation of acquired intangibles 3.9 3.7

Add: exceptional items 3.3 5.6





Underlying profit before tax 28.4 24.7

Underlying income tax expense (8.4) (8.8)





Underlying profit for the financial year 20.0 15.9

Less: amounts attributable to minority interests (0.9) (1.7)





Total 19.1 14.2










7 Dividends per share



The dividends to the Company's shareholders in the year ended 31 March 2010
were:



Years ended 31 March

2010 2009

GBPm GBPm



Final dividend in respect of year ended 31 March 2009

0.0p per share (31 March 2008 2.8p per share) - 8.6

Interim dividend in respect of year ended 31 March 2010

0.4p per share (31 March 2009 1.2p per share) 1.2 3.7





Total dividends to the Company's shareholders (note 23) 1.2 12.3







A final dividend in respect of the year ended 31 March 2010 of 0.8p per
Ordinary share, amounting to a total dividend of GBP2,430,103, is to be proposed
at the Annual General Meeting on 26 July 2010. The Employee Benefits Trust has
waived its rights to dividends in respect of 4,000,000 shares purchased in the
year ended 31 March 2010.



Scrip dividends to the value of GBP0.1m in respect of the interim dividend for
the year ended 31 March 2009 and to the value of GBP0.2m in respect of the final
dividend for the year ended 31 March 2008 were taken instead of a cash payment.








8 Goodwill and other intangible assets



Years ended 31 March

2010 2009

GBPm GBPm



Goodwill 221.8 225.6

Other intangible assets 31.7 32.4





253.5 258.0





Other intangible assets

Other intangible assets

Computer software

Externally Internally Client

Goodwill acquired generated relationships Total

GBPm GBPm GBPm GBPm GBPm

Cost

At 1 April 2008 229.5 16.2 6.1 31.4 283.2

Additions - 0.8 3.3 - 4.1

Reclassification of assets - - 2.5 - 2.5

Disposals - (1.4) - - (1.4)

Adjustments to goodwill on
recognition of tax assets (0.3) - - - (0.3)

Adjustments to deferred consideration (0.2) - - - (0.2)

Exchange differences 23.0 1.3 0.2 6.7 31.2



At 31 March 2009 252.0 16.9 12.1 38.1 319.1

Additions - 1.6 5.1 - 6.7

Disposals - (2.9) - - (2.9)

Adjustments to deferred consideration (0.2) - - - (0.2)

Exchange differences (3.6) 0.6 0.7 (0.7) (3.0)





At 31 March 2010 248.2 16.2 17.9 37.4 319.7





Accumulated amortisation

At 1 April 2008 26.4 10.5 3.0 11.9 51.8

Amortisation charge for the year - 1.9 1.5 3.4 6.8

Disposals - (1.4) - - (1.4)

Exchange differences - 1.0 - 2.9 3.9





At 31 March 2009 26.4 12.0 4.5 18.2 61.1

Amortisation charge for the year - 1.9 2.6 3.6 8.1

Disposals - (2.9) - - (2.9)

Exchange differences - 0.2 (0.1) (0.2) (0.1)





At 31 March 2010 26.4 11.2 7.0 21.6 66.2





Carrying amount

At 1 April 2008 203.1 5.7 3.1 19.5 231.4





At 31 March 2009 225.6 4.9 7.6 19.9 258.0





At 31 March 2010 221.8 5.0 10.9 15.8 253.5



The recoverable amount used in the assessment of goodwill for all cash
generating units comprises value in use. During the year the Group reviewed
its discount rate and long term growth rates and these have been applied in the
assessment. The value in use has been calculated by discounting at 8% per
annum (2009: 10% per annum) the anticipated post-tax cash flows. This equates
to an estimated pre-tax discount rate of 8.3% per annum. The forecasts are
prepared from management information taking into account historical trading
performance and anticipated changes in future market conditions. The detailed
forecasts cover a period of three years from the balance sheet date; cash flows
are projected beyond that period based on anticipated long-term growth of 2%
(2009: 2%).



The amortisation charge for the year of GBP8.1m (2009: GBP6.8m) is comprised of GBP
3.9m (2009: GBP3.7m) in respect of intangible assets acquired via business
combinations and GBP4.2m (2009: GBP3.1m) which relates to amortisation of software
purchased and internally generated by existing businesses.



Goodwill consists of the following amounts related to cash generating units of
the Group:





Years ended 31 March

2010 2009

restated

GBPm GBPm

Corporate Travel Management

UK 56.9 56.9

Sweden 14.6 14.6

Norway 17.9 17.9

Germany 45.7 47.4

Switzerland 20.0 19.6

North America 45.6 48.1

Other 17.6 17.6





218.3 222.1

Spendvision 3.5 3.5





221.8 225.6








The analysis of goodwill at 31 March 2009 has been restated to reflect
Spendvision as a separate operating segment.





9 Property, plant and equipment



Property Plant and equipment Total

GBPm GBPm GBPm

Cost

At 1 April 2008 9.3 38.9 48.2

Additions for the year 0.5 5.2 5.7

Disposals for the year (0.2) (3.1) (3.3)

Exchange differences 1.0 5.4 6.4



At 31 March 2009 10.6 46.4 57.0

Additions for the year 0.2 4.3 4.5

Disposals for the year (0.6) (2.2) (2.8)

Exchange differences 0.3 1.3 1.6





At 31 March 2010 10.5 49.8 60.3





Accumulated depreciation

At 1 April 2008 5.2 30.4 35.6

Depreciation charge for the year 0.9 3.7 4.6

Disposals for the year (0.1) (2.8) (2.9)

Exchange differences 0.6 4.0 4.6



At 31 March 2009 6.6 35.3 41.9

Depreciation charge for the year 0.9 4.2 5.1

Disposals for the year (0.6) (1.9) (2.5)

Exchange differences 0.3 0.7 1.0





At 31 March 2010 7.2 38.3 45.5





Carrying amount

At 1 April 2008 4.1 8.5 12.6





At 31 March 2009 4.0 11.1 15.1





At 31 March 2010 3.3 11.5 14.8







Property is comprised of leasehold properties and leasehold improvements.
Plant and equipment is comprised of IT and office equipment.




Years ended 31 March

2010 2009

GBPm GBPm

Contractual commitments for the acquisition of:

Property, plant and equipment 0.1 1.5





Carrying amount of property, plant and equipment held under finance leases 0.3 0.5












10 Net debt



Years ended 31 March

2010 2009

GBPm GBPm



Total financial liabilities - borrowings 135.5 152.4

Add back: Unamortised loan issue costs 0.8 1.4

Cash and cash equivalent assets (58.8) (68.5)





Net debt 77.5 85.3









Analysis by currency after currency swaps

Years ended 31 March

2010 2009

GBPm GBPm



Sterling 48.6 66.2

Euro (11.6) (15.1)

Swiss Franc 11.0 14.9

Other European currencies 4.8 (1.2)

Canadian Dollar 21.4 18.2

US Dollar (0.4) (0.8)

Other currencies 3.7 3.1





77.5 85.3










11 Retirement benefit obligations



Defined benefit pension arrangements



The Group's principal defined benefit pension arrangement is the Hogg Robinson
(1987) Pension Scheme (the UK Scheme). The UK Scheme was available to most UK
employees until it was closed to new members in March 2003. Its benefits are
based on final pensionable salary. The increase in final pensionable salary
since 31 March 2003 is limited to the lower of the increase in the Retail
Prices Index and 5% per annum. The latest actuarial valuation of the scheme was
carried out at 6 April 2008 by an independent qualified actuary.



The Group also operates defined benefit schemes in Norway, Switzerland, Germany
and Italy.







The following amounts have been included in the Consolidated Income Statement
in respect of defined benefit pension arrangements:



Years ended 31 March

2010 2009

GBPm GBPm



Current service charge 2.8 3.4

Curtailment gain (0.5) -





Charge to operating profit 2.3 3.4





Interest cost on pension scheme liabilities 16.3 16.1

Expected return on pension scheme assets (13.1) (14.9)





Charge to finance costs 3.2 1.2





Total charge to Consolidated Income Statement 5.5 4.6










The following amounts have been recognised as movements in equity:



Years ended 31 March

2010 2009

GBPm GBPm



Actual return on scheme assets 34.2 (31.4)

Less: expected return on scheme assets (13.1) (14.9)





21.1 (46.3)

Experience gains and losses arising on scheme liabilities 1.9 2.5

Changes in assumptions underlying the present value of

scheme liabilities (89.2) 21.9

Exchange rate movement 0.2 (1.5)





Movement in the year (66.0) (23.4)





Cumulative amount recognised in the Consolidated

Statement of Comprehensive Income since

the transition date to IFRS, 1 April 2003 (68.0) (2.0)









The key assumptions used for the UK Scheme were:



Years ended 31 March

2010 2009 2008



Rate of increase in salary 4.80% 4.00% 4.60%

Rate of increase in final pensionable salary 3.50% 2.70% 3.30%

Rate of increase in pensions in payment - accrued before 1999 5.00% 5.00% 5.00%

Rate of increase in pensions in payment - accrued after 1999 3.50% 2.70% 3.30%

Discount rate 5.50% 6.70% 6.30%

Inflation 3.50% 2.70% 3.30%



Expected rate of return on plan assets:

Equity instruments 8.00% 7.20% 8.00%

Debt instruments 4.50% 6.70% 5.30%

Property 8.00% 7.20% 8.00%

Other assets 4.40% 5.00% 5.40%






The assumptions for the schemes in Norway, Switzerland, Germany and Italy do
not produce materially different results from the assumptions used for the UK
Scheme.



The expected rates of return have been set taking into account current market
returns for each category of asset at the balance sheet dates.



The mortality assumptions for the UK Scheme are based on PMA/FA92 tables with
'medium cohort' projections and a 1% underpin in the rate of future
improvements in mortality. Life expectancy at the age of 65 is assumed to be:



Years ended 31 March

2010 2009

Current Pensioners

Male 22.7 22.6

Female 26.0 25.9



Future retirements

Male 24.7 24.1

Female 28.1 27.5




The UK liability is based on the assumption that active and deferred members
will take 25% of the value of their pension as a lump sum on retirement.



The provision included in the Consolidated Balance Sheet arising from
obligations in respect of defined benefit schemes is as follows:



Years ended 31 March

2010 2009

GBPm GBPm



Present value of defined benefit obligations

Unfunded scheme 9.6 8.9

Wholly or partly funded schemes 350.7 254.1





360.3 263.0

Fair value of scheme assets (233.9) (197.7)





126.4 65.3





The net present value of defined benefit obligations has moved as follows:



Years ended 31 March

2010 2009

GBPm GBPm



At beginning of year 263.0 269.4

Current service cost 2.8 3.4

Curtailment gain (2.3) -

Interest cost 16.3 16.1

Contributions by plan participants 1.4 1.6

Actuarial losses / (gains) 87.3 (24.4)

Foreign currency exchange changes 0.3 6.8

Benefits paid (8.5) (9.9)





At end of year 360.3 263.0






The fair value of scheme assets has moved as follows:



Years ended 31 March

2010 2009

GBPm GBPm



At beginning of year 197.7 221.3

Curtailment loss (1.8) -

Expected returns on plan assets 13.1 14.9

Actuarial gains / (losses) 21.1 (46.3)

Foreign currency exchange changes 0.5 5.3

Contributions by the employer 10.4 10.8

Contributions by plan participants 1.4 1.6

Benefits paid (8.5) (9.9)





At end of year 233.9 197.7








The assets held in defined benefit schemes were as follows:



Years ended 31 March

2010 2009

GBPm GBPm



Equity instruments 123.7 110.5

Debt instruments 64.1 62.7

Property 33.2 12.5

Other assets 12.9 12.0





233.9 197.7






None of the plan assets are represented by financial instruments of the Group.
None of the plan assets are occupied or used by the Group.



The schedule of contributions for the UK Scheme has been agreed with the
Trustees at 15.2% of pensionable salaries plus GBP6.6m per annum with effect from
April 2008. This is expected to amount to GBP8.7m for the year ending 31 March
2011.





The obligations and assets are split as follows:



Years ended 31 March

2010 2010 2010 2009 2009 2009

UK Overseas Total UK Overseas Total

GBPm GBPm GBPm GBPm GBPm GBPm



Defined benefit obligations (319.3) (41.0) (360.3) (223.0) (40.0) (263.0)

Fair value of plan assets 203.4 30.5 233.9 171.7 26.0 197.7





Deficit (115.9) (10.5) (126.4) (51.3) (14.0) (65.3)










Five year experience



Years ended 31 March

2010 2009 2008 2007 2006

GBPm GBPm GBPm GBPm GBPm



Defined benefit obligations (360.3) (263.0) (269.4) (274.8) (310.2)

Fair value of plan assets 233.9 197.7 221.3 214.9 185.7





Deficit (126.4) (65.3) (48.1) (59.9) (124.5)







Experience gains/(losses)

on plan liabilities 1.9 2.5 (2.3) (3.6) (1.8)

on plan assets 21.1 (46.3) (18.3) 4.0 22.4










Pension funding in excess of the charge to operating profit is shown in the
Consolidated Cash Flow Statement as follows:



Years ended 31 March

2010 2009

GBPm GBPm



Contributions less service cost (note 14) (7.6) (7.2)







12 Reserves



Retained earnings

Years ended 31 March

2010 2009

GBPm GBPm



At 1 April (155.2) (132.8)

Retained profit for the financial year 14.3 9.1

Dividends (note 7) (1.2) (12.3)

Minority interest (0.9) (1.7)

Shares purchased by Employee Benefits Trust (1.1) -

Actuarial loss (66.0) (23.4)

Deferred tax movement on pension liability 18.7 5.9





At 31 March (191.4) (155.2)










Other reserves



Share-based Exchange Other

incentives reserve reserves

GBPm GBPm GBPm



Balance at 1 April 2008 0.9 4.4 5.3



Other comprehensive income:

Currency translation differences - 17.6 17.6



Transactions with owners:

Share-based incentives 1.2 - 1.2





Balance at 1 April 2009 2.1 22.0 24.1



Other comprehensive income:

Currency translation differences - (11.8) (11.8)



Transactions with owners:

Share-based incentives 1.1 - 1.1





Balance at 31 March 2010 3.2 10.2 13.4







13 Minority interests



Years ended 31 March

2010 2009

GBPm GBPm

At 1 April 3.5 2.5

Exchange differences - 0.1

Dividends paid (1.0) (0.8)

Share of profit after tax 0.9 1.7





At 31 March 3.4 3.5










14 Cash generated from operations



Years ended 31 March

2010 2009

GBPm GBPm



Profit before tax from continuing operations 21.2 15.4



Adjustments for:

Depreciation and amortisation (note 8 and 9) 13.2 11.4

Net increase in provisions 4.4 7.2

Share of results of associates and joint ventures (0.2) (0.1)

Net finance costs (note 4) 7.0 10.0

Adjustments to goodwill on recognition of deferred tax assets (note 2) - 0.3

Pension curtailment credit (0.5) -

Other timing differences 1.4 0.9





46.5 45.1

Cash expenditure charged to provisions (8.4) (3.2)

Change in trade and other receivables (10.5) 27.3

Change in trade and other payables 16.2 3.2

Pension funding in excess of charge to operating profit (note 11) (7.6) (7.2)





Cash generated from operations 36.2 65.2










END





Hogg Robinson Group plc (HRG) is a holding company. The Company is engaged in the provision of corporate travel, expense and data management services. HRG targets the international and national managed sector, where clients require a range of globally integrated and tailored services underpinned by technology solutions and products. The company operates in two segments: Corporate Travel Management and Spendvision. Corporate travel management is the provision of support services to enable businesses to maximize traveler welfare, whilst fulfilling their global business travel needs. Spendvision is a global provider of total transaction management solutions, is a wholly owned subsidiary of HRG. Expense management is the delivery of systems and support services to enable businesses to streamline the processes, by which they control and administer staff business expenses. more »

Share Price (Full)
42p
Change
-0.8  -1.8%
P/E (fwd)
5.9
Yield (fwd)
5.5
Mkt Cap (£m)
138.6