SSP Group plc
Interim Results 2015
21 May 2015
foodtravelexperts.com
SSP Group plc
• Group Overview
Kate Swann
• Financial Review
Jonathan Davies
• Business Review
Kate Swann
3
Group overview • Good profit performance up 28% YoY at actual exchange rates
• LFL sales at 3.0% reflecting positive market dynamics
• Net new space in line with plan
• Progress on operating margin
• Maiden dividend of 2.1p
• Contract wins and medium term pipeline positive
• Continued investment in the business and its many growth opportunities 4
Financial Review
Interim Results 2015
Jonathan Davies, CFO
foodtravelexperts.com
Group financial overview
Change (%)
£m
1H 2015
1H 2014
Constant Currency
Reported FX Rates
Revenue 859.2 865.8 2.6%
(0.8%)
LFL Sales Growth 1 3.0%
3.2%
Operating Profit 2 25.2
19.7
35.2%
27.9%
Profit Before Tax 2
16.4
10.9 3
n/a
50.5%
(13.3)
(19.2)
n/a
30.7%
Operating Cash Flow 2
1 Same store like‐for‐like sales growth at constant currency
2 Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006 and exceptional items
3 Proforma assuming post‐IPO financing in place in 1H 2014
6
Like‐for‐like sales growth of 3.0%
Change at constant currency
Total Revenue
LFL Sales
Net Contract Gains/(Losses)
3.7%
(4.0%)
(0.3%)
‐
1.3%
1.3%
North America
7.0%
5.3%
12.3%
Rest of World
13.1%
0.3%
13.4%
3.0%
(0.4%)
2.6%
UK
Continental Europe
Group
7
Operating profit growth of 28%
Operating Profit*
£m
1H 2015 1H 2014 Constant Currency
Reported FX Rates
UK
18.0
13.1
37.4%
37.4%
Continental Europe
13.9
15.4
‐
(9.7%)
North America
0.9
(2.1)
n/m
n/m
Rest of World
6.3
4.6
30.0%
37.0%
(13.9)
(11.3)
(23.0%)
(23.0%)
25.2
19.7
35.2%
27.9%
Non‐attributable
Group
Operating profit is underlying, at actual currency
n/m = not meaningful
8
Change (%)
Operating profit margin increased by 0.6% £m
1H 2015
1H 2014
Revenue
859.2
865.8
Gross Profit
% Sales
573.1 66.7%
571.9 66.1% 0.6% *
Labour Costs
% Sales
267.0 31.1%
269.8
31.2%
0.1%
Concession Fees
% Sales
145.6
16.9%
142.5
16.5%
(0.5%) *
Overheads
% Sales
102.0
11.9%
105.6
12.2%
0.3%
Depreciation & Amortisation
% Sales
33.3
3.9%
34.3
4.0%
0.1%
Underlying Operating Profit
% Sales
25.2 2.9%
19.7 2.3%
0.6%
* Gross margin +0.3% adjusted for on‐board contract effect; concession fees (0.3%) adjusted for on‐board contract effect
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YOY change (% Sales) Underlying net profit of £10.2m
1H 2015
1H 2014
Change (%)
Operating Profit 1
25.2
19.7
27.9%
Net Financing Costs
(8.6)
(9.4) 2
8.5%
Share of Associates
(0.2)
0.6
n/m
Profit Before Tax 1
16.4
10.9 2
50.5%
Tax 1
(3.0)
(2.8) 2
(7.1%)
Non‐Controlling Interests
(3.2)
(2.0)
(60.0%)
Net Profit 1
10.2
6.1 2
67.2%
Earnings per share (p) 1
2.1
1.3 2
61.5%
Dividend per share (p)
2.1
‐
‐
£m
1 Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006 and exceptional items in 1H 2014
2 Proforma assuming post‐IPO financing in place in 1H 2014 n/m = not meaningful
10
Improved operating cash flow
£m
1H 2015
1H 2014
Operating Profit*
25.2
19.7
Depreciation & Amortisation
33.3
34.3
Working Capital
(24.5)
(32.4)
Capital Expenditure
(39.8) (33.4)
(7.6) (6.9) 0.1
(0.5) (13.3)
(19.2)
Net Financing Costs
(8.4) (14.5) Exceptional costs
(9.3)
(3.9)
(31.0)
(37.6)
Net Tax
Other
Operating Cash Flow*
Free Cash Flow
11
*Underlying
Financial summary
•
Good like‐for‐like sales growth of 3.0%
•
Net gains as expected; anticipate stronger performance in second half
•
Strong operating profit growth of 28%
•
Further benefits from efficiency programmes, operating margin up 60bps; tougher comparative in second half
•
Improved operating cash flow
•
Interim dividend per share of 2.1 pence
12
Business Review
Interim Results 2015
Kate Swann, CEO
foodtravelexperts.com
Simple strategy to deliver value for our shareholders
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
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Good LFL sales growth
• Group LFL +3.0%
• All divisions delivered robust performance
— Continued strong growth in the UK
— Continental Europe flat despite challenging conditions in some geographies
— North America strong LFL and ongoing opening programme
— Rest of World growth encouraging
• Underlying positive trends in travel channels continue
• Geographic diversification continues to benefit SSP
15
Progress on retail basics benefits LFL sales
Ranging improvements in key categories
• Best sellers into more locations – e.g baguettes
• Opportunity to improve ranges by benchmarking
Transferring ‘winners’ across SSP brands
Competitor best sellers
Best
sellers
A
Best
sellers
9
9
8
8
9
B
9
9
9
9
9
C
9
9
9
9
9
(Baguette)
D
9
9
9
9
8
E
8
8
9
9
9
F
9
8
9
8
8
G
9
9
9
9
9
A
9
8
8
9
8
I
9
8
9
9
9
(No Mozza)
(No Mozza)
9
9
(Chutney)
(Panini)
(Chk Bacon Club)
J
9
(Baguette)
16
9
9
9
8
(Ginster)
Competitor
A
9
8
(Ginster)
B
9
9
9
9
9
C
9
9
8
8
9
D
9
9
9
9
8
(Panini)
E
F
8
8
9
8
(Chk
Bacon
club)
(Baguette)
H
8
9
8
8
9
8
8
(Chicken
Bacon)
Competitor
G
9
9
9
9
9
B
H
9
8
9
8
8
I
9
9
8
8
9
J
8
8
8
8
8
Progress on retail basics benefits LFL sales
Merchandising
• Development of planograms to improve display
• Day part analysis to change displays by time of day
Pricing
• Country trials progressing well
— Germany
— North America
— France – Bonne Journee
• Increased resource centrally and regionally
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Grow profitable new space
•
•
•
•
•
•
•
Net gains in H1 ‐0.4% reflecting previous year as expected
Full year net gains expected to be positive
Timings of openings determined by clients
Always likely to be lumpy due to nature of contract wins
On average expect net gains of c1% over time
Renewal rate in line with plan and historic performance
New units opened in H1
Nando’s, Sydney Airport
18
Dunkin Donuts ,Copenhagen Station
Tai Hing, Beijing International Airport
Stansted Airport Case Study
Background
• In 2014 it was the 4th busiest Airport in the UK
• Manchester Airport Group purchased Stansted in February 2013 • MAG announced an £80m redevelopment programme SSP at Stansted Airport
• SSP has been trading at Stansted Airport for almost 20 years with a small presence
• As part of the redevelopment SSP won a 7‐year contract to operate 6 units
• Early days but performance very encouraging
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Stansted Airport Case Study
“The opening of the first ever James Martin Kitchen is a very exciting development at Stansted and will be a real hit with passengers seeking different tastes and experiences on their journey through. Our aim at Stansted is to give passengers greater choice and James Martin Kitchen offers something a little bit different and will be a very popular addition to the Stansted menu.”
Beth Brewster, Retail Director of Manchester Airports Group
“@jmartinkitchen @STN_Airport
absolutely superb branding packaging and food! Very friendly staff… #exceptional”
Cabin
James Martin Kitchen
20
Burger King
M&S Simply Food
Starbucks
Strong progress on contract wins
• New contract wins in H1 95 units (excluding CDG) including:
Norway
Montreal
10 units across 2 airports
10 units CDG
34 units*
Nice
Beijing
10 units
8 units Houston
10 units Thailand
Orlando
2 units
4 units 21
*20 new 14 renewals
SSP presence
Hobart
5 units Good progress building the brand portfolio
Gino Di Campo
22
Good progress on gross margin optimisation • Gross margin improved by 60bps (underlying 30 bps)
• Global/regional procurement where advantageous
• Crockery – rationalised range
• Frozen bakery – reduced suppliers
• Recipe rationalisation and improvement progressing well
• Further rollout of improved systems to allow margin management
• Waste management improvements – new central team and local network established
23
Encouraging progress on operating efficiency
•
•
•
•
Overheads ‐ 30bps improvement
Labour costs including central labour –10bps improvement underlying 40bps improvement
Substantial opportunity to align labour to sales far better
Systems project to enable labour forecasting, scheduling and KPI reporting
UK
Frabel
Dach
No/De
Swe/F
America
Spain
T&A and scheduling software 3
‐
3
3
3
3
3
Budgeting and scheduling tools – unit and site 3
3
3
‐
Activity based workload generator 3
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
Labour score card and performance review
3
‐
3
‐
‐
‐
‐
Roll‐out and training process and materials 3
3
‐
‐
‐
‐
Workforce profiling and planning • Further roll out of technology to improve efficiency and service
• Multi‐year programme
24
‐
Summary
• Strong H1 financial performance • LFL sales in line with plan and underlying trends positive
• Encouraging progress on margin and efficiency
• Success with new brands
• Maiden dividend 2.1p
• Pipeline encouraging going forward into the medium term
• H2 has started in line with our expectations
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SSP Group plc
Interim Results 2015 – Q&A
21 May 2015
foodtravelexperts.com
Disclaimer
Certain statements in the presentation may constitute “forward‐looking statements”. These statements reflect the Company’s beliefs and expectations and are based on numerous assumptions regarding the Company’s present and future business strategies and the environment the Company 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.
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