The Food Travel Experts Annual Results 2018 - PowerPoint PPT Presentation

The Food Travel Experts Annual Results 2018 www.foodtravelexperts.com

Presentation structure 1. Group highlights Kate Swann 2. Financial review Jonathan Davies 3. Business review Kate Swann 4. Q&A All SSP: The Food Travel Experts 2

Group highlights • Strong performance with operating profit up 19.8% at actual exchange rates, 22.7% at constant currency • Like for Like sales up 2.8%, net new space growth strong at 5.1% • Total sales growth up 9.5%* • Strong underlying operating margin growth of 70 bps • Strategic initiatives, delivering further growth and efficiency • EPS 25.1p, up 23.6%** • Strong cash generation ‒ Higher capex £144.2m ‒ Full year dividend 10.2p up 25.9%, payout ratio maintained at 40% ‒ Special dividend of c. £150m proposed • Medium term pipeline encouraging * At constant currency ** On an underlying basis 3 SSP: The Food Travel Experts

Financial review Annual Results 2018 Jonathan Davies, CFO 21 November 2018 SSP: The Food Travel Experts

Group financial overview Change (%) Constant Reported 2018 2017 £m Currency FX Rates Revenue 2,564.9 2,379.1 9.5% 7.8% LFL Sales Growth 2.8% 3.1% n/a n/a Operating Profit * 195.2 162.9 22.7% 19.8% Profit Before Tax * 184.4 148.7 n/a 24.0% Earnings per share (p) * 25.1 20.3 n/a 23.6% Net Debt (334.7) (262.2) n/a *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. SSP: The Food Travel Experts 5

2018 LFL sales growth 3.5% 2.8% 3.0% 2.7% LFL Sales Growth (%YOY ) 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 Q2 H1 Q3 Q4 H2 FY18 Note: Same store like-for-like sales growth at constant currency SSP: The Food Travel Experts 6

Revenue growth of 9.5% Net Contract Change at Constant Currency LFL Sales Total Revenue Gains/(Losses) UK 0.8% 0.5% 1.3% Continental Europe* 1.4% 2.8% 4.2% North America 4.2% 18.9% 23.1% Rest of World* 10.1% 7.0% 17.1% Group 2.8% 5.1% 7.9% Acquisition Impact: Stockheim 1.0% India 0.6% Reported Growth 9.5% *Excluding acquisition impact SSP: The Food Travel Experts 7

Operating profit growth of 19.8% Operating Profit* Change (%) Constant Reported FX £m 2018 2017 Currency Rates UK** 89.5 82.1 9.0% 9.0% Continental Europe 79.5 77.8 3.9% 2.2% North America 27.7 14.3 102.8% 93.7% Rest of World 35.7 21.2 77.0% 68.4% Non-attributable (37.2) (32.5) (14.5)% (14.5)% Group 195.2 162.9 22.7% 19.8% * Operating profit is underlying, at actual currency ** UK includes Republic of Ireland SSP: The Food Travel Experts 8

Reported Operating Margin up by 80 bps … and up 70 bps excluding TFS acquisition impact YOY bps Change £m 2018 2017* Constant Currency Reported FX Rates Revenue 2,564.9 2,379.1 Gross Profit 1,801.4 1,652.1 % Sales 70.2% 69.4 % 90 80 Labour Costs (736.3) (687.2) % Sales (28.7%) 28.9 % 20 20 Concession Fees (489.6) (438.0) % Sales (19.1)% 18.4 % (70) (70) Overheads (282.6) (268.5) % Sales (11.0)% 11.3 % 20 30 Depreciation & Amortisation (97.7) (95.5) % Sales (3.8%) 4.0 % 20 20 Operating Profit** 195.2 162.9 Operating Margin (%) 7.6% 6.8 % 80 80 *2017 comparative figures including 10 months of TFS. **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. SSP: The Food Travel Experts 9

Net profit up 22.7% £m 2018 2017 Change (%) Operating Profit * 195.2 162.9 22.7% Net Financing Cost* (15.6) (17.6) Share of Associates 4.8 3.4 Profit Before Tax * 184.4 148.7 24.0% Tax * (40.5) (33.8) Non-Controlling Interests (25.5) (18.4) Net Profit * 118.4 96.5 22.7% Earnings per share (p)* 25.1p 20.3p 23.6% Dividend per share (p) 10.2p 8.1p 25.9% *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. SSP: The Food Travel Experts 10

Operating cash generation of £90.2m £m 2018 2017 Operating Profit * 195.2 162.9 Depreciation & Amortisation* 97.7 95.5 Working Capital 12.8 18.3 Capital Expenditure (144.2) (115.0) Net Tax (37.2) (33.3) Disposal of associate - 7.3 Acquisitions (19.0) (35.0) Other (15.1) 2.8 Operating Cash Flow * 90.2 103.5 Net Financing Costs (11.6) (14.5) Free Cash Inflow * 78.6 89.0 *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. SSP: The Food Travel Experts 11

Net debt of £334.7m Leverage £m (Net Debt/EBITDA) Opening Net Debt (1 October 2017) (262.2) 1.0x Free Cash Flow 78.6 Dividend (145.8) Impact of foreign exchange rates (1.0) Other (4.3) Closing Net Debt (30 September 2018) (334.7) 1.1x SSP: The Food Travel Experts 12

Uses of cash and balance sheet efficiency Organic Investment M&A Significant structural growth Review of potential M&A opportunities around opportunities the world Balance sheet efficiency Medium term leverage: c. 1.5x - 2.0x Dividend Return to shareholders Pay-out ratio maintained at 40% c. £150m proposed via a special dividend SSP: The Food Travel Experts 13

Financial summary • Robust LFL sales growth of 2.8% • Net contract gains stronger at 5.1% • Strategic programmes delivering strong operating margin growth up 70bps • Operating profit up 22.7% at constant currency, 19.8% actual • EPS up 23.6% • Strong free cash flow of £78.6m • Full year dividend per share of 10.2p and c. £150m special dividend proposed SSP: The Food Travel Experts 14

Business Review Annual Results 2018 Kate Swann, CEO 21 November 2018 SSP: The Food Travel Experts

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 Experts 16

Regional progress update Revenue (£bn) • Added c£700m revenue since IPO 3,000 • CAGR since IPO, c. 9% £2,565m 2,500 High RoW – 14% growth • More balanced business, better markets now 2,000 £1,827m North America – 17% geographic diversification 31% High RoW – 7% growth North America – 9% markets 1,500 • All divisions growing revenue 16% Continental Continental Europe - 38% Europe - 44% 1,000 • Fastest growth in North America and ROW, now c. 1/3 of group revenue 500 UK - 40% UK - 31% • Encouraging new business pipeline 0 underpinning future revenue growth 2014 2018 UK Continental Europe North America Rest of World Note: All figures in constant currency SSP: The Food Travel Experts 17

Channel progress update Revenue (£bn) 3,000 • Strong PAX growth in air £2,565m 2,500 Other - 5% • Air sector now 64% of SSP Rail - 31% 2,000 £1,827m • Geographic growth will continue to drive Other – 7% air mix 1,500 Rail - 41% • Rail growth, but at slower rate than air 1,000 Air - 64% • Growth forecasts in travel remain Air - 52% 500 encouraging 0 2014 2018 Air Rail Other Note: All figures in constant currency SSP: The Food Travel Experts 18

Our focus remains on five key levers to deliver value Optimise our offer to benefit from the positive trends in our markets 1 Grow profitable new space 2 Optimise gross margin and leverage scale benefits 3 Run an efficient and effective business 4 Optimise investment using best practice and shared resource 5 SSP: The Food Travel Experts 19

Optimising our offer 1 Areas of Focus Improve ranges • LFL growth of 2.8% • Geographic diversification helps mitigate Optimise price and promotion specific country issues • Underlying positive trends in travel market Upselling • Strategic initiatives delivering well Maximise use of space Focus on category as well as brand performance SSP: The Food Travel Experts 20

Optimising our offer: Self-order screens • Self-order trial at Burger King restaurants • Labour productivity improvements • Customer usage of kiosks increasing, now up to 40% • Initial results show around 9% increase in transactions in units with kiosks • Testing applicability across our QSR estate SSP: The Food Travel Experts 21

Optimising our offer: Coffee machines • 4 types of coffee machine – various brands available: - Automatic - Semi automatic - Barista - Self service Barista • SSP traditionally used barista machines in the UK regardless of format • Trialled all 4 types of machine • Measured coffee sales and coffee penetration by unit Self serve • Clear plan to use barista and semi-automatic machines (and self service where relevant) Semi-automatic • Roll-out now planned SSP: The Food Travel Experts 22

Grow profitable new space 2 Areas of Focus • Very strong performance, 5.1% net gains New units within existing sites • Successful growth in existing sites, new sites and new markets Existing markets, new sites • Impact on P&L in first year varies • Disciplined approach to new business New markets • Renewal rate in line with plan • Strong pipeline for FY19, timing difficult to be certain about High renewal rate SSP: The Food Travel Experts 23