the food travel experts/media/files/s/... · 2016-11-29 · operating profit margin up by 70bps...
TRANSCRIPT
www.foodtravelexperts.com
TheFoodTravelExperts
SSPGroupplc
SSP:TheFoodTravelExperts
29November2016
AnnualResults2016
Presentationstructure
1. Grouphighlights KateSwann
2. Financialreview JonathanDavies
3. Businessreview KateSwann
4. Q&A
SSP:TheFoodTravelExperts
Grouphighlights
• Strongfullyearperformancewithoperatingprofitup24.6%atactualexchangerates,18.2%atconstantcurrency
• Like-for-Likesalesup3.0%
• Netnewspacegrowthat1.7%
• Strongoperatingmargingrowthof70bps
• Strategicinitiativesdeliveringfurthergrowthandefficiency
• EPS15.5p,up26%
• Fullyeardividend5.4p,up26%
• Contractwinsandmediumtermpipelineencouraging
• Ongoinginvestmentinthebusinessanditsmanygrowthopportunities
SSP:TheFoodTravelExperts
Financialreview
SSP:TheFoodTravelExperts
JonathanDavies,CFO
AnnualResults2016
Groupfinancialoverview
SSP:TheFoodTravelExperts
Change(%)
£m 2016 2015 ConstantCurrency
ReportedFXRates
Revenue 1,990.3 1,832.9 5.0% 8.6%
LFLSalesGrowth 3.0% 3.7% n/a n/a
OperatingProfit* 121.4 97.4 18.2% 24.6%
ProfitBeforeTax* 107.5 82.0 n/a 31.1%
Earnings pershare(p)* 15.5 12.3 n/a 26.0%
NetDebt (317.4) (319.8) n/a 0.8%
*UnderlyingexcludingamortisationofintangibleassetscreatedatacquisitionofSSPGroupbyEQTin2006
2016LFLsalesgrowth
SSP:TheFoodTravelExperts
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Q1 Q2 H1 Q3 Q4 H2
Note:Samestorelike-for-likesalesgrowthatconstantcurrency
3.3%2.9%
LFLS
alesGrowth(%
YOY)
FY16
Revenuegrowthof5%
SSP:TheFoodTravelExperts
ChangeatConstantCurrency LFLSales NetContractGains/(Losses) TotalRevenue
UK 3.1% (0.5%) 2.6%
Continental Europe 2.8% (1.7%) 1.1%
NorthAmerica 7.5% 13.1% 20.6%
RestofWorld (2.1%) 14.1% 12.0%
Group(ex.LeapYear) 3.0% 1.7% 4.7%
LeapYear n/a n/a 0.3%
ReportedGrowth 5.0%
Operatingprofitgrowthof18.2%
SSP:TheFoodTravelExperts
OperatingProfit* Change(%)
£m 2016 2015 ConstantCurrency
ReportedFXRates
UK 66.4 52.7 25.8% 26.0%
Continental Europe 60.1 53.5 3.9% 12.3%
NorthAmerica 12.5 3.5 231.4% 257.1%
RestofWorld 8.6 14.6 (44.5%) (41.1%)
Non-attributable (26.2) (26.9) 2.6% 2.6%
Group 121.4 97.4 18.2% 24.6%
*Operatingprofitisunderlying,atactualcurrency
UKincludesRepublicofIreland
Operatingprofitmarginupby70bps
SSP:TheFoodTravelExperts
YOYbpsChange
£m 2016 2015 ConstantCurrency
ReportedFXRates
Revenue 1,990.3 1,832.9
GrossProfit%Sales
1,353.868.0%
1,228.667.0% 70 100
Labour Costs%Sales
581.629.2%
541.729.6% 30 40
Concession Fees%Sales
349.617.6%
311.617.0% (50) (60)
Overheads%Sales
222.411.2%
205.011.2% 10 -
Depreciation&Amortisation%Sales
78.84.0%
72.94.0% 10 -
OperatingProfitOperating Margin(%)
121.46.1%
97.45.3% 70 80
Note:UnderlyingexcludingamortisationofintangibleassetscreatedatacquisitionofSSPGroupbyEQTin2006
Netprofitup26.3%
SSP:TheFoodTravelExperts
£m 2016 2015 Change (%)
OperatingProfit* 121.4 97.4 24.6%
NetFinancing Cost (15.2) (17.0)
ShareofAssociates 1.3 1.6
ProfitBeforeTax* 107.5 82.0 31.1%
Tax (24.2) (16.9)
Non-ControllingInterests (9.8) (6.9)
NetProfit* 73.5 58.2 26.3%
Earningspershare(p)* 15.5 12.3 26.0%
Dividendpershare(p) 5.4 4.3 25.6%
*UnderlyingexcludesamortisationofintangibleassetscreatedatacquisitionofSSPGroupbyEQTin2006
Freecashflowof£65m
SSP:TheFoodTravelExperts
£m 2016 2015
OperatingProfit* 121.4 97.4
Depreciation&Amortisation 78.8 72.9
WorkingCapital 3.8 5.3
CapitalExpenditure (95.9) (80.7)
NetTax (20.0) (17.3)
InvestmentinJV (4.7) -
Other (5.1) (6.8)
OperatingCashFlow* 78.3 70.8
NetFinancingCosts (13.3) (16.1)
FreeCashFlow* 65.0 54.7
*Underlying
Netdebtof£317m
SSP:TheFoodTravelExperts
£m Leverage(Net Debt/EBITDA)
OpeningNetDebt(1October2015) (319.8) 1.9x
FreeCashFlow 65.0
Dividend (22.3)
Impactofforeignexchangerates (39.1)
Other (1.2)
ClosingNetDebt(30September2016) (317.4) 1.6x
Acquisitionof49%stakeinTFS
• SSPcreatinga49%JVwithTravelFoodServices
• Initiallyacquiring33%,then16%YE2018
• Netconsiderationc£58m,c10.5x2017EV/EBITDA
• SSPwillhavemanagementandoperationalcontrol
• SSPwillfullyconsolidateTFS
• SSPwillgrossupTFS’JVs,noeffectoneconomicinterestornetincome
SSP:TheFoodTravelExperts
AllfiguresbasedonanexchangerateofIndianRupeestoSterlingof81.9.
TFSYearended31March£m
Proportionatelyconsolidated
Fullyconsolidatedproforma
2016 2017estimate
2017estimate
Revenue 41.7 56.9 69.6
EBITDA%Sales
8.320%
11.320%
13.820%
Depreciation%Sales
(2.8)5%
(3.5)5%
Restructuring (0.5) (0.5)
EBIT 8.0 9.8
(2.7)34%
(3.3)34%
Minorities (3.6)67%
(4.8)73%
Netincome 1.7 1.7
Tax
Financialsummary
• RobustLFLsalesgrowthof3.0%
• Netcontractgainsstrongerat1.7%
• Strategicprogrammes deliveringstrongoperatingmargingrowth(up70bps)
• Operatingprofitup18%
• EPSup26%
• Finaldividendpershareof2.9p,bringingfullyearto5.4p
SSP:TheFoodTravelExperts
Businessreview
SSP:TheFoodTravelExperts
KateSwann,CEO
AnnualResults2016
SSPbusinessfundamentals
• Multiplestructuralmarketgrowthdrivers
• Marketleaderinattractivechannelsandregions
• Strongbusinessplatformcombininginternationalscaleandlocalexpertise
• 5keyleverstodrivegrowthandefficiency
• Salesgrowth,marginexpansionandstrongcashgeneration
SSP:TheFoodTravelExperts
UKupdate
• 39%ofSSPrevenue
• Strongpresenceinrailandair
• 2.9%salesgrowthand25.8%operatingprofitgrowth
• Respondedwelltomoreuncertainmarket
• Strategicinitiativesdelivering
• Focuson‒ Strategicinitiatives– globaltestbed‒ Highrenewalrate– successfulyear‒ Furtherbranddevelopment‒ Selectivenewbusiness
SSP:TheFoodTravelExperts
Revenue
010203040506070
2012 2013 2014 2015 2016
£m
640660680700720740760
2012 2013 2014 2015 2016
£m
Operatingprofit
Note:Allfiguresinconstantcurrency
0
10
20
30
40
50
60
2012 2013 2014 2015 2016
£m
660680700720740760780
2012 2013 2014 2015 2016
£m
ContinentalEuropeupdate
• 39%ofSSPrevenue
• Strongpresenceinrailandair
• Solidperformancegivenexternalfactors
• 1.4%salesgrowthand3.9%operatingprofitgrowth
• Regionaldifferencescontinuedthroughoutyear
• Focuson‒ Efficiencyandflexibilityinchallengingmarkets‒ Highrenewalrate– successfulyear‒ Selectivenewbusiness‒ Mobilisationofnewcontracts
SSP:TheFoodTravelExperts
Revenue
Operatingprofit
Note:Allfiguresinconstantcurrency
(5)
0
5
10
15
2012 2013 2014 2015 2016
£m
050
100150200250300
2012 2013 2014 2015 2016
£m
NorthAmericaupdate
SSP:TheFoodTravelExperts
Revenue
Operatingprofit
• 13%ofSSPrevenue
• 21%salesgrowthand231%operatingprofitgrowth
• Exclusivelyairchannel
• Opportunitytogrowshare
• Focuson‒ Profitablenewbusiness‒ Mobilisingnewcontractsquicklyandefficiently‒ Investingininfrastructureandpeopletosupportgrowth
‒ Generatingefficienciesasbusinessgrows
Note:Allfiguresinconstantcurrency
0
5
10
15
20
2012 2013 2014 2015 2016
£m
0
50
100
150
200
2012 2013 2014 2015 2016
£m
RestofWorldupdate
• 9%ofSSPrevenue
• Focusedonairchannel,initialtrialsinrail
• 12.3%salesgrowthandprofitinlinewithexpectations
• Regionaldifferences‒ Externalfactorsimpactinge.g.Egypt,China‒ Continuedstronglike-for-likegrowthelsewhere
• Focuson‒ Profitablenewbusinessdevelopment‒ Selectivegeographicexpansion‒ Infrastructureandpeopletosupportgrowth
SSP:TheFoodTravelExperts
Revenue
Operatingprofit
Note:Allfiguresinconstantcurrency
Ourfocusremainsonfivekeyleverstodelivervalue
SSP:TheFoodTravelExperts
1 Optimiseouroffertobenefitfromthepositivetrendsinourmarkets
Growprofitablenewspace
Optimisegrossmarginandleveragescalebenefits
Runanefficientandeffectivebusiness
Optimiseinvestmentusingbestpracticeandsharedresource
2
3
4
5
Optimisingouroffer
• LFLgrowthof3.0%
• Regionalvariationinperformance
• Geographicdiversification
• Underlyingpositivetrendsintravelchannels
• Strategicinitiativesdeliveringwell
SSP:TheFoodTravelExperts
AreasofFocus
Improveranges
Optimisepriceandpromotion
Upselling
Maximiseuseofspace
Focusoncategoryaswellasbrandperformance
1
Optimisingouroffer:CaseStudy– Ritazza premiumisation
• Researchindicatedopportunity
• Breakfast,muffins,salads,paninis/baguettes
• Newpremiumrangebranded‘FineFoods’
• Trialsdelivereddoubledigitfoodsalesuplift
• RolloutDecember/January
SSP:TheFoodTravelExperts
Optimisingouroffer:CaseStudy– Millie’sCookies
• Millie’s– strongbrandamongstkids/teenagers
• Developedonlineofferin2014
• Introducedhomebakedproductthisyear‒ 3bestsellingvarieties‒ Frozenforconvenience
• Distributionextended
SSP:TheFoodTravelExperts
Growprofitablenewspace
• Strongperformance,1.7%netgains
• NewbusinessfocusedinUSA,AsiaPacific
• Successfulgrowthinexistingsites,newsitesandnewmarkets
• Encouragingpipeline
• Disciplinedapproachtonewbusiness
• Renewalrateinlinewithplan
SSP:TheFoodTravelExperts
AreasofFocus
Newunitswithinexistingsites
Existingmarkets,newsites
Newmarkets
Highrenewalrate
2
Newopenings:HongKong,WestHall
SSP:TheFoodTravelExperts
• SSPAsiahasbeenpresentinHKIAsince1998
• HKIApax 68million
• 28units,22brands,2lounges
• Wonanadditional6unitsinWestHall
• NewbrandsincludeBaikohkhen,SchoolFood,YungKee,OldTownWhiteCoffeeandStreetFood
NewSpace:India– newcountryforSSP• InlinewithstrategyoutlinedatIPO
• AttractivemarketwithsubstantialPAXgrowth
• Materialinfrastructuregrowth
• Jointventure- combinesSSP’sinternationalexpertiseandTFS’localknowledge
• TFSwellestablishedbusiness
• 170outletsmainlyinairports
• Goodportfolioofbrandsandmanagementteam
• Strongplatformforgrowth
SSP:TheFoodTravelExperts
Goodprogressoncontractwinsincluding:
SSP:TheFoodTravelExperts
Hangzhou2unitsEvenes
2unitsTorp6units
Helsinki4units
SSPpresence
Vancouver5units
DonMueang20units
Bergen3units
Newark3units
Frankfurt9units
Dusseldorf8units
SanFrancisco2units
Portland1unit
AbuDhabi10units
Shanghai2units
Paris–Chatelet3units
Sanya4units
Minneapolis3units
Phuket9units
Brandportfoliocontinuestodevelop
• BrandsdriveLFLsales,newbusinessandrenewals
• Developingourportfoliogloballywithinternationalandlocalbrands
• Furtherdevelopmentofownbrandsandbespokeconcepts
• Workingwithmorehighprofilechefsandlocalheroes
SSP:TheFoodTravelExperts
Furtherprogressoptimisinggrossmargin
• Grossmarginimprovedby70bps
• Keyinitiativesmakinggoodprogress
• Procurementdisciplinesandreciperationalisation progressingwell,butplentymoretodo
• Goodprogressonwasteandlossmanagement,furtherinvestmentthisyear
SSP:TheFoodTravelExperts
AreasofFocus
Procurementdisciplines
Simplifyandstandardiserecipes
Reducewasteandlosses
3
Grossmargins– Improvingtheservingprocessondraughtbeers
SSP:TheFoodTravelExperts
• DraughtbeersimportanttoSSPglobally
• Trialofsmartstock-takingforbeerssoldontapat3USairports
• Providesreal-timeinventoryandwastereports
• Helpsquantifythegapbetween‘poured’and‘sold’beer
• Successfultrialresults
• Rolloutto24moreairportsintheUSandnowtriallinginUK
Beersbrandslisted
Testunitname
Beerbrandlisted
xxxxxxxx
xxxxxxxx
xxxx
xxxx
Encouragingprogressonoperatingefficiency
• Totallabour costs30bpsimprovement
• Overheads10bpsimprovement
• Opportunitytoimproveserviceandefficiency
• Systemsdevelopments– forecastingandscheduling
• Technologytoimproveefficiency
• Multi-yearprogramme
SSP:TheFoodTravelExperts
4
AreasofFocus
Serviceoptimisation
Improveforecastingandscheduling
Employtechnologytoimproveefficiency
Improvereportingandaccountability
Operatingefficiencycasestudy– improvingforecastingandscheduling
SSP:TheFoodTravelExperts
• Improvedsalesforecastingandlabourscheduling
• Successful pilotinUKfor‘BetterServicePlanning’
• Newsystem/toollaunchedto50unitsacrosstheestate
• Encouragingresultswithlabourandsalesbeingmorecloselyrelated,drivingbetterserviceandefficiency
• Rolloutto350+UKunitsearly2017
• EarlyworkoninternationalpilotcommencesSpring2017
..andManagerscanthenclearlyseewhentoschedulehours
Man hrsper time
slot
3hr time slot
5am-8am 8am-11am 11am-2pm 2pm-5pm 5pm-8pm 8pm-11pm
Too many hours scheduled
Not enough hours scheduled
= Target # of man hours = # of man hours scheduled
Daily sales forecasting algorithm
Expected in-day
demand pattern
Man hours, by task type
Newanalyticsaccuratelydefinethetargethourstouse…
Optimisinginvestmenttodrivereturnsusingbestpracticeandsharedresources
• Differentsystemsandprocessesdevelopedhistoricallyindifferentregions
• Clearsharedserviceopportunityinback-of-housefinance
• Initialanalysissuggestedoutsourcingbestoption
• Tenderprocesscompletedandvendorselected
• 2sharedservicecentresnowoperating
• InitialtrialrunforUKinJanuary
• UK,GermanyandUScomplete,SwedenandNorwayinprogress
SSP:TheFoodTravelExperts
5
Summaryandoutlook• Strongfullyearfinancialperformance,profitup18%
• LFLsalesinlinewithplan
• Netnewopeningsaheadoforiginalplan
• On-goinggoodprogressonmarginandefficiency
• EPS15.5p,up26%
• Fullyeardividendof5.4p,up26%
• Pipelineencouraging
• Focusondeliveringvalueforourshareholders
SSP:TheFoodTravelExperts
Q&A
SSP:TheFoodTravelExperts
Annualresults2016
DisclaimerCertainstatementsinthepresentationmayconstitute“forward-lookingstatements”.ThesestatementsreflecttheCompany’scurrentbeliefsandexpectationsandarebasedonnumerousassumptionsregardingtheCompany’spresentandfuturebusinessstrategies andtheenvironmenttheCompanywilloperateinandaresubjecttorisksanduncertaintiesthatmaycauseactualresults,performanceorachievementstodiffermaterially.Forward-lookingstatementsinvolveinherentknownandunknownrisks,uncertaintiesandcontingenciesbecausetheyrelatetoeventsanddependoncircumstancesthatmayormaynotoccurinthefutureandmaycause theactualresults,performanceorachievementsoftheCompanytobemateriallydifferentfromthoseexpressedorimpliedbysuchforwardlookingstatements.
ManyoftheserisksanduncertaintiesrelatetofactorsthatarebeyondtheCompany’sabilitytocontrolorestimateprecisely,suchasfuturemarketconditions,currencyfluctuations,thebehaviour ofothermarketparticipants,theactionsofregulatorsandotherfactorssuchastheCompany’sabilitytocontinuetoobtainfinancingtomeetitsliquidityneeds,changesinthepolitical,socialandregulatoryframeworkinwhichtheGroupoperatesorineconomicortechnologicaltrendsorconditions.Asaresult,youarecautionednottoplaceunduerelianceonsuchforward-lookingstatements.Additionally,forward-lookingstatementsregardingpasttrendsoractivitiesshouldnotbetakenasarepresentationthatsuchtrendsoractivitieswillcontinueinthefuture.Forward-lookingstatementsspeakonlyasoftheirdateandtheCompany,anyothermemberoftheGroup,itsparentundertakings,thesubsidiaryundertakingsof suchparentundertakings,andanyofsuchperson’srespectivedirectors,officers,employees,agents,affiliatesoradvisersexpresslydisclaimanyobligationtosupplement,amend,updateorreviseanyoftheforward-lookingstatementsmadeherein,exceptwhereitwouldberequiredtodosounderapplicablelaworregulatoryobligations.Itisuptotherecipientofthispresentationtomakeitsownassessmentastothevalidityofsuchforward-lookingstatementsandassumptions.Nothinginthispresentationshallexcludeanyliabilityunderapplicablelawsthatcannotbeexcludedinaccordancewithsuchlaws.
SSP:TheFoodTravelExperts