27th Nov 2009 07:00
27 November 2009 Hogg Robinson Group plc (`HRG', `the Company' or `the Group')
Half-yearly financial report for the six months ended 30 September 2009
A resilient performance in challenging conditions; well placed for the economic recovery Summary of resultsSix months ended 30 September 2009 2008 Change Revenue GBP155.3m GBP171.0m -9.2% Underlying earnings (1) - Operating profit GBP11.3m GBP13.0m - 1.7m - Profit before tax GBP7.5m GBP7.8m - 0.3m - Earnings per share (p) 1.6p 1.5p +0.1p Reported earnings - Operating profit GBP7.1m GBP11.3m - 4.2m - Profit before tax GBP3.3m GBP6.1m - 2.8m - Earnings per share (p) 0.6p 1.1p -0.5p Net debt GBP96.0m GBP123.0m GBP27.0mNote
(1) Before amortisation of acquired intangibles and exceptional items
Financial Highlights
* Revenue decreased by 9.2% to 155.3m
- down 15.0% on a constant currency basis
* Underlying profit before tax broadly unchanged
- operating expenses reduced by 15.1% at constant currency
- operating profit margin broadly unchanged at 7.3%
* Underlying EPS up 6.7% to 1.6p
* Net debt of 96.0m; down 27.0m from September 2008; reflects continuation
of working capital management programme
* Interim dividend of 0.4p per share; equivalent to one third of last year's
annual dividend; in line with previously announced dividend policy
Operational Highlights
* Clients continuing to travel; HRG helping them to control travel spend * Client retention rate remains above 90%; net new business wins over the period * Cost base actively managed and at appropriate level * Europe - restructuring of branch network; exceptional charge of 2.3m * North America - benefits from cost reduction measures taken in FY09 * Asia Pacific - profitability maintained
* Spendvision revenue up 24% at constant currency; exciting new partnership
with Visa Outlook * Early signs of stabilisation, but prepared for the economic climate to remain challenging * Maintaining a disciplined approach to control of the cost base
* Full-year performance anticipated to be in line with market expectations
David Radcliffe, Chief Executive of Hogg Robinson Group plc, said:
"In the middle of a tough recession we have delivered a very resilientperformance. Our ability to provide our customers with excellent service and tohelp them control their travel budgets has helped to maintain our strong clientretention rate and secure net new wins.
We have continued to control our cost base tightly without damaging our ability to benefit from the upturn when it arrives.
Whilst we have seen some early signs of stabilisation, visibility remains limited. However, we continue to believe that the Group will deliver a full-year performance in line with market expectations and, looking further ahead, we believe that we are well positioned to respond as market conditions improve."
Contact DetailsHogg 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
A briefing by conference call for analysts and institutional investors will beheld at 0900h GMT today. For conference call details, please contact TulchanCommunications on +44 (0)20 7353 4200. The presentation slides used in thisbriefing will be available at http://investors.hoggrobinsongroup.com/hrg/en/investor-relations/presentation from 0845h today.A replay recording of the conference call will be available via audio webcastand podcast at http://investors.hoggrobinsongroup.com/hrg/en/investor-relations/presentation later today.
Notes to Editors
Hogg Robinson Group plc (HRG) , the international corporate travelservices company, was established in 1845 and operates from headquarterslocated in Basingstoke, Hampshire, UK. Its interests include owned orcontrolled corporate travel services operations in 25 key driver/growth marketsthroughout Europe, North America and Asia Pacific, which are supported by anetwork of contracted partners. The HRG network extends to nearly 120countries.HRG's philosophy is to focus on its clients, underpinned by threedifferentiators - its people, its technology and its breadth of service. Thecompany has experienced management and skilled operators together with a strongreputation for technology which it develops and owns in-house. In addition HRGis the only major travel management company to offer a real breadth and depthof services, all of which combine to serve every client around the globedelivering value, cost savings, efficiency and innovation, without compromise.HRG's portfolio of clients spans a broad range of industry sectors includingbut not limited to Automotive, Banking and Finance, Food Manufacturing, Mediaand Entertainment, Pharmaceutical, Retail and Telecommunications.
www.hoggrobinsongroup.com
This announcement may contain forward-looking statements with respect tocertain of the plans and current goals and expectations relating to the futurefinancial conditions, business performance and results of Hogg Robinson Group.By their nature, all forward-looking statements involve risk and uncertaintybecause they relate to future events and circumstances that are beyond thecontrol of HRG, including amongst other things, HRG's future profitability,competition with the markets in which the Company operates and its ability toretain existing clients and win new clients, changes in economic conditionsgenerally or in the travel and airline sectors, terrorist and geopoliticalevents, legislative and regulatory changes, the ability of its owned andlicensed technology to continue to service developing demands, changes intaxation regimes, exchange rate fluctuations, and volatility in the Company'sshare price. As a result, HRG's actual future financial condition, businessperformance and results may differ materially from the plans, goals andexpectations expressed or implied in these forward-looking statements. HRGundertakes no obligation to publicly update or revise forward-lookingstatements, except as may be required by applicable law and regulation(including the Listing Rules). No statement in this announcement is intended tobe 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 bylaws and therefore persons in such jurisdictions into which this announcementis release, published, transmitted or distributed should inform themselvesabout and observe such restrictions. Any failure to comply with therestrictions may constitute a violation of the securities laws of suchjurisdiction.Management ReviewOverview
We have now traded for a full year during the worst global recession since the1930s. When the recession started to take hold in October 2008, businessesquickly began to reduce discretionary spending and, in particular, to seeklower cost travel options. Data published by the major airlines and by theInternational Air Transport Association (IATA) have revealed major declines inboth passenger numbers and spend during the past 12 months. More recently,there are early signs that air passenger numbers and revenue have stabilised;the latest IATA data show that international passenger travel grew for thefirst time in 12 months, albeit a modest 0.3% up on the same month last year.In general, however, market conditions remain challenging and we remaincautious about any rapid recovery in corporate travel.Against this backdrop, our business has performed well during the first half ofour financial year with pleasing comparisons against the prior year that hadnot yet been impacted by the recession. Underlying profit before tax wasbroadly unchanged and net debt was 27m lower.Importantly, at HRG we work for our clients and earn the vast majority of ourrevenue from fees for the work we do rather than commissions based on the valueof the travel. In the current climate, clients have been trading down tocheaper forms of travel as well as reducing the frequency of travel. For themost part, we see little impact from trading down, but less frequent traveldoes reduce our revenue and requires us to reduce capacity.In response to this, throughout the whole of 2009 we have been reducing ouroperating costs to keep pace with lower client activity. Our commitment to highservice levels does however mean that cost reduction lags a fall in activitylevels.Importantly, wherever possible we have endeavoured to retain the flexibility toadd capacity when the economic climate improves and our established client basebegins to travel more again. For example, our technology is allowing us toincrease the number of travel consultants working from home. We also introduceda voluntary `Options for Change' programme which has allowed our employees tohelp us reduce costs in the coming months through reduced working hours,sabbaticals, unpaid holiday, salary reduction and voluntary redundancy.We have continued to offer our clients creative ways to make the most of theirreduced travel budgets including self-service reservations (SSR), data andsecurity tracking applications to support stronger policy compliance. We arealso offering the management of video conferencing facilities for clients'internal meetings.Historically, the majority of the group's earnings have come in the second halfof the financial year. On a reported basis, compared to the prior year, revenueand operating profit for the first half fell by 9.2% and 37.2% respectively.Reported profit before tax was 3.3m compared to 6.1m, with basic earnings pershare (EPS) of 0.6p compared to 1.1p.
Overall, currency movements had minimal impact on earnings during the first half, but did improve revenue by 5.8%. Excluding currency movements, revenue was down by 15.0%.
Underlying operating profit, which is before amortisation of acquiredintangibles and exceptional items, was 1.7m lower at 11.3m, and the underlingoperating profit margin moved from 7.6% to 7.3%. Lower interest costs helpedensure that underlying profit before tax was down only marginally, from 7.8mto 7.5m, and underlying EPS was 1.6p compared to 1.5p.Following our major restructuring programme in the final quarter of last year,we undertook two further restructuring initiatives to reduce costs in theNordic region and the UK which have produced an exceptional charge of 2.3mduring the first half. A further exceptional charge of around 1m is expectedin the second half to complete these initiatives.Historically, the first half has required higher working capital which hasreduced during the second half. The free cash outflow of 8.7m is 6.7m greaterthan in the prior year primarily due to the 5.0m cash settlement from Kuoniincluded last year. Closing net debt of 96.0m compares to 123.0m at 30September 2008 and 85.3m at year end. Our principal banking facility iscommitted until September 2011 and we have remained comfortably within ourcovenant limits.In common with many other companies, the Group pension deficits have increasedsince the year end, as positive investment performance did not offset theimpact of a lower discount rate being used to value the liabilities. The totaldeficits increased by 62.2m to 127.5m since the year end although cashcontributions remain unchanged. The principal defined benefit scheme in the UKhas been closed to new entrants for several years. However, the use of periodicmarket interest rates to value the liabilities at net present value willinevitably produce volatility.In line with our policy, the Board has declared an interim dividend of 0.4p pershare which will become due and payable on 6 January 2010 to shareholders onthe register at 11 December 2009. This represents one third of last year'sannual dividend of 1.2p per share.
Client activity
The first half was again successful in terms 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 period. As the economy returns to normal and this stable base of clients begin to travel more, HRG should benefit from that increased activity.
New clients that we welcomed to HRG during the period, and existing clients where we have secured regional extensions, include BNP Paribas, Discovery Communications, GDF Suez, KKR and SGS Group. We also won the Scottish Enterprise Department to add to our other substantial government business in the UK.
We also renewed contracts with several existing clients including Armani, BMW,Credit Suisse, Lloyds Banking Group, National Australia Bank, Nordea, Nycomed,Pfizer, Province of Ontario, Roche, Schlumberger, Tesco and UBS.
We are delighted to have been successful in extending our relationships with companies that have been involved in merger and acquisition activity. For example, we have combined service structures for companies such as Lloyds / HBOS, Nomura / Lehman Brothers and Wells Fargo / Wachovia.
The pipeline of new business remains healthy and includes opportunities in the Engineering, Financial, Food, Oil & Gas and Pharmaceutical sectors.
Our portfolio remains diverse, with our top ten clients accounting for 23% offirst-half client revenue and no single client accounting for more than 5%.While Banking & Finance remained our largest client sector, it accounted forless than 20% of client revenue.
Technology
Technology is a key element in the HRG strategy and continues to deliver products and process improvements to its clients and to HRG itself. Our ongoing investment in technology through the economic cycle is testament to HRG's steadfast commitment to this area.
During the first half of the financial year, we delivered a number of new andexciting technology products. The release of v8.0 of HRG Online, our onlinebooking tool, delivers greater functionality and an improved user interface. Anew reporting suite, together with travel tracker products, was introducedduring the period which enables clients to view and access their travel dataonline. Client adoption of HRG's i-Suite, offering clients a gateway to HRG andthird party products, continues to grow rapidly. New versions of HRG Point ofSale (Agency Desktop) application are currently undergoing testing andevaluation.Investment in our core infrastructure included a new wide area network, serverand desktop infrastructure improvements and further expansion of InternetProtocol telephony platforms. Combined with our continuing investment in ourUniversal Super Platform, we are building more efficient and flexible servicedelivery.Regional reviewEuropeSix months ended 30 September 2009 2008 Change Revenue GBP110.3mGBP128.1m -13.9% Operating profit GBP5.0m GBP11.4m - 6.4m
Underlying operating profit (1) GBP8.8m GBP12.7m - 3.9m
Underlying operating profit 8.0% 9.9% -1.9% margin (1)
(1) Before amortisation of acquired intangibles and exceptional items
Revenue fell by 17.9% during the period, excluding favourable currencymovements. Underlying operating profit reduced by 3.9m, with little impactfrom currency movements, as a result of lower activity. We recognised anexceptional charge of 2.3m (2008: nil) for restructuring during the period,with a further charge of around 1m expected in the second half.Our traditionally strong UK business performed reasonably well during theperiod, with effective cost control in the face of lower client activity. Thenumber of home-based travel consultants increased steadily during the periodand now numbers more than 180. This has helped us develop our `virtual' servicenetwork which is showing benefits in the form of increased flexibility oftelephony call-flow switching and reduced operating costs. The rationalisationof our UK branch network continues with focus on core `hub' and `specialist'locations in London, Manchester (rail centre), Glasgow, Leicester (hotelreservation centre), Belfast and Farnborough (24/7 support). In September welaunched `Simply HRG' which offers a range of services to small and mid-sizedcompanies with an annual travel spend of up to 2m.Our German business also reduced costs in line with lower client activity anddid not have the benefit from the Euro 2008 football championships reflected inlast year's results. Flexible cost reduction has been achieved by using theReduced Working Time Initiative introduced by the German Government to helpthose employees working reduced hours. A similar scheme is being utilised inSwitzerland.We have accelerated the consolidation of our branch network in continentalEurope, as we increasingly focus on large multinational managed clients. Duringthe period we reduced our network of branch offices in the Nordic region thatserve SME clients. In Sweden, we are consolidating our activities into key hubsin Stockholm, Malmo and Gothenburg.North AmericaSix months ended 30 September 2009 2008 Change Revenue GBP34.5m GBP32.5m +6.2% Operating profit GBP2.1m ( 0.1m) + 2.2m
Underlying operating profit (1) GBP2.4m GBP0.2m + 2.2m
Underlying operating profit 7.0% 0.6% +6.4% margin (1)
(1) Before amortisation of acquired intangibles and exceptional items
Revenue fell by 6.8%, excluding favourable currency movements. Underlying operating profit advanced by 2.2m with little impact from currency movements.
The North American market remains very competitive and requires efficientsystems that are suitable for large scale activity. Over the past few years, wehave been investing to reduce our cost base and improve productivity through arange of initiatives affecting front, middle and back-office functions while atthe same time adapting our service delivery to meet the needs of our new globalclients. We have also expanded the number of travel consultants working fromhome, to increase flexibility and improve profitability. Together theseinitiatives have helped to improve the profitability of our operations in NorthAmerica significantly.Asia PacificSix months ended 30 September 2009 2008 Change Revenue GBP10.5m GBP10.4m +1.0% Operating profit - - -
Underlying operating profit (1) GBP0.1m GBP0.1m -
Underlying operating profit 1.0% 1.0% - margin (1)
(1) Before amortisation of acquired intangibles and exceptional items
Revenue fell by 5.8% during the period, excluding favourable currency movements. Timely cost reduction allowed us to keep underlying operating profit unchanged.
In Australia we made changes to our operational structure and the business isnow positioned for, and focused on, winning new clients particularly thosebased in the key international hub of Sydney. Our contract with the QueenslandGovernment to provide a fully-integrated travel and expense management systemis now implemented and we are seeing increasing benefit from this majorcontract as activity levels increase.
In Singapore we were able to take advantage of government programmes to help retain staff.
We have seen recent signs of a relaxation of some clients' travel policies and are hopeful that the Asia Pacific region will be the first region of HRG's global network to return to more normal levels of activity.
Spendvision
The Spendvision results are included in the regional figures. The expensemanagement business continued to grow, with revenue up by 36% to 5.7m,including 12% from foreign exchange gains. In order to help accelerate futuregrowth, we increased investment in resources for product delivery and customersupport and this led to a 0.2m decrease in operating profit to 0.6m.At the end of September, we announced an exciting partnership with Visa wherebySpendvision will introduce a new global information tool that will provideextensive reporting and expense management capabilities for organisations ofall sizes on a single scalable platform, integrating with the entire suite
ofVisa B2B payment products.Summary and Outlook
HRG delivered a resilient performance during the first half of the financial year in a challenging economic climate. Clients continued to travel but activity levels were lower and this impacted our revenue.
Despite some early signs of stabilisation, the market remains challenging withlimited forward visibility. We have seen some recent signs that clients arerelaxing their travel policies and starting to travel more, but it is too earlyto say whether this will mark the beginning of a sustained recovery.In the meantime, we will continue to focus on providing excellent service andvalue for money to our clients. Our retention rate has remained high and wehave continued to win more new business than we have lost. Our strategy isunchanged and the longer-term outlook for HRG and the travel managementindustry remains positive. Historically, the majority of the Group's earningsand cash flow have come in the second half of the financial year and we havetaken action to ensure that our cost base is appropriate for the coming months.
The Board continues to believe that the Group will deliver a full-year performance in line with market expectations. Looking further ahead, we believe that we are well positioned to respond to the market when it does recover.
Additional Financial Disclosures
Revenue
Revenue declined by 9.2% from 171.0m to 155.3m; equivalent to a 15.0% decline excluding favourable currency movements.
Operating expenses
Operating expenses, excluding exceptional items and amortisation of acquiredintangibles, declined by 8.9% from 158.0m to 144.0m, primarily due to a 15.0%decline in the average number of employees, offset by an increase of 6.2% fromcurrency movements.Underlying operating profit
The decrease of 1.7m includes little impact from currency movements. The underlying operating profit margin declined from 7.6% to 7.3%.
Exceptional items
The cost of exceptional items was 2.3m (2008: nil) during the period, relating to restructuring in the Nordic operations and the UK.
Net finance costs
Net finance costs decreased from 5.4m to 3.8m, with the net pension interest increasing by 1.1m and the net external interest decreasing by 2.7m.
Taxation
The tax charge of 1.1m for the current year represents an effective rate of33% on profit before tax of 3.3m. The prior-year tax charge of 2.0m alsorepresents an effective tax rate of 33% on profit before tax of 6.1m. Weanticipate an effective tax rate for the full year of approximately 33%.
Earnings per share
After taking account of amounts attributable to minority shareholders, reportedearnings per share decreased by 46% from 1.1p to 0.6p, with no material changeto the weighted average number of shares outstanding.Underlying earnings per share increased from 1.5p to 1.6p; this is calculatedon the profit attributable to equity shareholders before amortisation ofacquired intangibles and exceptional items, after charging taxation associatedwith those profits as follows: 2009 2008 GBPm GBPm Profit before tax 3.3 6.1 Add: - Amortisation of acquired intangibles 1.9 1.7 - Exceptional items 2.3 - Underlying profit before tax 7.5 7.8 Underlying tax charge (2.3) (2.6) Underlying profit after tax 5.2 5.2 Less: - Amounts attributable to minority (0.5) (0.7)interests 4.7 4.5
Average number of ordinary shares issued 302.3m 303.9m
Underlying earnings per share 1.6p 1.5p
Cash flow
Free cash flow, which includes all cash flow except acquisitions and disposals,dividends and the impact of foreign exchange movements, decreased by 6.0m to 2.7m; this was primarily due to a one-off inflow of 5.0m in the prior year inrespect of a cash settlement from Kuoni. The Group was able to reduce itsworking capital significantly in March 2009 and September 2009 and expects torepeat this activity at future half-year and full-year reporting dates. Capitalexpenditure increased by 1.4m to 5.0m due primarily to continuing investmentin North America and the impact of changes in exchange rates.
In addition to free cash flow, there were no dividends paid in cash to shareholders during the period, compared to 8.4m in the prior year.
Risk management
The principal risks and uncertainties for the remaining months of the financialyear are fundamentally the same as those discussed on pages 21, 22, 28 and 29of our annual report for the year ended 31 March 2009.
In addition to the recession, general economic downturns as a result of terrorism, industrial disputes, fuel price escalation, national disasters, health pandemics or similar events could affect revenues.
HRG operates in a highly competitive market and revenues may be affected materially if we are unable to secure new clients or renew existing contracts. Client contracts are generally non-exclusive and generate fees on a per-transaction and/or fixed fee basis.
HRG's revenue is also substantially dependent on continued access to inventorythrough global distribution systems (GDS) and other suppliers. HRG depends onthe efficiency of its systems, third party systems and the ability to integrateits systems with clients, suppliers and third parties. HRG mitigates this riskthrough our continued investment and delivery of technology products to improveprocesses and systems.
Financial risks due to volatility in exchange rates and interest rates, together with the credit risk from clients and suppliers continue to be monitored centrally.
Funding and net debt
The Group's principal borrowing is from a 220m multi-currency revolving creditfacility (RCF) that is committed until September 2011. The RCF is used forloans, letters of credit and guarantees with interest based on LIBOR/EURIBORplus a margin and mandatory costs incurred by the lenders. In addition, thereare uncommitted facilities, amounting to around 24m at 30 September 2009,which are used for local flexibility.The principal banking covenants for the RCF are measured twice each year, atthe end of March and the end of September, against EBITDA before exceptionalitems. The definition of EBITDA for covenant purposes is not materiallydifferent to the definition used in these financial statements. The covenantsrequire that net debt is less than 3.0 times EBITDA and net external interestis covered at least 4.0 times by EBITDA. As measured by our banking covenants,the actual ratios at 30 September 2009 were 2.5 for net debt (31 March 2009:2.1) and 7.2 for net external interest (31 March 2009: 4.9).Net debt of 96.0m compares to 123.0m at 30 September 2008 and 85.3m at 31March 2009. Gearing was 52% (31 March 2009: 47%), or 108% (31 March 2009: 64%)including the pension deficits and related deferred tax assets.
Based on our current forecasts, the Board believes that these facilities provide sufficient headroom.
Pensions
The Group pension deficits under IAS19 have increased by 62.2m at 31 March 2009 to 127.5m before tax at 30 September 2009.
The UK defined benefit scheme deficit increased from 51.3m to 113.5m over thesame period. Favourable investment performance allowed the assets, whichcomprise 58% equities, to increase by 17.4m. The liabilities increased by 79.6m, with a lower discount rate adding 60.0m and a higher inflation rateadding 14.4m. For several years, the UK defined benefit scheme has been closedto new entrants and has capped increases in pensionable salary. Cashcontributions are set at essentially the same level as agreed at the time ofthe IPO in 2006, and equate to 15.2% of pensionable salaries plus an additionaldeficit reduction payment of 6.6m per annum.At 30 September 2009 there was a deferred tax asset of 31.8m (31 March 2009: 14.4m) related to the UK deficit and 1.3m (31 March 2009: 1.2m) related
tothe overseas schemes.Foreign currencyThe following principal exchange rates have been used in the financialstatements: Income Statement Balance Sheet 2009 2008 Change 2009 2008* Change Euro 1.14 1.26 +11% 1.09 1.08 -1% Swiss Franc 1.73 2.04 +18% 1.66 1.63 -2% US Dollar 1.60 1.92 +20% 1.60 1.43 -11% Canadian 1.79 1.97 +10% 1.72 1.80 +5%Dollar * As at 31 March 2009.Net debt included 33.2m (35%) of non-Sterling debt (31 March 2009: 19.1m:22%), with changes in exchange rates, including the effect of currency swaps,increasing the balance by 0.7m.
Articles of Association
The prospect of continuing volatility in the Group pension deficits hashighlighted a potential technical matter concerning the administration of theborrowing limits in our Articles of Association. We will be taking theopportunity to propose an amendment to the Articles in order to prevent anypotential issue at a future date. A circular will be sent to shareholders indue course.Going concern
The Board believes that the Group has access to adequate resources and committed financing facilities for the foreseeable future and has continued to prepare the Consolidated Financial Statements on a going concern basis.
Summary income statement Six months ended 30 September 2009 2008 GBPm GBPm Revenue 155.3 171.0 EBITDA(1) before exceptional items 15.8 16.7 Depreciation and amortisation (4.5) (3.7) Underlying operating profit 11.3 13.0 Amortisation of acquired intangibles (1.9) (1.7) Exceptional items (2.3) -- Operating profit 7.1 11.3 Share of results of associates and -- 0.2joint ventures Net finance costs (3.8) (5.4) Profit before tax 3.3 6.1 Taxation (1.1) (2.0) Profit for the period 2.2 4.1 Summary balance sheet 30 September 31 March 2009 2009 GBPm GBPm Goodwill and other intangible assets 251.8
258.0
Property, plant and equipment, and 17.3 17.9investments Working capital (86.5) (93.7) Current tax liabilities (net) (8.6) (7.8) Deferred tax assets (net) 50.0 32.2 Net debt (96.0) (85.3) Pension liabilities (pre-tax) (127.5) (65.3) Other items (7.6) (8.3) Net assets (7.1) 47.7 Summary cash flow statement Six months ended 30 September 2009 2008 GBPm GBPm EBITDA(1) before exceptional items 15.8 16.7 Exceptional items (2.3) -- Working capital movements (7.4) (4.4) Interest paid (2.0) (4.3) Tax paid (2.2) (2.9) Capital expenditure (4.9) (3.6) Pension funding in excess of EBITDA (3.7) (3.4)charge Other movements (2.0) (0.1) Free cash outflow (8.7) (2.0) Acquisitions and disposals -- 0.1 Dividends paid to external -- (8.4)shareholders Net cash outflow (8.7) (10.3) Foreign exchange and other (2.0) (2.3) (Increase) in net debt (10.7) (12.6)
(1) Earnings Before Interest, Taxation, Depreciation and Amortisation.
The comparatives in the summary cash flow statement have been restated toinclude dividends paid to minority interests in `Other movements' within freecash outflow.Hogg Robinson Group plc Consolidated Income Statement
For the period ended 30 September 2009
Half-year ended 30 Note September 2009 2008 GBPm GBPm Revenue 5 155.3 171.0 Operating expenses 6 (148.2) (159.7) Operating profit 5 7.1 11.3 Analysed as: Underlying operating profit 5 11.3 13.0
Amortisation of acquired intangibles (1.9) (1.7)
Exceptional items 6 (2.3) - Operating profit 7.1 11.3
Share of results of associates and joint - 0.2
ventures Finance income 8 0.1 0.7 Finance costs 8 (3.9) (6.1) Profit before tax 3.3 6.1 Income tax expense 9 (1.1) (2.0) Profit for the period 2.2 4.1 Profit attributable to:
Equity Shareholders of the Company 10 1.7 3.4
Minority interests 0.5 0.7 2.2 4.1 Half-year ended 30 Note September 2009 2008 pence pence Earnings per share Basic 10 0.6 1.1 Diluted 0.5 1.1
The notes form an integral part of the consolidated half-yearly financial information.
Hogg Robinson Group plc Consolidated Statement of Comprehensive Income For the period ended 30 September 2009
Note Half-year ended 30 September 2009 2008 GBPm GBPm Profit for the period 2.2 4.1 Other comprehensive income Currency translation differences 17 (8.9) 2.7 Actuarial (loss) / gain on pension schemes (64.5) 5.7 Deferred tax movement on pension liability 18.0 (1.6) Other comprehensive (loss) / income for the (55.4) 6.8period, net of tax Total comprehensive (loss) / income for the (53.2) 10.9period Total comprehensive (loss) / income attributable to:
Equity Shareholders of the parent (53.7) 10.2 Minority interests 0.5 0.7 (53.2) 10.9 The notes form an integral part of the consolidated half-yearly financialinformation.Hogg Robinson Group plc Consolidated Balance Sheet As at 30 September 2009 Note 30 31 March September 2009 2009 GBPm GBPm Non current assets Goodwill and other intangible assets 12 251.8 258.0 Property, plant and equipment 13 14.6 15.1 Investments accounted for using the equity 2.7 2.8 method Trade and other receivables 0.2 0.2 Deferred tax assets 50.5 33.8 319.8 309.9 Current assets Trade and other receivables 99.7 102.6 Current tax assets 0.8 1.5 Cash and cash equivalent assets 14 41.4 68.5 141.9 172.6 Total assets 461.7 482.5 Non current liabilities Financial liabilities - borrowings 14 (135.1) (144.4) Deferred tax liabilities (0.5) (1.6) Retirement benefit obligations 15 (127.5) (65.3) Provisions (3.6) (3.4) (266.7) (214.7)
Current liabilities Financial liabilities - borrowings 14 (1.2) (8.0) Financial liabilities - derivative (1.3) (0.6) financial instruments Current tax liabilities (9.4) (9.3) Trade and other payables (186.4) (196.5) Provisions (3.8) (5.7) (202.1) (220.1) Total liabilities (468.8) (434.8) Net (liabilities) / assets (7.1) 47.7
Capital and reserves attributable to equity
Shareholders Share capital 16 3.1 3.1 Share premium 172.2 172.2 Other reserves 17 15.2 24.1 Retained earnings (201.1) (155.2) (10.6) 44.2 Minority interests 3.5 3.5 Total equity (7.1) 47.7
The notes form an integral part of the consolidated half-yearly financial information.
Transactions with owners:
Hogg Robinson Group plc Consolidated Statement of Changes in Equity As at 30 September 2009 Attributable to owners of the Company Share Share Other Retained Minority Total capital premium reserves earnings Total Interests Equity GBPm GBPm GBPm GBPm GBPm GBPm GBPm Balance at 1 April 3.1 171.9 5.3 (132.8) 47.5 2.5 50.0 2008 Retained profit for - - - 3.4 3.4 0.7 4.1 the period Other comprehensive income: Actuarial gain on - - - 5.7 5.7 - 5.7 pension schemes Deferred tax - - - (1.6) (1.6) - (1.6) movement on pension liability Currency translation - - 2.7 - 2.7 - 2.7 differences Total comprehensive - - 2.7 7.5 10.2 0.7 10.9 income for the period ended 30 September 2008 Transactions with owners: Dividends paid - - - (8.6) (8.6) (0.2) (8.8) Scrip dividend - 0.2 - - 0.2 - 0.2 issued in lieu of dividend Share-based - - 0.6 - 0.6 - 0.6 incentives - 0.2 0.6 (8.6) (7.8) (0.2) (8.0) Balance at 30 3.1 172.1 8.6 (133.9) 49.9 3.0 52.9 September 2008 Balance at 1 April 3.1 171.9 5.3 (132.8) 47.5 2.5 50.0 2008 Retained profit for - - - 7.4 7.4 1.7 9.1 the year Other comprehensive income: Actuarial loss on - - - (23.4) (23.4) - (23.4) pension schemes Deferred tax - - - 5.9 5.9 - 5.9 movement on pension liability Currency translation - - 17.6 - 17.6 0.1 17.7 differences Total comprehensive - - 17.6 (10.1) 7.5 1.8 9.3 income for the year ended 31 March 2009 Dividends paid - - - (12.3) (12.3) (0.8) (13.1) Scrip dividend - 0.3 - - 0.3 - 0.3 issued in lieu of dividend Share-based - - 1.2 - 1.2 - 1.2 incentives - 0.3 1.2 (12.3) (10.8) (0.8) (11.6) Balance at 31 March 3.1 172.2 24.1 (155.2) 44.2 3.5 47.7 2009 Hogg Robinson Group plc
Consolidated Statement of Changes in Equity (continued) As at 30 September 2009 Attributable to owners of the Company Share Share Other Retained Minority Total capital premium reserves earnings Total Interests Equity GBPm GBPm GBPm GBPm GBPm GBPm GBPm Balance at 1 April 3.1 172.2 24.1 (155.2) 44.2 3.5 47.7 2009 Retained profit for - - - 1.7 1.7 0.5 2.2 the period Other comprehensive income: Actuarial loss on - - - (64.5) (64.5) - (64.5) pension schemes Deferred tax - - - 18.0 18.0 - 18.0 movement on pension liability Currency translation - - (8.9) - (8.9) - (8.9) differences Total comprehensive - - (8.9) (44.8) (53.7) 0.5 (53.2) income for the period ended 30 September 2009 Transactions with owners: Dividends paid - - - - - (0.5) (0.5) Shares held by - - - (1.1) (1.1) - (1.1) Employee Benefits Trust - - - (1.1) (1.1) (0.5) (1.6) Balance at 30 3.1 172.2 15.2 (201.1) (10.6) 3.5 (7.1) September 2009
The notes form an integral part of the consolidated half-yearly financial information.
Consolidated Statement of Cash Flows For the period ended 30 September 2009
Note Half-year ended 30 September 2009 2008 GBPm GBPm
Cash flows from operating activities
Cash generated from operations 18 0.9 9.2 Interest paid (2.4) (5.1) Tax paid (2.2) (2.9)
Cash flows from operating activities - net (3.7) 1.2 Cash flows from investing activities
Acquisition of subsidiaries, net of cash - (0.3) acquired Disposals of associates, joint ventures and - 0.4 other investments Purchase of property, plant and equipment (2.1) (1.6) Purchase of intangible assets (2.9) (2.0) Proceeds from sale of property, plant and 0.1 - equipment Interest received 0.2 0.7 Dividends received from associates 0.2 0.1
Cash flows from investing activities - net (4.5) (2.7) Cash flows from financing activities
Repayment of borrowings (13.7) (17.0) New borrowings - 8.6 Cash effect of currency swaps 0.8 (0.7) Employee Benefits Trust (1.1) - Dividends paid to external shareholders - (8.4) Dividends paid to minority shareholders (0.5) (0.2)
Cash flows from financing activities - net (14.5) (17.7) Net decrease in cash and cash equivalents (22.7) (19.2)
Half-year ended 30 September 2009 2008 GBPm GBPm Net decrease in cash and cash equivalents (22.7)
(19.2)
Cash and cash equivalents at the beginning of the 63.3 48.5period Exchange rate (0.3) 0.1effects Cash and cash equivalents at the end of the period 40.3 29.4 Cash and cash equivalent assets 41.4 37.1 Overdrafts (1.1) (7.7) 40.3 29.4
The notes form an integral part of the consolidated half-yearly financial information.
Hogg Robinson Group plc
Notes to the Consolidated Half-Year Financial Information
For the period ended 30 September 2009
1 General information
Hogg Robinson Group plc is a public limited company, incorporated in the UK under the Companies Act 1985. The address of its registered office is Global House, Victoria Street, Basingstoke, Hampshire, RG21 3BT, United Kingdom.
The Company is listed on the Official List of the UK Listing Authority and the London Stock Exchange, and its registered number is 3946303.
This condensed consolidated half-yearly financial information was approved for issue on 27 November 2009.
This condensed consolidated half-yearly financial information does not comprisestatutory accounts within the meaning of Section 434 of the Companies Act 2006.Statutory accounts for the year ended 31 March 2009 were approved by the Boardof Directors on 28 May 2009 and delivered to the Registrar of Companies. Thereport of the auditors on those accounts was unqualified, did not contain anemphasis of matter paragraph and did not contain any statement under Section237 of the Companies Act 1985.
This condensed consolidated half-yearly financial information has been reviewed, not audited.
2 Basis of preparation
This condensed consolidated half-yearly financial information for the half-yearended 30 September 2009 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, InterimFinancial Reporting, as adopted by the European Union. The half-yearlycondensed consolidated financial report should be read in conjunction with theAnnual Report and Financial Statements for the year ended 31 March 2009, whichhave been prepared in accordance with International Financial ReportingStandards (IFRSs) as adopted by the European Union.The Directors consider that, taking into account the assets and revenue of theGroup, the Group has adequate resources to continue in operational existencefor the foreseeable future. For this reason, the Directors adopt the goingconcern basis for the condensed consolidated half-yearly financial information.
3 Accounting policies
The accounting policies adopted are consistent with those of the Annual Consolidated Financial Statements for the year ended 31 March 2009, as described in those statements.
The following new standards, amendments to standards and interpretations to existing standards are mandatory for the first time for the financial year beginning 1 April 2009:
* IAS 1 (Amendment), Presentation of Financial Statements, effective from 1
January 2009. The revised standard prohibits the presentation of items of
income and expenses (that is `non-owner changes in equity') in the
Consolidated Statement of Changes in Equity, requiring `non-owner changes
in equity' to be presented separately from owner changes in equity. All
non-owner changes in equity are required to be shown in a performance
statement.
Entities can choose whether to present one performance statement (the `Consolidated Statement of Comprehensive Income') or two separate statements (the `Consolidated Income Statement' and the `Consolidated Statement of Comprehensive Income'). The Group has elected to present two separate performance statements under the revised disclosure requirements.
* IAS 23 (Amendment), Borrowing costs, effective from 1 January 2009 but not
currently applicable to the Group.
* IAS 32 (Amendment), Financial Instruments: Presentation and IAS 1
(Amendment), Presentation of Financial Statements, effective from 1 January
2009 but having no impact on the Group.
* IFRS 1 (Amendment), First time adoption of IFRS and IAS 27, Consolidated
and separate financial statements, effective 1 January 2009 but having no
impact on the Group.
* IFRS 2 (Amendment), Share Based Payment - Vesting and Conditions and
Cancellations, effective from 1 January 2009. This revision clarifies that
vesting conditions are service conditions and performance conditions only,
and that other features of a share-based payment are not vesting
conditions. The impact of adopting this amendment is not material to the
Group.
* IFRS 8, Operating Segments, effective from 1 January 2009. This has
resulted in no change to the number of reportable segments presented (note
5).
* IFRIC 15, Amendments to the Construction of Real Estate, effective from 1
January 2009 but currently not applicable to the Group.
* IFRIC 16, Hedges of a net investment in a foreign operation, effective from
1 October 2008 but not currently applicable to the Group.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 April 2009 and have not been early adopted:
* IAS 27 (Revised), Consolidated and Separate Financial Statements, effective
from 1 July 2009. The impact of adopting this standard in future periods is
under assessment.
* IAS 39 (Amendment), Financial instruments: Recognition and Measurement,
effective from 1 January 2009 subject to endorsement by the EU. The impact
of adopting this amendment is currently being assessed by the Group. * IFRS 3 (Revised), Business Combinations, applicable to business combinations effected from 1 July 2009. The impact of adopting this standard in future periods will be considered in the event of a future business combination.
* IFRIC 17, Distributions of non-cash assets to owners, effective from 1 July
2009 subject to endorsement by the EU but currently not applicable to the
Group.
* IFRIC 18, Transfer of Assets from Customers, effective from 1 July 2009
subject to endorsement by the EU but currently not applicable to the Group.
4 Seasonality
The Group's revenue and operating profit are affected by the seasonality ofcorporate travel business, with travel declining during the summer andChristmas holiday periods and, to a lesser extent, during Easter holidays,which are times when many corporate travellers are on holiday. Typically, theGroup experiences the highest levels of revenue in the last quarter of itsfinancial year, principally reflecting increased travel activity by its clientsduring this period and recognition of revenue due to the finalisation ofamounts due in connection with the annual review of supplier contracts.
5 Operating segments
The chief operating decision-maker has been identified as the Executive Management Team, who review 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 ofone service, Business Travel, which is further considered from a geographicperspective. The performance of the operating segments is assessed based on ameasure of operating profit excluding items of an exceptional nature. Interestincome and expenditure are not included in the result for each operatingsegment that is reviewed by the Executive Management Team. Other informationprovided, except as noted below, to the Executive Management Team is measuredin 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 part of the reconciliation to total Consolidated Balance Sheet assets.
Business Travel North Asia Europe America Pacific Total GBPm GBPm GBPm GBPm
Half-year ended 30 September 2009 Revenue from external customers 110.3 34.5 10.5 155.3
Underlying operating profit 8.8 2.4 0.1 11.3 Amortisation of acquired (1.5) (0.3) (0.1) (1.9)intangibles Operating profit before 7.3 2.1 - 9.4exceptional items Exceptional items (2.3) - - (2.3) Operating profit 5.0 2.1 - 7.1 Half-year ended 30 September 2008
Revenue from external customers 128.1 32.5 10.4 171.0
Underlying operating profit 12.7 0.2 0.1 13.0 Amortisation of acquired (1.3) (0.3) (0.1) (1.7)intangibles Operating profit before 11.4 (0.1) - 11.3exceptional items Exceptional items - - - - Operating profit 11.4 (0.1) - 11.3
External revenue from clients by geographical area (where the client is located) is not significantly different from external revenue from clients by origin (where the Group is located) disclosed above.
There is no material inter-segment revenue.
A reconciliation of operating profit to total profit before income tax expense is provided on the Consolidated Income Statement.
Business Travel North Asia Europe America Pacific Total GBPm GBPm GBPm GBPm Total segment assets 30 September 2009 264.8 89.7 14.5 369.0 31 March 2009 277.2 88.0 13.5 378.7
Reportable segments' assets are reconciled to total assets as follows:
30 31 March September 2009 2009 GBPm GBPm Total segment assets 369.0 378.7 Cash and cash equivalent 41.4 68.5assets Current tax assets 0.8 1.5 Deferred tax assets 50.5 33.8 461.7 482.5 6 Operating expenses Half-year ended 30 September 2009 2008 GBPm GBPm
Operating expenses before exceptional items: Staff costs (note 7) 95.4 103.7 Amortisation of client relationships 1.8 1.6 Amortisation of other intangible assets 2.2 1.5 Depreciation of property, plant and 2.4 2.3 equipment Operating lease rentals - buildings 7.1 7.1 Operating lease rentals - other assets 0.9 0.9 Currency translation differences 0.2 0.7 Other expenses 35.9 41.9 145.9 159.7 Exceptional items: Restructuring costs: Staff costs (note 7) 1.8 - Other expenses 0.5 - 2.3 -
Operating expenses including exceptional items 148.2 159.7 Restructuring costs of 2.3m were incurred during the period. These relate toplanned cost reduction programmes in Europe and are in respect of redundancycosts and onerous lease provisions.7 Staff costs Half-year ended 30 September 2009 2009 2009 2008 2008 2008 Before Before exceptional Exceptional exceptional Exceptional items items Total items items Total GBPm GBPm GBPm GBPm GBPm GBPm Salaries 80.1 - 80.1 86.0 - 86.0 Social security 9.9 - 9.9 10.6 - 10.6costs Pension costs 4.5 - 4.5 5.1 - 5.1 Redundancy and 0.9 1.8 2.7 1.4 - 1.4termination costs Share-based - - - 0.6 - 0.6incentives 95.4 1.8 97.2 103.7 - 103.7 Pension costs comprise: Defined benefit 1.3 - 1.3 1.8 - 1.8 schemes Defined 3.2 - 3.2 3.3 - 3.3 contribution schemes 4.5 - 4.5 5.1 - 5.1 Half-year ended 30 September 2009 2008 number number Average monthly number of staff employed by the 5,416 6,372Group
8 Finance income and finance costs
Half-year ended 30 September 2009 2008 GBPm GBPm
Finance income - bank interest 0.1 0.7 Interest on bank loans and overdrafts (1.9) (5.3) Amortisation of issue costs on bank loans (0.3) (0.3) Expected return on pension scheme assets less interest cost on pension scheme (1.6) (0.5) liabilities Other finance charges (0.1) - Finance costs (3.9) (6.1) Net finance costs (3.8) (5.4) 9 Taxation
The tax charge is split as follows:
Half-year ended 30 September 2009 2008 GBPm GBPm United Kingdom 2.2 1.0 Overseas (1.1) 1.0 1.1 2.0 Half-year ended 30 September 2009 2008 GBPm GBPm On recurring business 1.7 2.0 Exceptional items (0.6) - 1.1 2.0
Taxes on income in the half-years to 30 September are accrued using the tax rate that would be applicable to the expected total annual earnings by country.
* Earnings per share
Earnings per share attributable to equity holders of the Company were asfollows: Half-year ended 30 September 2009 2008 GBPm GBPm
Earnings for the purposes of earnings per share Profit for the period 2.2 4.1 Less: amount attributable to minority interests (0.5) (0.7)
Total 1.7 3.4 Half-year ended 30 September 2009 2008 number number m m
Weighted average number of Ordinary shares in issue Issued (for basic EPS) 302.3 303.9 Dilutive potential ordinary shares 9.6 2.4
For diluted EPS 311.9 306.3 11 DividendsThe Directors propose an interim dividend in respect of the six months ended 30September 2009 of 0.4p payable on 6 January 2010 to shareholders who are on theregister at 11 December 2009. This interim dividend, amounting to 1.2m has notbeen recognised as a liability in this half-yearly financial report, inaccordance with IAS 10, Events after the Balance Sheet Date.
12 Goodwill and other intangible assets
30 September 31 March 2009 2009 GBPm GBPm Goodwill 220.7 225.6 Other intangible assets 31.1 32.4 251.8 258.0 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 (0.3) - - - (0.3) recognition of tax assets Adjustments to deferred (0.2) - - - (0.2) consideration 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 - 0.3 2.6 - 2.9 Disposals - (0.1) - - (0.1) Exchange differences (4.9) 0.4 0.3 (1.2) (5.4) At 30 September 2009 247.1 17.5 15.0 36.9 316.5 Accumulated amortisation At 1 April 2008 26.4 10.5 3.0 11.9 51.8 Amortisation charge for the - 1.9 1.5 3.4 6.8 year 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 - 1.0 1.2 1.8 4.0 period Disposals - (0.1) - - (0.1) Exchange differences - 0.2 (0.1) (0.4) (0.3) At 30 September 2009 26.4 13.1 5.6 19.6 64.7 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 30 September 2009 220.7 4.4 9.4 17.3 251.8 The amortisation charge for the period of 4.0m (2008: 3.1m) is comprised of 1.9m (2008: 1.7m) in respect of intangible assets acquired via businesscombinations and 2.1m (2008: 1.4m) which relates to amortisation of softwarepurchased and internally generated by existing businesses.
13 Property, plant and equipment
Properties Plant and Total equipment GBPm GBPm GBPm At 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 period - 2.1 2.1 Disposals - (0.4) (0.4) Exchange differences (0.1) (0.3) (0.4) At 30 September 2009 10.5 47.8 58.3 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 period 0.4 2.0 2.4 Disposals - (0.4) (0.4) Exchange differences - (0.2) (0.2) At 30 September 2009 7.0 36.7 43.7 Carrying amount At 1 April 2008 4.1 8.5 12.6 At 31 March 2009 4.0 11.1 15.1 At 30 September 2009 3.5 11.1 14.6
The Group does not have any material capital commitments in respect of the purchase of property, plant and equipment.
14 Financial liabilities - borrowings
30 31 March September 2009 2009 GBPm GBPm At amortised cost Current (due within one year) Overdrafts 1.1 5.2 Bank loans 0.5 3.2 Unamortised loan issue costs (0.6) (0.6) Finance leases 0.2 0.2 Total current 1.2 8.0
Non-current (due after more than one year)
Bank loans 135.4 144.9 Unamortised loan issue costs (0.5) (0.8) Finance leases 0.2 0.3 Total non-current 135.1 144.4 Total 136.3 152.4 Net debt Total financial liabilities 136.3 152.4
Add back: unamortised loan issue costs 1.1 1.4 Cash and cash equivalent assets (41.4) (68.5)
Net debt 96.0 85.3
15 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 UKemployees until it was closed to new members in March 2003. Its benefits arebased on final pensionable salary. The increase in final pensionable salarysince 31 March 2003 is limited to the lower of the increase in the Retail PriceIndex and 5% per annum. The latest actuarial valuation of the scheme wascarried out at 6 April 2008 by an independent qualified actuary.
The Group also operates defined benefit schemes in Norway, Switzerland, Germany and Italy.
The amounts recognised on the Consolidated Balance Sheet are determined asfollows: 30 September 31 March 2009 2009 GBPm GBPm UK scheme: Defined benefit obligations (302.6) (223.0) Fair value of plan assets 189.1 171.7 Deficit - UK Scheme (113.5) (51.3) Deficit - Other Schemes (14.0) (14.0) (127.5) (65.3) The amounts recognised in the Consolidated Income Statement in respect of theUK Scheme are as follows: Half-year ended 30 September 2009 2008 GBPm GBPm Current service cost 0.7 1.1
Expected return on scheme assets (6.0) (6.9)
Interest cost 7.4 7.4
Total charge to the Consolidated Income 2.1 1.6
Statement
The key assumptions used for the UK Scheme were:
30 31 March September 2009 2009 Rate of increase in salary 4.50% 4.00%
Rate of increase in final pensionable salary 3.20% 2.70%
Rate of increase in pensions in payment - accrued 5.00% 5.00% before 1999
Rate of increase in pensions in payment - accrued 3.20% 2.70%after 1999 Discount rate 5.60% 6.70% Inflation 3.20% 2.70%
Expected rate of return on plan assets:
Equity instruments 7.70% 7.20% Debt instruments 5.60% 6.70% Property 7.70% 7.20% Other assets 4.30% 5.00%16 Share capital 30 September 2009 number Authorised Ordinary shares of 1p each 513,808,171 Issued and fully paid
At 1 April 2009 and 30 September 307,762,884
2009 30 September 2009 GBPm Issued and fully paid Ordinary shares of 1p 3.1 The HRG Employee Benefits Trust acquired 4,000,000 of the Company's Ordinaryshares through purchases on the London Stock Exchange on 10 June 2009. Thetotal amount paid to acquire shares in the period ended 30 September 2009 was 1.1m and has been deducted from retained earnings. The market value of Ordinaryshares in the Company held by the Employee Benefits Trust as at 30 September2009 was 2.5m.17 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 - 2.7 2.7 Transactions with owners: Share-based incentives 0.6 - 0.6 Balance at 30 September 2008 1.5 7.1 8.6 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 31 March 2009 2.1 22.0 24.1 Balance at 1 April 2009 2.1 22.0 24.1 Other comprehensive income: Currency translation differences - (8.9) (8.9) Balance at 30 September 2009 2.1 13.1 15.2 18 Cash generated from operations Half-year ended 30 September 2009 2008 GBPm GBPm
Profit before tax 3.3 6.1 Adjustments for: Depreciation and amortisation 6.4 5.4 Net increase in provisions 3.2 1.5 Share of results of associates and joint - (0.2)
ventures Net finance costs 3.8 5.4 Other timing differences 0.1 0.6 16.8 18.8
Cash expenditure charged to provisions (4.8) (1.8) Change in trade and other receivables 3.2 8.4 Change in trade and other payables (10.6) (12.8) Pension funding in excess of charge to (3.7) (3.4)operating profit Cash generated from operations 0.9 9.2
19 Related party transactions
There have been no material changes in the nature of related party transactionssince 31 March 2009, see note 28 in the Group's 31 March 2009 Annual Report andConsolidated Financial Statements.
20 Contingent assets and contingent liabilities
No change has taken place in the contingent assets and contingent liabilities as reported in note 26 of the Group's 31 March 2009 Annual Report and Consolidated Financial Statements.
Hogg Robinson Group plc
Statement of Directors' Responsibilities
The Directors confirm that this condensed consolidated half-yearly financialinformation has been prepared in accordance with IAS 34 as adopted by theEuropean Union and that the Interim Management Report herein includes a fairreview of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
* an indication of important events that have occurred during the first six
months and their impact on the condensed set of consolidated financial
statements, and a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
* material related-party transactions in the first six months and any
material changes in the related-party transactions described in the last
annual report.
The Directors of Hogg Robinson Group plc are listed in the Hogg Robinson Group plc Annual Report for 31 March 2009.
By Order of the BoardKeith BurgessCompany Secretary27 November 2009Hogg Robinson Group plc
Independent review report to Hogg Robinson Group plc
Introduction
We have been engaged by the Company to review the condensed set of ConsolidatedFinancial Statements in the half-yearly financial report for the six monthsended 30 September 2009, which comprises the Consolidated Income Statement,Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet,Consolidated Statement of Changes in Equity, Consolidated Statement of CashFlows and related notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of Consolidated Financial Statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As described in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of Consolidated Financial Statements included in this half-yearlyfinancial report has been prepared in accordance with International AccountingStandard 34, `Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensedset of Consolidated Financial Statements in the half-yearly financial reportbased on our review. This report, including the conclusion, has been preparedfor and only for the Company for the purpose of the Disclosure and TransparencyRules of the Financial Services Authority and for no other purpose. We do not,in producing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it maycome save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, `Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity', issued by the AuditingPractices Board for use in the United Kingdom. A review of the interimfinancial information consists of making enquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical andother review procedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UK andIreland) and consequently does not enable us to obtain assurance that we wouldbecome aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of Consolidated Financial Statements in the half-yearly financial report for the six months to 30 September 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London27 November 2009Notes:(a) The maintenance and integrity of the Hogg Robinson Group plc web site isthe responsibility of the Directors; the work carried out by the auditors doesnot involve consideration of these matters and, accordingly, the auditorsaccept no responsibility for any changes that may have occurred to thehalf-yearly financial report since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of the financial information may differ from legislation in other jurisdictions.
vendorRelated Shares:
Hogg Robinson Group