AGM Notice, Special Dividend & Share Consolidation

RNS Number : 9554C

SSP Group PLC

25 January 2018

 

25 January 2018

LEI: 213800QGNIWTXFMENJ24

SSP Group plc

(the "Company")

Posting of 2017 Annual Report and Accounts and Publication of a Circular including the Notice of Annual General Meeting and details of the Special Dividend and Share Consolidation

On 22 November 2017 the Company published its preliminary results for the year ended 30 September 2017 and announced its intention to return c.£100 million to shareholders by way of a Special Dividend. The Company today announces that the Directors have approved the decision to recommend the Special Dividend, subject to Shareholder approval, and have posted to Shareholders a circular which includes the Notice of Annual General Meeting and further details of the proposed Special Dividend and Share Consolidation (the "Circular"), a Form of Proxy and a copy of its Annual Report and Accounts for the period ending 30 September 2017. 

All definitions used in the Circular have the same meaning when used in this announcement. The summary set out in this announcement should be read in conjunction with the full text of the Circular.

Special Dividend

The amount of the Special Dividend is 20.9 pence per Existing Ordinary Share. Subject to Shareholder approval at the Annual General Meeting, the Board is proposing to pay the Special Dividend to Shareholders on the register of members of the Company at 6.00 p.m. (London time) on 13 April 2018.  The Special Dividend is expected to be paid to Shareholders on 27 April 2018.

Share Consolidation

It is proposed that the payment of the Special Dividend be accompanied by a consolidation of the Company's ordinary share capital. In line with market practice, the Share Consolidation is intended to maintain comparability, as far as possible, of the Company's share price before and after the Special Dividend, subject to normal market fluctuations. Under the proposed Share Consolidation, the Existing Ordinary Shares will be sub-divided and consolidated so that Shareholders will receive 30 New Ordinary Shares for every 31 Existing Ordinary Shares held at the Record Time, expected to be 6.00 p.m. on 13 April 2018. The nominal value of each New Ordinary Share will be 1 1/30 pence.  Unless a Shareholder elects otherwise, fractions of New Ordinary Shares arising from the Share Consolidation will be aggregated and sold in the market, with the proceeds being distributed to the SSP Foundation (a charitable organisation set up by SSP Group plc, registered under charity no. 1163717).

The ratio used for the Share Consolidation has been set by reference to the closing middle-market price of 654.5 pence per Existing Ordinary Share and the number of Existing Ordinary Shares in issue on 24 January 2018 (being the latest practicable date prior to the publication of the Circular).

Shareholders will own the same proportion of the Company as they did before the Share Consolidation so far as possible. Although the New Ordinary Shares will have a different nominal value, they will carry the same rights as currently attach to Existing Ordinary Shares under the existing articles of association.

The Special Dividend and Share Consolidation are conditional on Shareholder approval which will be sought at the Annual General Meeting on 27 February 2018 and Admission of the New Ordinary Shares to the Official List and to trading on the Main Market.

Applications will be made for (i) the Official List to be amended to reflect the New Ordinary Shares arising from the Share Consolidation, and (ii) the New Ordinary Shares to be admitted to trading on the Main Market. Trading on the London Stock Exchange for the Existing Ordinary Shares (under ISIN GB00BNGWY422) is expected to close at 4.30 p.m. on 13 April 2018, and it is expected that Admission of the New Ordinary Shares will become effective and trading in the New Ordinary Shares (under ISIN GB00BFWK4V16) will commence at 8.00 a.m. on 16 April 2018. 

Expected Timetable

Latest time and date for receipt of Forms of Proxy and CREST proxy instructions for the Annual General Meeting	11.00 a.m. on 23 February 2018
Annual General Meeting	11.00 a.m. on 27 February 2018
Ex-dividend date for the Final Dividend	15 March 2018
Record date for Final Dividend	6.00 p.m. on 16 March 2018
Payment date for Final Dividend	29 March 2018
Latest time of dealings in Existing Ordinary Shares	4.30 p.m. on 13 April 2018
Record Time for Special Dividend and Share Consolidation	6.00 p.m. on 13 April 2018
Effective time and date of the Share Consolidation	8.00 a.m. on 16 April 2018
Admission of New Ordinary Shares to the Official List and to trading on the Main Market and commencement of dealings in New Ordinary Shares	8.00 a.m. on 16 April 2018
CREST accounts credited with New Ordinary Shares	By or as soon as practicable after 8.00 a.m. on 16 April 2018
Dispatch (where applicable) of share certificates in respect of New Ordinary Shares	26 April 2018
Payment date for Special Dividend	27 April 2018

Notes

1.     All time references in this announcement are to London, UK time.

2.     These dates are given on the basis of the Board's current expectations and are subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service and will be available on the Company's website at www.foodtravelexperts.com.

3.     All events in the above timetable scheduled to take place after the Annual General Meeting in respect of the Final Dividend, the Special Dividend and the Share Consolidation respectively are conditional on the approval by Shareholders of the Final Dividend, the Special Dividend and the Share Consolidation respectively as proposed.  All events in the timetable from Admission of the New Ordinary Shares are also conditional upon Admission occurring.

Annual General Meeting

The Company's Annual General Meeting will be held at 11.00 a.m. on 27 February 2018 at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A 2AL.

National Storage Mechanism

Copies of the 2017 Annual Report and Accounts, the Circular and Form of Proxy have been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Morningstar.co.uk/uk/nsm. Copies of the 2017 Annual Report and Accounts and the Circular are also available on the Company's website at www.foodtravelexperts.com.

Regulated Information

The information set out in the Appendix, which is extracted from the 2017 Annual Report and Accounts, is included for the purposes of complying with DTR 6.3.5 and its requirements on how to make public annual financial reports.  The information in the Appendix should be read in conjunction with the Company's preliminary results for the year ended 30 September 2017 released on 22 November 2017 which can be viewed at www.foodtravelexperts.com. Together, these constitute the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service.

For further information contact:

SSP Group plc

Helen Byrne

Company Secretary & General Counsel

0207 543 3300

Investor and analyst enquiries

Sarah John

Director of Investor Relations

[phone]

E-mail: [e-mail]

Appendix

This material should also be read in conjunction with, and is not a substitute for reading, the full 2017 Annual Report and Accounts.

Note and page references in the text of this Appendix refer to note numbers and page numbers in the 2017 Annual Report and Accounts that can be viewed on the Company's website.

1.   Directors' Responsibility statement

The following responsibility statement is repeated here to comply with DTR 6.3.5.  This statement relates to, and is extracted from, page 57 of the 2017 Annual Report and Accounts. Responsibility is for the full 2017 Annual Report and Accounts, not the extracted information presented in this announcement and the full year results announcement.

The Directors are responsible for preparing the annual report and the Group and parent company financial statements in accordance with applicable law and regulations. 

Company law requires the Directors to prepare Group and parent company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law and have elected to prepare the parent company financial statements in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework. 

Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of the Group and parent company financial statements, the Directors are required to: 

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable, relevant, reliable and prudent; 

·      for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU; 

·      for the parent company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; 

·      assess the Group and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and 

·      use the going concern basis of accounting, unless they either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so. 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. 

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors' report, Directors' remuneration report and Corporate Governance statement that complies with that law and those regulations. 

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge: 

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and 

·      the Strategic report and Directors' report include a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. 

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Kate Swann

Chief Executive Officer

21 November 2017

Jonathan Davies

Chief Financial Officer

21 November 2017

2.   Principal Risks

The description below of the principal risks and uncertainties that the Company faces is extracted from pages 18 to 21 of the 2017 Annual Report and Accounts.

The following table summarises the principal risks and uncertainties to which the Group is exposed, and the actions taken to mitigate those risks and uncertainties. Risks are identified as principal based on the likelihood of occurrence and the potential impact on the Group and are listed in order of priority. 

Two new risks have been added to the principal risks since the prior year, indicated as such in the table below.

↑    Risk increasing             ↓ Risk decreasing              ↔ No risk movement

Risk/Risk Priority	Risk Description	Mitigating Factors
1.  Business environment ↔	The Group operates in the travel environment where external factors such as the general economic and geopolitical climate, levels of disposable income, weather, changing demographics and travel patterns could all impact both passenger numbers and consumer spending. There is a risk that the Group is unable to, or poorly placed to, respond to these external events. The travel environment is vulnerable to acts of terrorism or war, an outbreak of pandemic disease, or a major and extreme weather event or natural disaster which could reduce the number of passengers in travel locations.	The Group monitors the performance of individual business units and markets regularly. The Executive Directors review detailed weekly and monthly information covering a range of KPIs, and monitors progress on key strategic projects with local senior management. Specific short and medium-term actions are taken to address any trading performance issues which are monitored on an ongoing basis. The Group also conducts extensive research to understand current levels of customer satisfaction and gathers feedback on changing requirements. The Group has business continuity plans in place including liaison with authorities and clients in key locations to ensure that contingency plans are comprehensive and complete.
2.  Retention of existing client relationships ↑	The Group's operations are dependent on the terms of airport and railway station concession agreements. Growth is dependent on the Group's ability to retain existing concession contracts and win new contracts from either new or existing clients. The Group's clients may turn to alternative operators, cease operations, terminate contracts with the Group or increase cost pressure on the Group.	The Group's local management structures in all its major geographies allow it to maintain strong relationships with its clients and monitor performance in close partnership with its clients' management teams.  The Group has an established contact strategy with key clients to establish and/or maintain ongoing relationships. The Group also has an annual online and interview-based client survey to ensure any concerns are being addressed. Furthermore, the Group proactively seeks to invest in, extend and enhance its offers in key locations, working in conjunction with clients.
3.  Poor execution and mobilisation of new contracts ↔	There is a risk that the Group may not be successful in mobilising new contracts and operating them successfully.	The Group, regional and country senior management teams review mobilisation plans to ensure that new openings are delivered on time and in line with the specific agreement or contract.  The Group has strengthened the management teams in the high-growth regions of Asia Pacific, and India, especially in finance and operations.
4.  Labour laws and unions ↑	Approximately 46% of the Group's employees are subject to collective bargaining agreements. These are principally in France, Germany, Spain, Denmark, Finland, Norway, Sweden and the United States. The Group is also subject to minimum wage requirements and mandatory healthcare subsidisation in some of the jurisdictions in which it operates, notably North America, the United Kingdom and China.	The Group works proactively with all of its unions to ensure that the various collective bargaining agreements are appropriate for the Group and minimise commercial risks. The Group is reviewing the impact of changes in remuneration structures, including the introduction of the National Living Wage and Apprenticeship Levy in the United Kingdom and the healthcare bill in the United States and developing mitigating strategies across the Group.
5.  Implementation of efficiency programmes ↑	The Group is continuously seeking new programmes to improve efficiency. These change programmes could fail to deliver the desired benefits e.g. labour efficiency and improvements in waste and loss.	The Group has completed detailed evaluation, planning and partial implementation of its major change programmes, adapting and responding to feedback on an ongoing basis. Where required to aid these programmes, the Group continues to utilise specialist expertise in the business, both at a Group and a country level. The Group provides central support with regional CEOs and CFOs to facilitate appropriate country actions based on key performance indicators linked to margin management. Group IT also provides support for project management and implementation using agreed standard business processes and controls.
6.  Changing client behaviours ↔	Changing client requirements, such as splitting tenders across two or more providers, partnering with operators in joint ventures, developing third party purchasing models and favouring local brand operators or partnering directly with brand owners, may adversely affect the Group's business.	The Group has in place a clear 'SSP Value Proposition' that it presents to the client to address this risk. The Group Director of Strategic Partnerships and the Group Chief Commercial Officer work closely with country management teams to enhance and clarify the Group's proposition to its clients. The Group's contact strategy with key stakeholders and clients helps to mitigate this risk. This is informed by its annual client survey, which is carried out by an independent party.
7.  Expansion into new markets ↔	The Group's strategy involves expanding its business in developing markets, including Asia Pacific, India, Eastern Europe and the Middle East. Political, economic and legal systems and conditions in these countries are generally less predictable than in countries with more developed institutional structures, subjecting the Group to additional commercial, reputational, legal and compliance risks.	The Group has strengthened the management team in Asia Pacific, and India, especially in finance and operations where this risk is high and the Group is growing.  In addition, the Group adopts a joint venture model in certain new territories to provide access to existing local infrastructure and expertise as well as to help mitigate the risk inherent on entering new territories. The Group has clearly defined authorisation procedures for all contract investment to ensure that it is consistent with the objectives set by the Board, and fully considers and evaluates the risks inherent in expansion into new locations and territories. The Group works with in-house and external advisors to ensure the risks of doing business in developing markets are identified and, where possible, mitigated before entering those markets.This includes appropriate due diligence of potential joint venture and other local partners. The Group legal team works closely with country legal and operational teams to support business development activities and ensure compliance with local requirements. The risk of working in developing markets is also monitored by the Risk Committee and the Audit Committee.
8.  Senior management capability and retention ↔	The performance of the Group depends on its ability to attract, motivate and retain key employees. The skills developed in our business are highly attractive to other companies, which regularly target our staff for recruitment. The Group may not have sufficient management capability at a senior level, such as country leadership, to execute the planned operational efficiency programmes and support the growth and development of the business. The Group may not have sufficient resources such as in legal, finance and IT, to meet the changing and complex needs of an international and growing business.	The Group continues to review key roles and succession plans in country and at a Group level. Senior resources have been strengthened in a number of strategically important and growing businesses.  The Remuneration Committee monitors the levels of remuneration for senior management and seeks to ensure that they are designed to attract, retain and motivate the key personnel required to run the Group effectively. The Group carries out an annual talent mapping exercise to identify candidates for future roles and continues to invest in additional resource to support change initiatives and business development programmes.
9.  Intensified competition ↑	Competition intensifies as the Group's competitors become more sophisticated and direct more resources to the preparation of tenders and take a more aggressive position on commercial terms when tendering for contracts. This could put pressure on the Group's profitability and reduce the availability and attractiveness of contracts.	The Group has developed high-quality 'business-to-business' marketing collateral to clearly lay out the benefits of working with SSP, which it shares with the clients to help them better understand the Group's proposition from both quantitative and qualitative aspects. The Group's strengthened business development team utilises the feedback from regular client satisfaction surveys when developing new tenders to ensure they remain competitive to clients.  The Group has clear internal benchmarking and investment appraisal processes to evaluate tender proposals and to ensure that the Group is able to make a competitive offer, as well as meet its investment criteria.  The Group continues to extend its brand portfolio, including via partnerships with celebrity chefs, to provide breadth and depth as part of a tender process. .
10.        Impact of Brexit NEW RISK	There may be a potential impact from Brexit on consumer spending, cost inflation and the mobility of EU labour in the UK.	The Group carefully monitors the ongoing negotiations of the UK's exit from the EU and as further impacts of Brexit develop and crystallise, the Executive Directors and senior management will consider and implement additional mitigating actions. The Group maintains a global portfolio and regularly monitors the impact of foreign exchange fluctuations on its cash flows, mitigating the impact from exchange risk. The Group's pricing and range initiatives are driven by continuous monitoring of consumer spend benchmarks. Various gross margin initiatives including recipe re-engineering and procurement rationalisation continue to be pursued, in order to mitigate the impact of cost inflation. The Group continues to develop its UK recruitment strategy to ensure SSP is positioned as an attractive employer in the UK.
11.        Insufficient business development capability and investment ↓	The Group may not be successful in winning new contracts on commercially acceptable terms. The Group may not have the capability to enter new markets and capitalise on the business development opportunities these provide.	The Group prioritises its investment in new contracts as part of the ongoing review of its global pipeline, and the prioritisation of its capital investment and resources. The Group has strengthened the management team in Asia Pacific and India, especially in finance and operations.
12.        Compliance Risk NEW RISK	The laws and regulations governing the Group's industry have become increasingly complex across a number of jurisdictions and a wide variety of areas, including, among others, food safety, labour, employment, immigration, security and safety, health and safety, competition and antitrust, consumer protection (including data protection), environment, licensing requirements and related compliance. With a UK parent company, the Group is required to comply with the provisions of the UK Bribery Act and the new legislation aimed at preventing the facilitation of tax evasion, as well as the local equivalent laws in the territories in which the Group operates. The Group is required to comply with current data privacy laws, in many of the jurisdictions in which it operates. In the EU, the Company will be subject to the new General Data Protection Regulation (GDPR) from May 2018. This requires the adoption of stricter data management processes in order to address greater rights for individuals, mandatory breach reporting and more rigorous compliance obligations.  There is a risk that the Group fails to comply with the new rules or to implement adequate processes to safeguard personal data. This could give rise to larger fines, penalties and civil action from individuals. The preparation of food and maintenance of the Group's supply chain require a base level of hygiene, temperature maintenance and traceability, and expose the Group to possible food safety liability claims and issues.	The Group has processes in place to ensure compliance with local laws and regulations. The Group may obtain external advice to supplement the in-house legal and compliance team. The Group has a Code of Conduct and Anti-Bribery and Anti-Corruption Policy and training has been rolled out internationally.  The Group's procedures under the policy include regular reporting by the businesses into the Risk Committee. Compliance is monitored by Internal Audit and the Risk Committee on an ongoing basis and all alleged breaches of the Code of Conduct and policy are investigated. The Group has conducted a risk assessment regarding the new UK tax legislation and is reviewing its policies and procedures in this regard. The Group has established a GDPR working group with representatives from each key division to assess and ensure the Group is able to manage GDPR compliance risk. Local champions have been identified and the Group is making progress to ensure it is compliant with the new rules. The Group has food safety controls and procedures in place that are embedded in the Group's operations. These are monitored by country management teams on a regular basis and appropriate action is taken if any issues are identified. Training sessions are also held in country to ensure compliance with these procedures.
13.        Execution of outsourcing programmes        ↔	The Group fails to execute outsourcing projects effectively resulting in the business as usual being disrupted and the introduction of new third party risks.	The Group continues to utilise specialist resources in the business to manage implementation and transition projects and to use external advisors to provide input into the management of risks on such projects. Performance feedback is reported to the Executive Committee on a regular basis and the Risk Committee periodically. The Group has included the outsourcing centres in its Internal Audit review scope.  The outsourcing partners are highly reputable and were selected after a rigorous tender process and extensive due diligence.
14.       Maintenance/development of brand portfolio ↔	The Group's success is largely dependent upon its ability to maintain its portfolio of proprietary brands as well as the brands of its franchisors, and the appeal of those brands for clients and customers. The loss of any significant partner brands, the inability to obtain rights to new brands over time or the diminution in the appeal of partner brands or the Group's proprietary brands could impair the Group's ability to compete effectively in tender processes and ultimately have a material adverse effect on the Group's business.	The Group carries out extensive customer research into passengers' needs and continually analyses market trends in order to enhance its brand and concept portfolio on an ongoing basis. The Group continues to strengthen its dedicated brands team to work closely with its partner brands and to enable greater capacity to attract and manage a broader portfolio of external brands.
15.        Cyber threats ↔	The Group becomes exposed to information security and cyber threats e.g. Payment Card Industry Data Security Standards (PCIDSS).	The Group continually reviews its business continuity plans for its supply chain, IT disaster recovery, and information security policies and practices to ensure that these meet the changing landscape. The Group's segmental business model and IT systems structure help to ensure that potential cyber attacks are likely to remain isolated locally rather than impacting the whole Group.
16.        Tax strategy ↔	Risk that reputation is damaged if customers, clients and/or suppliers believe that the Group is engaged in aggressive or abusive tax avoidance.	The Group has a tax management policy which is based on Board guidance to adopt a low risk tax strategy.

3.   Related Parties

The following is extracted from note 27 to the Group's consolidated financial statements (on pages 97 to 98).

Related party relationships exist with the Group's subsidiaries, associates (note 12), key management personnel, pension schemes (note 19) and employee benefit trust (note 21).

Subsidiaries

Transactions between the Company and its subsidiaries, and transactions between subsidiaries, have been eliminated on consolidation and are not disclosed in this note. Where the Group does not own 100% of its subsidiary, significant transactions with the other investors in the jointly owned subsidiary (JV partner), other than those listed in note 21, are disclosed in this note. Sales and purchases with related parties are made at normal market prices.

Associates

Significant transactions with associated undertakings during the year, other than those included in note 12, are included in the table below.

	2017 £m	2016 £m
Purchases from related parties1	(5.4)	(4.8)
Management fee income	2.5	1.6
Other income	1.5	0.9
Other expenses2	(6.5)	(0.2)
Amounts owed by related parties at the end of the year	4.2	0.7
Amounts owed to related parties at the end of the year	(0.8)	(4.9)

1  The majority of purchases from related parties relates to purchases from The Minor Food Group PCL (£4.8m; 2016: £4.8m) which owns 51% of Select Service Partner Co. Limited. 

2  The majority of other costs relate to £5.3m concession fees charged by Mumbai Airport Private Limited, which owns 14.7% of Mumbai Airport Lounge Services Private Limited. 

The Group has provided a number of guarantees to third parties in respect of obligations of its associates, relating to, for example, concession agreements, franchise agreements and financing facilities. In addition, certain subsidiaries benefit from guarantees provided by the Group's JV partners to similar third parties (in respect of obligations of the subsidiaries). These guarantees are consistent with those provided in the normal course of business in respect of the Group's wholly owned subsidiaries.

Remuneration of key management personnel

The remuneration of key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 'Related Party Disclosures'. The Group considers key management personnel to be the Chief Executive Officer, Chief Financial Officer and Non-Executive Directors.

	2017 £m	2016 £m
Short-term employee benefits	(4.1)	(4.0)
Post-employment benefits	(0.4)	(0.4)
Share-based payments	(2.3)	(1.3)
	(6.8)	(5.7)

 

END

 

 

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