Final Results

RNS Number : 3604Q

SSP Group PLC

29 November 2016

 

29 November 2016

SSP GROUP PLC

Results for year ended 30 September 2016

SSP Group, a leading operator of food and beverage outlets in travel locations worldwide, announces its financial results for year ended 30 September 2016.

Highlights:                                                                                                                                                     

·   Underlying operating profit¹ of £121.4m: up 18.2% at constant currency, and 24.6% at actual exchange rates

·   Like-for-like sales up 3.0%: driven by growth in air passenger travel and retailing initiatives

·   Net gains of 1.7%: strong performances in North America and the Rest of the World

·   Revenue of £1,990m: up 5.0% at constant currency; 8.6% at actual exchange rates

·   Underlying operating margin¹ up 70 basis points at constant currency to 6.1%: strategic initiatives delivering further improvements

·   Underlying profit before tax of £107.5m: up 31.1%. Reported profit before tax of £105.6m

·   Underlying earnings per share of 15.5 pence: up 26.0%. Reported earnings per share of 15.2 pence

·   Final dividend of 2.9 pence per share, bringing the full year dividend to 5.4 pence per share: up 26.0%

·   Underlying operating cash inflow of £78.3m, after increased investment in the business

·   Brand and concept portfolio further strengthened

·   Encouraging pipeline of new contracts

Commenting on the results, Kate Swann, CEO of SSP Group, said:

"SSP has delivered another good performance in 2016 and we continue to make progress on our strategic initiatives.  Constant currency operating profit was up 18% driven by good like-for-like sales growth, further operational improvements and higher new contract openings.  We continue to develop our presence across the world, particularly in North America and Asia Pacific.

"The new financial year has started in line with our expectations and whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets and our programme of operational improvements."

 

Financial highlights:

			Year on year change
	2016 £m	2015 £m	Constant currency2	Actual FX rates
Revenue	1,990.3	1,832.9	+5.0%	+8.6%
Like-for-like sales growth3	+3.0%	+3.7%	n/a	n/a
Underlying operating profit1	121.4	97.4	+18.2%	+24.6%
Underlying operating margin1	6.1%	5.3%	+70 bps	+80 bps
Underlying profit before tax1	107.5	82.0	n/a	+31.1%
Underlying earnings per share (p)1	15.5	12.3	n/a	+26.0%
Dividend per share (p)	5.4	4.3	n/a	+25.6%
Underlying operating cash inflow4	78.3	70.8	n/a	+10.6%
Net debt	(317.4)	(319.8)	n/a	+0.8%

Statutory reported results:

The table below summarises the Group's statutory reported results (where the financial highlights above are adjusted).

	2016 £m	2015 £m	Year on year change
Operating profit	119.5	92.2	+29.6%
Operating margin	6.0%	5.0%	+100 bps
Profit before tax	105.6	76.8	+37.5%
Earnings per share (p)	15.2	11.2	+35.7%

¹ Stated on an underlying basis excluding amortisation of intangible assets arising on the acquisition of the SSP business in 2006. 

² Constant currency is based on average 2015 exchange rates weighted over the financial year by 2015 results.

³ 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.

Net contract gains / (losses) represent the net year on year revenue impact from new outlets opened and existing units closed in the past 12 months. Net contract gains / (losses) are presented on a constant currency basis.

⁴ Stated on an underlying basis after capital expenditure, net cash flows to/from associates/minorities, acquisitions and tax, and excluding exceptional items.

Please refer to page 16 for supporting reconciliations from the Group's statutory reported results to these performance measures.

CONTACTS:

Investor and analyst enquiries

Sarah John, Director of Investor Relations, SSP Group plc

On 29 November: [phone]

Thereafter: [phone]

E-mail: [e-mail]

Media enquiries

Elizabeth Davies, Group Head of Communications, SSP Group plc

[phone]

E-mail: [e-mail]

Peter Ogden / Lisa Kavanagh

Powerscourt

[phone]

E-mail: [e-mail]

SSP Group plc's Preliminary Results 2016 are available at www.foodtravelexperts.com.

NOTES TO EDITORS

About SSP

SSP is a leading operator of food and beverage concessions in travel locations, operating restaurants, bars, cafés, food courts, lounges and convenience stores in airports, train stations, motorway service stations and other leisure locations. With over 50 years of experience, today we have nearly 30,000 employees, serving approximately a million customers every day. We have business at approximately 130 airports and 280 rail stations, and operate more than 2,000 units in over 30 countries around the world.

SSP operates an extensive portfolio of more than 400 international, national, and local brands. Among these are local heroes such as MASH in Copenhagen, James Martin Kitchen in London, and Hung's Delicacies in Hong Kong.  Our range also includes proprietary brands created for the travel sector including Upper Crust, Le Grand Comptoir and Ritazza, as well as international names such as Burger King, Starbucks and YO! Sushi.  We also create stunning bespoke concepts such as Walter at Zurich.

www.foodtravelexperts.com 

Business review

Overview

The Group delivered a good performance in the year, driven by like-for-like sales growth, new contract openings across the world and the ongoing implementation of our programme of operational improvements. We are continuing to invest in the growth and development of the business and to bring new brands and concepts to our clients and customers. We are particularly pleased by the pace of development in North America and Asia Pacific, and the good progress of our strategic initiatives in the UK. Whilst the picture in Continental Europe remains mixed, we are encouraged by the improved operational performance in many of our larger countries.

Strong financial results

The financial performance of the Group is explained on an underlying basis, which is based on the statutory reported results adjusted for the effects of foreign exchange and excluding the amortisation of intangible assets created on the acquisition of the SSP business in 2006. The statutory reported performance of the Group is explained in the financial review, with detailed reconciliation between statutory and underlying performance provided on page 16.

The Group delivered a strong financial performance in 2016, with underlying operating profit increasing by 18.2% (on a constant currency basis) to £121.4m, and with a constant currency increase in the operating margin of 70 bps to 6.1%.

Total revenue increased by 5.0% on a constant currency basis, including like-for-like sales growth of 3.0%, net contract gains of 1.7% and a further 0.3% arising from the additional leap year day. After a strong start to the year, with like-for-like sales growth of 3.3% in the first half, like-for-like sales in the second half were slightly weaker, impacted by terrorist incidents in France, Belgium and Egypt and slowing growth in China. However at 2.9%, like-for-like sales growth in the second half was slightly ahead of our expectations.

Overall, like-for-like sales in the air sector grew more strongly than in rail, driven by the continued increase in passenger numbers throughout the year. Following the terrorist incidents in France and Belgium in the first half, trading across our UK and Continental European rail operations has remained slightly softer, particularly in the major capital cities.

Net contract gains were up 1.7% in the full year, an encouraging increase from last year's growth of 0.6%. Over the year we saw very strong contributions from North America and the Rest of the World, reporting net gains of c. 13% and 14%. New unit openings in Houston, Orlando and Montreal airports in North America, and at Dubai, Beijing and Bangkok's Don Mueang airports in the Rest of the World have contributed to this strong performance. We continue to focus on retaining profitable contracts and our contract renewal rate in 2016 was in line with our plans and slightly ahead of the historical average.

We are encouraged by the pipeline of new contracts. During the year we won a number of significant new contracts, including at airports in Newark, Vancouver, Los Angeles, Frankfurt, Dusseldorf, Bangkok, Shanghai, Hong Kong and Phuket. We expect to begin operating these contracts progressively over the next 3 years.

The strong operating margin improvement of 70 bps reflects the like-for-like sales growth and further encouraging progress on our strategic programmes. This was slightly ahead of our expectations, due to the stronger like-for-like sales growth in the second half and the fact that some expected pre-opening costs will now fall into the new financial year reflecting the slightly later timing of certain new unit openings.

We delivered strong free cash flow of £65.0m, after investing £95.9m in capital expenditure, which was a £15.2m increase on the prior year. The increase in capital expenditure reflects the increased number of new units opened in the year and is consistent with the increased net gains of 1.7%

The reduction in reported net debt of £2.4m to £317.4m masks a good underlying performance. On a constant currency basis net debt reduced by £41.5m driven by the free cash flow of £65.0m, net of the dividend payment of £22.3m.

Strategy

Our strategy is focused on creating long term sustainable value for our shareholders, delivered through five key levers. We made further progress on each of these levers in the year:

1.    Optimising our offer and driving like-for-like sales growth

We are focused on the food and beverage markets in travel locations, which benefit from long term structural growth. We aim to use our retailing skills and broad portfolio of brands to drive profitable like-for-like sales, ensuring that we benefit from the positive trends in these markets.

We have delivered another year of strong like-for-like sales growth in 2016. We continue to make good progress on rolling out our retailing programmes, which are increasingly gaining traction and supporting growth in like-for-like sales. We have made further good progress on ranging improvements, ensuring that we deliver the optimal range to customers and this year we have launched a premium product range called "Fine Foods" in our Ritazza brand. We have also had good success in extending the Millie's Cookies brand to on-line sales and introducing a Millie's bake at home offer.

Brands are important to SSP and support our ability to win new business, secure contract renewals and drive like-for-like sales. We have added strong names to our portfolio across the globe, for example, opening our first Hard Rock Cafe at Tampa Airport in the year, as well as our first Leon at Liverpool Street Station. In the US we have opened Osteria at Los Angeles Airport and in Asia the S&P Thai Restaurant at Bangkok's Don Mueang Airport, both strong local heroes. We are also very pleased to have agreed a deal with Itsu and the first site is expected to open at a London mainline railway station during the next year. We continue to work with high profile chefs across the globe and have secured an agreement with Paul Hollywood to open a new bakery concept in the UK rail business during 2017. In total SSP now operate over 400 brands globally

2.    Growing profitable new space

The travel food and beverage market in airports and railway stations is valued at approximately £14bn and characterised by long term structural growth. It offers excellent opportunities for SSP to expand its business across the globe.

Net contract gains were 1.7%, driven by new unit openings and high levels of contract retention. The growth in net gains was driven by strong performances in North America, which benefited from new openings at airports in Houston, Orlando, Tampa and Montreal, and in the Rest of the World, where we opened new units at Dubai, Beijing, Hong Kong, Phuket and Bangkok Don Mueang Airports. These large and growing markets (where we still have a relatively small share) represent an attractive expansion opportunity and the pipeline of new contracts is encouraging. We have strong disciplines around the contract tendering process which support our ability to deliver attractive returns from new business.

Our new business growth is underpinned by our ability to deliver attractive and effective food solutions at travel locations internationally. An important element of this is the brand line up we can offer. Our brands include both international brands which we franchise, such as Burger King and Starbucks, but also our own proprietary brands such as Upper Crust and Ritazza, as well as local heroes and bespoke concepts.

A significant development for SSP has been our recent agreement to enter India, the world's second most populated country with over one billion inhabitants. India has seen sustained strong passenger growth in recent years and this is forecast to continue. Infrastructure growth is expected to support this and it has been reported that the government is scheduled to invest $120bn in airport infrastructure over the next decade. SSP has agreed to enter into a joint venture with K Hospitality Group whose Travel Food Services ("TFS") business is well established in India with over 170 units.  TFS operates in 6 of the main airports including Delhi and Mumbai and also has operations in rail. Like SSP, TFS runs both their own brands, such as Curry Kitchen and Cafeccino, as well as leading third party brands, such as KFC, Pizza Hut and Krispy Kreme.

This partnership is in line with our strategy as set out at the IPO, which included expansion into new markets which offer the opportunity for value-creating growth. TFS brings a well-established business with a strong portfolio of brands. The combination of SSP's international expertise in the travel sector and TFS' strong local presence will provide an excellent platform for future growth in the Indian travel market. The acquisition of the initial 33% stake is expected to be fully complete by February 2017.

3.    Optimising gross margins

We increased gross margin by 70 bps in the year at constant currency. We continue to make good progress on our margin initiatives across the regions. Procurement disciplines are becoming increasingly embedded into the business. Recipe rationalisation and improvement is progressing well and we continue to eliminate unnecessary duplication of products and ingredients in our supply chain. We have also brought significantly more focus to waste and loss management. To support these initiatives, we have invested in central and local resources, including strengthening our purchasing teams, and recruiting central waste and loss prevention specialists.

4.    Running an efficient and effective organisation

We have made good progress in our multi-year programme to improve operating efficiency. Labour efficiencies (including central labour) contributed a 30 bps improvement to our operating margin.

We continue to develop systems to better align labour to sales allowing us to optimise service levels and labour costs. We have started to develop a more standardised, systematised process to ensure labour forecasting and scheduling becomes a core competence, through a programme called Better Service Planning. This year we have completed the development of a new forecasting tool which, in trials, delivered a significant improvement in the accuracy of sales forecasting. Having successfully piloted this, together with a new scheduling tool in the UK, we are now planning further roll out across the Group.

At the same time we saw advances in our management of overheads, which contributed a further 10 bps improvement to our operating margin.

We continue to see many good opportunities for further improvement to the efficiency and effectiveness of the business.

5.    Optimising investment utilising best practice and shared resource

We continue to focus on generating efficiencies to optimise our investments, drive returns and use best practice and shared resources. We have, for example, tight controls on the use of capital across the business. Potential projects are carefully evaluated before proceeding, closely managed through the process of fit out and the commencement of operations and thoroughly reviewed to compare budgeted to actual outcomes.

In addition to this we are increasingly looking at how shared back office services can reduce bureaucracy and cost and drive simpler, more efficient processes. Following a successful trial to consolidate certain finance and accounting processes, we have now established two outsourced shared service facilities which are used by a number of SSP's countries.

Summary and outlook

The Group delivered a strong financial performance in the year with good like-for-like sales growth, net gains and improvement in operating margin. The new financial year has started in line with our expectations and the pipeline of new contracts is encouraging, although it is always difficult to predict the precise timing of the opening of these new units. Looking forward to 2017, with tough like-for-like sales comparatives in the first half of the year and the current level of general economic uncertainty, we anticipate slightly lower like-for-like revenue growth next year. However the significant structural growth opportunities and our programme to deliver operational improvements, leave us well placed to continue to deliver both for our customers and our shareholders.

Financial review

Group performance

	2016 £m	2015 £m	Change
			Reported	Constant currency	LFL
Revenue	1,990.3	1,832.9	+8.6%	+5.0%	+3.0%
Underlying operating profit	121.4	97.4	+24.6%	+18.2%
Underlying operating margin	6.1%	5.3%	+0.8%	+0.7%
Operating profit	119.5	92.2	+29.6%
Operating margin	6.0%	5.0%	+1.0%

Revenue

Revenue increased by 5.0% on a constant currency basis, comprising like-for-like sales growth of 3.0%, net contract gains of 1.7% and a further 0.3% from the additional leap year day. At actual exchange rates, total revenue grew by 8.6%, to £1,990.3m.

Like-for-like sales growth of 3.0% benefited from the continued growth in passenger travel, particularly in the air channel, and the positive impact of rolling out our strategic initiatives.  Net gains contributed 1.7% to full year revenue growth, driven by strong contributions from North America and the Rest of the World region. Net gains during the second half of the year were slightly softer at 1.4%, as we saw the impact of our business at Charles de Gaulle Airport in Paris being transferred into a joint venture with Aéroports de Paris, which we do not consolidate, and reflecting the slightly later timing of certain new unit openings. Looking forward to 2017, excluding the impact of the recently-announced TFS joint venture in India, we would expect net contract gains to run at around 2.0%, although they are likely to be lower in the first half until we reach the anniversary in February of the commencement of the new Aéroports de Paris joint venture.  We expect the TFS joint venture to contribute approximately 2.0% to 2017 sales growth.

Trading results from outside the UK are converted into sterling at the average exchange rates for the year. The overall impact on revenue of the movement of foreign currencies (principally the Euro, US Dollar, Swedish Krona and Norwegian Krone) in 2016 compared to the 2015 average was +3.6%. If the current spot rates were to continue through 2017, we would expect a further positive currency impact on revenue of around 6% compared to the average rates used for 2016. This is however a translation impact only.

Underlying operating profit

Underlying operating profit increased by 18.2% on a constant currency basis, and by 24.6% at actual exchange rates to £121.4m. The underlying operating profit margin improved by 70 bps on a constant currency basis and 80 bps at actual exchange rates to 6.1%, reflecting good like-for-like sales growth and further encouraging progress on our strategic programmes, as well as the deferral of some pre-opening costs into 2017, reflecting the slightly later timing of certain new unit openings.

Gross margin increased by 70 bps year on year on a constant currency basis, or 50 bps underlying when adjusted for the higher sales growth in the air sector compared with the rail sector. The additional 20 bps margin growth arises because air sales typically have higher gross margins, but also higher concession fees relative to rail sales. The strong underlying performance was driven by the ongoing roll out of our strategic initiatives, including improved ranging and mix management, food procurement, and waste and loss reduction. Following the exceptional performance this year, looking forward to 2017 we expect the air and rail sales growth to revert to more normal levels and we are anticipating somewhat higher levels of food cost inflation. As a consequence, our expectation is for more modest year on year improvement in gross margin.

Labour costs improved by 30 bps year on year on a constant currency basis, or 40 bps before absorbing the impact of additional share-based payment costs. The improvement in labour ratios was driven by our broad based programmes to optimise service levels and labour costs. Looking forward to 2017, we expect to see more modest improvements in our labour ratios, as we face increases in labour costs, notably in the UK, with the increase in the National Living Wage, and in North America, where we also anticipate rising minimum wage levels in a number of states.

Concession fees rose by 50 bps, with the stronger growth in air sales contributing approximately 10 bps to the year on year increase. We would expect the underlying increase in concession fees of 40 bps to continue into 2017.

We made further good progress in overhead efficiency which improved by 10 bps year on year.

Operating profit

Operating profit was £119.5m (2015: £92.2m), reflecting an adjustment for the amortisation of acquisition-related intangible assets of £1.9m (2015: £5.2m).

Regional performance

UK

	2016 £m	2015 £m	Change
			Reported	Constant currency	LFL
Revenue	749.4	727.2	+3.1%	+2.9%	+3.1%
Underlying operating profit 1	66.4	52.7	+26.0%	+25.8%
Underlying operating margin 1	8.9%	7.2%	+1.7%	+1.7%

¹ Statutory reported operating profit was £64.9m and operating margin was 8.7% reflecting an adjustment for the amortisation of acquisition related intangible assets of £1.5m.

Revenue increased by 2.9% on a constant currency basis, comprising like-for-like growth of 3.1% and net contract losses of 0.5%. The impact of the additional leap year day added an additional 0.3% to the year's revenue growth. Like-for-like growth was particularly strong in the air sector, driven by continued growth in UK airport passenger numbers and increased spend per passenger. The rail sector saw weaker trading, with lower passenger numbers and dwell times, notably in London stations. This was particularly marked following the Paris attacks in mid-November.

Underlying operating profit for the UK increased by 25.8% on a constant currency basis to £66.4m, while underlying operating margin increased by 170 bps to 8.9%, benefiting from good like-for-like sales growth in the air sector, and from the implementation of our strategic initiatives, particularly gross margin optimisation, where the UK continues to lead the roll out of many of our retailing and procurement programmes.

Continental Europe

	2016 £m	2015 £m	Change
			Reported	Constant currency	LFL
Revenue	796.8	749.7	+6.3%	+1.4%	+2.8%
Underlying operating profit 2	60.1	53.5	+12.3%	+3.9%
Underlying operating margin 2	7.5%	7.1%	+0.4%	+0.2%

² Statutory reported operating profit was £59.7m and operating margin was 7.5% reflecting an adjustment for the amortisation of acquisition related intangible assets of £0.4m.

Revenue increased by 1.4% on a constant currency basis, comprising like-for-like growth of 2.8% and net contract losses of 1.7%. The impact of the additional leap year day added an additional 0.3% to the year's revenue growth. Similar to the UK, like-for-like sales were much stronger in air than in rail, with good growth in the air businesses in the Nordic region and in Spain, which has benefited from the transfer of tourism from the Eastern Mediterranean and the Middle East. This contrasted with more difficult trading conditions in the rail businesses, particularly in France and Belgium, both of which were impacted by geopolitical incidents.

Underlying operating profit increased by 3.9% on a constant currency basis to £60.1m. Profit growth was impacted by the sharp fall in sales following the terrorist incidents in the first half.  Nevertheless, the underlying operating margin increased by 20 bps on a constant currency basis to 7.5%, benefiting from the ongoing roll-out of our strategic initiatives.

North America

	2016 £m	2015 £m	Change
			Reported	Constant currency	LFL
Revenue	262.7	201.6	+30.3%	+20.9%	+7.5%
Underlying operating profit 3	12.5	3.5	+257.1%	+231.4%
Underlying operating margin 3	4.8%	1.7%	+3.1%	+3.1%

³ There are no adjustments between underlying operating profit and statutory reported operating profit.

Revenue increased by 20.9% on a constant currency basis, comprising like-for-like growth of 7.5% and net contract gains of 13.1%. The impact of the additional leap year day added a further 0.3% to the year's revenue growth. Like-for-like growth benefited from positive trends in airport passenger numbers in the North American market, as well as the transfer of additional Delta passengers into Terminal 4 at New York's JFK airport, the anniversary of which we passed during the second quarter. Net contract gains were driven principally by new outlets at a number of airports, including Houston, Orlando, Montreal and Toronto. 

Underlying operating profit increased by £9.0m to £12.5m, and underlying operating margin made excellent progress, increasing from 1.7% to 4.8%, driven by the benefit of increased sales and good progress on a number of the Group's productivity initiatives. This included a particularly strong contribution from our procurement initiatives, and was achieved despite the pre-opening costs associated with the ongoing opening programme.

Rest of the World

	2016 £m	2015 £m	Change
			Reported	Constant currency	LFL
Revenue	181.4	154.4	+17.5%	+12.3%	-2.1%
Underlying operating profit 4	8.6	14.6	-41.1%	-44.5%
Underlying operating margin 4	4.7%	9.5%	-4.8%	-4.8%

⁴ There are no adjustments between underlying operating profit and statutory reported operating profit.

Revenue increased by 12.3% on a constant currency basis, with a reduction in like-for-like sales of 2.1% offset by net contract gains of 14.1%. The impact of the additional leap year day added a further 0.3% to revenue. The fall in like-for-like sales reflected the sharp drop in passenger numbers across Egypt following the Sharm-el-Sheikh bombing in late October.  In addition to this we have also seen a slowing of growth in China, particularly during the second half, which has impacted a number of countries across the Asia Pacific region. Net contract gains included new openings in Dubai Airport, in Don Mueang Airport in Thailand and in Beijing Airport in China, as well as outlets opened in the prior year at a number of locations across the region.

Underlying operating profit for the Rest of the World was £8.6m, a reduction of 44.5% on a constant currency basis. The underlying operating margin reduced by 480 bps to 4.7% which was largely a consequence of the terrorist incident in Egypt, where sales fell by over 50% year on year. In addition, the region was impacted by significant pre-opening costs, particularly in Dubai and Beijing airports during the first half, and by higher depreciation charges associated with new contracts.

Share of profit of associates

The Group's share of profit from associates was £1.3m (2015: £1.6m).

Net finance costs

Net finance costs were £15.2m, a reduction of £1.8m compared to 2015, due to lower average levels of net debt and a reduction in margin following the "amend and extend" on our debt facilities, completed in July 2015.

Taxation

The Group's tax charge for the year was £23.8m (2015: £16.5m), equivalent to an effective tax rate of 22.5% (2015: 21.5%) on the reported profit before tax.

Non-controlling interests

The non-controlling interests' share of after-tax profits increased year on year by £2.9m to £9.8m. This increase primarily reflected the growth and improved profitability of our North America business, where our business partners often have a minority interest in individual contracts. We expect this rate of growth to continue in 2017, and in addition would expect to see an incremental c. £3m minority charge arising from the part year consolidation of the TFS business once the first stage of the acquisition is completed during the first half. 

Earnings per share

Underlying earnings per share, which excludes the impact of exceptional items and the amortisation of intangible assets arising on the 2006 acquisition of the SSP business, was 15.5 pence per share (2015: 12.3 pence per share). 

Reported earnings per share was 15.2 pence per share (2015: 11.2 pence per share).

Dividends

The Directors are proposing a final dividend of 2.9 pence per share (2015: 2.2 pence per share), which is subject to shareholder approval at the Annual General Meeting. If approved, this will result in a total dividend per share for the year of 5.4 pence (2015: 4.3 pence), consistent with the Board's intentions as stated in the IPO prospectus for an initial payout ratio of approximately 30 to 40% of annual underlying profit.

The final dividend will be paid, subject to shareholder approval, on 31 March 2017 to shareholders on the register on 3 March 2017. The ex-dividend date will be 2 March 2017.

 

Cash flow

The table below presents a summary of the Group's cash flow for 2016:

	2016 £m	2015 £m
Underlying operating profit1	121.4	97.4
Depreciation and amortisation	78.8	72.9
Working capital	3.8	5.3
Net tax	(20.0)	(17.3)
Other	4.5	1.0
Net cash flow from operating activities	188.5	159.3
Capital expenditure 2	(95.9)	(80.7)
Investment in associate	(4.7)	-
Net dividends to/from minorities/associates	(8.8)	(5.5)
Other	(0.8)	(2.3)
Underlying operating cash flow	78.3	70.8
Net finance costs	(13.3)	(16.1)
Underlying free cash flow	65.0	54.7
Exceptional costs	-	(12.0)
Dividend paid	(22.3)	(10.0)
Other	-	(1.0)
Net cash flow	42.7	31.7

¹ Excludes the amortisation of intangible assets arising on acquisition of the SSP business in 2006

² Capital expenditure is net of capital contributions from non-controlling interests of £8.4m (2015: £1.1m)

The Group generated net cash flow from operating activities of £188.5m (2015: £159.3m) and free cash flow of £65.0m, an increase of £10.3m compared to 2015, driven by the growth in operating profit, and after increased investment in the business. Capital expenditure increased by £15.2m to £95.9m, reflecting the larger new opening programme in 2016, as well as the impact of the weakening of Sterling during the year. The investment in associate of £4.7m comprised the initial capitalisation of our new joint venture with Aéroports de Paris, which commenced trading in February. 

Given the pipeline of new contracts for 2017 and the current planned opening programme, we expect capital expenditure to increase to around £100m in 2017 on a constant currency basis. In addition to this we expect an additional £5m of capital expenditure arising from the TFS joint venture in India. If current exchange rates continue for the remainder of the year, the translation into Sterling would add a further £7m to reported capital expenditure.

Working capital generated £3.8m of cash flow during the year, consistent with the growth in the business. Cash dividends to minorities, net of dividends received from associates, increased to £8.8m (2015: £5.5m) primarily reflecting growth in the North America business, while taxes paid increased by £2.7m to £20.0m.

Net finance costs paid of £13.3m were lower than in 2015, mainly reflecting the reduction in margin following the "amend and extend" of our borrowing facilities in July 2015. The dividend paid of £22.3m reflected the cost of the 2015 final dividend of 2.2 pence per share and the 2016 interim dividend of 2.5p per share.

Overall, the Group generated net cash flow of £42.7m during the year.
 

Acquisition of TFS

In October 2016, SSP announced the agreement to create a joint venture with K Hospitality Group, whereby SSP will own a 49% share in Travel Food Services Private Limited, a leading operator of food and beverage concessions in travel locations in India. 

SSP is acquiring 49% of TFS for an expected net consideration of £57.9m.  The acquisition will take place in two stages.  The first stage to acquire a 33% stake for an estimated net consideration of £39.0m, is expected to be fully completed by the end of February 2017.  The second stage, to acquire a further 16% is expected to take place by the end of 2018, for a net consideration of approximately £18.9m, contingent on the performance of the business.

The table below summarises TFS' performance for its financial year ended 31 March 2016 and our expectation for its year ending 31 March 2017.  On a proportionately consolidated basis TFS delivered revenue of £41.7m and EBITDA of £8.3m in its year ended 31 March 2016. Following its 2016 year end, TFS bought out a number of its joint venture partners, and the impact of these buyouts, along with the full year benefit of sales from units opened in 2016 and the like-for-like sales growth, is expected to add approximately £3m to TFS' EBITDA.

SSP will have management and operational control of TFS and as such TFS and its group companies will be fully consolidated into SSP's financial statements. Accounting standards require SSP to gross up TFS' existing joint ventures for consolidation. This will increase the reported consolidated revenue and profit which is set out in the fully consolidated proforma numbers in the table below. However, this will be reversed through a bigger minority charge, initially of 73%, and has no effect on the Group's economic interest or net income.

TFS Year ended 31 March	Proportionately consolidated		Fully consolidated proforma
£m	2016 Actual	2017 Estimate	2017 Estimate
Revenue	41.7	56.9	69.6
EBITDA	8.3	11.3	13.8
% Sales	20%	20%	20%
Depreciation		(2.8)	(3.5)
% Sales		5%	5%
Restructuring		(0.5)	(0.5)
EBIT		8.0	9.8
Tax		(2.7)	(3.3)
		34%	34%
Minorities		(3.6)	(4.8)
		67%	73%
Net income		1.7	1.7

All figures based on an exchange rate of Indian Rupees to Sterling of 81.9.

 

Balance sheet and net debt

The Group's balance sheet strengthened in the year, with year-end net debt reducing to £317.4m (2015: £319.8m) and net assets increasing to £382.7m (2015: £291.7m).

		£m
Opening net debt (30 September 2015)		(319.8)
Net cash flow		42.7
Impact of foreign exchange rates		(39.1)
Other		(1.2)
Closing net debt (30 September 2016)		(317.4)

The reduction in net debt of £2.4m was driven by the net cash flow generation of £42.7m offset by a foreign exchange translation impact of £39.1m arising from the weakening of Sterling during the year.

Leverage reduced during the year, leaving Net debt: EBITDA at the year-end at 1.6 times, compared with 1.9 times at the end of the prior year.

 

Alternative Performance Measures

The Directors use alternative performance measures as they believe these measures provide additional useful information on the underlying trends, performance and position of the Group. These measures are used for performance analysis.  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.  

Revenue growth

As the Group operates in over 30 countries, it is exposed to translation risk on fluctuations in foreign exchange rates, and as such the Group's reported revenue and operating profit 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 growth, like-for-like sales growth and net contract gains / (losses).

	UK	Continental Europe	North America	RoW	Total
2016 Revenue at actual rates by segment (£m)	749.4	796.8	262.7	181.4	1,990.3
Impact of foreign exchange (£m)	(1.3)	(36.6)	(19.0)	(8.0)	(64.9)
2016 Revenue at constant currency 1 (£m)	748.1	760.2	243.7	173.4	1,925.4
2015 Revenue (£m)	727.2	749.7	201.6	154.4	1,832.9
Constant currency sales growth (%)	2.9%	1.4%	20.9%	12.3%	5.0%
Which is made up of:
Like-for-like sales growth 2	3.1%	2.8%	7.5%	(2.1%)	3.0%
Net contact gains / (losses) 3	(0.5%)	(1.7%)	13.1%	14.1%	1.7%
Constant currency sales growth excluding the impact of the leap year	2.6%	1.1%	20.6%	12.0%	4.7%
Impact of additional leap year day	0.3%	0.3%	0.3%	0.3%	0.3%
	2.9%	1.4%	20.9%	12.3%	5.0%

1 Constant currency is based on average 2015 exchange rates weighted over the financial year by 2015 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 are excluded from like-for-like sales and classified as contract gains.  Prior period revenues in respect of closed outlets are excluded from like-for-like sales and classified as contract losses. Net contract gains / (losses) are presented on a constant currency basis.

Underlying profit measures

The Group presents underlying profit measures, including operating profit, profit before tax and earnings per share, which exclude amortisation of intangible assets arising on the acquisition of the SSP business. A reconciliation from the underlying to the statutory reported basis is presented below.

	2016			2015
	Underlying	Adjustments	Total	Underlying	Adjustments	Total
Operating profit (£m)	121.4	(1.9)	119.5	97.4	(5.2)	92.2
Operating margin (%)	6.1%	(0.1%)	6.0%	5.3%	(0.3%)	5.0%
Profit before tax (£m)	107.5	(1.9)	105.6	82.0	(5.2)	76.8
Earnings per share (p)	15.5	(0.3)	15.2	12.3	(1.1)	11.2

 

Consolidated income statement

for the year ended 30 September 2016

		2016				2015
		Underlying *	Adjustments	Total	Underlying *		Adjustments	Total
	Notes	£m	£m	£m	£m		£m	£m
Revenue	2	1,990.3	-	1,990.3	1,832.9		-	1,832.9
Operating costs	4	(1,868.9)	(1.9)	(1,870.8)	(1,735.5)		(5.2)	(1,740.7)
Operating profit		121.4	(1.9)	119.5	97.4		(5.2)	92.2
Share of profit of associates		1.3	-	1.3	1.6		-	1.6
Finance income	5	0.5	-	0.5	0.7		-	0.7
Finance expense	5	(15.7)	-	(15.7)	(17.7)		-	(17.7)
Profit before tax		107.5	(1.9)	105.6	82.0		(5.2)	76.8
Taxation		(24.2)	0.4	(23.8)	(16.9)		0.4	(16.5)
Profit for the year		83.3	(1.5)	81.8	65.1		(4.8)	60.3
Profit attributable to:
Equity holders of the parent		73.5	(1.5)	72.0	58.2		(4.8)	53.4
Non-controlling interests		9.8	-	9.8	6.9		-	6.9
Profit for the year		83.3	(1.5)	81.8	65.1		(4.8)	60.3
Earnings per share (p):
-          Basic	3	15.5		15.2	12.3			11.2
-          Diluted	3	15.4		15.0	12.2			11.2

*      The underlying numbers exclude non-cash accounting adjustments relating to amortisation of intangible assets arising on acquisition of the SSP business in 2006.

 

Consolidated statement of other comprehensive income

for the year ended 30 September 2016

		2016	2015
		£m	£m
Other comprehensive income / (expense)
Items that will never be reclassified to the income statement
Remeasurements on defined benefit pension schemes		(4.1)	3.6
Income tax credit relating to items that will not be reclassified		1.7	-
Items that are or may be reclassified subsequently to the income statement
Net (loss) / gain on hedge of net investment in foreign operations		(48.5)	21.5
Other foreign exchange translation differences		83.2	(25.3)
Effective portion of changes in fair value of cash flow hedges		(6.7)	(9.2)
Cash flow hedges - reclassified to the income statement		2.7	0.9
Income tax credit relating to items that are or may be reclassified		1.1	1.0
Other comprehensive income / (expense) for the year		29.4	(7.5)
Profit for the year		81.8	60.3
Total comprehensive income for the year		111.2	52.8
Total comprehensive income attributable to:
Equity shareholders		97.4	45.1
Non-controlling interests		13.8	7.7
Total comprehensive income for the year		111.2	52.8

 

Consolidated balance sheet

as at 30 September 2016

		2016	2015
		£m	£m
Non-current assets
Property, plant and equipment		272.0	212.7
Goodwill and intangible assets		701.3	632.1
Investments in associates		9.3	5.4
Deferred tax assets		18.1	11.4
Other receivables		37.3	26.6
		1,038.0	888.2
Current assets
Inventories		29.2	26.0
Tax receivable		4.3	0.7
Trade and other receivables		118.1	89.5
Cash and cash equivalents	8	155.8	134.7
		307.4	250.9
Total assets		1,345.4	1,139.1
Current liabilities
Short term borrowings	8	(30.7)	(27.7)
Trade and other payables		(404.1)	(329.3)
Tax payable		(23.8)	(14.6)
Provisions		(2.3)	-
		(460.9)	(371.6)
Non-current liabilities
Long term borrowings	8	(442.5)	(426.8)
Post employment benefit obligations		(19.2)	(13.7)
Provisions		(13.8)	(16.0)
Derivative financial liabilities	8	(14.2)	(9.8)
Deferred tax liabilities		(12.1)	(9.5)
		(501.8)	(475.8)
Total liabilities		(962.7)	(847.4)
Net assets		382.7	291.7
Equity
Share capital		4.7	4.7
Share premium		461.2	461.2
Capital redemption reserve		1.2	1.2
Other reserves		21.5	(6.3)
Retained earnings		(138.0)	(190.6)
Total equity shareholders' funds		350.6	270.2
Non-controlling interests		32.1	21.5
Total equity		382.7	291.7

 

Consolidated statement of changes in equity

for the year ended 30 September 2016

	Share capital	Share premium	Capital redemp-tion reserve	Other reserves 1	Retained earnings	Total parent equity	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m
At 30 September 2014	5.9	461.2	-	5.6	(241.4)	231.3	19.1	250.4
Profit for the year	-	-	-	-	53.4	53.4	6.9	60.3
Other comprehensive (expense) / income for the year	-	-	-	(11.9)	3.6	(8.3)	0.8	(7.5)
Cancellation of deferred shares	(1.2)	-	1.2	-	-	-	-	-
Capital contributions from non-controlling interests	-	-	-	-	-	-	1.1	1.1
Dividends paid to equity shareholders	-	-	-	-	(10.0)	(10.0)	-	(10.0)
Dividends paid to non-controlling interests	-	-	-	-	-	-	(6.4)	(6.4)
Share-based payments	-	-	-	-	3.8	3.8	-	3.8
At 30 September 2015	4.7	461.2	1.2	(6.3)	(190.6)	270.2	21.5	291.7
Profit for the year	-	-	-	-	72.0	72.0	9.8	81.8
Other comprehensive income / (expense) for the year	-	-	-	27.8	(2.4)	25.4	4.0	29.4
Acquisition of additional share in subsidiary	-	-	-	-	0.4	0.4	(0.5)	(0.1)
Capital contributions from non-controlling interests	-	-	-	-	-	-	8.4	8.4
Dividends paid to equity shareholders (note 7)	-	-	-	-	(22.3)	(22.3)	-	(22.3)
Dividends paid to non-controlling interests	-	-	-	-	-	-	(11.1)	(11.1)
Share-based payments	-	-	-	-	4.5	4.5	-	4.5
Deferred tax on share schemes	-	-	-	-	0.4	0.4	-	0.4
At 30 September 2016	4.7	461.2	1.2	21.5	(138.0)	350.6	32.1	382.7

¹ The increase of £27.8m (2015: decrease of £11.9m) comprises an increase to the translation reserve of £31.6m (2015: decrease of £4.3m) and a decrease to the cash flow hedging reserve of £3.8m (2015: decrease of £7.6m)

 

Consolidated cash flow statement

for the year ended 30 September 2016

	Notes	2016	2015
		£m	£m
Cash flows from operating activities
Cash flow from operations	6	208.5	179.4
Exceptional redundancy and restructuring costs		-	(2.8)
Tax paid		(20.0)	(17.3)
Net cash flows from operating activities		188.5	159.3
Cash flows from investing activities
Investment in associate		(4.7)	-
Dividends received from associates		2.3	0.9
Interest received		0.4	0.7
Purchase of property, plant and equipment		(97.6)	(78.1)
Purchase of other intangible assets		(6.7)	(3.7)
Acquisition of business		-	(5.1)
Net cash flows from investing activities		(106.3)	(85.3)
Cash flows from financing activities
Repayment of borrowings		(30.8)	(27.9)
Repayment of finance leases and other loans		(0.2)	(1.2)
Refinancing fee paid in the year		-	(1.0)
Interest paid		(13.7)	(16.8)
Dividends paid to equity shareholders		(22.3)	(10.0)
Dividends paid to non-controlling interests		(11.1)	(6.4)
Acquisition of increased share of subsidiary		(0.8)	-
Capital contribution from non-controlling interests		8.4	1.1
Exceptional IPO related transaction costs		-	(9.2)
Net cash flows from financing activities		(70.5)	(71.4)
Net decrease in cash and cash equivalents		11.7	2.6
Cash and cash equivalents at beginning of the year		134.7	133.3
Effect of exchange rate fluctuations on cash and cash equivalents		9.4	(1.2)
Cash and cash equivalents at end of the year		155.8	134.7
Reconciliation of net cash flow to movement in net debt
Net increase in cash in the year		11.7	2.6
Cash outflow from decrease in debt and finance leases		31.0	29.1
Change in net debt resulting from cash flows		42.7	31.7
Translation differences		(39.1)	20.3
Other non-cash changes		(1.2)	(0.7)
Decrease in net debt in the year		2.4	51.3
Net debt at beginning of the year		(319.8)	(371.1)
Net debt at end of the year		(317.4)	(319.8)

 

Notes

1              Preparation

Basis of preparation and statement of compliance

The consolidated financial statements of SSP Group plc have been prepared on a going concern basis and in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") and the Companies Act 2006 applicable to companies reporting under IFRS. These financial statements are presented in Sterling and unless stated otherwise, rounded to the nearest £0.1 million. The financial statements are prepared on the historical cost basis except for the derivative financial instruments which are stated at their fair value.

Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous year.

There are no EU-endorsed IFRS or IFRIC interpretations that are not yet effective that are expected to have a material impact on the Group.  

IFRS 16, Leases, issued in January 2016 with an effective date of 1 January 2019 is not yet EU endorsed.  Management is in the process of reviewing the impact that this will have on the Group.

 

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": the UK, Continental Europe, North America and Rest of the World ("RoW").  The UK includes operations in the United Kingdom and the Republic of Ireland; Continental Europe includes operations in the Nordic countries and in Western and Southern Europe; North America includes operations in the United States and Canada; and RoW includes operations in Eastern Europe, the Middle East and Asia Pacific. 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.

2016	UK	Continental Europe	North America	RoW	Non-attributable	Total
	£m	£m	£m	£m	£m	£m
Revenue	749.4	796.8	262.7	181.4	-	1,990.3
Underlying operating profit/(loss)	66.4	60.1	12.5	8.6	(26.2)	121.4
2015	UK	Continental Europe	North America	RoW	Non-attributable	Total
	£m	£m	£m	£m	£m	£m
Revenue	727.2	749.7	201.6	154.4	-	1,832.9
Underlying operating profit/(loss)	52.7	53.5	3.5	14.6	(26.9)	97.4
The following amounts are included in underlying operating profit:
	UK	Continental Europe	North America	RoW	Non-attributable	Total
	£m	£m	£m	£m	£m	£m
2016
Depreciation and amortisation*	(14.2)	(34.9)	(18.0)	(9.9)	(1.8)	(78.8)
2015
Depreciation and amortisation*	(16.5)	(31.0)	(15.7)	(4.8)	(4.9)	(72.9)

*     Excludes amortisation of acquisition-related intangible assets.

 

A reconciliation of underlying operating profit to profit before and after tax is provided as follows:

	2016 £m	2015 £m
Underlying operating profit	121.4	97.4
Adjustments to operating costs	(1.9)	(5.2)
Share of loss from associates	1.3	1.6
Finance income	0.5	0.7
Finance expense	(15.7)	(17.7)
Profit before tax	105.6	76.8
Taxation	(23.8)	(16.5)
Profit after tax	81.8	60.3

3             Earnings per share

Basic earnings 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 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 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:

	2016		2015
	£m		£m
Profit attributable to ordinary shareholders	72.0		53.4
Adjustments:
Amortisation of acquisition-related intangibles	1.9		5.2
Tax effect of adjustments	(0.4)		(0.4)
Underlying profit attributable to ordinary shareholders	73.5		58.2
Basic weighted average number of shares	475,169,510		475,040,543
Dilutive potential ordinary shares	3,579,804		1,137,801
Diluted weighted average number of shares	478,749,314		476,178,344
The number of ordinary shares in issue as at 30 September 2016 was 475,199,063 (30 September 2015: 475,113,354).
		2016	2015
Earnings per share (p):
-          Basic		15.2	11.2
-          Diluted		15.0	11.2
Underlying earnings per share (p):
-          Basic		15.5	12.3
-          Diluted		15.4	12.2

 

4              Operating costs

		2016	2015
		£m	£m
Cost of food and materials:
Cost of inventories consumed in the year		(636.5)	(604.3)
Labour cost:
Employee remuneration		(581.6)	(541.7)
Overheads:
Depreciation of property, plant and equipment		(74.2)	(68.0)
Amortisation of intangible assets - software		(4.6)	(4.9)
Amortisation of acquisition-related intangible assets		(1.9)	(5.2)
Rentals payable under operating leases		(349.6)	(311.6)
Other overheads		(222.4)	(205.0)
		(1,870.8)	(1,740.7)
Adjustments to operating costs
Amortisation of intangible assets arising on acquisition		(1.9)	(5.2)
		(1.9)	(5.2)

For the years presented above, underlying operating profit excludes non-cash accounting adjustments relating to amortisation of intangible assets arising on acquisition of the SSP business in 2006.

5             Finance income and expense

	2016	2015
	£m	£m
Finance income
Interest income	0.4	0.7
Net foreign exchange gains	0.1	-
Total finance income	0.5	0.7
Finance expense
Total interest expense on financial liabilities measured at amortised cost	(10.5)	(13.9)
Net change in fair value of cash flow hedges utilised in the year	(2.7)	(0.9)
Unwind of discount on provisions	(0.6)	(1.3)
Net interest expense on defined benefit pension obligations	(0.4)	(0.5)
Other	(1.5)	(1.1)
Total finance expense	(15.7)	(17.7)

 

6             Cash flow from operations

		2016	2015
		£m	£m
Profit for the year		81.8	60.3
Adjustments for:
Depreciation		74.2	68.0
Amortisation		6.5	10.1
Share-based payments		4.5	3.8
Finance income		(0.5)	(0.7)
Finance expense		15.7	17.7
Share of Profit of associates		(1.3)	(1.6)
Taxation		23.8	16.5
		204.7	174.1
(Increase) / decrease in trade and other receivables		(18.7)	1.2
Increase in inventories		(0.1)	(1.4)
Decrease in trade and other payables, and in provisions		22.6	5.5
Cash flow from operations		208.5	179.4

7             Dividends

	2016	2015
	£m	£m
Interim dividend paid in the year of 2.5p per share (2015: 2.1p)	(11.8)	(10.0)
Prior year final dividend of 2.2p per share paid in the year	(10.5)	-
	(22.3)	(10.0)

The proposed dividend of 2.9 pence per share, amounting to a final dividend of £13.8m, is not included as a liability in these financial statements, and subject to shareholder approval, will be paid on 31 March 2017 to shareholders on the register on 3 March 2017.
 

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, and the valuation methodologies detailed below:

-      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; and

-      the derivative financial liabilities relate to interest rate swaps. The fair values of interest rate swaps have been determined using relevant yield curves and exchange rates as at the balance sheet date.

Carrying amounts and fair values of certain financial instruments

The following table shows the carrying amounts of financial assets and financial liabilities. It does not include information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

	Carrying amounts
	2016	2015
	£m	£m
Financial instruments measured at fair value:
Non-current
Derivative financial liabilities	(14.2)	(9.8)
Financial instruments not measured at fair value:
Non-current
Long term borrowings	(442.5)	(426.8)
Current
Cash and cash equivalents	155.8	134.7
Short term borrowings	(30.7)	(27.7)

Financial assets and liabilities in the Group's consolidated balance sheet are either held at fair value, or their carrying value approximates to fair value, with the exception of loans, which are held at amortised cost. The fair value of total borrowings estimated using market prices at 30 September 2016 is £476.7m (30 September 2015: £459.0m).

All of the financial assets and liabilities measured at fair value are classified as level 2 using the fair value hierarchy, whereby inputs which are used in the valuation of these financial assets and liabilities and have a significant effect on the fair value are observable, either directly or indirectly. There were no transfers during the year.

 

9             Post balance sheet event

On 20 October 2016, the Group announced the creation of a joint venture with K Hospitality Group, whereby SSP will own a 49% share in Travel Food Services Private Limited, a leading operator of food and beverage concessions in travel locations in India. This partnership provides an entry point into the Indian market and the Group expects to benefit from TFS' established strong local presence.

SSP is acquiring 49% of TFS for an expected net consideration of £57.9m. The acquisition will take place in two stages. The first stage is to acquire a 33% stake for an estimated net consideration of £39.0m. This stage is expected to be fully completed by the end of February 2017. The second stage, to acquire a further 16%, is expected to take place by the end of 2018, for a net consideration of approximately £18.9m, contingent upon the performance of the business.

The Group will have control over TFS' relevant activities which affect its returns and as such will fully consolidate TFS and its group companies.

10           Annual General Meeting

The Group's Annual General Meeting will be held on 13 March 2017. 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 late January 2017.

11           Other information

The financial information for the year ended 30 September 2016 contained in this preliminary announcement was approved by the Board on 28 November 2016. This announcement does not constitute statutory accounts of the Company within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts.

Statutory accounts for the year ended 30 September 2015 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 30 September 2016 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

The auditors have reported on those accounts. Their reports were not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and 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 2016 will be posted and made available to shareholders on the Company's website in late January 2017.

 

12           Forward looking statement

This document contains forward-looking statements. These forward-looking statements include all matters that are not historical facts. Statements containing the words "believe", "expect", "intend", "may", "estimate" or, in each case, their negative and words of similar meaning are forward-looking. By their nature, forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that the Group's actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this document or other made by us or on the Group's behalf. In addition, even if the Group's financial condition, results of operations and cash flows, and the development of the industry in which we operate are consistent with the forward-looking statements in this document, those results or developments may not be indicative of results or developments in subsequent periods. Except where required to do so under applicable law or regulatory obligations, we undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.

 

END

 

 

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