Corporate travel and expense management specialist Hogg Robinson (HRG) is aligning its travel business to better suit the needs of its clients. The shift from traditional phone to online bookings is working to help customers cut costs, but this caused a 5 per cent reduction in revenue in the division - which makes up over 90 per cent of the overall figure. The group has also struggled against increased competitive pressures and weak demand for services in some geographies, notably Asia Pacific, which saw revenue drop 21 per cent.
But operating profits in the travel division were up 3.4 per cent, boosted by enhanced margins provided by the online business model. The group is also undergoing a three-year cost restructuring programme, which helped to save £4m in the 2016 financial year. Free cash inflows increased by £11m to £29m, which helped to deleverage the business. But, as £9m of this was a one-off payment, cash inflows are expected to be lower in the next financial year.
The group's second division, Fraedom - an SaaS technology platform designed to help businesses manage travel and expenses - continued to perform well, with revenue and margin improvements in the period helping to boost operating profit by 125 per cent.
Broker Investec expects 2017 adjusted pre-tax profits of £34.6m, giving EPS of 7.3p, up from £32.2m and 7p in the previous financial year.
HOGG ROBINSON (HRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 70p | MARKET VALUE: | £226m | |
| TOUCH: | 69-72p | 12-MONTH HIGH: | 76p | LOW: 54p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | * | NET DEBT | £33.6m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 374 | 34.1 | 7.4 | 2.00 |
| 2013 | 343 | 30.9 | 6.9 | 2.10 |
| 2014 | 341 | 25.3 | 5.3 | 2.21 |
| 2015 | 330 | 23.2 | 4.6 | 2.32 |
| 2016 | 318 | 26.7 | 5.8 | 2.51 |
| % change | -4 | +15 | +26 | +8 |
Ex-div: 30 Jun Payment: 29 Jul *Negative shareholder funds. Includes intangible assets of £241m, or 74p a share | ||||
