Final Results. Released : 29 Nov :00. RNS Number : 3604Q SSP Group PLC 29 November November 2016

Transcription

1 Final Results Released : 29 Nov 07:00 RNS Number : 3604Q SSP Group PLC 29 November 29 November SSP GROUP PLC Results for year ended 30 September SSP Group, a leading operator of food and beverage outlets in travel locations worldwide, announces its financial results for year ended 30 September. Highlights: Underlying operating profit 1 of 121.4m: up 18.2% at constant currency, and 24.6% at actual exchange rates Like for like sales up 3.0%: driven by growth in air passenger travel and retailing initiatives Net gains of 1.7%: strong performances in North America and the Rest of the World Revenue of 1,990m: up 5.0% at constant currency; 8.6% at actual exchange rates Underlying operating margin 1 up 70 basis points at constant currency to 6.1%: strategic initiatives delivering further improvements Underlying profit before tax of 107.5m: up 31.1%. Reported profit before tax of 105.6m Underlying earnings per share of 15.5 pence: up 26.0%. Reported earnings per share of 15.2 pence Final dividend of 2.9 pence per share, bringing the full year dividend to 5.4 pence per share: up 26.0% Underlying operating cash inflow of 78.3m, after increased investment in the business Brand and concept portfolio further strengthened Encouraging pipeline of new contracts Commenting on the results, Kate Swann, CEO of SSP Group, said: "SSP has delivered another good performance in and we continue to make progress on our strategic initiatives. Constant currency operating profit was up 18% driven by good like for like sales growth, further operational improvements and higher new contract openings. We continue to develop our presence across the world, particularly in North America and Asia Pacific. "The new 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 placed to benefit from the structural growth opportunities in our markets and our programme of operational improvements." Financial highlights: Year on year change Constant currency 2 Actual FX rates Revenue 1, , % +8.6% Like for like sales growth % +3.7% n/a n/a Underlying operating profit % +24.6% Underlying operating margin 1 6.1% 5.3% +70 bps +80 bps Underlying profit before tax n/a +31.1% Underlying earnings per share (p) n/a +26.0% Dividend per share (p) n/a +25.6%

2 Underlying operating cash inflow n/a +10.6% Net debt (317.4) (319.8) n/a +0.8% Statutory reported results: The table below summarises the Group's statutory reported results (where the financial highlights above are adjusted). Year on year change Operating profit % Operating margin 6.0% 5.0% +100 bps Profit before tax % Earnings per share (p) % 1 Stated on an underlying basis excluding amortisation of intangible assets arising on the acquisition of the SSP business in Constant currency is based on average exchange rates weighted over the financial year by results. 3 Like for like sales represent revenues generated in an equivalent period in each financial year in outlets which have been open for a minimum of 12 months. Like for like sales are presented on a constant currency basis. Net contract gains / (losses) represent the net year on year revenue impact from new outlets opened and existing units closed in the past 12 months. Net contract gains / (losses) are presented on a constant currency basis. 4 Stated on an underlying basis after capital expenditure, net cash flows to/from associates/minorities, acquisitions and tax, and excluding exceptional items. Please refer to page 16 for supporting reconciliations from the Group's statutory reported results to these performance measures. CONTACTS: Investor and analyst enquiries Sarah John, Director of Investor Relations, SSP Group plc On 29 November: +44 (0) Thereafter: +44 (0) E mail: sarah.john@ssp intl.com Media enquiries Elizabeth Davies, Group Head of Communications, SSP Group plc +44 (0) E mail: elizabeth.davies@ssp intl.com Peter Ogden / Lisa Kavanagh Powerscourt +44 (0) E mail: ssp@powerscourt group.com SSP Group plc's Preliminary Results are available at 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 over 50 years of experience, today we have nearly 30,000 employees, serving approximately a million customers every day. We have business at approximately 130 airports and 280 rail stations, and operate more than 2,000 units in over 30 countries around the world. SSP operates an extensive portfolio of more than 400 international, national, and local brands. Among these are local heroes such as MASH in Copenhagen, James Martin Kitchen in London, and Hung's Delicacies in Hong Kong. Our range also includes proprietary brands created for the travel sector including Upper Crust, Le Grand Comptoir and Ritazza, as well as international names such as Burger King, Starbucks and YO! Sushi. We also create stunning bespoke concepts such as Walter at Zurich.

3 Business review Overview The Group delivered a good performance in the year, driven by like for like sales growth, new contract openings across the world and the ongoing implementation of our programme of operational improvements. We are continuing to invest in the growth and development of the business and to bring new brands and concepts to our clients and customers. We are particularly pleased by the pace of development in North America and Asia Pacific, and the good progress of our strategic initiatives in the UK. Whilst the picture in Continental Europe remains mixed, we are encouraged by the improved operational performance in many of our larger countries. Strong financial results The financial performance of the Group is explained on an underlying basis, which is based on the statutory reported results adjusted for the effects of foreign exchange and excluding the amortisation of intangible assets created on the acquisition of the SSP business in The statutory reported performance of the Group is explained in the financial review, with detailed reconciliation between statutory and underlying performance provided on page 16. The Group delivered a strong financial performance in, with underlying operating profit increasing by 18.2% (on a constant currency basis) to 121.4m, and with a constant currency increase in the operating margin of 70 bps to 6.1%. Total revenue increased by 5.0% on a constant currency basis, including like for like sales growth of 3.0%, net contract gains of 1.7% and a further 0.3% arising from the additional leap year day. After a strong start to the year, with like for like sales growth of 3.3% in the first half, like for like sales in the second half were slightly weaker, impacted by terrorist incidents in France, Belgium and Egypt and slowing growth in China. However at 2.9%, like for like sales growth in the second half was slightly ahead of our expectations. Overall, like for like sales in the air sector grew more strongly than in rail, driven by the continued increase in passenger numbers throughout the year. Following the terrorist incidents in France and Belgium in the first half, trading across our UK and Continental European rail operations has remained slightly softer, particularly in the major capital cities. Net contract gains were up 1.7% in the full year, an encouraging increase from last year's growth of 0.6%. Over the year we saw very strong contributions from North America and the Rest of the World, reporting net gains of c. 13% and 14%. New unit openings in Houston, Orlando and Montreal airports in North America, and at Dubai, Beijing and Bangkok's Don Mueang airports in the Rest of the World have contributed to this strong performance. We continue to focus on retaining profitable contracts and our contract renewal rate in was in line with our plans and slightly ahead of the historical average. We are encouraged by the pipeline of new contracts. During the year we won a number of significant new contracts, including at airports in Newark, Vancouver, Los Angeles, Frankfurt, Dusseldorf, Bangkok, Shanghai, Hong Kong and Phuket. We expect to begin operating these contracts progressively over the next 3 years. The strong operating margin improvement of 70 bps reflects the like for like sales growth and further encouraging progress on our strategic programmes. This was slightly ahead of our expectations, due to the stronger like for like sales growth in the second half and the fact that some expected pre opening costs will now fall into the new financial year reflecting the slightly later timing of certain new unit openings. We delivered strong free cash flow of 65.0m, after investing 95.9m in capital expenditure, which was a 15.2m increase on the prior year. The increase in capital expenditure reflects the increased number of new units opened in the year and is consistent with the increased net gains of 1.7% The reduction in reported net debt of 2.4m to 317.4m masks a good underlying performance. On a constant currency basis net debt reduced by 41.5m driven by the free cash flow of 65.0m, net of the dividend payment of 22.3m. 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 year: 1. Optimising our offer and driving like for like sales growth We are focused on the food and beverage markets in travel locations, which benefit from long term structural growth. We aim to use our retailing skills and broad portfolio of brands to drive profitable like for like sales, ensuring that we benefit from the positive trends in these markets. We have delivered another year of strong like for like sales growth in. We continue to make good progress on rolling out our retailing programmes, which are increasingly gaining traction and supporting growth in like for like sales. We have made further good progress on ranging improvements, ensuring that we deliver the optimal range to customers and this year we have launched a premium product range called "Fine Foods" in our Ritazza brand. We have also had good success in extending the Millie's Cookies brand to on line sales and introducing a Millie's bake at home offer. Brands are important to SSP and support our ability to win new business, secure contract renewals and drive like for like sales. We have added strong names to our portfolio across the globe, for example, opening our first Hard Rock Cafe at Tampa Airport in the year, as well as our first Leon at Liverpool Street Station. In the US we have opened Osteria at Los Angeles Airport and in Asia the S&P Thai Restaurant at Bangkok's Don Mueang Airport, both strong local heroes. We are also very pleased to have agreed a deal with Itsu and the first site is expected to open at a London mainline railway station during the next year. We continue to work with high profile chefs across the globe and have secured an agreement with Paul Hollywood to open a new bakery concept in the UK rail business during In total SSP now operate over 400 brands globally

4 2. Growing profitable new space The travel food and beverage market in airports and railway stations is valued at approximately 14bn and characterised by long term structural growth. It offers excellent opportunities for SSP to expand its business across the globe. Net contract gains were 1.7%, driven by new unit openings and high levels of contract retention. The growth in net gains was driven by strong performances in North America, which benefited from new openings at airports in Houston, Orlando, Tampa and Montreal, and in the Rest of the World, where we opened new units at Dubai, Beijing, Hong Kong, Phuket and Bangkok Don Mueang Airports. These large and growing markets (where we still have a relatively small share) represent an attractive expansion opportunity and the pipeline of new contracts is encouraging. We have strong disciplines around the contract tendering process which support our ability to deliver attractive returns from new business. Our new business growth is underpinned by our ability to deliver attractive and effective food solutions at travel locations internationally. An important element of this is the brand line up we can offer. Our brands include both international brands which we franchise, such as Burger King and Starbucks, but also our own proprietary brands such as Upper Crust and Ritazza, as well as local heroes and bespoke concepts. A significant development for SSP has been our recent agreement to enter India, the world's second most populated country with over one billion inhabitants. India has seen sustained strong passenger growth in recent years and this is forecast to continue. Infrastructure growth is expected to support this and it has been reported that the government is scheduled to invest $120bn in airport infrastructure over the next decade. SSP has agreed to enter into a joint venture with K Hospitality Group whose Travel Food Services ("TFS") business is well established in India with over 170 units. TFS operates in 6 of the main airports including Delhi and Mumbai and also has operations in rail. Like SSP, TFS runs both their own brands, such as Curry Kitchen and Cafeccino, as well as leading third party brands, such as KFC, Pizza Hut and Krispy Kreme. This partnership is in line with our strategy as set out at the IPO, which included expansion into new markets which offer the opportunity for value creating growth. TFS brings a well established business with a strong portfolio of brands. The combination of SSP's international expertise in the travel sector and TFS' strong local presence will provide an excellent platform for future growth in the Indian travel market. The acquisition of the initial 33% stake is expected to be fully complete by February Optimising gross margins We increased gross margin by 70 bps in the year at constant currency. We continue to make good progress on our margin initiatives across the regions. Procurement disciplines are becoming increasingly embedded into the business. Recipe rationalisation and improvement is progressing well and we continue to eliminate unnecessary duplication of products and ingredients in our supply chain. We have also brought significantly more focus to waste and loss management. To support these initiatives, we have invested in central and local resources, including strengthening our purchasing teams, and recruiting central waste and loss prevention specialists. 4. Running an efficient and effective organisation We have made good progress in our multi year programme to improve operating efficiency. Labour efficiencies (including central labour) contributed a 30 bps improvement to our operating margin. We continue to develop systems to better align labour to sales allowing us to optimise service levels and labour costs. We have started to develop a more standardised, systematised process to ensure labour forecasting and scheduling becomes a core competence, through a programme called Better Service Planning. This year we have completed the development of a new forecasting tool which, in trials, delivered a significant improvement in the accuracy of sales forecasting. Having successfully piloted this, together with a new scheduling tool in the UK, we are now planning further roll out across the Group. At the same time we saw advances in our management of overheads, which contributed a further 10 bps improvement to our operating margin. We continue to see many good opportunities for further improvement to the efficiency and effectiveness of the business. 5. Optimising investment utilising best practice and shared resource We continue to focus on generating efficiencies to optimise our investments, drive returns and use best practice and shared resources. We have, for example, tight controls on the use of capital across the business. Potential projects are carefully evaluated before proceeding, closely managed through the process of fit out and the commencement of operations and thoroughly reviewed to compare budgeted to actual outcomes. In addition to this we are increasingly looking at how shared back office services can reduce bureaucracy and cost and drive simpler, more efficient processes. Following a successful trial to consolidate certain finance and accounting processes, we have now established two outsourced shared service facilities which are used by a number of SSP's countries. Summary and outlook The Group delivered a strong financial performance in the year with good like for like sales growth, net gains and improvement in operating margin. The new financial year has started in line with our expectations and the pipeline of new contracts is encouraging, although it is always difficult to predict the precise timing of the opening of these new units. Looking forward to 2017, with tough likefor like sales comparatives in the first half of the year and the current level of general economic uncertainty, we anticipate slightly

5 lower like for like revenue growth next year. However the significant structural growth opportunities and our programme to deliver operational improvements, leave us well placed to continue to deliver both for our customers and our shareholders. Financial review Group performance Change Reported Constant currency LFL Revenue 1, , % +5.0% +3.0% Underlying operating profit % +18.2% Underlying operating margin 6.1% 5.3% +0.8% +0.7% Operating profit % Operating margin 6.0% 5.0% +1.0% Revenue Revenue increased by 5.0% on a constant currency basis, comprising like for like sales growth of 3.0%, net contract gains of 1.7% and a further 0.3% from the additional leap year day. At actual exchange rates, total revenue grew by 8.6%, to 1,990.3m. Like for like sales growth of 3.0% benefited from the continued growth in passenger travel, particularly in the air channel, and the positive impact of rolling out our strategic initiatives. Net gains contributed 1.7% to full year revenue growth, driven by strong contributions from North America and the Rest of the World region. Net gains during the second half of the year were slightly softer at 1.4%, as we saw the impact of our business at Charles de Gaulle Airport in Paris being transferred into a joint venture with Aéroports de Paris, which we do not consolidate, and reflecting the slightly later timing of certain new unit openings. Looking forward to 2017, excluding the impact of the recently announced TFS joint venture in India, we would expect net contract gains to run at around 2.0%, although they are likely to be lower in the first half until we reach the anniversary in February of the commencement of the new Aéroports de Paris joint venture. We expect the TFS joint venture to contribute approximately 2.0% to 2017 sales growth. Trading results from outside the UK are converted into sterling at the average exchange rates for the year. The overall impact on revenue of the movement of foreign currencies (principally the Euro, US Dollar, Swedish Krona and Norwegian Krone) in compared to the average was +3.6%. If the current spot rates were to continue through 2017, we would expect a further positive currency impact on revenue of around 6% compared to the average rates used for. This is however a translation impact only. Underlying operating profit Underlying operating profit increased by 18.2% on a constant currency basis, and by 24.6% at actual exchange rates to 121.4m. The underlying operating profit margin improved by 70 bps on a constant currency basis and 80 bps at actual exchange rates to 6.1%, reflecting good like for like sales growth and further encouraging progress on our strategic programmes, as well as the deferral of some pre opening costs into 2017, reflecting the slightly later timing of certain new unit openings. Gross margin increased by 70 bps year on year on a constant currency basis, or 50 bps underlying when adjusted for the higher sales growth in the air sector compared with the rail sector. The additional 20 bps margin growth arises because air sales typically have higher gross margins, but also higher concession fees relative to rail sales. The strong underlying performance was driven by the ongoing roll out of our strategic initiatives, including improved ranging and mix management, food procurement, and waste and loss reduction. Following the exceptional performance this year, looking forward to 2017 we expect the air and rail sales growth to revert to more normal levels and we are anticipating somewhat higher levels of food cost inflation. As a consequence, our expectation is for more modest year on year improvement in gross margin. Labour costs improved by 30 bps year on year on a constant currency basis, or 40 bps before absorbing the impact of additional sharebased payment costs. The improvement in labour ratios was driven by our broad based programmes to optimise service levels and labour costs. Looking forward to 2017, we expect to see more modest improvements in our labour ratios, as we face increases in labour costs, notably in the UK, with the increase in the National Living Wage, and in North America, where we also anticipate rising minimum wage levels in a number of states. Concession fees rose by 50 bps, with the stronger growth in air sales contributing approximately 10 bps to the year on year increase. We would expect the underlying increase in concession fees of 40 bps to continue into We made further good progress in overhead efficiency which improved by 10 bps year on year. Operating profit Operating profit was 119.5m (: 92.2m), reflecting an adjustment for the amortisation of acquisition related intangible assets of 1.9m (: 5.2m). Regional performance UK

6 Change Reported Constant currency LFL Revenue % +2.9% +3.1% Underlying operating profit % +25.8% Underlying operating margin 1 8.9% 7.2% +1.7% +1.7% 1 Statutory reported operating profit was 64.9m and operating margin was 8.7% reflecting an adjustment for the amortisation of acquisition related intangible assets of 1.5m. Revenue increased by 2.9% on a constant currency basis, comprising like for like growth of 3.1% and net contract losses of 0.5%. The impact of the additional leap year day added an additional 0.3% to the year's revenue growth. 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 rail sector saw weaker trading, with lower passenger numbers and dwell times, notably in London stations. This was particularly marked following the Paris attacks in mid November. Underlying operating profit for the UK increased by 25.8% on a constant currency basis to 66.4m, while underlying operating margin increased by 170 bps to 8.9%, benefiting from good like for like sales growth in the air sector, and from the implementation of our strategic initiatives, particularly gross margin optimisation, where the UK continues to lead the roll out of many of our retailing and procurement programmes. Continental Europe Change Reported Constant currency LFL Revenue % +1.4% +2.8% Underlying operating profit % +3.9% Underlying operating margin 2 7.5% 7.1% +0.4% +0.2% 2 Statutory reported operating profit was 59.7m and operating margin was 7.5% reflecting an adjustment for the amortisation of acquisition related intangible assets of 0.4m. Revenue increased by 1.4% on a constant currency basis, comprising like for like growth of 2.8% and net contract losses of 1.7%. The impact of the additional leap year day added an additional 0.3% to the year's revenue growth. Similar to the UK, like for like sales were much stronger in air than in rail, with good growth in the air businesses in the Nordic region and in Spain, which has benefited from the transfer of tourism from the Eastern Mediterranean and the Middle East. This contrasted with more difficult trading conditions in the rail businesses, particularly in France and Belgium, both of which were impacted by geopolitical incidents. Underlying operating profit increased by 3.9% on a constant currency basis to 60.1m. Profit growth was impacted by the sharp fall in sales following the terrorist incidents in the first half. Nevertheless, the underlying operating margin increased by 20 bps on a constant currency basis to 7.5%, benefiting from the ongoing roll out of our strategic initiatives. North America Change Reported Constant currency LFL Revenue % +20.9% +7.5% Underlying operating profit % % Underlying operating margin 3 4.8% 1.7% +3.1% +3.1% 3 There are no adjustments between underlying operating profit and statutory reported operating profit. Revenue increased by 20.9% on a constant currency basis, comprising like for like growth of 7.5% and net contract gains of 13.1%. The impact of the additional leap year day added a further 0.3% to the year's revenue growth. Like for like growth benefited from positive trends in airport passenger numbers in the North American market, as well as the transfer of additional Delta passengers into Terminal 4 at New York's JFK airport, the anniversary of which we passed during the second quarter. Net contract gains were driven principally by new outlets at a number of airports, including Houston, Orlando, Montreal and Toronto. Underlying operating profit increased by 9.0m to 12.5m, and underlying operating margin made excellent progress, increasing from 1.7% to 4.8%, driven by the benefit of increased sales and good progress on a number of the Group's productivity initiatives. This included a particularly strong contribution from our procurement initiatives, and was achieved despite the pre opening costs associated with the ongoing opening programme. Rest of the World Change Reported Constant currency LFL Revenue % +12.3% 2.1% Underlying operating profit % 44.5%

7 Underlying operating margin 4 4.7% 9.5% 4.8% 4.8% 4 There are no adjustments between underlying operating profit and statutory reported operating profit. Revenue increased by 12.3% on a constant currency basis, with a reduction in like for like sales of 2.1% offset by net contract gains of 14.1%. The impact of the additional leap year day added a further 0.3% to revenue. The fall in like for like sales reflected the sharp drop in passenger numbers across Egypt following the Sharm el Sheikh bombing in late October. In addition to this we have also seen a slowing of growth in China, particularly during the second half, which has impacted a number of countries across the Asia Pacific region. Net contract gains included new openings in Dubai Airport, in Don Mueang Airport in Thailand and in Beijing Airport in China, as well as outlets opened in the prior year at a number of locations across the region. Underlying operating profit for the Rest of the World was 8.6m, a reduction of 44.5% on a constant currency basis. The underlying operating margin reduced by 480 bps to 4.7% which was largely a consequence of the terrorist incident in Egypt, where sales fell by over 50% year on year. In addition, the region was impacted by significant pre opening costs, particularly in Dubai and Beijing airports during the first half, and by higher depreciation charges associated with new contracts. Share of profit of associates The Group's share of profit from associates was 1.3m (: 1.6m). Net finance costs Net finance costs were 15.2m, a reduction of 1.8m compared to, due to lower average levels of net debt and a reduction in margin following the "amend and extend" on our debt facilities, completed in July. Taxation The Group's tax charge for the year was 23.8m (: 16.5m), equivalent to an effective tax rate of 22.5% (: 21.5%) on the reported profit before tax. Non controlling interests The non controlling interests' share of after tax profits increased year on year by 2.9m to 9.8m. This increase primarily reflected the growth and improved profitability of our North America business, where our business partners often have a minority interest in individual contracts. We expect this rate of growth to continue in 2017, and in addition would expect to see an incremental c. 3m minority charge arising from the part year consolidation of the TFS business once the first stage of the acquisition is completed during the first half. Earnings per share Underlying earnings per share, which excludes the impact of exceptional items and the amortisation of intangible assets arising on the 2006 acquisition of the SSP business, was 15.5 pence per share (: 12.3 pence per share). Reported earnings per share was 15.2 pence per share (: 11.2 pence per share). Dividends The Directors are proposing a final dividend of 2.9 pence per share (: 2.2 pence per share), which is subject to shareholder approval at the Annual General Meeting. If approved, this will result in a total dividend per share for the year of 5.4 pence (: 4.3 pence), consistent with the Board's intentions as stated in the IPO prospectus for an initial payout ratio of approximately 30 to 40% of annual underlying profit. The final dividend will be paid, subject to shareholder approval, on 31 March 2017 to shareholders on the register on 3 March The ex dividend date will be 2 March Cash flow The table below presents a summary of the Group's cash flow for : Underlying operating profit Depreciation and amortisation Working capital Net tax (20.0) (17.3) Other Net cash flow from operating activities Capital expenditure 2 (95.9) (80.7) Investment in associate (4.7) Net dividends to/from minorities/associates (8.8) (5.5) Other (0.8) (2.3) Underlying operating cash flow Net finance costs (13.3) (16.1)

8 Underlying free cash flow Exceptional costs (12.0) Dividend paid (22.3) (10.0) Other (1.0) Net cash flow Excludes the amortisation of intangible assets arising on acquisition of the SSP business in Capital expenditure is net of capital contributions from non controlling interests of 8.4m (: 1.1m) The Group generated net cash flow from operating activities of 188.5m (: 159.3m) and free cash flow of 65.0m, an increase of 10.3m compared to, driven by the growth in operating profit, and after increased investment in the business. Capital expenditure increased by 15.2m to 95.9m, reflecting the larger new opening programme in, as well as the impact of the weakening of Sterling during the year. The investment in associate of 4.7m comprised the initial capitalisation of our new joint venture with Aéroports de Paris, which commenced trading in February. Given the pipeline of new contracts for 2017 and the current planned opening programme, we expect capital expenditure to increase to around 100m in 2017 on a constant currency basis. In addition to this we expect an additional 5m of capital expenditure arising from the TFS joint venture in India. If current exchange rates continue for the remainder of the year, the translation into Sterling would add a further 7m to reported capital expenditure. Working capital generated 3.8m of cash flow during the year, consistent with the growth in the business. Cash dividends to minorities, net of dividends received from associates, increased to 8.8m (: 5.5m) primarily reflecting growth in the North America business, while taxes paid increased by 2.7m to 20.0m. Net finance costs paid of 13.3m were lower than in, mainly reflecting the reduction in margin following the "amend and extend" of our borrowing facilities in July. The dividend paid of 22.3m reflected the cost of the final dividend of 2.2 pence per share and the interim dividend of 2.5p per share. Overall, the Group generated net cash flow of 42.7m during the year. Acquisition of TFS In October, SSP announced the agreement to create a joint venture with K Hospitality Group, whereby SSP will own a 49% share in Travel Food Services Private Limited, a leading operator of food and beverage concessions in travel locations in India. SSP is acquiring 49% of TFS for an expected net consideration of 57.9m. The acquisition will take place in two stages. The first stage to acquire a 33% stake for an estimated net consideration of 39.0m, is expected to be fully completed by the end of February The second stage, to acquire a further 16% is expected to take place by the end of 2018, for a net consideration of approximately 18.9m, contingent on the performance of the business. The table below summarises TFS' performance for its financial year ended 31 March and our expectation for its year ending 31 March On a proportionately consolidated basis TFS delivered revenue of 41.7m and EBITDA of 8.3m in its year ended 31 March. Following its year end, TFS bought out a number of its joint venture partners, and the impact of these buyouts, along with the full year benefit of sales from units opened in and the like for like sales growth, is expected to add approximately 3m to TFS' EBITDA. SSP will have management and operational control of TFS and as such TFS and its group companies will be fully consolidated into SSP's financial statements. Accounting standards require SSP to gross up TFS' existing joint ventures for consolidation. This will increase the reported consolidated revenue and profit which is set out in the fully consolidated proforma numbers in the table below. However, this will be reversed through a bigger minority charge, initially of 73%, and has no effect on the Group's economic interest or net income. TFS Year ended 31 March Actual Proportionately consolidated 2017 Estimate Fully consolidated proforma 2017 Estimate Revenue EBITDA % Sales 20% 20% 20% Depreciation (2.8) (3.5) % Sales 5% 5% Restructuring (0.5) (0.5) EBIT Tax (2.7) (3.3) 34% 34% Minorities (3.6) (4.8) 67% 73% Net income All figures based on an exchange rate of Indian Rupees to Sterling of 81.9.

9 Balance sheet and net debt The Group's balance sheet strengthened in the year, with year end net debt reducing to 317.4m (: 319.8m) and net assets increasing to 382.7m (: 291.7m). Opening net debt (30 September ) (319.8) Net cash flow 42.7 Impact of foreign exchange rates (39.1) Other (1.2) Closing net debt (30 September ) (317.4) The reduction in net debt of 2.4m was driven by the net cash flow generation of 42.7m offset by a foreign exchange translation impact of 39.1m arising from the weakening of Sterling during the year. Leverage reduced during the year, leaving Net debt: EBITDA at the year end at 1.6 times, compared with 1.9 times at the end of the prior year. Alternative Performance Measures The Directors use alternative performance measures as they believe these measures provide additional useful information on the underlying trends, performance and position of the Group. These measures are used for performance analysis. The alternative performance measures are not defined by IFRS and therefore may not be directly comparable with other companies' performance measures and are not intended to be a substitute for IFRS measures. Revenue growth As the Group operates in over 30 countries, it is exposed to translation risk on fluctuations in foreign exchange rates, and as such the Group's reported revenue and operating profit will be impacted by movements in actual exchange rates. The Group presents its financial results on a constant currency basis in order to eliminate the effect of foreign exchange rates and to evaluate the underlying performance of the Group's businesses. The table below reconciles reported revenue to constant currency sales growth, like for like sales growth and net contract gains / (losses). UK Continental Europe North America Revenue at actual rates by segment () ,990.3 Impact of foreign exchange () (1.3) (36.6) (19.0) (8.0) (64.9) Revenue at constant currency 1 () ,925.4 RoW Total Revenue () ,832.9 Constant currency sales growth (%) 2.9% 1.4% 20.9% 12.3% 5.0% Which is made up of: Like for like sales growth 2 3.1% 2.8% 7.5% (2.1%) 3.0% Net contact gains / (losses) 3 (0.5%) (1.7%) 13.1% 14.1% 1.7% Constant currency sales growth excluding the impact of the leap year 2.6% 1.1% 20.6% 12.0% 4.7% Impact of additional leap year day 0.3% 0.3% 0.3% 0.3% 0.3% 2.9% 1.4% 20.9% 12.3% 5.0% 1 Constant currency is based on average exchange rates weighted over the financial year by results. 2 Like for like sales represent revenues generated in an equivalent period in each financial year in outlets which have been open for a minimum of 12 months. Like for like sales are presented on a constant currency basis. 3 Revenue in outlets which have been open for less than 12 months are excluded from like for like sales and classified as contract gains. Prior period revenues in respect of closed outlets are excluded from like for like sales and classified as contract losses. Net contract gains / (losses) are presented on a constant currency basis. Underlying profit measures The Group presents underlying profit measures, including operating profit, profit before tax and earnings per share, which exclude amortisation of intangible assets arising on the acquisition of the SSP business. A reconciliation from the underlying to the statutory reported basis is presented below. Underlying Adjustments Total Underlying Adjustments Total Operating profit () (1.9) (5.2) 92.2 Operating margin (%) 6.1% (0.1%) 6.0% 5.3% (0.3%) 5.0% Profit before tax () (1.9) (5.2) 76.8 Earnings per share (p) 15.5 (0.3) (1.1) 11.2

10 Consolidated income statement for the year ended 30 September Underlying * Adjustments Total Underlying * Adjustments Total Notes Revenue 2 1, , , ,832.9 Operating costs 4 (1,868.9) (1.9) (1,870.8) (1,735.5) (5.2) (1,740.7) Operating profit (1.9) (5.2) 92.2 Share of profit of associates Finance income Finance expense 5 (15.7) (15.7) (17.7) (17.7) Profit before tax (1.9) (5.2) 76.8 Taxation (24.2) 0.4 (23.8) (16.9) 0.4 (16.5) Profit for the year 83.3 (1.5) (4.8) 60.3 Profit attributable to: Equity holders of the parent 73.5 (1.5) (4.8) 53.4 Non controlling interests Profit for the year 83.3 (1.5) (4.8) 60.3 Earnings per share (p): Basic Diluted * The underlying numbers exclude non cash accounting adjustments relating to amortisation of intangible assets arising on acquisition of the SSP business in Consolidated statement of other comprehensive income for the year ended 30 September

11 Other comprehensive income / (expense) Items that will never be reclassified to the income statement Remeasurements on defined benefit pension schemes (4.1) 3.6 Income tax credit relating to items that will not be reclassified 1.7 Items that are or may be reclassified subsequently to the income statement Net (loss) / gain on hedge of net investment in foreign operations (48.5) 21.5 Other foreign exchange translation differences 83.2 (25.3) Effective portion of changes in fair value of cash flow hedges (6.7) (9.2) Cash flow hedges reclassified to the income statement Income tax credit relating to items that are or may be reclassified Other comprehensive income / (expense) for the year 29.4 (7.5) Profit for the year Total comprehensive income for the year Total comprehensive income attributable to: Equity shareholders Non controlling interests Total comprehensive income for the year Consolidated balance sheet as at 30 September 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 1, ,139.1 Current liabilities Short term borrowings 8 (30.7) (27.7) Trade and other payables (404.1) (329.3) Tax payable (23.8) (14.6) Provisions (2.3) (460.9) (371.6) Non current liabilities Long term borrowings 8 (442.5) (426.8) Post employment benefit obligations (19.2) (13.7) Provisions (13.8) (16.0) Derivative financial liabilities 8 (14.2) (9.8) Deferred tax liabilities (12.1) (9.5) (501.8) (475.8) Total liabilities (962.7) (847.4) Net assets Equity Share capital Share premium Capital redemption reserve Other reserves 21.5 (6.3)

12 Retained earnings (138.0) (190.6) Total equity shareholders' funds Non controlling interests Total equity Consolidated statement of changes in equity for the year ended 30 September Share capital Share premium Capital redemption reserve Other reserves 1 Retained earnings Total parent equity Noncontrolling interests Total equity At 30 September (241.4) Profit for the year Other comprehensive (expense) / income for the (11.9) 3.6 (8.3) 0.8 (7.5) year Cancellation of deferred shares (1.2) 1.2 Capital contributions from non controlling interests Dividends paid to equity shareholders (10.0) (10.0) (10.0) Dividends paid to noncontrolling (6.4) (6.4) interests Share based payments At 30 September (6.3) (190.6) Profit for the year Other comprehensive income / (expense) for the 27.8 (2.4) year Acquisition of additional share in subsidiary (0.5) (0.1) Capital contributions from non controlling interests Dividends paid to equity shareholders (note 7) (22.3) (22.3) (22.3) Dividends paid to noncontrolling interests (11.1) (11.1) Share based payments Deferred tax on share schemes At 30 September (138.0) The increase of 27.8m (: decrease of 11.9m) comprises an increase to the translation reserve of 31.6m (: decrease of 4.3m) and a decrease to the cash flow hedging reserve of 3.8m (: decrease of 7.6m) Consolidated cash flow statement for the year ended 30 September Notes Cash flows from operating activities Cash flow from operations Exceptional redundancy and restructuring costs (2.8) Tax paid (20.0) (17.3) Net cash flows from operating activities Cash flows from investing activities Investment in associate (4.7) Dividends received from associates Interest received Purchase of property, plant and equipment (97.6) (78.1) Purchase of other intangible assets (6.7) (3.7) Acquisition of business (5.1) Net cash flows from investing activities (106.3) (85.3) Cash flows from financing activities Repayment of borrowings (30.8) (27.9) Repayment of finance leases and other loans (0.2) (1.2) Refinancing fee paid in the year (1.0) Interest paid (13.7) (16.8)

13 Dividends paid to equity shareholders (22.3) (10.0) Dividends paid to non controlling interests (11.1) (6.4) Acquisition of increased share of subsidiary (0.8) Capital contribution from non controlling interests Exceptional IPO related transaction costs (9.2) Net cash flows from financing activities (70.5) (71.4) Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate fluctuations on cash and cash equivalents 9.4 (1.2) Cash and cash equivalents at end of the year Reconciliation of net cash flow to movement in net debt Net increase in cash in the year Cash outflow from decrease in debt and finance leases Change in net debt resulting from cash flows Translation differences (39.1) 20.3 Other non cash changes (1.2) (0.7) Decrease in net debt in the year Net debt at beginning of the year (319.8) (371.1) Net debt at end of the year (317.4) (319.8) Notes 1 Preparation Basis of preparation and statement of compliance The consolidated financial statements of SSP Group plc have been prepared on a going concern basis and in accordance with Interna onal Financial Repor ng Standards as adopted by the EU ("IFRS") and the Companies Act 2006 applicable to companies repor ng under IFRS. These financial statements are presented in Sterling and unless stated otherwise, rounded to the nearest 0.1 million. The financial statements are prepared on the historical cost basis except for the deriva ve financial instruments which are stated at their fair value. Changes in accounting policy and disclosures The accoun ng policies adopted are consistent with those of the previous year. 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. IFRS 16, Leases, issued in January with an effective date of 1 January 2019 is not yet EU endorsed. Management is in the process of reviewing the impact that this will have on the Group. 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 and in Western and Southern Europe; North America includes operations in the United States and Canada; and RoW includes operations in Eastern Europe, the Middle East and Asia Pacific. These segments comprise countries which are at similar stages of development and demonstrate similar economic characteristics. 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. UK Continental Europe North America RoW Total Revenue ,990.3 Underlying operating profit/(loss) (26.2) Nonattributable UK Continental North RoW Nonattributable Total Europe America

14 Revenue ,832.9 Underlying operating profit/(loss) (26.9) 97.4 The following amounts are included in underlying opera ng profit: UK Continental North RoW Nonattributable Total Europe America Depreciation and amortisation* (14.2) (34.9) (18.0) (9.9) (1.8) (78.8) Depreciation and amortisation* (16.5) (31.0) (15.7) (4.8) (4.9) (72.9) * Excludes amortisation of acquisition related intangible assets. A reconciliation of underlying operating profit to profit before and after tax is provided as follows: Underlying operating profit Adjustments to operating costs (1.9) (5.2) Share of loss from associates Finance income Finance expense (15.7) (17.7) Profit before tax Taxation (23.8) (16.5) Profit after tax Earnings per share Basic earnings per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year adjusted by potentially dilutive outstanding share options. Underlying earnings per share is calculated the same way except that the result for the year attributable to ordinary shareholders is adjusted for specific items as detailed below: Profit attributable to ordinary shareholders Adjustments: Amortisation of acquisition related intangibles Tax effect of adjustments (0.4) (0.4) Underlying profit attributable to ordinary shareholders Basic weighted average number of shares 475,169, ,040,543 Dilutive potential ordinary shares 3,579,804 1,137,801 Diluted weighted average number of shares 478,749, ,178,344 The number of ordinary shares in issue as at 30 September was 475,199,063 (30 September : 475,113,354). Earnings per share (p): Basic Diluted Underlying earnings per share (p): Basic Diluted Operating costs

15 Cost of food and materials: Cost of inventories consumed in the year (636.5) (604.3) Labour cost: Employee remuneration (581.6) (541.7) Overheads: Depreciation of property, plant and equipment (74.2) (68.0) Amortisation of intangible assets software (4.6) (4.9) Amortisation of acquisition related intangible assets (1.9) (5.2) Rentals payable under operating leases (349.6) (311.6) Other overheads (222.4) (205.0) (1,870.8) (1,740.7) Adjustments to operating costs Amortisation of intangible assets arising on acquisition (1.9) (5.2) (1.9) (5.2) For the years presented above, underlying opera ng profit excludes non cash accoun ng adjustments rela ng to amor sa on of intangible assets arising on acquisi on of the SSP business in Finance income and expense Finance income Interest income Net foreign exchange gains 0.1 Total finance income Finance expense Total interest expense on financial liabilities measured at amortised cost (10.5) (13.9) Net change in fair value of cash flow hedges utilised in the year (2.7) (0.9) Unwind of discount on provisions (0.6) (1.3) Net interest expense on defined benefit pension obligations (0.4) (0.5) Other (1.5) (1.1) Total finance expense (15.7) (17.7) 6 Cash flow from operations Profit for the year Adjustments for: Depreciation Amortisation Share based payments Finance income (0.5) (0.7) Finance expense Share of Profit of associates (1.3) (1.6) Taxation (Increase) / decrease in trade and other receivables (18.7) 1.2 Increase in inventories (0.1) (1.4) Decrease in trade and other payables, and in provisions Cash flow from operations Dividends