the food travel experts annual results 2018/media/files/s/... · 2018-11-20 · group highlights 3...

www.foodtravelexperts.com

The Food Travel Experts

Annual Results 2018

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


* At constant currency ** On an underlying basis

• 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

Financial review

SSP: The Food Travel Experts

Jonathan Davies, CFO

21 November 2018

Annual Results 2018

Group financial overview


Change (%)

£m

2018 2017 Constant Currency

Reported 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

5

*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.

2018 LFL sales growth


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Q1 Q2 H1 Q3 Q4 H2

Note: Same store like-for-like sales growth at constant currency

2.8% 2.7%

LFL

Sale

s G

row

th (%

YOY

)

FY18

6

Revenue growth of 9.5%


Change at Constant Currency LFL Sales Net Contract

Gains/(Losses) Total Revenue

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%

7

*Excluding acquisition impact

Operating profit growth of 19.8%


Operating Profit* Change (%)

£m 2018 2017 Constant Currency

Reported FX 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

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 % Sales

1,801.4 70.2%

1,652.1 69.4%

90

80

Labour Costs % Sales

(736.3) (28.7%)

(687.2) 28.9%

20

20

Concession Fees % Sales

(489.6) (19.1)%

(438.0) 18.4%

(70)

(70)

Overheads % Sales

(282.6) (11.0)%

(268.5) 11.3%

20

30

Depreciation & Amortisation % Sales

(97.7) (3.8%)

(95.5) 4.0%

20

20

Operating Profit** Operating Margin (%)

195.2 7.6%

162.9 6.8%

80

80

9

*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.

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%

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

11


Net debt of £334.7m


£m Leverage

(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

12

Uses of cash and balance sheet efficiency


Organic Investment Significant structural growth

opportunities around the world

M&A Review of potential M&A

opportunities

Return to shareholders c. £150m proposed via a special dividend

Dividend Pay-out ratio maintained at 40%

Balance sheet efficiency

Medium term leverage: c. 1.5x - 2.0x

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


Business Review


Kate Swann, CEO

21 November 2018

Annual Results 2018

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


Regional progress update


• Added c£700m revenue since IPO

• CAGR since IPO, c. 9%

• More balanced business, better geographic diversification

• All divisions growing revenue • Fastest growth in North America and

ROW, now c. 1/3 of group revenue

• Encouraging new business pipeline underpinning future revenue growth

Note: All figures in constant currency

0

500

1,000

1,500

2,000

2,500

3,000

2014 2018

UK Continental Europe North America Rest of World

High growth markets now 31%

Revenue (£bn)

High growth markets 16%

£2,565m

£1,827m

UK - 40%

Continental Europe - 44%

North America – 9%

RoW – 7%

UK - 31%

Continental Europe - 38%

North America – 17%

RoW – 14%

Channel progress update


• Strong PAX growth in air

• Air sector now 64% of SSP • Geographic growth will continue to drive

air mix

• Rail growth, but at slower rate than air

• Growth forecasts in travel remain encouraging

Note: All figures in constant currency

0

500

1,000

1,500

2,000

2,500

3,000

2014 2018

Air Rail Other

£2,565m

£1,827m

Air - 52%

Air - 64%

Rail - 41%

Other – 7%

Rail - 31%

Other - 5%

Revenue (£bn)

Our focus remains on five key levers to deliver value


1 Optimise our offer to benefit from the positive trends in our markets

Grow profitable new space

Optimise gross margin and leverage scale benefits

Run an efficient and effective business

Optimise investment using best practice and shared resource

2

3

4

5

19

Optimising our offer

• LFL growth of 2.8%

• Geographic diversification helps mitigate specific country issues

• Underlying positive trends in travel market

• 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

1

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

Optimising our offer: Coffee machines


• 4 types of coffee machine – various brands available: - Automatic - Semi automatic - Barista - Self service

• 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

• Clear plan to use barista and semi-automatic machines (and self service where relevant)

• Roll-out now planned

Barista

Semi-automatic

Self serve

Grow profitable new space

• Very strong performance, 5.1% net gains

• Successful growth in existing sites, new sites and new markets

• Impact on P&L in first year varies

• Disciplined approach to new business

• Renewal rate in line with plan

• Strong pipeline for FY19, timing difficult to be certain about


Areas of Focus

New units within existing sites

Existing markets, new sites

New markets

High renewal rate

2

23

Strong progress on new contract wins


Strong progress on new contract wins Helsinki

3 units New York 3 units 7 units

Phoenix 9 units

Moscow 9 units

Barcelona 7 units Portland

1 unit

San Francisco 4 units 1 unit

Mumbai 5 units

Taipei 3 units

Paris 22 units 8 units

Bhubaneswar 7 units

Lucknow 8 units

Guwahati 8 units

Goa 14 units 24 units

H1 Contract Wins H2 Contract Wins SSP presence

Key:

Las Palmas 10 units

Netherlands 29 units

Bahrain 17 units

Brussels 12 units

Beijing 6 units

Hong Kong 3 units

Greece 6 units

Kolkata 3 units

Pune 2 units

Rio 6 units

Sao Paulo 6 units

Germany 22 units

Seattle 3 units

New opening: Cebu Airport, Philippines

• First contract win in the Philippines

• Growing airport with 11m PAX annually

• JV partnership formed with client and local operator

• Selected for combination of local and international expertise

• In July, we opened 9 units in newly built T2

• Bonchon, Burger King, Coffee Bean and Tea Leaf, Camden food co, Ritazza, The Cabin Bar, Asian Kitchen, Nippon Ramen

• T1 renovation commencing shortly with c. 15 further units to open in 2019


The Cabin Bar Nippon Ramen

Asian Kitchen Ritazza

New Contract Win: Brazil

• First units in South America

• Growing airports with c. 40m PAX (Sao Paulo) and c. 16m PAX (Rio) in 2017

• Won 6 units in Sao Paulo and 6 units in Rio de Janeiro • JV with local partner • SSP selected for international expertise and strong mix

of brands

• Brand line up to include: Upper Crust, Ritazza, Mi Casa, Factory Bar & Grill, Camden food co, O’Leary’s and Jamie’s

• Operations expected to commence mid 2019


Brand portfolio continues to develop


• SSP has strong and growing portfolio of over 500 brands

• Further developing our big international brands – first ever M&S Airside concept

• Continue to develop concepts with high

profile chefs

• Further develop our own brands, e.g. Urban Express, a new retail offering in the UK

• Franchising our own brands for use

internationally, e.g. Millie’s Cookies

Bespoke concept: Hermanos Torres, Barcelona

Own brand: Urban Express, London Bridge Franchising Millie’s Cookies

M&S Food To Go

Further progress optimising gross margin

• Gross margin improved by 90 bps • Some increase in food inflation • Key initiatives continue to deliver good results

• Good progress on simplification and

standardisation


Areas of Focus

Procurement disciplines

Simplify and standardise recipes

Reduce waste and losses

3

28


• Loss prevention analytics centralised and outsourced for pilot countries

• Significant improvement in analytic capability • 200% increase in cases investigated and

c. 25% higher resolution rate

• Driving improved focus on waste and loss management

• Further roll-out planned

Optimising Gross Margin: Case Study - data analytics

40%

26%

Before After

60%

74% c. 1000 cases

No action taken

Action taken

c. 3,500 cases

Encouraging progress on operating efficiency

• Labour costs 20 bps improvement

• Other costs 20 bps improvement

• Continued rising costs in some countries • Service optimisation; a major focus in parallel

with forecasting and scheduling • Further automation and technology being

tested


4

Areas of Focus

Service optimisation

Improve forecasting and scheduling

Employ technology to improve efficiency

Improve reporting and accountability

30

Optimising Efficiency: Case Study – equipment specification review

• Lifetime cost of equipment calculated

• Dedicated resource to deliver savings • New equipment identified to reduce energy

consumption across the Group

• Two examples: • Synergy Grill – two-thirds less energy used

• Under-counter Refrigeration – 50% less energy used

• Short term payback


Summary and outlook


• Strong full year financial performance, CC revenue up 9.5%, profit up 22.7% , EPS up 23.6%

• Robust cash flow, FY dividend 10.2p, up 25.9% and c. £150m special dividend

• Significant progress since IPO:

-40 % increase in revenue to over £2.6bn, margin up 280 bps to 7.6%

-over £380m cash returns from paid and proposed ordinary and special dividends

• Large and growing market, geographically diversified towards high growth channels and geographies

• Embedded management processes driving strategic initiatives

• Experienced senior management team and continuity

• Encouraging start to the year, strong pipeline underpinning growth

• Continued focus on delivering value for our shareholders

Q&A


Annual Results 2018

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 and members of its group 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.


the food travel experts annual results 2018/media/files/s/... · 2018-11-20 · group highlights 3...

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