The economic skies may be darkening over Europe, but business travel group Hogg Robinson provided a ray of sunshine by announcing a 16 per cent hike in underlying pre-tax profits to £38.2m - beating analysts' expectations and leaving the shares looking too cheaply rated.
Hogg had some important client wins in the year, with AIG, Allianz and Posten Norge all joining the group. There was also organic growth from the existing customer base with client transactions up 2 per cent and spending up 5 per cent. Indeed, profits and margins were up across all divisions with the stand-out performance coming from transaction management unit Spendvision - where underlying profits tripled to £2.4m. The group completed the acquisition of the remaining minority stake in Spendvision in March - that was fully funded from cashflow, so group net debt remained roughly unchanged at £61m.
Still, despite Hogg's best efforts, falling government bond yields did meant that the group's pension deficit increased by £31.1m to £145.8m. The group also announced that finance director Julian Steadman will retire at July's AGM to be replaced by Philip Harrison.
Broker Canaccord Genuity expects reported pre-tax profit £35.5m for 2013, giving EPS of 7.9p.
HOGG ROBINSON (HRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 65p | MARKET VALUE: | £ 207m | |
| TOUCH: | 63-65p | 12-MONTH HIGH: | 72p | LOW: 43p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | * | NET DEBT: | £61m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 332 | 25.2 | 5.50 | 4.00 |
| 2009 | 351 | 15.4 | 2.40 | 1.20 |
| 2010 | 327 | 21.2 | 4.40 | 1.20 |
| 2011 | 358 | 28.9 | 6.30 | 1.50 |
| 2012 | 374 | 34.1 | 7.40 | 2.00 |
| % change | +4 | +18 | +17 | +33 |
Ex-div:27 Jun Payment:30 Jul *negative equity shareholders' funds | ||||
