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www.foodtravelexperts.com
The Food Travel Experts
Presentation structure
1. Group highlights Kate Swann
2. Financial review Jonathan Davies
3. Business review Simon Smith / Kate Swann
4. Q&A All
SSP: The Food Travel Experts2
Group highlights
• Good first half performance with operating profit up 14.6% at constant currency and 13.2% at actual exchange rates
• Total sales growth including acquisitions 6.8%*
• Like for Like sales up 2%
• Net new space growth strong at 4.1%
• Strong operating margin growth of 30bps
• EPS 6.7p, up 19.6% YOY
• Interim dividend 5.8p, up 20.8% YOY
• Medium term pipeline encouraging
SSP: The Food Travel Experts3
* At constant currency
Financial review
SSP: The Food Travel Experts
Jonathan Davies, CFO
Interim Results 2019
Group financial overview
SSP: The Food Travel Experts
Change (%)
£m H1 2019 H1 2018Constant Currency
Reported FX Rates
Revenue 1,261.6 1,177.8 6.8% 7.1%
LFL Sales Growth 2.0% 2.8% n/a n/a
Operating Profit* 62.5 55.2 14.6% 13.2%
Profit Before Tax* 54.2 48.7 n/a 11.3%
Earnings per share (p)* 6.7 5.6 n/a 19.6%
Net Debt (433.4) (290.1) n/a 49.4%
5
*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.
H1 2019 LFL sales growth 2.0%
SSP: The Food Travel Experts
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
H1 H2 FY18 Q1 Q2 H1
Note: Same store like-for-like sales growth at constant currency
LFL
Sale
s G
row
th (
%YO
Y)
FY18 H1 FY19
2.8%
6
2.7% 2.8%2.5%
1.5%
2.0%
Revenue growth of 6.8% at constant currency
SSP: The Food Travel Experts
Change at Constant Currency LFL SalesNet Contract
Gains/(Losses)Total
Revenue
UK 1.4% 2.9% 4.3%
Continental Europe (0.8)% 3.1% 2.3%
North America 5.4% 8.7% 14.1%
Rest of World (inc India) 6.4% 4.2% 10.6%
Group 2.0% 4.1% 6.1%
Acquisition Impact
Stockheim 0.7%
Reported Growth 6.8%
7
Operating profit growth of 14.6% at constant currency
SSP: The Food Travel Experts
Operating Profit* Change (%)
£m H1 2019 H1 2018Constant Currency
Reported FX Rates
UK** 39.1 33.4 17.4% 17.1%
Continental Europe 17.7 21.8 (15.3)% (18.8)%
North America 9.5 6.4 51.6% 48.4%
Rest of World 15.9 13.6 16.3% 16.9%
Non-attributable (19.7) (20.0) 1.5% 1.5%
Group 62.5 55.2 14.6% 13.2%
* Operating profit is underlying, at actual currency** UK includes Republic of Ireland
8
Operating profit margin up by 30bps
SSP: The Food Travel Experts
YOY bps Change
£m H1 2019 H1 2018Constant Currency
Reported FX Rates
Revenue 1,261.6 1,177.8
Gross Profit% Sales
892.270.7%
821.569.8% 90 90
Labour Costs% Sales
385.130.5%
356.730.3% (20) (20)
Concession Fees% Sales
248.619.7%
222.318.9% (80) (80)
Overheads% Sales
143.211.4%
139.611.9% 50 50
Depreciation & Amortisation*
% Sales
52.84.2%
47.74.1% (10) (10)
Operating Profit*
Operating Margin (%)
62.55.0%
55.24.7% 30 30
9
*Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
Net profit up 16.0%
SSP: The Food Travel Experts
£m H1 2019 H1 2018 Change (%)
Operating Profit* 62.5 55.2 13.2%
Net Financing Cost* (10.4) (6.7)
Share of Associates 2.1 0.2
Profit Before Tax* 54.2 48.7 11.3%
Tax* (12.0) (10.7)
Non-Controlling Interests (11.0) (11.1)
Net Profit* 31.2 26.9 16.0%
Earnings per share (p)* 6.7p 5.6p 19.6%
Dividend per share (p) 5.8p 4.8p 20.8%
10
*Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
Free cash outflow of £75.9m
SSP: The Food Travel Experts
£m H1 2019 H1 2018
Operating Profit* 62.5 55.2
Depreciation & Amortisation* 52.8 47.7
Working Capital (36.3) (0.5)
Capital Expenditure (108.2) (61.5)
Net Tax (18.7) (17.6)
Acquisition (3.4) (18.8)
Other (18.5) (4.5)
Operating Cash Flow* (69.8) (0.0)
Net Financing Costs (6.1) (6.1)
Other 0.0 (0.4)
Free Cash Outflow* (75.9) (6.5)
11
*Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
Net debt of £433.4m
SSP: The Food Travel Experts
H1 2019 H1 2018
£mLeverage
(NetDebt/EBITDA)
£mLeverage
(NetDebt/EBITDA)
Opening Net Debt (1 October) (334.7) 1.1x (262.2) 1.0x
Free Cash Flow (75.9) (6.5)
Dividend (25.2) (23.5)
Impact of foreign exchange rates 8.2 2.3
Other (5.8) (0.2)
Closing Net Debt (31 March) (433.4) 1.4x (290.1) 1.1x
12
Financial summary
• Robust LFL sales growth of 2.0%
• Net contract gains strong at 4.1 %
• Acquisitions add a further 0.7%
• Operating profit up 14.6 % at constant currency
• Strategic programmes delivering strong operating margin growth up 30bps
• EPS up 19.6%
• Interim dividend per share of 5.8p, up 20.8%
SSP: The Food Travel Experts13
Business Review
SSP: The Food Travel Experts
Simon Smith, CEO Designate
Interim Results 2019
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
SSP: The Food Travel Experts15
Regional progress update
SSP: The Food Travel Experts16
• Revenue growth in all regions
• Geographic diversification continues as planned
• Fast growth in North America and ROW, now 33% of the Group
• Further opportunities to grow in all regions
• Encouraging new business pipeline underpinning future revenue growth
*Note: figures included in graphs all at constant currency
Channel progress update
SSP: The Food Travel Experts17
• Good PAX growth in air
• Air sector now 63% of SSP
• Geographic growth will continue to drive air mix
• Rail growth, slower impacted by disruption
• Medium term growth forecasts in travel remain encouraging
*Note: figures included in graphs all at constant currency
Our focus remains on five key levers to deliver value
SSP: The Food Travel Experts
1 Optimise our offer to benefit from the positive trends in our markets
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
18
Optimising our offer
• LFL growth of 2.0%
• Geographic diversification helps mitigate specific country issues
• Variability in LFL growth usual
• Underlying medium term positive trends in travel market
• Strategic initiatives delivering well
SSP: The Food Travel Experts
Areas of Focus
Improve ranges
Optimise price and promotion
Upselling
Maximise use of space
Focus on category as well as brand performance
1
19
Optimising our offer: Technology to drive LFL
• Self-scan tills ⁻ Now 275 tills rolled out
⁻ Higher volumes
• Self-order kiosks⁻ Now 200 kiosks rolled out
⁻ Reduce queues and congestion
• Mobile ordering pilot⁻ Scan QR code to order from table
⁻ Serve more customers, more quickly
⁻ Labour more efficiently deployed
SSP: The Food Travel Experts20
Grow profitable new space
• Strong performance, 4.1% net gains
• New contracts/openings will materially differ from year to year
• Impact on P&L in first year varies based on type and timing of openings
• Disciplined approach to new business
• Renewal rate in line with plan
• Pipeline encouraging for 2020 and beyond
SSP: The Food Travel Experts
Areas of Focus
New units within existing sites
Existing markets, new sites
New markets
High renewal rate
2
21
Growing profitable new space - North America
SSP: The Food Travel Experts22
• Significant growth already delivered since IPO:
• Well established, credible player, strong momentum
• Significant future opportunity: food & beverage market in North America large and growing:‐ Growing PAX numbers‐ Airports increasing share of F&B‐ Desire for greater competition at airports‐ Desire for improved food and beverage offer ‐
• SSP present in only 25 out of the top 80 US airports
H1 2014 H1 2019 % change
Units 204 325 +60%
Revenue £78m £236m +203%
Chicago Midway
San Francisco
LAX
Portland
Recent new business wins yet to open
SSP: The Food Travel Experts23
• Significant recent wins still to open with over 80 units planned
• Including 48 units won in H1 2019
• Local approach successful
• Strong brand line up
• Substantial further pipeline
New YorkOakland
Vancouver
Salt Lake City
Bermuda
Ottowa
Boston
Indianapolis
Miami
Toronto
Montreal
Phoenix
Seattle
Wins where units have yet to open
Strong progress globally on new contract wins - including:
SSP: The Food Travel Experts24
H1 Contract Wins
SSP presence
Key:
New York5 units
St Petersburg4 units
Oakland8 units
Vancouver7 units
Salt Lake City6 units
Alicante6 units
Brussels4 unitsParis
12 units
Helsinki4 units
Athens4 units
Mumbai3 units
UK4 units
Singapore2 units
Bermuda3 units
Delhi9 units
Seville4 units
Brisbane5 units
Ottowa10 units
Salvador7 units
Further progress optimising gross margin
• Gross margin improved by 90bps
• Continued increase in food inflation
• Key initiatives continue to deliver good results
• Good progress on simplification and standardisation
SSP: The Food Travel Experts
Areas of Focus
Procurement disciplines
Simplify and standardise recipes
Reduce waste and losses
3
25
Gross margin: Supply Chain Initiatives
SSP: The Food Travel Experts26
• Complex supply chain
• Opportunity to review end to end process
• Early opportunities identified
• Delivery frequency analysed:⁻ Negotiated with suppliers to increase volume
delivered and reduce number of drops⁻ Shared cost saving benefits with supplier⁻ Standard methodology developed
• Rolling out in UK, global plan being trialled
Encouraging progress on operating efficiency
• Net operating efficiency improves 30bps
• Labour costs up 20bps
• Other overhead costs 50bps improvement
• Labour cost pressures continue as expected
SSP: The Food Travel Experts
4
Areas of Focus
Service optimisation
Improve forecasting and scheduling
Employ technology to improve efficiency
Improve reporting and accountability
27
Operating Efficiency: Further outsourcing
• Part of our ongoing outsourcing programme
• Identified multiple approaches to unit design across group – costly and inefficient
• Established a design agency in India to deliver drawings for low complexity schemes
• On the first 20 UK scheme savings of almost c. 40% identified
• International schemes now being included and more complex/ higher capex schemes will be trialled
SSP: The Food Travel Experts28
Ritazza, Belfast Airport
Looking ahead…….
• Excellent progress in driving commercial excellence in the UK, we can do much more of this around the world
• Significant market opportunity: North America and ROW
• Technology and automation offer lots of opportunity both in top line growth and cost optimization
• Many other areas, for example maintenance and inventory management have only seen limited work to date
• Expect continued good progress across the P&L as we focus on our many, many opportunities
SSP: The Food Travel Experts29
Summary and outlook
• Strong financial performance, profit up 14.6% at constant currency, 13.2% at actual exchange rates
• Solid LFL sales up 2%
• Net new openings ahead of plan at 4.1%
• Good progress on margin and efficiency, operating margin growth of 30bps
• EPS 6.7p, up 19.6%
• Half year dividend of 5.8p, up 20.8% YOY; special dividend executed in April
• Pipeline encouraging, continued investment in profitable new contracts
• Second half has started well
• Focus on delivering value for our shareholders
SSP: The Food Travel Experts30
Q&A
SSP: The Food Travel Experts
Interim Results 2019
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.
SSP: The Food Travel Experts32