Hogg Robinson Group Regulatory News (HRG)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO US PERSONS, OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

14 March 2012

Hogg Robinson Group plc

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

Proposed acquisition of the outstanding minority interest in

Spendvision Holdings Limited ("Spendvision")

Hogg Robinson Group plc, the international corporate travel services company, announces that its indirect subsidiary, Hogg Robinson plc, has entered into a conditional agreement to acquire, subject to shareholder approval, the 42 per cent. interest in Spendvision which it does not already own for a total consideration of £13,440,000 (the "Proposed Acquisition"). The Proposed Acquisition is expected to complete on 30 March 2012, conditional on shareholder approval at a General Meeting of Shareholders to be convened for 30 March 2012.

Highlights

·; Spendvision is a leading innovator in the development and support of transaction management solutions, including end-to-end expense management and payables automation.

·; HRG's strategy is to provide a broader range of integrated products to its corporate clients linked to its own proprietary technology.

·; The Directors believe that the Proposed Acquisition provides a timely opportunity to strengthen the HRG's product offering and end-to-end services proposition.

·; Following completion of the Proposed Acquisition, the Group will have full operational control of Spendvision bringing a number of operational and financial benefits to the Group.

·; The Consideration will be satisfied by £8,464,000 in cash from existing resources and 8,188,252 new Shares in the Company to the value of £4,976,000. The Vendors are also entitled to a cash payment of £1,956,000 on completion under pre-existing agreements resulting from earlier sales of shares held by them in Spendvision.

·; The Proposed Acquisition is expected to be earnings neutral in the year ending 31 March 2013 and marginally earnings enhancing in the year ending 31 March 2014, excluding the benefit of any cost or revenue synergies.

·; The Board, which has been so advised by its financial adviser, Collins Stewart, considers the terms of the Proposed Acquisition to be fair and reasonable so far as Shareholders are concerned. In giving advice to the Board, Collins Stewart has taken into account the Board's commercial assessments. The Board also consider that the Proposed Acquisition is in the best interests of Shareholders as a whole.

·; Accordingly, the Board unanimously recommend that Shareholders vote in favour of the Resolution as the Board intend to do in respect of their beneficial holdings, amounting, in aggregate, to 4,893,349 Shares representing approximately 1.58 per cent. of the issued share capital of the Company at the date of this announcement.

·; The Company has also received irrevocable undertakings and letters of intent from Shareholders to vote in favour of the Resolution at the General Meeting in respect of a further 209,504,743 Shares in aggregate, representing approximately 67.65 per cent. of the issued share capital of the Company at the date of this announcement (as more fully described in paragraph 7 of this announcement).

The Proposed Acquisition requires Shareholder approval as three of the Vendors are related parties to the Company for the purposes of Chapter 11 of the Listing Rules by virtue of being an associate of either a current director of Spendvision or a person who has been a director of Spendvision in the last twelve months.

HRG expects today to publish and send a circular to shareholders (the "Circular"), containing further details of the Proposed Acquisition and including notice of a general meeting to be held on 30 March 2012 at 9.00 a.m. (the "General Meeting") at which the Resolution will be proposed in order to approve the Related Party Transaction.

This announcement and the Circular will be available later today for download on HRG's website www.hrgworldwide.com. The Circular, and a Form of Proxy for use at the General Meeting, will shortly be posted or otherwise communicated to shareholders. To be valid, the Forms of Proxy should be completed, signed and returned following the procedures described in the Notes to the Notice of General Meeting so as to be received by the Company's registrars as soon as possible but, in any event, so as to arrive no later than 9.00am on 28 March 2012. Completion and return of a Form of Proxy will not prevent members from attending and voting in person should they wish to do so.

A copy of the Circular will shortly be submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do. A copy of the Circular will also be made available for inspection by shareholders at the Company's registered office, Global House, Victoria Street Basingstoke, Hampshire RG21 3BT, from the time of its publication until the date of the General Meeting itself.

Commenting on the Proposed Acquisition, David Radcliffe, Chief Executive Officer of HRG, said:

"We are delighted to announce the acquisition of the minority interest in Spendvision. Since our original investment in 2004, the Spendvision team has worked hard to develop the company into a leading innovator in end-to-end expense management.

"Our experience shows a clear trend towards more closely integrated payment and expense management solutions that provide greater control with more efficient processes. The acquisition of Spendvision strengthens HRG's integrated, end-to-end proposition to clients and means we are well positioned to continue to take advantage of this trend."

"As we move towards the end of our financial year, HRG has continued to trade in line with our expectations. We remain confident about the long-term prospects for HRG and look forward to the future benefits from this acquisition."

Enquiries:

Collins Stewart Europe Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting as adviser to Hogg Robinson Group plc in relation to the Proposed Acquisition and is not acting for any other person and will not be responsible to any other person for providing the protections afforded to clients of Collins Stewart Europe Limited or for providing advice in relation to the Proposed Acquisition or any other arrangements referred to herein.

Forward Looking Statements

This announcement contains certain forward looking statements with respect to the financial condition, results of operations and businesses and plans of the Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that have not yet occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. As a result, the Group's actual future financial condition, results of operations and business and plans may differ materially from the plans, goals and expectations expressed or implied by these forward-looking statements. HRG undertakes no obligation publicly to update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules of the Financial Services Authority). Nothing in this announcement should be construed as a profit forecast or be relied upon as a guide to future performance.

Other information

The release, publication, transmission or distribution of this announcement in, into or from jurisdictions other than the United Kingdom may be restricted by law and therefore persons in such jurisdictions into which the announcement is released, published, transmitted or distributed should inform themselves about and observe such restrictions. In particular (but without limitation) this announcement is not for release, publication, transmission or distribution, directly or indirectly, to US persons, or into the United States, or any other jurisdiction in which the same would be unlawful. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

Notes to Editors

About HRG

Hogg Robinson Group plc (HRG) is the award-winning international corporate services company. Established in 1845 and headquartered in Basingstoke, Hampshire, UK, HRG specialises in travel, expense and data management underpinned by proprietary technology solutions and products. With a worldwide network that comprises over 120 countries, HRG provides unparalleled local knowledge and global expertise in North America, Europe, Asia Pacific, Africa, Latin America and MEWA.

www.hrgworldwide.com

About Spendvision

Spendvision is a leading innovator of transaction management solutions. Through just one technology platform Spendvision delivers more effective purchasing that increases business profitability, improves decision making and delivers greater control and compliance. All this across the broadest range of transactions from simple cash, card, online travel bookings and telecoms right through to interactive coding, requisitions and dynamically funded accounts.

Spendvision is headquartered in the UK with offices in the US, Australia, New Zealand and Japan and works with leading customers and partners around the world. The Spendvision solution is available direct to businesses and through partners across the banking, telecoms and travel sectors that provide the Spendvision solution to their customers via their own brands.

www.spendvision.com

1. Introduction

The Company's indirect subsidiary, Hogg Robinson plc, currently owns 58 per cent. of the issued share capital of Spendvision. Today, the Company announces that Hogg Robinson plc had agreed, subject to Shareholder approval, to acquire the remaining 42 per cent. minority interests in Spendvision owned by the Vendors for an aggregate consideration of £13,440,000 (the "Proposed Acquisition").

The Group's stated strategy is to provide a broader range of integrated products to its corporate clients and the Directors believe that the Proposed Acquisition provides a timely opportunity to strengthen the Group's product offering and end-to-end services proposition.

The aggregate consideration in respect of the Proposed Acquisition will be satisfied by the payment of £8,464,000 in cash from the Group's existing resources and the allotment and issue of new Shares in the Company to the value of £4,976,000, which will be subject to lock-up arrangements lasting for up to three years from the date of completion of the Proposed Acquisition. In addition, upon completion of the Proposed Acquisition, the Vendors are entitled to a cash payment of £1,956,000 under pre-existing agreements resulting from earlier sales of shares held by them in Spendvision (which payment is not an element of the consideration for the Proposed Acquisition under the Spendvision SPD). On completion of the Proposed Acquisition, Hogg Robinson plc will own the entire issued share capital of Spendvision.

2. Information on Spendvision and the Related Parties

Spendvision is a leading innovator in the development and support of transaction management solutions, including end-to-end expense management and payables automation. The online platform makes it easy for companies to capture, pay for, manage and understand all their corporate transactions, giving complete control over spend and increased cost efficiency. It also automates the processing of expense claims for employees.

Spendvision has two established routes to market: (1) direct to corporate customers, for example, Rio Tinto and De Beers; and (2) via partner organisations, for example, Visa. Spendvision has approximately 20,000 clients around the world and handles over 100 million transactions a year. The Spendvision platform is accessed by users in nearly 130 countries and is available in 16 languages. Spendvision's profit before tax for the 12 month period ending 31 March 2011 was £295,000 and the value of the gross assets the subject of the Proposed Acquisition as at 31 March 2011 was £9,489,000.

The Group has held an interest in Spendvision since 2004 when Spendvision was formed by Hogg Robinson plc jointly with the key management and founders to develop Spendvision's technology and expense management products. At the outset, the Group held a 25 per cent. interest in Spendvision and parties associated with the key management and founders of Spendvision held the remaining 75 per cent. of the company.

The Spendvision Shareholders' Agreement provides that Hogg Robinson plc could exercise call options so as to acquire certain tranches of shares in Spendvision with the intent that the Group could ultimately own 100 per cent. of the issued share capital of Spendvision. Through acquisitions in 2006 and 2008, Hogg Robinson plc acquired shares in Spendvision from the Vendors and another party (who is no longer a shareholder in Spendvision) to the point where, since 13 March 2008 and, as at the date of this announcement, Hogg Robinson plc owns 58 per cent. of Spendvision, and the Vendors currently own 42 per cent. as follows:

3. Background to and reasons for the Proposed Acquisition

The Group's strategy is to provide a broad range of integrated products to its corporate clients, linked to its own proprietary technology. The Group's original investment in Spendvision was to address a trend towards more integrated payment and expense management products by larger travel management companies. The Directors believe that this trend will continue and that therefore the Proposed Acquisition provides a timely opportunity to strengthen the Group's end-to-end proposition in this respect.

On 3 February 2012, the Group received an offer to acquire 100 per cent. of Spendvision from a proposed buyer in cooperation with Flamingo Way for aggregate consideration of £32 million. As Spendvision forms an important part of the Group's strategy for the future and the Directors have no desire to dispose of the Group's interest in Spendvision, the Directors have determined that it is in the best interests of the Group to acquire the remaining minority interests in Spendvision.

The Spendvision Shareholders' Agreement provides that where any Spendvision shareholder (other than Hogg Robinson plc) wishes to sell its shares to a third party, that shareholder must ensure that any offer from that third party to purchase their shares relates to 100 per cent. of the shares of Spendvision. There is no obligation under the Spendvision Shareholders' Agreement for Hogg Robinson plc to acquire further shares in Spendvision. However, Hogg Robinson plc has the right, on a pre-emptive basis, either to elect to acquire the Spendvision shares on identical terms to the offer or to accept the offer in relation to its interest in Spendvision should any offer be forthcoming.

Following completion of the Proposed Acquisition, the Group will have full operational control of Spendvision and the Directors anticipate this will bring a number of operational and financial benefits to the Group. The Directors believe there will be an increased opportunity to sell integrated travel management and payment and expense products to the Group's existing corporate clients. These integrated contracts are typically longer term than the Group's travel management contracts and thus provide the opportunity to sell clients additional value added services.

The Directors also believe that the Proposed Acquisition will provide the opportunity to realise certain cost synergies over the medium term by the reduction of duplicated costs. Additionally, the anticipated higher growth profile of Spendvision's revenues combined with the higher operating margins historically achieved, provide the opportunity for Group profit margin expansion over the medium term.

Full ownership of Spendvision will provide a barrier to entry for competitors and reduce the need for the Group to develop relationships with other technology platform providers to provide these types of services. The Proposed Acquisition will therefore also provide a low risk technology platform for the introduction of new products to the Group's clients.

The Proposed Acquisition is expected to be earnings neutral in the year ending 31 March 2013 and marginally earnings enhancing in the year ending 31 March 2014, excluding the benefit of any cost or revenue synergies.

4. The principal terms of the Proposed Acquisition

Each of the parties to the Spendvision Shareholders' Agreement has given their consent to the terms of the Proposed Acquisition. For the reasons explained in paragraph 5 of this announcement, the Spendvision SPD provides for the termination of the Spendvision Shareholders' Agreement immediately prior to completion, and accordingly, the Proposed Acquisition is not subject to the transfer and completion restrictions of the Spendvision Shareholders' Agreement. The principal terms of the Spendvision SPD are set out in this paragraph 4.

Each of the Vendors has agreed to sell their entire shareholding in Spendvision to Hogg Robinson plc conditional upon the Resolution being passed (without amendment) by 30 April 2012 and, prior to Completion, upon (inter alia) the delivery of such documents as may reasonably be requested by Hogg Robinson plc in connection with the Proposed Acquisition.

The aggregate consideration under the Spendvision SPD comprises:

i) a cash payment to each of Flamingo Way, Liberte, Bruhns/Dixon and PMG of, respectively, £4,508,000, £1,701,000, £1,701,000, and £554,000 (being the Cash Consideration); and

ii) the allotment (which Hogg Robinson plc shall procure) of 8,188,252 Shares in certificated form (which have a value equal to £2,488,000 in respect of each of Liberte and Bruhns/Dixon) on the basis of the average mid-market closing price of the Shares over the three month period to 12 March 2012 (being the last practicable date prior to this announcement). In calculating the number of Consideration Shares to allot to each of Liberte and Brunhs/Dixon, any fractional entitlements have been rounded up to the nearest Share. The Consideration Shares will rank pari passu with the existing Shares and application will be made for the admission of such Shares to the Official List and to trading on the Main Market.

The Consideration Shares will, subject to certain customary exceptions, be subject to a three year lock-up period from completion of the Proposed Acquisition. The lock-up provisions provide that, unless the Company agrees otherwise, up to one third of the Consideration Shares may be sold from the anniversary of completion, up to two thirds may be sold from 24 months after completion and the full amount may be sold from 36 months after completion, any such disposal also being subject to certain restrictions with a view to preserving an orderly market in the Shares.

The Vendors have determined the apportionment of the Consideration between themselves such that, following Completion, Liberte and Bruhns/Dixon may transfer part of their respective portions directly or indirectly to certain individuals who have supported the Vendors' efforts to build the value of Spendvision. Accordingly, the Consideration payable to Liberte and Bruhns/Dixon has been increased and the Consideration payable to Flamingo Way and PMG has been reduced in accordance with the Vendors' instructions. Any such transfers of Consideration Shares may be permitted as a release of the lock-up provisions described above (exercisable at the discretion of the Company and Hogg Robinson plc). One of the conditions to the exercise of such discretion by the Company and Hogg Robinson plc is likely to be that the relevant transferees enter into a deed of adherence to such lock-up provisions.

In addition, upon completion of the Proposed Acquisition, the Vendors are entitled to a cash payment of £1,956,000 under pre-existing agreements resulting from earlier sales of shares held by them in Spendvision. This cash payment is not an element of the consideration for the Proposed Acquisition under the Spendvision SPD.

Each of the Vendors has given warranties as to title and capacity. If, at any time prior to the completion of the Proposed Acquisition, it is found that any of these warranties has not been fulfilled or is untrue or is inaccurate or misleading, the Purchaser shall be entitled to give notice in writing to the Vendors prior to completion to terminate the Spendvision SPD, in which circumstance the Proposed Acquisition will not take place. The Vendors and Robert Kirby, Shane Bruhns, Simon Raymer and Paul Gadd have given standard restrictive covenants as to non-competition matters, non-solicitation and confidentiality.

On completion of the Spendvision SPD, Spendvision will enter into an amendment to the service agreements with each of Seaview Solutions Limited (in respect of Shane Bruhns) and Liberte Consulting Limited (in respect of Simon Raymer) pursuant to which Shane Bruhns and Simon Raymer will continue to work for Spendvision for a further fixed period of three years. The fees paid to Seaview Solutions Limited and Liberte Consulting Limited under each service agreement will be NZ$500,000 per annum and an annual bonus of 30 per cent. of such fees. The annual bonus will be payable on the achievement of conditions linked to the financial performance of Spendvision and defined personal objectives.

5. The General Meeting

Implementation of the Proposed Acquisition is subject to Shareholder approval at the General Meeting. The General Meeting is being convened for the purposes of considering and, if thought fit, passing the Resolution in order to approve the Related Party Transaction. Being an ordinary resolution, the Resolution will require the approval of not less than 50 per cent. of the votes cast at the meeting.

The General Meeting is being convened on notice of 14 clear days in accordance with the authority granted by Shareholders at the Company's last Annual General Meeting held on 25 July 2011. The Spendvision Shareholders' Agreement (which was negotiated in 2004 prior to the Company's admission to the Official List in 2006) includes a timetable of 30 days for completion of any process to acquire the outstanding interests once such a process has been initiated. By virtue of the agreement of each party to the Spendvision Shareholders' Agreement to provide for the termination of that agreement immediately prior to completion of the Spendvision SPD, the timetable of 30 days for completion no longer applies to the Proposed Acquisition. However, the Spendvision SPD has been negotiated against the background of that timetable and it is therefore commercially important for the business proposed at the General Meeting to be voted upon by Shareholders in a timely and efficient way. It continues to be the Board's intention only to use the authority to convene General Meetings on periods shorter than 21 days notice where it is commercially important to do so.

6. Action to be taken

If you would like to vote on the Resolution but cannot attend the General Meeting in person, please complete the Form of Proxy accompanying the Circular and return it to Equiniti Limited as soon as possible. Equiniti Limited must receive all Forms of Proxy by no later than 9.00 a.m. on 28 March 2012.

As an alternative to completing the Form of Proxy, you can appoint a proxy electronically via www.sharevote.co.uk to be received by Equiniti Limited by no later than 9.00 a.m. on 28 March 2012. CREST members can also appoint proxies by using the CREST electronic proxy appointment service and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by Equiniti Limited by no later than 9.00 a.m. on 28 March 2012. The time of receipt will be taken to be the time from which Equiniti Limited is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the CREST Regulations.

The completion and return of a Form of Proxy or making use of the CREST electronic proxy appointment service will not prevent Shareholders from attending and voting at the General Meeting should they so wish. In the event that a Shareholder votes in person, any proxy votes lodged with Equiniti Limited by that Shareholder will be excluded.

7. Irrevocable Undertakings

The Company has received irrevocable undertakings to vote in favour of the Resolution from each of Boron Investments N.V., dnata, Artemis Investment Management and Jupiter Asset Management as detailed below:

The Company has also received a letter of intent from Cazenove Capital Management to vote in favour of the Resolution in respect of 11,008,114 Ordinary Shares representing 3.55 per cent. of the issued share capital of the Company.

8. Recommendation

Your Board, which has been so advised by its financial adviser, Collins Stewart, considers the terms of the Proposed Acquisition to be fair and reasonable so far as Shareholders are concerned. In giving advice to the Board, Collins Stewart has taken into account the Board's commercial assessments. The Board also considers that the Proposed Acquisition is in the best interests of Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolution as the Directors intend to do in respect of their beneficial holdings, amounting, in aggregate, to 4,893,349 Shares representing approximately 1.58 per cent. of the issued share capital of the Company at the date of this announcement.

In addition, the Company has received irrevocable undertakings and a letter of intent as further described in paragraph 7 of this announcement.

In total, the Company has therefore received irrevocable undertakings, a letter of intent and intentions from Directors to vote in favour of the Resolution in respect of 214,398,092 Ordinary Shares, representing 69.23 per cent. of the issued share capital of the Company.

When considering what action you should take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other professional adviser duly authorised under the FSMA.

The following definitions apply to words and phrases used in this announcement except where the context requires otherwise:

All times referred to in this announcement are to London time.