The Food Travel Experts/media/Files/S/... · 2019-11-19 · • SSP continues to pay variable concession fees (i.e. % of sales) • Minimum Annual Guarantee is capitalised • Brings

www.foodtravelexperts.com

The Food Travel Experts

Preliminary Results 2019

Presentation structure

1. Group highlights Simon Smith

2. Financial review Jonathan Davies

3. Business review Simon Smith

4. Q&A All

SSP: The Food Travel Experts2

Group highlights

• Good full year performance

• Significant expansion across our geographies and entry into new countries

• Total sales growth including acquisitions 7.8% at CC, 9.0% at actual FX

• Net new space growth strong at 5.6%; like-for-like sales up 1.9%

• Strong operating profit up 12.1% at CC, 13.3% at actual FX, margin growth of 30bps

• EPS 29.1p, up 15.9%

• Final dividend 11.8p, up 15.7% YOY

• Up to £100m share buyback announced • Strong pipeline for 2020 and the medium-term


* At constant currency

Financial review

SSP: The Food Travel Experts

Jonathan Davies, CFO


Group financial overview


Change (%)

£m 2019 2018 Constant Currency

Reported FX Rates

Revenue 2,794.6 2,564.9 7.8% 9.0%

LFL Sales Growth 1.9% 2.8% n/a n/a

Operating Profit* 221.1 195.2 12.1% 13.3%

Profit Before Tax* 203.2 184.4 n/a 10.2%

Earnings Per Share (p) * 29.1 25.1 n/a 15.9%

Net Debt (483.4) (334.7) n/a

5

*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006, the revaluation of the final consideration to acquire an additional 16% of TFS and the additional non-cash interestfrom debt modifications under IFRS9.

2019 LFL sales growth


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Q1 Q2 H1 Q3 Q4 H2

Note: Same store like-for-like sales growth at constant currency

2.0% 1.9%

LFL

Sale

s Gro

wth

(%YO

Y)

FY19

6

Revenue growth of 7.8% at constant currency


Change at Constant Currency LFL Sales Net Contract Gains/(Losses) Total Revenue

UK 2.4% 2.9% 5.3%

Continental Europe* (0.2)% 6.6% 6.4%

North America 3.5% 13.0% 16.5%

Rest of World 4.5% 0.0% 4.5%

Group 1.9% 5.6% 7.5%

Stockheim Acquisition 0.3%

Reported Growth 7.8%

7

*Excluding acquisition impact

Operating profit growth of 12.1%


Operating Profit* Change (%)

£m 2019 2018 Constant Currency

Reported FX Rates

UK** 101.8 89.5 13.7% 13.7%

Continental Europe 79.3 79.5 0.6% (0.3)%

North America 41.9 27.7 44.9% 51.3%

Rest of World 35.9 35.7 (2.3)% 0.6%

Non-attributable (37.8) (37.2) (1.9)% (1.6)%

Group 221.1 195.2 12.1% 13.3%

* Operating profit is underlying, at actual currency, and excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006

** UK includes Republic of Ireland

8

Reported operating margin up by 30 bps


YOY bps Change

£m 2019 2018 Constant Currency Reported FX Rates

Revenue 2,794.6 2,564.9

Gross Profit% Sales

1,987.971.1%

1,801.470.2% 80 90

Labour Costs% Sales

(809.3)(29.0)%

(736.3)(28.7)% (20) (30)

Concession Fees% Sales

(551.8)(19.7)%

(489.6)(19.1)% (60) (60)

Overheads% Sales

(300.4)(10.7)%

(282.6)(11.0)% 30 30

Depreciation & Amortisation% Sales

(105.3)(3.8)%

(97.7)(3.8)% - -

Operating Profit*Operating Margin (%)

221.17.9%

195.27.6% 30 30

9

*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006.

Net profit up 11.1%


£m 2019 2018 Change (%)

Operating Profit* 221.1 195.2 13.3%

Net Financing Cost* (22.0) (15.6)

Share of Associates 4.1 4.8

Profit Before Tax* 203.2 184.4 10.2%

Tax* (45.1) (40.5)

Non-Controlling Interests (26.6) (25.5)

Net Profit* 131.5 118.4 11.1%

Earnings Per Share (p)* 29.1p 25.1p 15.9%

Dividend Per Share (p) 11.8p 10.2p 15.7%

10

*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006, the revaluation of the final consideration to acquire an additional 16% of TFS and the additional non-cash interestfrom debt modifications under IFRS9.

Operating cash generation of £67.9m


£m 2019 2018

Operating Profit* 221.1 195.2

Depreciation & Amortisation 105.3 97.7

Working Capital 3.7 12.8

Capital Expenditure (185.0) (144.2)

Net Tax (37.1) (37.2)

Acquisitions (25.8) (19.0)

Other (14.3) (15.1)

Operating Cash Flow 67.9 90.2

Net Financing Costs (17.4) (13.6)

Free Cash Inflow 50.5 76.6

11

*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006

Net debt of £483.4m


£m Leverage(Net Debt/EBITDA)

Opening Net Debt (1 October 2018) (334.7) 1.1x

Free Cash Flow 50.5

Dividend (200.8)

Impact of Foreign Exchange Rates (0.6)

Other 2.2

Closing Net Debt (30 September 2019) (483.4) 1.5x

12

Uses of cash and balance sheet efficiency


Organic InvestmentSignificant structural growth

opportunities around the world

M&AReview of potential M&A

opportunities

Return to shareholdersup to £100m proposed via a share

buyback

DividendPay-out ratio maintained at 40%

Balance sheet efficiency

Target leverage: c. 1.5x - 2.0x

IFRS 16

• Applies from 1 October 2019 – impacts the way assets, liabilities and the income statement are presented going forward

• No impact on the economics, cash flow or how we run the business

• SSP continues to pay variable concession fees (i.e. % of sales)• Minimum Annual Guarantee is capitalised

• Brings both an asset and liability onto the balance sheet (c.£1.6 billion)

• Operating profit expected to increase by c.£10m, PBT expected to be c.£25m lower*

• Effective for 2019/20 interim results – we will continue to report pre and post the impact of IFRS 16 in the near term


*Indicative impact versus current IAS 17 based on existing portfolio of leases

Financial summary

• Robust LFL sales growth of 1.9%

• Net contract gains strong at 5.6%

• Strategic programmes delivering strong operating margin growth up 30bps

• Operating profit up 12.1% at constant currency, 13.3% actual FX rates

• EPS up 15.9%

• Free cash flow of £50.5m

• Full year dividend per share of 11.8p and announcement of up to £100m share buyback


Business Review


Simon Smith, CEO


Underpinned by our corporate governance framework and a commitment to our environmental and social responsibilities

Delivering across all our stakeholder groups….


Customers Clients

Investors Colleagues

Brand Partners

Delivering long term sustainable value for shareholders


Strong and sustainable growth in earnings, cash flow and returns to shareholders

£22bn market & growing

More space dedicated to F&B

Market leading positions

International scale, local expertise

Multiple levers

Culturally embedded

Technology & Automation

Track record

Disciplined ROI

Strategic fit

Disciplined capital allocation

Balance sheet efficiency

Returns to shareholders

Cost efficienciesOrganic growth Focus on returnsSelective M&A

Increased weighting to higher growth regions and channels


• Strong market positions in UK & CE

• Regional mix shift to faster growing markets

• NA and ROW 33% of total group sales

• Air now almost 2/3 of the business

2014 Sales 2019 Sales

NA and Rest of World

UK and C Europe

2014 Channel Split 2019 Channel Split

AirRailOther

83%

17%

41%

7%

52%

67%

33%

5%

31%

64%

Early actions….


Drive profitable LFL

Faster value creating growth in ROW

Capitalise on NA growth opportunity; drive commercial excellence

Automation and Technology

Greater operational efficiency

Selective M&A

Launched programmes to respond to changing needs of customers

Appointed new CEO. New resource into business development team

Additional support and strengthened commercial teams

Systematic reviews. Faster roll-out of best practice

Accelerated programmes focused on operational efficiencies and improving customer journey

Jamie's and proposed Red Rock acquisitions

Corporate, Social and Environmental Responsibilities Created CSR executive team. Clear focus. Accelerating actions

Five successful value creation levers


1 Optimise our offer to benefit from the positive trends in our markets and drive profitable LFL

Grow profitable new space

Optimise gross margin and leverage scale benefits

Run an efficient and effective business

Optimise investment using best practice and shared resource

2

3

4

5

21

Optimising our offer…driving profitable LFL

• Favourable market trends

• Ongoing passenger growth

• Sharper focus on profitable LFL

• Using data to highlight opportunities

• Changing consumer preferences

• Technology presenting new opportunities


Areas of Focus

Improve ranges

Optimise price and promotion

Upselling

Maximise use of space

Focus on category as well as brand performance

1

22

Aligning our offer to changing customer needs

Changing Customer Profile

Greater diversity of diets

Premiumisation

Customers trading up

Technology

Speed and self selection


1

Mobile ordering driving sales and reducing costs

• Mobile ordering pilot in UK bars⁻ Scan QR code to order from table⁻ Serve more customers, more quickly ⁻ Labour more efficiently deployed

• Increased volume and sales value

• Customers trading up

• Continuing testing and roll-out across UK estate

• Pilots running in NA and other markets


1

Grow profitable new space

• Significant new space growth delivered

• Consistently high renewal rate

• Opportunities in existing and new markets


Areas of Focus

New units within existing sites

Existing markets, new sites

New markets

High renewal rate

2

25

Expanding our footprint has been a key driver of value in the last 3 years


• Acceleration in net gains

• c.£350m annualised sales over last 3 years

• Opportunities differ from year to year; timing of capex varies

• Disciplined approach to new business

• Long term contracts; consistent delivery

• Pipeline encouraging

3.3% 3.7% 3.0% 3.1% 2.8% 1.9%

0.7% 0.6% 1.7%

6.0% 5.1%

5.6%

2.9%

1.6% 0.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2014 2015 2016* 2017* 2018 2019

YoY

Sale

s gro

wth

LfL Net Gains Acquisitions

2

*LFL excludes impact of Leap Year

Growing profitable new space: the North American opportunity


• Significant progress to date

• Considerable scope for future growth:

-c.£6bn market and growing; SSP < 10% share

- Present in only 27 of the top 80 airports

- More new space being created

- More space allocated to F&B

- Clients driving more competition

• Strong pipeline of new contract wins SSP

Rest of Market

N America Market Share

SSP N America Revenue

c.£6bn

N America Market Share

£0m

£200m

£400m

£600m

2014 2015 2016 2017 2018 2019

<10%

2

Strong progress globally on new contract wins including:


Contract Wins at H1Contract Wins since H1

SSP presence

Key:

New York5 units7 units

St Petersburg4 units

Oakland8 units

Vancouver7 units

Salt Lake City6 units

Alicante6 units

Brussels4 units

Paris12 units

Helsinki4 units

Athens4 units

Mumbai3 units

UK4 units6 units

Singapore2 units3 units

Bermuda3 units

Delhi9 units

Seville4 units

Brisbane5 units

Ottawa10 units

Salvador7 units

Indianapolis5 units

San Jose10 units

Shenzhen6 units

Stuttgart8 units

Bangalore5 units

Kuala Lumpur2 units

Bodo4 units

Stockholm2 units

Melbourne6 units

Ubon2 units

Brazil

Bahrain

Malaysia

New Markets

BermudaDallas3 units

Hongqiao5 units

Perth10 units

Miami3 units

Seattle3 units

Providence11 units

Further progress optimising gross margin

• Significant driver of value

• Continued increase in food inflation

• Further opportunities


Areas of Focus

Procurement disciplines

Simplify and standardise recipes

Reduce waste and losses

3

29

Driving commercial excellence

• Focus on sales driving and gross margin management across:• Range• Price• Space• Communications & Display• Operations

• Approach:• Dedicated team • Data analytics• Market segmentation; consumer profile review• Menu/range/pricing benchmarked• Operational benchmarking

30

Range

Price

Space

Communications & Display

Operations

3

Encouraging progress on operating efficiency

• Ongoing significant labour inflation

• Continuation of roll out of labour tools

• Better forecasting and scheduling

• Technology delivering cost reduction


4

Areas of Focus

Service optimisation

Improve forecasting and scheduling

Employ technology to improve efficiency

Improve reporting and accountability

31

Automated kitchen equipment driving performance

• Increased range of new equipment available

• Greater consistency of food production

• Lower cost

• Energy savings


Auto Burger cooker Pizza Dough Press

Sushi Machine Scrambled egg machine

4

Summary and outlook• Strong financial performance in 2019, despite external headwinds; EPS up 16%, £100m share

buyback

• New financial year started in line with expectations

• Significant opportunity for growth

• Clear priorities set out and initial actions delivered

• Strong pipeline of new openings, building a significant base for the medium term

• Continued focus on delivering long term value for our shareholders


Q&A



DisclaimerCertain 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 ownassessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude anyliability under applicable laws that cannot be excluded in accordance with such laws.


Documents

The Food Travel Experts/media/Files/S/... · 2019-11-19 · • SSP continues to pay variable concession fees (i.e. % of sales) • Minimum Annual Guarantee is capitalised • Brings