SSP Group plc. Preliminary Results November foodtravelexperts.com

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2 SSP Group plc Preliminary Results November 2014 foodtravelexperts.com

3 SSP Group plc Group Overview Kate Swann Financial Review Jonathan Davies Business Review Kate Swann 3 SSP The Food Travel Experts

4 Group overview Good profit performance up 21% YOY at constant currency (+12% actual) LFL sales at +3.3%; net new space in line with plan, taking total sales growth to +4.0% at constant currency Encouraging performance in existing and new geographies Operating margin up 50bps Strong cash generation and strengthened balance sheet Early wins from initiatives to benefit from best practice and international scale Forward pipeline positive and in line with plan Continued investment in the business and its many growth opportunities 4 SSP The Food Travel Experts

5 Financial Review Preliminary Results 2014 Jonathan Davies, CFO foodtravelexperts.com

6 Group financial overview Year on Year Change % m Constant Currency 4 Reported FX Rates Revenue 1, , % Flat LFL Sales 1 3.3% 4.3% n/a n/a Operating Profit % 12.3% Profit Before Tax n/a 61.4% Proforma Profit Before Tax n/a 14.0% Operating Cash Flow n/a 24.3% 1 Same store like for like sales growth at constant currency 2 Underlying excluding exceptional items and amortisation of intangible assets created at acquisition of SSP Group by EQT in Proforma assumes post IPO financing in place throughout both years 4 Constant currency is based on 2013 exchange rates weighted over the year by 2014 results 6 SSP The Food Travel Experts

7 Revenue growth of 4.0% (at constant currency) % YoY (at Constant Currency) 1 LFL Sales Net Contract Gains/(Losses) Total Revenue Growth UK 4.1% (2.2%) 1.9% Continental Europe 1.1% 0.6% 1.7% North America 5.9% 13.9% 19.8% Rest of World 8.8% 2.4% 11.2% Group 3.3% 0.7% 4.0% 1 Constant currency is based on 2013 exchange rates weighted over the year by 2014 results. 7 SSP The Food Travel Experts

8 Operating profit growth* of 21% (at constant currency) Operating Profit* Year on Year Change % Constant Reported FX m Currency Rates UK % 16.6% Continental Europe % 6.3% North America (0.1) (1.2) 111.5% 91.7% Rest of World % (5.2%) Non attributable (21.5) (21.7) 1.2% 0.9% Group % 12.3% *Underlying 8 SSP The Food Travel Experts

9 Operating profit margin* increased by 0.5% year on year m Year on Year Change % Sales Revenue 1, ,827.2 Gross Profit 1, ,212.5 % Sales 66.5% 66.4% 0.1% Labour Costs % Sales 29.7% 30.6% 0.9% Concession Fees % Sales 16.5% 16.2% (0.3%) Overheads % Sales 11.3% 11.2% (0.1%) Depreciation & Amortisation % Sales 4.1% 4.0% (0.1%) Underlying Operating Profit % Sales 4.8% 4.3% 0.5% *Underlying 9 SSP The Food Travel Experts

10 Underlying net profit of 39.8m m Reported Adjustments Underlying Underlying Revenue 1, , ,827.2 Operating Costs (1,787.1) 48.5 (1,738.6) (1,748.4) Operating Profit Net Financing Costs (54.3) 26.1 (28.2) (42.9) Share of Associates Loss on Disposal of Business (0.7) 0.7 (Loss)/Profit Before Tax (13.5) Tax (14.3) (3.6) (17.9) (14.0) Non Controlling Interests (4.1) (4.1) (3.5) Net (Loss)/Profit (31.9) Proforma net financing costs of 18.5m in SSP The Food Travel Experts

11 Free cash flow of 51.5m m Operating Profit* Depreciation & Amortisation Working Capital Capital Expenditure (76.0) (78.0) Net Tax (15.7) (12.3) Other (1.9) (1.1) Operating Cash Flow* Net Financing Costs (25.1) (34.2) Exceptional Redundancy Costs (6.7) (8.0) Free Cash Flow *Underlying 11 SSP The Food Travel Experts

12 Net debt at 371m m m Opening Net Debt (1 Oct 2013) (870.4) Free Cash Flow 51.5 Net IPO Proceeds to delever: Gross issue proceeds Less: settlement to B1 investors (32.0) Less: other transaction expenses (31.7) Impact of FX Rates 43.9 Other Non Cash Movements 0.5 Closing Net Debt (30 Sept 2014) (371.1) 12 SSP The Food Travel Experts

13 Financial summary Strong operating profit growth, up 21% (at constant currency) Good sales growth, up 4.0% (at constant currency) Early benefits from efficiency programmes, operating margin up 50 bps Healthy free cash flow, m Strengthened balance sheet post IPO, leverage down to 2.3x EBITDA at year end 13 SSP The Food Travel Experts

14 Business Review Preliminary Results 2014 Kate Swann, CEO foodtravelexperts.com

15 Simple strategy to deliver value for our shareholders 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 15 SSP The Food Travel Experts

16 1. Good growth in all divisions Group LFL +3.3%, total sales +4.0% All divisions performed strongly Good growth in the UK Trading mixed in Continental Europe Strong growth in North America and substantial opening programme Encouraging growth in Rest of the World but impacted by political instability Continued underlying positive tailwinds expected Broadly based business with good geographic diversification 16 SSP The Food Travel Experts

17 1. Progress on key retail basics Ranging Processes being established for ongoing range management Better matching of ranges to market demand and trends Trading up Perfect partner programme introduced in all major countries Menus developed to encourage trading up 17 SSP The Food Travel Experts

18 1.Progress on key retail basics Merchandising and impulse purchase Early success with improved displays Further impulse lines being introduced Category management Speciality hot drinks Upper Crust Burger category Impulse products Truffle burger 18 SSP The food travel experts

19 1. Better understanding of pricing, but still early days Improved understanding of pricing elasticity but early days Example: SSP pricing vs competitors Base pricing still very mixed Baguettes Bockwurst -4% 29% Bratwurst 0% Meat dishes 7% Soups 21% Sandwiches -13% Chocolate bars -2% Ice creams -14% Cola -2% Beer 6% Coffee 7% TOTAL 0% Source: SSP price checks SSP The Food Travel Experts

20 2. Grow profitable new space new units opened Net gains in the year +0.7%, in line with our plan Always likely to be lumpy due to nature of contract wins 48 net new units opened in 2013/14 Substantial opening programme in North America Doha Airport Doha Airport Bordeaux Airport 20 JFK Airport San Diego Airport Phoenix Airport SSP The Food Travel Experts

21 2. Phoenix Sky Harbor International Airport case study Phoenix Sky Harbor International Airport The 11 th largest airport in the US, handling over 40 million passengers 1 The airport has a stated mission to be the friendliest airport in the US and to support the local community SSP offered a creative solution of brands based on community anchored dining The SSP package for Phoenix Sky Harbor International Airport Phoenix Sky Harbor International Airport's goal of providing customers with a mix of local, regional and national favorites has received international recognition. Passengers are delighted to find establishments like Matt's Big Breakfast, Lo Lo's Chicken and Waffles and Four Peaks Brewing Company as they travel through our busiest terminal." Tamie Fisher, Acting Aviation Director 10 year contract for 26 outlets Local heroes and bespoke concepts 1 Airports Council International (ACI) website 21 SSP The Food Travel Experts

22 2. Good progress on contract renewals and encouraging pipeline Key renewals secured during 2013/14 Newcastle Airport Hurghada Airport Some key contract wins during the period Timing often difficult to predict Helsinki Airport Beijing Airport Dubai Airport London Stansted Airport 22 SSP The Food Travel Experts

23 2. Continued development of new brands and concepts Innovating with our international brand partners Trend for bespoke new and unique continues 23 SSP The Food Travel Experts

24 2. Continued development of new brands and concepts Partnering with experts and chefs in the industry Further development of our own brands Flying Hippo, Newcastle Airport Alan Yau James Martin Mum s Kitchen, Malaga Airport 24 SSP The Food Travel Experts

25 3. Early progress on gross margin optimisation Gross margin improvement 10 bps YOY Example: Waste losses by outlet UK % of COS, 2013 Utilising international scale Simplification and rationalisation based on improved data collection Waste an area of focus Roll out of systems to allow better margin management 25 SSP The Food Travel Experts

26 4. Encouraging progress on operating efficiency Labour efficiency projects in 8 countries Introduced scheduling technology Improved scheduling capability: Sales / Transactions Shift lengths Multi skilling Management ratios Comparison of sales, transactions and labour hours by time of day ~15 transactions / man hr Understaffed? 1 Hours Manager Hours Team Sales Transactions ~4 transactions / man hr Overstaffed? Comparison of Spend vs. Sales of QSR in Spain Labour Costs ( m) Management / supervision share of hours worked Represents individual units Similar sales, although labour spend ~75% higher Sales ( m) Labour v management hours SSP The food travel experts Total management & supervision labour costs k

27 4. Encouraging progress on operating efficiency Technology enabled: Digital customer feedback introduced Cash counting LED bulbs Overheads in the centre and in unit: Relocated Group head office Group deals on healthcare, telecoms, uniforms Eat on the Move website 27 SSP The Food Travel Experts

28 5. Optimising investment using international scale and best practice Central commercial function under Mark Angela Group Chief Commercial Officer New Group Marketing Director and Head of Brands New Group Capital Projects Director Investing in analytical capability and information systems Capital projects database Common group wide recipes Continued focus on international benchmarking of unit performance 28 SSP The Food Travel Experts

29 Summary Strong 2014 financial performance Margins benefitted from early implementation of gross margin and efficiency initiatives Pipeline encouraging and wide range of initiatives to drive growth 2015 has started in line with our expectations 29 SSP The Food Travel Experts

30 SSP Group plc Preliminary Results 2014 Q&A 27 November 2014 foodtravelexperts.com

31 Disclaimer Certain statements in the presentation may constitute forward looking statements. These statements reflect the Company s 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