21 May 2015
SSP GROUP PLC 2015 INTERIM RESULTS
SSP Group, a leading operator of food and beverage outlets in travel locations worldwide, announces its
results for the first half of its 2015 financial year, covering the six months ended 31 March 2015.
Highlights:
 Like-for-like sales up 3.0%: strong increases in the UK, North America, Rest of the World
 Revenue of £859.2m: up 2.6% on a constant currency basis; down 0.8% at actual exchange rates
 Operating profit¹ of £25.2m: up 35.2% in constant currency, and 27.9% at actual exchange rates
 Operating margin¹ up 0.6% to 2.9%; tougher comparative in second half
 Increased investment in the business: capital expenditure up 19.2% to £39.8m
 Good progress on future development pipeline for the medium-term
 Brand and concept portfolio further strengthened: working with Jamie Oliver Restaurant Group;
James Martin Kitchen opened; new brands include Joe & the Juice and Maan Coffee
 Maiden interim dividend of 2.1 pence per share, consistent with the policy stated at the IPO
Commenting on the results, Kate Swann, CEO of SSP Group, said:
“We delivered a good performance in the first half of 2015 with profit up 28% and like-for-like sales
growth of 3.0%. We have continued to successfully implement our strategy, and are encouraged by the
significant contract wins we have secured so far this year.
Our confidence in the future is supported by our increasing investment in the business and by the
further strengthening of the portfolio of brands and concepts we offer to our clients. The second half of
the financial year has started in line with our expectations, and whilst a degree of uncertainty always
exists around passenger numbers in the short-term, we continue to be well positioned to benefit from
the underlying positive trends in our markets.”
1
Change H1 2015
vs H1 2014
Constant
Actual FX
Currency
Rates
H1 2015
£m
H1 2014
£m
859.2
865.8
+2.6%
(0.8%)
-
-
+3.0%
-
19.7
+35.2%
+27.9%
n/a
+50.5%
n/a
+61.5%
Revenue
Like-for-like sales growth
Operating profit
1
25.2
Profit before tax
1
16.4
10.9
2.1
1.3
2.1
-
n/a
n/a
(13.3)
(19.2)
n/a
+30.7%
Earnings per share (p)
1
Dividend per share (p)
Operating cash outflow
3
2
2
1
Stated on an underlying basis, excluding exceptional items in the first half of 2014 and amortisation of intangible assets
arising on the acquisition of the Group by EQT in 2006. Please refer to the consolidated income statement for a reconciliation
from the underlying to the statutory reported basis
2
Pro-forma results for the first half of 2014, given on a non-audited basis, as if post IPO financing had been in place
3
Stated on an underlying basis after capital expenditure and tax, and excluding exceptional items
Like-for-like (LFL) sales represent revenues generated in an equivalent period in each financial year in outlets which have been
open for a minimum of 12 months and occupy a similar sales area.
CONTACTS:
Investor and analyst enquiries
Charles King
Director of Investor Relations, SSP Group plc
On 21 May: +44 (0) 7908 710749
Thereafter: +44 (0) 203 714 5251
E-mail: [email protected]
Media enquiries
Jenni Wheller
Head of Communications, SSP Group plc
On 21 May: +44 (0) 7538 210699
Thereafter: +44 (0) 203 714 5245
E-mail: [email protected]
Rory Godson / Rob Greening / Lisa Kavanagh
Powerscourt
+44 (0) 207 250 1446
E-mail: [email protected]
2
NOTES TO EDITORS
About SSP
SSP is a leading operator of food and beverage concessions in travel locations, operating restaurants,
bars, cafés, food courts, lounges and convenience stores in airports, train stations, motorway service
stations and other leisure locations. With a heritage stretching back over 50 years, today SSP has nearly
30,000 employees, serving approximately a million customers every day. As at 31 March 2015, it has
business at circa 130 airports and circa 270 rail stations, and operates approximately 2,000 units in 29
countries around the world.
SSP operates an extensive portfolio of approximately 300 international, national, and local brands.
These include Upper Crust, Starbucks, Caffè Ritazza, Burger King, M&S Simply Food, Caviar House &
Prunier, Millie’s Cookies, and YO! Sushi, as well as stunning bespoke concepts such as the Montreux Jazz
Café, Café Deco in Hong Kong and Shanghai, and the award winning Center Bar at Zurich.
www.foodtravelexperts.com
3
Business review
Overview
The Group delivered a good performance in the first half of 2015, driven by like-for-like sales growth
and the continued successful implementation of our strategy. We also made good progress in winning
new contracts, and in enhancing our competitive position through increased investment and by further
strengthening the portfolio of brands and concepts we offer to our clients.
Good financial results
The Group delivered a good financial performance in the first half of the 2015 financial year.
Like-for-like sales grew 3.0%, with continued strong performances in the UK, North America and Rest of
World, although trading remains more challenging in some parts of Continental Europe, notably France
and Germany given weak consumer spending and strikes.
Net contract losses reduced revenue by 0.4%, principally reflecting the previously announced loss of an
on-board rail contract in 2014. We continue to expect a stronger net contract gains performance in the
second half of this financial year as we pass the anniversary of this loss and as we see the benefits of a
number of new openings, including at Stansted, Nice, and Toronto; we expect positive full year net
contract gains.
Total revenue increased by 2.6% on a constant currency basis. At actual exchange rates, total revenue
decreased by 0.8% to £859.2m, principally as a result of the strengthening of Sterling against the Euro,
the Norwegian Krone and the Swedish Krona when compared to the first half of 2014.
Underlying operating profit of £25.2m grew by 35.2% on a constant currency basis and by 27.9% at
actual exchange rates. Underlying operating margin increased by 0.6% to 2.9%, reflecting encouraging
progress on gross margin optimisation and on our ongoing programme to improve our operating
efficiency. However, the second half of the year will represent a tougher comparative than the first half
in terms of margin improvement, principally because a number of our efficiency initiatives were only at
an early stage in the first half of 2014, but were more developed in the second half. We also anticipate
incurring higher pre-opening costs in the second half as new contracts mobilise. Accordingly, we expect
our second half underlying operating margin to be broadly in line with the comparable period last year.
Investment in the business increased in the first half of this year, with capital expenditure of £39.8m, an
increase of 19.2%. Despite this increased capital expenditure, the free cash outflow normally seen in
the first half given the seasonality of the business was reduced by £6.6m to £31.0m, and, as a result,
including foreign exchange movements, net debt rose only by £10.3m in the half year, to £381.4m.
Strategy
Our strategy is focused on creating long term sustainable value for our shareholders, delivered through
five key levers. We made further progress on each of these levers in the period:
1. Driving our like-for-like sales growth
Our focus is on the food and beverage market in travel locations. We expect to benefit from the
structural growth in this market, and our aim is to capitalise on it by using our retail skills to drive
profitable like-for-like sales growth.
4
The underlying trends in this market continued to be positive in the first half of 2015, and all divisions
delivered a robust performance. We saw continued good growth in the UK, driven particularly by the
air sector, and in North America. We also saw an encouraging performance in the Rest of the World,
with strong sales growth in China, Thailand, and Egypt where we benefited from the recovery in tourism
following last year’s disruption. Continental Europe’s like-for-like sales were flat, due to the continued
challenging trading environment in France and Germany.
Our progress on our ‘retail basics’ programme benefited our like-for-like sales, with improvements
made to the ranges in key categories to ensure that best-selling products are offered in more locations,
and gaps in ranges are reduced. We also strengthened merchandising disciplines with the development
of improved “planograms” to optimise our displays. In addition, we have made further progress on
optimising our pricing, with our country trials progressing well, supported by increased resource both in
the central team and our regions.
2. Growing profitable new space
As expected, we saw net contract losses reduce revenue in the first half of this year, with a decline of
0.4%. This principally reflected the loss part way through 2014 of a UK rail on-board catering contract,
as previously announced, as well as the timing of new contract openings due this year, which will be
weighted to the second half. We expect a stronger performance in the second half, as we pass the
anniversary of the on-board contract loss and as new contracts open, and for our full year net contract
gains to be positive. Our contract renewal rate in the first half of 2015 was in line with our historic
experience.
We had a strong first half in terms of business development, including securing our first business at a
number of airports, including Nice Côte d’Azur, in a contract valued at €180m over 11 years, and
Montréal-Trudeau International (US$200m over 10 years). In addition, we expanded our presence at
Houston George Bush Intercontinental (US$200m over 10 years), Beijing Capital International (£60m
over 6 years) and Orlando International (US$70m over 7 years) airports. We also secured an important
contract at Paris Charles de Gaulle airport, subject to approval by the competition authorities, through a
new joint venture with Aéroports de Paris for 20 new units and 14 renewed units.
We also further strengthened the portfolio of brands and concepts we offer to our clients. We are
working with the Jamie Oliver Restaurant Group to operate a number of concepts, including Jamie’s
Italian restaurants, at airports across France, Germany, Switzerland and Holland, and opened the first
James Martin Kitchen at Stansted Airport in partnership with the well-known celebrity chef. Other new
brands we are working with include international brands such as Joe & the Juice and Pret A Manger, and
strong local and regional brands such as Maan Coffee and Maison Pradier.
3. Optimising gross margins
We further increased gross margin through leveraging the opportunities that arise from being a large
international organisation. Gross margin improved by 0.6%, or by 0.3% excluding UK rail on-board
catering. We made further progress on our programme to rationalise recipes and ranges, and entered
into a number of procurement deals, including agreements for more standardised crockery, glassware
and cutlery, and frozen bakery, across Europe. Our programme is being supported by increased
investment in systems to allow closer management of our margin. We are also investing in greater
capability, and have established new central and regional teams to improve our management of
wastage.
5
4. Running an efficient and effective organisation
We made encouraging progress in the first half on our multi-year programme to improve our operating
efficiency, with better management of overheads contributing a 0.3% improvement to operating
margin. Labour costs (including central labour) contributed 0.1%, or 0.4% on an underlying basis when
adjusted for the additional costs in 2015 of being a publicly quoted company. This improvement is being
partly driven by the further roll-out of systems and technology. This includes new systems to align
labour forecasting, scheduling and KPI reporting, as well as technology to improve our efficiency and
service, such as cash counting machines and self-scan systems. We continue to see good opportunities
for further improvement in optimising the alignment of labour to sales.
5. Optimising investment utilising best practice and shared resource
We are continuing to invest in further resources and improved capability to support both business
development and the implementation of best practice across our businesses. In the first half, we
strengthened our business development teams in North America and Asia Pacific, and our dedicated
teams which oversee capital projects and concept design. We have also reinforced our teams dedicated
to category management, labour scheduling, and wastage management and loss prevention.
Summary and outlook
The Group delivered a good performance in the first half of this financial year, with like-for-like sales in
line with our plan and market trends, encouraging progress on margin and efficiency, and success with
contract wins and securing important new brands. The second half of the financial year has started in
line with our expectations, and the pipeline of new business opportunities is positive. Whilst a degree
of uncertainty always exists around passenger numbers in the short-term, we are well positioned to
benefit from the underlying positive trends in our markets.
6
Financial review
Group performance
Change
Revenue
Underlying operating profit
Underlying operating
margin
H1 2015
£m
H1 2014
£m
Reported
Constant
Currency
859.2
25.2
865.8
19.7
(0.8%)
27.9%
2.6%
35.2%
2.9%
2.3%
+60bps
LFL
3.0%
Revenue
Compared with the first half of 2014, revenue increased by 2.6% on a constant currency basis,
comprising like-for-like growth of 3.0% and net contract losses of 0.4%. At actual exchange rates, total
revenue was 0.8% lower compared to the first half of 2014, at £859.2m. Revenue in the first half of the
Group’s financial year is typically lower than in the second half, as a significant part of our business
serves the leisure sector of the travel industry, which is particularly active during the summer in the
northern hemisphere.
Like-for-like sales growth was strong across most of the Group, including in the UK, North America, the
Middle East, Eastern Europe and Asia Pacific. Trading in Continental Europe was more mixed, with good
performances in the Nordic region and Spain offset by more challenging trading conditions in some
other countries, most notably in France and Germany. In general, the airport business saw good likefor-like sales growth benefiting from increasing passenger numbers in most territories.
Net contract losses reduced revenue by 0.4%, reflecting the previously announced loss of an on-board
rail contract in 2014. We continue to expect a stronger net contract gains performance in the second
half of this financial year, as we pass the anniversary of the on-board rail contract loss, and as we see
the benefits of a number of new contracts, including at Stansted, Nice, and Toronto; we expect positive
full year net contract gains.
Total revenue at actual exchange rates reflected movements in foreign currencies against Sterling
compared to the first half of 2014, principally the strengthening of Sterling against the Euro and Nordic
currencies.
Underlying operating profit
Underlying operating profit increased by 35.2% on a constant currency basis, and by 27.9% at actual
exchange rates, to £25.2m. The improvement in underlying operating profit margin of 60 basis points to
2.9% primarily reflected encouraging progress on our programmes to improve operational efficiency,
and on our productivity initiatives which benefited our gross margin, albeit the benefit was accentuated
in the first half given the seasonality of our business. The second half of the year will represent a
tougher comparative than the first half in terms of margin improvement, principally because a number
of our efficiency initiatives were only at an early stage in the first half of 2014, but were more developed
in the second half. We also expect higher pre-opening costs in the second half of 2015, given that we
will be mobilising a number of large new contracts towards the end of the year.
7
Operating profit
Operating profit was £22.6m, reflecting an adjustment for the amortisation of acquisition-related
intangible assets of £2.6m (H1 2014: £2.6m). Operating profit in the first half of 2014 of £9.3m also
reflected an adjustment for redundancy and restructuring costs of £7.8m; there were no such costs in
the first half of 2015.
Regional performance
UK
Change
Revenue
Underlying operating profit
Underlying operating
margin
H1 2015
£m
H1 2014
£m
Reported
Constant
Currency
342.7
18.0
344.7
13.1
(0.6%)
37.4%
(0.3%)
37.4%
5.3%
3.8%
+150bps
LFL
3.7%
N.B. UK division also includes Republic of Ireland
Revenue decreased slightly by 0.3% on a constant currency basis, comprising like-for-like growth of 3.7%
and net contract losses of 4.0%. Like-for-like growth was particularly strong in the air sector, driven by
continued growth in UK airport passenger numbers and increased spend per passenger. The net
contract losses were primarily a consequence of the previously reported loss of a rail on-board catering
contract part way through 2014.
Underlying operating profit for the UK increased by 37.4% to £18.0m, while underlying operating margin
increased by 1.5% to 5.3%, benefiting from good like-for-like sales growth, and from early
implementation of our productivity programmes, particularly in the rail estate, which will have a smaller
weighting in the second half of the year.
Continental Europe
Change
H1 2015 H1 2014
£m
£m
Revenue
Underlying operating profit
Underlying operating
margin
Reported
Constant
Currency
1.3%
0.0%
351.3
13.9
379.0
15.4
(7.3%)
(9.7%)
4.0%
4.1%
(10bps)
LFL
0.0%
Revenue increased by 1.3% on a constant currency basis, comprising stable like-for-like sales and net
contract gains of 1.3%. Like-for-like sales included a strong performance in Spanish airports and further
growth in the Nordic region, offset by continued more difficult trading in France and Germany, primarily
as a result of weak consumer expenditure and strikes in both countries which impacted our rail
operations. Net contract gains were driven by new operations in several locations, including Bordeaux
airport and the opening of our first outlets at Nice airport.
8
At actual exchange rates, total revenue of £351.3m fell by 7.3%, reflecting the strengthening of Sterling
against the Euro and Nordic currencies during the period.
Underlying operating profit for Continental Europe was flat on a constant currency basis and decreased
by 9.7% at actual exchange rates to £13.9m. Underlying operating margin decreased by 10 basis points
to 4.0%, with the impact of weaker sales mitigated by continued progress on our productivity
programmes, notably in the larger countries.
North America
Change
Revenue
Underlying operating profit
/ (loss)
Underlying operating
margin
H1 2015
£m
H1 2014
£m
Reported
Constant
Currency
LFL
91.6
78.0
17.4%
12.3%
7.0%
0.9
(2.1)
n/m
n/m
1.0%
(2.7%)
+370bps
Revenue increased by 12.3% on a constant currency basis, comprising like-for-like growth of 7.0% and
net contract gains of 5.3%. Like-for-like growth benefited from positive trends in airport passenger
numbers in the North American market, the transfer of additional Delta passengers into Terminal 4 at
New York JFK airport, and a good contribution from the major new contracts opened last year. Net
contract gains were driven principally by new outlets opened in the prior year at a number of airports,
including Phoenix, JFK, San Diego and Sacramento. At actual exchange rates, total revenue of £91.6m
grew by 17.4%, reflecting the strengthening of the US dollar against Sterling compared to the first half
of 2014.
Underlying operating profit was £0.9m, compared with a loss of £2.1m in the first half of 2014, and
underlying operating margin improved by 370 basis points to 1.0%, driven both by the benefit of
increased sales and by a lower level of start-up costs than in the first half of 2014.
Rest of the World
Change
Revenue
Underlying operating profit
Underlying operating
margin
H1 2015
£m
H1 2014
£m
Reported
Constant
Currency
73.6
6.3
64.1
4.6
14.8%
37.0%
13.4%
30.0%
8.6%
7.2%
+140 bps
LFL
13.1%
Revenue increased by 13.4% on a constant currency basis, comprising like-for-like growth of 13.1% and
net contract gains of 0.3%. Like-for-like sales reflected very good passenger growth across most of the
region, including Asia Pacific and the Middle East, notably in China and Thailand, and in our Egyptian
9
business which saw some recovery from last year’s disruption. At actual exchange rates, total revenue
of £73.6m grew by 14.8%.
Underlying operating profit for the Rest of the World increased by 30.0% on a constant currency basis,
and by 37.0% at actual exchange rates to £6.3m, with margin increasing 1.4% to 8.6%, benefiting from
strong like-for-like sales growth.
Share of profit or loss of associates
The Group’s share of the loss of associates was £0.2m, compared to a profit of £0.6m in the first half of
2014. This reduction primarily reflects the disposal of the Group’s minority shareholding in Momentum
Services Ltd.
Net finance costs
Net finance costs were £8.6m, a reduction of £7.0m compared to the first half of 2014, due to lower
average levels of net debt. This primarily reflected the significant repayment of borrowings following
the Group’s IPO in July 2014.
Taxation
The Group’s underlying tax charge was £3.0m (H1 2014: £5.9m), equivalent to an effective tax rate of
21.5% on reported profit before tax.
Earnings per share
Underlying earnings per share was 2.1 pence per share. This compares to an underlying loss per share of
1.3 pence in the first half of 2014. Basic earnings per share was 1.6 pence (H1 2014: loss of 5.6 pence
per share).
Dividends
The Board has declared an interim dividend of 2.1 pence per share (H1 2014: £nil), consistent with the
Board’s intentions as stated in the IPO prospectus for a progressive dividend policy, with an initial
payout ratio of approximately 30 to 40 per cent of annual underlying profit after tax, with the total
annual payment to be split equally between the interim and final dividends.
The dividend will be paid on 3 July 2015 to shareholders registered on 5 June 2015. The ex-dividend
date will be 4 June 2015.
10
Cash flow
The table below presents a summary of the Group’s free cash flow for the first half of 2015:
H1 2015
£m
H1 2014
£m
Underlying operating profit
Depreciation and amortisation
Working capital
Capital expenditure
Net tax
Net dividends to/from minorities/associates
Other
25.2
33.3
(24.5)
(39.8)
(7.6)
(2.0)
2.1
19.7
34.3
(32.4)
(33.4)
(6.9)
(0.7)
0.2
Underlying operating cash flow
Net finance costs
Exceptional costs
(13.3)
(8.4)
(9.3)
(19.2)
(14.5)
(3.9)
Free cash flow
(31.0)
(37.6)
The underlying operating cash outflow in the first half of 2015 was £13.3m. This represents an
improvement of £5.9m compared to the first half of 2014, despite increased investment in the business,
with capital expenditure up £6.4m, or 19.2%, compared to the first half of 2014.
The main driver of this year-on-year improvement was the strong growth in underlying operating profit,
which was further enhanced by a reduced working capital outflow. Taxes paid were £7.6m, while cash
dividends to minorities, net of dividends received from associates, amounted to £2.0m.
Net finance costs paid of £8.4m were substantially lower than in the first half of 2014, mainly as a result
of lower average net debt. Exceptional costs of £9.3m reflected amounts accrued in 2014, but paid in
the first half of this year, principally in respect of the IPO.
Net debt
Net debt increased by £10.3m in the first half of the year to £381.4m, reflecting the seasonal cash
outflow of the business, partly offset by £21.4m of foreign exchange gains, mainly arising on the
proportion of the Group’s bank debt that is denominated in currencies other than Sterling. The
committed Revolving Credit Facility remained undrawn during the half year, and together with the cash
on our balance sheet of £102.0m, provides ample headroom to meet future development and funding
needs.
The table below explains the movement in net debt during the first half of 2015:
£m
Opening net debt (30 September 2014)
(371.1)
Free cash flow
Impact of foreign exchange rates
Other
(31.0)
21.4
(0.7)
Closing net debt (31 March 2015)
(381.4)
11
Principal risks
The principal risks facing the Group for the remainder of the year are unchanged from those reported in
the Annual Report and Accounts 2014.
These risks, together with the Group’s risk management process, are detailed on pages 8 to 12 of the
Annual Report and Accounts 2014, and relate to the following areas: Strategic: business environment,
strategic development, brand portfolio, client relationships; Operational: business interruption, supply
chain, food commodity price inflation, key personnel, technology and infrastructure systems, data
protection; Financial: interest rate risk, currency risk, liquidity and debt covenants; Legal and
Regulatory: compliance, food safety, and labour laws and unions.
12
Responsibility statement of the directors in respect of the half-yearly report
We confirm that to the best of our knowledge:
•
The condensed set of financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU;
•
The interim management report includes a fair review of the information required by:
a)
DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important
events that have occurred during the first six months of the financial year and their
impact on the condensed set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year; and
b)
DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions
that have taken place in the first six months of the current financial year and that have
materially affected the financial position or performance of the entity during that
period; and any changes in the related party transactions described in the last annual
report that could do so.
On behalf of the board
Kate Swann
Jonathan Davies
Chief Executive Officer
Chief Financial Officer
20 May 2015
20 May 2015
13
Independent review report to SSP Group plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the halfyearly financial report for the six months ended 31 March 2015 which comprises the condensed
consolidated income statement, the condensed consolidated statement of comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and the related explanatory notes. We have read the
other information contained in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the company in accordance with the terms of our engagement to assist the
company in meeting the requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s
Financial Conduct Authority (“the UK FCA”). Our review has been undertaken so that we might state to
the company those matters we are required to state to it in this report and for no other purpose. To
the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
company for our review work, for this report, or for the conclusions we have reached.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the
UK FCA.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with
IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and
Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the
Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for the six months ended 31 March 2015 is
not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of
the UK FCA.
Tudor Aw
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London E14 5GL
20 May 2015
14
Condensed consolidated income statement
for the six months ended 31 March 2015
Notes
Six months ended 31 March 2015
Six months ended 31 March 2014
Underlying *
Adjustments
Total
Underlying *
Adjustments
Total
£m
£m
£m
£m
£m
£m
859.2
(834.0)
(2.6)
859.2
(836.6)
865.8
(846.1)
(10.4)
865.8
(856.5)
Operating profit
25.2
(2.6)
22.6
19.7
(10.4)
9.3
Share of (loss) / profit
of associates
Loss on disposal of
business
Finance income
Finance expense
(0.2)
-
(0.2)
0.6
-
0.6
-
-
-
-
(0.7)
(0.7)
0.4
(9.0)
-
0.4
(9.0)
0.3
(15.9)
-
0.3
(15.9)
Profit / (loss) before
tax
16.4
(2.6)
13.8
4.7
(11.1)
(6.4)
Taxation
(3.0)
-
(3.0)
(5.9)
0.1
(5.8)
Profit / (loss) for the
period
13.4
(2.6)
10.8
(1.2)
(11.0)
(12.2)
10.2
(2.6)
7.6
(3.2)
(11.0)
(14.2)
3.2
-
3.2
2.0
-
2.0
13.4
(2.6)
10.8
(1.2)
(11.0)
(12.2)
Revenue
Operating costs
2
4
5
5
Profit / (loss)
attributable to:
Equity holders of the
parent
Non-controlling
interests
Profit / (loss) for the
period
Earnings / (loss) per
share (pence):
-
Basic
3
2.1
1.6
(1.3)
(5.6)
-
Diluted
3
2.1
1.6
(1.3)
(5.6)
* Underlying operating profit excludes items that are considered to be exceptional in nature. In the prior period,
these included redundancy and restructuring costs associated with a number of significant organisation
changes. It also excludes non-cash accounting adjustments relating to amortisation of intangible assets arising
on acquisition of the Group by EQT in 2006.
.
15
Condensed consolidated statement of other comprehensive income
for the six months ended 31 March 2015
Six
months
ended 31
March
2015
£m
Six
months
ended 31
March
2014
£m
(0.7)
1.3
21.1
(22.0)
(7.9)
0.2
1.8
6.6
(8.0)
(1.1)
2.1
-
Other comprehensive (expense) / income for the period
Profit / (loss) for the period
(7.5)
10.8
0.9
(12.2)
Total comprehensive income / (expense) for the period
3.3
(11.3)
(1.7)
5.0
(12.4)
1.1
3.3
(11.3)
Other comprehensive income / (expense)
Items that will never be reclassified to the income statement
Remeasurements on defined benefit pension schemes
Items that are or may be reclassified subsequently to the income statement
Net gain on hedge of net investment in foreign operations
Other foreign exchange translation differences
Effective portion of changes in fair value of cash flow hedges
Cash flow hedges - reclassified to profit and loss
Income tax relating to items that have or may be reclassified
Total comprehensive income / (expense) attributable to:
Equity shareholders
Non-controlling interests
Total comprehensive income / (expense) for the period
16
Condensed consolidated balance sheet
As at 31 March 2015
31 March 2015
£m
30 September
2014
£m
209.6
631.0
4.1
4.8
29.6
879.1
201.9
659.0
4.6
2.5
27.9
895.9
25.5
2.1
81.6
102.0
211.2
24.4
0.5
89.1
133.3
247.3
1,090.3
1,143.2
(29.3)
(299.9)
(6.2)
(335.4)
(29.8)
(340.8)
(9.2)
(379.8)
(454.1)
(17.7)
(11.7)
(8.6)
(8.3)
(500.4)
(474.6)
(17.9)
(11.6)
(0.9)
(8.0)
(513.0)
(835.8)
(892.8)
254.5
250.4
4.8
461.2
1.1
(3.0)
(232.4)
5.9
461.2
5.6
(241.4)
Total equity shareholders’ funds
Non-controlling interests
231.7
22.8
231.3
19.1
Total equity
254.5
250.4
Non-current assets
Property, plant and equipment
Goodwill and intangible assets
Investments in associates
Deferred tax assets
Other receivables
Current assets
Inventories
Tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Short term borrowings
Trade and other payables
Tax payable
Non-current liabilities
Long term borrowings
Post employment benefit obligations
Provisions
Derivative financial liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
17
Condensed consolidated statement of changes in equity
for the six months ended 31 March 2015
Share
capital
Share
premium
Capital
redemp
-tion
reserve
Other
reserves
Retained
earnings
Total
parent
equity
Noncontrolling
interests
Total
equity
£m
£m
£m
£m
£m
£m
£m
£m
5.4
642.9
-
(5.6)
(857.6)
(214.9)
19.8
(195.1)
-
-
-
-
(14.2)
(14.2)
2.0
(12.2)
-
-
-
0.5
1.3
1.8
(0.9)
0.9
-
-
-
-
-
-
(1.4)
(1.4)
At 31 March 2014
5.4
642.9
-
(5.1)
(870.5)
(227.3)
19.5
(207.8)
At 1 October 2014
Profit for the
period
Other
comprehensive
(expense) / income
for the period
Cancellation of
deferred shares
Capital
contributions from
non-controlling
interests
Dividends paid to
non-controlling
interests
Share-based
payments
5.9
461.2
-
5.6
(241.4)
231.3
19.1
250.4
-
-
-
-
7.6
7.6
3.2
10.8
-
-
-
(8.6)
(0.7)
(9.3)
1.8
(7.5)
(1.1)
-
1.1
-
-
-
-
-
-
-
-
-
-
-
1.1
1.1
-
-
-
-
-
-
(2.4)
(2.4)
-
-
-
-
2.1
2.1
-
2.1
4.8
461.2
1.1
(3.0)
(232.4)
231.7
22.8
254.5
At 1 October 2013
(Loss) / profit for
the period
Other
comprehensive
income / (expense)
for the period
Dividends paid to
non-controlling
interests
At 31 March 2015
1
1 The decrease comprises a decrease to the translation reserve of £1.9m (2014: £0.5m) and a decrease
to the cash flow hedging reserve of £6.7m (2014: increase of £1.0m).
18
Condensed consolidated cash flow statement
for the six months ended 31 March 2015
Six
months
ended 31
March
2015
£m
Six
months
ended 31
March
2014
£m
36.1
(2.2)
(7.6)
26.3
21.6
(3.9)
(6.9)
10.8
Cash flows from investing activities
Dividends received from associates
Interest received
Proceeds from disposal of business
Purchase of property, plant and equipment
Purchase of other intangible assets
Net cash flows from investing activities
0.4
0.3
(40.5)
(0.4)
(40.2)
0.7
0.3
0.2
(32.7)
(0.7)
(32.2)
Cash flows from financing activities
Repayment of finance leases and other loans
Interest paid
Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Exceptional IPO related transaction costs
Net cash flows from financing activities
(0.6)
(8.7)
(2.4)
1.1
(7.1)
(17.7)
(0.6)
(14.8)
(1.4)
(16.8)
Net decrease in cash and cash equivalents
(31.6)
(38.2)
Cash and cash equivalents at beginning of the period
Effect of exchange rate fluctuations on cash and cash equivalents
133.3
0.3
182.1
(1.8)
Cash and cash equivalents at end of the period
102.0
142.1
Reconciliation of net cash flow to movement in net debt
Decrease in cash in the period
Cash outflow from decrease in debt and finance leases
(31.6)
0.6
(38.2)
0.6
Change in net debt resulting from cash flows
Translation differences
Other non-cash changes
(31.0)
21.4
(0.7)
(37.6)
12.2
(0.9)
(10.3)
(371.1)
(381.4)
(26.3)
(870.4)
(896.7)
Notes
Cash flows from operating activities
Cash flow from operations
Exceptional redundancy and restructuring costs
Tax paid
Net cash flows from operating activities
Increase in net debt in the period
Net debt at beginning of the period
Net debt at end of the period
6
19
Notes
1
Preparation
Basis of preparation and statement of compliance
The condensed consolidated half-yearly financial statements of SSP Group plc (the Group) have been
prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting as
adopted by the EU. The annual consolidated financial statements of the Group are prepared in
accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”) and the
Companies Act 2006 applicable to companies reporting under IFRS. These condensed consolidated halfyearly financial statements do not comprise statutory accounts within the meaning of Section 435 of the
Companies Act 2006, and should be read in conjunction with the Annual Report and Accounts 2014. The
comparative figures for the year ended 30 September 2014 are not the Group’s statutory accounts for
that financial year. Those accounts were reported upon by the Group’s auditors and delivered to the
registrar of companies. The report of the auditors was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without qualifying their report and
did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.
Except as described below, the accounting policies adopted in the preparation of these condensed
consolidated half-yearly financial statements to 31 March 2015 are consistent with the accounting
policies applied by the Group in its consolidated financial statements as at, and for the year ended, 30
September 2014 as required by the Disclosure and Transparency Rules of the UK’s Financial Conduct
Authority.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous period except for the following
new and amended IFRSs adopted as of 1 October 2014:

IFRS 10 Consolidated Financial Statements

IFRS 11 Joint Arrangements

IFRS 12 Disclosure of Interests in Other Entities

Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32

Recoverable amount disclosures for non-financial assets – Amendments to IAS 36
With the exception of new disclosure requirements, none of these have had a significant impact on the
consolidated financial statements of the Group.
There are no EU-endorsed IFRS or IFRIC interpretations that are not yet effective that are expected to
have a material impact on the Group.
20
2
Segmental reporting
SSP operates in the food and beverage travel sector, mainly at airports and railway stations.
Management monitors the performance and strategic priorities of the business from a geographic
perspective, and in this regard has identified the following four key ‘reportable segments’: the UK,
Continental Europe, North America and Rest of the World (‘RoW’). The UK includes operations in the
United Kingdom and the Republic of Ireland; Continental Europe includes operations in the Nordic
countries, France, Belgium, the Netherlands, Germany, Switzerland, Austria, and Spain; North America
includes operations in the United States and Canada; and RoW includes operations in Eastern Europe,
Middle East and Asia Pacific.
The Group’s management assesses the performance of the operating segments based on revenue and
underlying operating profit. Interest income and expenditure are not allocated to segments, as they are
managed by a central treasury function, which oversees the debt and liquidity position of the Group.
The non-attributable segment comprises costs associated with the Group’s head office function and
depreciation of central assets.
Total
£m
Nonattributable
£m
91.6
73.6
-
859.2
13.9
0.9
6.3
(13.9)
25.2
North
America
£m
RoW
£m
Nonattributable
£m
Total
£m
Continental
Europe
£m
344.7
379.0
78.0
64.1
-
865.8
13.1
15.4
(2.1)
4.6
(11.3)
19.7
North
America
£m
RoW
£m
Nonattributable
£m
Total
£m
Continental
Europe
£m
Six months ended 31 March 2015
Depreciation and amortisation*
(8.1)
(14.5)
(6.4)
(2.2)
(2.1)
(33.3)
Six months ended 31 March 2014
Depreciation and amortisation*
(10.1)
(14.2)
(5.6)
(2.3)
(2.1)
(34.3)
Six months ended 31 March 2015
Revenue
Underlying operating profit/(loss)
Six months ended 31 March 2014
Revenue
Underlying operating profit/(loss)
UK
North
America
£m
RoW
£m
Continental
Europe
£m
342.7
351.3
18.0
UK
£m
£m
The following amounts are included in underlying operating profit:
UK
£m
*Excludes amortisation of acquisition-related intangible assets.
21
A reconciliation of underlying operating profit to profit / (loss) before and after tax is provided as
follows:
Six months
ended 31
March 2015
£m
25.2
(2.6)
(0.2)
0.4
(9.0)
13.8
(3.0)
10.8
Underlying operating profit
Adjustments to operating costs
Share of (loss) / profit from associates
Loss on disposal of business
Finance income
Finance expense
Profit / (loss) before tax
Taxation
Profit / (loss) after tax
3
Six months
ended 31
March 2014
£m
19.7
(10.4)
0.6
(0.7)
0.3
(15.9)
(6.4)
(5.8)
(12.2)
Earnings / (loss) per share
Basic earnings / (loss) per share is calculated by dividing the result for the period attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding during the
period.
Diluted earnings / (loss) per share is calculated by dividing the result for the period attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding during the
period adjusted by potentially dilutive outstanding share options. In accordance with IAS 33, the dilutive
earnings per share are without reference to adjustments in respect of outstanding share options where
the impact would be anti-dilutive.
Underlying earnings / (loss) per share is calculated the same way except that the result for the period
attributable to ordinary shareholders is adjusted for specific items as detailed below:
Six months
ended 31
March 2015
£m
Six months
ended 31 March
2014
(restated)*
£m
Profit / (loss) attributable to ordinary shareholders
7.6
(14.2)
Adjustments:
Exceptional redundancy and restructuring costs
Amortisation of acquisition-related intangibles
Loss on disposal of business
Tax effect of adjustments
2.6
-
7.8
2.6
0.7
(0.1)
10.2
(3.2)
Basic weighted average number of shares
Dilutive potential ordinary shares
475,005,914
1,143,293
252,570,015
-
Diluted weighted average number of shares
476,149,207
252,570,015
Underlying profit / (loss) attributable to ordinary shareholders
The number of ordinary shares in issue as at 31 March 2015 was 475,029,144.
22
Six months
ended 31
March 2015
Six months
ended 31 March
2014
(restated)*
Earnings / (loss) per share (pence):
Basic
Diluted
1.6
1.6
(5.6)
(5.6)
Underlying earnings / (loss) per share (pence):
Basic
Diluted
2.1
2.1
(1.3)
(1.3)
* As part of the preparation for the IPO, a capital reorganisation was carried out on 15 July 2014 which
resulted in an increase in the number of ordinary shares in issue with no corresponding increase in
resources. The loss per share figures have been adjusted retrospectively to reflect the higher
number of shares as required by IAS 33.
4
Operating costs
Six months
ended 31
March 2015
£m
Six months
ended 31
March 2014
£m
Cost of food and materials:
Cost of inventories consumed in the period
(286.2)
(293.9)
Labour cost:
Employee remuneration
(267.0)
(269.8)
(31.5)
(1.8)
(2.6)
(145.6)
(101.9)
(836.6)
(32.5)
(1.8)
(2.6)
(142.5)
(105.6)
(7.8)
(856.5)
(2.6)
(2.6)
(7.8)
(2.6)
(10.4)
Overheads:
Depreciation of property, plant and equipment
Amortisation of intangible assets – software
Amortisation of acquisition-related intangible assets
Rentals payable under operating leases
Other overheads
Exceptional redundancy and restructuring costs
Adjustments to operating costs
Redundancy and restructuring costs
Amortisation of intangible assets arising on acquisition
Underlying operating profit excludes items that are considered to be exceptional in nature. In the prior
period, these included redundancy and restructuring costs associated with a number of significant
organisation changes. It also excludes non-cash accounting adjustments relating to amortisation of
intangible assets arising on acquisition of the Group by EQT in 2006. In the current period, there are
exceptional cash outflows reflecting amounts accrued in 2014 but paid in the first half of 2015, principally in
respect of the IPO.
23
5
Finance income and expense
Six months
ended 31
March 2015
£m
Six months
ended 31
March 2014
£m
0.3
0.1
0.4
0.3
0.3
(7.6)
(0.2)
(0.6)
(0.3)
(0.3)
(9.0)
(12.4)
(2.1)
(0.8)
(0.4)
(0.2)
(15.9)
Finance income
Interest income
Net foreign exchange gains
Total finance income
Finance expense
Total interest expense on financial liabilities measured at amortised cost
Net change in fair value of cash flow hedges utilised in the period
Unwind of discount on provisions
Net interest expense on defined benefit pension obligations
Other
Total finance expense
6
Cash flow from operations
Profit / (loss) for the period
Adjustments for:
Depreciation
Amortisation
Share-based payments
Loss on disposal of business
Finance income
Finance expense
Share of loss / (profit) of associates
Exceptional costs before tax
Taxation
Decrease in trade and other receivables
Increase in inventories
Decrease in trade and other payables, and in provisions
Cash flow from operations
7
Six months
ended 31
March 2015
£m
Six months
ended 31
March 2014
£m
10.8
(12.2)
31.5
4.4
2.1
(0.4)
9.0
0.2
3.0
60.6
32.5
4.4
0.7
(0.3)
15.9
(0.6)
7.8
5.8
54.0
7.5
(1.1)
(30.9)
(0.3)
(32.1)
36.1
21.6
Dividends
The directors have declared an interim dividend of 2.1 pence per ordinary share (2014 nil), totalling £10.0m
(2014 £nil). The dividend will be paid on 3 July 2015 to shareholders registered on 5 June 2015. The exdividend date will be 4 June 2015.
24
8
Fair value measurement
Certain of the Group’s financial instruments are held at fair value.
The fair values of financial instruments held at fair value have been determined based on available market
information at the balance sheet date, and the valuation methodologies detailed below:
-
-
the fair values of the Group’s borrowings are calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the balance sheet date;
and
the derivative financial liabilities relate to interest rate swaps. The fair values of interest rate swaps
have been determined using relevant yield curves and exchange rates as at the balance sheet date.
Carrying amounts and fair values of certain financial instruments
The following table shows the carrying amounts of financial assets and financial liabilities. It does not
include information for financial assets and financial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
Carrying amounts
31 March 2015
30 September 2014
£m
£m
(8.6)
(0.9)
(454.1)
(474.6)
Cash and cash equivalents
102.0
133.3
Short term borrowings
(29.3)
(29.8)
Financial instruments measured at fair value:
Non-current
Derivative financial liabilities
Financial instruments not measured at fair value:
Non-current
Long term borrowings
Current
Financial assets and liabilities in the Group’s consolidated balance sheet are either held at fair value, or their
carrying value approximates to fair value, with the exception of loans, which are held at amortised cost. The
fair value of total borrowings estimated using market prices at 31 March 2015 is £487.2m (30 September
2014: £508.3m).
All of the financial assets and liabilities measured at fair value are classified as level 2 using the fair value
hierarchy, whereby inputs which are used in the valuation of these financial assets and liabilities and have a
significant effect on the fair value are observable, either directly or indirectly. There were no transfers during
the period.
25
9
Forward looking statement
This announcement contains certain forward looking statements with respect to the operations,
strategy, performance and the financial condition of the Group. By their nature, these statements
involve uncertainty since future events and circumstances can cause results to differ from those
anticipated. Nothing in this announcement should be construed as a profit forecast. Except where
required to do so under applicable law or regulatory obligations, we undertake no obligation to update
any forward looking statements whether as a result of new information, future events or otherwise.
26