SSP Group plc Interim Results 2016 18 May 2016 foodtravelexperts.com
Presentation structure 1. Group highlights Kate Swann 2. Financial review Jonathan Davies 3. Business review Kate Swann 4. Q & A 3
Group highlights • Good first half performance with operating profit up 22.6% at actual exchange rates, 28.0% at constant currency • Like for Like sales up 3.3%*, strong first quarter, some moderation since then • Net new space growth strong at +2.0% • Strong operating margin growth of 50bps • Strategic initiatives delivering strongly on both growth and efficiency • Interim dividend 2.5p, up 19% • Contract wins and medium term pipeline encouraging • On-going investment in the business and its many growth opportunities * Excluding impact of extra day in leap year 4
Financial Review Interim Results 2016 Jonathan Davies, CFO foodtravelexperts.com
Group Financial Overview Change (%) 1H 2016 1H 2015 Constant Reported FX £m (except where stated) Currency Rates 896.7 859.2 5.9% 4.4% Revenue LFL Sales Growth 1 3.3% 3.0% n/a n/a Operating Profit 2 30.9 25.2 28.0% 22.6% Profit Before Tax 2 23.2 16.4 n/a 41.5% Earnings per share (p) 2 3.0 2.1 n/a 42.9% (374.7) (381.4) n/a 1.8% Net debt 1 Same store like-for-like sales growth at constant currency. Excluding impact of extra day in leap year 2 Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006 6
LFL Sales Growth by quarter Note: Same store like-for-like sales growth at constant currency. * FY16 Q2 LFL sales excluding impact of extra day in leap year 7 .:
Revenue growth of 5.9% Change at constant Net Contract Total Revenue currency LFL Sales Gains/(Losses) UK 2.8% (0.6%) 2.2% Continental Europe 2.9% (0.6%) 2.3% North America 7.6% 14.6% 22.2% Rest of World 2.2% 10.6% 12.8% Group (ex. Leap Year) 3.3% 2.0% 5.3% Leap Year n/a n/a 0.6% Reported Growth 5.9% 8
Operating profit growth of 22.6% Operating Profit* Change (%) Constant Reported FX 1H 2016 1H 2015 £m Currency Rates UK 26.5 18.0 47.2% 47.2% Continental Europe 11.9 13.9 (7.6%) (14.4%) North America 3.7 0.9 300.0% 311.1% Rest of World 2.4 6.3 (61.3%) (61.9%) Non-attributable (13.6) (13.9) 2.2% 2.2% Group 30.9 25.2 28.0% 22.6% * Operating profit is underlying, at actual currency UK includes Republic of Ireland 9
Operating profit margin up by 0.5% YOY change £m 1H 2016 1H 2015 (% Sales) 896.7 859.2 Revenue 603.0 573.1 Gross Profit 67.2% 66.7% 0.5% % Sales 275.1 267.0 Labour Costs 30.7% 31.1% 0.4% % Sales 156.4 145.6 Concession Fees 17.4% 16.9% (0.5%) % Sales 106.0 102.0 Overheads % Sales 11.8% 11.9% 0.1% 34.6 33.3 Depreciation & Amortisation % Sales 3.9% 3.9% 0.0% 30.9 25.2 Operating Profit 3.4% 2.9% 0.5% % Sales 10 Note: Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006
Net profit up 41.2% £m 1H 2016 1H 2015 Change (%) Operating Profit 1 30.9 25.2 22.6% (7.5) (8.6) Net Financing Costs (0.2) (0.2) Share of Associates Profit Before Tax 1 23.2 16.4 41.5% Tax 1 (5.2) (3.0) (3.6) (3.2) Non-Controlling Interests Net Profit 1 14.4 10.2 41.2% Earnings per share (p) 1 3.0 2.1 42.9% 2.5 2.1 19.0% Dividend per share (p) 1 Underlying excluding amortisation of intangible assets created at acquisition of SSP Group by EQT in 2006 11
Free cash flow £m 1H 2016 1H 2015 30.9 25.2 Operating Profit* 34.6 33.3 Depreciation & Amortisation (19.8) (24.5) Working Capital (49.2) (39.8) Capital Expenditure (9.2) (7.6) Net Tax (4.7) - Investment in JV (2.9) 0.1 Other (20.3) (13.3) Operating Cash Flow* (6.7) (8.4) Net Financing Costs (27.0) (21.7) Free Cash Flow* 12 *Underlying
Net debt increased by £54.9m £m Opening net debt (1 October 2015) (319.8) Free cash flow (27.0) Dividend (10.5) Impact of foreign exchange rates (16.8) Other (0.6) Closing net debt (31 March 2016) (374.7) 13
Financial summary Robust LFL sales growth of 3.3% • • Net contract gains strengthening to 2.0% • Strategic programmes delivering strong Operating Margin growth (up 50 bps) • Operating profit up 28% YoY (at constant currency) EPS up 43% YoY • Interim dividend of 2.5p, up 19% YoY • 14
Business Review Interim Results 2016 Kate Swann, CEO foodtravelexperts.com
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 16
UK - Regional update Revenue Profit • 39% SSP revenue 400 350 • Another strong performance in H1 300 250 £m 200 • 2.2%* sales growth, 47.2% operating profit growth 150 100 50 • Benefitting from strengthened management team 0 H1 H1 H1 H1 H1 2012 2013 2014 2015 2016 • Key focus on: - Strategic initiatives driving growth & efficiency 30 - High renewal rate 25 20 - Selective new business 15 £m - Brand development 10 5 0 H1 H1 H1 H1 H1 2012 2013 2014 2015 2016 * Excluding impact of extra day in leap year 17 Note: All figures at constant currency
Continental Europe - Regional update Revenue Profit • 39% SSP revenue 400 • Robust performance despite external factors 350 300 250 • 2.3%* sales growth and small operating profit decline 200 £m 150 100 • Regional differences: some countries impacted by geopolitical 50 0 events, others stronger H1 H1 H1 H1 H1 2012 2013 2014 2015 2016 • Key focus on: - Efficiency & flexibility in challenging markets 14 - High renewal rate 12 10 £m - Selective new business 8 - Efficient mobilisation of contract wins particularly in France 6 4 2 0 H1 H1 H1 H1 H1 * Excluding impact of extra day in leap year 2012 2013 2014 2015 2016 18 Note: All figures at constant currency
Rest of World – Regional update Revenue Profit • 9% SSP revenue 90 • Good sales in H1, performance well managed despite 80 70 external factors 60 50 £m 40 • 12.8%* sales growth, profit in line with expectations 30 20 10 0 • Regional differences: H1 H1 H1 H1 H1 2012 2013 2014 2015 2016 - Some countries impacted by external events - Continued strong like for like growth in others 7 • Substantial contract openings ahead of plan 6 5 • Key focus on: 4 £m 3 2 - Profitable new business development 1 - Infrastructure development to support growth 0 H1 H1 H1 H1 H1 2012 2013 2014 2015 2016 * Excluding impact of extra day in leap year 19 Note: All figures at constant currency
North America – Regional update Revenue Profit • 13% of SSP revenue 120 • Strong performance in H1 100 80 • 22.2%* sales growth and 300% operating profit growth 60 £m 40 • Focus on air channel, opportunity to grow share 20 0 H1 H1 H1 H1 H1 • Strengthened management team delivering growth & efficiency 2012 2013 2014 2015 2016 • Key focus on: 4 - Building credentials 3 2 - Profitable new business development £m 1 - Mobilising new contracts quickly & efficiently 0 H1 H1 H1 H1 H1 - Generating efficiencies as the business grows -1 2012 2013 2014 2015 2016 -2 -3 * Excluding impact of extra day in leap year 20 Note: All figures at constant currency
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 21
Optimising our offer – LFL sales growth 1 • LFL growth of 3.3%*, Q2 impacted by geopolitical events Area of Focus • Underlying positive trends in travel channels Improve ranges • Geographic diversification Optimise price and promotion • Strategic initiatives delivering well Upselling • Focus on range improvements • Strengthening brand portfolio Maximise use of space Focus on category as well as brand performance 22 * Excluding impact of extra day in leap year
Like for like growth: Case Study – Best sellers into more units Opportunity to increase presence of best-sellers Range fragmentation reducing, on-going opportunity 100% 5% Existing Missing 11% 6 units 4% 90% 4% 100 5% 5 units 7% 5% 80% 90 4 units 8% 3 units 80 Proportion of products 70% 20% 70 60% 22% 2 units Presence of bestsellers 60 50% 50 40% 40 30% 30 60% 1 unit 48% 20 20% 10 10% 0 Upper Crust Ritazza Retail Lavazza Freeflow Bars 0% Apr-15 Dec - 2015 M 23
Grow profitable new space 2 • Strong performance, 2.0% net gains, ahead of expectations Area of Focus • Renewal rate in line with plan: - Focus on retention of profitable New units within existing sites business • Disciplined approach to new business Existing markets, new sites - Selective investment - All investments reviewed at centre - Strict financial criteria New markets - Post-opening reviews • Encouraging pipeline in H2 High renewal rate 24
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