The Food Travel Experts.

Transcription

1 The Food Travel Experts

2 SSP Group plc Annual Results November 2016

3 Presentation structure 1. Group highlights Kate Swann 2. Financial review Jonathan Davies 3. Business review Kate Swann 4. Q&A

4 Group highlights Strong full year performance with operating profit up 24.6% at actual exchange rates, 18.2% at constant currency Like-for-Like sales up 3.0% Net new space growth at 1.7% Strong operating margin growth of 70bps Strategic initiatives delivering further growth and efficiency EPS 15.5p, up 26% Full year dividend 5.4p, up 26% Contract wins and medium term pipeline encouraging Ongoing investment in the business and its many growth opportunities

5 Financial review Annual Results 2016 Jonathan Davies, CFO

6 Group financial overview Change (%) m Constant Currency Reported FX Rates Revenue 1, , % 8.6% LFL Sales Growth 3.0% 3.7% n/a n/a Operating Profit * % 24.6% Profit Before Tax * n/a 31.1% Earnings per share (p) * n/a 26.0% Net Debt (317.4) (319.8) n/a 0.8% * Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006

7 2016 LFL sales growth 4.5% LFL Sales Growth (%YOY) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 3.3% 2.9% 0.5% 0.0% Q1 Q2 H1 Q3 Q4 H2 FY16 Note: Same store like-for-like sales growth at constant currency

8 Revenue growth of 5% Change at Constant Currency LFL Sales Net Contract Gains/(Losses) Total Revenue UK 3.1% (0.5%) 2.6% Continental Europe 2.8% (1.7%) 1.1% North America 7.5% 13.1% 20.6% Rest of World (2.1%) 14.1% 12.0% Group (ex. Leap Year) 3.0% 1.7% 4.7% Leap Year n/a n/a 0.3% Reported Growth 5.0%

9 Operating profit growth of 18.2% m Operating Profit* Change (%) Constant Currency Reported FX Rates UK % 26.0% Continental Europe % 12.3% North America % 257.1% Rest of World (44.5%) (41.1%) Non-attributable (26.2) (26.9) 2.6% 2.6% Group % 24.6% * Operating profit is underlying, at actual currency UK includes Republic of Ireland

10 Operating profit margin up by 70bps m Constant Currency YOY bps Change Reported FX Rates Revenue 1, ,832.9 Gross Profit % Sales Labour Costs % Sales Concession Fees % Sales Overheads % Sales Depreciation & Amortisation % Sales Operating Profit Operating Margin (%) 1, % % % % % % 1, % % % (50) (60) % % % Note: Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006

11 Net profit up 26.3% m Change (%) Operating Profit* % Net Financing Cost (15.2) (17.0) Share of Associates Profit Before Tax* % Tax (24.2) (16.9) Non-Controlling Interests (9.8) (6.9) Net Profit* % Earnings per share (p)* % Dividend per share (p) % *Underlying excludes amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006

12 Free cash flow of 65m m Operating Profit* Depreciation & Amortisation Working Capital Capital Expenditure (95.9) (80.7) Net Tax (20.0) (17.3) Investment in JV (4.7) - Other (5.1) (6.8) Operating Cash Flow* Net Financing Costs (13.3) (16.1) Free Cash Flow* * Underlying

13 Net debt of 317m m Leverage (Net Debt/EBITDA) Opening Net Debt (1 October 2015) (319.8) 1.9x Free Cash Flow 65.0 Dividend (22.3) Impact of foreign exchange rates (39.1) Other (1.2) Closing Net Debt (30 September 2016) (317.4) 1.6x

14 Acquisition of 49% stake in TFS SSP creating a 49% JV with Travel Food Services Initially acquiring 33%, then 16% YE 2018 Net consideration c 58m, c10.5 x 2017 EV/EBITDA SSP will have management and operational control SSP will fully consolidate TFS SSP will gross up TFS JVs, no effect on economic interest or net income TFS Year ended 31 March m Proportionately consolidated estimate All figures based on an exchange rate of Indian Rupees to Sterling of Fully consolidated proforma 2017 estimate Revenue EBITDA % Sales Depreciation % Sales % % (2.8) 5% % (3.5) 5% Restructuring (0.5) (0.5) EBIT Tax (2.7) (3.3) 34% 34% Minorities (3.6) 67% (4.8) 73% Net income

15 Financial summary Robust LFL sales growth of 3.0% Net contract gains stronger at 1.7% Strategic programmes delivering strong operating margin growth (up 70bps) Operating profit up 18% EPS up 26% Final dividend per share of 2.9p, bringing full year to 5.4p

16 Business review Annual Results 2016 Kate Swann, CEO

17 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

18 UK update 39% of SSP revenue Strong presence in rail and air 2.9% sales growth and 25.8% operating profit growth Responded well to more uncertain market Strategic initiatives delivering Focus on Strategic initiatives global test bed High renewal rate successful year Further brand development Selective new business Note: All figures in constant currency m m Revenue Operating profit

19 Continental Europe update 39% of SSP revenue Strong presence in rail and air Solid performance given external factors 1.4% sales growth and 3.9% operating profit growth m Revenue Regional differences continued throughout year Focus on Efficiency and flexibility in challenging markets High renewal rate successful year Selective new business Mobilisation of new contracts Note: All figures in constant currency m Operating profit

20 North America update 13% of SSP revenue 21% sales growth and 231% operating profit growth Exclusively air channel Opportunity to grow share m Revenue Focus on Profitable new business Mobilising new contracts quickly and efficiently Investing in infrastructure and people to support growth Generating efficiencies as business grows Note: All figures in constant currency m (5) Operating profit

21 Rest of World update 9% of SSP revenue Focused on air channel, initial trials in rail 12.3% sales growth and profit in line with expectations Regional differences External factors impacting e.g. Egypt, China Continued strong like-for-like growth elsewhere Focus on Profitable new business development Selective geographic expansion Infrastructure and people to support growth Note: All figures in constant currency m m Revenue Operating profit

22 Our focus remains on five key levers to deliver value 1 Optimise our offer to benefit from the positive trends in our markets 2 Grow profitable new space 3 Optimise gross margin and leverage scale benefits 4 Run an efficient and effective business 5 Optimise investment using best practice and shared resource

23 1 Optimising our offer LFL growth of 3.0% Regional variation in performance Geographic diversification Underlying positive trends in travel channels Strategic initiatives delivering well Areas of Focus Improve ranges Optimise price and promotion Upselling Maximise use of space Focus on category as well as brand performance

24 Optimising our offer: Case Study Ritazza premiumisation Research indicated opportunity Breakfast, muffins, salads, paninis/baguettes New premium range branded Fine Foods Trials delivered double digit food sales uplift Rollout December/January

25 Optimising our offer: Case Study Millie s Cookies Millie s strong brand amongst kids/teenagers Developed online offer in 2014 Introduced home baked product this year 3 best selling varieties Frozen for convenience Distribution extended

26 2 Grow profitable new space Strong performance, 1.7% net gains New business focused in USA, Asia Pacific Successful growth in existing sites, new sites and new markets Encouraging pipeline Disciplined approach to new business Areas of Focus New units within existing sites Existing markets, new sites New markets Renewal rate in line with plan High renewal rate

27 New openings: Hong Kong, West Hall SSP Asia has been present in HKIA since 1998 HKIA pax 68 million 28 units, 22 brands, 2 lounges Won an additional 6 units in West Hall New brands include Baikohkhen, School Food, Yung Kee, Old Town White Coffee and Street Food

28 New Space: India new country for SSP In line with strategy outlined at IPO Attractive market with substantial PAX growth Material infrastructure growth Joint venture - combines SSP s international expertise and TFS local knowledge TFS well established business 170 outlets mainly in airports Good portfolio of brands and management team Strong platform for growth

29 Good progress on contract wins including: Torp 6 units Evenes 2 units Helsinki 4 units Hangzhou 2 units Dusseldorf 8 units Bergen 3 units Vancouver 5 units Portland 1 unit Newark 3 units Paris Chatelet 3 units Shanghai 2 units Sanya 4 units San Francisco 2 units Phuket 9 units Minneapolis 3 units Frankfurt 9 units Abu Dhabi 10 units Don Mueang 20 units SSP presence

30 Brand portfolio continues to develop Brands drive LFL sales, new business and renewals Developing our portfolio globally with international and local brands Further development of own brands and bespoke concepts Working with more high profile chefs and local heroes

31 3 Further progress optimising gross margin Gross margin improved by 70bps Key initiatives making good progress Procurement disciplines and recipe rationalisation progressing well, but plenty more to do Good progress on waste and loss management, further investment this year Areas of Focus Procurement disciplines Simplify and standardise recipes Reduce waste and losses

32 Gross margins Improving the serving process on draught beers Draught beers important to SSP globally Test unit name Trial of smart stock-taking for beers sold on tap at 3 US airports Provides real-time inventory and waste reports Helps quantify the gap between poured and sold beer Successful trial results xx xx xx xx Rollout to 24 more airports in the US and now trialling in UK Beer brand listed Beers brands listed xx xx xx xx xx xx xx xx

33 4 Encouraging progress on operating efficiency Total labour costs 30bps improvement Overheads 10bps improvement Opportunity to improve service and efficiency Systems developments forecasting and scheduling Technology to improve efficiency Multi-year programme Areas of Focus Service optimisation Improve forecasting and scheduling Employ technology to improve efficiency Improve reporting and accountability

34 Operating efficiency case study improving forecasting and scheduling Improved sales forecasting and labour scheduling New analytics accurately define the target hours to use Successful pilot in UK for Better Service Planning Daily sales forecasting algorithm Expected in-day demand pattern Man hours, by task type New system/tool launched to 50 units across the estate Encouraging results with labour and sales being more closely related, driving better service and efficiency Rollout to 350+ UK units early and Managers can then clearly see when to schedule hours Man hrs per time slot Too many hours scheduled Not enough hours scheduled Early work on international pilot commences Spring am-8am 8am-11am 11am-2pm 2pm-5pm 5pm-8pm 8pm-11pm 3hr time slot = Target # of man hours = # of man hours scheduled

35 5 Optimising investment to drive returns using best practice and shared resources Different systems and processes developed historically in different regions Clear shared service opportunity in back-of-house finance Initial analysis suggested outsourcing best option Tender process completed and vendor selected 2 shared service centres now operating Initial trial run for UK in January UK, Germany and US complete, Sweden and Norway in progress

36 Summary and outlook Strong full year financial performance, profit up 18% LFL sales in line with plan Net new openings ahead of original plan On-going good progress on margin and efficiency EPS 15.5p, up 26% Full year dividend of 5.4p, up 26% Pipeline encouraging Focus on delivering value for our shareholders

37 Q & A Annual results 2016

38 Disclaimer Certain 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 will operate in and are subject to risks and uncertainties that may cause actual results, performance or achievements to differ materially. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as the Company s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Forward-looking statements speak only as of their date and the Company, any other member of the Group, its parent undertakings, the subsidiary undertakings of such parent undertakings, and any of such person s respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law or regulatory obligations. It is up to the recipient of this presentation to make its own assessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.