25 Jul 2012 10:30
25 July 2012 Hogg Robinson Group plc (`HRG', `the Company' or `the Group') INTERIM MANAGEMENT STATEMENT HRG continues to see full-year performance in line with expectations
Ahead of today's Annual General Meeting, Hogg Robinson Group plc, the international corporate services company, announces its first Interim Management Statement for the year ending 31 March 2013, covering the period from 1 April 2012 to date.
Group performance
In our full-year results announcement on 23 May 2012, we highlighted that given the macroeconomic outlook, we expected trading conditions to remain challenging. The period since our last update has seen a continuation of this trend as reflected by recent key industry indicators.
After the strong first quarter we reported last year, more demanding year-on-year comparatives combined with these trends contributed to a 12% decline in revenue versus prior year (down 8% at constant currency) in the three months to the end of June, somewhat below management's expectations. Client travel transaction activity was lower by 3% and client spend fell by 7% (down 4% at constant currency) year on year, underscoring our continued determination to help our clients maximise the value of their travel-related expenditure while delivering incremental cost savings.
Outlook
Despite current conditions, the Board believes HRG will continue to show good progress and deliver a full-year performance in line with market expectations.
The majority of the Group's earnings have traditionally come in the second half of the financial year. Our pipeline of new business opportunities remains strong and we see ample scope to grow our business profitably around the world. HRG's model does not rely on large revenue growth to enable margin progression. We will continue to manage our cost base carefully to ensure that it remains appropriate while enabling us to continue to deliver excellent service to our existing clients at all times.
David Radcliffe, Chief Executive of Hogg Robinson Group plc, commented:
"It has been a challenging start to the year for the industry given the difficult macroeconomic conditions, and HRG has also faced more demanding year-on-year comparatives after the strong first half we reported last year. However, HRG's model does not rely on large revenue growth to enable margin progression and whilst we continue to be mindful of the economic environment, the Group continues to see the full-year performance in line with expectations."
Market overview
Overall, market conditions have shown no significant change since our full-year results announcement in May. However, ongoing macroeconomic weakness and uncertainty, combined with tougher year-on-year comparatives, have resulted in slower growth in airline passenger trends reported by the International Air Transport Association (IATA) and global hotel occupancy trends reported by STR Global, particularly in Europe and North America.
Client activity
With regard to new business, we are pleased to have welcomed a number of new clients to our portfolio since the start of the financial year while extending our existing relationships with others. These include CH2M HILL, Cricket Australia, the governing body for professional and amateur cricket in Australia, Ernst & Young, Hansel, the central procurement unit of the Finnish Government, Holcim, Premier Foods, the UK Government and Volkswagen. Our implementation of service in over 70 countries to new client Unilever began during the period, ahead of the commencement of trading in the second half of the year. Noteworthy contract renewals include BNP Paribas, BSkyB, Deutsche Bank, GDF Suez, Lloyds Banking Group and Nordea.
Financial position
The Group's cash generation and balance sheet remain robust. At 30 June 2012, net debt was approximately £7m higher than at the same date last year, following our acquisition of the remaining interest in Spendvision (cash consideration of approximately £10m) and the purchase of additional shares for the Employee Benefits Trust (approximately £9m).
In recent years, the Group has used an active programme to reduce working capital requirements at the end of each half-year reporting period. As noted in our full-year results statement, after successfully reducing net debt over the past few years, we no longer see the need for this working capital programme to continue in the future. This programme reduced net debt by approximately £19m in September 2011 and we therefore anticipate a corresponding increase in net debt at 30 September 2012.
There have been no material adverse events or transactions that have impacted the Group's financial position since 31 March 2012 save for the information provided in this statement.
Funding
The Group has £220m of committed credit lines, with £190m committed until 2014 and £30m repayable by 2018. Based on our current forecasts, the Board believes that these facilities provide the Group with sufficient headroom.
- Ends - Enquiries:Hogg Robinson Group +44 (0)1256 312 600 Philip Harrison, Group Finance Director Designate Angus Prentice, Head of Investor Relations Tulchan Communications +44 (0)20 7353 4200 Stephen Malthouse David Allchurch Martin Robinson Notes to Editors
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. With a worldwide network that comprises over 120 countries, HRG provides unparalleled global expertise and local knowledge in Europe, North America, Asia Pacific, Africa, Latin America and MEWA. Read the latest HRG news and search our archives.
www.hrgworldwide.com
Forward-looking statements
This announcement may contain forward-looking statements with respect to certain of the plans and current goals and expectations relating to the future financial conditions, business performance and results of Hogg Robinson Group. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the control of HRG, including amongst other things, HRG's future profitability, competition with the markets in which the Company operates and its ability to retain existing clients and win new clients, changes in economic conditions generally or in the travel and airline sectors, terrorist and geopolitical events, legislative and regulatory changes, the ability of its owned and licensed technology to continue to service developing demands, changes in taxation regimes, exchange rate fluctuations, and volatility in the Company's share price. As a result, HRG's actual future financial condition, business performance and results may differ materially from the plans, goals and expectations expressed or implied in these forward-looking statements. HRG undertakes no obligation to publicly update or revise forward-looking statements, except as may be required by applicable law and regulation (including the Listing Rules). No statement in this announcement is intended to be a profit forecast or be relied upon as a guide to future performance.
The release, publication, transmission or distribution of this announcement in, into or from jurisdictions other than the United Kingdom may be restricted by laws and therefore persons in such jurisdictions into which this announcement is release, published, transmitted or distributed should inform themselves about and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of such jurisdiction.
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