26 July 2010
Hogg Robinson Group plc
(`HRG', `the Company' or `the Group')
INTERIM MANAGEMENT STATEMENT
Ahead of today's Annual General Meeting, Hogg Robinson Group plc, the
international corporate travel services company, announces its first Interim
Management Statement for the year ending 31 March 2011, covering the period
from 1 April to 26 July 2010.
Market conditions have generally continued to improve during the period since
our last update to the market on 26 May 2010, which was based on trading to end
April 2010. The International Air Transport Association (IATA) reported strong
growth in air travel in May having been depressed in April by the impact of
airspace closures associated with the Icelandic ash cloud plume, and has
confirmed that during the first five months of 2010 air travel, measured as
revenue passenger kilometres (RPK), rose 7.2% year-on-year, above the 6-7%
average run-rate achieved during the last two decades. The most recent data for
hotel occupancy issued by STR Global shows continued monthly revenue per
available room (RevPAR) year-on-year growth albeit the improving trends were
most marked in Asia Pacific.
HRG has performed very well during the first three months of the financial year
with client revenue 6% ahead of last year at constant currency. When coupled
with lower operating costs, this has produced a strong result for the quarter.
We continue to manage our cost base carefully and will benefit from increased
operational gearing as activity increases.
While we have seen some early evidence from selected clients of a return to
premium travel, the majority continue to seek help from us in tightly
controlling their travel costs. However, compared to last year, client travel
spend in the first quarter was up by 19% at constant currency.
The majority of HRG's revenue comes from client fees rather than from supplier
commissions. So, whilst upgrades in class of travel and standards of
accommodation are positive indicators of the overall improving health of the
corporate travel market, they do not necessarily lead to a direct increase in
the Group's revenue.
HRG's client retention rate remains high and it is from this loyal client base
that the Group will increasingly benefit as our existing clients' staff travel
more frequently. In addition, we expect to see the benefit from last year's
client wins coming through as they begin to trade with HRG. These include
additional business from Ericsson and the wins of Ernst & Young, Novartis, SGS
and Volkswagen AG.
In terms of new business, since the start of the current financial year, we are
delighted to have welcomed several new clients and to have extended our
existing relationships with others. These include Agilent, HCL AXON, Institute
of International Education and Syngenta. Successful contract renewals include
ABB, National Australia Bank, Takeda and Willis. Our new business pipeline
remains healthy and offers significant opportunities for HRG to grow its
business around the world.
The Group has committed funding in place at attractive rates until September
2011. Based on our current forecasts, the Board believes that these facilities
provide sufficient headroom. Preparation is already underway for the
renegotiation of these facilities, which is likely to result in an increase in
the cost of funds.
The financial year has started well. Despite the limited visibility that is
inherent for corporate travel management, at this early point in our financial
year our confidence is increasing. We expect travel activity amongst our
existing clients to continue to increase in line with macroeconomic conditions.
We will see additional benefit from new clients that have yet to trade with HRG
and will maintain tight control over our cost base without damaging our
reputation for superior client service and value.
The majority of the Group's earnings have traditionally come in the second half
of the financial year. The Board believes HRG will continue to progress and
deliver a full-year performance in line with its expectations.
- Ends -
Hogg Robinson Group plc +44 (0)1256 312 600
Julian Steadman, Group Finance Director
Angus Prentice, Head of Investor Relations
Tulchan Communications LLP +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
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 within 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 released, 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