Annual Financial Report

RNS Number : 6995X

SSP Group PLC

06 January 2022

 

6 January 2022

LEI: 213800QGNIWTXFMENJ24

SSP Group plc

(the "Company")

Posting of 2021 Annual Report and Accounts and Notice of Annual General Meeting

On 8 December 2021, the Company published its preliminary results for the year ended 30 September 2021. The Company announces that it has today posted to shareholders copies of its Annual Report and Accounts for the period ending 30 September 2021, the Notice of Annual General Meeting (the "Notice of AGM") and Form of Proxy.

Copies of the 2021 Annual Report and Accounts, the Notice of AGM and Form of Proxy have been submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism . Copies of the 2021 Annual Report and Accounts and the Notice of AGM are also available on the Company's website at:  https://investors.foodtravelexperts.com/investors.aspx .

Annual General Meeting

The Company's Annual General Meeting ("AGM") will be held at 11am on 4 February 2022 at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A 2AL.

We would like to remind our shareholders that they should not attend the AGM if they are suffering from Covid-19 symptoms or are otherwise isolating in accordance with Government Guidance. Furthermore, due to the evolving nature of the pandemic, it may be necessary to make changes at short notice to the way in which we conduct the AGM, including in the event of a reintroduction of government restrictions on social distancing or public gatherings. Shareholders planning to attend the meeting in person should therefore check the Company's website for any further announcements :  https://investors.foodtravelexperts.com/investors/shareholder-information/2022.aspx .

We strongly recommend that you appoint the Chair or another nominated person as your proxy to ensure your vote can be counted, whether or not you intend to attend the AGM in person. Please note that if restrictions on public gatherings are reintroduced, if you appoint someone other than the Chair as your proxy they may not be permitted to attend the AGM and therefore would not be able to vote your shares. Subject to Government Guidance at the relevant time, completing a Form of Proxy will not prevent you from attending and voting at the AGM in person.

Proxy appointments must be received by Computershare by no later than 11.00 a.m. (GMT) on Wednesday 2 February 2022.

Regulated Information

The information set out in the Appendix, which is extracted from the 2021 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 2021 released on 8 December 2021 which can be viewed at https://investors.foodtravelexperts.com/investors/reports-and-presentations/2021.aspx . 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

General Counsel & Company Secretary

[phone]

Investor and analyst enquiries

Sarah John

Corporate Affairs Director

[phone]

E-mail: [e-mail]

Appendix

This material should also be read in conjunction with, and is not a substitute for reading, the full 2021 Annual Report and Accounts.

Note and page references in the text of this Appendix refer to note numbers and page numbers in the 2021 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 136 of the 2021 Annual Report and Accounts. Responsibility is for the full 2021 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 Accounts 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 the Group's 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 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 the Directors' Report includes 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.

Jonathan Davies

Deputy Chief Executive Officer and Chief Financial Officer

7 December 2021

2.  Principal Risks

The description below of the principal risks and uncertainties that the Company faces is extracted from pages 57 to 67 of the 2021 Annual Report and Accounts.

1.  Impact of Covid-19
Executive responsibility for this risk: Group CEO, Deputy CEO and CFO, Regional CEOs
Link to Strategy:  1, 3,4		Trend: ↔
Risk description		Mitigating factors
The pandemic has continued to have a severe effect on the travel sector, with closures due to lockdowns in most of SSP's markets in the first half of the year and a slow recovery in the second half. There is a risk of further lockdowns and restrictions due to mutations of the virus, further stalling the recovery in our markets, as was seen with the Delta variant (including the Omicron variant) in the current financial year. Covid-19 may result in long-term structural changes to the industry and consumer behaviour. In the Air sector most industry analysts expect that there will not be a recovery to pre-Covid levels of activity until 2023 or 2024. The principal reasons for this will be a potential loss of business travel, as companies look to restrict travelling and promote video-conferencing, and a reduction in long haul travel, as a consequence of airline capacity reductions and safety concerns. In the Rail sector, passenger numbers may be impacted longer term as a consequence of the accelerated trend towards working from home, thereby reducing commuter travel which is important for SSP's rail operations. These structural changes mean that passenger volumes may not return to pre-Covid levels, potentially impacting our sales potential and profitability, given the fixed operational cost base. Similarly, pressure from clients to pay fixed minimum guaranteed rents (MAGs) and open more outlets, despite low passenger numbers, increases the risk that units will not operate profitably. There is also the risk that in the case of further outbreaks of the virus, government support such as furlough schemes may not be available. Outlet reopenings have been impacted by shortage of operational staff in certain locations. There is a risk that due to the severe impact of the pandemic on the food travel sector, staff may change industry and the shortages become a long-term trend. See pages 16 to 17 for our view on the likely recovery of the travel market.		The Group has implemented short-term cost reductions and a significant restructuring programme to reduce the cost base, while also improving short-term liquidity by the use of government support schemes, a reduction in capital expenditure and negotiating rent reliefs with its clients. A reduction in product range has also further reduced supply chain complexity and costs. Following the Rights Issue in April 2021, SSP is now well placed to fund the recovery phase. For more information on the Rights Issue see pages 68 to 69 and 151. Long-standing client relationships have enabled our local teams to successfully renegotiate rents and reopening programmes. In the medium term, SSP's product offer will reflect the changing passenger mix, in particular the shift towards leisure from business travel. The Group CEO and CFO continue to carry out focused weekly trading reviews with country management teams, who now use rolling forecasts in place of quarterly forecasts to enable the Group to react to changes as they occur. Group HR has led a comprehensive review of government guidelines on health and safety and social distancing procedures to ensure customer and employee safety can be ensured as offices and units start to reopen.
2.  Business environment and geopolitical uncertainty
Executive responsibility for this risk: GroupCEO, Deputy CEO and CFO, Regional CEOs
Link to strategy: 1, 2		Trend: ↔
Risk description		Mitigating factors
The Group operates in the travelenvironmentwhereexternalfactorssuchas the general economic and geopolitical climate, levels of disposableincome, changing demographics and travel patterns could all impact bothpassengernumbersandconsumerspending.ThereisariskthattheGroupisunable,orpoorlyplaced,torespondtotheseexternalevents. The travel environment is vulnerable to acts of terrorism or war, furtheroutbreaks of pandemic disease, or a major and extreme weather eventornaturaldisasterwhichcouldreducethenumberofpassengersintravel locations.Whilstterrorismcontinuestobeaprominentrisk,nosignificantattacks have taken place in the current year, although the events inAfghanistanhaveincreasedriskintheregion. Tourism and business travel were materially impacted by Covid-19 resulting in a direct business impact duetothedownturnintheglobaleconomy. However,therecoveryintheoverallglobaleconomyhasbeenrobustinthefourth quarter in most of our major markets, approaching pre-pandemiclevels.ThereisariskthatthismaybeimpactedbyfutureCovid-19variantsincludingOmicron. Furthermore, Covid-19 has exacerbated risk to airline stability, whichhadpreviouslybeenincreasing,e.g.thefailureofJetAirways. In the medium to longer term, public concern over climatechangemayimpactairtravel,eitherdirectlyorthroughgovernmentpolicies.		The Group monitors the performance of individual business units andmarkets regularly. The Executive Directors review detailed weekly andmonthly performance, covering a range of KPIs, and monitor progress onkey strategic projects with local senior management. Specific short- andmedium-termactionsaretakentoaddressanytradingperformanceissueswhicharemonitoredonanongoingbasis. There continues to be greater focus on business continuity planning andrecovery.TheBusinessContinuityplanwastestedduringthiscurrentcrisis,with staff working from home, and has proved to be effective. The Grouphas been conducting research to understand changing requirements ofcustomersinlightofthepandemictobettertailorouroffertotheirneeds. On climate change, we are developing our response totheTCFDrequirements. Forfurtherinformationseepages54to57.Inaddition,seeOurStrategyonpages20to25andCreatingSustainableValueonpages42to47
3.  Availability of labour and wage inflation
Executive responsibility for this risk: Regional CEOs, Group Chief People Officer
Link to strategy: 3,4		Trend: New risk
Risk description		Mitigating factors
Covid-19 has had a near-term impact on the hospitality sector resulting in frontline staff and skilled labour shortages across the Group. This is a result of the shift in the workforce to other sectors (e.g. online or service centre operations). In addition, government support during the pandemic has reduced participation in the workforce (e.g. in the US). This has resulted in high wage inflation adversely impacting margins as well as causing delays to the store reopening programme. There is also a risk that SSP will be unable to recruit sufficient resources to support planned growth in a timely manner. Mass migration and population movements in both the UK (Brexit) and the US (immigration policy) continue to contribute to these supply shortages. There is also a trend towards greater demands by unions for additional employee protections (e.g. payments during mandatory quarantine, increased healthcare payments) adding to inflationary pressures.		Group HR continues to support the development of mitigating strategies for labour cost inflation across the Group. Various incentives are being offered to retain existing frontline staff. Each business area is closely monitoring their markets by location to ensure SSP remains competitive, in terms of pay and benefits, and continues to attract talent. Group HR is working with the business to ensure we take either defensive or proactive steps to ensure business continuity. See pages 33 to 37 and 48 to 49 for details of our relaunched People Strategy as well as details of engagement with our colleagues.
4.  Impact of Brexit
Executive responsibility for this risk: Regional CEOs, Group Chief People Officer
Link to strategy:  1,3    Trend: ↔
Risk description		Mitigating factors
Brexit has had an adverse impact on the wider economic environment in the UK and across the EU, resulting in weaker consumer spending in the travel food and beverage market. Restrictions on mobility of EU nationals post-Brexit has impacted SSP's labour force in the UK. The challenges in recruiting skilled kitchen labour and catering staff have continued over the prior year and may do so over the medium term.		Various gross margin initiatives, including recipe re-engineering andprocurementationalization,continuetobepursued,tomitigatetheimpactofcostinflation. The Group's pricing and range initiatives are drivenbycontinuousmonitoringofconsumerspendingbenchmarks. The Group continues to develop itsUKrecruitmentstrategytoensureSSPispositionedasanattractiveemployerintheUKduringthestorereopeningprogramme. There is also an ongoing focus on labour flexibility andproductivity to improve staff retention rates. An increased focus ontechnology initiatives during the Covid-19 recovery stage will help reducedemandforlabourasunitsopen. The Group Treasury team maintains a global portfolio and regularly monitors the impact of foreign exchange fluctuations on its cash flows, mitigating the impact from foreign exchange risk. For more information, see Our Strategy on pages 20 to 25 and our People Strategy on pages 48 to 49.

5.  Supply chain disruption and product cost inflation
Executive responsibility for this risk: Regional CEOs, Chief Procurement Officer
Link to strategy : 3		Trend: New risk
Risk description		Mitigating factors
There has been a shortage of lorry delivery drivers in the UK, Europe andUScausingsupplydisruption.Lessfrequentdeliverieshavehadanadverseimpactonefficiencyandhencecost.Similarly,thereisariskthatSSPcan't meetincreasedsupplierminimumorderquantitieswhilecustomernumbersremaindepressedasaresultofCovid-19. Globally, demand has significantly exceeded supply capability for variousproducts.Lackofavailabilityhasledtoadeclineinvolume-baseddiscountsand purchasing and marketing income. Similarly, a shortage of supply of ITequipment risks delaying implementation of various efficiency programmes suchasOrderatTableandreplacementofelectronictillsatunits. There also continues to beariskoffurtherproductcostincreasesduetocostofsocialdistancinginfactoriesaswellasariskofsupplychain disruptionifmanufacturershaltoperationsduetolocalCovid-19outbreaksorinsolvency. Capital expenditure costs will increase as projects deferred during theheightofCovid-19topreservecashstarttoresume,inmanycasesathighercostsgivethecurrentinflationinbuildingcosts.Asaresult,originalreturnsoninvestmentmaynolongerbeachievable.		In response to the supply chain disruption andproductcostinflation,therehas been a reduction in product range to reduce supply chain complexity,and a programme to identify alternative suppliers where any issues arenotedwithexistingsuppliers. For further details on our engagement withsuppliersseepage45. ARightsIssuewascompletedinApril2021raising£475mofcash(£450.8mnet proceeds). This has ensured that sufficient cash is available to financeanyrequiredcapitalexpenditure.Inaddition,capitalrationingandproactivenegotiations are ongoing with clients to ensure that capital expenditure isstaggeredandcanbedeferredwherepossible.
6.  Senior Management capability and retention
Executive responsibility for this risk: Group Chief People Officer
Link to strategy: 4		Trend: ↑
Risk description		Mitigating factors
The performance of the Group depends on its ability to attract, motivateandretainkeyemployees.GiventheimpactofCovid-19andtheincreasingrisk over staff retention, particularly for senior employees withtransferableskills,insufficientseniorcapabilityriskcontinuestobehigh. Additionally, there continues to be a risk that the Group may not havesufficientresourcesinvariousfunctions,includinginlegal,financeandIT,tomeetthechangingandcomplexneedsofaninternationalbusiness asitadaptsandrecoversfromtheimpactofCovid-19. Itmayalsobedifficulttoattractsenioremployeesasthetravelfoodsector will be considered riskier in the shorttomediumterm.		The Remuneration Committee reviewed and revised remuneration packages (including through revised Bonus and LTIP schemes) for senior management with the aim of ensuring that the reward offer is designed to attract, retain and motivate the key personnel required to run the Group effectively. Similarly, Group HR continues to evaluate remuneration of senior staff (including retention measures) to ensure they remain motivated and fairly compensated. See pages 108 to 132 for more information. The Group also continues to review key roles and succession plans at a country and at a Group level. The Group carries out an annual talent mapping exercise to identify candidates for future roles and continues to invest in additional resources to support change initiatives and career development programmes (including restarting its leadership training programmes). For further details on the People Strategy see pages 48 to 49.

7.  Retention of existing contracts
Executive responsibility for this risk: Regional CEOs
Link to strategy : 1,2	Trend: ↓
Risk description	Mitigating factors
The Group's operations are dependent on the terms of airport and railwaystationconcessionagreements.Growth(andmaintenanceofmarketshare)is dependent on the Group's ability to retain existing concession contractsandwinnewcontractsfromeitherneworexistingclients. As sales improve, it will become increasingly difficult to get rent relieffromclients and negotiations may result in friction, especially for relief soughtbeyond the near term or where there are ongoing disputes. UnsuccessfulrentreliefnegotiationsmayforcetheGrouptoexitunitsthatarenolongerviableortooperateatlessprofitablelevels. Moreover, as trading recovers from Covid-19 impact, there may be tensionsover the timing of reinstatement of suspended capital expenditureprogrammes,giventheongoingpandemicandunitclosures. Resource reductions made in response to Covid-19 may result in reducedoperationalstandards,impactingrelationshipswithclientsandfranchisepartnersinthemediumterm.	The Group's local management structures in all its major geographies allow it to maintain strong relationships with its clients and to monitor performance in close partnership with its clients' management teams. Furthermore, the Group has an established contact strategy with key clients to establish and/or maintain ongoing relationships. These are discussed between Group and local management on a regular basis. Management has actively engaged with clients on a reopening programme to ensure that units can be reopened profitably. Following the Rights Issue and improved liquidity at Group, there is a plan to recommence reinvestment in sites and to address deferred capital expenditure. For further details on our strategic priorities (including business development) see pages 22 to 25 and for an update on our engagement with clients see page 44.

8.  Regulatory compliance
Executive responsibility for this risk: Deputy CEO and CFO, General Counsel and Company Secretary, Regional CEO
Link to strategy:  1,2	Trend: ↔
Risk description	Mitigating factors
The Group's operations are subject to an increasingly wide range of evolving domestic and international legislation and standards, regulatory requirements, including as relates to ESG (including TCFD), fraud, anti-bribery and corruption and privacy (such as the General Data Protection Regulation (GDPR)) matters. Failure to comply with, or failure to adapt to changes in, legislation, regulations and standards (including the evolving and increased environmental responsibilities) could expose the Group to increased compliance costs, liability to third parties, fines, penalties, reputational damage, or result in trading restrictions or disruption. Any of the above could have an adverse impact on the Group's performance, share price or continuation of business. The Group anticipates an increased compliance and litigation risk as a result of Covid-19 and the resultant economic environment (including a reduction in resource), resulting in material settlements, fines, penalties and reputational harm.	The Group has a number of policies and operating procedures in place to ensure compliance with local laws and regulations and seeks specialist advice and additional resource where needed. The Group operates mandatory compliance training programmes. These are supported by the Internal Audit process and include review of compliance with legislation and regulations and awareness of key policies and procedures. There is regular reporting on compliance matters to the Risk Committee, with any alleged breaches of the Group's policies investigated. Since the onset of Covid-19, the Group's legal and finance teams have continued to work with the operational teams to assess the risk of non-compliance with laws and contracts arising from the crisis and to advise on mitigating actions (including operational protocols to safeguard our various stakeholders). GDPR compliance is determined and managed locally with oversight from a cross functional Group steering committee. The Group's Global Privacy programme operated under minimum controls during the year but has been bolstered by additional specialist resource who is tasked with developing our privacy controls. Emerging compliance risk is continually monitored throughout the business, supported by the annual risk management assessment process. This process led to the appointment of additional resource to prepare a plan for TCFD compliance, managed by Risk Committee. For further information on our activities regarding compliance see Embedding Sustainability (pages 28 to 41) and Corporate Governance Report (pages 82 to 95).

9. Food safety and product compliance
Executive responsibility for this risk:  Regional CEOs, General Counsel and Company Secretary
Link to strategy: 1,2	Trend: ↔
Risk description	Mitigating factors
Food safety and integrity are vital for our business. The preparation of food and maintenance of the Group's supply chain require a base level of hygiene, temperature maintenance and traceability. Non-compliance with food safety laws or failure to effectively respond to a food safety incident, can expose the Group to significant reputational damage as well as possible food safety liability claims, financial penalties and other issues. There is a risk that the UK business is not compliant with the new allergen laws ('Natasha's Law') introduced in October 2021, where foods pre-packaged for direct sale must be labelled with a full ingredients list with allergenic ingredients emphasised within it or upcoming calorie labelling laws. This could lead to fines or damage to reputation. An increase in NGO activism and UK public awareness has seen increased pressure to reduce the use of plastics in the food and beverage (F&B) industry. Switching to non-plastic alternative materials could have significant cost impact on the business. There is also the risk of additional levies being imposed by the government on the use of plastic.	The Group has implemented a global safety management programme, setting minimum standards of health and safety, fire safety and food safety across all its operations and requiring periodic reporting of performance and incident statistics. The food safety standards include processes to monitor the supply chain and to manage allergens. All SSP country operations are required to report on all food safety incidents (including allergens) on a periodic basis to the Risk Committee (which reports to the Audit Committee as appropriate). SSP UK & Ireland currently controls allergen management within the supply chain, supported by staff training and unit audits. All operational staff undertake mandatory onboarding allergen training and all existing unit colleagues completed updated training for the new legislation. All units are subject to an unannounced 'Safe and Legal' audit by the Health and Safety team on a 12-monthly cycle. The UK business has also partnered with a third-party software system, Nutritics to provide compliant labels with ingredients verification by the Health and Safety team. This system will also support compliance with the new calorie labelling regulation being introduced in April 2022. A working group has been set up to ensure timely compliance. Ongoing reviews of operations are being carried out in the UK to determine plastic-free feasibility and opportunities. For further details on activities undertaken in this area see Embedding Sustainability on pages 28 to 41.

10.  Sustainability
Executive responsibility for this risk: Group CEO, Corporate Affairs Director, Chief Procurement Officer
Link to strategy: 4	Trend:  New
Risk description	Mitigating factors
Increasing expectations from stakeholders (including customers, clients, brand partners, investors, NGOs, regulators, communities, competitors, colleagues and suppliers) on sustainability means that SSP needs to understand and act on its key sustainability issues. Climate change is an increasing risk that could impact both our operations and supply chain physically and as a result of transition to a low carbon economy (including in terms of reduced air travel) if we are not sufficiently prepared. Failure to integrate sustainability into our overall business strategy and decision-making, and to keep pace with our competitors in this area, including our rating in ESG Indices, may reduce our competitiveness and market position. Increased sustainability activism could result in disruption if SSP were found to be in breach of its sustainability responsibilities (including environmental, human rights or animal welfare). Sustainability issues are increasingly being legislated on (including Streamlined Energy and Carbon Reporting (SECR) regulations, Modern Slavery Act (MSA), Taskforce for Climate-Related Financial Disclosures (TCFD)) and it requires vigilance to stay abreast of, and respond to changing requirements, both ensuring mandatory disclosures are made and action is being taken. Failure to have appropriate due diligence processes to identify and act on sustainability issues internally and within our supply chain could potentially result in reputational damage; loss of client, brand partner and customer trust; and business continuity issues.	The Group recognises the importance of sustainability to our business and stakeholders. As such, the Board is responsible for challenging our approach and performance, including considering the impacts of sustainability and ESG risk. The Group Executive Committee is responsible for setting, driving and monitoring our sustainability direction. Issue Owners (Group HR, Procurement and Commercial) oversee sustainability activity and a senior sustainability role has been created to manage our sustainability programme. Our sustainability framework helps us to focus on the key sustainability issues that are important for our stakeholders and for SSP. It has been updated this year, building on existing commitments, setting new timebound targets, developing regional action plans including bi-annual divisional performance dashboards. Our sustainability framework takes into account stakeholder expectations. This year we have further engaged with key internal and external stakeholders and have completed a benchmarking of competitors and ESG Index ratings which will be updated periodically. For more information on stakeholder engagement see pages 42 to 47. Processes are in place to monitor compliance with sustainability related legislation and responsibilities and to manage specific sustainability risks across key topics, including policies, audits, training and briefings. Our SECR report is on page 40 and our most recent modern slavery statement is available on our website www.foodtravelexperts.com/international . For TCFD, we are aligning our disclosure with the requirements and have appointed a consultancy to undertake climate-related scenario analysis in order to prepare for FY22 reporting. For more information on progress on adopting the TCFD requirements see pages 54 to 55. Our due diligence programme monitors supplier compliance with our Ethical Trade Code of Conduct and Human Rights Policy requirements. Our risk-based approach targets compliance of key higher risk suppliers and we work collaboratively with our suppliers to improve conditions and take corrective action. For more information on progress on Embedding Sustainability see pages 28 to 41.

11.  Information security and stability
Executive responsibility for this risk:  Chief Digital and Technology Officer
Link to strategy: 4,5	Trend: ↔
Risk description	Mitigating factors
There is a risk that the Group becomes exposed to information security,cyber threats, e.g. threats detailed in the Payment Card Industry DataSecurityStandards(PCIDSS)aswellasransomwareattacks,particularlyinlightofincreasedhomeworkingofitsheadofficestaff. The Group is in the process of implementing SAPInventoryandFinancesystems which can risk significant operational disruption. There is alsoa risk that the speed of implementation is negatively impacted by theCovid-19recoveryprocess. There has been a reduction in resource as part ofSSP'sCovid-19response.Whilst resources are being scaled up to required levels, there will beincreasedpressureonITteamsintheshortterm. SSP has some operating systems which are approaching end of life in thenext18-36months.Thereisariskthatsupportforthesesystemswillcease,whichmaycausedisruption.	The Group has developed extensive IT disaster recoveryandinformationsecurity policies and practices, to ensure that these meet the changinglandscape. These are regularly discussed and reviewed by the Risk andAuditCommitteesaswellastheBoard. The Group's has a dedicated security operation centre which providestargeted threat intelligence to reduce time to detect and respond toincidents(spam,malwareattacks,phishingemails,etc.).Additionallayersof protection to prevent ransomware impacting critical files on servershavebeenadded. 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 impact the entire Group. The Group has commenced rollout of new modern workplace technology to improve security of our laptops across the business (e.g. multi factor authentication, encryption of all data on hard disks). A clear governance and management structure has been set up for the SAP project implementation including the engagement of a SAP preferred partner for the roll-out which has significant experience of implementing SAP at large companies. For further information on our investment in technology see Our Strategy on page 25.
12.  Benefits realization from efficiency programmes
Executive responsibility for this risk:  Deputy CEO and CFO, Regional CEOs
Link to strategy: 3,4,5	Trend:  ↔
Risk description	Mitigating factors
The Group is continuously seeking new programmes to improve efficiency. There is a risk that these programmes may be difficult to implement due to complexity and challenges introduced by Covid-19, and furthermore that they could fail to deliver the desired benefits, e.g. labour efficiency and minimising waste and loss. The impact of Covid-19 restructuring has been significant and may lead to loss of momentum on technology enhancements and capital investment that are required for sustainable growth. This may be compounded by the loss of resource in areas such as commercial, waste and loss, procurement and labour management.	The Group's strategy throughout the Covid-19 period has focused on cash management. This has included initiatives such as simplification of product offering and profitable reopening of units. The Group reviews its major change programmes as appropriate and adapts and responds to feedback on an ongoing basis. These programmes are supported by specialist expertise in the business where required, both at a Group and at a country level. Group IT also provides support for project management and implementation, using agreed standard business processes and controls. For further information see Our Strategy on page 24.

13.  Innovation and development of brand portfolio
Executive responsibility for this risk:  Group CEO, Chief Customer Officer
Link to strategy: 1,2	Trend: ↑
Risk description	Mitigating factors
The Group's success is largely dependent uponitsabilitytoaddtoandstrengthen its portfolio of proprietary brands and the brands of itsfranchisors,aswellastoinnovateanddevelopitsownbrands. During the pandemic, there was a reduction in investment in SSP's ownbrand as a part of the drive to minimise costs. There is a risk that such atrend will result in a decline in sales. Similarly, the loss of any significantpartnerbrands,theinabilitytoobtainrightstonewbrandsovertimeorthediminution in appeal of partner brands could impair the Group's ability tocompete effectively in tender processes and ultimately have a materialadverseeffectontheGroup'sbusiness. There is now increased pressure from brand partners to revert to fullmenus,followingsimplificationadoptedduringthepandemic.Complexityof menus may result in higher costs and greater resource requirementswhichmaybechallenginginthecurrentscenario. Franchised brands make up a high proportion of SSP's business, a trendwhich is increasing. In some cases the commercial deal structure of ourfranchise agreements may be unattractive. There is a risk that if SSPincreasespricestoimproveprofitabilitythenitmayriskbreachingtermsofthefranchiseagreements.	The Group has set as a priority the strengthening of its propriety brands, and is in the process of increasing marketing resources. A new Chief Customer Officer has been appointed with a key responsibility to reinvigorate these brands. In light of Covid-19, to provide greater support to the regions, the top 10 franchise brand negotiations are being handled by the Group centrally. There are also ongoing negotiations with franchise brand partners to obtain better terms. SSP has been successful in negotiations with several franchisors in achieving higher levels of flexibility and is working closely with brands to maximise the roll-out of operational efficiencies to ensure units are opening profitably despite lower passenger numbers. The Group will continue to carry out customer research into passengers' needs, as necessary, to ensure its brands and concepts have the right offer in the post-Covid-19 world. Finally, the Group continuously looks to strengthen the depth and breadth of its brand partners as well as to strengthen its own proprietary brands. See Our Strategy for details of investment in this area on page 25 as well as Creating Sustainable Value for details of our engagement with Brand Partners with details on page 45.
14.  Liquidity and funding
Executive responsibility for this risk:  Group CEO, Deputy CEO and CFO
Link to strategy: 5	Trend:  ↓
Risk description	Mitigating factors
Covid-19 has significantly reduced trading over anextendedanduncertaintimeframe. An inability to effectively respond and manage expenditureaccordingly would impact the Group's ability to operate within committedcredit facilities.Although salesremainedat very lowlevels during thefirst half year (c. 20% and pre-Covid 19 levels) there has been a markedimprovementoverthesummermonthswithsalesreaching50%of pre-pandemiclevelstowardtheendoftheyear.WiththesuccessfulRightsIssue,theGroup'scashflowpositionisveryrobust.Thishasresultedin asignificantreductionintheriskscoreovertheprioryear. There have been some funding issues noted at divisional level where bankshave been reluctant to provide guarantees and there has been increasedpressurefromclientstoprovidecashdepositsratherthanbankguarantees. The risk of breaching covenants on its existing financing facilitieshasbeenmaterially reduced, even after the return of £300m of Covid CorporateFinancingFacility(CCFF)fundsinFebruary2022.	SSPcompletedaRightsissueinApril2021raising£475mofcash(£450.8mnet proceeds). The Group has also secured extension to its main bankfacilities to January 2024 that were previously due to mature in July 2022,and secured waivers and modifications of the existing covenants underthose bank facilities and its US Private Placement notes. This coupled withtrend of improved sales results in a very robust liquidity and fundingposition. SSP is now able to provide funding for capital expenditure andcashdepositstodivisionsasneeded. There is continued close monitoring ofcashburnbyseniormanagementtoensurethatthisremainswithinagreedtargets.Thereisalsoaprogrammeinplacetoensurethatunitsarereopenedprofitably. For further information ontheRightsIssueandourliquidityposition,seepages68to69and151to152.
15.  Changing client behaviours
Executive responsibility for this risk:  Regional CEOs
Link to strategy: 1,2	Trend:  ↔
Risk description	Mitigating factors
During the pandemic period, there was increased flexibility from clientsandareductioninnewtenders.However,assalesstarttorecover,thiscanbe expected to change with brands demanding more investment whichwasdelayedduringtheCovid-19period.Theremayalsobeincreased requirementsforintroducing'localhero'brands,whichlikeotherfranchisedbrands,willofferrelativelylowermarginsthanSSP'sproprietybrands. There is increased competition in some ofourmajormarketsincludingtheUKandUS.Thismeansthattherewillbefurtherpressureonsalesasmorecompetitionischasinglimitedsalesduringthistimeofrecovery. As the industry returns to pre-pandemic status, the impact of previouslyconsideredclientrequirementsmaybecomearenewedrisk.Forexample,splitting tenders across two or more providers, seeking new incomestreamsthroughpouringrightsagreements,partneringwithoperatorsinjoint ventures, developing third-party purchasing models and favouringfranchise and local brand operators or partnering directly with brandowners or increased health and safety monitoring requirements, may adversely affect the Group's business and/or profit margins. For more information on market drivers see Our Market on pages 16 to 17.	The Group has in place a clear 'SSP Value Proposition' thatitpresentstotheclienttoaddressthisrisk. Senior Group commercial management works closely with countrymanagementteamstoenhanceandclarifytheGroup'spropositiontoitsclients.Thereisgreaterfocusondevelopinginternalconceptstoreducecomplexityandcosts. The Group's contact strategy with key stakeholders andclientshelps tomitigatethisriskandwearelookingtorestartourregularclientsurvey,whichiscarriedoutbyanindependentparty. There continues to be greater focus on developing internalconcepts toreducerelianceonfranchisedbrandsandhencecomplexityandcosts. See Our Strategy section (page23)andCreatingSustainableValue(page 44 - Clients) for more information on investment in businessdevelopmentandengagementwithclients.
16.  Outsourcing programmes
Executive responsibility for this risk:  Deputy CEO and CFO, Regional CEOs
Link to strategy: 5	Trend: ↓
Risk description	Mitigating factors
The Group may fail to execute outsourcing projects effectively, resulting in business as usual being disrupted andtheintroductionofnewthird-partyrisks. Furthermore, anybenefitsexpectedfromtheoutsourcingprogrammemaynotberealised. Staff turnover at outsourcing partners may be impacted by Covid-19,leadingtoincreasedriskfromlackofcontinuity.Whilsttherehasbeenlimited disruption to date, some divisions have noted short-termoperationalissueswithoutsourcingserviceproviders.	The Group continues to utilise specialist resources in the business to manage implementation and transition projects, and it continues to use external advisors to provide input into the management of risks in such projects. The Group has temporarily scaled down some outsourced resources to match reduction in business operations in light of Covid-19. This process has been well managed. Over the next year resources will be scaled up in line with the recovery of the business. There are also monthly and quarterly reviews with outsourcing partners focusing on efficiency and costs to ensure shared services are being appropriately managed. Performance feedback is reported to the Executive Committee and the Risk Committee on a regular basis.
17.  Tax compliance and responsibility
Executive responsibility for this risk:  Deputy CEO and CFO, Group Head of Tax
Link to strategy: 1,2	Trend: ↔
Risk description	Mitigating factors
The Group may suffer reputational damage if customers, clients orsuppliersbelievethattheGroupisengagedinaggressiveorabusivetaxavoidance. There is a risk that the Group may not betaxcompliantduetocomplicatedlocal tax laws across different geographical territories. Covid-19 supportschemes(e.g.furlough)havefurtherincreasedthetaxcomplianceburden. There is an increased focus on tax governance from the tax authorities,includingtheintegrationofsystemswithtaxauthorities.Therecontinuesto be more investment from OECD into Base Erosion and Profit Shifting(BEPS) related initiatives. There is a risk that there could be wholesalechanges to how taxation systems work based on the data gathered in thefuture. This is also driving digitisation resulting in a cost and complexityimpact.	The Group has a tax management policy which is based on the Board's guidance to adopt a low-risk tax strategy. The Group also regularly reviews its tax priorities and has done so in light of the Covid-19 pandemic. For example, to improve accuracy, advice was taken on the implementation of the various iterations of furlough schemes that were rolled out at short notice, and cross-functional teams have worked together to optimise the systems used to make these claims. There is also increased oversight and monitoring of key tax issues within divisions by the Group tax team and increased disclosure of tax policy and tax payments in Group financial documents. For details on our tax strategy see our website www.foodtravelexperts.com/international.

18.  Expansion into new markets
Executive responsibility for this risk:  Regional CEOs, Legal Counsel and Company Secretary
Link to strategy: 1,2	Trend: ↔
Risk description	Mitigating factors
Historically, the Group's strategy has involved expanding its business indevelopingmarkets.Thepolitical,economicandlegalsystemsandconditions inthesemarketsarelesspredictablethanincountrieswithmoredevelopedinstitutional structures, subjecting the Group to additional commercial,reputational,legalandcompliancerisks. However, this risk has reduced due to the ongoing impact of Covid-19 asentering new markets in the short to medium term is unlikely. However, thepandemicmayextendthetimeperiodoverwhichnewbusinessescanreachprofitabilityaftertheinitialset-up	The Group has strong management teamsindevelopingmarketswherethis risk exists. In addition, the Group adopts a joint venture model incertainnewterritoriestoprovideaccesstoexistinglocalinfrastructureand expertise, as well as to help mitigate the risk inherent on enteringnewterritories. The Group has clearly defined authorisation procedures for all contractinvestments, to ensure that they are consistent with the objectives setbytheBoardandthattheyfullyconsiderandevaluatetherisksinherentinexpansionintonewlocationsandterritories.TheGroupworkswith in-house and external advisors to ensure the risks of doing business indeveloping markets are identified and where possible, mitigated beforeenteringthosemarkets.Thisincludesappropriateduediligenceofpotentialjointventureandotherlocalpartners. The Group legal team works closely withcountrylegalandoperationalteams to support business development activities and to ensurecompliancewithlocalrequirements. The risk of working in developing markets is alsomonitoredbytheRiskCommittee,GroupInvestmentCommitteeandtheAuditCommittee. ForfurtherinformationseeOurStrategyonpage23.

3.  Related Parties

The following is extracted from note 30 to the Group's consolidated financial statements (on page 192).

Related party relationships exist with the Group's subsidiaries, associates (note 14), key management personnel, pension schemes (note 22) and employee benefit trust (note 24).

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 non-wholly owned subsidiary ('investor'), other than those listed in note 24, are disclosed within this note (in the table below). 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 14, are included in the table below.

Related party transactions 

	2021 £m	2020 £m
Purchasesfromrelatedparties	(0.5)	(1.7)
Managementfeeincome	1.4	2.2
Otherincome	0.3	1.1
Otherexpenses 1	(7.5)	(11.2)
Amountsowedbyrelatedpartiesattheendoftheyear	4.1	3.6
Amountsowedtorelatedpartiesattheendoftheyear	(6.6)	(6.1)
1   Themajorityofotherexpensesrelatesto£7.0mrentfromMidwayPartnershipLLC(2020:£11.2m).

Bank guarantees

The Group has provided a number of guarantees to third parties and has given guarantees to partners of consolidated non-wholly owned subsidiaries in respect of obligations of its non-wholly owned subsidiaries, relating to, for example, concession agreements, franchise agreements and financing facilities. In addition, certain subsidiaries benefit from guarantees provided by the Group's non-controlling interest 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. At 30 September 2021 the value of the guarantees given by the various Group companies in respect of both wholly owned and other subsidiaries was £114.3m (2020: £119.0m). The Group does not expect these guarantees to be called on and as such no liability has been recognised in the financial statements.

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, Non-Executive Directors and the Group Executive Committee.

	2021 £m	2020 £m
Short-term employee benefits	(7.4)	(5.0)
Post-employment benefits	(0.6)	(0.6)
Share-based payments	(0.4)	(0.8)
	(8.4)	(6.4)

 

END

 

 

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