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Profit up 24 per cent at HRG, but UK arm sees declines and job changes

UK arm sees falls in client spend and bookings – and reveals plans to expand the movement of jobs to Poland
22/08/2017

Pictured: chairman Nigel Northridge

Hogg Robinson Group saw pre-tax profit rise by 24 per cent year-on-year to £33.1 million in 2017. Revenue was up 5 per cent to £335.1m for the year ended 31 March 2017, according to accounts filed at Companies House.

However, the group’s UK arm has seen declines in both client spend and bookings following the loss of Government business – and it has revealed plans to expand the movement of jobs from the UK to Poland in 2018.

In a statement accompanying the accounts, chairman Nigel Northridge said: “Hogg Robinson Group delivered a good financial performance during the last year in line with market expectations. Helped by favourable exchange rates, the company saw revenue grow by 5 per cent and operating profit by 16 per cent on a reported basis, while underlying earnings and operating margin increased at constant currency.

“Strong free cash generation resulted in a 38 per cent reduction in net debt to £21m at the financial year-end. This was underpinned by a strong operational performance and significant strategic progress.”

However, the group’s UK travel management arm saw declines in both client spend and bookings after being restricted from retaining all of the UK Government business it had historically serviced..

The operational report said: “The resulting loss of several UK Government departments along with a number of corporate losses and continued downtrading in the energy and marine sector, has meant that client travel spend and booking activity in the UK declined versus prior year by 9 per cent and 11 per cent respectively."

The report added that while the second half of the year saw some growth in a number of existing clients, the success rate for new business was “not at the levels we normally experience”.

The report said: “We have taken steps to further develop our proposition, as well as invest in additional sales resource that will be in place for the start of FY18. This has been a challenging year for client contract renewals, which is reflected in some lost business but we are pleased to have secured, renewed or extended contracts with a number of key clients.

"The challenging trading environment has meant that our three-year cost restructuring programme has remained a key priority. During the final quarter, we commenced a project to consolidate our Leicester business travel operations into Manchester, which will be completed by the summer.

“The centralisation of operational support tasks from the UK and other European markets into Poland has been successful and plans to expand this further during FY18 have commenced.”

Referring to the movement of jobs to Poland, Ian Windsor, global travel services director, said: “Over the last eight or so years of global economic disruption, we have taken deliberate steps to ensure our business is as efficient as possible in order that we can continue to exceed the needs of our clients. 
 
“Of course, jobs move and in many cases we enable our people to become remote workers, still delivering their unrivalled talent and experience to the clients but enjoying the multiple benefits and flexibility of working from home. Our people are also redeployed within the business to enjoy and develop additional skills and talents. We are not able to put a number on the number of job changes. But we are confident in this ongoing and longstanding strategy.”


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