The Food Travel Experts
www.foodtravelexperts.com Presentation structure
1. Group highlights Kate Swann 2. Financial review Jonathan Davies 3. Business review Kate Swann 4. Q&A All
2 SSP: The Food Travel Experts Group highlights
• Good first half performance with operating profit up 29.0% at actual exchange rates, 32.6% at constant currency • Like for Like sales up 2.8%, net new space growth strong at 7.1% • Total sales growth including acquisitions 11.9%* • Strong operating margin growth of 50bps, excluding the acquisition impact of India • Strategic initiatives, delivering further growth and efficiency • EPS 5.6p, up 33.3% • Interim dividend 4.8p, up 50.0% YOY • Medium term pipeline encouraging
* At constant currency
3 SSP: The Food Travel Experts Financial review Interim Results 2018
Jonathan Davies, CFO
SSP: The Food Travel Experts Group financial overview
Change (%)
Constant Reported £m H1 2018 H1 2017 Currency FX Rates
Revenue 1,177.8 1,072.5 11.9% 9.8%
LFL Sales Growth 2.8% 2.9% n/a n/a
Operating Profit* 55.2 42.8 32.6% 29.0% Profit Before Tax* 48.7 34.7 n/a 40.3% Earnings per share (p)* 5.6 4.2 n/a 33.3% Net Debt (290.1) (378.8) n/a 23.4%
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
5 SSP: The Food Travel Experts H1 2018 LFL sales growth 2.8%
4.5%
4.0%
) 3.5% 3.3% 3.1% 2.9% 3.0% 3.0% 2.7% 2.8% 2.5%
2.0%
1.5%
LFL Sales Growth (%YOY Growth Sales LFL 1.0%
0.5%
0.0% H1 H2 FY17 Q1 Q2 H1 FY17 H1 FY18
Note: Same store like-for-like sales growth at constant currency
6 SSP: The Food Travel Experts Revenue growth of 11.9% at constant currency
Net Contract Total Change at Constant Currency LFL Sales Gains/(Losses) Revenue UK 0.7% 0.5% 1.2% Continental Europe 2.2% 2.9% 5.1% North America 3.1% 31.1% 34.2% Rest of World (inc India) 10.3% 9.5% 19.8%
Group 2.8% 7.1% 9.9% Acquisition Impact India 1.4% Stockheim 0.6% Reported Growth 11.9%
7 SSP: The Food Travel Experts Operating profit growth of 32.6% at constant currency
Operating Profit* Change (%) Constant Reported FX £m H1 2018 H1 2017 Currency Rates
UK** 33.4 29.7 12.5% 12.5%
Continental Europe 21.8 20.2 9.0% 7.9%
North America 6.4 5.6 20.0% 14.3%
Rest of World 13.6 4.8 202.1% 183.3%
Non-attributable (20.0) (17.5) (14.3)% (14.3)%
Group 55.2 42.8 32.6% 29.0%
* Operating profit is underlying, at actual currency ** UK includes Republic of Ireland
8 SSP: The Food Travel Experts Operating profit margin up by 70 bps (50bps ex acquisition impact of TFS) YOY bps Change Constant Reported FX £m H1 2018 H1 2017 Currency Rates Revenue 1,177.8 1,072.5
Gross Profit 821.5 738.8 % Sales 69.8% 68.9% 100 90 Labour Costs 356.7 327.5 % Sales 30.3% 30.5% 30 30 Concession Fees 222.3 195.5 % Sales 18.9% 18.2% (70) (70) Overheads 139.6 129.0 % Sales 11.9% 12.0% 10 20 Depreciation & Amortisation* 47.7 44.1 % Sales 4.1% 4.1% 0 0 Operating Profit* 55.2 42.8 Operating Margin (%) 4.7% 4.0% 70 70 *Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
9 SSP: The Food Travel Experts Net profit up 35.9%
£m H1 2018 H1 2017 Change (%)
Operating Profit* 55.2 42.8 29.0%
Net Financing Cost* (6.7) (8.8) Share of Associates 0.2 0.7
Profit Before Tax* 48.7 34.7 40.3%
Tax* (10.7) (7.6) Non-Controlling Interests (11.1) (7.3)
Net Profit* 26.9 19.8 35.9% Earnings per share (p)* 5.6p 4.2p 33.3% Dividend per share (p) 4.8p 3.2p 50.0%
*Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
10 SSP: The Food Travel Experts Free cash outflow of £6.5m
£m H1 2018 H1 2017 Operating Profit* 55.2 42.8 Depreciation & Amortisation* 47.7 44.1 Working Capital (0.5) (19.6) Capital Expenditure (61.5) (61.4) Net Tax (17.6) (14.4) Acquisitions (18.8) (35.0) Other (4.5) (1.6) Operating Cash Flow* (0.0) (45.1) Net Financing Costs (6.1) (7.9) Other (0.4) - Free Cash Outflow* (6.5) (53.0)
*Excludes amortisation of intangible assets created at acquisition of the SSP business in 2006 and the revaluation of the final consideration to acquire an additional 16% of TFS.
11 SSP: The Food Travel Experts Net debt of £290.1m
H1 2018 H1 2017 Leverage Leverage £m (Net £m (Net Debt/EBITDA) Debt/EBITDA)
Opening Net Debt (1 October) (262.2) 1.0x (317.4) 1.6x
Free Cash Flow (6.5) (53.0)
Dividend (23.5) (13.8)
Impact of foreign exchange rates 2.3 6.1
Other (0.2) (0.7)
Closing Net Debt (31 March) (290.1) 1.1x (378.8) 1.7x
12 SSP: The Food Travel Experts Financial summary
• Robust LFL sales growth of 2.8% • Net contract gains strong at 7.1 % • Acquisitions add a further 2.0% • Strategic programme delivering strong operating margin growth up 50bps excluding the acquisition impact of India • Operating profit up 32.6 % at constant currency • EPS up 33.3% • Interim dividend per share of 4.8p, up 50.0%
13 SSP: The Food Travel Experts Business Review Interim Results 2018
Kate Swann, CEO
SSP: The Food Travel Experts SSP business fundamentals
• Multiple structural market growth drivers
• Market leader in attractive channels and regions
• Strong business platform combining international scale and local expertise
• 5 key levers to drive growth and efficiency
• Sales growth, margin expansion and strong cash generation
15 SSP: The Food Travel Experts Regional update progress since IPO
• Strong revenue growth since IPO, up 36%
• More balanced business, better geographic diversification
• Fast growth in North America and ROW, now c30% of the Group
• Air sector now 62% of SSP
• Further opportunities to grow
16 SSP: The Food Travel Experts Our focus remains on five key levers to deliver value
1 Optimise our offer to benefit from the positive trends in our markets
2 Grow profitable new space
3 Optimise gross margin and leverage scale benefits
4 Run an efficient and effective business
5 Optimise investment using best practice and shared resource
17 SSP: The Food Travel Experts 1 Optimising our offer
Areas of Focus
• LFL growth of 2.8% in line with plan Improve ranges
• Geographic diversification helps mitigate specific country issues Optimise price and promotion
• Underlying medium term positive trends Upselling in travel market remain
• Strategic initiatives continue to deliver Maximise use of space well
Focus on category as well as brand performance
18 SSP: The Food Travel Experts Optimising our offer: Premiumisation with our brand partners
• Premiumisation meets customer demands and drives ATV
• Travel is a unique sector for many of our partners
• Trial of new “Starbucks Deli” range e.g. artisan sourdough sandwiches and filled croissants not available on high street
• Trial of new premium – range in Jamie’s Deli, e.g. premium pizza
• Bespoke premium dishes in Tai Hing e.g. Angus steak stir fried noodles
• Further opportunities across other categories and brand partners
19 SSP: The Food Travel Experts
Optimising our offer: Self-order screens 1 2 Main menu • High quality speed of service critical in travel QUICK ORDER OUR MOST environment POPULAR MEALS
SEASONAL OFFERS BURGERS • Self-order kiosks being trialled in selected QSR units WHOPPER MEAL CHICKEN BREAKFAST CHICKEN ROYALE • Located at front of the unit to encourage MEAL VEGGIE, WRAPS DRINKS participation AND SALAD YOUR ORDER YOUR ORDER IS EMPTY 3 • Main menu 4 Kiosks driving service improvements and ATV growth Main menu
Added to your order
Choose your Choose your meal EXTRA WATER FOR YOUR JOURNEY? meal
Customize and • Customize and Screens guide the customer through menu quickly, change quantity change quantity
ADD ONION RINGS ADD CHICKEN NUGGETS and to optimise add on sales Add extras Add extras
Review your Review your ADD CHICKEN STRIPS ADD DESSERT YES PLEASE order and pay order and pay CARD ONLY CARD ONLY NO THANKS
Review order • Technology being developed with plan to trial in Main menu and pay
BACK CANCEL other formats BACK CANCEL YOUR ORDER YOUR ORDER
Total £X.XX View full order Total £X.XX View full order
5
4
20 SSP: The Food Travel Experts 2 Grow profitable new space
• Very strong performance, 7.1% net gains Areas of Focus
• Successful growth in existing sites, new New units within existing sites sites and new markets
• New contracts/openings will materially Existing markets, new sites differ from year to year
• Impact on P&L in first year varies based on type and timing of openings New markets
• Disciplined approach to new business
• Renewal rate in line with plan High renewal rate
21 SSP: The Food Travel Experts
Growing the business – progress since IPO Sales Asia Pac • Significant progress since the IPO to develop internationally 280% • Asia Pac and North America have seen high levels of unit and site growth
• Expansion into new countries (e.g. India, Philippines) 2014 2018 North America • Brands portfolio has increased 154%
• Investment in Asia and US management
• Future growth opportunity continues 2014 2018
22 SSP: The Food Travel Experts New opening: Shenyang airport, China
• Shenyang airport, NE province
• 17.3 million passengers in 2017
• Double digit passenger growth forecast in medium term Ajisen Ramen Da Qing Hua • 6 airside and landside units, openings commenced early 2018
• International and local brands: Ajisen Ramen, Yon Ho Soya Bean, Happy Gimbaq, Gang Zai, Da Qing Hua and Yoshinoya Yoshinoya Yon Ho
23 SSP: The Food Travel Experts Strong progress on new contract wins - including:
Helsinki 3 units
Paris 22 units
Seattle Moscow 3 units Barcelona 9 units Portland 7 units 1 unit San Francisco 4 units New York 3 units Phoenix Taipei 9 units 3 units Goa 14 units Guwahati 8 units Lucknow Mumbai 8 units Bhubaneswar 5 units 7 units Key: SSP presence
24 SSP: The Food Travel Experts Contract win: LaGuardia airport, New York
• La Guardia airport: nearly 30m passengers annually • Major plan to redevelop airport • Initially redevelopment of existing terminal • Brief to create a sense of place reflecting New York City and State • Brands include a mix of local brands and concepts
25 SSP: The Food Travel Experts
3 Further progress optimising gross margin
• Gross margin improved by 100bps Areas of Focus
• Increase in food inflation in some Procurement disciplines geographies
• Key initiatives continue to deliver good Simplify and standardise recipes results
• Good progress on simplification and standardisation Reduce waste and losses
26 SSP: The Food Travel Experts Gross margin: Automation in Kitchens
• Automated equipment rollout underway
• New purpose-built central production kitchen at Chicago Midway opened with full automation package
• Improves labour efficiency, food quality, recipe compliance, portion size and waste
• Now rolling out into many CPUs, food production kitchens and individual units
27 SSP: The Food Travel Experts
4 Encouraging progress on operating efficiency
Areas of Focus
• Labour costs 30bps improvement Service optimisation
• Labour cost pressures continue as expected
• Service optimisation; a major focus in Improve forecasting and scheduling parallel with forecasting and scheduling
• Further technology being piloted Employ technology to improve efficiency
Improve reporting and accountability
28 SSP: The Food Travel Experts Operating efficiency: Better Service Planning
Example Pilot Unit: Yo Sushi Oslo Central Station
• BSP better matches labour spend to sales More consistent scaling of labour hours with sales….
BEFORE AFTER • BSP business-as-usual in the UK for 12 months and Labour Labour has delivered: ‒ More efficient labour usage ‒ Improved service levels ‒ More consistent weekly labour spend vs target Sales Sales • Go live in Norway and Sweden from March 2018, … achieved by better matching hours to sales within the day following successful 26 week pilot Pilot Week 1 - Tuesday Pilot Final Week - Tuesday Sales Hours • Proof of concept commenced in America
• BSP pilots in Denmark and Finland commenced, France and Germany being planned Labour hours better aligned to sales trends
29 SSP: The Food Travel Experts
Summary and outlook • Strong half year financial performance, profit up 32.6% at constant currency, 29.0% at actual exchange rates • Good LFL sales in line with expectations • Net new openings ahead of plan at 7.1% • On-going good progress on margin and efficiency • EPS 5.6p, up 33.3% • Half year dividend of 4.8p, up 50.0% YOY; special dividend executed in April • Pipeline encouraging, continued investment in profitable new contracts • Second half started in line with expectations • Focus on delivering value for our shareholders
30 SSP: The Food Travel Experts Q&A Interim Results 2018
SSP: The Food Travel Experts Disclaimer
Certain statements in the presentation may constitute “forward-looking statements”. These statements reflect the Company’s current beliefs and expectations and are based on numerous assumptions regarding the Company’s present and future business strategies and the environment the Company and members of its group will operate in and are subject to risks and uncertainties that may cause actual results, performance or achievements to differ materially. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements.
Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Forward-looking statements speak only as of their date and the Company, any other member of the Group, its parent undertakings, the subsidiary undertakings of such parent undertakings, and any of such person’s respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law or regulatory obligations. It is up to the recipient of this presentation to make its own assessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.
32 SSP: The Food Travel Experts