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The Food Travel Experts www.foodtravelexperts.com
Presentation structure 1. Group highlights Kate Swann 2. Financial review Jonathan Davies 3. Business review Kate Swann 4. Q&A All 2 SSP: The Food Travel Experts
Group highlights
• Strong performance with operating profit up 34.2% at actual exchange rates, 27.0% at constant currency
• Like for Like sales up 3.1%, net new space growth strong at 6.0%
• Total sales growth including India 11.7%*
• Strong underlying operating margin growth of 50bps, 80bps including India
• Strategic initiatives, delivering further growth and efficiency
• EPS 20.3p, up 31.0%
• Strong cash generation
‒ Higher capex £115m
‒ Full year dividend 8.1p up 50%, payout ratio 40%
‒ Special dividend of c.£100m proposed
• Indian acquisition, encouraging performance
• Contract wins underpinning medium term pipeline
*At constant currency
3 SSP: The Food Travel Experts
Financial review Annual Results 2017 Jonathan Davies, CFO 22nd November 2017 SSP: The Food Travel Experts
Group financial overview
Change (%)
Constant Reported
£m 2017 2016
Currency FX Rates
Revenue 2,379.1 1,990.3 11.7% 19.5%
LFL Sales Growth 3.1% 3.0% n/a n/a
Operating Profit* 162.9 121.4 27.0% 34.2%
Profit Before Tax* 148.7 107.5 n/a 38.3%
Earnings per share (p) * 20.3 15.5 n/a 31.0%
Net Debt (262.2) (317.4) n/a 17.4%
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
5 SSP: The Food Travel Experts
2017 LFL sales growth
4.0%
3.5% 3.3%
2.9%
LFL Sales Growth (%YOY)
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Q1 Q2 H1 Q3 Q4 H2
FY17
Note: Same store like-for-like sales growth at constant currency
6 SSP: The Food Travel Experts
Revenue growth of 11.7%
Net Contract
Change at Constant Currency LFL Sales Total Revenue
Gains/(Losses)
UK 2.1% 2.7% 4.8%
Continental Europe 2.7% 0.4% 3.1%
North America 4.9% 22.9% 27.8%
Rest of World (excl India) 7.4% 18.1% 25.5%
Group (excl India) 3.1% 6.0% 9.1%
Leap Year (0.3)%
Group (incl Leap Year) 8.8%
India 2.9%
Reported Growth 11.7%
7 SSP: The Food Travel Experts
Operating profit growth of 27.0%
Operating Profit* Change (%)
Constant Reported FX
£m 2017 2016
Currency Rates
UK** 82.1 66.4 23.2% 23.6%
Continental Europe 77.8 60.1 18.6% 29.5%
North America 14.3 12.5 0.8% 14.4%
Rest of World (excl India) 8.3 8.6 11.8% (3.5)%
Non-attributable (32.5) (26.2) (24.0)% (24.0)%
Group (excl India) 150.0 121.4 17.5% 23.6%
India 12.9 - n/a n/a
Group 162.9 121.4 27.0% 34.2%
* Operating profit is underlying, at actual currency
** UK includes Republic of Ireland
8 SSP: The Food Travel Experts
Operating profit margin (excl India) up by 50bps
YOY bps Change
£m 2017 2016 Constant Currency Reported FX Rates
Revenue 2,313.9 1,990.3
Gross Profit 1,602.0 1,353.8
% Sales 69.2% 68.0% 90 120
Labour Costs (677.4) (581.6)
% Sales 29.3% 29.2% 20 (10)
Concession Fees (423.2) (349.6)
% Sales 18.3% 17.6% (60) (70)
Overheads (259.0) (222.4)
% Sales 11.2% 11.2% 0 0
Depreciation & Amortisation (92.5) (78.8)
% Sales 4.0% 4.0% 0 0
Operating Profit (excl India)* 150.0 121.4
Operating Margin (%) 6.5% 6.1% 50 40
India 12.9 n/a n/a n/a
Operating Margin (%) 19.7%
162.9 121.4
Operating Profit*
6.8% 6.1% 80 70
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
9 SSP: The Food Travel Experts
Acquisition of 49% stake in TFS
• In October 2016 SSP announced the acquisition of a 49% JV with Fully consolidated (10 months)
Travel Food Services, completed in December 2016 £m Reported FX rates
Revenue 65.2
• SSP currently owns 33%, the remaining 16% is to be acquired in Operating profit 12.9
2018 % 19.7%
Net finance charges (0.2)
• SSP has management and operational control
Tax (4.0)
% (31.6)%
• TFS is fully consolidated in the SSP figures
Profit After Tax 8.7
Minorities* (6.8)
• Significant new opening programme underway
% (78.7)%
• Encouraging start and good contract pipeline Net income 1.9
*SSP’s share of the fully consolidated revenue and profit was 11% (December
2016 – February 2017) and 26% (March - September 2017). On a fully
consolidated basis the minority interest was 82.9% of TFS’ PAT in H1 17 and
77.2% in H2 17.
10 SSP: The Food Travel ExpertsNet profit up 31.3%
£m 2017 2016 Change (%)
Operating Profit* 162.9 121.4 34.2%
Net Financing Cost* (17.6) (15.2)
Share of Associates 3.4 1.3
Profit Before Tax* 148.7 107.5 38.3%
Tax* (33.8) (24.2)
Non-Controlling Interests (18.4) (9.8)
Net Profit* 96.5 73.5 31.3%
Earnings per share (p)* 20.3p 15.5p 31.0%
Dividend per share (p) 8.1p 5.4p 50.0%
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
11 SSP: The Food Travel ExpertsFree cash generation of £89m
£m 2017 2016
Operating Profit* 162.9 121.4
Depreciation & Amortisation* 95.5 78.8
Working Capital 18.3 3.8
Capital Expenditure (115.0) (95.9)
Net Tax (33.3) (20.0)
Sale of/(Investment in) Associates 7.3 (4.7)
Acquisition of TFS, adjusted for net debt acquired (35.0) -
Other 2.8 (5.1)
Operating Cash Flow* 103.5 78.3
Net Financing Costs (14.5) (13.3)
Free Cash Inflow* 89.0 65.0
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
12 SSP: The Food Travel ExpertsNet debt of £262m
Leverage
£m
(Net Debt/EBITDA)
Opening Net Debt (1 October 2016) (317.4) 1.6x
Free Cash Flow 89.0
Dividend (29.0)
Impact of foreign exchange rates (3.4)
Other (1.4)
Closing Net Debt (30 September 2017) (262.2) 1.0x
13 SSP: The Food Travel ExpertsUses of cash and balance sheet efficiency
Organic Investment M&A
Significant structural growth Review of potential M&A
opportunities around opportunities
the world Balance sheet
efficiency
Medium term
leverage: c1.5x - 2.0x
Dividend Return to shareholders
Pay-out ratio increased to 40% c. £100m proposed via a special dividend
14 SSP: The Food Travel ExpertsFinancial summary • Robust LFL sales growth of 3.1% • Net contract gains (excl India) stronger at 6.0% • Strategic programmes delivering strong operating margin growth (excl India) up 50bps • India adding 2.9% to revenue and an additional 30bps to operating margin • Operating profit up 27.0% • EPS up 31.0% • Strong Free Cash Flow of £89m • Full year dividend per share of 8.1p and c. £100m special dividend proposed 15 SSP: The Food Travel Experts
Business review Annual Results 2017 Kate Swann, CEO 22nd November 2017 SSP: The Food Travel Experts
SSP business fundamentals • Multiple structural market growth drivers • Market leader in attractive channels and regions • Strong business platform combining international scale and local expertise • 5 key levers to drive growth and efficiency • Sales growth, margin expansion and strong cash generation 17 SSP: The Food Travel Experts
UK update
Revenue
• 33%* of SSP revenue, strong presence in rail and air 800
780
• Air continues to grow strongly, rail softer 760
740
720
• Further good profit performance 700
680
660
• Strategic initiatives delivering well 640
2013 2014 2015 2016 2017
• Planning well advanced for cost pressures going forward
Operating profit
90
• Focus on 80
70
‒ Strategic initiatives 60
50
‒ High renewal rate 40
30
‒ Further brand development 20
10
‒ Selective new business 0
2013 2014 2015 2016 2017
* SSP revenue by region %s is calculated, adjusting for the impact of annualised India sales
Note: All figures in constant currency
18 SSP: The Food Travel ExpertsContinental Europe update
Revenue
• 38%* of SSP revenue, strong presence in rail and air 820
800
780
• Improved performance 760
740
720
• Management changes to reflect changing market and 700
680
business needs 660
640
2013 2014 2015 2016 2017
• Focus on
‒ Cost efficiency and flexibility of labour Operating profit
80
‒ High renewal rate 70
‒ Selective new business 60
50
‒ Mobilisation of new contracts, particularly in France, 40
Germany and Norway 30
20
10
0
2013 2014 2015 2016 2017
* SSP revenue by region %s is calculated, adjusting for the impact of annualised India sales
Note: All figures in constant currency
19 SSP: The Food Travel ExpertsNorth America update
Revenue
• 16%* of SSP revenue 350
300
• Focus on air channel, increasing share 250
200
• 27.8% sales growth including 22.9% net gains 150
100
50
• Successful year for new openings and new contract wins 0
2013 2014 2015 2016 2017
• Strategic initiatives improving profitability
Operating profit
• Focus on 15
‒ Profitable new business 10
‒ Mobilising new contracts quickly and efficiently 5
‒ Infrastructure and people to support growth
0
‒ Generating efficiencies over time as business grows 2013 2014 2015 2016 2017
-5
* SSP revenue by region %s is calculated, adjusting for the impact of annualised India sales
Note: All figures in constant currency
20 SSP: The Food Travel ExpertsRest of World update excl. India
Revenue
• 10%* SSP revenue, focused on air, initial trials in rail 250
200
• 25.5% sales growth including 18.1% net gains
150
• Regional differences 100
‒ Large geographical spread 50
‒ Terminal developments impacting some countries 0
2013 2014 2015 2016 2017
‒ Continued good LFL growth elsewhere
Operating profit
• Operating profit growth in line with expectations 20
15
• Focus on
‒ Profitable new business development 10
‒ Selective geographic expansion 5
‒ Infrastructure and people to support growth 0
2013 2014 2015 2016 2017
* SSP revenue by region %s is calculated, adjusting for the impact of annualised India sales
Note: All figures in constant currency
21 SSP: The Food Travel ExpertsRest of World – India update
• Joint venture – combines SSP’s international
expertise and TFS’ local knowledge
• Focused on air, trials in Rail and MSA
• Strong performance throughout the year
• Successful Delhi renewal and expansion
• Good progress on integration
• Focus on
‒ Integration
‒ Profitable new business
‒ Infrastructure and people
22 SSP: The Food Travel ExpertsOur focus remains on five key levers to deliver value
1 Optimise our offer to benefit from the positive trends in our markets
2 Grow profitable new space
3 Optimise gross margin and leverage scale benefits
4 Run an efficient and effective business
5 Optimise investment using best practice and shared resource
23 SSP: The Food Travel Experts1 Optimising our offer
Areas of Focus
• LFL growth of 3.1% Improve ranges
• Geographic diversification helps Optimise price and promotion
mitigate specific country issues
• Underlying positive trends in travel Upselling
market
• Strategic initiatives delivering well Maximise use of space
Focus on category as well as brand performance
24 SSP: The Food Travel ExpertsOptimising our offer: Premiumisation • Customers demanding better quality and more innovation • Premiumisation initiatives drive ATV, delivering sales and profit growth • Premiumisation needs to be accessible and engaging • Successfully introducing premium lines across many formats and geographies 25 SSP: The Food Travel Experts
Optimising our offer: Premiumisation case study • On board offer with Virgin Trains East Coast • First class - Introduced new menus in collaboration with James Martin • Standard class - added James Martin Kitchen lines to existing offer • Double digit sales increases • Customer advocacy increased immediately after launch • Won industry and client awards James Martin First Class menu 26 SSP: The Food Travel Experts
2 Grow profitable new space
Areas of Focus
• Very strong performance, 6% net gains New units within existing sites
• Successful growth in existing sites, new sites
and new markets
Existing markets, new sites
• Impact on P&L in first year varies
• Good pipeline for FY18
New markets
• Disciplined approach to new business
• Renewal rate in line with plan
High renewal rate
27 SSP: The Food Travel ExpertsStrong progress on new contracts - including:
Helsinki
5 units
UK Stavanger
3 units 2 units
Boston
3 units
Marseille
13 units
Seattle Ibiza China
5 units 3 units
12 units
Los Angeles Philippines
6 units New York 21 units
7 units
Phoenix Chicago Thailand
2 units 18 units 3 units
Greece
Toronto Toronto City 5 units
4 units 4 units Chennai
Key: 4 units
H1 Contract Wins
H2 Contract Wins
SSP presence
28 SSP: The Food Travel ExpertsNew opening: Chicago Midway
• New contract win, Chicago Midway airport
• 22.6 million PAX
• SSP selected to improve consumer
experience and bring greater choice
• Operating all units on temporary basis from Big & Little’s Home Run Inn
May 2017
• Gradual conversion programme over next
few years
• New brands planned - iconic Chicago brands,
e.g. Big & Little’s, Home Run Inn, Reilly’s
Daughter, M Burger
Reilly’s Daughter M Burger
29 SSP: The Food Travel ExpertsNew Contract Win: Philippines • New contract win – 21 units at Cebu airport • Growing airport with 11m PAX annually • High levels of interest in tender • JV with client and local partner • SSP selected for combination of local and international expertise • Brand line up includes Lechon, Burger King, Ritazza, Camden • Development expected to commence Summer 2018 30 SSP: The Food Travel Experts
Brand portfolio continues to develop
• SSP has strong and growing portfolio of
international brands, local heroes, bespoke
concepts and own brands
Paul Hollywood - Euston
• We now operate over 450 brands
• Brands drive LFL sales, new business and
renewals
• Developing concepts with high profile chefs
• Refreshing own brands for use
internationally
Upper Crust - Brisbane Camden Food Co – Dubai
31 SSP: The Food Travel Experts3 Further progress optimising gross margin
• Gross margin improved by 90bps* Areas of Focus
Procurement disciplines
• Some increase in food inflation
• Key initiatives continue to deliver Simplify and standardise recipes
good results
• Good progress on simplification and Reduce waste and losses
standardisation
* At constant currency excluding India
32 SSP: The Food Travel ExpertsOptimising Gross Margin: Case Study – Equipment and process changes
• Central kitchens common in big sites
• Traditionally very manual
• Specialised equipment introduced
• Cutting and slicing
• Automatic depositer
• Wrapping machine
• Conveyor tables Robot Coupe Automated depositer
• Successfully trialled in three US airports
• Improves recipe compliance, portion size, waste and
efficiency
• Roll-out commenced Conveyor tables Wrapping machine
33 SSP: The Food Travel Experts4 Encouraging progress on operating efficiency
Areas of Focus
• Labour costs 20bps improvement*
Service optimisation
• Continued rising labour costs; minimum
wage, living wage
Improve forecasting and scheduling
• Service optimisation; a major focus in
parallel with forecasting and scheduling
• Successful UK rollout, Nordics and North Employ technology to improve efficiency
America now in pilot
• Further technology being tested
Improve reporting and accountability
* At constant currency excluding India
34 SSP: The Food Travel ExpertsOptimising Efficiency: Case Study – self-pay and self-order • Self-scan checkouts successful trialled in UK M&S stores • Self-scan participation now in excess of 60% • Roll-out planned for 2018 • Useful learnings for further trials • Self-order functionality now being piloted in the UK and in the US in QSR • Initial results encouraging 35 SSP: The Food Travel Experts
Summary and outlook • Strong full year financial performance, profit up 27.0%, 34.2% at actual exchange rates • Good LFL sales 3.1% • Net new openings well ahead of plan at 6% • On-going good progress on margin and efficiency • EPS 20.3p, up 31.0% • Strong free cash generation £89m • Full year dividend of 8.1p, up 50%, payout ratio increased to 40% • Special dividend of c.£100m proposed • Pipeline encouraging, continue to invest in our many opportunities • Continued focus on delivering value for our shareholders 36 SSP: The Food Travel Experts
Q&A SSP: The Food Travel Experts
Disclaimer Certain statements in the presentation may constitute “forward-looking statements”. These statements reflect the Company’s current beliefs and expectations and are based on numerous assumptions regarding the Company’s present and future business strategies and the environment the Company and members of its group will operate in and are subject to risks and uncertainties that may cause actual results, performance or achievements to differ materially. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Forward-looking statements speak only as of their date and the Company, any other member of the Group, its parent undertakings, the subsidiary undertakings of such parent undertakings, and any of such person’s respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law or regulatory obligations. It is up to the recipient of this presentation to make its own assessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws. 38 SSP: The Food Travel Experts
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