TIDMSSPG
RNS Number : 6989V
SSP Group PLC
05 December 2023
l
5 December 2023 LEI: 213800QGNIWTXFMENJ24
2023 FULL YEAR RESULTS ANNOUNCEMENT
STRONG FULL YEAR PERFORMANCE; SIGNIFICANT PROGRESS ON STRATEGIC
PRIORITIES
SSP Group plc, a leading operator of food and beverage outlets
in travel locations worldwide, announces its financial results for
the year ended 30 September 2023.
FY 2023 FY 2022 Change at Change at
actual FX constant
rates FX rates
Underlying Pre-IFRS
16(1,3)
Revenue GBP3,010m GBP2,185m 37.7% 37.9%
EBITDA(2) GBP280m GBP142m 97.3% 103.5%
Operating profit GBP164m GBP30m 440.3% 495.2%
Operating profit
margin 5.4% 1.4% +400bp +440bp
Earnings/(loss)
per share 7.1p (4.5)p +11.6p
Dividend per share 2.5p - +2.5p
Free cash flow(4) GBP(125)m GBP52m GBP(177)m
Net debt(5) GBP(392)m GBP(297)m GBP( 95 )m
Statutory
Operating profit GBP167m GBP92m +82.3%
Profit before tax GBP88m GBP25m +249.6%
Earnings/(loss)
per share 1.0p (1.3)p +2.3p
Net debt(5) GBP(1,421)m GBP(1,151)m GBP(270)m
------------ ------------ ----------- ----------
Performance Highlights: (Underlying pre- IFRS16(1,3) )
-- Significant further recovery in Group performance with
full-year revenue of GBP3.0bn, up 38% compared to last year and
ahead of pre Covid-19 levels throughout the year
-- H2 revenue growth of 25% on a constant currency basis
comprising: like-for-like growth of 19% driven by a further
recovery in passenger numbers, with North America (at 24%) and APAC
and EEME (at 44%) the principal contributors; net gains of 6% from
the mobilisation of our new contract pipeline
-- Trading momentum sustained into new financial year with Group
revenues in first 8 weeks up 22% on a constant currency basis
-- EBITDA of GBP280m, up from GBP142m last year, driven by
strong revenue growth and profit conversion; EBITDA outturn at top
end of Preliminary Results 2022 planning assumptions despite
significant strengthening of Sterling over the last twelve
months
-- Operating profit margin up 400 bps year-on-year to 5.4%,
driven by operating leverage as volumes have recovered, alongside
our extensive efficiency programme and pricing action, which has
mitigated the impact of the high levels of inflation across most of
our cost base
-- Strong contributions to profitability delivered by the North
America and APAC and EEME regions, reflecting the faster recovery
in demand in these markets and strong profit conversion, as margins
increased in line with revenue growth
-- Profit growth in UK and Continental Europe impacted by the
relatively slower revenue recovery in the rail channel and
significant disruption caused by strikes and civil protests
-- Underlying pre-IFRS 16 EPS of 7.1p per share compared with a
loss of 4.5p per share in the prior year. Reported EPS of 1.0p per
share compared with a loss of 1.3p per share in the period
year.
-- The strong recovery in profitability and earnings gives the
Group the confidence to propose a resumption of o rdinary dividend
payments with final dividend of 2.5p reflecting a payout ratio of
35% on full-year underlying earnings
-- Free cash usage limited to GBP125m after funding higher
capital investment of GBP220m (compared with GBP149m in the prior
year), acquisitions of GBP41m and a small use of working capital as
a result of the unwind of payment deferrals of c.GBP50m
-- Net Debt of GBP392m at the end of September 2023, and
leverage (Net Debt: EBITDA) improving from 2.1x to 1.4x. Under IFRS
16, net debt increased from GBP1,151m to GBP1,421m
-- Refinancing completed in July 2023, extending our maturity
profile and maintaining a high level of liquidity
-- The secured pipeline of contracts yet to open (at the end of
September 2023) now represents estimated annualised revenues of
c.GBP450m, once fully mobilised; in 2024 we expect organic net
gains of c. 5% (excluding the full year of the Midfield concessions
acquisition, which will add a further c. 2% to sales), all of which
should be delivered from the secured pipeline. In the medium-term
net gains in the region of 3%-5% on average are anticipated,
underpinned by our secured pipeline and current momentum in new
business success.
-- Continued to make good progress against our strategic
priorities: pivoting to higher growth markets approximately two
thirds of the sales from the secured new business pipeline is
planned to come from North America and APAC; enhanced business
capabilities - in particular, strengthened portfolio of partner
brands, including new partnerships BrewDog in the UK and Europe,
Breakfast Club in the UK and Jones the Grocer in Singapore and
existing partners, including Pret, Hard Rock Café, Popeyes and
Starbucks
-- Contract retention levels have remained consistent with
long-run historical levels, underpinned by the strength of our
operational performance, client relationships and brand
portfolio
-- We have a clear and consistent compounding growth and returns
strategy to further strengthen our market-leading positions in food
travel markets globally, based on our key priorities: Pivoting to
high growth markets, enhancing business capabilities and delivering
operational efficiencies
Recent Trading and Outlook
Strong trading momentum continues into new financial year
Since our year-end, trading has remained strong in all key
markets, with total revenue during the first eight weeks (from 1
October to 26 November) up 22% on FY2023 levels on a constant
currency basis. Our revenue performance is being driven by
passenger recovery, a strong customer proposition and robust
operational execution. In addition, revenues are benefitting from
net gains as we mobilise our secured pipeline.
In North America, sales grew by 33% year-on-year on a constant
currency basis, driven by robust domestic air passenger numbers and
strong like-for-like performance. Our performance includes a sales
benefit from the acquisition of the Midfield concessions business,
with the transfer of units at all seven airports now complete. In
Continental Europe, revenues grew by 14% year-on-year, on a
constant currency basis, benefitting from an extended holiday
season into the Autumn. In the UK, sales increased by 22%,
reflecting a strong performance in our Air business and an ongoing
improvement in rail passenger volumes as commuters continue to
return to working in offices. In APAC and EEME, revenues rose by
29% on a constant currency basis, as we saw further improvements in
passenger numbers across the Asia Pacific region.
SSP in strong position to benefit from long-term structural
growth in the industry
FY2024 expectations
While we face into macroeconomic and political uncertainty, we
believe that demand for travel will remain resilient and is well
set for near and long-term structural growth.
In 2024, we are planning for like-for-like sales growth of
between 6% and 10%, reflecting the expectation of an ongoing
recovery in passenger demand as well as increased spend per
passenger including year on year price increases. We expect net
contract gains to be in the region of 5%, as we mobilise our
pipeline of secured new contracts, with a further contribution of
c.2% from the acquisition of the concessions business of Midfield
Concession Enterprises, Inc in North America.
In total we are planning for revenue to be in the region of
GBP3.4-3.5bn in 2024 with a corresponding underlying pre-IFRS 16
EBITDA within the range of GBP345-GBP375m and an underlying
pre-IFRS 16 operating profit within the range of GBP210-235m, all
stated on a constant currency basis.
Our expected performance would represent a further strong
recovery in profitability despite the ongoing inflationary
pressures on operating costs, which we continue to manage
successfully through productivity and pricing initiatives.
Reflecting the strong momentum in the pipeline and the timing of
openings, we are planning for capital expenditure to be in the
region of GBP280m in the 2024 financial year (which includes
cGBP30m deferred from FY2023) comprising: capital to fund our
renewals and maintenance programme of c.GBP140m; expansion capital
for new contracts of c.GBP80m and c.GBP60m reflecting the deferral
of renewal and maintenance capital expenditure from the Covid-19
period. Our capital investment programme is expected to deliver
in-year organic net contract gains of c.5% in 2024, with returns in
line with historical levels (typically a 3-4 year discounted
payback).
Medium-term outlook
Our compounding shareholder growth and returns model, aligned to
our medium-term financial framework is set to deliver:
-- Sales growth ahead of pre-Covid levels, including net gains
of between 3% and 5% p.a., resulting from our pivot to higher
growth markets (principally the North America and APAC regions)
which offer higher levels of structural demand and infrastructure
growth, and where we have strong businesses with relatively low
market shares and significant momentum.
-- Sustainable operating margin enhancement benefitting from
operating leverage (driven by revenue growth), greater use of
technology and automation and our wide-ranging efficiency
programme, all of which will enable us to mitigate the impact of
rising rent levels and inflationary cost increases.
-- Sustainable medium-term earnings growth driven by strong
operating profit growth, with minority interest continuing to grow
in line with revenue growth in countries with joint venture
partnerships.
-- Capital investment funded from operating cashflow,
underpinned by high returns on capital projects, with 3-4 year
discounted cashflow paybacks, in line with historical performance;
we expect contract renewal and maintenance capex to be on average
c. 4% of Group sales and expansionary capex to be c.2-3% of Group
sales, both in line with historical levels.
-- Balance sheet deleveraging, the pace of which will be
determined by the scale of new business investment and value
creating infill M&A.
-- Payment of the ordinary dividend with a target payout ratio
of c.30-40% and surplus cash returned to shareholders in line with
our capital allocation framework.
Commenting on the results, Patrick Coveney, CEO of SSP Group,
said:
"This has been a year of strong financial, operational and
strategic progress for SSP. We are continuing to lay the
foundations for accelerated expansion in key growth markets such as
North America and Asia Pacific. We are also making clear strides in
enhancing our customer proposition, our digital capabilities and
our sustainability initiatives. Our ongoing focus on these areas
has led to SSP delivering strong like-for-like growth, high levels
of new business, a robust margin recovery, and even closer
relationships with our clients and brand partners. We are very
pleased to be taking the important step today of proposing to
reinstate the ordinary dividend.
SSP is in very good shape, and we are excited by the
opportunities in front of us. We are building strong momentum
across all areas of the business thanks to the efforts of our
outstanding colleagues across the world, as well as the ongoing
support of our clients and brand partners. The commitment of our
people, the structural growth in travel demand and the strength of
our business model mean we are well placed to deliver compounding
growth and returns in the years to come."
(1) Stated on an underlying basis, which excludes non-underlying
items as further explained in the section on Alternative
Performance Measures (APMs) on pages 20-23.
(2) Underlying EBITDA (on a pre-IFRS 16 basis) is the underlying
pre-IFRS 16 operating profit excluding depreciation and
amortisation.
(3) We have decided to maintain the reporting of our profit and
other key financial measures like net debt and leverage on a
pre-IFRS 16 basis. Pre-IFRS 16 profit numbers exclude the impact of
IFRS 16 by removing the depreciation on right-of-use (ROU) assets
and interest arising on unwinding of discount on lease liabilities,
offset by the impact of adding back in charges for fixed rent. This
is further explained in the section on Alternative Performance
Measures (APMs) on pages 20-23.
(4) A reconciliation of Underlying operating profit/(loss) to
Free cashflow is shown on page 18.
(5) Net debt reported under IFRS 16 includes lease liabilities
whereas on a pre-IFRS 16 basis lease liabilities are excluded.
Refer to 'Net debt' section of the 'Financial review' for
reconciliation of net debt.
(6) Constant currency for 2023 is based on average 2022 exchange
rates weighted over the financial year by 2022 results. Constant
currency for 2024 is based on 2023 exchange rates.
A live webcast will be held at 9am (UKT) today, and details of
how to join can be accessed at:
SSP - Food Travel Expert (foodtravelexperts.com)
CONTACTS
Investor and analyst enquiries
Sarah John, Corporate Affairs Director, SSP Group plc
Sarah Roff, Group Head of Investor Relations, SSP Group plc
On 5 December 2023: +44 (0) 7736 089218 / +44 (0) 7980
636214
E-mail: sarah.john@ssp-intl.com / sarah.roff@ssp-intl.com
Media enquiries
Rob Greening / Nick Hayns
Powerscourt
+44 (0) 207 250 1446
E-mail: ssp@powerscourt-group.com
NOTES TO EDITORS
About SSP
SSP is a leading operator of food and beverage outlets in travel
locations worldwide, with c.42,000 colleagues in over 600 locations
across 37 countries. We operate sit-down and quick service
restaurants, cafes, lounges and food-led convenience stores,
principally in airports and train stations, with a portfolio of
more than 550 international, national and local brands. These
include our own brands (such as Urban Crave, which brought the
first "street eats" concept to airports in the US and Nippon Ramen,
a noodle and dumpling concept in the APAC region) as well as
franchise brands (such as M&S Simply Foods, Starbucks and
Burger King).
Our purpose is to be the best part of the journey, and this is
underpinned by our aim to bring leading brands and innovative
concepts to our clients and customers around the world, with an
emphasis on great value, taste, quality and service - using digital
technology to boost efficiency.
www.foodtravelexperts.com
Business review
A year of significant progress against our strategic
priorities
We are making significant progress against the strategic
priorities we outlined in December 2022, setting us up to deliver
long-term sustainable growth and returns.
Our strategic priorities are:
1. Pivoting to high growth markets
2. Enhancing business capabilities; driving competitive advantage
3. Delivering operational efficiencies
1. Pivoting to high growth markets
Our strategy is to increase our focus on the higher growth
markets of North America and APAC and EEME, while continuing to
grow selectively in the UK and Continental Europe. These large and
fragmented markets, in which SSP already has well-established
businesses, offer significant growth potential for the Group.
The secured pipeline of contracts yet to open (at the end of
September 2023) now represents estimated annualised revenues of
c.GBP450m, once fully mobilised]. In 2024 we expect organic net
gains of c. 5% (excluding the full year effect of the Midfield
concessions acquisition, which will add a further c. 2% to sales),
all of which should be delivered from the secured pipeline. In the
medium-term net gains in the region of 3%-5% on average are
anticipated, underpinned by our secured pipeline and current
momentum in new business success.
Once fully mobilised, two thirds of our new business pipeline
will be delivered in North America and Asia Pacific, Eastern Europe
and Middle East. The majority of our new business wins for 2023
were in the air channel, with 14 new airport clients secured in the
year, including Dulles Washington Airport in the USA, Calgary
Airport in Canada, Menorca Airport in Spain and Krabi Airport in
Thailand. In aggregate, our net new business win level across the
Group (in terms of forecasted sales from new business) is ahead of
the pre-Covid-19 average.
Consistent with the strategy of accelerating growth in North
America, in May 2023, we announced the acquisition of the Midfield
concessions business in the USA and, in June 2023, we completed the
transfer of units at six of the seven airports with the final
airport transferred in November 2023. In total, the acquisition has
added 40 new units, including at four new airport locations
(Detroit Metropolitan Wayne County, Denver International,
Philadelphia International and Cleveland Hopkins International) and
is expected to contribute a total of c.$100m to revenues, on an
annualised basis.
We secured entry to three new markets in the year including our
first contract in Italy at Rome Rail station, our first contract in
Iceland at Reykjavik Airport and our first contract in Saudi Arabia
at Riyadh Airport. We have also maintained high retention rates on
contracts. For example, we had renewals momentum in UK and Europe
with important and high-profile contract retentions including at
London Gatwick, London Heathrow, Newcastle, Liverpool, Marseille
and Trondheim airports.
Joint venture partnerships
Our strategy to accelerate our growth in North America and APAC
and EEME will reposition the business to benefit from significant
structural growth, creating an opportunity for us to expand faster
and to increase market share. In these markets, we frequently
operate with joint venture partners whose attributes include local
knowledge, access to brands and concepts, and relationships with
clients and government. These attributes enable us to run the
day-to-day business operations more effectively as well as
improving our ability to win new business . In equal measure, our
JV partners contribute to the capital costs of expansion in
addition to taking a share of profitability.
In the USA, there is generally a requirement to operate with JV
partners under the Airport Concession Disadvantaged Business
Enterprise legislation. Joint ventures are created for each
airport, with shares ranging from 10% to 49% and currently
averaging 25% for the North America business as a whole.
In APAC and EEME, we work with JV partners at market level, and
overall c.35% of our business is currently owned by minority JV
partners. We operate with these partners in a number of
strategically important markets in the region, including in India,
Thailand, Malaysia, the Philippines, and across the Middle East. In
India, where profit has doubled compared to 2019 we operate in a
joint venture partnership (Travel Food Services "TFS") and which
also selectively partners with some local airport owners. As a
result, the share of the business owned by minority JV partners is
currently in the region of 60%.
2. Enhancing business capability; driving competitive advantage
We are investing across our business to improve our capability
and to support the delivery of like-for-like growth, principally in
our customer proposition, formats and brands; digital technology;
our people and culture; and sustainability.
Developing great customer propositions
Developing formats and concepts that offer customers quality
food and beverage and a great overall experience is critical to
retaining existing business with our clients and winning new
business.
In the year, we have continued to innovate and develop our
formats, including scaling up our lounge offer in Malaysia and
enhancing our casual dining offer with the opening of new concepts
such as 'Hunt & Fish Grill' and 'Bad Egg' in the USA. We also
secured several new brand partnerships, including 'The Breakfast
Club' in the UK and independent craft brewer 'BrewDog' in the UK
and Europe, in addition to acquiring the right to develop the Pret
A Manger franchise in German-speaking Switzerland.
We have also made significant progress in developing our
convenience retail offer. For example, we are rolling out our
SSP-owned retail concept Point across our markets, aiming to bring
'freshly made food to go' to the convenience sector. Point's motto
is to be 'fast, fresh & local' and it is designed to help
travellers shop quickly, find delicious freshly made food and a
range of global and local hero products. From an initial presence
in the Nordics, we now operate 28 units and are set to open new
stores in Thailand and Switzerland.
Customers are responding well to our improved proposition with
our 'Global Reputation Score', as measured through our customer
listening tool, Reputation, improving to 4.2 out of 5 from 3.9 last
year.
Digitising our business
Embracing digital technology solutions is an important part of
our strategy to improve our customers' experience and drive
like-for-like sales through improved penetration levels and average
spend per transaction. It also acts as an enabler for operational
efficiencies, both front and back of house. In the year, we have
continued to roll out digital technologies such as Order at table
(OAT), kiosks and self checkouts. Digital ordering and payment
systems can now be found in approximately 500 of our units and
customers are embracing the new technology with 12.6% of all
transactions now being completed through one of these systems.
We are also integrating digital technology into specifications
across our new unit opening and renovation programme. For example,
we used digital technology across The Mezz, a new street food
concept in Dublin Airport that opened in July 2023. The food court
is a customer-oriented concept offering four brands in one place,
including local Irish favourites and new brands we have developed.
Ordering is quick and easy, and innovative digital kiosks allow
customers to order from each brand in one place. With the digital
screens showcasing our food and drink offer, customers are guided
to self-order kiosks. The average time from ordering to collection
is under three minutes and 'Order Ready' screens indicate to
customers their collection time at the centralised collection
point, directly linked to the central kitchen.
Supporting our people and culture
By the end of 2023, we employed approximately 42,000 colleagues
across the world, of whom 87% were team members or supervisors, 7%
were operations and unit-level management and the remaining were
support function colleagues. We are focused on ensuring SSP is a
great place to work where each one of these colleagues can fulfil
their potential. To support that goal, we are strengthening our
employer brand and building capability across a number of areas
including colleague recruitment, retention, inclusion, engagement,
skill building and safety.
At the end of the first half of 2023, we carried out our third
global engagement survey with over three-quarters of our colleagues
taking part. We registered an overall score of 3.98 out of 5 for
engagement, an improvement on the equivalent score last year. As a
result of the survey, we identified areas for improvement and
developed action plans in collaboration with our senior leadership
teams.
We are building a diverse, inclusive culture where everyone is
welcomed, which reflects the communities where we operate and the
customers, clients and stakeholders we serve. As part of this, we
are proud of the progress we have made on gender diversity. As of
September 2023, 37% of our Group Executive Committee and their
direct reports were women. To build on this progress, the Board
formally amended its Board Diversity Policy to include a new
objective to achieve 40% women in senior management by 2025.
In the year , we implemented new training initiatives, including
the roll-out of our 'High-Five' customer service training across
the globe and our Team Leaders Development Programme in the UK; we
also focused on developing engaging and accessible training
materials.
Building a sustainable business
Our Sustainability Strategy focuses on our most material issues
under the pillars of: Product, Planet and
People. Key deliverables against our strategy this year include:
PRODUCT : serving our customers responsibly :
-- We have exceeded our 2025 target for 30% of meals offered by
our own brands to be plant-based or vegetarian, achieving 34%
globally in 2023. Our 'People & Planet Menu Framework' provides
practical guidelines for integrating healthier and more sustainable
food and drink options across our own brands. And, in 2023, we
launched 'A Better Choice' toolkit, which uses simple iconography
to help our customers easily identify healthier or more nutritious
options on our menus.
-- 71% of coffee, 49% of tea, 80% of hot chocolate and 61% of
fish for our own brands are certified to standards such as
Fairtrade, Rainforest Alliance and MSC. 48% of eggs for our
own-brands are from cage-free sources. We are committed to
achieving 100% across all these areas by 2025.
PLANET : protecting our environment :
-- We have a science-based target to reach net-zero GHG
emissions across our value chain by 2040, from a 2019 base year. In
2023, we achieved a 42% reduction in absolute Scope 1 and 2
emissions from our 2019 base year, while Scope 3 emissions
increased by 7%, driven by business growth. Across all scopes
absolute emissions have remained relatively flat, with a negligible
1.4% increase, while emissions intensity (kg of CO2e per GBPm
revenue) reduced by 6% compared to 2019. We believe this
demonstrates the progress we are making in putting the right
measures in place to ensure that, as our business grows, we are
doing so efficiently and controlling absolute emissions increases
in line with growth projections set out in our net zero
roadmap.
-- By the end of 2023, 84% of our own brand packaging was free
of unnecessary single-use plastic and 85% was recyclable, reusable
or compostable. We are committed to achieving 100% by 2025.
-- We are also making strong progress in reducing food waste,
with programmes across all our markets prioritising food waste
prevention in the first instance, followed by redistribution of
surplus food, such as our partnership with the world's largest food
saving app, Too Good To Go. Since our partnership with Too Good To
Go began in 2016, we have saved over 1,200 tonnes of food from
landfill, avoiding the equivalent of c.3,000 tonnes of CO(2) e.
PEOPLE : supporting our colleagues and communities :
-- In 2023, we updated our Human Rights Policy and Supplier Code
of Conduct with strengthened global standards, commitments and
expectations for all our business operations, colleagues and
suppliers to adhere to and work towards. These are aligned to the
Ethical Trading Initiative Base Code, which is founded on ILO
conventions and is an internationally recognised code of labour
practice that we have adopted as our international standard. To
support this, we al-so implemented a revised human rights due
diligence process for our suppliers, and we aim for 100% of
high-risk suppliers to undergo ethical trade reviews by 2025.
-- We play an important role in the communities where we
operate, supporting them through charitable partnerships to
alleviate food poverty and other causes. In 2023, we worked with 24
charity partners across 14 countries, including 13 partnerships
focused on alleviating food poverty. For example, in the UK, the
SSP Foundation held a charity gala in 2023, raising more than
GBP225,000 for FareShare, the UK's largest charity fighting hunger
and food waste, and Trussell Trust, the UK's largest network of
food banks.
GOVERNANCE : upholding high standards:
-- Published a new Supplier Code of Conduct and strengthened
policies for Human Rights, Environment, Responsible Sourcing and
Animal Welfare.
-- Upgraded to an MSCI ESG rating of A.
-- Our 2022 Sustainability Report won Gold for 'Best printed CSR
or ESG report' in Communicate magazine's Corporate & Financial
Awards 2023.
3. Delivering operational efficiencies
Running efficient operations is a core SSP competency and deeply
embedded in our business. We aim to optimise gross margins and
leverage the international scale of our business, by paying
rigorous attention to managing the key costs of food, labour,
concession rentals and overheads.
Our multi-year value creation plan includes the continual
re-engineering of our customer offer to optimise gross margins,
keeping unnecessary complexity out of our product ranges, whilst
providing the appropriate level of customer choice. We also
continue to drive labour efficiency, conscious of the pressures on
labour rates and availability in certain regions. This means a
continued focus on staff scheduling and kitchen productivity, as
well as using digital order and payment technology to drive service
levels and efficiency.
Through labour scheduling, we ensure optimal colleague
deployment with the aim of both driving sales and ensuring great
customer service. At the beginning of the week, we consider the
sales plan and ensure the distribution of labour hours matches the
expected sales pattern. At the end of the week, we review
performance against our forecasts and identify opportunities to
improve scheduling in the following week.
Other examples of efficiency initiatives include commercial
deep-dives to identify ways to maximise sales in high-value
locations. Each of our deep-dives can be actioned at brand,
category or location level. They aim to deliver value through
analysis, benchmarking, on-site observations and functional
expertise and are targeted at our high-performing units.
Our ability to drive efficiencies across our operations has been
even more important in the inflationary environment. We have kept
rigorous pricing processes in place and continued to work hard to
mitigate the impact of cost pressures by identifying alternatives
to ingredients impacted by price increases. We have also continued
to focus on waste reduction and re-engineering supply chain
logistics, including forward-buying where possible, price
renegotiations, and working with suppliers to deliver revenue
generating initiatives.
To reduce energy consumption, we have started the rollout of
Automated Meter Readers (AMRs) to our units worldwide. The AMRs
present three opportunities: they help minimise our carbon
emissions, aligned with our net-zero ambition; they drive
significant cost efficiencies; and they enable energy-saving. The
AMRs provide half-hourly energy readings, and UK trials showed an
average 5-7.5% reduction in energy consumption and associated costs
where AMRs have been introduced.
Delivering compounding growth and returns for shareholders
through our economic model
The progress we are making in each of these strategic priorities
is driving an improved financial performance through our economic
model. The model has four key elements. Firstly, we drive
like-for-like revenue by improving the customer proposition and by
increasing customer capture rates and spend. Secondly, we drive a
high profit conversion by leveraging the international scale of our
business and by running an efficient and effective business.
Thirdly, we achieve a strong conversion to free cash flow and
invest our cash in line with our capital allocation framework.
Lastly, we develop new business, investing in contracts that are
expected to deliver financial returns in line with our target
hurdle rates and criteria. When we invest in more new contracts to
further develop new business, as these sites mature, this further
accelerates like-for-like revenue and thus we create a cycle of
compounding growth and returns for shareholders.
Our pivot to the faster growth markets of North America and APAC
and EEME, where we frequently work alongside partners, will
generate more sustainable and more significant opportunities for
long-term growth than focusing on growing our more mature markets
of UK and Continental Europe, which are fully owned.
Financial review
Group performance
Change
2023 2022 Actual Constant
GBPm GBPm currency currency LFL
---------- ---------- -------
Revenue 3,009.7 2,185.4 +37.7% +37.9% +31.5%
-------- -------- ---------- ---------- -------
Underlying operating
profit 204.8 31.7 +546.1%
-------- -------- ---------- ---------- -------
Operating profit 166.8 91.5 +82.3%
-------- -------- ---------- ---------- -------
- EBITDA was GBP280.0m (2022: GBP142.0m) and Underlying
operating profit was GBP 163.7 m (2022: GBP30.3m) on a pre-IFRS 16
basis.
- Revenue in 2019 was GBP2,794.6m
The Group's trading performance has continued to recover
strongly, with revenues tracking above pre-Covid levels throughout
the year. At actual foreign exchange rates, total Group Revenue of
GBP3,009.7m was 7.7% ahead of 2019 levels (9.6% on a constant
currency basis) and increased by 37.7% compared to 2022 (37.9% on a
constant currency basis). This revenue performance included the
benefit from net contract gains as we accelerated the mobilisation
of our significant pipeline, in addition to price increases
compared to the same period in each year.
During the first half year, revenues were 4.5% ahead of 2019
levels at actual exchange rates and 3.8% ahead on a constant
currency basis. This performance was driven by a strong recovery in
passenger numbers, initially led by strong leisure travel demand
throughout the autumn, following an extended holiday season in
several markets. This momentum continued throughout the winter and
early spring, despite significant industrial action impacting the
UK Rail network, with trading across the Group demonstrating a
resilience to broader pressures on consumer spending. Compared to
the first half of 2022, sales increased by 64.1% (58.7% on a
constant currency basis).
During the second half year, trading continued to strengthen,
increasing by 10.3% at actual exchange rates compared to 2019
(14.5% on a constant currency basis). Against 2022, where the prior
year comparatives were considerably more challenging than in the
first half, second half revenues increased by 22.4% (25.4% on a
constant currency basis). This further improvement in underlying
trading was driven by a continued recovery in passenger numbers
over the summer, particularly in the air sector, as well as our
stronger customer proposition and further deployment of digital
order and payment technology.
For the year as a whole, like-for-like sales growth versus 2022
was 31.5%. The growth in the air channel has been particularly
encouraging, driven by strong recoveries in passenger numbers in
most of our major markets. The recovery in the rail channel
continued to be impacted by ongoing industrial action, principally
in the UK.
Net gains contributed 6.4% to full year revenue growth versus
2022, driven by strong contributions from North America, including
a benefit from the acquisition of the Midfield concessions business
in June and significant new openings in Ontario, Seattle,
LaGuardia, Vancouver and Kelowna, and from the APAC and EEME
division, where we opened material new contracts in Malaysia,
Thailand, Australia and India.
Since our year-end we have seen trading continue to strengthen
in all of our principal markets, with total first quarter revenue
during the first eight weeks increasing by 22% compared to 2023 on
a constant currency basis.
Looking forward to 2024, notwithstanding the current level of
economic and geopolitical uncertainty, we are planning for
like-for-like sales growth of between 6% and 10%, driven
principally by a further recovery in passenger numbers and
additional year on year price increases, and net contract gains in
the region of 5%, with a further c.2% contribution from the
Midfield Concession acquisition. This would equate to total sales
in the region of GBP3.4-3.5bn on a constant currency basis.
Trading results from outside the UK are converted into sterling
at the average exchange rates for the year. The overall impact of
the movement of foreign currencies (principally the Euro, US
Dollar, Swedish Krona, Norwegian Krone, Indian Rupee, Egyptian
Pound and Swiss Franc) in 2023 compared to the 2022 average was
-0.1% on revenue, -2.6% on EBITDA and -4.8% on operating profit. If
the current spot rates (30 November 2023) were to continue through
2024, we would expect a negative currency impact on revenue, EBITDA
and operating profit of approximately -1.6%, -2.1% and -2.5%
compared to the average rates used for 2023, which is the basis of
the constant currency guidance above. This is a translation impact
only.
Operating profit
The underlying operating profit was GBP204.8m, compared to
GBP31.7m in the prior year. On a reported basis under IFRS 16, the
operating profit was GBP166.8m (2022: GBP91.5m), reflecting a
charge of GBP38.0m (2022: GBP59.8m credit) for the non-underlying
operating items.
On a pre-IFRS 16 basis, the Group reported underlying EBITDA of
GBP280.0m (2022: GBP142.0m) and underlying operating profit of
GBP163.7m (2022: GBP30.3m). The underlying pre-IFRS 16 EBITDA
margin improved to 9.3% (2022: 6.5%) and the underlying pre-IFRS 16
operating profit margin improved to 5.4% (2022: 1.4%).
Looking ahead to 2024, the Group expects to deliver further
improvements in pre-IFRS 16 EBITDA and operating profit,
anticipating EBITDA to be within the range GBP345-375m and
operating profit to be within the range GBP210-235m, all stated on
a constant currency basis. Depreciation on a pre-IFRS 16 basis is
expected to be in the region of 4.0% to sales, in line with
historical levels.
Non-underlying operating items
Items which are not considered reflective of the normal trading
performance of the business, and are exceptional because of their
size, nature or incidence, are treated as non-underlying operating
items and disclosed separately.
The non-underlying operating items included in the net charge of
GBP38.0m are summarised below:
- Impairment of goodwill: as a result of past acquisitions, and
in particular the creation of SSP by the acquisition of the SSP
business by EQT in 2006, the Group holds a significant amount of
goodwill on its consolidated balance sheet. This is allocated to
cash generating units, and performance is monitored on this basis.
Goodwill impairment testing is carried out annually, or more
frequently if indicators of impairments have been identified, by
comparing the value relating to each cash generating unit with the
net present value of its expected future cash flows. Following the
most recent reviews, a goodwill impairment of GBP12.5m was
identified, comprising a write down in respect of the Rail Gourmet
business in the UK.
- Impairment of property, plant and equipment and right-of-use
assets: t he Group has carried out impairment reviews where
indications of impairment have been identified. These impairment
reviews compared the value-in-use of individual sites, based on
management's current assumptions regarding future trading
performance, to the carrying values of the associated assets.
Following this review, a charge of GBP5.6m has been recognised,
which includes a net impairment of right-of-use assets of
GBP3.2m.
- Gain on de-recognition of leases: as a consequence of certain
contract terminations (FY22: modifications) the leases have been
derecognised in the period, resulting in a gain of GBP2.7m (2022:
GBP61.5m).
- Site exits costs: t he Group has recognised a charge of
GBP8.6m relating to site exits and redundancies carried out across
the Group during the year, principally reflecting the planned exit
from our motorway service area business in Germany.
- Contractual settlements: during the year the Group negotiated
contractual settlements in respect of the Covid-19 period which
resulted in a net charge of GBP4.7m.
- Other non-underlying expenses: in the current year these
items, primarily relating to transaction costs and other legal
fees, amounted to GBP9.3m (2022: GBP2.3m).
Regional performance
This section summarises the Group's performance across its four
operating segments. For full details of our key reporting segments,
please refer to note 2 on page 32.
North America
Change
2023 2022 Actual Constant
GBPm GBPm currency currency LFL
---------- ---------- -------
+ 46.9
Revenue 668.8 455.4 % +44.7% +32.7%
------ ------ ---------- ---------- -------
Underlying operating
profit 68.2 18.4 +270.7.%
------ ------ ---------- ---------- -------
Operating profit 67.0 17.3 +287.3%
------ ------ ---------- ---------- -------
- EBITDA was GBP91.9m (2022: GBP51.0m) and underlying operating
profit was GBP54.9m (2022: GBP17.4m), both on a pre-IFRS 16
basis.
- Revenue in 2019 was GBP533.4m.
Revenue during the year of GBP668.8m increased by 46.9% compared
to the prior year, and 25.4% versus 2019 levels (both at actual
exchange rates). The performance included a significant
contribution from net contract gains, as we continue to grow our
business in conjunction with our joint venture partners.
During the first half, the sales recovery in North America
remained strong, running 27.1% above 2019 levels and 71.8% ahead of
2022, reflecting the ongoing recovery in domestic leisure and
business travel, in addition to the contribution from the new
openings.
During the second half, sales increased by 24.0% compared to
2019 and 31.4% versus 2022, including a sales benefit from the
acquisition of the Midfield Concession business, with the transfer
of six of the seven airports completed in June. During the first
eight weeks of the new financial year trading has remained very
encouraging, with sales currently running 33% ahead of 2023 on a
constant currency basis.
The underlying operating profit for the period was GBP 68.2 m,
compared to GBP18.4m in the prior year, and the reported operating
profit was GBP67.0m (2022: GBP17.3m). This strong performance,
taking operating profit and margins to levels above those reported
in 2019, reflected the rapid recovery in like-for-like sales and a
good profit contribution from the new business.
Non-underlying operating items represented transaction costs
totalling GBP1.2m. On a pre-IFRS 16 basis, the underlying operating
profit was GBP54.9m, which compared to GBP17.4m last year.
Continental Europe
Change
2023 2022 Actual Constant
GBPm GBPm currency currency LFL
---------- ---------- -------
Revenue 1,136.7 867.9 +31.0% +30.4% +26.4%
-------- ------ ---------- ---------- -------
Underlying operating
profit 51.9 22.6 +129.6%
-------- ------ ---------- ---------- -------
Operating profit 32.6 82.0 -60.2%
-------- ------ ---------- ---------- -------
- EBITDA was GBP77.6m (2022: GBP60.7m) and underlying operating
profit was GBP 35.8 m (2022: GBP19.8m) both on a pre-IFRS 16
basis.
- Revenue in 2019 was GBP1,036.9m.
Revenue in Continental Europe of GBP1,136.7m represented an
increase of 31.0% compared to 2022 and 9.6% versus 2019 levels
(both at actual exchange rates).
Most markets in Continental Europe recovered strongly in the
first six months of the year, running 9.3% above 2019 levels across
this period (56.9% ahead of 2022), helped by the extended European
summer holiday season which stretched into the autumn, most notably
in Spain, and was in spite of industrial action in February and
March which impacted several countries, notably France.
During the second half year, sales strengthened further to 9.8%
above 2019 levels (16.2% above 2022), driven by strong air
passenger numbers over the late spring and summer and despite the
impact of protests and travel disruption in France, as well as more
challenging comparatives from 2019. Since our year-end, trading in
the Continental Europe region has made good further progress, with
sales currently running 14% above 2023 levels on a constant
currency basis.
The underlying operating profit for the period was GBP51.9m
compared to GBP22.6m in the prior year, with a reported operating
profit of GBP32.6m (2022: GBP82.0m). Non-underlying operating items
comprised site exits costs amounting to GBP7.2m, relating to the
planned exit from our motorway service area business in Germany,
historical contractual settlements totalling GBP4.7m, impairments
totalling GBP6.6m and other costs of GBP0.8m. On a pre-IFRS 16
basis, the underlying operating profit was GBP35.8m, which compared
to GBP19.8m last year.
UK (including Republic of Ireland)
Change
2023 2022 Actual Constant
GBPm GBPm currency currency LFL
---------- ---------- -------
Revenue 773.6 614.9 +25.8% +25.6% +23.2%
------ ------ ---------- ---------- -------
Underlying operating
profit 66.1 23.5 +181.3%
------ ------ ---------- ---------- -------
Operating profit 54.6 27.7 +97.1%
------ ------ ---------- ---------- -------
- EBITDA was GBP73.1m (2022: GBP38.8m) and underlying operating
profit was GBP 57.4 m (2022: GBP25.9m) both on a pre-IFRS 16
basis.
- Revenue in 2019 was GBP840.5m.
Revenue in the UK of GBP773.6m represented an increase of 25.8%
compared to 2022 and a recovery to 92.0% of 2019 levels (both at
actual exchange rates).
During the first half year, sales recovered to 85.2% of 2019
levels (41.0% ahead of 2022), reflecting an ongoing recovery in
both leisure and commuter travel, despite the impact of regular
strike action impacting the rail business.
In the second half, underlying UK trading in both the air and
rail channels continued to strengthen, with revenues averaging
97.8% of 2019 levels (16.5% above 2022), despite the rail sector
continuing to be impacted by ongoing industrial action. Since our
year-end trading in the UK has continued to strengthen, with sales
currently running 22% above 2023 levels on a constant currency
basis.
The underlying operating profit for the UK was GBP66.1m compared
to GBP23.5m in the prior year, with a reported operating profit of
GBP54.6m (2022: GBP27.7m). Non-underlying operating items comprised
impairments of goodwill of GBP12.5m and other items amounting in a
net credit of GBP1.0m. On a pre-IFRS 16 basis, the underlying
operating profit was GBP57.4m, which compared to GBP25.9m last
year.
APAC and EEME
Change
2023 2022 Actual Constant
GBPm GBPm currency currency LFL
---------- ---------- -------
Revenue 430.6 247.2 +74.2% +82.6% +68.4%
------ ------ ---------- ---------- -------
Underlying operating
profit 71.0 13.5 +425.9%
------ ------ ---------- ---------- -------
Operating profit 72.2 14.6 +394.5%
------ ------ ---------- ---------- -------
- EBITDA was GBP76.8m (2022: GBP25.0m) and underlying operating
profit was GBP 63.5 m (2022: GBP13.8m) both on a pre-IFRS 16
basis.
- Revenue in 2019 was GBP383.8m.
Revenue in APAC and EEME of GBP430.6m represented an increase at
actual exchange rates of 74.2% compared to 2022 (82.6% on a
constant currency basis) and 12.2% versus 2019 levels (21.1% on a
constant currency basis).
Revenues continued to recover rapidly in this region throughout
the first half, including an exceptional performance in our
business in India (TFS), where sales more than doubled year on
year. Australia, Thailand and the Middle East have also performed
particularly well. First half sales for the APAC and EEME region as
a whole grew by 142.4% compared to the equivalent period in 2022
(at actual exchange rates).
In the second half of the year, compared to 2022, sales improved
by 41.2% at actual exchange rates (53.9% on a constant currency
basis), as we saw further improvements in passenger numbers across
the Asia Pacific region, as well as strong performances in India
and Egypt. In addition, the region continued to benefit from
significant net gains as we continued to roll out the new business
pipeline there, with strong contributions from new openings in
Malaysia, Australia, Thailand, Bahrain and India.
During the first eight weeks of the new financial year, trading
in the APAC and EEME has continued to improve, with sales currently
running 29% ahead of 2023 levels on a constant currency basis.
The underlying operating profit for the year was GBP71.0m,
compared to GBP13.5m in the prior year, and the reported operating
profit was GBP72.2m (2022: GBP14.6m). Non-underlying operating
items included impairments of GBP1.3m, gains on derecognition of
leases of GBP4.1m and site exit and other costs of GBP1.6m. On a
pre-IFRS 16 basis, the underlying operating profit was GBP63.5m,
which compared to GBP13.8m last year.
Share of profit of associates
The Group's underlying share of profits of associates was
GBP7.2m (2022: GBP6.6m profit), driven primarily by strong
performance from the Group's associates in Cyprus and Qatar. On a
reported basis, the share of profits of associates of GBP0.5m
(2022: GBP6.6m profit) included a GBP6.7m non-underlying impairment
charge relating to the mandatory recapitalisation of the Group's
associate in France.
On an underlying pre-IFRS 16 basis, the Group's share of profit
from associates was also GBP7.2m (2022: GBP6.6m profit).
Net finance costs
The underlying net finance expense for the financial year was
GBP86.6m (2022: GBP81.5m), which includes interest on lease
liabilities of GBP53.1m (2022: GBP37.9m). A credit to finance costs
of GBP7.4m has been recognised within non-underlying items relating
to the refinancing of the Group debt. The reported net finance
expense under IFRS 16 was GBP79.2m (2022: GBP72.9m).
On a pre-IFRS 16 basis, underlying net finance costs were lower
than the prior year at GBP33.5m (2022: GBP43.6m), driven by a lower
cost of debt on our USPP loan notes, as well as foreign exchange
gains arising on certain cash balances held in foreign currencies.
In 2024, we expect net finance costs to be marginally higher than
2023.
Taxation
The Group's underlying tax charge for the period was GBP29.1m
(2022: GBP0.9m credit), representing an effective tax rate of 23.2%
(2022: 2.1%) of underlying profit before tax. On a reported basis,
the tax charge for the period was GBP32.0m (2022: GBP15.3m charge)
representing an effective tax rate of 36.3% (2022: 60.7%).
On a pre-IFRS 16 basis, the Group's underlying tax charge was
GBP31.2m (2022: GBP4.6m), equivalent to an effective tax rate of
22.7% (2022: a negative effective tax rate of 68.7%) of the
underlying profit (2022: loss) before tax. Our current expectation
is that the group's tax rate will remain at a similar level in
2024.
The Group's tax rate is sensitive to the geographic mix of
profits and losses and reflects a combination of higher rates in
certain jurisdictions, as well as the impact of losses in some
countries for which no deferred tax asset is recognised. The
underlying tax rate for the current year reflects a return to
pre-pandemic rates of around 22-23%, the prior year tax rates
having been impacted by the significant change in the geographic
mix caused by Covid-19.
Non-controlling interests
The profit attributable to non-controlling interests was
GBP48.0m (2022: GBP20.1m profit). On a pre-IFRS 16 basis the profit
attributable to non-controlling interests was GBP49.7m (2022:
GBP24.2m profit), with the year-on-year increase reflecting a
significantly improved trading performance from our partially owned
subsidiaries (operated with joint venture partners) in North
America and APAC and EEME, including in India, Thailand, the
Philippines and the UAE.
In comparison to 2019, the profit growth in North America and
India has driven a significant increase in profit attributable to
non-controlling interests (a c. GBP23m or 87% increase). In North
America, the profit attributable to non-controlling interests has
increased from GBP13m to GBP23m, driven by strong profit growth in
several airports with high minority participation, while in India
it has increased from GBP9m to GBP22m.
For 2024, we expect the profit attributable to non-controlling
interests to increase year on year by between 15% and 25%, in line
with our expectations for profit growth in our businesses with
joint venture partners.
Earnings/(loss) per share
The Group's underlying earnings per share was 6.2 pence per
share (2022: loss of 7.7 pence per share), and its reported
earnings per share was 1.0 pence per share (2022: loss of 1.3 pence
per share).
On a pre-IFRS 16 basis the underlying earnings per share was 7.1
pence per share (2022: loss of 4.5 pence per share).
Dividends
In line with the Group's stated priorities for the uses of cash
and after careful review of its medium-term investment
requirements, the Board is proposing a final dividend of 2.5 pence
per share (2022: nil), which is subject to shareholder approval at
the Annual General Meeting. The Group is proposing a payout ratio
of 35% of the underlying pre-IFRS 16 earnings per share, which is
in the middle of our proposed payout range of 30-40%. The final
dividend will be paid, subject to shareholder approval, on 29
February 2024 to shareholders on the register on 2 February
2024.
The ex-dividend date will be 1 February 2024.
Free Cash flow
The table below presents a summary of the Group's free cash
outflow for 2023:
2023 2022
GBPm GBPm
Underlying operating profit(1) 163.7 30.3
Depreciation and amortisation 116.3 111.7
Exceptional operating costs (17.8) (3.6)
Working capital (19.8) 116.7
Net tax payment (19.6) (2.3)
Capital expenditure(2) (220.0) (148.9)
Acquisitions, net of cash received (41.2) (1.4)
Net dividends to non-controlling interests and from associates (46.0) (14.5)
Net finance costs (46.1) (40.5)
Other 5.6 4.5
Free cash (outflow)/inflow (124.9) 52.0
-------- --------
(1) Presented on an underlying pre-IFRS 16 basis (refer to pages
20 - 23 for details)
(2) Capital expenditure is net of cash capital contributions
received from non-controlling interests of GBP22.5m (2022:
GBP10.7m)
The Group's net cash outflow during the year was GBP124.9m,
compared to a GBP52.0m net cash inflow last year. This year-on-year
change primarily reflected the anticipated higher levels of capital
expenditure and working capital outflows in 2023. The net outflow
in the year also included the impact of the acquisition of the
Midfield Concession business in June, as well as exceptional
restructuring and other costs incurred during the year.
Capital expenditure was GBP220.0m, a significant increase
compared to the GBP148.9m in the prior year, reflecting the ongoing
mobilisation of our new business pipeline, as well as a rebound in
the level of renewals and maintenance projects, many of which were
put on hold in the aftermath of Covid. With expenditure in 2023
slightly below our previous expectations, we now expect capex for
the 2024 financial year to be in the region of GBP280m.
Although working capital benefited from a further recovery in
sales across the year (increasing from around 95% of 2019 levels in
September 2022 to around 110% in September 2023), this was more
than offset by a reduction in the level of the Group's deferred
liabilities, largely rents, during the period, amounting to
approximately GBP50m, resulting in a net cash outflow for the year
of GBP19.8m. This reduction in deferred liabilities was lower than
our previous guidance of c.GBP80m, largely due to further deferrals
and delays to the timing of payments, and we now expect the
remaining c.GBP30m to be paid during the next twelve months.
Accordingly for 2024, we anticipate overall working capital to
remain at a similar level, and therefore be broadly neutral in
terms of cash flow, with the benefit of the expected sales increase
broadly offset by the further unwind of these deferred
liabilities.
Acquisition costs of GBP41.2m comprised GBP2.8m consideration
paid for the AMT business in the UK in December 2022, together with
a further GBP38.4m for the purchase of the units at six of the
seven Midfield Concession locations in North America in June 2023.
We took operational control of the units at Denver airport on 16
November 2023.
Net corporation tax payments of GBP19.6m (compared to GBP2.3m in
2022) and net dividends paid to non-controlling interests (net of
receipts from associates) of GBP46.0m (2022: GBP14.5m) were both
much higher year on year, reflecting the Group's significant
increase in profitability over the last twelve months.
Net finance costs paid of GBP46.1m were also higher than in the
prior year (2022: GBP40.5m), mainly reflecting the payment of
deferred interest liabilities in respect of the Group's US Private
Placement notes following the Rights Issue in 2021.
Net debt
Overall net debt increased by GBP95.7m to GBP392.2m on a
pre-IFRS 16 basis, largely reflecting the free cash outflow in the
year of GBP124.9m as detailed above. On a reported basis under IFRS
16, net debt was GBP1,420.9m (30 September 2022: GBP1,150.7m),
including lease liabilities of GBP1028.7m (30 September 2022:
GBP854.6m).
Based on the pre-IFRS 16 net debt at GBP392.2m at 30 September
2023, leverage (Net debt/EBITDA) reduced to approximately 1.4x from
2.1x at 30 September 2022. Looking ahead to September 2024, we
expect leverage to be at the lower end of our target range of 1.5x
to 2.0x.
The table below highlights the movements in net debt in the year
on a pre-IFRS 16 basis.
GBPm
Net debt excluding lease liabilities at 1 October
2022 (Pre-IFRS 16 basis) (296.5)
Free cash flow (124.9)
Impact of foreign exchange rates 21.9
Other(1) 7.3
Net debt excluding lease liabilities at 30 September
2023 (Pre-IFRS 16 basis) (392.2)
Lease liabilities (1,028.7)
----------
Net debt including lease liabilities at 30 September
2023 (IFRS 16 basis) (1,420.9)
----------
(1) Other changes relate to the effect of our debt
refinancing carried out in the year
Alternative Performance Measures
The Directors use alternative performance measures for analysis
as they believe these measures provide additional useful
information on the underlying trends, performance and position of
the Group. The alternative performance measures are not defined by
IFRS and therefore may not be directly comparable with other
companies' performance measures and are not intended to be a
substitute for IFRS measures.
1. Revenue measures
As the Group is present in 37 countries, it is exposed to
translation risk on fluctuations in foreign exchange rates, and as
such the Group's reported revenue and operating profit / loss will
be impacted by movements in actual exchange rates. The Group
presents its financial results on a constant currency basis in
order to eliminate the effect of foreign exchange rates and to
evaluate the underlying performance of the Group's businesses. The
table below reconciles reported revenue to constant currency
sales.
(GBPm) North Continental UK APAC and Total
America Europe EEME
2023 Revenue at actual rates by region 668.8 1,136.7 773.6 430.6 3,009.7
Impact of foreign exchange (10.2) (4.9) (1.6) 20.7 4.0
--------- ------------ -------- --------- ----------
2023 Revenue at constant currency(1) 658.6 1,131.8 772.0 451.3 3,013.7
2022 Revenue at actual rates by region 455.4 867.9 614.9 247.2 2,185.4
Constant currency sales growth 44.7% 30.4% 25.6% 82.6% 37.9%
Which is made up of:
Like-for-like sales growth(2) 32.7% 26.4% 23.2% 68.4% 31.5%
Net contract gains(34) 12.0% 4.0% 2.4% 14.2% 6.4%
Total constant currency sales growth 44.7% 30.4% 25.6% 82.6% 37.9%
========= ============ ======== ========= ==========
(1) Constant currency is based on average 2022 exchange rates
weighted over the financial year by 2022 results.
(2) Like-for-like sales represent revenues generated in an
equivalent period in each financial year in outlets which have been
open for a minimum of 12 months. Like-for-like sales are presented
on a constant currency basis.
(3) Revenue in outlets which have been open for less than 12
months and prior period revenues in respect of closed outlets are
excluded from like-for-like sales and classified as contract gains.
Net contract gains/(losses) are presented on a constant currency
basis.
(4) The impact of the Midfield Concession acquisition has been
included in net contract gains.
2. Non-underlying items
The Group presents underlying profit/(loss) measures, including
operating profit/(loss), profit/(loss) before tax, and
earnings/loss) per share, which exclude a number of items which are
not considered reflective of the normal trading performance of the
business, and are considered exceptional because of their size,
nature or incidence. The table below provides a breakdown of the
non-underlying items in both the current and prior year.
Non-underlying items
IFRS 16 IFRS 16
2023 2022
GBPm GBPm
Operating costs
Impairment of goodwill (12.5) -
Impairment of property, plant and equipment (2.4) ( 12.1)
Impairment of right-of-use assets (3.2) ( 6.1)
Contractual settlements (4.7) -
Site exits costs (8.6) (2.9)
Gain on derecognition of leases 2.7 61.5
IFRS 16 rent credit - 23.0
Debt amendment expenditure and extension
of bank facilities - (1.3)
Other non-underlying costs (9.3) (2.3)
--------------------- --------------------
(38.0) 59.8
Impairment of investment in associate (6.7) -
Debt refinancing and effective interest
rate adjustments 7.4 8.6
Tax charge on non-underlying items (2.9) (16.2 )
--------------------- --------------------
Total non-underlying items (40.2) 52.2
--------------------- --------------------
Further details of the non-underlying operating items have been
provided in the Financial Review section on page 12. Furthermore, a
reconciliation from the underlying to the statutory reported basis
is presented below:
2023 (IFRS 16) 2022 (IFRS 16)
Non-underlying Non-underlying
Underlying Items Total Underlying Items Total
Operating profit/(loss)
(GBPm) 204.8 (38.0) 166.8 31.7 59.8 91.5
Operating margin 6.8% (1.2%) 5.5% 1.5% 2.7% 4.2%
Profit/(loss) before
tax (GBPm) 125.4 (37.3) 88.1 (43.2) 68.4 25.2
Earnings/(Loss)
per share (p) 6.2 (5.2) 1.0 (7.7) 6.4 (1.3)
3. Pre-IFRS 16 basis
In addition to our reported results under IFRS 16 we have
decided to also maintain the reporting of our profit and other key
KPIs like net-debt on a pre-IFRS 16 basis. This is because the
pre-IFRS 16 profit is consistent with the financial information
used to inform business decisions and investment appraisals. It is
our view that presenting the information on a pre-IFRS 16 basis
will provide a useful and necessary basis for understanding the
Group's results. As such, commentary has also been included in the
Business Review, Financial Review and other sections with reference
to underlying profit measures computed on a pre-IFRS 16 basis.
A reconciliation of key underlying profit measures to 'Pre-IFRS
16' numbers is presented below:
Year ended Year ended
30 September 2023 30 September 2022
Underlying Impact of Underlying Underlying Impact of Underlying
IFRS 16 IFRS 16 Pre-IFRS 16 IFRS 16 IFRS 16 Pre-IFRS 16
Notes GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 2 3,009.7 - 3,009.7 2,185.4 - 2,185.4
Operating costs 4 (2,804.9) (41.1) (2,846.0) (2,153.7) (1.4) (2,155.1)
Operating profit 204.8 (41.1) 163.7 31.7 (1.4) 30.3
Share of profit
from associates 7.2 - 7.2 6.6 - 6.6
Finance income 5 17.0 - 17.0 4.9 - 4.9
Finance expense 5 (103.6) 53.1 (50.5) (86.4) 37.9 (48.5)
Profit / (loss)
before tax 125.4 12.0 137.4 (43.2) 36.5 (6.7)
Taxation (29.1) (2.1) (31.2) 0.9 (5.5) (4.6)
Profit / (loss)
for the period 96.3 9.9 106.2 (42.3) 31.0 (11.3)
------------- -------------- ------------- ------------- -------------- -------------
Profit/(loss)
attributable to:
Equity holders of
the parent 49.6 6.9 56.5 (60.9) 25.4 (35.5)
Non-controlling
interests 46.7 3.0 49.7 18.6 5.6 24.2
Profit/(loss) for
the period 96.3 9.9 106.2 (42.3) 31.0 (11.3)
------------- -------------- ------------- ------------- -------------- -------------
Earnings/(loss)
per share
(pence) (1) :
- Basic 3 6.2 7.1 (7.7) (4.5)
- Diluted 3 6.2 7.0 (7.7) (4.5)
Underlying operating profit is GBP41.1m lower on a pre-IFRS 16
basis, as adding back the depreciation of the right-of-use assets
of GBP194.5 does not fully offset the recognition of fixed rents of
GBP230.4m and the gain on derecognition of leases of GBP5.2m.
Profit before tax is GBP12.0m higher on a pre-IFRS 16 basis as a
result of adding back GBP53.1m in finance charges on lease
liabilities. The impact of IFRS 16 on net debt is primarily the
recognition of the lease liability balance.
Pre-IFRS 16 basis underlying EBITDA is a key measure of
profitability for the Group. A reconciliation to pre-IFRS 16 basis
underlying operating profit for the year is presented below:
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
Pre-IFRS 16 underlying EBITDA 280.0 142.0
Depreciation of property, plant and equipment (106.6) (97.9)
Amortisation of intangible assets (9.7) (13.8)
Pre-IFRS 16 underlying operating profit 163.7 30.3
-------------- --------------
Furthermore, a reconciliation from pre-IFRS 16 underlying
operating profit for the year to the statutory profit for the year
is as follows:
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
Pre-IFRS 16 underlying operating profit
for the year 163.7 30.3
Depreciation of right-of-use assets (194.5) (170.0)
Fixed rent on leases 230.4 154.8
Gain on derecognition of leases 5.2 16.6
Non-underlying operating (costs) / profit
(note 4) (38.0) 59.8
Underlying share of profit from associates 7.2 6.6
Non-underlying share of loss from associates (6.7) -
(note 4)
Net finance expense (86.6) (81.5)
Non-underlying finance income (note 5) 7.4 8.6
Taxation (32.0) (15.3)
-------------- --------------
Profit for the year 56.1 9.9
-------------- --------------
A reconciliation of underlying operating profit to profit before
and after tax is provided as follows:
Year ended Year ended
30 September 30 September
2023 2022
GBPm GBPm
Underlying operating profit 204.8 31.7
Non-underlying operating (loss)/profit
(note 4) (38.0) 59.8
Underlying share of profit from associates 7.2 6.6
Non-underlying share of loss from associates (6.7) -
(note 4)
Finance income 17.0 4.9
Finance expense (103.6) (86.4)
Non-underlying finance income (note 5) 7.4 8.6
-------------- --------------
Profit before tax 88.1 25.2
Taxation (32.0) (15.3)
-------------- --------------
Profit after tax 56.1 9.9
-------------- --------------
4. Liquidity and cashflow
Liquidity remains a key KPI for the Group. Available liquidity
at 30 September 2023 has been computed as GBP606.9m, comprising
cash and cash equivalents of GBP303.3m, and undrawn credit
facilities of GBP303.6m.
A reconciliation of free cashflow to underlying operating
profit/(loss) is shown on page 18.
Principal risks
One new risk relating to "Mergers and acquisitions" has been
added to the principal risks since last year.
The specific Covid risk has been deleted and its impact included
in the "Business environment risk". In the prior year the Group
disclosed 10 Principal risks. In current year the disclosure has
been expanded to cover the 14 Principal risks noted below, as a
number of these risks were more specific to the Group's
strategy.
The Group's "Principal risks", together with the Group's risk
management process, will be set out in the Annual Report and
Accounts 2023, and relate to the following areas: Business
environment, geo-political uncertainty and terrorism threat,
Availability of labour and wage inflation, Supply chain disruption
and product cost inflation, Health and food safety, Information
security and stability, Compliance, Mobilisation of pipeline, The
competition landscape, changing client behaviours and client
retention, Insufficient senior capability at Group and country
level, Benefits realisation from efficiency programmes,
Sustainability, Innovation of brand portfolio & changing
customer demands, Merger and acquisition activity, Expansion into
new markets.
Consolidated income statement
for the year ended 30 September 2023
Year ended 30 September Year ended 30 September
2023 2022
Notes Underlying(1) Adjustments Total Underlying(1) Adjustments Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 2 3,009.7 - 3,009.7 2,185.4 - 2,185.4
Operating costs 4 (2,804.9) (38.0) (2,842.9) (2,153.7) 59.8 (2,093.9)
Operating profit 204.8 (38.0) 166.8 31.7 59.8 91.5
Share of profit
of associates 7.2 (6.7) 0.5 6.6 - 6.6
Finance income 5 17.0 - 17.0 4.9 - 4.9
Finance expense 5 (103.6) 7.4 (96.2) (86.4) 8.6 (77.8)
Profit/(loss)
before tax 125.4 (37.3) 88.1 (43.2) 68.4 25.2
Taxation (29.1) (2.9) (32.0) 0.9 (16.2) (15.3)
Profit/(loss)
for the year 96.3 (40.2) 56.1 (42.3) 52.2 9.9
-------------- ------------ ---------- -------------- ------------ ----------
Profit/(loss) attributable to:
Equity holders
of the parent 49.6 (41.5) 8.1 (60.9) 50.7 (10.2)
Non-controlling
interests 46.7 1.3 48.0 18.6 1.5 20.1
Profit/(loss)
for the year 96.3 (40.2) 56.1 (42.3) 52.2 9.9
-------------- ------------ ---------- -------------- ------------ ----------
Earnings/(loss) per share (p):
- Basic 3 6.2 1.0 (7.7) (1.3)
- Diluted 3 6.2 1. 0 (7.7) (1.3)
(1) Stated on an underlying basis, which excludes non-underlying
items as further explained in the section on Alternative
Performance Measures (APMs) on pages 20 - 23.
Consolidated statement of other comprehensive income
for the year ended 30 September 2023
2023 2022
GBPm GBPm
Other comprehensive income / (expense)
Items that will never be reclassified to the
income statement
Remeasurements on defined benefit pension schemes (4.4) 8.5
Tax credit/(charge) relating to items that will
not be reclassified 1.0 (1.2)
Items that are or may be reclassified subsequently
to the income statement
Net gain/(loss) on hedge of net investment in
foreign operations 33.9 (56.3)
Other foreign exchange translation differences (49.4) 45.6
Effective portion of changes in fair value of
cash flow hedges - (0.1)
Cash flow hedges - reclassified to income statement - 1.4
Tax (charge)/credit relating to items that are
or may be reclassified (1.1) 3.6
Other comprehensive (expense)/income for the
year (20.0) 1.5
Profit for the year 56.1 9.9
Total comprehensive income for the year 36.1 11.4
------- -------
Total comprehensive income/(expense) attributable
to:
Equity shareholders (0.7) (19.6)
Non-controlling interests 36.8 31.0
Total comprehensive income for the year 36.1 11.4
------- -------
Consolidated balance sheet
as at 30 September 2023
Notes 2023 2022
GBPm GBPm
Non-current assets
Property, plant and equipment 586.9 469.3
Goodwill and intangible assets 681.1 701.7
Right-of-use assets 931.5 736.3
Investments in associates 16.2 17.0
Deferred tax assets 91.0 89.0
Other receivables 81.2 85.5
2,387.9 2,098.8
Current assets
Inventories 42.4 37.0
Tax receivable 6.0 1.5
Trade and other receivables 158.6 142.0
Cash and cash equivalents 303.3 543.6
510.3 724.1
Total assets 2,898.2 2,822.9
---------- ----------
Current liabilities
Short-term borrowings 8 (12.6) (68.8)
Trade and other payables (741.1) (719.3)
Tax payable (23.3) (18.5)
Lease liabilities (252.3) (216.5)
Provisions (25.3) (24.6)
(1,054.6) (1,047.7)
Non-current liabilities
Long-term borrowings 8 (682.8) (771.1)
Post-employment benefit obligations (10.5) (10.8)
Lease liabilities (776.4) (638.1)
Other payables (1.3) (1.4)
Provisions (30.7) (35.9)
Deferred tax liabilities (19.8) (6.9)
(1,521.5) (1,464.2)
Total liabilities (2,576.1) (2,511.9)
---------- ----------
Net assets 322.1 311.0
---------- ----------
Equity
Share capital 8.6 8.6
Share premium 472.7 472.7
Capital redemption reserve 1.2 1.2
Other reserves (18.2) (9.0)
Retained losses (238.1) (248.5)
Total equity shareholders' funds 226.2 225.0
Non-controlling interests 95.9 86.0
Total equity 322.1 311.0
---------- ----------
Consolidated statement of changes in equity
for the year ended 30 September 2023
Share Share Capital Other Retained Total NCI Total
capital premium redemption reserves(1) losses parent equity
reserve equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October 2021 8.6 472.7 1.2 7.7 (249.9) 240.3 70.4 310.7
Loss for the year - - - - (10.2) (10.2) 20.1 9.9
Other comprehensive
expense for the
year - - - (16.7) 7.3 (9.4) 10.9 1.5
Capital contributions
from NCI - - - - - - 3.4 3.4
Dividends paid
to non controlling
interests - - - - - - (18.8) (18.8)
Share-based payments - - - - 4.0 4.0 - 4.0
Tax on share-based
payments - - - - 0.1 0.1 - 0.1
Other movements - - - - 0.2 0.2 - 0.2
At 30 September
2022 8.6 472.7 1.2 (9.0) (248.5) 225.0 86.0 311.0
Profit for the
year - - - - 8.1 8.1 48.0 56.1
Other comprehensive
expense for the
year - - - (5.4) (3.4) (8.8) (11.2) (20.0)
Capital contributions
from NCI - - - - - - 17.3 17.3
Dividends paid
to non controlling
interests - - - - - - (45.3) (45.3)
Purchase of additional
stake in subsidiary - - - (1.) - (1.1) 1.1 -
Transactions with
non-controlling
interests - - - (2.7) - (2.7) - (2.7)
Share-based payments - - - - 5.7 5.7 - 5.7
At 30 September
2023 8.6 472.7 1.2 (18.2) (238.1) 226.2 95.9 322.1
(1) At 30 September 2022 and 30 September 2023, the other
reserves include the translation reserve and the result of
purchasing additional stake in subsidiary
Consolidated cash flow statement
for the year ended 30 September 2023
Notes 2023 2022
GBPm GBPm
Cash flows from operating activities
Cash flow from operations 6 498.3 434.5
Tax paid (19.6) (2.3)
Net cash flows from operating
activities 478.7 432.2
Cash flows from investing activities
Dividends received from associates 7.3 4.3
Interest received 11.5 2.2
Purchase of property, plant
and equipment (219.9) (146.0)
Purchase of other intangible
assets (22.6) (13.6)
Acquisitions, net of cash and
cash equivalents acquired (41.2) (1.4)
Net cash flows from investing
activities (264.9) (154.5)
Cash flows from financing activities
Repayment of bank borrowings (95.9) (304.9)
Debt refinancing and modification
fees paid (4.6) (1.3)
Receipt of bank loans - 1.0
Loans (repaid to)/taken from
non-controlling interests (1.2) 8.6
Payment of lease liabilities
- principal (197.5) (137.0)
Payment of lease liabilities
- interest (53.1) (37.9)
Interest paid excluding interest
on lease liabilities (57.6) (42.7)
Dividends paid to non-controlling
interests (45.3) (18.8)
Recapitalisation of associate (8.0) -
Capital contribution from non-controlling
interests 22.5 10.7
Net cash flows from financing
activities (440.7) (522.3)
Net decrease in cash and cash
equivalents (226.9) (244.6)
Cash and cash equivalents at
beginning of the year 543.6 773.6
Effect of exchange rate fluctuations
on cash and cash equivalents (13.4) 14.6
Cash and cash equivalents at
end of the year 303.3 543.6
---------- ----------
Reconciliation of net cash
flow to movement in net debt
Net decrease in cash in the
year (226.9) (244.6)
Cash outflow Term Loan and USPP 77.4 -
facility
Cash outflow from Covid Corporate
Financing Facility - 300.0
Cash outflow/(inflow) from other
changes in debt 19.7 (4.7)
Change in net debt resulting
from cash flows, excluding lease
liabilities (129.8) 50.7
Translation differences 21.9 (44.5)
Other non-cash changes 12.0 5.3
(Increase)/decrease in net
debt excluding lease liabilities
in the year (95.9) 11.5
Net debt at beginning of the
year (296.3) (307.6)
---------- ----------
Net debt excluding lease liabilities
at end of the year (392.2) (296.1)
Recognition of lease liabilities
upon transition to IFRS 16
Lease liabilities at beginning
of the year (854.6) (1,172.8)
Cash outflow from payment of
lease liabilities 250.6 174.9
Lease amendments (460.5) 198.5
Translation differences 35.8 (55.2)
---------- ----------
Lease liabilities at end of
the year (1,028.7) (854.6)
Net debt including lease liabilities
at end of the year (1,420.9) (1,150.7)
---------- ----------
Notes
1 Basis of preparation and accounting policies
1.1 Basis of preparation
SSP Group plc (the Company) is a company incorporated in the
United Kingdom under the Companies Act 2006. The Group financial
statements consolidate those of the Company and its subsidiaries
(together referred to as the Group) and equity-account the Group's
interest in its associates. These financial statements have been
prepared in accordance with UK-adopted International Accounting
Standards('IAS'), with International Financial Reporting
Standards('IFRS') as issued by the International Accounting
Standards Board ('IASB') and with the requirements of the Companies
Act 2006 (the 'Act').
The financial statements are presented in Sterling, which is the
Company's functional currency. All information is given to the
nearest GBP0.1 million.
The financial statements are prepared on the historical cost
basis, except in respect of financial instruments (including
derivative instruments) and defined benefit pension schemes for
which assets are measured at fair value, as explained in the
accounting policies below.
1.2 Going concern
These financial statements are prepared on a going concern
basis.
The Board has reviewed the Group's financial forecasts as part
of the preparation of its financial statements, including cash flow
forecasts prepared for a period of twelve months from the date of
approval of these financial statements ("the going concern period")
and taking into consideration a number of different scenarios.
Having carefully reviewed these forecasts, the Directors have
concluded that it is appropriate to adopt the going concern basis
of accounting in preparing these financial statements for the
reasons set out below.
In making the going concern assessment, the Directors have
considered forecast cash flows and the liquidity available over the
going concern period. In doing so they assessed a number of
scenarios, including a base case scenario and a severe but
plausible downside scenario. The base case scenario reflects an
expectation of a continuing recovery in passenger numbers in most
of our key markets during the forecast period, augmented by the
ongoing roll-out of our new business pipeline.
With some uncertainty surrounding the economic and geo-political
environment over the next twelve months, a downside scenario has
also been modelled, applying severe but plausible assumptions to
the base case. This downside scenario reflects a pessimistic view
of the travel markets for the remainder of the current financial
year, assuming sales that are around 10% lower than in the base
case scenario.
In both its base case and downside case scenarios, the Directors
are confident that the Group will have sufficient funds to continue
to meet its liabilities as they fall due for a period of at least
12 months from the date of approval of the financial statements,
and that it will have headroom against all applicable covenant
tests throughout this period of assessment. The Directors have
therefore deemed it appropriate to prepare the financial statements
for the year ended 30 September 2023 on a going concern basis.
1.3 Changes in accounting policies and disclosures
During the year ended 30 September 2023, the Group adopted the
following standards:
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)
-- Onerous Contracts - Cost of fulfilling a Contract (Amendments to IAS 37)
-- Annual Improvements to IFRS Standards 2018-2020
-- Amendments to IAS 12 Income Taxes - International Tax Reform - Pillar Two Model Rules
There were no adjustments to current year or prior year amounts
as a result of adopting these standards.
Amendments to IAS 12 Income Taxes - International Tax Reform -
Pillar Two Model Rules: The Group has adopted the amendments to IAS
12 for the first time in the current year. The IASB amends the
scope of IAS 12 to clarify that the Standard applies to income
taxes arising from tax law enacted or substantively enacted to
implement the Pillar Two model rules published by the OECD,
including tax law that implements qualified domestic minimum top up
taxes described in those rules. The amendments introduce a
temporary exception to the accounting requirements for deferred
taxes in IAS 12, so that an entity would neither recognise nor
disclose information about deferred tax assets and liabilities
related to Pillar Two income taxes. Following the amendments, the
Group is required to disclose that it has applied the exception and
to disclose separately its current tax expense (income) related to
Pillar Two income taxes.
1.4 New accounting standards not yet adopted by the Group
The following amended standards and interpretations are not
expected to have a significant impact on the Group's consolidated
financial statements:
* IFRS 17 'Insurance Contracts'
* Classification of liabilities as current or
non-current (Amendments to IAS 1)
* Disclosure of Accounting Policy (Amendments to IAS 1
and IFRS Practice Statement 2)
* Definition of Accounting Estimate (Amendments to IAS
8)
* Amendments to IAS 12 - Deferred Tax related to Assets
and Liabilities arising from a Single transaction
* Amendment to IFRS 16 - Leases on sale and leaseback
2 Segmental reporting
SSP operates in the food and beverage travel sector, mainly at
airports and railway stations.
Management monitors the performance and strategic priorities of
the business from a geographic perspective, and in this regard has
identified the following four key "reportable segments": North
America, Continental Europe, the UK and APAC and EEME. North
America includes operations in the United States, Canada and
Bermuda; Continental Europe includes operations in the Nordic
countries and in Western and Southern Europe; The UK includes
operations in the United Kingdom and the Republic of Ireland; and
APAC and EEME includes operations in Asia Pacific, India, Eastern
Europe and the Middle East, and South America. These segments
comprise countries which are at similar stages of development and
demonstrate similar economic characteristics.
The Group's management assesses the performance of the operating
segments based on revenue and underlying operating profit. Interest
income and expenditure are not allocated to segments, as they are
managed by a central treasury function, which oversees the debt and
liquidity position of the Group. The non-attributable segment
comprises costs associated with the Group's head office function
and depreciation of central assets.
North Continental UK APAC Non-attributable Total
America Europe and EEME
GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 30 September
2023
--------- ------------ ------- ------------ ----------------- ----------
Revenue 668.8 1,136.7 773.6 430.6 - 3,009.7
--------- ------------ ------- ------------ ----------------- ----------
Underlying operating
profit/(loss) 68.2 51.9 66.1 71.0 (52.4) 204.8
--------- ------------ ------- ------------ ----------------- ----------
Non-underlying operating
(loss)/profits (1.2) (19.3) (11.5) 1.2 (7.2) (38.0)
--------- ------------ ------- ------------ ----------------- ----------
Operating profit/(loss) 67.0 32.6 54.6 72.2 (59.6) 166.8
--------- ------------ ------- ------------ ----------------- ----------
Year ended 30 September
2022
--------- ------------ ------- ------ --------------------------- ------
Revenue 455.4 867.9 614.9 247.2 - 2,185.4
--------- ------------ ------- ------------ ----------------- ----------
Underlying operating
profit/(loss) 18.4 22.6 23.5 13.5 (46.3) 31.7
--------- ------------ ------- ------------ ----------------- ----------
Non-underlying operating
(loss)/profits (1.1) 59.4 4.2 1.1 (3.8) 59.8
--------- ------------ ------- ------------ ----------------- ----------
Operating profit/(loss) 17.3 82.0 27.7 14.6 (50.1) 91.5
--------- ------------ ------- ------------ ----------------- ----------
The following amounts are included in underlying operating
profit/(loss):
North Continental UK APAC Non-attributable Total
America Europe and
EEME
GBPm GBPm GBPm GBPm GBPm GBPm
Year ended 30 September
2023
--------- ------------ ------- ------- ----------------- --------
Depreciation and amortisation (73.4) (136.7) (47.4) (44.8) (8.5) (310.8)
--------- ------------ ------- ------- ----------------- --------
Year ended 30 September
2022
--------- ------------ ------- ------- ----------------- --------
Depreciation and amortisation (62.6) (123.7) (42.0) (40.3) (13.1) (281.7)
--------- ------------ ------- ------- ----------------- --------
A reconciliation of underlying operating profit/(loss) to profit
before and after tax is provided as follows:
2023 2022
GBPm GBPm
Underlying operating profit/(loss) 204.8 31.7
Non-underlying operating (loss)/profit (note
4) (38.0) 59.8
Share of profit from associates 0.5 6.6
Finance income 17.0 4.9
Finance expense (103.6) (86.4)
Non-underlying finance expense (note 5) 7.4 8.6
-------- -------
Profit before tax 88.1 25.2
Taxation (32.0) (15.3)
-------- -------
Profit after tax 56.1 9.9
-------- -------
3 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the
result for the year attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
year. Diluted earnings/(loss) per share is calculated by dividing
the result for the year attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during
the year adjusted by potentially dilutive outstanding share
options.
Underlying earnings/(loss) per share is calculated the same way
except that the result for the year attributable to ordinary
shareholders is adjusted for specific items as detailed below:
2023 2022
GBPm GBPm
Profit/(loss) attributable to ordinary shareholders 8.1 (10.2)
Adjustments:
Non-underlying operating expense/(income) 38.0 (59.8)
Non-underlying share of loss of associate 6.7 -
Non-underlying finance income ( 7.4) (8.6)
Tax effect of adjustments 2.9 16.2
Non-underlying costs attributable to NCI 1.3 1.5
------------ ------------
Underlying profit/(loss) attributable to
ordinary shareholders 49.6 (60.9)
------------ ------------
Basic weighted average number of shares 796,439,158 796,050,446
Dilutive potential ordinary shares 9,533,231 -
------------ ------------
Diluted weighted average number of shares 805,972,389 796,050,446
------------ ------------
Earnings/(loss) per share (p):
- Basic 1.0 (1.3)
- Diluted 1.0 (1.3)
Underlying earnings/(loss) per share (p):
- Basic 6.2 (7.7)
- Diluted 6.2 (7.7)
The number of ordinary shares in issue as at 30 September 2023
was 796,529,196 which excludes treasury shares (30 September 2022:
796,113,196). The Company also holds 263,499 treasury shares (2022:
263,499).
Potential ordinary shares can only be treated as dilutive when
their conversion to ordinary shares would decrease earnings per
share or increase loss per share. As the Group recognised a loss
for the prior year, none of the potential ordinary shares were
considered to be dilutive.
4 Operating costs
2023 2022
GBPm GBPm
Cost of food and materials:
Cost of inventories consumed in the year (836.6) (610.2)
Labour cost:
Employee remuneration (918.4) (686.7)
Overheads:
Depreciation of property, plant and equipment (106.6) (97.9)
Depreciation of right-of-use assets (194.5) (170.0)
Amortisation of intangible assets (9.7) (13.8)
Non-underlying operating (loss)/profit (38.0) 59.8
Gain on lease derecognition 5.2 16.6
Rentals payable under leases (396.8) (299.3)
Other overheads (347.5) (292.4)
(2,842.9) (2,093.9)
---------- ----------
Non-underlying operating items
The non-underlying operating costs in each year are shown
below.
2023 2022
GBPm GBPm
Impairment of goodwill (12.5) -
Impairment of property, plant and equipment (2.4) (12.1)
Impairment of right-of-use assets (3.2) (6.1)
Non-cash change in lease liabilities - 23.0
Site exit costs (8.6) (2.9)
Contractual settlement costs (4.7) -
Fees for debt amendment and extension of
bank facilities - (1.3)
Gain on lease derecognition 2.7 61.5
Other non-underlying costs (9.3) (2.3)
------- -------
Total non-underlying operating items (38.0) 59.8
------- -------
5 Finance income and expense
2023 2022
GBPm GBPm
Finance income
Interest income 11.5 3.9
Net foreign exchange gains 5.0 -
Other 0.5 1.0
Total finance income 17.0 4.9
------- -------
Finance expense
Total interest expense on financial liabilities
measured at amortised cost (49.8) (45.4)
Lease interest expense (53.1) (37.9)
Debt refinancing gains/(loss) 2.3 (3.1)
Effective interest rate adjustment 5.1 13.7
Net change in fair value of cash flow hedges
utilised in the year - (1.4)
Unwind of discount on provisions (0.9) (0.3)
Net interest expense on defined benefit
pension obligations 0.2 (0.1)
Net foreign exchange losses - (3.3)
Total finance expense (96.2) (77.8)
------- -------
6 Cash flow from operations
2023 2022
GBPm GBPm
Loss for the year 56.1 9.9
Adjustments for:
Depreciation of property, plant and equipment 106.6 97.9
Depreciation of right-of-use assets 194.5 170.0
Amortisation of intangible assets 9.7 13.8
Profit on derecognition of leases (7.9) (78.1)
Non-cash change in lease liabilities - (23.0)
Impairments 18.1 18.2
Share-based payments 5.7 4.5
Finance income (17.0) (4.9)
Finance expense 96.2 77.8
Share of profit of associates (0.5) (6.6)
Taxation 32.0 15.3
Other (0.1) 0.6
------- -------
493.4 295.4
Increase in trade and other receivables (12.2) (45.9)
Increase in inventories (5.3) (13.3)
Increase in trade and other payables including
provisions 22.4 198.3
Cash flow from operations 498.3 434.5
------- -------
7 Dividends
In line with the Group's stated priorities for the uses of cash
and after careful review of its medium-term investment requirements,
the Board is proposing a final dividend of 2.5 pence per share (2022:
nil), which is subject to shareholder approval at the Annual General
Meeting. The Group is proposing a payout ratio of 35% of the underlying
pre-IFRS 16 earnings per share, which is in the middle of our proposed
payout range of 30-40%.
The final dividend will be paid, subject to shareholder approval,
on 29 February 2024 to shareholders on the register on 2 February
2024. The ex-dividend date will be 1 February 2024.
8 Fair value measurement
Certain of the Group's financial instruments are held at fair
value.
The fair values of financial instruments held at fair value have
been determined based on available market information at the
balance sheet date. The fair values of the Group's borrowings are
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the balance sheet date.
Carrying value and fair values of certain financial
instruments
The following table shows the carrying value of financial assets
and financial liabilities.
As at As at
30 September 30 September
2023 2022
GBPm GBPm
Financial assets measured at amortised
cost
Cash and cash equivalents 303.3 543.6
Trade and other receivables 191.8 186.7
---------------------------------------------- -------------- --------------
Total financial assets measured at amortised
cost 495.1 730.3
---------------------------------------------- -------------- --------------
Non-derivative financial liabilities
measured at amortised cost
Bank loans (347.0) (455.2)
US private placement notes (348.4) (384.7)
Lease liabilities (1,028.7) (854.6)
Trade and other payables (712.4) (689.9)
---------------------------------------------- -------------- --------------
Total financial liabilities measured
at amortised cost (2,436.5) (2,384.4)
---------------------------------------------- -------------- --------------
Financial assets and liabilities in the Group's consolidated
balance sheet are either held at fair value, or their carrying
value where it approximates to fair value, with the exception of
loans which are held at amortised cost. The fair value of total
borrowings excluding lease liabilities estimated using market
prices at 30 September 2023 was GBP693.1m (30 September 2022:
GBP825.5m).
Financial assets and liabilities are measured at fair value and
are classified as level 2. This uses the fair value hierarchy
whereby inputs, which are used in the valuation of these financial
assets, and liabilities have a significant effect on the fair
value, are observable either directly or indirectly. There were no
transfers during the period.
9 Debt refinancing
In July 2023, the Group successfully refinanced its Senior
Facilities, replacing the existing Senior Bank Facilities maturing
15 January 2025 with new GBP600m Senior Facilities comprising
GBP300m of drawn Term Loans, split equally between GBP and EUR, and
a GBP300m undrawn multi-currency Revolving Credit Facility. The new
facilities agreement has an initial term of 4 years, to 12 July
2027 plus a 1-year optional extension subject to agreement by the
parties.
As a result of refinancing, the existing Senior Bank Facilities
were derecognised and the refinancing was treated as a substantial
modification of the Group's existing debt agreement as the new
Senior Bank Facilities are on substantially different terms. As a
result, all remaining unamortised arranged fees and debt
modification adjustments from existing Senior Bank Facilities were
recognised in the statement of profit or loss as a non-underlying
gain of GBP2.3m.
10 Acquisition of the concessions business of Midfield
Concession Enterprise Inc. ('MCE').
On 4 May 2023, the Group announced its expansion in North
America by adding 40 new units at seven airports, including four
new locations, through the acquisition of the concessions business
of Midfield Concession Enterprise Inc. ('MCE'). This trade and
assets deal has provided the Group with access to Detroit
Metropolitan Wayne County, Denver International, Philadelphia
International, and Cleveland Hopkins International, and it has also
expanded SSP's existing presence at Minneapolis St. Paul
International, San Francisco International, and Newark Liberty
International.
The total consideration under the agreement is GBP54.1m ($67
million) paid in cash on the completion date, with the deal
structured in two parts: one covering the initially acquired six
airports (GBP37.5m ($46m)) and one covering Denver airport
(remaining GBP16.6m ($21m) consideration). The transaction in
relation to the six airports was completed on 6 June 2023. On 16
November 2023, the Group took operational control of the Denver
airport part of the acquisition.
Assets acquired and liabilities assumed (provisional)
The fair values of the identifiable assets and liabilities of
the six airports (completed in the year) as at the date of
acquisition were provisionally determined as follows:
Fair value
recognised
on
acquisition
GBPm
Assets
Property, plant and equipment 25.9
Right-of-use assets 34.5
Inventory 0.3
Cash 0.1
Liabilities
Lease liabilities (23.3)
-------------
Total identifiable net assets at fair
value 37.5
Non-controlling interest measured at
fair value (9.5)
Increase in Other receivables due from
NCI 8.4
Goodwill arising on acquisition 1.1
-------------
Total net assets acquired 37.5
Satisfied by:
Purchase consideration transferred 37.5
The transaction costs of relating to the acquisition amounted to
GBP1.2m.
11 Events after the balance sheet date
On 16 November 2023, the Group took operational control of the
Denver airport part of the acquisition of the concessions business
of Midfield Concession Enterprises, Inc. The total consideration
for the Denver airport concession (GBP16.6m ($21m)) is yet to be
paid, and will be paid on legal completion of the transaction which
is expected imminently.
Assets acquired and liabilities assumed (provisional)
The fair values of the identifiable assets and liabilities
related to the post-balance sheet event, and that have not been
accounted for in the balance sheet at 30 September 2023 were
provisionally determined as follows:
Fair value
recognised
on
acquisition
GBPm
Assets
Property, plant and equipment 9.8
Right-of-use assets 9.9
Liabilities
Lease liabilities (7.0)
Total identifiable net assets at fair
value 12.7
Non-controlling interest measured at
fair value (3.2)
Increase in Other receivables due from
NCI 4.2
Goodwill arising on acquisition 2.9
Total net assets acquired 16.6
Satisfied by:
Purchase consideration transferred 16.6
12 Annual General Meeting
The Group's Annual General Meeting will be held in January 2024.
Details of the resolutions to be proposed at that meeting will be
included in the notice of Annual General Meeting that will be sent
to shareholders in December 2023.
13 Other information
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 September 2023
or 30 September 2022 but is derived from those accounts. Statutory
accounts for year ended 30 September 2022 have been delivered to
the Registrar of Companies, and those for year ended 30 September
2023 will be delivered in due course.
The auditor has reported on the accounts for the year ended 30
September 2023; their report was:
i. unqualified, and
ii. did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Company's Annual Report and Accounts for the year ended 30
September 2023 will be posted and made available to shareholders on
the Company's website in January 2024.
14 Forward looking statement
Certain information included in this announcement is forward
looking and involves risks, assumptions and uncertainties that
could cause actual results to differ materially from those
expressed or implied by forward looking statements.
Forward looking statements cover all matters which are not
historical facts and include, without limitation, projections
relating to results of operations and financial conditions and the
Company's plans and objectives for future operations, including,
without limitation, discussions of expected future revenues,
financing plans, expected expenditures and divestments, risks
associated with changes in economic conditions, the strength of the
food and support services markets in the jurisdictions in which the
Group operates, fluctuations in food and other product costs and
prices and changes in exchange and interest rates. Forward looking
statements can be identified by the use of forward looking
terminology, including terms such as 'believes', 'estimates',
'anticipates', 'expects', 'forecasts', 'intends', 'plans',
'projects', 'goal', 'target', 'aim', 'may', 'will', 'would',
'could' or 'should' or, in each case, their negative or other
variations or comparable terminology. Forward looking statements in
this Annual Report and Accounts are not guarantees of future
performance. All forward looking statements in this Annual Report
and Accounts are based upon information known to the Company on the
date of this Annual Report and Accounts. Accordingly, no assurance
can be given that any particular expectation will be met and
readers are cautioned not to place undue reliance on forward
looking statements, which speak only at their respective dates.
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. Other than in
accordance with its legal or regulatory obligations (including
under the UK Listing Rules and the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority), the Company
undertakes no obligation to publicly update or revise any forward
looking statement, whether as a result of new information, future
events or otherwise. Nothing in this announcement shall exclude any
liability under applicable laws that cannot be excluded in
accordance with such laws.
This information is provided by RNS, the news service of the
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END
FR UPGRGPUPWUQA
(END) Dow Jones Newswires
December 05, 2023 02:00 ET (07:00 GMT)
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