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Annual Results

Hogg Robinson pre-tax profits rise

24 May 2017 07:41

Hogg Robinson Group's underlying pre-tax profits rose to £37.0m in the year to the end of March - 15% up at actual exchange rates and 4% higher at constant currencies.

The group also announced that had agreed to acquire the digital travel innovator, a next-generation travel management company.

It said the acquisition was expected to complete within the next 15 working days.

The group said financial highlights for the year ended 31 March were:

- Encouraging earnings growth with underlying profit before tax up 15%, up 4% at constant currency, driven by improved profitability with underlying operating profit margin up from 14.1% to 14.7%

- Underlying basic EPS up 8% from 7.2p to 7.8p, with reported basic EPS up 19% from 5.8p to 6.9p

- HRG delivered a robust performance, with a 5% reduction in constant currency revenues largely offset by an improvement in operating margin with underlying operating profit broadly flat year-on-year at constant currency

- Fraedom performed strongly with revenue up 29% and underlying operating profit up 39%, or up 13% and 22% respectively at constant currency

- Net debt further reduced to £21.0m, representing 0.3x EBITDA, creating a platform to support strategic intent with ongoing cash generation available to invest in the business

- Final dividend up 5% to 1.925p per share; full-year dividend up 5% to 2.64p with underlying dividend cover of 3.0 times (2016: 2.9 times)

The group said the pension deficit increased by £6.9m to £265.2m.

An increase of £96.7m in liabilities resulting from a decrease in the discount rate from 3.5% to 2.7% in the period was largely offset as a result of a collaborative exercise with the Trustees which refined the underlying demographic assumptions for the members of the UK Defined Benefit Pension Scheme and contributed to a reduction in the UK Scheme's liabilities of £68.4m.

Chief executive David Radcliffe said: "This has been a successful year for Hogg Robinson Group.

"We re-focused our growth strategy while also delivering a good financial and operating performance in line with our expectations.

"We are now seeing real gains in terms of improved efficiency, lower operating costs and an enhanced service to our clients and end customers.

"Against a backdrop of continuing macroeconomic and geopolitical uncertainty, combined with previously flagged strong competitor pricing activity, we have this year continued to expand underlying operating profit margin and deliver earnings growth.

"As outlined at the half year, we have completed our review of the strategy for the Group.

"This has reaffirmed our confidence in the growth opportunities for HRG, our travel management business, and Fraedom, our FinTech business. We have a clear strategy and a defined route to accelerate and improve performance, underpinned by our technology.

"We have already started and will continue to invest in both businesses as we deliver our strategic objectives for growth."

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