SSP Group plc
Annual Report
and Accounts
2015
foodtravelexperts.com
Strategic report
Contents
SSP at a glance
Strategic report
1
About us
2 Chairman’s statement
3 Chief Executive’s statement
4 Our marketplace
6 Our business model
10 Our strategy
11 Key performance indicators
12 Risk management and
principal risks
18 Financial review
22 Sustainability report
Corporate governance
26 Board of Directors
28 Corporate governance report
32 Audit Committee report
36 Statement by the Chairman
of the Remuneration
Committee
37 Annual report on
remuneration
44 Directors’ remuneration
policy
51 Directors’ report
56 Statement of Directors’
responsibility
Financial statements
57 Independent auditor’s report
60 Consolidated income
statement
61 Consolidated statement of
other comprehensive income
62 Consolidated balance sheet
63 Consolidated statement of
changes in equity
64 Consolidated cash flow
statement
65 Notes to consolidated
financial statements
95 Company balance sheet
96 Notes to the Company
financial statements
103 Company information
SSP is a leading operator of food and beverage outlets
in travel locations across 29 countries in the United
Kingdom, Europe, North America, Asia Pacific and the
Middle East. We create and operate a broad range of
outlets from quick service to fine dining and serve, on
average, one million customers each day.
As ‘The Food Travel Experts’ we provide a variety
of food and drink products to a broad range of
customers in the travel environment. We have a deep
understanding of our diverse customer base; our
insights into food and beverage trends mean we have
created an extensive range of brands and concepts that
we can run in operationally demanding, high-volume
travel locations.
We operate more than 300 brands globally through an
extensive portfolio of c.2,000 outlets, including coffee
shops, sandwich bars, bakeries, casual and fine-dining
restaurants, as well as convenience and retail outlets.
Our scale
29
countries
c.2,000
units
c.1,000,000
customers daily
c.600
sites
c.30,000
employees
SSP Group Annual Report and Accounts 2015
Strategic report
1
Revenue
£1,832.9m
Constant currency increase
+4.9%
+3.3%
+3.7%
+4.0%
+4.3%
£1,721.0m
+5.7%
£1,737.5m
+1.0%
£1,827.2m
+5.2%
£1,827.1m
Flat
£1,832.9m
+0.3%
+4.3%
(year on year at
constant currency)
2011
2012
2013
2014
2015
y
c
n
e
r
r
u
c
l
a
u
t
c
A
Underlying operating profit†
£97.4m
Constant currency increase
*
+21.7%
+15.4%
+20.8%
+17.6%
y
c
n
e
r
r
u
c
l
a
u
t
c
A
£57.0m
*
2011
£66.7m
+17.0%
2012
£88.5m
+12.3%
£97.4m
+10.1%
£78.8m
+18.1%
2013
2014
2015
† Underlying operating profit excludes exceptional items and amortisation of acquisition-related intangible assets.
* Not provided as not directly comparable following the Group’s transition from UK GAAP to IFRS in 2011.
+17.6%
(year on year at
constant currency)
Our brands
We have a broad portfolio of international and local proprietary brands tailored
specifically to the travel environment, as well as bespoke concepts which we
have created in collaboration with clients, brand partners and leading chefs.
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Strategic report
Chairman’s statement
A strong performance in 2015
I am pleased to report that the Group performed strongly in 2015. In this, our first full year as a listed
company, we capitalised on the positive underlying trends in our markets to deliver growth in revenue
of 4.3% and underlying operating profit of 17.6% (both on a constant currency basis), and an increase
in earnings per share of 19.4% (on a proforma basis).
We continued to invest in the business to deliver sustainable growth in the future, increasing capital
expenditure, and strengthening central, regional and local teams to support the implementation of our
strategy. At the same time, we further reduced our net debt, as a result of the strongly cash generative
nature of our business.
We also announced a number of major contract wins in the year, which will extend our presence in the
important North American and Asia Pacific markets, and further strengthen and diversify our leading
market positions.
Dividend
Given the Group’s strong performance, and in line with the progressive policy outlined at the time of
our IPO, the Board proposes to pay a final dividend of 2.2 pence per share (subject to shareholder
approval at the Annual General Meeting on 4 March 2016), making a total dividend for the year of
4.3 pence per share.
Sustainability
SSP is committed to operating sustainably in its markets, and in our last report we undertook to give
more detail on how we do this and how we measure our performance. This is set out on pages 22 to 25.
Our initiatives are wide-ranging, and whilst there is further work to be done, I believe we made good
progress in 2015.
Board composition
There have been two changes to the Board during the year. In June, following the sale of the remainder
of EQT IV Limited’s shareholding, Per Franzén, EQT’s nominated director, resigned as a non-executive
director. In July, we were delighted to welcome Per Utnegaard to the Board as a non-executive director.
His significant management experience in a number of senior pan-European and global positions, as
well as his substantial knowledge of the international airport sector, will be highly complementary to
the balance of skills on our Board.
Our employees and stakeholders
The Group’s strong performance reflects the dedication of the Group’s employees and their skills,
experience and commitment, as well as the relationships we have built with our customers, clients,
suppliers, business partners and shareholders. On behalf of the Board, I would like to thank all of them
for their continued support over the past year.
Outlook
I believe that SSP is well positioned to take advantage of the significant opportunities available in its
markets, and the Board looks forward to the coming year with optimism.
Vagn Sørensen
Chairman
25 November 2015
SSP Group Annual Report and Accounts 2015
3
Chief Executive’s statement
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 continued successful implementation of
our programme of operational improvements. We are continuing to invest in the growth and
development of the business and to bring exciting new brands and concepts to our clients
and customers. We are particularly pleased by the strong performances 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 Group delivered a strong financial performance in 2015, with underlying operating profit
increasing by 17.6% (on a constant currency basis) to £97.4m, and with an increase in the
operating margin of 50 basis points. Profit growth was driven by the strong revenue growth
and also encouraging progress in our wide-ranging programme to optimise gross margins and
improve operating efficiency.
Total revenue increased by 4.3% on a constant currency basis, comprising like-for-like sales
growth of 3.7% and net contract gains of 0.6%.
Like-for-like sales grew by around 3% in the first three quarters of the year and by 5.2% in the
fourth quarter. The very strong performance in the fourth quarter was as a result of increased air
passenger numbers in the UK and Continental Europe over the summer.
Net contract gains strengthened in the second half of the year to 1.6%, bringing the full-year
growth to 0.6%, with important new openings around the globe, including those at Toronto,
Orlando and Nice airports.
We delivered strong free cash flow of £54.7m, after investing £80.7m of capital expenditure,
which was a £4.7m increase on the prior year. In addition to this, we invested £5.1million in
acquiring 32 Heberer bakery outlets in Germany, helping us to strengthen our offer there. Net
debt reduced by £51.3m to £319.8m, driven by the strength of the free cash flow and the impact
of currency translation.
The pipeline of new contracts is encouraging and during the year we won a number of significant
new contracts, including those at Shenyang, Tampa, Montreal and Luxembourg airports. We
expect these sites to open progressively over the next two to three years.
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. Whilst a degree of
uncertainty always exists around passenger numbers in the short term, the geographical and
sectoral diversity in our business, together with the significant structural growth opportunities
and our programme to deliver operational improvements, leave us well placed to continue to
deliver both to our customers and our shareholders.
Kate Swann
Chief Executive Officer
25 November 2015
Strategic report 4
Strategic report
Our marketplace
Our operations are managed on a
regional basis, and are primarily
focused on the airport and
railway station markets. During
2015, 54.0% of our revenues
were generated in the air sector
and 39.5% in the rail sector.
We estimate that our core market (comprising
food and beverage sales in airports and railway
stations) was valued at approximately £13.8bn
in 2013*. The travel food and beverage market is
highly fragmented with the top three players (of
which we are one) accounting for approximately
29% of the global market (on the basis of this
valuation).
The air and rail food and beverage markets benefit
from a number of long-term structural growth
drivers:
• the increasing propensity to travel, driven by
increasing GDP and disposable incomes;
• ongoing trends towards eating out of home and
eating on the move; and
• investment in travel infrastructure, with
increasing focus on the provision of food and
beverage offerings in travel hubs to drive
additional commercial revenue streams.
SSP Group Annual Report and Accounts 2015
Strategic report
5
Air
Global air passenger numbers have more than doubled over a
20-year period, reaching 5.5bn by 2012, with an average annual
growth rate of 4.7%. Historically, this long-run growth in passenger
numbers has been resilient, even in the face of major events that
have impacted air travel, such as 9/11 or the SARS virus. Airport
Council International (ACI) expects air passenger volumes to
double again in the next two decades, with an average annual
growth rate of 4.1% expected for the period 2012 to 2031.
This growth is underpinned by a number of factors, including:
rising disposable incomes (particularly in the developing markets,
driven by the emergence of a more affluent middle class); the
increasing globalisation of business; investment in airline capacity,
in particular by low-cost carriers which have driven prices down and
stimulated demand; and investment in airport infrastructure, most
notably in developing markets.
As a consequence, growth in passenger numbers is forecast
over the medium term in all our geographic markets, with annual
increases expected to be strongest in the Asia Pacific region (6.7%)
and Middle East and Africa (5.5%). However, passenger growth is
also anticipated in our major geographies of Europe (3.4%) and
North America (2.3%).
Furthermore, spend per passenger has been boosted by a number
of specific factors, including the rapid development of the low-cost
airlines, which have limited provision of food and beverage for
passengers, and the scaling back of on-board catering services by
the major flagship carriers.
Rail
Rail passenger numbers in the European market were estimated to
be approximately 10.7bn* in 2013 and have increased at an average
annual rate ranging from 1.7% to 3.6% in the decade to 2013 in our
key European rail markets (i.e. UK, France, Germany and Sweden).
Growth in passenger numbers is forecast to continue in the
medium term, rising at between 1.6% and 1.8% in these markets.
The key driver of this growth is expected to be further investment
in rail infrastructure by European governments, alongside
various policies to encourage passengers to switch from road
transport to rail in order to reduce road congestion and to address
environmental concerns. As a consequence, significant expansion
of rail track is planned across Europe, including the completion of
major high speed rail lines which are expected to increase capacity
to 16,000km by 2020 (an additional 5,000km compared with 2011).
In addition, investment in new train capacity and the replacement
of existing train fleets is planned, which is expected to drive an
increase in passenger numbers.
Source air: World Bank Development Indicators (WDI), ACI Global Traffic Forecast.
Source rail: Euromonitor, 2010-2020 CAGR based on EU Energy Trends Report.
*Company estimate based on third-party market research commissioned for the SSP IPO
(March 2014). The core market includes airports and railway stations around the world but excludes
rail in North America.
6
Strategic report
Our business model
Our business model is focused on meeting the food
and beverage needs of our clients and customers
in the complex and challenging travel environment.
We are able to achieve this through a combination of
international scale and local expertise.
Our proposition to clients is ‘The Food Travel Experts’ which has helped us
achieve our leading market position and retain our clients over the long term.
It will also provide a strong platform for profitable growth in the future.
This business model is founded on five key elements:
Leading
market
positions
1
5
Experienced
management
team
Local
insight and
international
scale
2
4
Long-term
client
relationships
Food
travel
expertise
3
SSP Group Annual Report and Accounts 2015
Strategic report
7
SSP presence
1
2
Leading market positions
We have leading positions in some of the most attractive
sectors and regions of the travel food and drink market.
These sectors have a number of long-term structural
growth drivers, such as increasing passenger volumes and
rising spend per passenger and are supported by clients
increasingly seeking to develop and commercialise their
sites.
We have outlets in 29 countries around the world; from the
UK to Australia. We have experienced and established teams
in all of these countries.
Local insight and international scale
We combine local insight into markets and customers with
international scale and expertise. A strong local presence
enables us to understand local customers’ tastes and needs,
as well as allowing us to maintain close relationships with
clients and brand partners.
Our international reach enables us to benefit from economies
of scale, such as in procurement and corporate functions and
systems, as well as being able to share best practice across
regions, countries and sites.
8
Strategic report
Our business model continued
3
4
5
Food travel expertise
We provide a compelling proposition for both clients and
customers based on our food travel expertise, which includes
a deep understanding of customers’ food and beverage needs,
an extensive range of brands and concepts, a track record of
innovation, and operational expertise in logistically demanding
travel environments.
Our reputation for understanding the changing needs of the
customer is strong.
Long-term client relationships
Our principal clients are the owners and operators of airports
and railway stations, with airport and railway station locations
generating over 90 per cent of our revenues in 2015. Other
clients include hospitals, leisure centres and shopping centres.
We can demonstrate an ability to win, build and maintain
strong, profitable long-term client relationships. We have
longstanding relationships with many of our clients, and have
maintained high success rates in retaining our contracts.
Experienced management team
Our senior management team has deep experience, and is
supported by high-quality local management. They have
substantial expertise within the travel food and beverage
market and broader retail industry.
SSP Group Annual Report and Accounts 2015
Strategic report
9
10
Strategic report
Our 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:
unnecessary duplication of products and ingredients in our supply
chain. Waste and loss management has been an area of focus this
year, and we are now seeing the benefits of our investments in
systems and resources to manage these areas more effectively,
particularly in the larger countries.
In all of these areas we have invested in both central and local
resources to drive gross margin more directly. This includes a
stronger purchasing team, more recipe development
chefs and a new central waste and loss prevention team with
regional specialists supporting them.
4. Running an efficient and effective organisation
We have made good progress in our multi-year programme to
improve operating margin. Labour costs (including central labour)
contributed 10 basis points, or 40 basis points on an underlying
basis when adjusted for additional costs in 2015 of being a publicly-
quoted company. We continue to develop systems to better align
labour to sales demand and hence optimise service levels and
labour costs. We have begun to develop a more standardised,
systematised process to ensure that labour forecasting and
scheduling becomes a core competence. In addition to labour
scheduling and forecasting we continue to explore other areas
where technology can drive greater efficiency. For example, we
have made good progress installing cash-counting machines
and digital point of sale systems. We continue to see many good
opportunities for further improvement in this area.
We also delivered efficiencies in our management of overheads,
which contributed a further 20 basis points improvement to
operating margin.
5. Optimising investment
We continue to invest in further resources and improved capability
to support business development and the implementation of best
practice across the Group. We have strengthened the business
development teams in North America and the Rest of the World
and invested in dedicated teams to oversee capital projects and
concept design. We have also strengthened our teams dedicated
to category management, labour scheduling and the management
of waste and loss. We have also recruited new central resource for
capital procurement, as well as construction and property directors
in our key countries.
1. Driving our like-for-like sales growth
We are focused on the food and beverage market in travel
locations, which benefits from long term structural growth. We
aim to use our retail 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 continue to make good progress on rolling out our ‘retailing
basics’ programme, which is increasingly gaining traction and
supporting growth in like-for-like sales. Our focus in the year
has been on category management disciplines, and in particular
on range management and menu composition. As part of this
programme we have introduced new ranges into a number of our
core brands, such as Upper Crust. We continue to carry out work
to improve our product merchandising and promotional offer,
and have made further progress in testing price elasticity in key
categories and sectors.
2. Growing profitable new space
In the year, net contract gains were +0.6%, with stronger growth in
the second half of the year at 1.6%, as we passed the anniversary
of a lost on-board rail contract in the UK. This good performance
was driven by new unit openings, including those at Houston and
Orlando airports in North America, at Nice and Stavanger airports
in Continental Europe, at Stansted Airport in the UK, and in the
Rest of the World at Sydney and Hobart airports in Australia.
We continue to focus on retaining profitable contracts and our
contract renewal rate in 2015 was in line with our plan.
We had a strong year in terms of business development, winning
important new contracts across the globe, including those at
Shenyang Taoxian International Airport in China, Tampa and
Montreal airports in North America, and Luxembourg Findel
Airport in Continental Europe.
We have further strengthened our portfolio of brands and concepts
adding new names such as Pret A Manger, James Martin Kitchen,
Maison Pradier and Maan Coffee.
3. Optimising gross margins
We increased gross margin by 50 basis points year-on-year,
although this included the benefit of the loss of a major on-board
rail contract and the strong air sales in the final quarter. Adjusting
for these effects, the comparable improvement in gross margin
was around 30 basis points.
We continue to make progress with our initiatives to maximise the
purchasing benefits of our international scale, and we have entered
into a number of international supplier deals during the year,
for example in crockery, glassware, bakery packaging and sugar
sachets. Our programme of range and recipe rationalisation and
simplification is also progressing well and we continue to eliminate
SSP Group Annual Report and Accounts 2015
Strategic report
11
Key performance indicators
Revenue
(actual currency)
£1,832.9m
Year-on-year revenue growth
(constant currency)
2014: £1,827.1m
4.3%
2014: 4.0%
+5.7%
+1.0%
+5.2%
Flat
+0.3%
4.9%
3.3%
3.7%
4.0%
4.3%
£1,721.0m
£1,737.5m
£1,827.2m
£1,827.1m
£1,832.9m
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Definition
Revenue represents amounts for catering
and retail goods and services sold to
customers excluding value added tax and
similar items.
Comment
Total revenue grew by 0.3% to £1,832.9m
(at actual exchange rates). The overall
impact on revenue of the movement in
currencies (primarily the Euro, Norwegian
Krone and Swedish Krona) was 4.0%.
Definition
Revenue at constant currency eliminates the
impact of foreign exchange rates on reported
revenue. Constant currency is based on
average 2014 exchange rates weighted over
the financial year by 2014 results.
Comment
Revenue increased by 4.3% in
2015 on a constant currency basis,
comprising like-for-like growth of
3.7% and net contract gains of 0.6%.
Like-for-like sales increase
3.7%
Underlying operating profit
£97.4m
2014: 3.3%
2014: £88.5m
4.8%
2.7%
4.3%
3.3%
3.7%
*
+17.0%
+18.1%
+12.3%
+10.1%
2011
2012
2013
2014
2015
£66.7m
£78.8m
£88.5m
£97.4m
2012
2013
2014
2015
57.0m
2011
Definition
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 and
occupy a similar sales area.
Comment
Like-for-like sales growth of 3.7%
reflected strong growth in most regions,
notably in the airport business, driven by
increasing passenger numbers in most
territories.
Definition
Underlying operating profit represents
revenue less operating costs excluding
exceptional items and amortisation of
acquisition-related intangible assets.
Comment
Underlying operating profit increased
by 17.6% on a constant currency basis
and by 10.1% at actual exchange rates
to £97.4m.
Underlying operating profit margin
5.3%
Underlying operating cash flow
£70.9m
2014: £83.3m
2014: 4.8%
3.3%
3.8%
4.3%
4.8%
5.3%
*
+51.3%
-20.0%
+24.3%
-14.9%
£83.8m
£67.0m
£83.3m
£70.9m
£55.4m
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Definition
Underlying operating profit margin
represents underlying operating profit as
a percentage of revenue.
Comment
Underlying operating profit margin increased
by 50 basis points to 5.3% reflecting strong
like-for-like sales growth and further
encouraging progress in our programmes to
improve operational efficiency.
Definition
Underlying operating cash flow
represents net cash flow from operations
after capital expenditure, tax and net
cash flow to and from minorities and
associates. It excludes exceptional costs.
Comment
Underlying operating cash flow was
£70.9m, a decrease of £12.4m compared
to the prior year. However, this was after
a higher level of capital investment
(+£4.7m) and the £5.1m cost of the
acquisition of Heberer bakery outlets in
Germany.
* Not provided as not directly comparable following the Group’s transition from UK GAAP to IFRS from 2011.
12
Strategic report
Risk management and principal risks
The management of risks is delegated through the business with a
variety of committees responsible for reviewing and managing the
procedures. We recognise that they are designed to manage rather
than eliminate the risk of failure to achieve business objectives.
They can only provide reasonable and not absolute assurance
against material errors, losses, fraud or breaches of law and
regulations.
The Board has established processes that meet the requirements
of the UK Corporate Governance Code. These processes include
having clear lines of responsibility, documented levels of delegated
authority and appropriate operating procedures.
The role of management is to implement the Board’s policies on
risk and control and provide assurance on compliance with these
policies.
The Group’s risk management framework
Internal Audit
• Assurance activities
Board
The Board has overall responsibility for our system of internal controls and risk
management policies and is also responsible for reviewing their effectiveness.
Top down
• Oversight and
leadership of risk
management
approach
• Overall responsibility for risk
• Receives regular risk updates and
management and internal controls.
reports.
Audit Committee
The Audit Committee reviews procedures that relate to risk management
processes and financial controls. The assessment of controls and risk management
processes provide a reasonable basis for the Board to make proper judgements
on an ongoing basis as to the financial position and prospects of the Group. The
Chairman of the Audit Committee reports to the Board on any matters that have
arisen from the Audit Committee’s review of the way risk management and internal
control processes have been applied. This includes insights from its review of the
reports of the internal and external auditors.
• Supports the Board by reviewing
risk management processes and
financial controls.
• Receives and reviews detailed risk
registers.
Risk Committee
The Risk Committee operates under the management of the Audit Committee. It is
not a Board committee and is made up of executives only. The Committee is chaired
by the Chief Financial Officer and comprises the Group General Counsel, the Group
Financial Controller, Director of Business Controls, senior representatives from
Deloitte, which acts as internal auditor to the Group, and other key colleagues where
necessary.
• Reviews risk registers periodically.
• Takes action, as agreed and
documented in the registers.
• Meets quarterly.
• Identifies new risks for inclusion in
the registers.
• Reviews operational risks, controls
and KPIs on an ongoing basis.
Business Controls
• Coordinates the risk management process.
• Holds meetings with risk owners across the business.
• Updates risk registers, assesses risk ratings and documents mitigating controls.
Businesses
• Local risk registers and risk maps.
Bottom up
• Identification,
assessment,
mitigation and
escalation of risk
13
Internal controls framework
Regional and country management are responsible for
implementing internal control and risk management practices
within their own businesses and for ensuring compliance with the
Group’s policies and procedures.
• the Board considers social, environmental and ethical matters
in relation to the Group’s business and assesses these when
reviewing the risks faced by the Group; further information
regarding environmental and ethical matters is available on
pages 22 to 25; and
During 2015, the Directors reviewed the effectiveness of the
Group’s system of controls, risk management and high-level
internal control processes. These reviews included an assessment
of internal controls, in particular operational and compliance
controls and their effectiveness, supported by reports from
the internal auditor, as well as the external auditor on matters
identified in the course of its statutory audit work.
• the Group has established and rolled out a Code of Conduct, a
Whistleblowing Policy and an Anti-bribery Policy, all of which are
refreshed on an ongoing basis. Training has been provided to the
Board and to the senior management covering the obligations
and behaviours of the UK listed company, including those on
compliance, insider dealing and market abuse. Anti-bribery
training for all applicable staff levels has been rolled out.
Risk management framework
The Group’s risk management framework is designed to ensure
that material business risks throughout the business are identified
and effectively managed on an ongoing basis.
The Board confirms that there is an ongoing process for identifying,
evaluating and managing significant risks faced by the Group.
This process was in place throughout 2015 and up to the date of
approval of this annual report and meets the requirements of the
guidance produced by the Financial Reporting Council. The Audit
Committee has kept under review the effectiveness of the system
of internal control and has reported regularly to the Board.
The key features of the risk management process are as follows:
• the Group conducts an annual risk assessment and maintains
country and regional risk registers. A top down Group risk
register is maintained covering risks to the overall Group. Risks
are evaluated in respect of their potential impact and likelihood.
The regional/country registers, covering the assessment of risk
as well as current and future mitigation activities, are discussed
by the Executive Committee and key risks are presented to the
Risk Committee and the Audit Committee;
• the Board discusses and agrees the principal risks that are
included in the annual report; and
• a risk management action plan is put in place to further enhance
the Group’s risk management capability.
The Audit Committee supports the Board by regularly reviewing
the effectiveness of the Group’s system of internal control.
There were no changes to the Group’s internal control over financial
reporting that occurred during the year ended 30 September 2015
that have materially affected, or are reasonably likely to materially
affect, the Group’s reported financial position.
The key elements of the internal control environment in relation to
the financial reporting process are as follows:
• review of the Group’s strategic plans and objectives by the Board
on an annual basis;
• a detailed budget is produced annually in accordance with our
financial processes and reviewed and approved by the Board.
Operational reports are provided to Executive Management on
a weekly and monthly basis and performance against the budget
is kept under regular review in accordance with the Group’s
financial procedures manual. The Chief Executive reports to the
Board on performance and key issues as they arise;
• the Audit Committee assists the Board in the discharge of its
duties regarding the Group’s financial statements, accounting
policies and maintenance of proper internal business,
operational and financial controls. The Committee provides
a direct link between the Board and the internal and external
auditors through regular meetings;
• the Board has formal procedures in place for approval of
client contracts, capital investment and acquisition projects,
with clearly designated levels of authority, supported by post
investment review processes for selected acquisitions and
capital expenditure;
• each country is required to submit a Controls Self-Assessment
confirmation to verify its compliance with the controls set over
core processes. This must be signed off by senior management
before being submitted to Group;
SSP Group Annual Report and Accounts 2015Strategic report 14
Risk management and principal risks continued
The following table summarises the principal risks and uncertainties to which the Group is exposed, and the actions taken to mitigate those
risks and uncertainties:
Risks
Mitigating factors
Strategic development
The Group’s strategy involves expanding its business in
developing markets, including Asia Pacific and Eastern
Europe & the Middle East.
The Group prioritises its investment in new contracts as
part of the ongoing review of its global pipeline, and the
prioritisation of its capital investment and resources.
Client relationships
Senior management capability
and retention
The Group may not be successful in winning new
contracts on commercially acceptable terms, or may
win new contracts but fail to mobilise and operate them
successfully in these territories.
The Group’s operations are dependent on the terms of
airport and railway station concession agreements and
on its ability to retain existing concession contracts and
win new contracts either from its existing or new clients.
The Group’s clients may turn to alternative operators,
cease operations, terminate contracts with the Group or
increase pricing pressure on the Group.
The Group has strengthened the management team in Asia
Pacific, USA and Eastern Europe & Middle East, especially
in business development and operations.
The Group’s local management structures in all its major
geographies allow it to maintain strong relationships with
its clients and monitor performance in close partnership
with its clients’ management teams. The Group has now
established a ‘contact strategy’ with key stakeholders at
clients to establish and/or maintain ongoing relationships.
The Group also has an annual online and interview-based
client survey to ensure that any concerns are being
addressed. Furthermore, the Group proactively seeks to
invest in, extend and enhance its offers in its key locations,
working in conjunction with its clients.
The performance of the Group depends on its ability to
attract, motivate and retain key employees. The skills
developed in our business are highly attractive to other
companies, who regularly target them for recruitment.
The Group may not have sufficient management
capability at a senior level (e.g. country leadership) to
execute the planned operational efficiency programmes
and support the growth and development of the
business.
The Group continues to review key roles and succession
plans in country and at the centre.
The Group carries out an annual talent mapping exercise to
identify candidates for future roles.
The Group Remuneration Committee monitors the levels
of remuneration for senior management and seeks to
ensure that they are designed to attract, retain and
motivate the key personnel to run the Group effectively.
Business environment
The Group operates in the travel environment where
external factors such as the general economic climate,
levels of disposable income, weather, changing
demographics and travel patterns could all impact both
passenger numbers and consumer spending. There is
a risk that the Group is unable to or is poorly placed to
respond to these external events.
Changing business model
Changing client requirements, such as splitting tenders
across two or more providers, favouring local brand
operators or partnering directly with brand owners, may
adversely affect the Group’s business.
Brand portfolio
The Group’s success is dependent in large part upon its
ability to maintain its portfolio of proprietary brands as
well as the brands of its franchisors, and the appeal of
those brands for clients and customers. The loss of any
significant partner brands, the inability to obtain rights
to new brands over time or the diminution in the appeal
of partner brands or the Group’s proprietary brands
could impair the Group’s ability to compete effectively
in tender processes and ultimately have a material
adverse effect on the Group’s business.
The Group monitors the performance of individual
business units and markets regularly. The executive
management team reviews detailed weekly and monthly
information covering a range of KPIs, and monitors
progress on key strategic projects. Specific short and
medium-term actions are taken to address any trading
performance issues which are monitored on an ongoing
basis.
The Group also conducts extensive customer research to
understand current levels of customer satisfaction and
gathers feedback on changing consumer requirements.
The Group has in place a clear ‘SSP Value Proposition’ that
it presents to the client to address this risk.
The Group Chief Commercial Officer works closely with
the country management teams to enhance and clarify
SSP’s proposition to its clients.
SSP’s ‘contact strategy’ with key stakeholders of its clients
helps to mitigate this risk.
The Group carries out extensive customer research into
passengers’ needs and continually analyses market trends
in order to enhance its brand and concept portfolio on an
ongoing basis.
The Group has a dedicated brands team to work with its
partner brands on a day-to-day basis.
Strategic report 15
Risks
Mitigating factors
Intensified competition
Competition intensifies as the Group’s competitors
become more sophisticated and direct more
resources to the preparation of bids and take a more
aggressive position on commercial terms when
bidding for contracts. This could put pressure on the
Group’s profitability and reduce the availability and
attractiveness of contracts.
Expansion in developing
markets
The Group operates business directly in a number of
developing markets, including Asia Pacific and Eastern
Europe & the Middle East. Political, economic and
legal systems and conditions in these countries are
generally less predictable than in countries with more
developed institutional structures, subjecting the Group
to additional reputational, legal and compliance risks of
doing business in such economies.
Implementation of efficiency
programmes
The change programmes fail to deliver benefits e.g.
labour efficiency and improvements in wastage and loss.
The Group has clear internal benchmarking and investment
appraisal processes to evaluate tender proposals and to
ensure that the Group is able to make a competitive offer,
as well as meet its investment criteria.
The Group has developed high-quality ‘business-to-
business‘ marketing collateral to clearly lay out benefits
of working with SSP, which it shares with the clients to
help them better understand SSP’s proposition from both
quantitative and qualitative aspects.
The Group has clearly defined authorisation procedures
for all contract investment to ensure that it is consistent
with the objectives set by the Board, and fully considers
and evaluates the risks inherent in expansion into new
locations and territories.
The Group works with in-house and external advisors to
ensure risks of doing business in developing markets are
identified and where possible mitigated before entering
those markets.
Risk of working in developing markets is also discussed
by the Group Risk Committee and the Group Audit
Committee.
The Group has completed detailed evaluation and planning
for its major change programmes. Specialist expertise has
been recruited into the business where required, both at a
Group and a country level.
The Group provides central support with regional CEOs
and CFOs to facilitate appropriate country actions
based on key performance indicators linked to margin
management.
Group IT also provides support for project management
and implementation using agreed standard business
processes and controls.
The Group continually reviews and updates its business
continuity plans for its supply chain, IT disaster recovery
and its information security policies and practices to
ensure that it meets the changing landscape.
Cyber threats
Tax strategy
The Group becomes exposed to cyber threats e.g.
Payment Card Industry Data Security Standards
(PCIDSS), information security.
Risk that reputation is damaged if customers, clients
and/or suppliers believe that SSP is engaged in
aggressive or abusive tax avoidance.
The Group has a tax management policy that is based on
Board guidance to adopt a low-risk tax strategy.
The Group also faces other risks that are operational, financial and regulatory in nature. These risks are summarised below:
Operational
Business interruption
The travel environment is vulnerable to acts of
terrorism or war, an outbreak of pandemic disease, or
a major and extreme weather event or natural disaster
which could reduce the number of passengers in travel
locations.
Supply chain
The interruption or loss of supply of core category
products from a key supplier to our units may affect our
ability to trade, whilst quality of supply issues may also
impact the Group’s reputation and its ability to trade.
SSP has business continuity plans in place including liaison
with authorities and clients in key locations to ensure that
contingency plans are in place.
The Group also has comprehensive insurance at both
global and local levels with leading insurers to cover,
among other things, property damage, business
interruption, public and product liability, employer’s
liability, workers’ compensation, Directors’ and Officers’
liability, motor and other cover as required by local laws
and regulations. This cover is reviewed on an annual basis.
The Group conducts risk assessments of all of its key
suppliers to identify alternatives and develop contingency
plans in the event that any of these key suppliers fail.
The Group has contractual and other relationships with
numerous third parties in support of its business activities.
None of these arrangements are individually considered
to be essential to the business continuity of the Group, as
most of the Group’s purchasing is managed at a local level.
SSP Group Annual Report and Accounts 2015Strategic report 16
Risk management and principal risks continued
Risks
Mitigating factors
Operational continued
Food commodity price inflation A substantial element of the Group’s cost base
Technology and infrastructure
systems
Financial
Interest rate risk
Currency risk
Liquidity and debt covenants
comprises food and drink products and raw materials.
As such, the profitability of the Group’s contracts will
depend on its management of its cost of goods, which
also determines its ability to offer competitive pricing
to its customers while maintaining sufficient margins.
The failure of key operational IT systems could cause
interruption to the trading of the business.
Advances in technologies or alternative methods of
delivery, including advances in vending technology,
mobile payments, digital marketing and customer
loyalty programmes, could have a negative effect on
the Group’s business if the Group is not able to respond
adequately to these technological challenges.
The Group seeks to manage cost inflation through: pricing
reviews; menu management to substitute ingredients in
response to any forecast shortages and cost increases;
and continuing to drive greater purchasing efficiencies
through supplier negotiations, rationalisation and
compliance.
All IT programmes of any significance are authorised
and overseen by the Chief Information Officer and
project managed using well-recognised development
methodologies and protocols.
The Group is exposed to fluctuations in interest rates on
its loan balances.
Although the functional currency of the Group
is Sterling, the Group’s operating cash flows are
transacted in a number of different currencies. The
Group’s principal currencies of operation are Sterling,
the Euro, the US Dollar, the Swedish Krona and the
Norwegian Krone. The Group is subject to currency
exchange risk including translation risk and economic
risk.
The Group maintains a balance of fixed and floating rate
debt so that the risks associated with increases in interest
rates are mitigated through the use of interest rate swaps.
The Group’s policy in managing this financial currency risk
is to use foreign currency denominated borrowings to
ensure that interest costs arise in currencies which reflect
the operating cash flows, thereby minimising net cash
flows in foreign currencies.
The Group needs continuous access to funding in
order to meet its trading obligations and to support
investments. There is a risk that the Group may be
unable to obtain the necessary funds when required or
that such funds will only be available on unfavourable
terms.
The Group has put in place long-term borrowings in various
currencies to meet its demand for funds. In addition, the
Group has access to a revolving credit facility should
such demands arise at short notice. The Group’s treasury
department maintains an appropriate level of funds and
facilities to meet each year’s planned funding requirement.
The Group’s borrowing facilities include a requirement
to comply with certain specified covenants in relation
to the level of net debt and interest cover. A breach of
these covenants could result in the Group’s borrowings
becoming repayable immediately.
Compliance with the Group’s biannual debt covenant is
monitored on a monthly basis based on the management
accounts. Sensitivity analysis using various scenarios is
applied to forecasts to assess their impact on covenants.
Strategic report 17
Legal and regulatory
Compliance
Food safety
Labour laws and unions
Risks
Mitigating factors
The laws and regulations governing the Group’s industry
have become increasingly complex across a number
of jurisdictions and a wide variety of areas, including,
among others, food safety, labour, employment,
immigration, security and safety, health and safety,
competition and antitrust, consumer protection
(including data protection), environment, licensing
requirements and related compliance. The Group is also
required to comply with applicable data protection laws
and regulations in many of the jurisdictions in which it
operates.
As a UK company, the Group is required to comply with
the provisions of the UK Bribery Act, as well as the local
anti-bribery and anti-corruption laws in the territories in
which it operates.
The Group has processes in place to ensure compliance
with local laws and regulations. Depending on the nature
of complexity in a country, the Group may obtain external
advice to supplement the in-house legal and compliance
team.
The Group has a Code of Conduct and Anti-bribery
and Anti-corruption Policy in place and anti-bribery
training has been rolled out internationally. The Group’s
procedures under the policy include regular reporting by
the businesses into the Risk Committee. Compliance is
monitored by Internal Audit and the Risk Committee on
an ongoing basis and all alleged breaches of the Code of
Conduct and policy are investigated.
The preparation of food and the maintenance of the
Group’s supply chain require a base level of hygiene,
temperature maintenance and traceability, and expose
the Group to possible food safety liability claims and
issues, such as the risk of food poisoning.
The Group has food safety controls and procedures in
place that are embedded in the Group’s operations. These
are monitored by country management teams on a regular
basis and appropriate action is taken if any issues are
identified.
Approximately 35% of the Group’s employees are
subject to collective bargaining agreements, principally
in France, Germany, Spain, Denmark, Finland, Norway,
Sweden and the United States. The Group is also
subject to minimum wage requirements and mandatory
health care subsidisation in some of the jurisdictions
in which it operates, notably North America, the United
Kingdom and China.
Training sessions are also held in country to ensure
compliance with these procedures.
The Group works proactively as union contracts
and collective bargaining agreements expire or are
re-negotiated from time to time to put in place measures
to minimise the risk of less favourable terms to the Group.
Viability statement
In accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council in September 2014
(the ‘Code’), the Directors have assessed the prospects and the longer-term viability of the Group. The Directors’ assessment has been
made with reference to the Group’s current position and prospects, the Group’s strategy, the Board’s risk appetite and the Group’s principal
risks and how these are managed, as detailed in the Strategic report. In particular, the Directors have carried out a robust assessment of
the Group’s principal risks and those that would threaten the Group’s business model, future performance, solvency and liquidity.
The Directors have determined that three years is an appropriate period over which to provide its viability statement, as this is consistent
with the Group’s Medium Term Plan, which was approved by the Board in July 2015. The Medium Term Plan, which reflects the strategy and
associated principal risks of the various business units across the Group, is underpinned by a detailed financial model which is based on a
variety of assumptions about the key drivers of revenue, profit, capital expenditure and cash flow.
The plan is stress tested to provide the Board with assurance as to the Group’s viability under a number of scenarios, for example in the
event of a severe downturn in trading. These stress tests include one that uses as its reference point the 2008/09 financial crisis, when
global economic conditions adversely impacted both passenger volumes and the spending habits of customers, leading to a rapid and
unprecedented drop in like-for-like sales, and one that envisages an external event that has a significant impact on the travel sector for
a number of months. The Medium Term Plan review is supported by regular Board briefings provided by the business unit heads, which
consider both the market opportunity and the associated risks and mitigating factors. These risks are also reviewed as part of the Board’s
annual risk assessment process.
Based on this assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the three-year period to September 2018.
Going concern
In addition, based on the detailed cash flow projections discussed above, as well as the stress-tested scenarios considered, the Directors
are confident that the Group will be able to operate within its banking covenants and has sufficient liquidity levels for the next 12 months
from the date of this report. Accordingly, the Directors believe it is appropriate to prepare the Annual Report and Accounts on a going
concern basis. See page 54 for further detail.
SSP Group Annual Report and Accounts 2015Strategic report 18
Financial review
“We’ve delivered a good set
of results in our first full year
post IPO. Our cash generation
has been healthy, and we’ve
continued to strengthen our
balance sheet.”
Jonathan Davies, Chief Financial Officer
Group performance
Revenue
Underlying operating profit
Underlying operating margin
2015
£m
1,832.9
97.4
5.3%
2014
£m
1,827.1
88.5
4.8%
Reported
0.3%
10.1%
+0.5%
Change
constant
currency
4.3%
17.6%
LFL
3.7%
Revenue
Full-year revenue increased by 4.3% on a constant currency basis,
comprising like-for-like sales growth of 3.7% and net contract gains
of 0.6%. At actual exchange rates, total revenue grew by 0.3%, to
£1,832.9m.
Like-for-like sales growth of 3.7% reflects the growth in passenger
travel and the positive impact of rolling out our strategic initiatives.
Net gains for the year contributed 0.6% to revenue growth, with
stronger growth in the second half of the year of 1.6% as we passed
the anniversary of the lost on-board rail contract in the UK.
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 2015 compared to the 2014
average was -4.0%.
Underlying operating profit
Underlying operating profit increased by 17.6% on a constant
currency basis, and by 10.1% at actual exchange rates to £97.4m.
The underlying operating profit margin improved by 50 basis points
to 5.3%, reflecting good like-for-like sales growth and further
encouraging progress on our programmes to improve operational
efficiency. A reconciliation of underlying operating profit to profit/
(loss) before and after tax is provided in note 3 to the financial
statements.
Gross margin increased by 50 basis points year-on-year, or
approximately 30 basis points on a comparable basis, after adjusting
for the impact of the lost on board rail contract and the benefit of
the stronger air sales in the fourth quarter. This improvement in
gross margin offset an increase in concession fees, which rose by 50
basis points, or approximately 30 basis points on a comparable basis
(again, after adjusting for the two items referred to above).
Labour costs improved by 10 basis points in the year, or 40 basis
points excluding the impact of the additional costs of being a listed
company (mainly share-based payment schemes), and overheads
reduced by 20 basis points.
Operating profit
Operating profit was £92.2m, reflecting an adjustment for the
amortisation of acquisition-related intangible assets of £5.2m (2014:
£5.3m) , all of which relate to the acquisition of the SSP business in
2006.
Operating profit in 2014 of £40.0m also reflected adjustments for
exceptional redundancy and restructuring costs of £9.5m and costs
in respect of the Initial Public Offering (IPO) of £33.7m in aggregate;
there were no such exceptional costs in 2015.
Strategic report 19
Regional performance
UK
Revenue
Underlying operating profit
Underlying operating margin
2015
£m
727.2
52.7
7.2%
2014
£m
720.5
40.0
5.6%
Reported
0.9%
31.8%
+1.6%
Change
constant
currency
1.4%
32.2%
LFL
3.7%
Revenue increased by 1.4% on a constant currency basis, comprising
like-for-like growth of 3.7% and net contract losses of 2.3%.
offset by some important new openings, for example at Stansted
Airport.
Like-for-like growth was strong in the air sector, driven by continued
growth in UK airport passenger numbers, with particularly strong
passenger growth in the fourth quarter, and the successful ongoing
roll out of strategic initiatives.
Net contract losses were primarily a consequence of the previously
reported loss of a rail on-board catering contract part-way through
2014 and the closures of outlets at some of the major London
stations, which are being redeveloped. These impacts were partially
Underlying operating profit for the UK increased by 32.2% at
constant currency to £52.7m and the operating margin increased
by 160 basis points to 7.2%. Profit growth was helped by a £5.9m
fall in depreciation, mainly arising from the retirement of fixed
assets relating to earlier periods. Excluding the impact of lower
depreciation, this strong performance was driven by the like-for-like
sales growth and the continued roll-out of our operating efficiency
initiatives, of which the UK continues to be a major beneficiary.
Continental Europe
Revenue
Underlying operating profit
Underlying operating margin
Revenue increased by 3.3% on a constant currency basis,
comprising like-for-like growth of 1.6% and net contract gains
of 1.7%. Like-for-like sales were driven by good growth in the air
sector, notably in the Nordic countries and in Spain, and ongoing
progress in the roll-out of our retail initiatives in a number of the
major countries. The trading environment in the rail businesses
in France and Germany remains challenging, with consumer
spending weak.
Net contract gains were up 1.7%, reflecting some important new
contracts, including at Nice Côte d’Azur International Airport in
France and Stavanger and Haugesund airports in Norway. We
have also renewed and expanded our contract at Charles de
North America
Revenue
Underlying operating profit
Underlying operating margin
2015
£m
749.7
53.5
7.1%
2014
£m
803.5
57.4
7.1%
Reported
(6.7%)
(6.8%)
Flat
Change
constant
currency
3.3%
5.0%
LFL
1.6%
Gaulle Airport in Paris, which from February 2016 will operate
under a 50/50 joint venture with our client, Aéroports de Paris. In
addition to contract wins, in September we acquired 32 Heberer
bakery outlets in travel locations in Germany.
Underlying operating profit increased by 5.0% on a constant
currency basis to £53.5m. Growth was driven by like-for-like sales
in the air sector and improvements in the operating performance.
The underlying operating margin was unchanged at 7.1%,
benefiting from the good progress on our operating efficiency
initiatives, which helped to mitigate the impact of the weak like-
for-like rail sales in both France and Germany.
2015
£m
201.6
3.5
1.7%
2014
£m
168.0
(0.1)
(0.1%)
Reported
20.1%
n/a
+1.8%
Change
constant
currency
14.3%
n/a
LFL
7.8%
Revenue increased by 14.3% on a constant currency basis,
comprising like-for-like growth of 7.8% and net contract gains of
6.5%.
Like-for-like sales were driven by strong growth in airport passenger
numbers and were helped by the transfer of additional Delta
passengers into Terminal 4 at New York’s JFK International Airport
and a good contribution from the major new contracts opened in
2014, most notably, at Phoenix Sky Harbor International Airport.
Net contract gains reflected the full-year impact of new openings in
2014, including outlets at Phoenix, JFK, San Diego and Sacramento
airports, and from the new openings at Toronto, Houston and
Orlando airports during 2015.
The pipeline of new business continues to be healthy, with a number
of new contract wins announced during the year, including those at
Tampa, Montreal and Boston airports.
Underlying operating profit was £3.5m, compared with a loss of
£0.1m in 2014, and underlying operating margin improved to 1.7%,
driven by strong like-for-like growth and good progress on a number
of productivity initiatives.
SSP Group Annual Report and Accounts 2015Strategic report
20
Strategic report
Financial review continued
Rest of the world
Revenue
Underlying operating profit
Underlying operating margin
2015
£m
154.4
14.6
9.5%
2014
£m
135.1
12.7
9.4%
Reported
14.3%
15.0%
0.1%
Change
constant
currency
13.0%
13.7%
LFL
11.1%
Revenue increased by 13.0% on a constant currency basis,
comprising like-for-like growth of 11.1% and net contract gains of
1.9%.
Net contract gains were stronger in the second half (+3.2%),
principally due to the new openings in Australia, at Sydney and
Hobart airports.
Like-for-like sales reflected very strong passenger growth across
most of the region throughout the year, albeit we saw a slight
softening in the rate of passenger growth in China in the second
half.
Underlying operating profit increased by 13.7%, on a constant
currency basis, driven by the strong sales growth. The underlying
operating margin increased by 10 basis points to 9.5%, reflecting
the strong like-for-like sales, but offset by the impact of the pre-
opening costs of the new contracts.
Share of profit from associates
The Group’s share of profit from associates increased by £0.1m to
£1.6m, reflecting increased profits in airport business joint ventures,
net of reduced profit in train on-board joint ventures due to the full-
year impact of the disposal of the Group’s minority shareholding in
Momentum Services Ltd.
Net finance costs
Underlying net finance costs of £17.0m reduced by £11.2m compared
to the prior year, principally due to lower average levels of net debt.
This primarily reflected the significant repayment of borrowings
following the IPO in July 2014.
In July, we completed an ‘amend and extend’ of our existing debt
facilities, securing a 12-month extension of the term and a slight
reduction in the margin paid .
Taxation
The Group’s tax charge for the year was £16.5m (2014: £14.3m),
equivalent to an effective tax rate of 21.5% on the reported profit
before tax. The tax charge benefited from the recognition of
certain deferred tax assets, made possible because of improving
profitability.
Non-controlling interests
The non-controlling interests’ share of after tax profits increased
by £2.8m to £6.9m. This increase primarily reflected the growth and
improved profitability of our North America business, where our
business partners will often have a minority interest in individual
contracts, and the very strong profit growth in some of our joint
ventures in the Middle East and Asia.
Earnings per share
Underlying earnings per share, which excludes the impact of
exceptional items and the amortisation of intangible assets
arising on the acquisition in 2006 of the SSP business, was 12.3
pence per share. This is lower than the 13.3 pence per share
reported in 2014, although the two are not comparable due to a
significant increase in the number of shares in issue following
the IPO in July 2014. Underlying earnings per share increased by
19.4% on a proforma basis (calculated as if post-IPO financing
had been in place throughout the year and using the post-IPO
number of shares in issue).
Reported earnings per share was 11.2 pence per share (2014: a loss
of 10.7 pence per share).
Dividends
The Directors are proposing a final dividend of 2.2 pence per
share (2014: £nil), 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 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 16 March 2016 to shareholders on the register on 19 February
2016. The ex-dividend date will be 18 February 2016.
Cash flow
Underlying operating profit
Depreciation and amortisation
Working capital
Capital expenditure
Net tax
Net cash flow to minorities/associates
Acquisition of business
Share-based payments
Underlying operating cash flow
Net finance costs
Free cash flow
Exceptional costs
Dividend paid
Other
Net cash flow
21
2014
£m
88.5
75.7
12.7
(76.0)
(15.7)
(2.4)
_
0.5
83.3
(25.1)
58.2
(6.7)
_
-
51.5
2015
£m
97.4
72.9
5.3
(80.7)
(17.3)
(5.5)
(5.1)
3.8
70.8
(16.1)
54.7
(12.0)
(10.0)
(1.0)
31.7
The Group delivered free cash flow of £54.7m (2014: £58.2m), driven by
the growth in operating profit, and after increased investment in the
business.
Working capital improved by £5.3m during the year. This was after
the reversal of a number of large payments (c £7m) at the end of the
2014 financial year, which fell into the 2015 financial year. These had
contributed to the exceptional working capital performance in 2014,
when we generated £12.7m of cash.
Capital expenditure increased by £4.7m to £80.7m, reflecting the larger
new opening programme in 2015. Spend on acquisitions in the year was
£5.1m, representing the acquisition of 32 Heberer bakery outlets in the
travel channel in Germany.
Cash dividends to minorities, net of dividends received from associates,
increased to £5.5m (2014: £2.4m) primarily reflecting growth in the North
America business, carried out by partly owned subsidiaries, while taxes
paid increased by £1.6m to £17.3m.
Net finance costs paid of £16.1m were substantially lower than in 2014,
mainly as a result of lower average net debt as a result of the refinancing
associated with the Group’s IPO in July 2014.
Exceptional costs of £12.0m reflected amounts accrued in 2014, but paid
in this year, principally in respect of the IPO. The dividend paid of £10.0m
reflected the cost of the 2015 interim dividend of 2.1p per share. No
dividend was paid in the 2014 financial year.
Overall, the Group generated net cash flow of £31.7m during the year.
Balance sheet and net debt
The Group’s balance sheet strengthened in the year, with year-end net debt reducing to £319.8m (2014: £371.1m) and net assets increasing
to £291.7m (2014: £250.4m).
Opening net debt (1 October 2014)
Net cash flow
Impact of foreign exchange rates
Other
Closing net debt (30 September 2015)
£m
(371.1)
31.7
20.3
(0.7)
(319.8)
The reduction in net debt of £51.3m was driven by the net cash flow generation of £31.7m and a benefit from movements in foreign
currencies against Sterling compared to 2014, principally the effect of the strengthening of Sterling against the Euro and the Swedish
Krona and Norwegian Krone.
Leverage reduced during the year, leaving net debt: EBITDA at the year-end at 1.9x, compared with 2.3x at the end of the prior year.
We have delivered a strong financial performance in our first full year post IPO, with good sales and margin growth. We have generated
healthy cash flow and continued to strengthen our balance sheet, providing capacity for future growth.
Jonathan Davies
Chief Financial Officer
25 November 2015
SSP Group Annual Report and Accounts 2015Strategic report 22
Strategic report
Sustainability report
We believe that a commitment to sustainability makes
good business sense. We aim to responsibly manage those
environmental and social issues which have been identified
as material to our business, and to do this in a way which
also supports the Group’s overall commercial strategy.
SSP Group Annual Report and Accounts 2015
Strategic report
23
Accountability for sustainability is integrated
into our management structures, with a named
member of the Executive Committee responsible
for each of the four elements of our programme;
Marketplace, People, Environment and Community.
The Group Board regularly reviews progress on the
implementation of our strategy.
This report provides a summary of our
sustainability activity. More detail, together
with relevant policies, is available at
www.foodtravelexperts.com.
Marketplace
We are committed to providing quality products and services to our
customers, and to ensuring the safety and sustainability of those
products, and of the supply chain behind them.
Our customers
Customer focus is one of our core business values and we expect
our employees to understand our customers’ needs, making their
satisfaction our priority. Our global digital platform ‘Eat on the
Move’ allows customers to tell us their thoughts via smart phones
or other devices to help us understand where we’re doing well and
how we can improve.
As a leading food and beverage provider, we have a responsibility to
offer our customers choice and include healthier options within our
product range. We focus our work on SSP’s own brands, where we
have control over product ranges and customer messaging. During
the year, we have been working closely with the Queen Elizabeth
University Hospital Glasgow to develop a product range which
is low in salt, sugar and fat and meets the UK NHS healthy eating
guidelines.
Sustainable and ethical sourcing
We are committed to ensuring that the products we sell are from
sustainably managed sources and that the people producing these
goods are fairly treated.
We have formalised our responsible sourcing policy, which outlines
the approach we expect our purchasing and menu development
teams across the world to take.
We are committed to maintaining high standards of animal welfare
and endorse the ‘Five Freedoms’ concept proposed by the Farm
Animal Welfare Council. Our Rail Gourmet business holds a Good
Egg Award from Compassion in World Farming in recognition of
its commitment to only source cage-free eggs. During the year,
we have also reviewed all of our fish purchasing to ensure that we
remove any fish that is on the Marine Conservation Society’s Fish
to Avoid List.
We are dedicated to buying coffees and teas which are certified as
having been produced in accordance with ethical and sustainable
standards, for example, under the Fairtrade or Rainforest Alliance
certification schemes. We are making good progress towards this
objective, with around 90% of coffee and tea sold in proprietary
brands now from Fairtrade or Rainforest Alliance sources.
24
Strategic report
Sustainability report continued
As a global business we purchase a wide range of products from a
large supply base, spread across many countries, however we also
recognise the importance of supporting local producers, especially
for fresh produce and meat. In the UK, our Rail Gourmet business
has developed relationships with a network of small companies
along train routes where it operates, bringing great quality food and
beverages to customers, while also helping to promote and support
these regional businesses.
Our Code of Conduct, which is aligned to the Ethical Trading
Initiative’s Base Code, outlines the standards we expect our
suppliers to work towards. In line with the requirements of the 2015
Modern Slavery Act, we are developing our systems to monitor and
manage any modern slavery risks within our supply chain.
People
Our employees are core to our business success and we invest in our
people to enable them to reach their full potential, as well as providing
a positive, non-discriminatory and safe working environment.
Employee engagement and recognition
It is important to us that our employees are fully engaged with the
business strategy and objectives. We achieve this through regular
employee briefings and through updates via our enterprise social
network, SSP Connections. In the UK, staff can provide feedback to
us via the Your Shout forum and our recognition platform Celebrate!,
which allows employees to send an e-badge to a colleague to
recognise great behaviour and performance.
Learning and development
Our bespoke learning and development programmes have been
tailored to meet the needs of the individual, their team and
the operating business. The SSP Academy, our online learning
system, offers more than 6,000 training programmes and has
more than 10,000 active users across the Group. Some of our
training programmes for Unit Managers and above are aligned to
universities, giving our employees the opportunity to achieve an
externally-recognised qualification at the end of their training.
Our apprenticeship programmes operate in our UK and German
businesses. In the past year, we have seen more than 300
apprentices complete their qualifications in the UK. We now plan to
launch a chef apprenticeship programme, responding to the current
national skills shortage in the UK and creating a pipeline for qualified
chefs for the business.
As part of our recruitment strategy, we work with community
groups to bring young people from disadvantaged communities
into the workplace, providing them with pre-employment training,
work experience and permanent jobs. In the UK, we work with
organisations such as The Prince’s Trust and the King’s Cross
Partnership and we run similar programmes that operate across
the Group. For example, in China we are working with the China
Development Research Foundation to give work experience to young
people from rural areas and, in France, we work in partnership with
Ecole de La Deuxième Chance to support people returning to work.
Equal opportunities and diversity
We have a comprehensive Equality and Diversity Policy, which
outlines our expectation that all our employees should be treated
with respect and work in an environment in which all employees can
realise their potential, free of harassment and discrimination in any
form. We provide training and guidance to all employees to ensure
their understanding and compliance with this policy. In addition,
we also seek to support minority groups within our business,
for example, through SSP America’s programme to increase
internal promotions from minority groups through mentoring and
apprenticeships and by creating employee support networks.
Disabled persons
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled,
SSP Group Annual Report and Accounts 2015
SSP Group Annual Report and Accounts 2015
Strategic report
Strategic report
25
every effort is made to ensure that their employment with the Group
continues and that appropriate training is arranged. It is the policy
of the Group that the training, career development and promotion
of disabled persons should, as far as possible, be identical to that of
other employees.
Employees by gender
Board of Directors
Senior management
All employees
Male
86% (6)
Female
14% (1)
77% (64)
23% (21)
47% (13,618) 53% (15,644)
Health and safety
We are committed to maintaining high standards of health and
safety for our employees and our customers at all times. All
employees complete regular training on health and safety, and we
monitor performance against key safety performance indicators.
Environment
We are reducing the environmental impacts of our operations,
recognising that greater environmental efficiency can also make
good business sense. In the majority of our locations, we do not
purchase utilities or services ourselves, so we continue to work with
our clients to improve the quality of environmental impact data and
look for ways to improve.
Global greenhouse gas emissions data
2014/15
2013/14
Tonnes of
CO2e
Percentage of
carbon footprint
Tonnes of
CO2e
6,572
8%
11,026
76,069
92%
62,052
Scope 1 emissions
Combustion of fuel and
operation of facilities
Scope 2 emissions
Electricity, heat, steam and
cooling purchased for own
use
Total
82,641
100%
73,078
Intensity measurement
Total emissions reported
above normalised per £ of
turnover
45.09
grams/£
40.0
grams/£
Scope and methodology
We have reported on all of the emission sources required under the Companies
Act 2006 (strategic report and Directors’ report) Regulations 2013. These
sources fall within our consolidated financial statements. This data covers the
continuing activities undertaken by our retailing operations worldwide.
The methodology applied to data gathering and analysis is consistent with
the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard
for Scope 1 and Scope 2 emissions and the DEFRA Environmental Reporting
Guidelines, including mandatory greenhouse gas emissions reporting guidance.
A full documentation of the methodology used, including collection of data
from worldwide operations, exclusions of any non-material emission sources,
emission factors used and assumptions made is available upon request.
Reducing our carbon footprint
The largest contributor to our carbon footprint is the electricity
and gas used to light and power our outlets and we have been
working hard to establish systems to collate consumption data
centrally and share good practice on energy efficiency across our
global business.
Our LED lighting replacement programmes in the UK, Europe and
the Rest of the World, are delivering savings in both emissions
and operating cost. In the UK, we have trialled the use of smart
meters, enabling us to closely monitor energy usage and identify
any spikes quickly. We have also been testing more energy-efficient
refrigeration systems.
We regularly look for opportunities to reduce the transport miles
associated with delivering our products. Our business in the
United Arab Emirates sources organic produce from local farmers,
supporting regional suppliers and also reducing CO2 emissions from
transport. In the year ahead, we plan to review our fresh produce
sourcing to increase the use of seasonal produce, helping to reduce
airfreight and, in many cases, costs.
Reducing our waste to landfill
Reducing waste is a priority for our business. Across our global
operations, we have systems in place to recycle packaging and waste
cooking oil. In our Hong Kong business, for example, more than 700
litres of waste cooking oil has been converted into biodiesel.
We have been conducting a number of trials to look at ways to
reduce food waste. SSP America’s WasteTrax project is targeting
waste reductions in various ways, including closer monitoring of
waste volumes, reducing waste during food preparation and better
segregation and recycling/donation of waste and unsold food. This is
a complex area but we are working hard to find an approach that will
enable us to make significant reductions in the amount of food that
is thrown away.
Community
As a leading food service provider, it is appropriate that our
community investment should focus on projects promoting healthy
eating. We are working in partnership with the Children’s Food Trust,
a UK registered charity, that aims to improve the food our children
eat. SSP is funding a pilot to establish Let’s Get Cooking Clubs in
10 further education colleges in the Greater London area. 16-18
year olds in each college attend four sessions, to learn how to cook
simple and healthy meals, how to budget for food, and how to use up
leftovers and avoid waste.
In the UK, our employees and customers have been raising funds for
Cancer Research and we have seen almost £500,000 raised for the
charity over the past two years. Going forward, the SSP Foundation
(registered charity no. 1163717) will be the focus for our fundraising
activity. The Foundation will work with partner charities on projects
to promote healthy eating; and support employee-nominated
charities in the communities where SSP operates. Our hope is that
the Foundation’s grants will support a wide range of relevant good
causes in our local communities across the UK.
Approved by the Board and signed on its behalf by:
Kate Swann
Chief Executive Officer
25 November 2015
26
Board of Directors
Vagn Sørensen
Chairman
Kate Swann
Chief Executive Officer
Jonathan Davies
Chief Financial Officer
Jonathan has been the Chief
Financial Officer of SSP since its
formation within Compass Group
in 2004.
Board Committees: None
Previous experience:
Jonathan began his career in
the food industry with Unilever
plc, before joining OC&C,
the strategic management
consultancy, in 1987. Over the
following eight years he was
part of its rapid growth and
development from a start-up to
becoming a leading international
consulting firm. In 1995 Jonathan
joined Safeway plc, where he
was responsible for strategy
and planning, before becoming
Finance Director on the Executive
Board between 1999 and 2004.
He has a degree in Chemistry
from Oxford University and an
MBA from INSEAD Business
School, France.
Vagn joined the SSP Board as
Chairman in June 2006.
Kate joined SSP as Chief
Executive Officer in September
2013.
Board Committees:
Member: Nomination Committee
Board Committees: None
Previous experience:
Vagn was the President and Chief
Executive Officer of Austrian
Airlines Group from 2001 to
2006 and held various senior
commercial positions and served
as Deputy Chief Executive
Officer with SAS Scandinavian
Airlines System. He has served as
the Chairman of the Association
of European Airlines and as
a member of the Board of
Governors of the International
Air Transport Association.
Current external appointments:
Vagn is a Senior Industrial and
Investment Advisor to EQT
Partners. He is Chairman of
Scandic Hotels AB, Automic
Software GmbH and a board
member of Air Canada, Royal
Caribbean Cruises Limited,
Lufthansa Cargo AG, Braganza
AS, F L Smidth & Co A/S, Nordic
Aviation Capital A/S, TDC A/S,
TIA Technology A/S, DFDS
A/S and Bureau van Dijk BV. In
addition, Vagn is a consultant
Senior Advisor to Morgan
Stanley in the Nordic region.
He has a M.Sc. in Economics
and Business Administration
from Aarhus Business School in
Denmark.
Previous experience:
Kate began her retail career with
Tesco plc before working with
some of the UK’s best-known
companies, including Homepride
Foods, Coca-Cola Schweppes
and Dixons Retail plc. She then
joined Homebase (part of the
Home Retail Group), ultimately
in the role of Managing Director,
and in 2000 was made Managing
Director of Argos. Kate joined
WH Smith plc as Chief Executive
Officer in 2003. In 2012 she
received both The Daily Telegraph
award for Business Leader of the
Decade at the National Business
Awards and the Institute for
Turnaround Chairman’s Special
Award for exceptional and
extraordinary performance in the
transformation of WH Smith.
Current external appointments:
Kate has been a Non-Executive
Director at Babcock International
Group plc since 2011.
Kate graduated from the
University of Bradford in 1986 with
a BSc in Business Management
and received an honorary
doctorate from the university in
2007 where she is now Chancellor.
She is also a member of the
advisory Board to the Selfridges
Group.
Corporate governance
27
John Barton
Senior Independent Non-
Executive Director
Ian Dyson
Independent Non-Executive
Director
Per Utnegaard
Independent Non-Executive
Director
Denis Hennequin
Independent Non-Executive
Director
John joined SSP as an
independent Non-Executive
Director in April 2014.
Ian joined SSP as an independent
Non-Executive Director in April
2014.
Per joined the SSP Board as an
independent Non-Executive
Director in July 2015.
Denis joined the SSP Board as
an independent Non-Executive
Director in February 2014.
Board Committees:
Chairman: Nomination
Committee, Remuneration
Committee
Member: Audit Committee
Previous experience:
John has served as Chairman
of Cable & Wireless Worldwide
plc, Brit Insurance Holdings plc
and Wellington Underwriting
plc. He was previously Senior
Independent Director of WH
Smith plc and Hammerson plc.
He was also the Chief Executive
of insurance broker JIB Group
plc from 1984 to 1997. After JIB’s
merger with Lloyd Thomson in
1997, he became Chairman of the
combined group, Jardine Lloyd
Thompson Group plc, until 2001.
Current external appointments:
John was appointed to the Board
of easyJet as Chairman in May
2013 and is also Chairman of
Next plc. He is also a director of
Matheson & Co., Limited.
John is a qualified chartered
accountant and received an MBA
from Strathclyde University.
Board Committees:
Chairman: Audit Committee
Member: Nomination Committee,
Remuneration Committee
Board Committees:
Member: Remuneration
Committee, Audit Committee
Board Committees:
Member: Nomination Committee,
Remuneration Committee, Audit
Committee
Previous experience:
Denis began his career at
The McDonald’s Corporation,
becoming President of
McDonald’s Europe in 2005
where he was responsible
for 6,600 restaurants in 40
countries. He was Chairman and
Chief Executive Officer of Accor
S.A., the worldwide hotel group,
until 2013.
Current external appointments:
Denis is currently a Non-
Executive Director of Eurostar
International Limited and the
John Lewis Partnership. His
other directorships include EIL
Hospitality Ltd, The Green Jersey
Limited and Cojean Limited.
Previous experience:
He was formerly Chief Executive
Officer of Punch Taverns plc,
Group Finance & Operations
Director at Marks & Spencer
Group plc and Finance Director
of The Rank Group plc. Prior
to this he was Group Financial
Controller of Hilton Group plc. He
joined Hilton from Le Meridien, a
division of Forte Group plc, where
he had been Finance Director. Ian
was a Non-Executive Director of
Misys plc until September 2005.
His early career was spent
with Arthur Andersen, where
he qualified as a chartered
accountant in 1986 and was
promoted to a Partner of the firm
in 1994.
Current external appointments:
Ian is Senior Independent
Director of Betfair Group plc and
ASOS plc and Non-Executive
Director of Intercontinental
Hotels Group plc and Punch
Taverns plc.
Previous experience:
Per’s previous roles include
Group Wholesale Director and a
member of the Group Board at
Alliance UniChem plc, Senior Vice
President, Corporate Business
Development at Danzas Holding
Ltd. (a subsidiary of Deutsche
Post AG) and various senior
positions at TNT Post Group.
Between 2004 and 2013 he was
also a Non-Executive Director at
Berendsen plc.
Current external appointments:
Per has been a member of the
Board of Swissport International
Ltd since 2007. He has been its
Vice Chairman since August 2015
and was previously its Group
President and CEO.
Per has been Non-Executive
Director of Palletways Group Ltd
since 2008 and a Board Member
of Envirotainer AB since 2010.
Per has been Chairman of the
Executive Board of Bilfinger SE
since June 2015.
SSP Group Annual Report and Accounts 2015Corporate governance 28
Corporate governance report
UK Corporate Governance Code compliance
Responsibility for good governance lies with the Board. The Board is accountable to shareholders and is committed to the highest standards
of corporate governance as set out in the UK Corporate Governance Code published in September 2014 (together the ‘Code’). The Code
can be found on the Financial Reporting Council website at www.frc.org.uk. This corporate governance report, together with the Directors’
remuneration report set out on pages 36 to 50, describes how the Board has applied the main principles of good governance set out in the
Code during the year under review.
Compliance statement
It is the Board’s view that for the year ended 30 September 2015 the Company has complied with all of the principles set out in the Code other
than in relation to the independence of the Chairman, as Vagn Sørensen was not independent at the time of his appointment (provision A.3.1 of
the Code). The Directors believe that this non-compliance is justified, as a result of Vagn’s knowledge of the Group’s business, his experience in
the industry and the continuity his service provides.
How we govern the Company
Our governance structure comprises the Board and various committees (detailed below), supported by the Group’s standards, policies and
controls, which are described in more detail in this report.
The Board
Composition
As at 30 September 2015, and as at the date of this report, the Board of Directors was made up of seven members, comprising the Chairman,
two Executive Directors and four Non-Executive Directors. Per Franzén, EQT’s nominated director, resigned on 18 June 2015 as a Non-Executive
Director of the Company following the sale of EQT IV Limited’s shareholding in the Company as announced on 28 May 2015.
John Barton, Ian Dyson, Per Utnegaard and Denis Hennequin are considered by the Board to be independent of management and free of any
relationship which could materially interfere with the exercise of their independent judgement. The Board considers that each of the Non-
Executive Directors brings their own senior level of experience, gained in each of their own fields.
Biographical details of each of the Directors currently in office are shown on pages 26 and 27. The Company’s policy relating to the terms of
appointment and the remuneration of both Executive and Non-Executive Directors is detailed in the Directors’ remuneration report which is on
pages 36 to 50.
The Board meets regularly during the year, as well as on an ad hoc basis, as required by business need. The Board met six times between
1 October 2014 and 30 September 2015 and attendance at these meetings is shown in the table on page 29. Each Director is also
proposing to attend the AGM to answer shareholder questions.
Responsibilities
The Board manages the business of the Company and may, subject to the Articles of Association and applicable legislation, borrow money,
guarantee, indemnify, mortgage or charge the business, property and assets (present and future) and issue debentures and other securities
and give security, whether outright or as a collateral security, for any debt, liability or obligation of the Company or of any third party. The Board
has a formal schedule of matters reserved for its decision, although its primary role is to direct the strategic development of the Group. In
addition, the Board sets the Group’s values and standards and ensures that it acts ethically and that its obligations to its shareholders are
understood and met. The Board may delegate any of its powers to any committee consisting of one or more Directors.
The Board has established a procedure for Directors, if deemed necessary, to take independent professional advice at the Company’s expense
in the furtherance of their duties. Every Director also has access to the General Counsel and Company Secretary, who is charged with ensuring
that Board procedures are followed and that good corporate governance and compliance are implemented throughout the Group. Together
with the Chief Executive Officer and the General Counsel and Company Secretary, the Chairman ensures that the Board is kept properly
informed and is consulted on all issues reserved to it. Board papers and other information are distributed at times to allow Directors to be
properly briefed in advance of meetings.
The roles of Chairman and Chief Executive Officer are separate and clearly defined in accordance with the division of responsibilities set out in
writing and agreed by the Board.
Director effectiveness and training
In accordance with best practice, the Chairman addresses the developmental needs of the Board as a whole, with a view to further developing
its effectiveness as a team, and ensures that each Director refreshes and updates his or her individual skills, knowledge and expertise.
Meetings between the Non-Executive Directors, both with and without the presence of the Chief Executive Officer, are scheduled in
the Board’s annual programme. Board meetings are also held at Group business locations to help all Board members to gain a deeper
understanding of the business. This also provides senior managers from across the Group with the opportunity to present to the Board, as well
as to meet the Directors on more informal occasions.
Succession planning is a matter for the whole Board, rather than for a committee. The Company’s Articles of Association provide that at every
Annual General Meeting, each Director shall retire and seek re-election. New Directors may be appointed by the Board, but are subject to
election by shareholders at the first opportunity after their appointment, as is the case with all Directors. The Articles of Association limit the
number of Directors to not less than two save where shareholders decide otherwise. Non-Executive Directors are normally appointed for an
initial term of three years which is reviewed and may be extended for a further three years.
Corporate governance 29
A formal, comprehensive and tailored induction is given to all Non-Executive Directors following their appointment, including visits to key
locations within the Group and meetings with members of the Executive Board and other key senior executives. The induction also covers a
review of the Group’s governance policies, structures and business, including details of the risks and operating issues facing the Group.
John Barton is the Company’s Senior Independent Director. His role includes providing a sounding board for the Chairman and acting as an
intermediary for the Non-Executive Directors, where necessary. The Board believes that John Barton continues to have the appropriate
experience, knowledge and independence to continue in this role.
The Chairman ensures that the Board maintains an appropriate dialogue with shareholders.
Board effectiveness
A performance evaluation of the Board and of its committees is carried out annually to ensure that they continue to be effective and that
each of the Directors demonstrates commitment to his or her respective role and has sufficient time to meet his or her commitment to the
Company.
Overall, the Board considers each Director to be effective and that both the Board and its committees continue to provide effective leadership
and exert the required levels of governance and control. The Board will continue to review its procedures, effectiveness and development in
the year ahead.
Conflicts of interest
As part of their ongoing development, the Executive Directors may seek one external non-executive role on a non-competitor board, for which
they may retain the remuneration in respect of the appointment. In order to avoid any conflict of interest, all appointments are subject to the
Board’s approval and the Board monitors the extent of Directors’ other interests to ensure that its effectiveness is not compromised.
Each Director has a duty under the Act to avoid a situation in which he or she has or can have a direct or indirect interest that conflicts or
possibly may conflict with the interests of the Company. This duty is in addition to the obligation that he or she owes to the Company to
disclose to the Board his or her interest in any transaction or arrangement under consideration by the Company. The Company’s Articles of
Association authorise the Directors to approve such situations and to include other provisions to allow conflicts of interest to be dealt with.
The Board follows an established procedure when deciding whether to authorise an actual or potential conflict of interest. Only independent
Directors (i.e. those who have no interest in the matter under consideration) will be able to take the relevant decision, and in taking the decision
the Directors must act in good faith and in a way they consider will be most likely to promote the Company’s success. Furthermore, the
Directors may, if appropriate, impose limits or conditions when granting authorisation.
Any authorities are reviewed at least every 15 months. The Board considered and authorised each Director’s reported actual and potential
conflicts of interest at its September 2015 Board meeting.
Committees of the Board
The Board has established a number of committees to assist in the discharge of its duties and the formal Terms of Reference for the principal
committees, approved by the Board and complying with the Code, are available from the General Counsel and Company Secretary. Their Terms
of Reference are reviewed annually and updated where necessary. Membership and details of the principal committees are shown on pages 30
and 31. The General Counsel and Company Secretary acts as Secretary to all Board committees.
Meeting attendance
The following table shows the attendance of Directors at meetings of the Board, Audit, Nomination and Remuneration Committees in the year
ended 30 September 2015:
Name
John Barton
Jonathan Davies
Ian Dyson
Per Franzén (Note 1)
Denis Hennequin
Vagn Sørensen
Kate Swann
Per Utnegaard (Note 2)
Board
6 of 6
6 of 6
6 of 6
4 of 4
6 of 6
6 of 6
6 of 6
2 of 2
Audit Committee
Nomination Committee
Remuneration Committee
5 of 5
–
5 of 5
–
5 of 5
–
–
2 of 2
2 of 2
–
2 of 2
1 of 1
2 of 2
2 of 2
–
–
3 of 3
–
3 of 3
–
3 of 3
–
–
1 of 1
The table shows the number of meetings attended out of the number of meetings that each Director was eligible to attend. Directors who are
not members of individual Board committees have also been invited to attend one or more meetings of those committees during the year.
Notes:
1. Per Franzén resigned as a Non-Executive Director 0n 18 June 2015 and ceased to be a member of the Nomination Committee.
2. Per Utnegaard was appointed as a Non-Executive Director on 1 July 2015, when he also became a member of the Audit Committee and
Remuneration Committee.
SSP Group Annual Report and Accounts 2015Corporate governance 30
Corporate governance report continued
Nomination Committee
Key responsibilities
The Nomination Committee reviews the structure, size and composition of the Board and its committees and makes recommendations
with regard to any changes considered necessary in the identification and nomination of new Directors, the reappointment of existing
Directors and appointment of members to the Board’s committees. It also assesses the roles of the existing Directors in office to ensure
that there continues to be a balanced Board in terms of skills, knowledge, experience and diversity. The Nomination Committee reviews the
senior leadership needs of the Group to enable it to compete effectively in the marketplace. The Nomination Committee also advises the
Board on succession planning for Executive Director appointments, although the Board itself is responsible for succession generally.
The Nomination Committee’s key objective is to ensure that the Board comprises individuals with the necessary skills, knowledge and
experience to ensure that it is effective in discharging its responsibilities.
Membership as at 30 September 2015
John Barton (Chairman)
Ian Dyson
Denis Hennequin
Vagn Sørensen
Per Franzén resigned as a Non-Executive Director on 18 June 2015 and ceased to be a member of the Nomination Committee on that date.
Meetings held in 2015 financial year: two
Board appointments process
The Company adopts a formal, rigorous and transparent procedure for the appointment of new Directors and senior executives with due
regard to diversity and gender. Prior to making an appointment, the Nomination Committee will evaluate the balance of skills, knowledge,
independence, experience and diversity on the Board and, in the light of this evaluation, will prepare a description of the role and
capabilities required, with a view to appointing the best placed individual for the role.
In identifying suitable candidates, the Nomination Committee:
• uses open advertising or the services of external advisors to facilitate the search;
• considers candidates from different genders and a wide range of backgrounds; and
• considers candidates on merit and against objective criteria ensuring that appointees have sufficient time to devote to the position, in
light of other significant commitments.
In the year ahead, the Nomination Committee will continue to assess the Board’s composition and how it may be enhanced and will consider
diversity (gender and experience) and geographic representation and use independent consultants as appropriate to ensure a broad
search for suitable candidates.
Remuneration Committee
Key responsibilities
The Remuneration Committee is responsible for making recommendations to the Board on remuneration policy for the Chairman,
Executive Directors and senior management.
Membership as at 30 September 2015
John Barton (Chairman)
Ian Dyson
Denis Hennequin
Per Utnegaard (appointed 1 July 2015)
Meetings held in 2015 financial year: three
The Directors’ remuneration report is set out on pages 36 to 50 and includes details of the Remuneration Committee’s activities during
the year and the remuneration policy. The Chairman of the Remuneration Committee will attend the AGM to respond to any shareholder
questions that might be raised on the Remuneration Committee’s activities.
Corporate governance
31
Audit Committee
Key responsibilities
The Audit Committee is responsible for assisting the Board with the discharge of its responsibilities in relation to financial reporting,
including reviewing the Group’s annual and half-year financial statements and accounting policies, internal and external audits and controls,
reviewing and monitoring the scope of the annual audit and the extent of the non-audit work undertaken by external auditors, advising
on the appointment of external auditors and reviewing the effectiveness of the internal audit, internal controls, whistleblowing and fraud
systems in place within the Group.
Membership as at 30 September 2015
Ian Dyson (Chairman)
John Barton
Denis Hennequin
Per Utnegaard (appointed 1 July 2015)
Meetings held in 2015 financial year: five
The Audit Committee’s report is set out on pages 32 to 35 and includes details of the Audit Committee’s responsibilities and activities
during the year. The Chairman of the Audit Committee will attend the AGM to respond to any shareholder questions that might be raised on
the Audit Committee’s activities.
Other Committees
Executive Committee
The Executive Committee is not a Board committee but is the key management committee for the Group and is made up of executives and
senior management.
The Executive Committee meets regularly and is responsible for developing the Group’s strategy and capital expenditure and
investment budgets and reporting on those areas to the Board for approval, implementing Group policy, monitoring financial,
operational and quality of customer service performance, health and safety, purchasing and supply chain issues, succession planning
and day-to-day management of the Group.
Risk Committee
The Risk Committee is responsible for risk management. It is not a Board committee and is made up of executives only. It meets quarterly
and reports to the Audit Committee. Further details of the Risk Committee are set out in the Strategic report on pages 12 and 13.
Communicating with shareholders
The Company places considerable importance on communication with its shareholders, including its private shareholders. The Chief
Executive Officer and the Chief Financial Officer are closely involved in investor relations supported by the Group’s investor relations
function, which has primary responsibility for day-to-day communication with investors. The views of the Company’s major shareholders
are reported to the Board by the Chief Executive Officer and the Chief Financial Officer, as well as by the Chairman, and are discussed at its
meetings.
The Board recognises the importance of promoting mutual understanding between the Company and its shareholders through a
programme of engagement. It is intended that this will include the maintenance of a regular dialogue between the Board and senior
management and major shareholders. The AGM provides an opportunity for all shareholders to meet the Group’s Directors and to hear
more about the strategy and performance of the Group. Shareholders are encouraged to attend the AGM and to raise any questions at the
meeting or in advance, using the email address shown in the AGM pack which is sent to shareholders.
The primary method of communication with shareholders is by electronic means, helping to make the Company more environmentally
friendly by reducing waste and pollution associated with the printing and posting of its annual report. The SSP Group Annual Report and
Accounts 2015 is available to all shareholders and can be accessed via the Company’s website at www.foodtravelexperts.com. The Group’s
annual and interim results are also published on the Company’s website, together with other announcements and documents issued to the
market, such as trading updates and presentations. Enquiries from shareholders may also be addressed to the Group’s investor relations
function through the contacts provided on the Group’s website.
The Notice of AGM is circulated to shareholders at least 20 working days prior to such meeting and it is Company policy not to combine
resolutions to be proposed at general meetings. All shareholders are invited to the Company’s AGM, at which they have the opportunity
to put questions to the Board, and it is standard practice to have the Chairman of the Audit, Nomination and Remuneration Committees
available to answer questions. The results of proxy voting for and against each resolution, as well as abstentions, are announced to the
London Stock Exchange and are published on the Company’s website shortly after the meeting.
SSP Group Annual Report and Accounts 2015Corporate governance
32
Dear Shareholder
I am pleased to report on the activities of the Audit Committee (the ‘Committee’) for the year ended 30 September 2015.
During the year, the Committee members formally met five times and, in line with the terms of reference, focused on
protecting the interests of the shareholders with regard to the integrity of the financial reporting, audit, risk management
and internal controls. The Committee receives independent assurance from the Group’s Internal Audit function, which is
outsourced to Deloitte and also receives updates from the external auditors across a wide range of issues in support of
their respective oversight responsibilities. The Committee is further supported by the Risk Committee.
The Committee comprises myself and three other independent Non-Executive Directors – John Barton, Denis Hennequin
and Per Utnegaard (appointed 1 July 2015). As Chairman, I have recent and relevant financial experience through my
past roles as a CEO and CFO of publicly quoted companies. The expertise and experience of the members of the Audit
Committee is summarised on pages 26 and 27. Helen Byrne (Company Secretary) acts as Secretary to the Committee.
The Committee also invites the Chairman of the Board, the Chief Executive, the Chief Financial Officer, the Group
Financial Controller and the Group Director of Business Controls, together with senior representatives from the internal
and external auditors, to attend each meeting although, from time to time, the Committee reserves time for discussions
without invitees being present. Other senior management are invited to present such reports as are required for the
Committee to discharge its duties. The Committee holds private sessions with the external and internal auditors without
management present, and I meet privately with both internal and external auditors.
I provide regular updates to the Board on the key issues discussed at the Committee’s meetings and will attend the AGM
to respond to any shareholder questions that might be raised on its activities.
During the year the Committee:
• reviewed the Group’s risk assessment, with particular focus on the risks which were deemed to have increased , either
in likelihood or impact, along with the supporting action plans to mitigate the risks;
• reviewed the Group’s internal financial control and risk management systems, whistleblowing arrangements and other
audit and risk-related arrangements to assist the Board in fulfilling its responsibilities relating to the effectiveness of
those systems. It also reviewed a number of detailed reports on the internal controls and risk management processes
within the business units;
• evaluated the performance of both internal and external auditors;
• reviewed and monitored the external auditor’s independence and objectivity and the effectiveness of the audit
process;
• conducted an external audit tender process and made recommendations to the Board on the appointment of the
auditors and the audit fee;
• continued to challenge the assumptions and judgements made by management in determining the half-year and full-
year financial results of the Group and to assess for appropriateness their disclosure in the financial statements; and
• considered in detail the accounting policy for exceptional and one-off items and supplier rebates.
Corporate governanceAudit Committee report 33
Terms of reference
The terms of reference of the Committee can be found at www.foodtravelexperts.com.
Risk management and internal control
The Board has overall responsibility for risk management and the system of internal control and for reviewing their effectiveness.
The Committee oversees the risk management process and provides oversight of internal controls on the Board’s behalf. The
system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and can
only provide reasonable and not absolute assurance against material misstatement or loss.
The Board has established a clear organisational structure with defined authority levels. The day-to-day running of the Group’s
business is delegated to the Executive Directors of the Group. The Executive Directors meet with both operational and finance
management on a monthly basis. Key financial and operational measures are reported on a monthly basis and are measured
against both budget and reforecasts in these meetings.
The Group maintains Group and regional/country level risk registers which outline the key risks faced by the Group including their
impacts and likelihood along with relevant mitigating controls and actions. On an annual basis, regional and country management
teams are required to update local risk registers and risk maps to ensure that the key strategic, operational, financial and
accounting risks in each location are captured and prioritised according to likelihood and impact and to identify the risk
management activities for each risk. The regional and country risk registers are used in conjunction with input from the Executive
Committee to update the Group risk register. The Risk Committee and Executive Committee review the assessment of risk, as
well as current and future mitigation activities, at both Group and regional/country level. A summary of this review is presented
to the Committee annually.
The principal risks and uncertainties which are currently judged to have the most significant impact on the Group’s long-term
performance are set out on pages 14 to 17.
The Committee reviewed the effectiveness of the Group’s financial controls and system of internal control by reviewing the
scope of work and reports of the internal and external auditor. The Committee also reviewed the risk assessment process and
Group, regional and country risk registers during the year.
Internal audit
Internal audit plays an important role in assessing the effectiveness of internal controls by a programme of reviews based on
a continuing assessment of business risk across the Group. Deloitte acts as internal auditor to the Company and the partner
responsible is a permanent member of the Risk Committee and reports directly to the Audit Committee. Internal audit is in
regular dialogue with regional Chief Financial Officers. Where control deficiencies are noted, Deloitte will perform follow-up
reviews and visits.
The Audit Committee meets regularly with Deloitte to review and progress the Group’s internal audit plan. The relevant audit
plan and procedures are aimed at addressing financial risk management objectives and providing coverage of the risks identified
in the regional and country risk registers. The internal audit plans have been prepared in accordance with standards promoted
by the Chartered Institute of Internal Auditors. The Committee continues to monitor the effectiveness of internal audit plans in
accordance with the Group’s ongoing requirements.
The Committee considered the output from the 2015 annual internal audit programme of assurance work, reviewed
management’s response to the matters raised and ensured that any action was timely and commensurate with its level of risk,
whether real or perceived.
There were no significant weaknesses identified in the year that would materially impact the Group as a whole, but a number of
recommendations were acted upon within the Group to strengthen in-place controls or risk-mitigating actions. The Committee
remains satisfied that the Group’s system of internal controls works well.
The Committee determines the adequacy of the performance of the internal auditor through the quality and depth of findings
and recommendations. During 2015, the Committee also carried out an assessment of Deloitte using questionnaires completed
by senior finance personnel both at Group and in country, along with key members of the legal and tax departments. The survey
covered areas such as their position and organisation, purpose and remit, process management, people and knowledge and
performance and communication. The survey indicated overall satisfaction with Deloitte’s interaction with local teams and their
understanding of the business and issues it faces. The Committee was satisfied with Deloitte’s responses to the points raised in
the survey.
SSP Group Annual Report and Accounts 2015Corporate governance 34
Audit Committee report continued
Anti-bribery and whistleblowing
SSP has a Group-wide Anti-bribery and Corruption Policy to comply with the Bribery Act 2010 and it periodically reviews its procedures to
ensure continued effective compliance in its businesses around the world.
The Group’s Whistleblowing Policy provides the framework to encourage and give all employees confidence to ‘blow the whistle’ and report
irregularities. Employees are encouraged to raise concerns with designated individuals, including the Executive Directors or the Chairman
of the Audit Committee. The Audit Committee monitors this policy and reviews annually the number of matters reported and the outcome
of any investigations.
The Audit Committee will periodically review the Group’s policies and procedures for preventing and detecting fraud, its systems,
controls and policies for preventing bribery, its code of corporate conduct and business ethics and its policies for ensuring that the
Group complies with relevant regulatory and legal requirements. The Committee receives updates on bribery and fraud trends and
activity in the business, if any, at least twice a year, with individual updates being given to the Committee, as needed, in more serious
cases of alleged bribery, fraud or related activities. During the year we also reviewed the effectiveness of the Group’s implementation
of its anti-bribery and corruption policies.
External audit
The effectiveness and the independence of KPMG, the Group’s external auditor, are key to ensuring the integrity of the Group’s published
financial information. Prior to the commencement of the audit, the Committee reviewed and approved the audit plan to gauge whether
it was appropriately focused. KPMG presented to the Committee its proposed plan of work which was designed to ensure there are no
material misstatements in the financial statements. The Committee considered the accounting, financial control and audit issues reported
by the auditors that flowed from the audit work.
At the conclusion of the 2014 audit, the Committee carried out an assessment of KPMG. This was supported by the results of discussions
with individual Committee members and questionnaires completed by senior finance personnel both at Group and in country, along with
key members of the legal and tax departments.
The survey covered areas such as communication, the audit approach and scope, the calibre of the audit teams, technical expertise and
independence. The survey indicated overall satisfaction with the services provided by KPMG and the Committee was satisfied with
KPMG’s responses to the points raised in the survey.
Audit tender
The Committee considered the FRC proposals concerning audit tenders and decided to tender the audit during this year as KPMG
had been in place since 2006 and the audit partner was required to rotate in the following year. During the year a Working Committee,
nominated by the Committee, undertook the audit tender process. The team comprised the Chairman of the Audit Committee, the Group
CEO, the Group CFO and the Group Financial Controller. At the beginning of the process, we approached four firms to assess their interest
in participating in the audit tender and their ability to perform the audit, and to confirm their independence. Subsequently, three audit firms
took part in the tender process. They were given access to management across the Group to assist them in understanding our business, our
finance and accounting function and our accounting policies.
In July 2015, each firm submitted a proposal document that included an audit plan and approach with particular focus on key risks faced by
the Group. Presentations were made to the Working Committee in August and September 2015.
After consideration of each firm with the Committee’s requirements including proposed approach, experience in the sector and technical
capability, the Working Committee nominated KPMG as external auditor. The Committee carefully considered the results of the audit
tender process and supported this conclusion and, in September 2015, recommended to the Board that KPMG be appointed the auditor to
the Group. A proposal to appoint KPMG as external auditor will be put to shareholders for approval at the 2016 AGM.
Auditor independence and non-audit services policy
The Audit Committee has adopted a formal policy governing the engagement of the auditor to provide non-audit services, taking
into account the relevant ethical guidance on the matter. This policy is reviewed annually by the Committee. The policy describes the
circumstances in which the auditor may be engaged to undertake non-audit work for the Group. The Committee oversees compliance with
the policy and considers and approves requests to use the auditor for non-audit work.
Recognising that the auditor is best placed to undertake certain work of a non-audit nature, the engagements for non-audit services that
are not prohibited are subject to formal review by the Committee based on the level of fees involved. Non-audit services that are pre-
approved are either routine in nature with a fee that is not significant in the context of the audit, or are audit-related services.
Details of fees payable to the auditor are set out in note 5 on page 73. In 2015, non-audit fees represented 20% of the audit fee. KPMG also
complied with the independence requirements as set out by the APB Ethical Standards for Reporting Accountants.
The external auditor reported to the Committee on its independence from the Group. The Committee is satisfied that KPMG has adequate
policies and safeguards in place to ensure that auditor objectivity and independence are maintained.
Corporate governance 35
Financial reporting
As part of our work to ensure the integrity of the financial reporting, the Committee focused on the following during the year:
• Goodwill and intangible assets:
The Group has a significant goodwill balance, representing consideration paid in excess of the fair value of the identified net assets
acquired relating to the 2006 acquisition of the SSP business through the purchase of various Compass Group plc subsidiaries by
various subsidiaries of SSP Group. The net assets acquired include intangible assets relating to the Group’s own brands and franchise
rights in respect of third-party brands which were determined at the date of acquisition.
The Audit Committee recognises that there is a risk that a business can become impaired, for example, due to market changes. As a
result the Group monitors carrying values of goodwill and intangibles to ensure that they are recoverable and any specific indicators of
goodwill or intangible impairment are discussed by the Executive Directors with both operational and financial management.
The carrying value of goodwill is subject to impairment testing, on an annual basis. The carrying values of goodwill and intangible assets
are reviewed on the identification of a possible indicator of impairment, to ensure that the carrying values are recoverable. This testing,
including the key assumptions and sensitivity analysis, is reviewed by the Chief Financial Officer and the Group Financial Controller.
After reviewing reports from management and consulting, where necessary, with the external auditor, the Audit Committee is satisfied
that the financial statements appropriately address the critical judgements and key estimates, both in respect to the amounts reported
and the disclosures provided. The Audit Committee agrees with management that no impairment needs to be recognised.
• Taxation:
The Group operates in and is subject to income taxes in a number of jurisdictions. Management is required to make judgements and
estimates in determining the provisions for income taxes and the amount of deferred tax assets and liabilities recognised in the
consolidated financial statements.
The Audit Committee recognises that management judgement is required in determining the amount and timing of recognition of tax
benefits and an assessment of the requirement for provisions against the recognition of such benefits.
The Committee reviewed the Group’s tax strategy and received reports and presentations from the Head of Tax highlighting the
principal tax risks that the Group faces, the tax strategy and the judgements underpinning the provisions for potential tax liabilities. The
Committee also reviewed the results of the external auditor’s assessment of provisions for income taxes and deferred tax assets and
liabilities and, having done so, was satisfied with the key judgements made by management.
• Viability statement:
The Committee agreed the parameters of, and reviewed a report to support the viability statement as presented on page 17 of the
strategic report.
• Fair, balanced and understandable financial statements
An intrinsic requirement of a group’s financial statements is for the Annual Report and Accounts to be fair, balanced and understandable.
The co-ordination and review of the Group-wide input into the Annual Report is a sizeable exercise performed within an exacting
timeframe, which runs alongside the formal audit process undertaken by the auditor.
The process to ensure that the Committee, and then the Board, are satisfied with the overall fairness, balance and clarity of the
document has been underpinned by:
• guidance issued to contributors at operational level;
• a verification process dealing with the factual content of the reports; and
• comprehensive review by the Directors and the senior team.
Ian Dyson
Chairman, Audit Committee
25 November 2015
SSP Group Annual Report and Accounts 2015Corporate governance
36
Statement by the Chairman of the Remuneration Committee
Dear Shareholder
I am delighted to present our Directors’ remuneration report for the financial year ended 30 September 2015 which
comprises this statement and the Annual Report on Remuneration on pages 37 to 43.
Our remuneration policy was approved by shareholders at our 2015 AGM. The Remuneration Committee (the ‘Committee’)
has continued to operate in accordance with that policy during the 2015 financial year. The Committee is satisfied that the
policy remains appropriate, and no changes to the policy are proposed for 2016. The Policy is provided on pages 44 to 50
for information only.
Key decisions and pay outcomes for the year ended 30 September 2015
Following a review in the year, our Executive Directors’ base salaries were increased by 2% effective 1 June 2015, in
line with the average salary increases awarded to UK employees who are paid on a monthly basis. This resulted in base
salaries of £765,000 for Kate Swann and £408,000 for Jonathan Davies .
The Group delivered a strong financial performance in the year with good like-for-like sales, net gains and improvement
in operating margin. There was continued progress against the Group’s strategic objectives, with new contract openings
across the globe and the continued successful implementation of the programmes of operational improvements. Further
information regarding the Group’s performance during the year can be found in the Strategic report on pages 1 to 25.
Based on a combination of the financial performance of the business and personal performance achieved in the financial
year, the Committee awarded an annual bonus of 200% of salary to Kate Swann and 100% of salary to Jonathan Davies.
As a reminder, no awards under long-term incentive awards were due to vest in the year.
Remuneration for the year ending 30 September 2016
The Committee will continue to apply the current remuneration framework during the year ending 30 September 2016.
- The current salaries of Executive Directors will continue to apply from 1 October 2015 and we will review salaries with
effect from 1 June 2016, in line with our usual timetable.
- The annual bonus plan will operate on the same basis as in 2015. Awards will be primarily based on underlying Group
operating profit performance, and will be subject to a multiplier based on individual performance.
- As mentioned in our previous Directors’ remuneration report, other than new joiners, we did not grant any awards last
year under the SSP Performance Share Plan as an award post IPO was made in July 2014. This year, we intend to grant
a PSP award in November 2015 of 200% of salary to Kate Swann and 125% of salary to Jonathan Davies. These awards
will be subject to performance over the three financial years to 30 September 2018. The performance measures for
these awards will continue to be 75% EPS growth and 25% relative TSR performance. The TSR comparator group for
awards to be made under the SSP Performance Share Plan in 2015 will largely be consistent with that for awards made
in 2014, except to reflect the merger of companies in the TSR comparator group.
- As mentioned last year, the UK Corporate Governance Code was revised in 2014. Malus and clawback provisions
are now required on all performance-related components of pay. Our approved policy includes clawback and malus
provisions for bonus and PSP awards to Executive Directors. We are therefore compliant with this aspect of the Code.
I hope very much that shareholders will support the Committee’s continuing overall approach to remuneration and, on
behalf of the Committee, I commend our report to you.
John Barton
Chairman of the Remuneration Committee
25 November 2015
Corporate governance
37
Annual report on remuneration
Audited information
The information presented in this report up until the end of page 39 is the audited section.
Single total figure of remuneration
The following table sets out the total remuneration for Executive Directors and Non-Executive Directors for the year ended
30 September 2015. All figures are for the full financial year unless otherwise stated.
Salary and fees (a)
Benefits (b)
Pension (c)
Annual bonus (d)
Long-term
incentives (e)
Other (f)
Total
All figures shown in £000
2015 2014
2015 2014
2015 2014
2015 2014
2015 2014
2015 2014
2015 2014
Executive Directors
Kate Swann*
Jonathan Davies*
Non-Executive Directors (g)
Vagn Sørensen
John Barton
Ian Dyson
Per Franzén
(left 18 June 2015)
John Barry Gibson
(left 16 June 2014)
Denis Hennequin
Simon Marinker
(left 16 June 2014)
Per Utnegaard
(appointed 1 July 2015)
735
395
211
117
66
23
15
4
264
85
74
25
1,500 440
400
98
175
65
55
32
70
19
17
10
–
15
45
–
18
16
11
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,513 493
89
19
349
99
1,900 538
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 3,807
2,565 4,547
– 1,393
903 1,637
–
–
–
–
–
–
–
–
100
175 170
75
75
–
50
75
–
–
65
55
32
94
92
10
–
65
45
–
93
16
11
–
– 5,575
3,851 6,724
* Kate Swann and Jonathan Davies were appointed as Directors of the Company on 16 June 2014. Prior to 16 June 2014, they were employees of SSP
Financing UK Limited. As such, the table above for 2014 shows their remuneration for the period from appointment as Directors to 30 September 2014.
Notes to the table
(a) Salary and fees – this represents the base salary or fees paid in respect of the relevant financial year. These figures are net of £20k for Kate Swann and
£8k for Jonathan Davies in relation to salary sacrificed for annual leave.
(b) Benefits – this represents the taxable value of all benefits paid in respect of the relevant financial year. Executive Directors’ benefits may include
private healthcare (for the Executive and their family), car allowance or a company car, company fuel card and travel to and from work (including
associated tax paid).
(c) Pension – Executive Directors receive a cash allowance in lieu of pension contributions. Kate Swann received a cash allowance of 35% of salary per
annum and Jonathan Davies received a cash allowance of 21% of salary per annum. No director accrues retirement benefits under money purchase or
defined benefit schemes.
(d) Annual bonus – this represents the annual bonus payable for the financial year. In 2014, the bonus disclosed relates to the period from appointment to
the Board to 30 September 2014.
(e) Long-term incentives – this represents the value of any long-term incentive awards with a performance period ending in the relevant year. No long-term
incentive plan awards vested in 2014 or 2015.
(f) Other – as disclosed in the 2014 accounts and the Company’s Prospectus, certain individuals received additional awards in recognition of their
contribution to the successful admission of the Company onto the London Stock Exchange in 2014. Kate Swann received a cash award of £1,325,000
(from the Company) and an award of 1,181,862 shares (from the previous majority shareholder) on admission worth £2,482,000, based on the IPO offer
price of 210p. Jonathan Davies received a cash award of £400,000 (from the Company) and an award of 472,746 shares (from the previous majority
shareholder) on admission worth £993,000 based on the IPO offer price of 210p.
(g) Non-Executive Directors – the Chairman receives a fee of £175,000 per annum. Other Non-Executive Directors receive a basic fee of £45,000 per
annum. The Senior Independent Director, Chairman of the Audit Committee and Chairman of the Remuneration Committee each receive an additional
£10,000 per annum per appointment. In 2014, the Chairman, Vagn Sørensen, received a fee of £100,000 and John Barton, Ian Dyson and Denis Hennequin
each received a fee of £75,000 from the Company on admission to reward the work undertaken in preparing the Company for admission to the London
Stock Exchange. They all used the post-tax amount of the fee to purchase shares in the Company upon admission. John Barry Gibson received a fee of
£50,000 funded by the previous majority shareholder under a pre-existing entitlement.
SSP Group Annual Report and Accounts 2015Corporate governance
38
Annual report on remuneration continued
Additional disclosures in respect of the single figure table
Base salary
The base salaries of the Executive Directors are:
Kate Swann
Jonathan Davies
From 15 July 2014
£750,000 per annum
£400,000 per annum
From 1 June 2015
£765,000 per annum
£408,000 per annum
Change
2%
2%
Annual bonus
The bonus for the 2015 financial year was primarily based on underlying Group operating profit performance. Any bonus earned in respect
of underlying Group operating profit performance was subject to a multiplier based on an assessment of individual performance (including
financial, personal and/or strategic objectives). If the individual performance rating is significantly below expectations, the Committee
could decide not to award a bonus. Under this framework Kate Swann had the opportunity to receive an annual bonus up to a maximum of
200% of her base salary and Jonathan Davies had the opportunity to receive up to 125% of his base salary.
Underlying Group operating profit performance in the year was £97.4m, which at 2015 financial year budget foreign exchange rates was
£104.5m, slightly exceeding the maximum target of £103.8m. Based on this performance, and individual performance in the year, Kate
Swann earned a bonus of 200% of salary and Jonathan Davies earned a bonus of 100% of salary.
Scheme interests awarded during the financial year
SSP Performance Share Plan awards
No PSP awards were made in the 2015 financial year other than to new joiners as PSP awards were made following the Company’s
admission to the London Stock Exchange in July 2014.
Share Incentive Plan awards
SSP encourages share ownership by the use of Matching Shares within an all-employee UK Share Incentive Plan (‘UK SIP’). Executive
Directors were eligible to participate in the UK SIP on the same basis as other eligible employees. The table below provides details of
Partnership Shares purchased by and Matching Shares awarded to the Executive Directors under the UK SIP during the year ended 30
September 2015. In addition, it shows any Dividend Shares purchased under the UK SIP from any dividends declared on the Partnership
Shares or Matching Shares.
Total SIP shares
held at
1 October 2014
Partnership (a)
Shares
purchased
Matching (b)
Shares
awarded
Dividend (c)
shares
purchased
Total SIP shares
held at
30 September 2015
Kate Swann
Jonathan Davies
–
–
338
338
338
338
2
2
678
678
(a) Partnership Shares purchased during the 2015 financial year at a price of between £2.88 and £3.05 per share.
(b) Matching Shares awarded during the 2015 financial year at nil consideration.
(c) Dividend Shares purchased during the 2015 financial year from the proceeds of dividends payable on SIP shares.
Corporate governance
39
Payments for loss of office
There have been no payments to Directors for loss of office in the 2015 financial year (2014: £nil).
Statement of Directors’ shareholding and share interests
Directors’ shareholdings and share ownership guidelines
Shareholding guidelines require Executive Directors to build up over time a personal shareholding in the Company equivalent in value
to 200% of salary for the CEO and 125% of salary for the CFO. Executives are encouraged to retain vested shares earned under the
Company’s incentive plans until the shareholding guidelines have been met.
The Chairman and each Independent Non-Executive Director are expected to build and then maintain a shareholding in the Company
equivalent in value to 100% of their annual gross fee. The period over which the minimum shareholding must be built up is a three-year
period, either from the date of admission (15 July 2014), or from the date of appointment if later.
Director
Kate Swann
Jonathan Davies
Vagn Sørensen
John Barton
Ian Dyson
Denis Hennequin
Per Utnegaard
Shareholding requirement
as a % of salary
Shareholding as a %
of salary achieved
Shares owned outright at 30
September 2015
Interests in share incentive
schemes, awarded subject
to performance conditions
at 30 September 2015
200%
125%
–
–
–
–
–
1837%
979%
860%
268%
105%
128%
–
4,602,478
1,308,842
493,147
57,142
18,928
18,928
–
714,286
238,096
–
–
–
–
–
For the purposes of determining Executive Director shareholding requirements, the individual’s salary at the year-end and the share price
at 30 September 2015 (305.30p) has been used. The interests in the share capital of the Company of the Directors are beneficial or are
interests of a person connected with a Director.
Interests in share incentive schemes subject to performance conditions relate to Performance Share Plan awards granted in July 2014.
75% of these awards may vest based on earnings per share (EPS) growth over the three-year period from 1 October 2014 to 30 September
2017. 0% of this element will vest if compound EPS growth is less than 7% p.a. over the period, 25% will vest for 7% p.a. and 100% will vest
for EPS growth of 12% p.a., with vesting on a straight-line basis between these points. 25% of these awards may vest based on Relative
TSR performance. SSP’s TSR will be calculated using the IPO offer price of 210p as the starting value. For constituents of the peer group
a three-month average from 16 June 2014 will be used. TSR performance will be measured to the three months after the announcement
of results for the financial year ending 30 September 2017. 25% of this element will vest for median performance and 100% will vest for
upper-quartile performance, with vesting on a straight-line basis between these points.
This is the end of the audited section of the annual report on remuneration.
SSP Group Annual Report and Accounts 2015Corporate governance 40
Corporate governance
Annual report on remuneration continued
Historical TSR performance
As the Company is a constituent of the FTSE 250, the FTSE 250 Index provides an appropriate indication of market movements against
which to benchmark the Company’s performance. The chart below summarises the Company’s TSR performance against the FTSE 250
Index over the 63-week period from admission on 15 July 2014 to 30 September 2015.
TSR performance since admission
R
S
T
140
135
130
125
120
115
110
105
100
95
90
Admission 30/09/2014
(15/07/2014)
SSP Group plc
FTSE 250
30/09/2015
Chief Executive Officer remuneration outcomes
The table below summarises the Chief Executive Officer single figure for total remuneration, and the annual bonus payable and long-term
incentive plan vesting levels as percentages of maximum opportunity for the 2015 financial year.
Chief Executive Officer
Chief Executive Officer single figure of remuneration (£m)
Annual bonus payable (as a % of maximum opportunity)
Long-term incentive vesting out-turn (as a % of maximum opportunity)
2015
£2.6m
100%
n/a
2014
£4.5m
100%
n/a
Total remuneration for 2014 includes additional awards of cash and shares made on admission by the Company and the previous majority shareholder.
Percentage change in remuneration of the Chief Executive Officer and other employees
The required disclosure of the remuneration of the Chief Executive Officer in the table on page 37 does not provide meaningful information
to calculate the percentage change in remuneration between financial years, as the Chief Executive Officer was appointed as a Director of
SSP Group plc on 16 June 2014, part-way through the previous financial year.
As stated in the 2014 annual report we have therefore provided additional information in order for the required comparison to be made.
On the annual salary review date of 1 June 2015, the Chief Executive Officer’s base salary increased by 2%, compared with average annual
salary increases of 2% awarded to UK employees who are paid on a monthly basis. This population was chosen as a suitable comparator
group because it is considered to be the most relevant in terms of employment location and remuneration structure.
In addition, there were no changes made to the benefits provided to the Chief Executive Officer in the year.
41
Relative importance of the spend on pay
The table below shows the total spend on employee pay in 2014 and 2015, and the total expenditure on dividends.
Total staff costs
Dividends
2014
£542m
£nil
2015
£542m
£10m
Percentage change
nil
n/a
Fees from external directorships
Kate Swann was a Non-Executive Director of Babcock International Group plc during the year and retained a fee of £56,500 in respect of
that directorship for the year ended 30 September 2015. Jonathan Davies did not receive any fees from external directorships during the
year.
Implementation of remuneration policy in the year ending 30 September 2016
This section provides an overview of how the Committee is proposing to implement our remuneration policy in the year ending
30 September 2016.
Base salary
The Remuneration Committee considers a number of factors when reviewing the base salaries, including:
• the individuals’ skills, experience and recent performance;
• business performance;
• affordability;
• market practice for comparable roles at companies of a similar size and complexity; and
• pay and conditions elsewhere in the Group.
The table below shows base salaries at 1 October 2015.
Kate Swann
Jonathan Davies
Base salary at 1 October 2015
£765,000
£408,000
Benefits
The benefits received by each Executive Director will continue to include private healthcare (for the executive and their family), life
insurance, car allowance or a company car, company fuel card and travel to and from work (including associated tax paid).
Pension allowance
The current Executive Directors will receive a cash allowance in lieu of pension. The table below shows the expected cash allowances for
the year ending 30 September 2016.
Kate Swann
Jonathan Davies
Cash allowance in lieu of pension (% of salary)
35%
21%
Annual bonus
The maximum annual bonus opportunity for Executive Directors for the year ending 30 September 2016 will remain 200% of base salary
for the Chief Executive Officer and 125% of salary for the Chief Financial Officer.
The structure of the annual bonus performance measures will remain unchanged. Bonuses for the year ending 30 September 2016 will use
underlying Group operating profit as the primary financial target, with a multiplier based on the individual performance assessment. The
Group operating profit targets are considered commercially sensitive so have not been disclosed. The Company will disclose the targets
retrospectively when they are considered no longer commercially sensitive.
SSP Group Annual Report and Accounts 2015Corporate governance
42
Annual report on remuneration continued
Performance Share Plan
The Committee is intending to make PSP awards in the 2016 financial year to Kate Swann and Jonathan Davies in respect of ordinary
shares with a value set out below:
Kate Swann
Jonathan Davies
Face value (£)
Face value (% of salary)
End of performance period
£1,530,000
£510,000
200%
125%
30 September 2018
30 September 2018
The number of shares subject to an award will be calculated using the closing share price on the day before the award date.
It is proposed the vesting of these awards be subject to two types of performance conditions as detailed below.
75% of the award – Earnings Per Share (EPS) growth over the
three-year period from 1 October 2015 to 30 September 2018.
25% of the award – relative Total Shareholder Return (TSR)
performance against a peer group of companies over the three-
year period from 1 October 2015 to 30 September 2018.
EPS – compound annual growth
Percentage of the award vesting
Relative TSR performance
Percentage of the award vesting
Less than 7% per annum
7% per annum
12% per annum or more
0%
Below median
25%
Median
100%
Upper quartile
0%
25%
100%
Straight-line vesting operates between these points.
Straight-line vesting operates between these points.
EPS growth will normally be calculated using actual foreign
exchange rates. However, given the international nature of SSP’s
business, in order to ensure that management performance during
the performance period is appropriately rewarded, the Committee
may make an adjustment upwards or downwards where there have
been exceptional movements in foreign exchange rates during the
performance period.
The relative TSR comparator group will be consistent with that
used for awards made in 2014 apart from to reflect the merger of
Carphone Warehouse Group and Dixons to form Dixons Carphone
as set out below.
Autogrill
Dunelm Group
Inchcape
Millennium & Copthorne Hotels
Stagecoach Group
Booker Group
Elior
InterContinental Hotels Group Mitchells & Butlers
Tesco
Enterprise Inns
JD Sports Fashion
Compass Group
First Group
J D Wetherspoon
Debenhams
Go-Ahead Group
Dignity
Greene King
J Sainsbury
Kingfisher
N Brown Group
National Express
Next
Ocado Group
Dixons Carphone* Halfords Group
Marks and Spencer Group
The Restaurant Group
Thomas Cook Group
TUI Travel
UDG Healthcare
WHSmith
Whitbread
Domino’s Pizza
Group
Home Retail Group
Marston’s
Sports Direct International
Wm Morrison Supermarkets
* Following the merger of Carphone Warehouse Group and Dixons during the 2015 financial year, the combined company remains in the comparator group.
Share Incentive Plan Awards
Executive Directors will be eligible to participate in the UK SIP on the same basis as other eligible employees.
Corporate governance
43
Non-Executive Director remuneration
The Non-Executive Director fees are not expected to be reviewed in the coming year and therefore the fees will remain as outlined in the
table below.
Chairman of the Board
Board member
Additional fee for Senior Independent Director
Additional fee for Chairman of Audit/Remuneration Committee
2015 fees
£175,000
£45,000
£10,000
£10,000
Consideration by the Directors of matters relating to Directors’ remuneration
The SSP Board entrusts the Remuneration Committee with the responsibility for setting the remuneration policy in respect of Executive
Directors and senior executives and ensuring its ongoing appropriateness and relevance. In setting the remuneration for these groups, the
Committee considers the pay and conditions of the wider workforce and roles in relevant geographies.
Internal advice
The Chief Executive Officer, Chief Financial Officer, the Group HR Director and the Company Secretary attend Committee meetings by
invitation, other than when their personal remuneration is being discussed. The Company Secretary acted as secretary to the Committee.
External advice
During the year ended 30 September 2015, the Committee received independent advice on executive remuneration matters from Deloitte.
Deloitte received £46,200 in fees for these services. Deloitte is a member of the Remuneration Consultants Group and, as such, voluntarily
operates under the code of conduct in relation to executive remuneration consulting in the UK. During the year, Deloitte also provided the
Company with internal audit services, consulting services, tax services and transaction-related services.
The Committee appointed Deloitte to the role of independent advisor to the Committee. The Committee has reviewed the advice provided
by Deloitte during the year and is comfortable that it has been objective and independent. The Committee has reviewed the potential for
conflicts of interest and judged that there were appropriate safeguards against such conflict.
Statement of shareholder voting
Votes cast at the AGM in March 2015 in respect of the approval of the Directors’ remuneration policy and Directors’ remuneration report
are given below:
Votes
for
%
for
Votes
against
329,917,672
92.38%
27,195,478
%
against
7.62%
Total
shares
voted
% of Issued
share capital
voted
357,113,150
75.18%
Votes
withheld
1,354,493
342,937,941
98.04%
6,867,652
1.96%
349,805,593
73.64%
8,662,050
Resolution
To approve
the Directors'
remuneration
policy
To approve
the Directors'
remuneration
report
Where shareholders voted against our policy, the Committee has sought to engage with them to understand their concerns as part of
determining future policy.
SSP Group Annual Report and Accounts 2015Corporate governance
44
Directors’ remuneration policy
This part of the report sets out the Directors’ remuneration policy as determined by the Remuneration Committee (‘the Committee‘) and
approved by shareholders at the 2015 Annual General Meeting. The scenario charts have been updated to reflect the application of the
policy as at 30 September 2015, references to prior financial years have been updated to aid understanding and the list of Non-Executive
Directors has been updated to reflect changes in the year. A copy of the shareholder-approved policy, including the scenario charts for
2014/2015 is in the Annual Report and Accounts 2014 which is available at www.foodtravelexperts.com in the Investors section.
Key principles of remuneration policy
The remuneration policy for the Directors of the Company is intended to help recruit and retain executives who can execute SSP’s strategy
by rewarding them with appropriate compensation and benefit packages. The policy seeks to align the interests of Executive Directors
with the performance of the Company and the interests of its shareholders.
Our incentive arrangements are designed to reward performance against key financial and strategic performance objectives. Our aim is to
reward management for delivering sustainable long-term performance and support the retention of critical talent.
Future policy table
The table below describes the policy in relation to the components of remuneration for Executive Directors and, at the bottom of the table,
the policy for the Non-Executive Directors.
Element and link to strategy
Operation
Maximum potential value
Performance metrics
Executive Directors
Base salary
A core element of the
remuneration package used
to recruit, reward and retain
Executive Directors who can
deliver our strategic objectives.
Normally reviewed annually.
The Remuneration Committee
may, however, award an out-of-
cycle increase if it considers it
appropriate.
Base salaries are set by the
Committee taking into account a
number of internal and external
factors, including:
• the individual’s skills, experience
and performance;
• the size and scope of the
Executive Director’s role and
responsibilities;
• market positioning and inflation;
and
• pay and conditions elsewhere in
the Group.
None.
Salary increases in percentage
terms will normally be in line with
increases awarded to other head
office employees in the relevant
geography, but may be higher in
certain circumstances.
The circumstances may include but
are not limited to:
• where a new Executive Director
has been appointed at a lower
salary, higher increases may be
awarded over an initial period
as the Executive Director gains
experience in the role;
• where there has been an
increase in the scope or
responsibility of an Executive
Director’s role;
• where a salary has fallen
significantly below market
positioning.
There is no maximum increase or
opportunity.
Pension
To provide an income following
retirement and assist the
Executive Director in building
wealth for their future.
The Company operates an
approved defined contribution
pension arrangement, to which the
Company may make contributions.
A cash allowance may be provided
in lieu of pension contributions.
Company contributions or cash
allowance of up to 35% of base
salary may be paid in respect of
each financial year of the Company.
None.
Corporate governance
45
Element and link to strategy Operation
Maximum potential value
Performance metrics
None.
Car allowance of up to £13,000
per annum.
The cost of insured benefits
may vary from year to year
depending on the individual’s
circumstances, and therefore
the Committee has not
imposed any overall maximum
value on the benefit.
Other benefits
To provide appropriate
benefits as part of a
remuneration package
that assists in recruiting,
rewarding and retaining
Executive Directors.
Each Executive Director receives a tailored
benefits package including (but not limited to)
private health insurance for themselves, their
spouse and dependent children, annual health
screening, smartphone (or similar devices), life
assurance, business travel and permanent health
insurance.
Travel benefits, including car allowance, company
car, driver, the cost of fuel for private mileage,
insurance, maintenance and servicing and travel to
and from work (including any associated tax and
social security charges) may also be provided.
In the event that an Executive Director is
required by the Group to relocate, other benefits
may include, but are not limited to, the costs
of relocation, housing, travel and education
allowances and subsistence costs.
Expenses incurred in the performance of duties
for the Group may be reimbursed or paid for
directly by the Company, as appropriate, including
any tax or social security charges due on the
expenses.
The Executive Directors are eligible to receive
other benefits (such as a colleague discount card)
on the same terms as other eligible employees of
the Group.
Annual bonus
To reward performance on
an annual basis against key
annual objectives.
Performance objectives will be determined by the
Committee at the beginning of the financial year.
The Committee will assess performance against
these objectives following the end of the relevant
financial year.
Awards are delivered wholly in cash, and are paid
once the results for the year have been audited.
The Committee may claw back awards up to three
years after vesting if the Group’s accounts have
been materially misstated or there has been
an error in the calculation of any performance
conditions that results in overpayment.
The maximum annual bonus
opportunity is 200% of base
salary per annum.
For 2015/16 maximum annual
opportunities are:
• Chief Executive Officer, Kate
Swann – 200% of salary per
annum.
• Chief Financial Officer,
Jonathan Davies – 125% of
salary per annum.
Performance is measured
relative to targets in key financial,
operational and/or strategic
objectives over the financial year.
The measures selected and
their weightings may vary each
year according to the strategic
priorities.
Entitlement to bonus only starts
to accrue at a minimum threshold
level of financial and individual
performance. Below this level, no
bonus will be paid.
To earn a maximum bonus there
must be outperformance against
stretching objectives.
SSP Group Annual Report and Accounts 2015Corporate governance 46
Directors’ remuneration policy continued
Element and link to strategy
Operation
Maximum potential value
Performance metrics
The maximum award that
may be made is up to 200%
of salary per annum under the
rules of the plan in respect
of any financial year of the
Company.
Performance Share Plan
(‘PSP’)
The PSP rewards the delivery
of Company performance and
shareholder value over the
longer term.
The awards are share based
to align the interests of
Executive Directors with
those of shareholders.
Awards may be made to Executive Directors
at the discretion of the Committee in the form
of conditional share awards, nil-cost options,
forfeitable shares or equivalent rights.
Awards will normally be subject to performance
conditions set by the Committee measured over
a period of at least three years. Awards will vest
following the end of the performance period.
Awards (other than forfeitable shares) may
incorporate the right to receive (in cash or shares)
the value of dividends that would have been paid
on the award shares that vest between the grant
and vesting of awards, which will, unless the
Committee determines otherwise, assume the
reinvestment of those dividends in the Company’s
shares on a cumulative basis.
The Committee has the discretion to reduce the
number of shares subject to unvested awards if,
prior to vesting, there is a material misstatement
in the Company’s annual financial statements, or
a material failure of risk management, or serious
reputational damage to a member of the Group or
relevant business unit.
The Committee may claw back awards up to three
years after vesting if the Group’s accounts have
been materially misstated or there has been
an error in the calculation of any performance
conditions that results in overpayment.
It is currently anticipated that
for PSP awards performance
will be based on:
• 25% on relative Total
Shareholder Return (‘TSR’)
• 75% on Earnings per Share
(‘EPS’)
If the minimum level of
performance is not achieved
then none of the award will vest
and the award will lapse.
For performance at the
threshold levels 25% of the
award will vest.
The whole award will vest if the
maximum level of performance,
or above, is achieved.
Long-term incentive
performance conditions are
reviewed on an annual basis,
and may vary to ensure that
they are aligned with the
corporate strategy.
The Committee would seek
to consult with its major
shareholders as appropriate on
any proposed material changes.
All-employee share plans
Executive Directors may participate on the same
basis as other employees.
Participants can contribute up
to the relevant limits set out in
the country plan.
None.
Non-Executive Directors
Fees
To attract and retain Non-
Executive Directors of the
calibre required to oversee
the development and
execution of the Company’s
strategy.
None.
The Chairman’s fees are determined by the Committee.
The Non-Executive Directors’ fees are determined by the Board.
The total fees for Non-Executive Directors, including the Chairman, will not exceed
the maximum stated in the Company’s Articles of Association.
The level of fees takes into account the time commitment, responsibilities, market
levels and the skills and experience required.
Non-Executive Directors normally receive a basic fee and an additional fee for
specific Board responsibilities, including chairmanship or membership of Board
committees or acting as the Senior Independent Director.
Additional fees may be paid to Non-Executive Directors on a per diem basis to reflect
increased time commitment in certain limited circumstances.
Expenses incurred in the performance of non-executive duties for the Company may
be reimbursed or paid for directly by the Company, as appropriate, including any tax
and social security due on the expenses.
Non-Executive Directors may be provided with benefits to enable them to undertake
their duties.
Notes to the tables on pages 44 to 46
The Company also operates a shareholding policy – details can be found on page 39 of this report.
The PSP will be operated in accordance with the plan rules. In accordance with the rules of the PSP, any performance condition may
be substituted or varied if the Committee considers it appropriate, provided that the amended performance condition is in its opinion
reasonable and not materially less difficult to satisfy. The plan rules also provide for the adjustment of awards in the event of any variation
of the Company’s share capital, capital distribution, demerger, special dividend or other event having a material impact on the value of
shares.
Malus applies where stated in the above table. Other elements of remuneration are not subject to recovery provisions. Under Kate Swann’s
service contract, if her employment is terminated by the Company making a payment in lieu of notice and the Company subsequently
discovers that there were grounds for her summary dismissal, Kate Swann may be required to make a repayment equal to the net of tax
value of any payments, benefits or shares received under any relevant bonus or incentive plan.
Corporate governance 47
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any
discretions available to it in connection with such payments) that are not in line with the policy set out above where the terms of the
payment were agreed:
(i) before the policy came into effect (including payments relating to the admission); or
(ii) at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in
consideration for the individual becoming a Director of the Company.
For these purposes, ‘payments’ include the Committee satisfying awards of variable remuneration and an award over shares is ‘agreed’ at
the time the award is granted.
Performance measures and targets
Annual bonus
Annual bonus metrics and targets are selected to incentivise Directors to meet objectives for the year and are chosen in line with the
following principles:
• The targets set for financial measures should be incentivising and appropriately stretching. Targets may be adjusted by the Committee
to take into account significant capital transactions during the year.
• There should be flexibility to change the measures and weightings year-on-year in line with the needs of the business.
PSP
Performance conditions and targets are determined by the Committee to reflect the Group’s strategy and having regard to market
practice within the Company’s business sector. For 2014 and 2015 awards, the measures were selected taking into account that:
• Earnings per Share is considered by the Company to be the best indicator of long-term performance
• Total Shareholder Return is a key objective of most of our shareholders.
Remuneration arrangements throughout the Group
Differences in the policies for Executive Directors and other employees in the Group generally reflect differences in market practice taking
into account role and seniority. The remuneration policies for Executive Directors and the senior executive team are generally consistent in
terms of structure and the performance measures used. All eligible employees may participate in the Company’s all-employee share plans
in the relevant territory.
Illustrative scenario analysis
The following charts show the potential split between the different elements of the Executive Directors’ remuneration under three
different performance scenarios: ‘Minimum’, ‘Target’ and ‘Maximum’ (see table below).
CEO: Kate Swann
CFO: Jonathan Davies
£4,159k
37%
37%
26%
£2,246k
17%
34%
49%
£1,099k
100%
Long-term incentive
Annual bonus
Fixed pay
£517k
100%
£899k
14%
28%
58%
£1,537k
33%
33%
34%
Minimum
Target
Maximum
Minimum
Target
Maximum
Long-term incentive
Annual bonus
Fixed pay
Component
‘Minimum’
‘Target’
‘Maximum’
Fixed remuneration
Base salary
Annual base salary for 2015/16
Pension
Benefits
Chief Executive Officer: 35% of salary; Chief Financial Officer: 21% of salary
Taxable value of annual benefits provided in the year ended 30 September 2015
Annual bonus
Maximum opportunity
Chief Executive Officer: 200% of salary; Chief Financial Officer: 125% of salary
Vesting
0% of maximum
opportunity
50% of maximum
opportunity
100% of maximum
opportunity
Performance Share Plan*
Maximum opportunity
Chief Executive Officer: 200% of salary; Chief Financial Officer: 125% of salary
Vesting
0% vesting
25% vesting
100% vesting
* Excludes share price growth and dividends.
SSP Group Annual Report and Accounts 2015Corporate governance 48
Directors’ remuneration policy continued
Approach to recruitment remuneration
In the event that the Group appointed a new Executive Director, remuneration would be determined in line with the following principles:
• The Committee will take into account all relevant factors, including the calibre and experience of the individual and the market from
which they are recruited, while being mindful of the best interests of the Group and its shareholders and seeking not to pay more than
is necessary.
• So far as practical the Committee will look to align the remuneration package for any new appointment with the remuneration policy set
out in the table on page 47.
• Salaries may be higher or lower than the previous incumbent, but will be set taking into account the review principles set out in the policy
table. Where appropriate the salaries may be set at an initially lower level, with the intention of increasing salary at a higher than usual
rate as the Executive Director gains experience in the role. For interim positions a cash supplement may be paid rather than salary (for
example a Non-Executive Director taking on an executive function on a short-term basis).
• To facilitate recruitment the Committee may need to ‘buy-out’ terms or remuneration arrangements forfeited on joining the Company.
Any buy-out would take into account the terms of the arrangements, in particular, any performance conditions and the time over
which they would vest. The overriding principle would be that the value of any replacement buy-out awards should be no more than the
commercial value of awards that have been forfeited. The form of any award would be determined at the time and the Committee may
make buy-out awards under LR 9.4.2 of the Listing Rules (for buy-out awards only).
• The maximum variable pay opportunity in respect of recruitment (excluding buy-outs) comprises a maximum annual bonus of 200% of
annual salary and a maximum PSP grant of 200% of annual salary, as stated in the policy table on page 47. The Committee retains the
flexibility to determine that, for the first year of appointment, any annual incentive award within this maximum will be subject to such
terms as it may determine.
Where an Executive Director is appointed from within the Company or following corporate activity/reorganisation (for example, merger
with another company), the normal policy would be to honour any legacy arrangements in line with the original terms and conditions.
Where the recruitment requires relocation of the individual, the Committee may provide for additional costs and benefits.
On the appointment of a new Chairman or Non-Executive Director, the remuneration package will be consistent with the policy set
out above.
Details of Directors’ service contracts
Executive Directors
Executive Directors have rolling service contracts. None of the existing service contracts for Executive Directors makes any provision for
termination payments, other than for payment in lieu of notice.
Kate Swann’s payment in lieu of notice would be calculated by reference to the base salary and pension contributions (or equivalent
allowance) in respect of any unexpired portion of the notice period. This payment can be made in instalments over the notice period
and can be reduced where alternative employment is commenced during the notice period. Any such payment to Kate Swann would be
repayable (net of tax) if it was subsequently discovered that the Company would have been permitted to dismiss her summarily.
Jonathan Davies’s payment in lieu of notice would be calculated by reference to the base salary in respect of any unexpired portion of
the notice period. This payment can be made in instalments over the notice period and can be reduced where alternative employment is
commenced during the notice period.
Corporate governance
49
The Executive Directors’ service contracts contain provisions relating to salary, car allowance, pension arrangements, medical insurance,
life insurance, business travel insurance, company car, holiday and sick pay, and the reimbursement of reasonable out of pocket expenses
incurred by the Executive Directors while on company business.
Kate Swann’s service contract includes the provision that she is entitled to participate in the annual bonus scheme. For any new Executive
Directors appointed their participation in the Company’s incentive plans will be at the discretion of the Remuneration Committee.
The following service contracts in respect of Executive Directors who were in office during the year are rolling service contracts and
therefore have no end date:
Kate Swann
Jonathan Davies
15 July 2014
15 July 2014
9 months
9 months
12 months
12 months
Date of commencement of contract
Notice period for Director
Notice period for Company
Service contracts for new Executive Directors will be limited to nine months’ notice for the Director and 12 months’ notice for the Company.
Chairman
The terms of the Chairman’s appointment broadly reflect the terms of the three-year appointments of the Non-Executive Directors.
The Chairman’s appointment can be terminated at any time upon written notice, resignation or in accordance with the articles of
association of the Company.
The Chairman receives no benefits from the office other than fees and reimbursement of expenses incurred in performance of his duties,
including any tax due on the expenses. He is not eligible to participate in Group pension arrangements.
Non-Executive Directors
All Non-Executive Directors have been appointed on an initial term of three years, subject to renewal thereafter. All are subject to annual
re-election by shareholders.
The Non-Executive Directors have letters of appointment which can be terminated at any time upon written notice, resignation or in
accordance with the articles of association of the Company. Non-Executive Directors receive no benefits from their office other than fees
and reimbursement of expenses incurred in performance of their duties, including any tax due on the expenses. They are not eligible to
participate in Group pension arrangements.
Effective date of appointment letter
Current term expires
Vagn Sørensen
John Barton
Ian Dyson
Denis Hennequin
Per Utnegaard
15 July 2014
15 July 2014
15 July 2014
15 July 2014
1 July 2015
14 July 2017
14 July 2017
14 July 2017
14 July 2017
30 June 2018
Directors’ service contracts are kept for inspection by shareholders at the Company’s registered office.
Payments to departing Directors
In the event that the employment of an Executive Director is terminated, any compensation payable will be determined by reference to
the terms of the service contract between the Company and the employee, as well as the rules of any incentive plans. The Committee
may structure any compensation payments in such a way as it deems appropriate, taking into account the circumstances of departure.
In the event of the Company terminating an Executive Director’s contract, the level of compensation would be subject to mitigation if
considered appropriate.
SSP Group Annual Report and Accounts 2015Corporate governance
50
Directors’ remuneration policy continued
Payment in lieu
of notice
Annual bonus
Performance
Share Plan awards
In the event of termination by the Company of an Executive Director’s employment, a payment in lieu of notice may be
paid. This payment would be equal to a maximum of annual base salary and cash allowance in lieu of pension in respect
of any unexpired portion of the notice period. This payment can be made in instalments over the notice period and can be
reduced where alternative employment is commenced during the notice period.
Executive Directors may, at the determination of the Committee, remain eligible to receive an annual bonus for the
financial year in which they ceased employment.
Any such bonus will be determined by the Committee, taking into account time in employment and performance.
On cessation of employment, any outstanding unvested awards will lapse unless the participant dies or is deemed to be
a ‘good leaver’ by the Committee in its discretion.
Where the participant is deemed to be a ‘good leaver’, any outstanding unvested awards will normally continue and
will vest at the normal vesting date to the extent the original performance conditions have been satisfied. Awards will
normally, unless the Committee determines that an alternative proportion of the awards should vest, be pro-rated for
the portion of the vesting period completed in employment.
The Committee may, in exceptional circumstances, or if the participant dies, decide to allow awards to vest on cessation
of employment subject to the Committee’s assessment of performance against the original performance conditions
at that time or the Committee’s assessment of the likely achievement of the performance conditions over the original
performance period. Awards will normally, unless the Committee determines that an alternative proportion of the
awards should vest, be pro-rated for the portion of the vesting period completed in employment.
Payments in relation to
statutory rights
The Company may pay an amount considered reasonable by the Remuneration Committee in respect of an Executive
Director’s statutory rights.
Payments required by law
The Company may pay damages, awards, fines or other compensation awarded to an Executive Director by any
competent court or tribunal or other payments required to be made on termination of employment under applicable law.
Professional fees
The Company may pay an amount considered reasonable by the Remuneration Committee in respect of fees for legal
and tax advice, and outplacement support for the departing Executive Director.
Award under LR 9.4.2
Were an award to be made under LR 9.4.2 then the leaver provisions would be determined at the time of award.
Takeovers and other corporate events
Under the PSP, on a takeover or voluntary winding-up of the Company, PSP awards will vest in accordance with the rules of the plan.
Vesting would be determined by the Committee based on the proportion of the vesting period that has elapsed and the extent to which the
performance conditions have been satisfied, although the Committee has the discretion to determine that such greater proportion as it
considers appropriate of the awards should vest, including where it considers the level of shareholder returns is at a superior level.
In the event of a variation of share capital, demerger, capital distribution or any other event having a material impact on the value of
the shares, the Committee may determine that outstanding PSP awards shall vest on the same basis as set out above for a takeover.
Alternatively the Committee may (with the consent of the acquiring company) decide that PSP awards will not vest on a corporate event
but will be replaced by new awards over shares in the new acquiring company or another company determined by the acquiring company.
Bonuses may be paid in respect of the year in which the change of control or winding up of the Company occurs, if the Committee considers
this appropriate. The Committee may determine the level of bonus taking into account any factors it considers appropriate.
Amendments
The Committee may make amendments to the terms of the Company’s incentive plans in accordance with the rules of those plans (which
were summarised for shareholders in the Company’s IPO prospectus). The Committee may make minor amendments to the policy set
out above (for regulatory, exchange control, tax, administrative purposes or to take account of a change in legislation) without obtaining
shareholder approval for that amendment.
Consideration of conditions elsewhere in the Group
In making remuneration decisions, the Committee also considers the pay and employment conditions elsewhere in the Group. When
reviewing and setting Executive Director remuneration, the Committee takes into account the pay and employment conditions of Group
employees. The Group-wide pay review budget is one of the key factors when reviewing the salaries of the Executive Directors. Although
the Group has not carried out a formal employee consultation regarding Board remuneration, it does comply with local regulations and
practices regarding employee consultation more broadly.
Consideration of shareholder views
In reviewing and setting remuneration, including that of Executive Directors, the Committee receives updates on investors’ views, and may
from time to time engage directly with investors and/or investor representative organisations on remuneration topics as appropriate.
These lines of communication ensure that emerging best practice principles are factored into the Committee’s decision-making.
Corporate governance 51
Directors’ report
This section of the annual report includes additional information required to be disclosed under the Companies Act 2006 (the ‘Act’), the
UK Corporate Governance Code (the ‘Code’), the Disclosure and Transparency Rules (the ‘DTRs’) and the Listing Rules of the Financial
Conduct Authority.
Certain information required to be included in the Directors’ report is included in other sections of this annual report, including:
• The strategic report on pages 1 to 25;
• The corporate governance report on pages 26 to 31;
• The Audit Committee report on pages 32 to 35; and
• The Directors’ remuneration report on pages 36 to 50.
The sections referred to above provide an overview of the strategy, development and performance of the Company’s business in the
year ended and as at 30 September 2015, together with information on the approach of the Company to Corporate Governance and the
constitution, work and effectiveness of the Board and its principal committees. These sections are incorporated by reference into the
Directors’ report.
Corporate information and Listing on the London Stock Exchange
The Company was incorporated and registered in England and Wales on 9 March 2006 as a private company limited by shares under the
Companies Act 1985 with the registered number 5735966. On 4 July 2014, the Company was re-registered as a public limited company. The
Company’s registered office and principal place of business is at 169 Euston Road, London NW1 2AE.
On 15 July 2014, the entire issued ordinary share capital of the Company was admitted to the premium listing segment of the Official List of
the Financial Conduct Authority and to unconditional trading on the London Stock Exchange plc’s main market for listed securities under
the ticker ‘SSPG’ (admission).
Dividends
The Directors declared an interim dividend of 2.1p per share in the 2015 financial year amounting to £10m (2014: £nil). In addition, the
Directors are recommending a final dividend of 2.2p per share amounting to £10.5m which will result in a total dividend of 4.3p for the year
amounting to £20.5m (2014: £nil). The final dividend will be paid on 16 March 2016 to shareholders on the register of members as at the
close of business on 19 February 2016, subject to approval of shareholders at the AGM to be held on 4 March 2016. The ex-dividend date
will be 18 February 2016.
Share capital
At 30 September 2015 there were 475,113,354 Ordinary shares of 1p in issue, which are fully paid up and are quoted on the London Stock
Exchange. Further information regarding the Company’s issued share capital and movements in the financial year can be found in note 21 to
the financial statements on pages 86 and 87.
Powers conferred on the Directors in relation to issuing or buying back shares
Subject to applicable law and the Company’s articles of association the Directors may exercise all powers of the Company, including the
power to authorise the issue and/or market purchase of the Company’s shares (subject to an appropriate authority being given to the
Directors by shareholders in general meeting and any conditions attaching to such authority). The shareholders delegated the following
powers in relation to the issuing or market purchase by the Company of its shares at the Company’s 2015 Annual General Meeting:
• authority to allow shares for cash and/or sell treasury shares without having to offer such shares to existing shareholders in connection
with a rights issue or with a nominal value of up to approximately 5% of the Company’s issued share capital; and
• authority to make market purchases of its own shares, up to a maximum of approximately 10% of the Company’s issued share capital.
These standard authorities will expire on 31 March 2016, or at the conclusion of the AGM in 2016, whichever is the earlier. The Directors will
seek to renew the authorities at the 2016 AGM in accordance with the latest Pre-Emption Group Guidelines. To date, neither authority has
been exercised.
During the 2015 financial year, 113,400 Ordinary shares in the Company were issued to satisfy Matching Share awards under the Company’s UK
SIP. However, these do not count against the authorities granted by shareholders in accordance with the Companies Act 2006.
Rights and restrictions on shares and transfers of shares
Certain restrictions, which are customary for a listed company, apply to the rights and transfers of Ordinary shares in the Company. The
rights and obligations attaching to the Company’s Ordinary shares, in addition to those conferred on their holders by law, are set out in
the Company’s Articles of Association, copies of which can be obtained from Companies House in the UK or by writing to the Company
Secretary. The key points are summarised on the next page.
SSP Group Annual Report and Accounts 2015Corporate governance
52
Directors’ report continued
Ordinary shares
Notice of meetings must be given to every shareholder and to any person entitled to a share unless the Articles of Association or the rights
of the shares say they are not entitled to receive them from the Company. The Board can decide that only people who are entered on the
register of members at the close of business on a particular day are entitled to receive the notice. On a show of hands at a general meeting
every member present in person shall have one vote and, on a poll, every member present in person or by proxy shall have one vote for
every ordinary share held. No shareholder holds Ordinary shares which carry special rights relating to the control of the Company.
Deferred Ordinary shares
On 3 March 2015, the Company purchased 1,156,863 deferred Ordinary shares of £1/1,156,863 each in the capital of the Company for a total
consideration of £1 under the terms of a contract that was approved by shareholders at the Company’s AGM held on 3 March 2015.
Dividends and distributions on winding up to shareholders
Holders of Ordinary shares may receive interim dividends approved by Directors and dividends declared in general meetings. On a
liquidation and subject to a special resolution of the Company, the liquidator may divide among members in specie the whole or any part of
the assets of the Company and may, for such purpose, value any assets and may determine how such division shall be carried out.
Transfers of Ordinary shares
The Articles of Association place no restrictions on the transfer of Ordinary shares or on the exercise of voting rights attached to them
except: (i) in very limited circumstances (such as a transfer to more than four persons) and (ii) where the Company has exercised its rights
to suspend their voting rights or to prohibit their transfer following the omission by their holder or any person interested in them to provide
the Company with information requested by it in accordance with Part 22 of the Act. Restrictions on transfers may apply where the holder
is precluded from exercising rights by the Listing Rules, the City Code on Takeovers and Mergers or any other regulations.
Dealings subject to the Model Code of the Listing Rules
Pursuant to the Listing Rules, Directors and other persons discharging managerial responsibilities and certain employees require the
approval of the Company to deal in the Ordinary shares of the Company.
Exercise of rights of shares in employee share schemes
Awards held by relevant participants under the Company’s various share plans carry no rights until the shares are issued. The Trustee of the
Performance Share Plan does not seek to exercise voting rights on existing shares held in the employee trust.
Notification of major shareholdings
Information provided to the Company pursuant to the Disclosure and Transparency Rules (DTRs) is published on a Regulatory Information
Service and on the Company’s website. As at 24 November 2015, being the last practical date before the signing of these accounts, the
following notifications of major shareholdings of 3% or more have been received by the Company under DTR5. The holdings shown
below are correct at the date of notification. It should be noted that these holdings may have changed since the Company was notified as
notification of any change is not required until the next notifiable threshold is crossed.
Name
Old Mutual plc
Artemis Investment Management LLP
Marathon Asset Management LLP
BlackRock, Inc.
Legal & General Group plc
Schroders plc
APG Asset Management N.V.
JP Morgan Asset Management (UK) Limited and
JP Morgan Investment Management Inc
Royal London Asset Management Limited
GIC Private Limited
No. of Ordinary shares
and voting rights notified
% of voting rights
as at the date of this report
67,939,055
35,067,425
28,119,834
25,560,788
23,923,262
23,720,071
19,768,617
17,000,000
16,873,681
15,000,000
14.30%
7.38%
5.92%
5.38%
5.04%
4.99%
4.16%
3.58%
3.55%
3.16%
Notifications were also received from EQT IV Limited and Permian Investment Partners, LP during the year to disclose they no longer held
notifiable interests.
Directors
Particulars of the Directors in office at the date of this report are listed on pages 26 and 27. Each of the Directors held office throughout
the year, with the following exceptions:
• on 1 July 2015, Per Utnegaard was appointed as a Non-Executive Director of the Company; and
• on 18 June 2015, Per Franzén, EQT’s nominated director, resigned as a Non-Executive Director of the Company, following the sale of
EQT IV Limited’s shareholding in the Company as announced on 28 May 2015.
Corporate governance 53
Appointment and removal of Directors
The Company may, by ordinary resolution of the shareholders of the Company at a general meeting, remove any Director from office and
elect another person in place of a Director so removed from office following recommendation by the Nomination Committee in accordance
with its terms of reference for approval by the Board.
The processes for the appointment and replacement of Directors are governed by the Company’s Articles of Association, the Code, the
Act, the Listing Rules and related legislation. In accordance with the Code, all Directors stand for election at the AGM following their
appointment, and stand for re-election on an annual basis.
Powers of the Directors
Subject to the Articles of Association, the Act and related legislation, any directions given by special resolution and any relevant statutes
and regulations, the business of the Company will be managed by the Board who may exercise all the powers of the Company.
Directors’ interests
The Directors’ interests in shares and options over Ordinary shares in the Company are shown in the Directors’ remuneration report on
page 39. In line with the requirements of the Act, each Director has notified the Company of any situation in which he or she has, or could
have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company (a situational conflict). These
were considered and approved by the Board in accordance with the Company’s Articles of Association in September 2015 and each
Director was informed of the authorisation and any terms on which it was given. The Board has formal procedures to deal with Directors’
conflicts of interest. The Board reviews and, where appropriate, approves certain situational conflicts of interest that are reported to it by
Directors, and a register of those situational conflicts is maintained and will be reviewed by the Board going forward.
Directors’ indemnities
The Company has made qualifying indemnity provisions, as defined by section 236 of the Act, for the benefit of its Directors during the
financial year ended 30 September 2015 and which remain in force at the date of this report. In addition, Directors and Officers of the
Company and its subsidiaries are covered by Directors’ and Officers’ liability insurance.
Awards under employee share schemes
Details of employee share schemes and awards made during the year and held by Executive Directors as at 30 September 2015 are set out
in the Directors’ remuneration report on pages 36 to 50.
Details of awards made during the year and held by employees as at 30 September 2015 under the Performance Share Plan are disclosed in
note 22 to the consolidated financial statements on page 88.
Controlling shareholders
Any person who exercises or controls on their own or together with any person with whom they are acting in concert, 30% or more of
the votes able to be cast on all or substantially all matters at general meetings of a company are known as ‘controlling shareholders’. The
Financial Conduct Authority Listing Rules require companies with controlling shareholders to enter into a written and legally binding
agreement, which is intended to ensure that the controlling shareholder complies with certain independence provisions.
As at 30 September 2015, the Company had no controlling shareholders.
Annual General Meeting
All holders of Ordinary shares are entitled to attend the Company’s AGM and all holders of Ordinary shares on the register at the relevant
record date are entitled to receive the Notice of AGM, which will be posted at least 20 working days before the AGM. They are also entitled
to speak at general meetings of the Company, to appoint one or more proxies or, if they are corporations, corporate representatives, and to
exercise voting rights. Shareholders may vote and appoint proxies electronically. The notice of meeting specifies deadlines for exercising
voting rights and appointing a proxy or proxies to vote in relation to resolutions to be put to the AGM.
The AGM will be held on 4 March 2016. The results of the voting on resolutions will be made available to shareholders on the Group’s
website after the meeting. At the meeting, the Group Chief Executive Officer and the Chairmen of the Board Committees will also be
present to answer questions on any matters relating to the Group’s business. Shareholders will also have an opportunity to meet Directors
informally after the meeting.
Change of control
Contracts
There are a number of contracts that allow the counterparties to alter or terminate those arrangements in the event of a change of
control of the Company. These arrangements are commercially sensitive and confidential and their disclosure could be seriously
prejudicial to the Group.
Other agreements
The Company does not have agreements with any Director or Officer that would provide compensation for loss of office or employment
resulting from a takeover, except that provisions of the Company’s share plans may cause options and awards granted under such plans
to vest on a takeover.
SSP Group Annual Report and Accounts 2015Corporate governance 54
Directors’ report continued
The Company’s main credit facilities, being the committed bank facilities dated 16 June 2014 (as amended from time to time), contain a
provision such that in the event of a change of control, if a lender so requires, and has notified the agent within 10 business days of the
agent notifying the lenders of the event, the commitment of that lender will be cancelled and all outstanding amounts, together with
accrued interest under that commitment, will become repayable, on the date notified in writing by the agent that the relevant commitment
has been cancelled (where such date must be not fewer than 10 business days after the date of the notice).
Articles of Association
The Articles of Association of the Company may be amended by special resolution of the shareholders.
Political donations
The Company’s policy is not to make political donations. Neither the Company nor its subsidiaries, during the financial year ended
30 September 2015, made any political donation to a political party, other political organisation or independent election candidate, or
incurred any political expenditure or made any contribution to a non-EU political party. The Company will propose to shareholders at
this year’s AGM that a precautionary authority be granted up to £25,000 in aggregate. Details are included in the Notice of AGM.
Greenhouse gas emissions
The Board has identified and assessed the significant environmental, social and governance risks to the Company’s short- and long-term
value, as well as the opportunities to enhance value that may arise from improving its environmental performance. The sustainability
report on pages 22 to 25 reports on environmental matters, including the impact of the Group’s businesses on the environment, the Group’s
annual quantity of greenhouse emissions in tonnes of carbon dioxide, the Group’s employees, and on social and community issues.
Treasury and risk management
The Group’s financial risk management objectives and policies, including its hedging policy, and the main risks arising from the Group’s
financial assets and liabilities are summarised on page 16 and in note 24 to the consolidated financial statements on pages 89 to 93.
Going concern
The financial information has been prepared on a going concern basis, in support of which, the Board has reviewed the Group’s trading
forecasts for the next 12 months. These forecasts, which include detailed cash flow projections, comprise assumptions as to sales and
profit performance by segment and by month and take account of the normal seasonality profile of the business. As a result, the Directors
are confident that the assumptions underlying their forecasts are reasonable and that the Group will be able to operate within its banking
covenants and available liquidity headroom.
Notwithstanding the above however, there remains a risk that a downturn in the global economy could result in passenger numbers
and consumer spending in the travel market which are worse than the Board is currently envisaging. As a result, the Directors have
also reviewed forecasts which include sensitivities that make allowance for this risk. Should such a scenario arise, the Directors are
confident they have adequate liquidity and covenant headroom to ensure that the Group can meet its liabilities as they fall due for the
foreseeable future.
Accordingly, the Directors believe that it is appropriate to prepare this financial information on a going concern basis.
In addition, in accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council in
September 2014, the Directors have assessed the prospects and viability of the Group over a longer period than the 12 months required by
the Going Concern provision on page 17 of the Strategic report.
Auditor
The auditor KPMG, has indicated its willingness to continue in office and a resolution that it will be re-appointed will be proposed at the AGM.
Corporate governance 55
Statement of disclosure of information to auditor
So far as each Director in office on the date of this report is aware, there is no relevant audit information of which the Company’s auditor is
unaware and the Directors have taken all the steps which they ought to have taken as Directors to make themselves aware of any relevant
audit information and to establish that the Company’s auditor is aware of that information. This confirmation is given and should be
interpreted in accordance with the provisions of section 418 of the Act.
Forward-looking statements
These reports and financial statements contains certain forward-looking statements which are subject to assumptions, risks and
uncertainties; actual future results may differ materially from those expressed in or implied in such statements. Many of these
assumptions, risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely. The
forward-looking statements reflect the knowledge and information available at the date of preparation of this annual report, and will
not be updated during the year. These forward-looking statements include all matters that are not historical facts. They appear in a
number of places throughout these Reports and Financial Statements and include statements regarding the current intentions, beliefs or
expectations of the Directors or the Company concerning, among other things, the results of operations, financial condition, prospects,
growth, strategies, and dividend policy of the Company and the industry in which it operates. In particular, the statements regarding
the Company’s strategy and other future events or prospects are forward-looking statements. Nothing in this annual report should be
construed as a profit forecast.
Approved by the Board and signed on its behalf by:
Helen Byrne
General Counsel and Company Secretary
25 November 2015
SSP Group Annual Report and Accounts 2015Corporate governance
56
Corporate governance
Statement of Directors’ responsibility in respect of the annual report and the
financial statements
The Directors are responsible for preparing the annual report and the Group and Parent Company financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law,
they are required to prepare the Group financial statements in accordance with 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.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and
Parent Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable 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; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent
Company will continue in business.
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 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 Group’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
• the Group and Parent Company 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 Parent Company and the undertakings included in
the consolidation taken as a whole; and
• the strategic report/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 2015, 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.
By order of the Board
Kate Swann
Chief Executive Officer
25 November 2015
Jonathan Davies
Chief Financial Officer
25 November 2015
Financial statements
57
Independent auditor’s report to the members of SSP Group plc only
Opinions and conclusions arising from our audit
1. Our opinion on the financial statements is unmodified
We have audited the financial statements of SSP Group plc for the year ended 30 September 2015 set out on pages 60 to 102. In our
opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 September
2015 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards as
adopted by the European Union;
• the Parent Company financial statements have been properly prepared in accordance with UK Accounting Standards; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the
Group financial statements, Article 4 of the IAS Regulation.
2. Our assessment of risks of material misstatement
In arriving at our audit opinion above on the financial statements, the risks of material misstatement that had the greatest effect on our
audit were as follows:
a) Valuation of goodwill and indefinite life intangible assets (£609.7m)
Refer to Audit Committee report on page 35, notes 1 and 2 on pages 67 and 70 and note 11 on pages 77 and 78.
The risk
• The Group carries significant goodwill and indefinite life intangible assets resulting from acquisitions of businesses in a wide range
of geographical locations. The Group’s business is impacted by economic trends such as levels of discretionary travel and consumer
spending. There is a risk that the Group’s goodwill balance may not be recoverable due to economic and political uncertainty and poor
trading conditions. The Group’s assessment of impairment of goodwill and indefinite life intangible assets is based on discounted
future cash flow analysis. Due to the inherent uncertainty involved in preparing cash flow projections, including the subjectivity in
determining the underlying assumptions, this is one of the most judgemental areas of the audit.
Our response
In this area our audit procedures were as follows:
• We challenged the assumptions for key inputs used by the Group in their forecasts, such as projected market growth, future capital
expenditure levels, revenue growth rates, cost projections and inflation, by comparing them to external data, industry norms and our
expectations based on our knowledge and experience of the Group. Additionally, our valuation specialists assisted us in assessing
the appropriateness of the methodology and assumptions used by the Group. We applied sensitivities to key assumptions to assess
their impact on the recoverability of the assets.
• We evaluated the historical accuracy of the Group’s forecasts by comparing actual to budgeted results.
• We corroborated our understanding of any adverse changes in the business, such as anticipated decline in trading, with the Group’s
forecasts and considered whether or not such events had been appropriately captured in the impairment models.
• We compared the results of the discounted cash flows against the Group’s market capitalisation, after adjusting for its debt, to
determine if there were any significant differences requiring further investigation.
• We also considered the adequacy of the Group’s disclosure of the key risks and whether that disclosure reflected the risks inherent in
the valuation of goodwill and indefinite life intangible assets.
b) Completeness, existence and accuracy of current and deferred tax (net current tax liability: £13.9m, net deferred tax asset: £1.9m)
Refer to the Audit Committee report on page 35, notes 1 and 2 on pages 69 and 70, note 8 on page 75 and note 13 on pages 79 and 80.
The risk
The Group operates in numerous tax jurisdictions. The interpretation of tax law can be complex and judgemental. Differences in tax
laws may have a significant impact on how the Group calculates its current and deferred tax liabilities. Additionally, the outcomes of tax
audits and related tax provisions may be different to those anticipated by the Group.
The amount and timing of recognition of deferred tax assets involves judgement, as it is based on specific considerations, such as the
future profitability of the business in various jurisdictions, local tax law and availability of temporary differences, such as an excess
of capital allowances over depreciation or tax losses. During the current year, the Group has, following a period of realising tax losses,
begun to demonstrate tax profits in some jurisdictions indicating that deferred tax assets can be recovered. Therefore this is one of the
key judgement areas on which our audit is focused.
SSP Group Annual Report and Accounts 2015 58
Financial statements
Independent auditor’s report to the members of SSP Group plc only continued
Our response
In this area, our audit procedures were as follows:
• We used our own tax specialists to assist us in assessing and challenging the assumptions and judgement made by the Group.
We considered all significant differences between the statutory and effective rates in each jurisdiction and assessed whether
adjustments to accounting profit are in accordance with accounting standards and local laws.
• We considered the tax provisions made by the Group and the underlying assumptions.
• In assessing the Group’s calculations, we have used both our own knowledge of recent tax cases and, where available, external data
on the pattern of recent local tax settlements. We have inspected correspondence with relevant tax authorities and any relevant
transfer pricing documentation to determine whether the tax provisions made by the Group were reasonable.
• In assessing the level of deferred tax asset balances recognised in the consolidated balance sheet, we compared the assumptions
used in respect of future taxable income to the Group’s long-term forecasts and budget for the relevant jurisdictions.
• We considered whether the improving performance in certain jurisdictions, where there were unrecognised deferred tax assets,
amounted to convincing evidence sufficient to support the recognition of deferred tax assets. In addition to profitability, we also
considered other factors, such as the expected timing of reversal of temporary differences, any restrictions in accessing such
temporary differences, and other qualitative factors specific to each of the jurisdictions in question.
• We also assessed the adequacy of the Group’s disclosures in respect of current and deferred taxes.
3. Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at £10.0m, determined with reference to a benchmark of Group
revenue of £1,832.9m of which it represents 0.5%. We consider revenue to be the most appropriate benchmark as it provides a more
stable measure year on year than Group profit before tax.
We report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £0.5m in addition to other
identified misstatements that warranted reporting on qualitative grounds.
Of the Group’s 11 reporting components, nine were subject to an audit for Group reporting purposes and two to reviews. The latter were
not individually financially significant enough to require an audit for Group reporting purposes, but did present specific individual risks
that needed to be addressed. Together, these audits cover 84% of Group revenue, 79% of Group profit before tax and 78% of Group
total assets.
The Group audit team instructed component auditors as to the significant areas to be covered, including the relevant risks detailed
above and the information to be reported back. The Group audit team approved the component materialities, which ranged from
£0.2m to £8m, having regard to the mix of size and risk profile of the Group across the components. The work on 11 of the Group’s 15
components was performed by component auditors and the rest by the Group audit team.
In 2015, the Group audit team visited eight of the 15 component locations. Video and telephone conference meetings were also held with
these component auditors and the majority of the others that were not physically visited. At these visits and meetings, the findings
reported to the Group audit team were discussed in more detail.
4. Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion:
• The part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006;
• The information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
5. We have nothing to report on the disclosures of principal risks
Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
• the Directors’ statement on page 17, concerning the principal risks, their management, and, based on that, the Directors’ assessment
and expectations of the Group’s continuing in operation over the three years to 30 September 2018; or
• the disclosures in note 1 of the financial statements concerning the use of the going concern basis of accounting.
Financial statements
59
6. We have nothing to report in respect of the matters on which we are required to report by exception
Under ISAs (UK and Ireland) we are required to report to you if, based on the knowledge we acquired during our audit, we have identified
other information in the annual report that contains a material inconsistency with either that knowledge or the financial statements, a
material misstatement of fact, or that is otherwise misleading.
In particular, we are required to report to you if:
• we have identified material inconsistencies between the knowledge we acquired during our audit and the Directors’ statement that
they consider that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s performance, business model and strategy; or
• the Audit Committee report on pages 32 to 35 does not appropriately address matters communicated by us to the Audit Committee.
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Under the Listing Rules, we are required to review:
• the Directors’ statements, set out on pages 17 and 54, in relation to going concern and the longer-term viability; and
• The part of the Corporate Governance Statement on pages 26 to 55 of the Annual Report and Accounts relating to the Parent Company’s
compliance with the 11 provisions of the 2014 UK Corporate Governance Code specified for our review.
We have nothing to report in respect of the above responsibilities.
Scope of report and responsibilities
As explained more fully in the Directors’ responsibilities statement set out on page 56, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. A description of the scope of an audit of financial
statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. This report is made solely
to the Parent Company’s members as a body and is subject to important explanations and disclaimers regarding our responsibilities,
published on our website at www.kpmg.com/uk/auditscopeukco2014a, which are incorporated into this report as if set out in full and
should be read to provide an understanding of the purpose of this report, the work we have undertaken and the basis of our opinions.
Tudor Aw
(Senior Statutory Auditor)
for and on behalf of KPMG, Statutory Auditor
Chartered Accountants
15 Canada Square
London, E14 5GL
25 November 2015
SSP Group Annual Report and Accounts 2015 60
Financial statements
Consolidated income statement
for the year ended 30 September 2015
Revenue
Operating costs
Operating profit
Share of profit of associates
Loss on disposal of business
Finance income
Finance expense
Profit/(loss) before tax
Taxation
Profit/(loss) for the year
Profit/(loss) attributable to:
Equity holders of the Parent Company
Non-controlling interests
Profit/(loss) for the year
Earnings/(loss) per share (pence):
– Basic
– Diluted
2015
Underlying*
£m
2015
Adjustments
£m
Notes
2015
Total
£m
2014
Underlying*
£m
2014
Adjustments
£m
3
5
12
12
7
7
8
21
4
4
1,832.9
(1,735.5)
97.4
1.6
–
0.7
(17.7)
82.0
(16.9)
65.1
58.2
6.9
65.1
12.3
12.2
–
(5.2)
(5.2)
–
–
–
–
(5.2)
0.4
(4.8)
(4.8)
–
(4.8)
1,832.9
1,827.1
(1,740.7)
(1,738.6)
92.2
1.6
–
0.7
(17.7)
76.8
(16.5)
60.3
53.4
6.9
60.3
11.2
11.2
88.5
1.5
–
0.8
(29.0)
61.8
(17.9)
43.9
39.8
4.1
43.9
13.3
13.3
–
(48.5)
(48.5)
–
(0.7)
–
(26.1)
(75.3)
3.6
(71.7)
(71.7)
–
(71.7)
2014
Total
£m
1,827.1
(1,787.1)
40.0
1.5
(0.7)
0.8
(55.1)
(13.5)
(14.3)
(27.8)
(31.9)
4.1
(27.8)
(10.7)
(10.7)
* Underlying operating profit and underlying profit exclude items that are considered to be exceptional in nature. In the prior period, these included
redundancy and restructuring costs associated with a number of significant organisation changes and costs in respect of the IPO and associated
refinancing. The underlying numbers also exclude non-cash accounting adjustments relating to amortisation of intangible assets arising on acquisition of the
SSP business in 2006.
Financial statements
61
Consolidated statement of other comprehensive income
for the year ended 30 September 2015
Other comprehensive income/(expense)
Items that will never be reclassified to the income statement:
Notes
2015
£m
2014
£m
Remeasurements on defined benefit pension schemes
19
3.6
(3.9)
Items that are or may be reclassified subsequently to the income statement:
Net gain on hedge of net investment in foreign operations
Other foreign exchange translation differences
Effective portion of changes in fair value of cash flow hedges
Cash flow hedges – reclassified to the income statement
Income tax credit/(charge) relating to items that have or may be reclassified
Other comprehensive (expense)/income for the year
Profit/(loss) for the year
Total comprehensive income/(expense) for the year
Total comprehensive income/(expense) attributable to:
Equity holders of the Parent Company
Non-controlling interests
Total comprehensive income/(expense) for the year
21.5
(25.3)
(9.2)
0.9
1.0
(7.5)
60.3
52.8
45.1
7.7
52.8
22.2
(15.7)
(2.6)
7.0
(0.9)
6.1
(27.8)
(21.7)
(24.6)
2.9
(21.7)
21
SSP Group Annual Report and Accounts 2015
62
Financial statements
Consolidated balance sheet
for the year ended 30 September 2015
Non-current assets
Property, plant and equipment
Goodwill and intangible assets
Investments in associates
Deferred tax assets
Other receivables
Current assets
Inventories
Tax receivable
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Short-term borrowings
Trade and other payables
Tax payable
Non-current liabilities
Long-term borrowings
Post-employment benefit obligations
Provisions
Derivative financial liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
Total equity shareholders’ funds
Non-controlling interests
Total equity
Notes
10
11
12
13
15
14
15
16
17
18
17
19
20
24
13
21
21
21
21
21
2015
£m
212.7
632.1
5.4
11.4
26.6
888.2
26.0
0.7
89.5
134.7
250.9
1,139.1
2014
£m
201.9
659.0
4.6
2.5
27.9
895.9
24.4
0.5
89.1
133.3
247.3
1,143.2
(27.7)
(29.8)
(329.3)
(340.8)
(14.6)
(9.2)
(371.6)
(379.8)
(426.8)
(474.6)
(13.7)
(16.0)
(9.8)
(9.5)
(17.9)
(11.6)
(0.9)
(8.0)
(475.8)
(513.0)
(847.4)
(892.8)
291.7
250.4
4.7
461.2
1.2
(6.3)
5.9
461.2
–
5.6
(190.6)
(241.4)
270.2
21.5
291.7
231.3
19.1
250.4
These financial statements were approved by the Board of Directors on 25 November 2015 and were signed on its behalf by:
Jonathan Davies
Chief Financial Officer
Consolidated statement of changes in equity
for the year ended 30 September 2015
Financial statements
63
At 1 October 2013
(Loss)/profit for the year
Other comprehensive income/(expense)
for the year
Capital reduction
Capital reorganisation
Shares issued in the year
Dividends paid to non-controlling interests
Share-based payments (note 22)
At 30 September 2014
Profit for the year
Other comprehensive (expense)/income
for the year
Cancellation of deferred shares (note 21)
(1.2)
Capital contributions from non-controlling
interests (note 21)
Dividends paid to equity shareholders
(note 9)
Dividends paid to non-controlling interests
(note 21)
Share-based payments (note 22)
–
–
–
–
Share
capital
£m
5.4
–
–
Share
premium
£m
642.9
–
–
(4.2)
(642.9)
2.5
2.2
–
–
5.9
–
–
–
461.2
–
–
461.2
–
–
–
–
–
–
–
Capital
redemption
reserve
£m
Other
reserves1
£m
Retained
earnings
£m
Total parent
equity
£m
Non-
controlling
interests
£m
–
–
–
–
–
–
–
–
–
–
–
1.2
–
–
–
–
(5.6)
–
11.2
–
–
–
–
–
5.6
–
(11.9)
–
–
–
–
–
(857.6)
(31.9)
(3.9)
647.1
(2.5)
–
–
7.4
(241.4)
53.4
3.6
–
–
(214.9)
(31.9)
7.3
–
–
463.4
–
7.4
231.3
53.4
(8.3)
–
–
(10.0)
(10.0)
19.8
4.1
(1.2)
–
–
–
(3.6)
–
19.1
6.9
0.8
–
1.1
–
Total
equity
£m
(195.1)
(27.8)
6.1
–
–
463.4
(3.6)
7.4
250.4
60.3
(7.5)
–
1.1
(10.0)
–
3.8
–
(6.4)
(6.4)
3.8
–
21.5
3.8
291.7
At 30 September 2015
4.7
461.2
1.2
(6.3)
(190.6)
270.2
1 The decrease of £11.9m (2014: increase of £11.2m) comprises a decrease to the translation reserve of £4.3m (2014: increase of £6.8m) and a
decrease to the cash flow hedging reserve of £7.6m (2014: increase of £4.4m). See note 21 for further details.
SSP Group Annual Report and Accounts 2015 64
Financial statements
Consolidated cash flow statement
for the year ended 30 September 2015
Cash flows from operating activities
Cash flow from operations
Exceptional redundancy and restructuring costs
Exceptional IPO-related costs
Tax paid
Net cash flows from operating activities
Cash flows from investing activities
Dividends received from associates
Interest received
Proceeds from disposal of business
Purchase of property, plant and equipment
Purchase of other intangible assets
Acquisition of business
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from share issue
(Repayment)/drawdown of borrowings under post-IPO debt facility
Repayment of borrowings under pre-IPO debt facility
Repayment of finance leases
Refinancing fee paid in the year
Interest paid
Dividends paid to equity shareholders
Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Exceptional IPO-related costs
Settlement of the obligations to the B1 investors
Other transaction costs
Net cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate fluctuations on cash and cash equivalents
Cash and cash equivalents at end of the year
Reconciliation of net cash flow to movement in net debt
Net increase/(decrease) in cash in the year
Cash outflow from decrease in debt and finance leases
Decrease in net debt resulting from cash flows
Translation differences
Other non-cash changes
Decrease in net debt in the year
Net debt at beginning of the year
Net debt at end of the year
Notes
23
5
12
10
11
27
9
21
21
5
2015
£m
179.4
(2.8)
–
(17.3)
159.3
0.9
0.7
–
(78.1)
(3.7)
(5.1)
2014
£m
177.2
(6.7)
(21.0)
(15.7)
133.8
1.2
0.8
0.2
(72.8)
(3.2)
–
(85.3)
(73.8)
–
(27.9)
467.1
510.0
–
(1,009.8)
(1.2)
(1.0)
(16.8)
(10.0)
(6.4)
1.1
–
(9.2)
(71.4)
2.6
133.3
(1.2)
134.7
2.6
29.1
31.7
20.3
(0.7)
51.3
(1.2)
–
(25.9)
–
(3.6)
–
(32.0)
(10.7)
(106.1)
(46.1)
182.1
(2.7)
133.3
(46.1)
501.0
454.9
43.9
0.5
499.3
(371.1)
(870.4)
24
(319.8)
(371.1)
Financial statements
65
Notes to consolidated financial statements
1. Accounting policies
1.1 Basis of preparation
SSP Group plc (the ‘Company’) is a company incorporated in the United Kingdom under the Companies Act 2006. The Group financial
statements consolidate those of the Company and its subsidiaries (together referred to as the ‘Group’) and equity-account the Group’s
interest in associates. These financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’)
as adopted by the EU and the Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements are presented in Sterling, which is the Company’s functional currency. All information is given to the nearest
£0.1 million.
The financial statements are prepared on the historical cost basis, except in respect of the derivative financial instruments that are stated at
their fair value.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial
statements.
1.2 Going concern
These financial statements have been prepared on a going concern basis. The Board has reviewed the Group’s trading forecasts
for the next 12 months. These forecasts, which include detailed cash flow projections, comprise assumptions as to sales and profit
performance by segment and by month and take account of the normal seasonality profile of the business. As a result, the Directors are
confident that the assumptions underlying their forecasts are reasonable and that the Group will be able to operate within its banking
covenants and available liquidity headroom.
Notwithstanding the above, however, there remains a risk that a downturn in the global economy could result in passenger numbers and
consumer spending in the travel market that are worse than the Board is currently envisaging. As a result, the Directors have also reviewed
forecasts that include sensitivities that make allowance for this risk. Should such a scenario arise, the Directors are confident they have
adequate liquidity and covenant headroom to ensure that the Group can meet its liabilities as they fall due for the foreseeable future.
Accordingly, the Directors believe that it is appropriate to prepare these financial statements on a going concern basis.
In addition, in accordance with provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council in
September 2014, the Directors have assessed the prospects and viability of the Group over a longer period than the 12 months required by the
Going Concern provision. Further details of this assessment are provided on page 17 of the Strategic report.
1.3 Basis of consolidation
The financial statements of the Group consolidate the results of the Company and its subsidiary entities, together with the Group’s
attributable share of the results of associates. All intercompany balances and transactions, including unrealised profits and losses arising
from intragroup transactions, have been eliminated in full.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control is the power to direct the relevant activities of the subsidiary that significantly affect
the subsidiary’s return so as to have rights to the variable return from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the
date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit balance.
Associates and jointly controlled entities
An associate is an undertaking in which the group has a long-term equity interest and over which it has the power to exercise significant
influence.
Associates are accounted for using the equity method and are initially recognised at cost (including transaction costs). The Group’s interest
in the net assets of associates is reported as an investment on the consolidated balance sheet and its interest in their results is included in
the consolidated income statement below the Group’s operating profit. The Group’s investment in associates includes goodwill identified
on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of the total
comprehensive income and equity movements of equity-accounted investees, from the date that significant influence commences until the
date that significant influence ceases. When the Group’s share of losses exceeds its interest in an equity-accounted investee, the carrying
amount of the Group’s investment is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of an investee.
Investments in associates are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be
recoverable. The impairment review compares the net carrying value with the recoverable amount, where the recoverable amount is the higher
of the value in use calculated as the present value of the Group’s share of the associates’ future cash flows and its fair value less costs to sell.
SSP Group Annual Report and Accounts 2015 66
Financial statements
Notes to consolidated financial statements continued
1. Accounting policies continued
1.4 Foreign currency
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the
functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the
income statement, except for differences arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign
operation that is effective, or qualifying cash flow hedges, which are recognised directly in other comprehensive income. Non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to
the Group’s presentation currency, Sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of
foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at
the dates of the transactions.
Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and
accumulated in the translation reserve or non-controlling interest, as appropriate. When a foreign operation is disposed of, such that
control, joint control or significant influence is lost, the entire accumulated amount in the foreign currency translation reserve, net of
amounts previously attributed to non-controlling interests, is recycled to the income statement as part of the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while still retaining control, the
relevant proportion of the accumulated amount is reattributed to non-controlling interests. When the Group disposes of only part of its
investment in an associate or joint venture that includes a foreign operation while still retaining significant influence or joint control, the
relevant proportion of the cumulative amount is recycled to the income statement.
Exchange differences arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned
nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity
in the translation reserve. Foreign currency differences arising on the retranslation of a hedge of a net investment in a foreign operation are
recognised directly in equity, in the translation reserve, to the extent that the hedge is effective. When the hedged part of a net investment is
disposed of, the associated cumulative amount in equity is recycled to the income statement as an adjustment to the profit or loss on disposal.
1.5 Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or
financial liabilities with another party under conditions that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability.
1.6 Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash
equivalents, loans and borrowings, and trade and other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised cost
using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised cost
using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management are included as a component of cash and cash equivalents.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost using the effective interest method.
1.7 Derivative financial instruments and hedging
Derivative financial instruments
Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately
in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on
the nature of the item being hedged, as set out below.
Financial statements
67
Cash flow hedges
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a
highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in
the cash flow hedging reserve. Any ineffective portion of the hedge is recognised immediately in the income statement.
If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated
gains and losses that were recognised directly in equity are recycled into the income statement in the same period or periods during
which the asset acquired or liability assumed affects profit or loss, i.e. when interest income or expense is recognised.
For cash flow hedges, other than those covered by the preceding two policy statements, the associated cumulative gain or loss
is removed from equity and recognised in the income statement in the same period or periods during which the hedged forecast
transaction affects profit or loss.
Fair value hedges
Where a derivative financial instrument is designated as a hedge of the variability in fair value of a recognised asset or liability or an
unrecognised firm commitment, all changes in the fair value of the derivative are recognised immediately in the income statement.
The carrying value of the hedged item is adjusted by the change in fair value that is attributable to the risk being hedged (even if it
is normally carried at cost or amortised cost) and any gains or losses on remeasurement are recognised immediately in the income
statement (even if those gains would normally be recognised directly in reserves).
1.8 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of
property, plant and equipment.
Leases in which the Group assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance
leases. Leased assets acquired by way of a finance lease are stated at an amount equal to the lower of their fair value and the present
value of the minimum lease payments at inception of the lease, less accumulated depreciation and accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of
property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:
• Freehold buildings
2% per annum
• Leasehold land and buildings
the life of the lease
• Plant and machinery
8% to 33% per annum
• Fixtures, fittings, tools and equipment
8% to 33% per annum
1.9 Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date at which control is
transferred to the Group.
1.10 Acquisitions and disposals of non-controlling interests in subsidiary undertakings
Acquisitions and disposals of non-controlling interests that do not result in a change of control are accounted for as transactions with owners
in their capacity as owners and, therefore, no goodwill is recognised as a result of such transactions. The adjustments to non-controlling
interests are based on a proportionate amount of the net assets of the subsidiary. Any difference between the price paid or received and the
amount by which non-controlling interests are adjusted is recognised directly in equity and attributed to the owners of the Parent Company.
1.11 Goodwill and intangible assets
Goodwill
Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. Goodwill is stated at cost less any
accumulated impairment losses.
Other intangible assets
Expenditure on internally-generated goodwill and brands is recognised in the income statement as an expense as incurred.
Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets (between 7%
and 11% per annum) unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically tested for
impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use.
1.12 Inventories
Inventories comprise goods purchased for resale and consumable stores and are stated at the lower of cost and net realisable value. Cost is
calculated using the first in first out method.
SSP Group Annual Report and Accounts 2015 68
Financial statements
Notes to consolidated financial statements continued
1. Accounting policies continued
1.13 Impairment excluding inventories and deferred tax assets
Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired (with a charge to the income statement) if objective evidence indicates that a loss
event has occurred after the initial recognition of the asset, and that the loss event has had a negative effect on the estimated future cash
flows of that asset, which can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired
asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to
decrease, the decrease in impairment loss is reversed through the income statement.
Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date
to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For
goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each
period at the same time.
The recoverable amount of an asset or cash-generating unit (or ‘CGU’) is the greater of its value in use and its fair value less costs to sell. For
the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. Subject
to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are
aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the
synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses
are recognised in the income statement. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of
any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent the asset’s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment
loss had been recognised.
1.14 Employee benefits
Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net obligation in respect of
defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in the
current and prior periods, discounting the amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the
calculation results in a potential asset for the Group, the recognised asset is limited to the present value of the economic benefits available
in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic
benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the
effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. Net interest expense and
other expenses related to defined plans are recognised in the income statement.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or
loss on curtailment is recognised immediately in the income statement. The Group recognises gains and losses on the settlement of a defined
benefit plan when the settlement occurs.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the employing company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension
plans are recognised as an expense in the income statement in the periods during which services are rendered by employees.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A
liability is recognised for the amount expected to be paid under a short-term cash bonus if the employing company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
Financial statements
69
Share-based payments
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value
excludes the effect of service and non-market-based vesting conditions.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting
period, with a corresponding adjustment to equity reserves, based on the Group’s estimate of equity instruments that will eventually vest. At
each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of service and non-
market-based vesting conditions. The impact of changes to the original estimates, if any, is recognised in the income statement such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserves.
1.15 Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that
can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a rate that reflects risks specific to the liability.
1.16 Segment information
Segment information is provided based on the geographical segments that are reviewed by the chief operating decision maker. In accordance
with the provisions of IFRS 8, the Group’s chief operating decision maker is the Board of Directors. The operating segments are aggregated
if they meet certain criteria. Segment results include items directly attributable to a segment, as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly head office expenses, finance income, finance charges and income tax. No disclosure is
made for net assets/liabilities as these are not reported by segment to the chief operating decision maker.
1.17 Revenue
Revenue represents amounts for retail goods and catering services supplied to third party customers excluding discounts, value-added tax
and similar sales taxes.
Sale of goods
Revenue is recognised at the point of sale of food, beverage and retail goods.
Provision of catering services
Revenue is recognised in the period in which services are provided.
1.18 Supplier income
The Group enters into agreements with suppliers to share the costs and benefits of promotional activity and volume growth. Supplier
incentives, rebates and discounts are recognised within cost of sales as they are earned.
1.19 Exceptional items
Exceptional items are those that, in management’s judgment, need to be disclosed by virtue of their size, nature or incidence, in order to draw
the attention of the reader and to show the underlying business performance of the Group more accurately. Such items are included within the
income statement caption to which they relate, and are separately disclosed either in the notes to the consolidated financial statements or on
the face of the consolidated income statement.
1.20 Lease payments
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease
incentives received are recognised in the income statement as an integral part of the total lease expense.
Finance lease payments
Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is
allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.21 Finance income and expense
Finance income comprises interest receivable on funds invested, dividend income and net foreign exchange gains. Finance expense comprises
interest payable, finance charges on shares classified as liabilities, finance lease charges recognised in the income statement using the
effective interest method, the unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the income
statement.
Interest income and interest expense are recognised in the income statement as they accrue, using the effective interest method. Dividend
income is recognised in the income statement on the date the entity’s right to receive payment is established. Foreign currency gains and
losses are reported on a net basis.
1.22 Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to items recognised directly in equity, in which case, it is recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods.
SSP Group Annual Report and Accounts 2015 70
Financial statements
Notes to consolidated financial statements continued
1. Accounting policies continued
1.22 Taxation continued
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. No provision is made for the following temporary differences: the initial recognition of goodwill; the
initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available, against which the
temporary difference can be utilised.
1.23 IFRSs not yet applied
There are no IFRS, IFRS Interpretations Committee interpretations or amendments that have been issued but are not yet effective that
would be expected to have a material impact on the Group.
1.24 Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous period except for the following new and amended IFRSs
adopted as of 1 October 2014:
• IFRS 10 Consolidated Financial Statements
• IFRS 11 Joint Arrangements
• IFRS 12 Disclosure of Interests in Other Entities
• IAS 27 (2011) Separate Financial Statements
• IAS 28 (2011) Investments in Associates and Joint Ventures
The adoption of these accounting standards has not had a significant impact on the consolidated financial statements of the Group.
2. Accounting estimates and judgements
The preparation of the consolidated financial statements requires management to make estimates, judgements and assumptions
concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. These estimates
and assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities within
the next financial year are discussed below.
Goodwill and intangible assets
The Group recognises goodwill and intangible assets that have arisen through acquisitions. These assets are subject to impairment reviews
to ensure that the assets are not carried above their recoverable amounts. For goodwill and indefinite life intangible assets, reviews are
performed annually. For other intangible assets, reviews are performed if events or circumstances indicate that this is necessary.
The recoverable amounts of CGUs or groups of CGUs have been determined based on value in use calculations. These calculations require
the use of estimates and assumptions consistent with the most up-to-date budgets and plans that have been formally approved by the
Board. The key assumptions used for the value in use calculations are set out in note 11 to these financial statements.
Current and deferred tax
The Group is required to determine the corporate tax provision in each of the many jurisdictions in which it operates. During the ordinary
course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group
recognises tax liabilities based on estimates of whether additional taxes and interest will be due. The recognition of tax benefits and
assessment of provisions against tax benefits requires management judgement. In particular, the Group is routinely subject to tax audits
in many jurisdictions, which by their nature are often complex and can take several years to resolve. Provisions are based on management’s
interpretation of country specific tax law and the likelihood of settlement. To the extent that the outcome differs from the estimates made,
tax adjustments may be required in future periods.
The evaluation of recoverability of deferred tax assets requires judgements to be made regarding the availability of future taxable income.
Management therefore recognises deferred tax assets only where it believes it is probable that such assets will be realised.
Financial statements
71
3. 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 the 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.
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.
Revenue is measured in a manner consistent with that in the income statement.
2015
Revenue
Underlying operating profit/(loss)
2014
Revenue
Underlying operating profit/(loss)
UK
£m
727.2
52.7
UK
£m
720.5
40.0
Continental
Europe
£m
749.7
53.5
Continental
Europe
£m
803.5
57.4
North
America
£m
201.6
3.5
North
America
£m
168.0
(0.1)
RoW
£m
154.4
14.6
RoW
£m
135.1
12.7
Non-
attributable
£m
–
(26.9)
Non-
attributable
£m
–
(21.5)
Total
£m
1,832.9
97.4
Total
£m
1,827.1
88.5
Disclosure in relation to net assets and liabilities for each reportable segment is not provided as these are only reported on and
reviewed by management in aggregate for the Group as a whole.
Additional information
Although the Group’s operations are managed on a geographical basis, we provide additional information in relation to revenue, based
on the type of travel locations as follows:
Turnover
Air
Rail
Other
2015
£m
989.9
723.5
119.5
1,832.9
The following amounts are included in underlying operating profit:
2015
Depreciation and amortisation*
2014
UK
£m
(16.5)
Continental
Europe
£m
(31.0)
North
America
£m
(15.7)
RoW
£m
(4.8)
Non-
attributable
£m
(4.9)
2014
£m
949.8
756.0
121.3
1,827.1
Total
£m
(72.9)
Depreciation and amortisation*
(22.4)
(29.9)
(14.0)
(5.2)
(4.2)
(75.7)
*Excludes amortisation of acquisition-related intangible assets.
SSP Group Annual Report and Accounts 2015
72
Financial statements
Notes to consolidated financial statements continued
3. Segmental reporting continued
A reconciliation of underlying operating profit to profit/(loss) before and after tax is provided as follows:
Underlying operating profit
Adjustments to operating costs
Share of profit from associates
Loss on disposal of business
Finance income
Finance expense
Profit/(loss) before tax
Taxation
Profit/(loss) after tax
2015
£m
97.4
(5.2)
1.6
–
0.7
(17.7)
76.8
(16.5)
60.3
2014
£m
88.5
(48.5)
1.5
(0.7)
0.8
(55.1)
(13.5)
(14.3)
(27.8)
The Group’s customer base primarily represents individuals or groups of individuals travelling through airports and railway stations. It does
not rely on a single major customer; therefore additional segmental information by customer is not provided.
4. Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings/(loss) per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year adjusted by potentially dilutive outstanding share options. In accordance
with IAS 33, the dilutive earnings per share are without reference to adjustments in respect of outstanding share options where the impact
would be anti-dilutive.
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:
Profit/(loss) attributable to ordinary shareholders
Adjustments:
Exceptional operating costs
Amortisation of acquisition-related intangibles
Loss on disposal of business
Exceptional finance costs
Tax effect of adjustments
Underlying profit attributable to ordinary shareholders
Basic weighted average number of shares
Dilutive potential ordinary shares
Diluted weighted average number of shares
Earnings/(loss) per share (pence):
– Basic
– Diluted
Underlying earnings per share (pence):
– Basic
– Diluted
2015
£m
53.4
–
5.2
–
–
(0.4)
58.2
2014
£m
(31.9)
43.2
5.3
0.7
26.1
(3.6)
39.8
475,040,543
299,493,591
1,137,801
113,880
476,178,344
299,607,471
11.2
11.2
12.3
12.2
(10.7)
(10.7)
13.3
13.3
The 2014 weighted average number of shares reflects the increase in share capital on 15 July 2014 as a result of a capital reorganisation
completed in preparation for the IPO, together with the issue of new ordinary shares at IPO.
5. Operating costs
Cost of food and materials:
Cost of inventories consumed in the period
Labour cost:
Employee remuneration
Overheads:
Depreciation of property, plant and equipment
Amortisation of intangible assets – software
Amortisation of acquisition-related intangible assets
Rentals payable under operating leases*
Other overheads
Exceptional operating costs
Financial statements
73
2015
£m
2014
£m
(604.3)
(612.1)
(541.7)
(541.8)
(68.0)
(4.9)
(5.2)
(311.6)
(205.0)
–
(1,740.7)
(72.5)
(3.2)
(5.3)
(301.8)
(207.2)
(43.2)
(1,787.1)
*The Group’s rentals payable consist of fixed and variable elements depending on the levels of revenue earned from the respective sites. The fixed element
of rent payable during the year was £207.6m (2014: £199.9m)
Adjustments to operating costs
Redundancy and restructuring costs1
Costs in respect of the IPO2
Share-based payments3
Exceptional operating costs
Amortisation of intangible assets arising on acquisition
2015
£m
–
–
–
–
(5.2)
(5.2)
2014
£m
(9.5)
(26.6)
(7.1)
(43.2)
(5.3)
(48.5)
Underlying operating profit excludes items that are considered to be exceptional in nature. In the prior year, these included redundancy
and restructuring costs associated with a number of significant organisation changes and costs in respect of the IPO and associated
refinancing. In both years, it also excludes non-cash accounting adjustments relating to amortisation of intangible assets arising on
the acquisition of the SSP business in 2006. In the current year, there are exceptional cash outflows of £12.0m (comprising £2.8m of
redundancy and restructuring costs and £9.2m of IPO related costs) reflecting amounts accrued in 2014 but paid in 2015.
The exceptional costs charged to operating profit in the prior year are detailed below:
1 The redundancy and restructuring costs were associated with a number of significant organisation changes.
2 Certain professional and advisory fees were incurred as part of the process of obtaining admission to list the Company’s shares on the
London Stock Exchange through an Initial Public Offering (IPO). In addition, costs of £3.7m were recognised directly in equity (as a charge
to share premium).
3 A charge of £7.1m was incurred in respect of an aggregate of 3,329,904 ordinary shares awarded by the Company’s previous majority
shareholder to the Executive Directors and certain other members of management at the time of the Company’s admission to the London
Stock Exchange.
Auditor’s remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Tax compliance services
Non-audit services in relation to the IPO
2015
£m
0.2
0.6
0.2
–
1.0
2014
£m
0.2
0.6
0.2
2.1
3.1
Amounts paid to the Company’s auditor and its associates in respect of services to the Company, other than the audit of the Company’s
financial statements, have not been disclosed as the information is required instead to be disclosed on a consolidated basis.
SSP Group Annual Report and Accounts 2015
74
Financial statements
Notes to consolidated financial statements continued
6. Staff numbers and costs
The average number of persons employed by the Group (including Directors) during the year, analysed by category, was as follows:
Operations
Sales and marketing
Administration
The aggregate payroll costs of the Group were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payments (note 22)
7. Finance income and expense
Finance income:
Interest income
Total finance income
Finance expense:
Total interest expense on financial liabilities measured at amortised cost2,3
Net change in fair value of cash flow hedges utilised in the year
Swap break costs1
Unwind of discount on provisions
Net interest expense on defined benefit pension obligations
Other
Total finance expense
Adjustments to finance expense:
Swap break costs1
Additional consideration payable to B1 investors2
Other net interest credit3
Number of employees
2015
28,828
127
1,257
30,212
2014
27,813
475
1,169
29,457
2015
£m
2014
£m
(470.3)
(474.6)
(57.5)
(10.1)
(3.8)
(541.7)
2015
£m
0.7
0.7
(13.9)
(0.9)
–
(1.3)
(0.5)
(1.1)
(17.7)
2015
£m
-
-
-
-
(57.4)
(9.5)
(0.3)
(541.8)
2014
£m
0.8
0.8
(44.9)
(3.0)
(4.0)
(1.6)
(0.6)
(1.0)
(55.1)
2014
£m
(4.0)
(32.0)
9.9
(26.1)
On 15 July 2014, the Company completed an IPO, as a result of which its shares were listed on the London Stock Exchange, and on the same
day it restructured its debt facilities, resulting in the following items:
1 Interest rate swaps were terminated, resulting in an exceptional charge of £4.0m.
2 The Company paid £32.0m additional consideration as settlement of its obligations to its B1 investors (broadly, the providers of junior
debt).
3 Unamortised fees of £4.6m relating to the Group’s pre-IPO financing arrangements were written off in full. At the same time, interest
charges accrued in prior periods of £14.5m relating to an effective interest rate adjustment on the pre-IPO debt were credited to the
income statement.
8. Taxation
Current tax expense:
Current year
Adjustments for prior years
Deferred tax expense:
Origination and reversal of temporary differences
Recognition of deferred tax assets not previously recognised
Adjustments for prior years
Total tax expense
Financial statements
75
2015
£m
(22.3)
(1.4)
(23.7)
(1.2)
7.2
1.2
7.2
(16.5)
2014
£m
(12.2)
(0.1)
(12.3)
(1.9)
–
(0.1)
(2.0)
(14.3)
Reconciliation of effective tax rate
The tax expense for the year is different to the standard rate of corporation tax in the UK of 20.5% (2014: 22%) applied to the profit (2014:
loss) before tax for the year. The differences are explained below:
Profit/(loss) before taxation
Tax (charge)/credit using the UK corporation tax rate of 20.5% (2014: 22%)
Non-deductible expenses
Effect of tax rates in foreign jurisdictions
Withholding taxes
Secondary and irrecoverable taxes
Temporary differences for which no deferred tax was recognised
Recognition of deferred tax assets not previously recognised
Adjustments for prior years
Exceptional operating and finance costs (non-deductible)
Total tax expense
Factors that may affect future tax charges
2015
£m
76.8
(15.7)
(0.3)
(1.4)
(0.5)
(2.0)
(3.6)
7.2
(0.2)
–
(16.5)
2014
£m
(13.5)
3.0
(1.4)
1.5
(0.6)
(1.3)
(2.9)
–
(0.2)
(12.4)
(14.3)
The Group expects the tax rate in the future to be affected by the geographical mix of profits and the different tax rates that will apply to
those profits, the use of brought forward tax losses and the outcome of tax audits.
Reductions in the corporation tax rate in the UK from 23% to 21% (effective from 1 April 2014) and to 20% (effective from 1 April 2015) were
substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective from 1 April 2020) were
substantively enacted on 26 October 2015.
The Group has significant tax losses in certain jurisdictions, and these will be recognised in future periods as and when use is determined to
be probable based on estimates of future profitability in those jurisdictions and the tax legislation applying at the relevant times.
The Group is routinely subject to audit by tax authorities in the territories in which it operates, and, where appropriate, holds provisions
for the potential tax liabilities that might arise. To the extent that the outcome differs from the estimates made, tax adjustments may be
required in future periods.
9. Dividends
An interim dividend of 2.1p per share, amounting to £10.0m was paid and recognised as a dividend in the year (2014: £nil).
The proposed final dividend of 2.2p per share, totalling £10.5m (2014: £nil), is not included as a liability in these financial statements, and will
be paid, subject to shareholder approval, on 16 March 2016 to shareholders on the register on 19 February 2016.
SSP Group Annual Report and Accounts 2015
76
Financial statements
Notes to consolidated financial statements continued
10. Property, plant and equipment
Cost
At 1 October 2013
Additions
Disposals
Effects of movements in foreign exchange
Other movements
At 30 September 2014
Additions1
Disposals
Business acquisition
Effects of movements in foreign exchange
Other movements
At 30 September 2015
Depreciation
At 1 October 2013
Charge for the period
Disposals
Effects of movements in foreign exchange
Other movements
At 30 September 2014
Charge for the period
Disposals
Effects of movements in foreign exchange
Other movements
At 30 September 2015
Net book value
At 30 September 2015
At 30 September 2014
At 1 October 2013
Land, buildings
and leasehold
improvements
£m
Equipment,
fixtures and
fittings
£m
102.2
12.7
(13.4)
(2.1)
14.9
114.3
17.7
(12.3)
–
2.6
3.6
125.9
(69.9)
(11.8)
13.4
1.2
(5.5)
(72.6)
(12.7)
12.3
(1.1)
–
638.0
60.1
(65.3)
(24.4)
(15.3)
593.1
60.4
(43.5)
1.2
(17.8)
(1.5)
591.9
(460.3)
(60.7)
65.3
16.9
5.9
(432.9)
(55.3)
43.5
13.2
0.5
Total
£m
740.2
72.8
(78.7)
(26.5)
(0.4)
707.4
78.1
(55.8)
1.2
(15.2)
2.1
717.8
(530.2)
(72.5)
78.7
18.1
0.4
(505.5)
(68.0)
55.8
12.1
0.5
(74.1)
(431.0)
(505.1)
51.8
41.7
32.3
160.9
160.2
177.7
212.7
201.9
210.0
1 Included in other movements in 2015 is £2.7m (2014: £nil) in respect of increases to the restoration costs provision (see note 20).
At 30 September 2015, the net carrying amount of equipment, fixtures and fittings held under finance leases was £0.9m (2014: £1.6m).
Depreciation for the year on these assets was £1.1m (2014: £1.4m). The leased equipment secures lease obligations.
SSP Group Annual Report and Accounts 2015
Financial statements
77
11. Goodwill and intangible assets
Indefinite life
intangible
assets
£m
Definite life
intangible
assets
£m
Goodwill
£m
Software
£m
Cost
At 1 October 2013
Additions
Disposals
Effects of movement in foreign exchange
Other movements
At 30 September 2014
Additions
Business acquisition
Effects of movement in foreign exchange
Other movements
At 30 September 2015
Amortisation
At 1 October 2013
Charge for the period
Disposals
Effect of movements in foreign exchange
Other movements
At 30 September 2014
Charge for the period
Effect of movements in foreign exchange
Other movements
At 30 September 2015
Net book value
At 30 September 2015
At 30 September 2014
At 1 October 2013
Total
£m
753.1
3.2
(0.1)
(31.0)
0.4
725.6
3.7
4.3
(25.5)
0.6
708.7
(58.3)
(8.5)
0.1
0.5
(0.4)
(66.6)
(10.1)
0.6
(0.5)
607.3
–
–
(30.5)
–
576.8
–
–
(24.7)
–
552.1
–
–
–
–
–
–
–
–
–
–
57.9
–
–
(0.2)
–
57.7
–
–
(0.1)
–
57.6
–
–
–
–
–
–
–
–
–
–
58.7
–
–
(0.4)
–
58.3
–
4.3
(0.3)
–
62.3
(37.1)
(5.3)
–
0.4
-
(42.0)
(5.2)
0.2
–
29.2
3.2
(0.1)
0.1
0.4
32.8
3.7
–
(0.4)
0.6
36.7
(21.2)
(3.2)
0.1
0.1
(0.4)
(24.6)
(4.9)
0.4
(0.5)
(47.0)
(29.6)
(76.6)
552.1
576.8
607.3
57.6
57.7
57.9
15.3
16.3
21.6
7.1
8.2
8.0
632.1
659.0
694.8
Goodwill relates to the acquisition of the SSP business in June 2006 through the purchase of various Compass Group PLC subsidiaries by
subsidiaries of the Company.
The indefinite life intangible assets relate to the Group’s own brands and the definite life intangible assets relate to franchise rights in
respect of third-party brands.
78
Financial statements
Notes to consolidated financial statements continued
11. Goodwill and intangible assets continued
Impairment tests for goodwill and indefinite life intangible assets
Goodwill and indefinite life intangible assets are allocated to the Group’s CGUs identified according to operating segment. Details of
goodwill and indefinite life intangible assets allocated to CGUs or groups of CGUs are provided in the table below:
UK
Continental Europe
North America
Rest of the World
Goodwill
Indefinite life
intangible assets
2015
£m
169.0
307.0
12.5
63.6
552.1
2014
£m
169.0
332.7
11.8
63.3
576.8
2015
£m
55.5
2.1
–
–
2014
£m
55.5
2.2
–
–
57.6
57.7
The Group tests goodwill and indefinite life intangible assets annually for impairment. This did not result in any impairment in the year
(2014: £nil).
The recoverable amount of all CGUs is determined based on value in use calculations. These calculations use cash flow projections based
on financial budgets and forecasts approved by the Board, and include a terminal value based on expectations of growth thereafter. The
key assumptions for these calculations are shown below:
2015
Growth rate applied beyond approved forecast period
Discount rate
Forecast period1
2014
Growth rate applied beyond approved forecast period
Discount rate
Forecast period1
UK
Continental Europe
North America
2.0%
7.0%
5 years
2.0% to 3.0%
7.0% to 9.9%
5 years
2.0%
7.0%
5 years
UK
Continental Europe
North America
2.0%
8.1%
5 years
2.0% to 3.0%
7.5% to 8.5%
5 years
2.0%
7.5%
5 years
RoW
5.0%
7.0% to 10.5%
5 years
RoW
5.0%
7.5% to 11.5%
5 years
1The cash flow forecast period is based on management’s three-year medium term plan, a further year of assumed growth, followed by a
final year showing a terminal value based on the rates as shown in the table above.
The values applied to the key assumptions in the value in use calculations are derived from a combination of external and internal factors,
based on past experience together with management’s future expectations about business performance.
Sensitivity analysis
A sensitivity analysis has been performed in assessing the recoverability of goodwill and indefinite life intangible assets. For each
operating segment, an increase of 0.5% in the discount rate or a decrease in the growth rate of 0.5% would not result in the carrying
amount for any CGU or groups of CGUs exceeding its recoverable amount.
Financial statements
79
12. Investments in associates
The Group’s share of the results of its associates, all of which are unlisted, and its share of the aggregated assets and liabilities, are as
follows:
Assets
Liabilities
Revenue
Profit
The following table summarises the movement in investments in associates during the year:
At beginning of the year
Profits for the year
Dividends received
Disposal (see below)
Currency adjustment
At end of the year
2015
£m
13.4
(10.0)
38.7
1.6
2015
£m
4.6
1.6
(0.9)
–
0.1
5.4
2014
£m
8.8
(6.5)
38.3
1.5
2014
£m
5.3
1.5
(1.2)
(0.7)
(0.3)
4.6
The financial information of the Group’s associates included in their own financial statements required by IFRS 12 Disclosure of Interests
in Other Entities has not been presented as all the Group’s associates are immaterial individually and in aggregate. Details of the Group’s
interests in associates are shown in note 39.
In 2014, the Group sold its 49% share in each of Momentum Services Limited and Lounge Services SAS for a combined cash consideration
of £0.2m, resulting in a loss on disposal of £0.7m.
13. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Intangible assets
Property, plant and equipment
Provisions
Tax loss carry forwards
Other
Deferred tax assets/(liabilities)
Set-off
Deferred tax assets/(liabilities)
Movement in net deferred tax during the year:
Intangible assets
Property, plant and equipment
Provisions
Tax loss carry forwards
Other
Assets
2015
£m
–
7.0
4.3
2.5
1.5
15.3
(3.9)
11.4
2014
£m
–
4.2
0.6
3.0
0.1
7.9
(5.4)
2.5
Liabilities
2015
£m
(8.2)
(2.1)
(0.1)
–
(3.0)
(13.4)
3.9
(9.5)
2014
£m
(8.9)
(2.3)
–
–
(2.2)
(13.4)
5.4
(8.0)
1 October
2014
£m
Recognised
in the year
£m
Currency
adjustment
£m
30 September
2015
£m
(8.9)
1.9
0.6
3.0
(2.1)
(5.5)
0.7
2.9
3.6
(0.6)
0.6
7.2
–
0.1
–
0.1
–
0.2
(8.2)
4.9
4.2
2.5
(1.5)
1.9
SSP Group Annual Report and Accounts 2015
80
Financial statements
Notes to consolidated financial statements continued
13. Deferred tax assets and liabilities continued
Unrecognised deferred tax assets and liabilities
Unrecognised deferred tax assets and liabilities in these financial statements are attributable to the following:
Property, plant and equipment
Tax losses
Provisions
Assets
2015
£m
18.6
77.0
6.9
102.5
2014
£m
18.0
72.9
5.9
96.8
Liabilities
2015
£m
–
–
–
–
2014
£m
–
–
–
–
The above deferred tax assets have not been recognised either because of uncertainty over the future profitability of the relevant companies
within the Group to which the deferred tax assets relate, or because the deferred tax assets relate to tax losses which are subject to
restrictions on use or forfeiture, due, for example, to time restrictions, or change of ownership rules.
£18.6m of the Group’s unrecognised deferred tax assets relate to the UK, with the balance relating to unrecognised deferred tax assets in
overseas jurisdictions, mainly the US and certain countries in Europe. The largest proportion of the unrecognised deferred tax assets relate
to brought forward losses in territories where operations have been loss-making for some time. Profitability forecasts for these territories
are reviewed carefully and used as the basis for considering the recognition of deferred tax assets.
No deferred tax liability has been recognised on the unremitted earnings of overseas subsidiaries and associates based on the current
repatriation policy of the Group and the fact that, given the current tax regimes in the countries in which the Group operates, no withholding
or other tax should arise should the Group choose to remit the earnings of those subsidiaries, or should associates choose to remit their
earnings. As such, no deferred tax liability has been recognised in respect of undistributed earnings.
14. Inventories
Food and beverages
Other
15. Trade and other receivables
Trade receivables
Other receivables1
Prepayments and accrued income
Of which:
Non-current (other receivables)
Current
2015
£m
21.6
4.4
26.0
2015
£m
34.5
32.0
49.6
116.1
26.6
89.5
1 Other receivables include long-term security deposits of £21.4m (2014: £24.8m) relating to some of the Group’s concession agreements.
16. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
2015
£m
88.0
46.7
134.7
2014
£m
20.4
4.0
24.4
2014
£m
33.5
50.5
33.0
117.0
27.9
89.1
2014
£m
86.0
47.3
133.3
17. Short-term and long-term borrowings
Current liabilities
Bank loans
Finance leases
Non-current liabilities
Bank loans
Finance leases
Bank loans
Financial statements
81
2015
£m
(27.2)
(0.5)
(27.7)
(425.6)
(1.2)
(426.8)
2014
£m
(28.6)
(1.2)
(29.8)
(473.3)
(1.3)
(474.6)
• On 15 January 2015, the Group’s leverage met criteria required within its facility agreement to reduce the margin payable on debt in each
of Facility A and Facility B by 0.25% per annum.
• On 15 July 2015, the Group completed an amend and extend of its debt facilities, resulting in a further 0.50% per annum reduction in
the margin payable on all drawn facilities and the debt was extended by an additional year. Furthermore, the Revolving Credit Facility
was reduced from £75m to £50m. Arrangement fees associated with the amend and extend amounted to £1.0m. These costs were
capitalised and offset against the amount of the bank loan in the year. The amend and extend is a renegotiation of existing debt and did
not constitute a substantial modification as defined by IAS 39 Financial Instruments: Recognition and Measurement.
• As at 30 September 2015, the Group had Facility A borrowings of £215.2m. This debt matures on 15 July 2020 and accrues cash-pay
interest at LIBOR (or equivalent benchmark rate) plus a margin of 1.75% per annum as at 30 September 2015. During the year, the margin
was approximately 2.24% per annum. Facility A debt requires a mandatory payment of 11.7% of the debt annually in July. In accordance
with the facility agreement, the margin can fall in increments of 0.25% per annum to no lower than 1.25% per annum, should the Group
meet the required criteria.
• As at 30 September 2015, the Group had Facility B borrowings of £243.8m. This debt matures on 15 July 2020 and accrues cash-pay
interest at LIBOR (or equivalent benchmark rate) plus a margin of 2.00% per annum at 30 September 2015. During the year, the margin
was approximately 2.49% per annum. In accordance with the facility agreement, the margin can fall in increments of 0.25% per annum
to no lower than 1.50% per annum, should the Group meet the required criteria.
• As at 30 September 2015, the Group has a committed Revolving Credit Facility of £50m. This committed facility matures on 15 July
2020. This facility was undrawn throughout the financial year ended 30 September 2015. A commitment fee also applies to the facility.
In accordance with the facility agreement, if drawn, the margin can fall in increments of 0.25% per annum to no lower than 1.00% per
annum, should the Group meet the required criteria.
• At 30 September 2015, the Group had interest rate swap contracts to hedge 90% of its floating interest rate exposure until July 2016,
and then 75% until July 2019 (see note 24 for details of the Group’s interest rate profile).
• Under the financing agreement, the Group has to comply with covenants relating to Net Debt cover and Interest cover. These covenants
are tested bi-annually.
Bank loans are shown net of unamortised arrangement fees totalling £6.2m at 30 September 2015 (2014: £6.4m).
Finance lease liabilities
Finance lease liabilities are payable as follows:
Less than 1 year
Between 1 and 5 years
More than 5 years
2015
£m
(0.5)
(0.9)
(0.3)
(1.7)
2014
£m
(1.2)
(1.1)
(0.2)
(2.5)
SSP Group Annual Report and Accounts 2015
82
Financial statements
Notes to consolidated financial statements continued
18. Trade and other payables
Trade payables
Other payables
Other taxation and social security
Accruals and deferred income
2015
£m
(89.4)
(104.2)
(14.7)
(121.0)
(329.3)
2014
£m
(81.2)
(118.1)
(16.7)
(124.8)
(340.8)
19. Post-employment benefit obligations
Group
The Group operates a number of post-employment benefit schemes, including both defined contribution and defined benefit schemes.
In respect of the defined contribution schemes, amounts paid during the year were £9.5m (2014: £8.6m) across the Group. There are no
contributions outstanding at the balance sheet date. The principal defined contribution scheme is called the SSP Group Pension Scheme.
The Group also operates a combination of funded and unfunded defined benefit schemes across Europe, the respective net plan liabilities
of which are presented below:
Funded schemes (see (a) below)
Unfunded schemes (see (b) below)
2015
£m
(5.2)
(8.5)
(13.7)
2014
£m
(9.1)
(8.8)
(17.9)
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market
(investment) risk. The plans are administered by pension funds that are legally separate from the Group and are required to act in the best
interests of the plan participants. The Group expects to pay £1.0m in contributions to its defined benefit plans in 2016. As at 30 September
2015, the weighted average duration of the defined benefit obligation was 20.7 years (2014: 20.9 years).
Information disclosed below is aggregated by funded and unfunded schemes.
(a) Funded schemes
The Group operates funded schemes in the UK and Norway. In the UK, the Group operates the Rail Gourmet UK Scheme (‘RG scheme’),
which is a final salary scheme and provides benefits linked to salary at retirement or earlier date of leaving service. The RG scheme covers
permanent managerial, administrative and sales staff of Rail Gourmet UK Limited and is closed to new entrants.
In June 2012, it was agreed with the Trustee of the RG scheme that, from 1 July 2012, the employing company contributions would remain at
13.5% of pensionable pay (with members paying 9%), from 1 July 2013 the employing company contributions would increase to 15% (with
employees paying 10%) and, from 1 July 2014, the employing company contributions would increase to 16.5% (with employees paying 11%)
until the results of the next formal actuarial review are known.
The RG scheme was subject to its last full actuarial valuation by a qualified actuary as at 31 December 2010. In addition, the preliminary
results of the actuarial valuation as at 31 December 2013 were made available to the Group before the year end. These results have been
used by a qualified independent actuary in the valuation of the scheme as at 30 September 2015 for the purposes of IAS 19 (revised).
Major assumptions used in the valuation of the funded schemes on a weighted average basis are set out below:
Discount rate applied to scheme liabilities
Rate of increase in salaries
Rate of increase in pensions in payment
Inflation assumption
At the balance sheet date, scheme members were assumed to have the following life expectancies at age 60:
Male pensioner now aged 60
Female pensioner now aged 60
Male pensioner now aged 40
Female pensioner now aged 40
2015
3.4%
2.8%
1.5%
2.8%
2015
26.4
29.0
26.6
29.6
2014
3.8%
3.2%
1.7%
3.2%
2014
26.1
28.6
26.8
29.7
Financial statements
83
Sensitivity analysis
Changes at the reporting date to one of the relevant actuarial assumptions by 1%, holding other assumptions constant, would have
affected the defined benefit obligation by the amounts shown below:
As at 30 September 2015
Discount rate applied to scheme liabilities
Rate of increase in salaries
Rate of increase in pensions in payment
Inflation assumption
Mortality rates (change of 1 year)
Defined benefit obligation
Increase
£m
Decrease
£m
5.6
(2.1)
(6.0)
(7.0)
(1.1)
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it does provide an
approximation of the sensitivity.
The major categories of assets in the funded schemes and their percentage of the total scheme assets were:
Equities, of which:
– actively traded
Property and infrastructure
Fixed interest investments
Cash
Total assets related to:
– RG scheme
– Norway
The fair value of the scheme assets and the present value of the scheme’s liabilities of the funded schemes were:
Fair value of scheme assets
Present value of funded liabilities
Net pension liability
The following amounts have been charged or credited in arriving at the profit (2014: loss) for the year:
Current service cost (reported in employee remuneration)
Net interest on pension scheme liabilities (reported in finance income and expense)
Total amount charged
2015
33.7%
73.1%
14.6%
39.1%
12.6%
83.6%
16.4%
2015
£m
32.8
(38.0)
(5.2)
2015
£m
(0.5)
(0.3)
(0.8)
(7.2)
1.8
4.4
5.7
1.1
2014
38.1%
72.7%
14.4%
38.0%
9.5%
81.2%
18.8%
2014
£m
34.6
(43.7)
(9.1)
2014
£m
(0.8)
(0.4)
(1.2)
SSP Group Annual Report and Accounts 2015
84
Financial statements
Notes to consolidated financial statements continued
19. Post-employment benefit obligations continued
Changes in the present value of the scheme liabilities are as follows:
Scheme liabilities at beginning of the period
Current service cost
Curtailment
Employee contributions
Interest on pension scheme liabilities
Remeasurements:
– arising from changes in financial assumptions
– arising from changes in experience adjustments
Benefits paid
Currency adjustment
Scheme liabilities at end of the period
Changes in the fair value of the scheme assets are as follows:
Scheme assets at beginning of the period
Interest income
Employer contributions
Employee contributions
Remeasurement: return on plan assets excluding interest income
Benefits paid
Currency adjustment
Scheme assets at end of the period
The following amounts have been recognised in other comprehensive income:
Remeasurements
2015
£m
(43.7)
(0.5)
-
(0.1)
(1.5)
(1.5)
4.4
3.4
1.5
(38.0)
2015
£m
34.6
1.2
0.6
0.1
0.9
(3.4)
(1.2)
32.8
2015
£m
3.8
2014
£m
(39.5)
(0.8)
0.6
(0.1)
(1.7)
(1.7)
(2.8)
1.7
0.6
(43.7)
2014
£m
32.7
1.3
0.7
0.1
1.8
(1.7)
(0.3)
34.6
2014
£m
(2.7)
(b) Unfunded schemes
The principal unfunded scheme of the Group operates in Germany. To be eligible for the general plan, employees must complete five years
of service and the normal retirement age for this plan is 65. Employees in Germany are also provided with a long-service (‘Jubilee’) award,
which provides a month’s gross salary after the employee has worked a certain number of years of service. All unfunded schemes are
valued in accordance with IAS 19 (revised) and have been updated for the period ended 30 September 2015 by a qualified independent
actuary. The major assumptions (on a weighted average basis) used in these valuations were:
Rate of increase in salaries
Rate of increase in pensions in payment and deferred pensions
Discount rate applied to scheme liabilities
Inflation assumption
At the balance sheet date, scheme members were assumed to have the following life expectancies at age 65:
Pensioner now aged 65
Pensioner now aged 40
2015
2.2%
1.6%
2.1%
1.8%
2015
24.8
25.9
2014
2.0%
1.6%
2.1%
1.8%
2014
21.2
24.2
Financial statements
85
Sensitivity analysis
Changes at the reporting date to one of the relevant actuarial assumptions by 1%, holding other assumptions constant, would have
affected the defined benefit obligation by the amounts shown below:
As at 30 September 2015
Discount rate applied to scheme liabilities
Rate of increase in salaries
Rate of increase in pensions in payment
Inflation assumption
Mortality rates (change by 1 year)
Defined benefit obligation
Increase
£m
Decrease
£m
0.7
(0.4)
(0.6)
(1.0)
(0.2)
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it does provide an
approximation of the sensitivity.
The present value of the scheme’s liabilities of the unfunded schemes was:
Net pension liability
The movement in the liability during the period was as follows:
Deficit in the schemes at start of the period
Current service cost
Contributions
Interest on pension scheme liabilities
Remeasurements:
– arising from changes in financial assumptions
– arising from changes in experience adjustments
Currency adjustment
Deficit in the schemes at end of the period
The following amounts have been charged in arriving at profit (2014: loss) for the year in respect of these schemes:
Current service cost (reported in employee remuneration)
Interest on pension scheme liabilities (reported in finance income and expense)
Total amount charged
The following amounts have been recognised directly to other comprehensive income:
Remeasurements
2015
£m
(8.5)
2015
£m
(8.8)
(0.1)
0.4
(0.2)
–
(0.2)
0.4
(8.5)
2015
£m
(0.1)
(0.2)
(0.3)
2015
£m
(0.2)
(1.1)
0.2
0.5
0.7
0.2
2014
£m
(8.8)
2014
£m
(8.2)
(0.1)
0.4
(0.2)
(1.1)
(0.1)
0.5
(8.8)
2014
£m
(0.1)
(0.2)
(0.3)
2014
£m
(1.2)
SSP Group Annual Report and Accounts 2015
86
Financial statements
Notes to consolidated financial statements continued
20. Provisions
At 1 October 2014
Created in the year
Unwind of discount
Utilised in the year
At 30 September 2015
Represented by:
Current
Non-current
Onerous
contracts
£m
Restoration
costs
£m
(4.3)
(4.4)
(0.4)
1.3
(7.8)
(1.4)
(6.4)
(7.8)
(7.3)
(2.7)
(0.9)
2.7
(8.2)
(1.0)
(7.2)
(8.2)
Total
£m
(11.6)
(7.1)
(1.3)
4.0
(16.0)
(2.4)
(13.6)
(16.0)
Provision for onerous contracts is made when the expected benefits to be derived by the Group from a contract are lower than the
unavoidable cost of meeting its obligations under the contract. The timing of the utilisation of these provisions is variable, dependent on the
contract expiry dates, which vary between one and 10 years.
Provision for restoration costs represents estimates of expected costs to be incurred in restoring a site to its original condition when it is
vacated at the end of the lease term. These provisions will be utilised at the end of the lease terms, which vary between one and 10 years in
length.
21. Capital and reserves
Share capital and share premium
Issued, called up and fully paid:
Ordinary shares of £0.01 each
Deferred ordinary shares of £1.00 each
At 30 September 2014
Cancellation of deferred ordinary shares1
Ordinary shares issued in the year
At 30 September 2015
Comprised of:
Issued, called up and fully paid:
Ordinary shares of £0.01 each
Number of
shares
Share capital
£m
Share
premium
£m
474,999,954
1,156,863
476,156,817
(1,156,863)
113,400
475,113,354
4.7
1.2
5.9
(1.2)
–
4.7
461.2
–
461.2
–
–
461.2
475,113,354
4.7
461.2
1 The issued deferred ordinary share capital of the Company was cancelled in the year, resulting in an increase to the capital redemption
reserve of £1.2m.
Ordinary shares
The Ordinary shareholders are entitled to receive notice of, attend, and speak at and vote at general meetings of the Company. Ordinary
shareholders have one vote for each ordinary share held by them.
Financial statements
87
Reserves
Details of reserves (other than retained earnings) are set out below:
At 1 October 2013
Net gain on hedge of net investments in foreign operations
Current tax charge on gain on hedge of net investment in foreign operations
Other foreign exchange translation differences
Current tax credit on losses arising on exchange translation differences
Effective portion of changes in fair value of cash flow hedges
Cash flow hedges – reclassified to profit and loss
Creation of capital redemption reserve (resulting from capital reduction) (see below)
At 30 September 2014
Net gain on hedge of net investments in foreign operations
Current tax charge on gain on hedge of net investment in foreign operations
Other foreign exchange translation differences
Current tax credit on losses arising on exchange translation differences
Effective portion of changes in fair value of cash flow hedges
Cash flow hedges – reclassified to profit and loss
Tax credit on cash flow hedges
Increase of capital redemption reserve (resulting from cancellation of shares)
(see below)
At 30 September 2015
Capital
redemption
reserve
£m
Translation
reserve
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.2
1.2
(0.3)
22.2
(4.9)
(14.5)
4.0
–
–
–
6.5
21.5
(4.4)
(26.1)
4.7
–
–
–
–
2.2
Cash flow
hedging
reserve
£m
(5.3)
–
–
–
–
(2.6)
7.0
–
(0.9)
–
–
–
–
(9.2)
0.9
0.7
–
(8.5)
Total
£m
(5.6)
22.2
(4.9)
(14.5)
4.0
(2.6)
7.0
–
5.6
21.5
(4.4)
(26.1)
4.7
(9.2)
0.9
0.7
1.2
(5.1)
Capital redemption reserve
The cancellation of the deferred Ordinary shares in the year resulted in an increase to the capital redemption reserve of £1.2m. In 2014,
a capital redemption reserve of £1 was created due to the cancellation of the then existing deferred Ordinary shares as part of a capital
reorganisation in preparation for the IPO.
Translation reserve
The translation reserve comprises all foreign exchange differences arising since 1 October 2010, the transition date to IFRS, from the
translation of the financial statements of subsidiaries with non-sterling functional currency, as well as from the translation of liabilities
that hedge the Group’s net investment in foreign subsidiaries.
Cash flow hedging reserve
The hedging reserve comprises the cumulative net change in the fair value of the Group’s interest rate swaps.
Non-controlling interests
At beginning of the year
Share of profit for the year
Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Currency adjustment
At end of the year
2015
£m
19.1
6.9
(6.4)
1.1
0.8
21.5
2014
£m
19.8
4.1
(3.6)
–
(1.2)
19.1
SSP Group Annual Report and Accounts 2015 88
Financial statements
Notes to consolidated financial statements continued
22. Share-based payments
The Group has granted equity-settled share awards to its employees under the Performance Share Plan (‘PSP’) and the UK Share Incentive
Plan (‘UK SIP’).
Details of the terms and conditions of each share-based payment plan and of the Group’s TSR comparator group are given in the Directors’
remuneration report on pages 36 to 50.
In 2014, the Group incurred an exceptional charge of £7.1m in respect of an aggregate of 3,329,904 Ordinary shares awarded by the
Company’s previous majority shareholder to the Executive Directors and certain other members of management at the time of the
Company’s admission to the London Stock Exchange.
Performance Share Plan
The PSP awards are based on two independent performance conditions, which apply to separate numbers of shares under the award and
are assessed independently. 25% of the award is based on SSP’s Total Shareholder Return (‘TSR’) relative to a comparator group and 75%
of the award is based on an Earnings Per Share (‘EPS’) performance condition.
Expense in the year
The Group incurred a charge of £3.8m in 2015 (2014: £0.3m) in respect of the PSP.
Outstanding at beginning of the year
Granted during the year
Lapsed during the year
Outstanding at end of the year
Exercisable at end of the year
Weighted average remaining contracted life (years)
Weighted average fair value of awards granted (£)
The exercise price for the PSP awards is £nil.
2015
Number of
shares
4,559,220
291,653
(346,345)
4,504,528
–
2.1
1.90
2014
Number of
shares
–
4,573,489
(14,269)
4,559,220
–
3.1
1.86
Details of awards granted in the year
The fair value of equity-settled awards granted in the year with the TSR performance condition was determined using an option pricing
model (based on similar principles to a Monte Carlo model). The following inputs were used for the option pricing model:
Weighted average share price at grant (£)
Weighted average exercise price
Expected volatility
Expected life (years)
Vesting period (years)
Expected correlation between the share price of TSR comparators
2015
2.10
–
26%
3.6
3.6
25%
Expected volatility was determined with reference to the historic volatility for the constituents of the Group’s TSR comparator group over
a period commensurate with the expected life of the awards.
Awards subject to EPS performance criteria have been valued with reference to the share price at the date of the award.
UK Share Incentive Plan
In December 2014, the Company issued the first invitations to eligible employees under the UK SIP, which is an all-employee share
ownership plan. The UK SIP is a share-matching scheme which entitles participating employees to be given up to two free Ordinary shares
(‘Matching shares’) for each SSP Group plc ordinary share purchased (‘Partnership shares’). Both the Partnership and Matching shares are
placed in trust for at least a three-year period.
For the period from January 2015 to December 2015, the actual entitlement to Matching shares was fixed at one Matching share for each
Partnership share purchased. The Group incurred a charge of £0.1m in respect of the matching element of the UK SIP in 2015.
SSP Group Annual Report and Accounts 2015
Financial statements
89
23. Cash flow from operations
Profit/(loss)for the year
Adjustments for:
Depreciation
Amortisation
Share-based payments
Loss on disposal of business
Finance income
Finance expense
Share of profit of associates
Exceptional costs before tax
Taxation
Decrease/(increase) in trade and other receivables
(Increase)/decrease in inventories
Increase in trade and other payables, and in provisions
Cash flow from operations
24. Financial instruments
(a) Financial assets and liabilities by category
Financial assets
Trade and other receivables (excluding prepayments and accrued income)
Cash and cash equivalents
Financial liabilities
Bank loans
Finance leases
Derivative financial instruments
Trade and other payables (excluding other taxation and social security)
Note
10
11
6
12
7
7
12
8
2015
£m
60.3
68.0
10.1
3.8
–
(0.7)
17.7
(1.6)
–
16.5
174.1
1.2
(1.4)
5.5
179.4
2015
£m
66.5
134.7
201.2
(452.8)
(1.7)
(9.8)
(314.6)
(778.9)
2014
£m
(27.8)
72.5
8.5
0.3
0.7
(0.8)
29.0
(1.5)
69.3
14.3
164.5
(6.1)
0.4
18.4
177.2
2014
£m
84.0
133.3
217.3
(501.9)
(2.5)
(0.9)
(324.1)
(829.4)
90
Financial statements
Notes to consolidated financial statements continued
24. Financial instruments continued
(b) Fair values of financial assets and liabilities
The fair values of all financial assets and financial liabilities by class, together with their carrying amounts shown in the balance sheet, are as
follows:
Loans and receivables
Cash and cash equivalents
Trade and other receivables
Total loans and receivables
Non-derivative financial liabilities measured at amortised cost
Bank loans
Finance lease liabilities
Trade and other payables
Total financial liabilities measured at amortised cost
Derivative financial liabilities
Interest rate swaps
Total derivative financial liabilities
Carrying
amount
2015
£m
134.7
66.5
201.2
(452.8)
(1.7)
(314.6)
(769.1)
(9.8)
(9.8)
Fair
value
2015
£m
134.7
66.5
201.2
(459.0)
(1.7)
(314.6)
(775.3)
(9.8)
(9.8)
Carrying
amount
2014
£m
133.3
84.0
217.3
(501.9)
(2.5)
(324.1)
(828.5)
(0.9)
(0.9)
Fair
value
2014
£m
133.3
84.0
217.3
(508.3)
(2.5)
(324.1)
(834.9)
(0.9)
(0.9)
Bank loans
Fair value is 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. Bank loans are categorised as Level 2 financial liabilities, whereby inputs, which are used in the valuation of these
financial liabilities and have a significant effect on the fair value are observable, either directly or indirectly.
Finance lease liabilities
Fair value is based on the present value of the future lease payments, discounted at the rate implicit in the lease.
Other non-derivative financial instruments (excluding bank loans)
Due to the short-term nature of non-derivative financial instruments (excluding bank loans), the fair value is approximate to the carrying
value.
Derivative financial instruments
Derivative financial instruments relate to interest rate swaps and are valued using relevant yield curves and exchange rates as at the balance
sheet date.
Fair value hierarchy
All derivative financial liabilities are categorised as Level 2 under which the fair value is measured using the inputs other than quoted prices
observable for the liability, either directly or indirectly.
(c) Credit risk
The Group’s concentration of credit risk in relation to trade receivables is not considered material. The balances relate to a number of
customers for whom there is no recent history of default. The ageing of trade receivables at the balance sheet date was as follows:
Total trade receivables
Less: impairment provision for trade receivables
Of which:
Not yet due
Overdue, between 0 and 6 months
Overdue, more than 6 months
Impairment provision for trade receivables
2015
£m
35.8
(1.3)
34.5
20.4
12.8
2.6
(1.3)
34.5
2014
£m
34.5
(1.0)
33.5
22.0
11.4
1.1
(1.0)
33.5
Financial statements
91
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
At beginning of the year
Charged in the year
Utilised in the year
Currency adjustment
At end of the year
2015
£m
(1.0)
(0.4)
0.1
–
(1.3)
Other classes of assets in trade and other receivables do not include any impaired assets.
(d) Credit quality of cash at bank and short-term deposits
The credit quality of cash at bank and short-term deposits has been assessed by reference to Moody’s external ratings as follows:
High grade
Upper medium grade
Medium grade
Non-investment grade
Unrated
Cash in hand and in transit
2015
£m
24.2
86.4
2.8
1.5
1.3
116.2
18.5
134.7
2014
£m
(1.0)
(0.6)
0.5
0.1
(1.0)
2014
£m
25.3
76.6
4.7
2.2
1.0
109.8
23.5
133.3
(e) Financial risk management
The main financial risks of the Group relate to the availability of funds to meet business needs, the risk of default by counterparties to
financial transactions, and fluctuations in interest and foreign exchange rates. In this regard, the Treasury function is mandated by the
Board to manage the financial risks that arise in relation to underlying business needs. The function has clear policies and operating
parameters, and its activities are regularly reviewed by the Board to ensure compliance. The function does not operate as a profit centre
and speculative transactions are not permitted.
Financial instruments, including derivatives, are used on occasion to manage the main financial risks arising during the course of business.
These risks are liquidity risk and market risk and are discussed further below:
Liquidity risk
The Group’s objective in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. In order
to achieve this, the Treasury department maintains an appropriate level of funds and facilities to meet each year’s planned funding
requirement.
The following are the contractual maturities of financial liabilities including estimated interest payments:
Non-derivative financial liabilities
Bank loans
Finance lease liabilities
Trade and other payables
Derivative financial liabilities
Carrying
amount
£m
Contractual
cash flows
£m
1 year
or less
£m
2015
1 to
<2 years
£m
2 to
<5 years
£m
>5 years
£m
(452.8)
(516.0)
(40.6)
(39.9)
(435.5)
–
(1.7)
(2.0)
(0.6)
(0.4)
(0.6)
(0.4)
(314.6)
(314.6)
(314.6)
–
–
–
–
Interest rate swaps used for hedging
(9.8)
(9.7)
(2.2)
(2.6)
(4.9)
(778.9)
(842.3)
(358.0)
(42.9)
(441.0)
(0.4)
SSP Group Annual Report and Accounts 2015
92
Financial statements
Notes to consolidated financial statements continued
24. Financial instruments continued
Liquidity risk continued
Non-derivative financial liabilities
Bank loans
Finance lease liabilities
Trade and other payables
Derivative financial liabilities
Interest rate swaps used for hedging
Carrying
amount
£m
Contractual
cash flows
£m
(501.9)
(2.5)
(324.1)
(0.9)
(829.4)
(583.6)
(2.7)
(324.1)
(0.4)
(910.8)
1 year
or less
£m
(45.3)
(1.3)
(324.1)
(1.0)
(371.7)
2014
1 to
<2 years
£m
(44.6)
(0.5)
–
(0.3)
(45.4)
2 to
<5 years
£m
>5 years
£m
(493.7)
(0.7)
–
0.9
(493.5)
–
(0.2)
–
–
(0.2)
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income or the
value of its holdings of financial instruments. These are discussed further below.
Currency risk
Although the functional currency of the Group is Sterling, the Group’s operating cash flows are transacted in a number of different currencies.
The Group’s policy in managing this financial currency risk is to use foreign currency denominated borrowings to ensure that interest costs
arise in currencies that reflect the operating cash flows, thereby minimising net cash flows in foreign currencies. As the mix of foreign
currency cash flows generated by the business changes over time, there may be a requirement to restructure borrowings (via financial
instruments or other treasury products) to maintain this hedge. The Board reviews financial currency risk at least once a year.
The currency profile of the cash balances of the Group at 30 September 2015 was as follows:
Sterling
Other currencies
2015
£m
57.8
76.9
134.7
2014
£m
55.8
77.5
133.3
The Group applies hedge accounting to cover the risk of foreign exchange differences arising between the functional currency of the foreign
operation and the Group’s functional currency, i.e. Sterling. The designated exchange risk is the spot foreign exchange risk because the
hedging instruments are not derivatives, but foreign currency-denominated bank loans. The fair value of the bank loans used as hedging
instruments was £274.8m as at 30 September 2015 (2014: £312.7m). There was no ineffectiveness recognised in the income statement arising
from hedges of net investments in foreign operations.
No sensitivity analysis is provided in respect of currency risk as the Group’s currency exposure mainly relates to translation risk as discussed
above.
Interest rate risk
The Group has entered into a series of interest rate swaps in order to hedge its interest rate exposure from its variable rate term loan
facilities. The impact of all of these transactions is reflected in the table below.
The interest rate and currency profile of the Group’s bank loans at 30 September 2015, after taking into account interest rate swaps and
before adjustment for unamortised bank fees of £6.2m (2014: £6.4m), was as follows:
Currency
Sterling
Euro
US Dollar
Swedish Krona
Norwegian Krone
Floating-rate liabilities
Fixed-rate liabilities
Total
2015
£m
(18.4)
(17.4)
(3.1)
(3.0)
(4.0)
(45.9)
2014
£m
(19.6)
(19.5)
(3.1)
(3.4)
(5.3)
(50.9)
2015
£m
(165.7)
(156.6)
(28.0)
(26.7)
(36.1)
(413.1)
2014
£m
(176.0)
(175.3)
(27.8)
(30.8)
(47.5)
(457.4)
2015
£m
(184.1)
(174.0)
(31.1)
(29.7)
(40.1)
(459.0)
2014
£m
(195.6)
(194.8)
(30.9)
(34.2)
(52.8)
(508.3)
SSP Group Annual Report and Accounts 2015
Financial statements
93
Interest rate swaps
All interest rate swap contracts exchanging floating-rate interest amounts for fixed interest amounts are designated as cash flow hedges
to reduce the Group’s cash flow exposure resulting from variable interest rates on borrowings. The interest rate swaps and the interest
payments on the loan occur simultaneously and the amount accumulated in equity is reclassified to the income statement over the period
that the floating rate interest payments on debt affect the income statement.
The fair value of the interest rate swaps was £9.8m as at 30 September 2015 (2014: £0.9m).
In 2015, a debit of £9.2m (2014: debit of £2.6m) was recognised in other comprehensive income representing the effective portion of
changes in the fair value of the interest rate swaps in the year. There was no ineffectiveness recognised in the income statement in either
year.
In 2015, a credit of £0.9m in other comprehensive income arose on the reclassification of the cumulative changes in fair value of the
interest rate swaps to the income statement (see note 7). In the prior year, in the period to 14 July 2014, a credit of £3.0m arose in other
comprehensive income relating to amounts reclassified to the income statement. On 14 July 2014, the interest rate swap agreements were
terminated, resulting in a further credit of £4.0m in other comprehensive income on the reclassification of the cumulative changes in fair
value of the interest rate swaps to the income statement.
Sensitivity analysis
A change of 50 basis points in interest rates at the balance sheet date would have increased/(decreased) equity by the amounts in the table
below. This is driven by changes in the carrying value of derivative financial instruments. At 30 September 2015, these were in fully effective
hedge relationships and the movement would have had no impact on the income statement.
This calculation assumes that the change occurred at the balance sheet date and has been applied to risk exposures existing at that date.
In addition, all other variables, in particular, foreign currency rates, have been assumed to remain constant.
Equity
Increase
Decrease
2015
£m
6.4
(4.2)
2014
£m
11.5
(11.2)
(f) Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development. The Group’s capital is represented by the share capital and reserves (as set out in note 21), retained earnings, and net debt
(see below). The funding requirements of the Group are met by a mix of medium-term borrowings, short-term borrowings (under its RCF)
and available cash (as detailed in the table below). During the year, the Group continued to monitor covenant compliance and has passed
comfortably the requirements in its borrowing facilities. As part of its banking arrangement, the Group has to comply with the financial
covenants relating to Net Debt Cover and Interest Cover. These covenants are tested bi-annually.
As at 30 September 2015, the Group had a leverage of 1.9x underlying LTM (last 12 months) EBITDA (2014: 2.3x).
The following table shows the movement in net debt of the Group during the year:
Cash and cash equivalents
Debt due within 1 year:
Bank loans
Finance leases
Debt due after 1 year:
Bank loans
Finance leases
Total
At beginning
of the year
£m
133.3
(28.6)
(1.2)
(473.3)
(1.3)
(371.1)
Cash
flow
£m
2.6
27.9
1.2
–
–
31.7
Non-cash
changes
£m
Translation
differences
£m
At end of
the year
£m
–
(1.2)
134.7
(27.2)
(0.5)
26.9
0.1
(0.7)
0.7
–
20.8
–
20.3
(27.2)
(0.5)
(425.6)
(1.2)
(319.8)
There were no changes to the Group’s approach to capital management during the year.
94
Financial statements
Notes to consolidated financial statements continued
25. Operating leases
The Group leases a number of operating units under non-cancellable operating lease agreements. The leases have variable terms, escalation
clauses and renewal rights.
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Less than 1 year
Between 1 and 5 years
More than 5 years
26. Commitments
Capital commitments at the end of the financial year, for which no provision has been made, are as follows:
Contracted for but not provided
27. Acquisition
2015
£m
227.1
651.9
300.3
1,179.3
2015
£m
53.8
2014
£m
207.6
537.6
180.9
926.1
2014
£m
47.0
On 1 September 2015, the Group acquired 32 outlets in Germany from Wiener Feinbäckerei Heberer GmbH for a cash consideration of
EUR 7.0m, equal to £5.0m. The outlets sell bakery products in travel locations in Germany, with 30 of them located in railway stations
and two in airports. The net assets acquired and the fair value adjustments are set out below:
Property, plant and equipment
Definite life intangible assets
Finance lease liabilities
Net assets acquired
Cash consideration
Associated legal costs
Total acquisition cost
Book value
prior to
acquisition
£m
Fair value
adjustments
£m
Fair value
to Group on
acquisition
£m
0.8
–
–
0.8
0.4
4.3
(0.4)
4.3
1.2
4.3
(0.4)
5.1
5.0
0.1
5.1
In total, the acquisition contributed revenues of £1.1m and a net profit after tax of £0.1m from the date of acquisition to 30 September 2015.
The Group revenue and profit after tax for the year ended 30 September 2015 would have been £1,848.3m and £61.3m respectively if the
acquisition was assumed to have been made on 1 October 2014.
Deferred tax liabilities of £1.3m were recognised in relation to the acquired intangible assets. Deferred tax assets of £1.3m were also
recognised, to offset the recognised deferred tax liabilities.
28. Related parties
Remuneration of key management personnel
The remuneration of the 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, the Chief Financial Officer and
the Non-Executive Directors.
Short-term employee benefits
Post-employment benefits
Share-based payments
2015
£m
(4.0)
(0.4)
(0.8)
(5.2)
2014
£m
(5.6)
(0.3)
(4.0)
(9.9)
Company balance sheet at 30 September 2015
Fixed assets
Investments
Current assets
Debtors due within 1 year
Liabilities falling due within 1 year
Creditors
Net current assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total equity shareholders’ funds
Financial statements
95
Notes
2015
£m
2014
£m
30
31
32
33
33
33
33
920.9
918.3
109.3
121.7
(5.4)
103.9
–
121.7
1,024.8
1,040.0
4.7
461.2
1.2
557.7
5.9
461.2
–
572.9
1,024.8
1,040.0
These financial statements were approved by the Board of Directors on 25 November 2015 and were signed on its behalf by:
Jonathan Davies
Chief Financial Officer
SSP Group Annual Report and Accounts 2015
96
Financial statements
Notes to the Company financial statements
29. Accounting policies
SSP Group plc (the ‘Company’) is a company incorporated in the UK.
The Company’s balance sheet and related notes present information about the Company as an individual undertaking and not about its
Group. The separate financial statements are presented as required by the Companies Act 2006.
Basis of preparation
The balance sheet and related notes have been prepared in accordance with applicable United Kingdom accounting standards (‘UK GAAP’)
under the historical cost accounting rules.
The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the
Company’s balance sheet and related notes.
The Company uses Sterling as its presentational and functional currency and all values have been rounded to the nearest £0.1 million unless
otherwise stated.
Under section s408 of the Companies Act 2006, the Company is exempt from the requirement to present its own profit and loss account.
The Ioss for the financial year (2014: profit) is disclosed in note 33 to these accounts. The Company has no other recognised gains or losses
in the current or preceding year and, therefore, no statement of recognised gains or losses is presented.
Under FRS 1 (revised) ‘Cash Flow Statements’, the Company is exempt from the requirements to prepare a cash flow statement as its cash
flows are included within the published consolidated cash flow statement of the Group (see page 64).
The Company is also exempt under the terms of Revised FRS 8 ‘Related Party Disclosures’ from disclosing related party transactions with
wholly-owned subsidiaries within the Group.
Going concern
SSP Group plc is the ultimate parent company of the SSP Group. The Company balance sheet has been prepared on a going concern basis,
having regard to SSP Group’s trading forecasts for the next 12 months. See page 54 for consideration of the Group’s going concern basis.
Investments
Investments in subsidiaries are stated at cost less provision for impairment losses.
Impairment
The carrying values of the Company’s assets are reviewed for impairment when events or changes in circumstances indicate that the
carrying amount of the fixed asset may not be recoverable. If any such indication exists, the asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. When a subsequent event
or change in circumstances causes the recoverable amount of an asset to increase, the decrease in impairment loss is reversed through
the profit and loss account.
Taxation
The charge for taxation is based on the results for the year and takes into account taxation deferred because of timing differences
between the treatment of certain items for taxation and accounting purposes. Tax is recognised in the profit and loss account except
where it relates to items taken directly to equity, in which case it is recognised in equity. Deferred tax is recognised in respect of
all timing differences between the treatment of items for taxation and accounting purposes which have arisen but not reversed by
the balance sheet date, except as otherwise required by FRS 19. The Company has not adopted a policy of discounting deferred tax
balances, as permitted by FRS 19.
Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered.
Share-based payment compensation
The Company has granted equity-settled share awards to Group employees. Equity-settled awards are measured at fair value at grant
date. The fair value of awards granted to employees of the Company is expensed on a straight-line basis over the vesting period, based
on the Company’s estimate of the number of shares that will actually vest. The cost of awards to employees of subsidiary undertakings is
accounted for as an additional investment in the employing subsidiary.
Changes in accounting standards not yet applied
Following the publication of FRS 100 Application of Financial Reporting Requirements by the Financial Reporting Council, being the
standard setting body in the UK, the Company is required to change its accounting framework for its financial statements, which
are currently prepared under UK GAAP, for the financial year commencing 1 October 2015. The Company is reviewing the different
options and currently expects to prepare its accounts for the financial year commencing 1 October 2015 under either FRS 101 Reduced
Disclosure Framework or FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, which introduces a
single standard based broadly on the IFRS for SMEs.
30. Investments in subsidiary undertakings
Cost
At 1 October 2014
Additions1
At 30 September 2015
Net book value:
At 30 September 2015
At 30 September 2014
Financial statements
97
Shares in Group
undertaking
£m
918.3
2.6
920.9
920.9
918.3
1 The additions are in respect of the cost of share-based payments relating to employees of subsidiary undertakings.
Impairment
The Directors have assessed whether the Company’s fixed asset
investments require impairment under the accounting principles
set out in FRS11.
In order to make this assessment, future cash flows were forecast
for the next five years with growth rates of between 2% and 5% per
annum thereafter. These cash flows were discounted by applying
discount rates of between 7.0% and 10.5%. The values applied to
the key assumptions are derived from a combination of external
and internal factors based on past experience together with
management’s future expectations about business performance.
This assessment did not result in any impairment in 2015. It didn’t
result in any impairment in 2014, enabling the Company to reverse
an impairment provision. The absence of an impairment in 2014
reflected stronger cash flows than those that had been forecast in
2009 when the provision was created and a lower discount factor
applied to the cash flows due to the reduction in the Company’s
weighted average cost of capital following the IPO.
31. Debtors
Due within 1 year
Amount receivable from Group undertakings
32. Creditors
Due within 1 year
Accruals and deferred income
33. Capital and reserves
Share capital and Share premium
Issued, called up and fully paid:
Ordinary shares of £0.01 each
Deferred ordinary shares of £1.00 each
At 30 September 2014
Cancellation of deferred ordinary shares1
Ordinary shares issued in the year
At 30 September 2015
Comprised of:
Issued, called up and fully paid:
Ordinary shares of £0.01 each
2015
£m
109.3
2015
£m
(5.4)
2014
£m
121.7
2014
£m
–
Share capital
number of
shares
Share
capital
£m
Share
premium
£m
474,999,954
1,156,863
476,156,817
(1,156,863)
113,400
475,113,354
4.7
1.2
5.9
(1.2)
–
4.7
461.2
–
461.2
–
–
461.2
475,113,354
4.7
461.2
1 The issued deferred ordinary share capital of the Company was cancelled in the year, resulting in an increase to the capital redemption reserve of £1.2m.
SSP Group Annual Report and Accounts 2015
98
Financial statements
Notes to the Company financial statements continued
33. Capital and reserves continued
Reserves
At 1 October 2013
Profit for the year
Capital reduction
Capital reorganisation
Share-based payments
Creation of capital redemption reserve (resulting from capital reduction) (see below)
At 30 September 2014
Loss for the year
Cancellation of deferred ordinary shares (see below)
Dividends paid to equity shareholders
Share-based payments
At 30 September 2015
Capital
redemption
reserve
£m
Profit and
loss account
£m
–
–
–
–
–
–
–
–
1.2
–
–
1.2
(431.5)
356.0
647.1
(2.5)
3.8
–
572.9
(9.0)
–
(10.0)
3.8
557.7
Total
£m
(431.5)
356.0
647.1
(2.5)
3.8
–
572.9
(9.0)
1.2
(10.0)
3.8
558.9
Capital redemption reserve
The cancellation of the deferred ordinary shares in the year resulted in an increase to the capital redemption reserve of £1.2m. In 2014,
a capital redemption reserve of £1 was created as part of a capital reorganisation in preparation for the IPO.
Profit and loss account
The Company’s loss for the financial year was £9.0m (2014: profit of £356.0m). The profit in 2014 includes a credit of £417.8m in respect of
the reversal of impairment of the Company’s investment in subsidiaries and exceptional charges of £57.5m in respect of the IPO.
Dividends
An interim dividend of 2.1p per share, amounting to £10.0m was paid and recognised as a dividend in the year (2014: £nil).
The proposed final dividend of 2.2p per share, totalling £10.5m (2014: £nil), is not included as a liability in these financial statements, and will
be paid, subject to shareholder approval, on 16 March 2016 to shareholders on the register on 19 February 2016.
34. Employee share plans
Awards over shares of the Company have been granted to employees of the Company under the Performance Share Plan (‘PSP’) and the UK
Share Incentive Plan (‘UK SIP’).
Details of the terms and conditions of each share-based payment plan and of the Group’s TSR comparator group are given in the Directors’
remuneration report on pages 36 to 50.
PSP
Outstanding at the beginning of the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted average remaining contracted life (years)
Weighted average fair value of awards granted (£)
Expense recognised for the year (£m)
The exercise price for the Performance Share Plan is £nil.
Information on awards granted in the year can be found in note 22 to the Group accounts.
UK SIP
See note 22 to the Group accounts for information on awards granted under the UK SIP in 2015.
2015
Number of
shares
1,269,901
82,792
1,352,693
–
2.1
1.89
1.1
2014
Number of
shares
–
1,269,901
1,269,901
–
3.1
1.86
0.1
Financial statements
99
35. Directors’ remuneration
The remuneration of the Directors of the Company is disclosed in note 28 to the Group accounts and the Directors’ remuneration report
on pages 37 to 43.
36. Related parties
The Company has identified the Directors of the Company as related parties for the purpose of FRS 8 ‘Related Party Disclosures’. Details of
the relevant relationships with these related parties are disclosed in the Directors’ remuneration report and note 28 to the Group accounts.
37. Contingent liabilities
The Company is a member of a VAT group and, consequently, is jointly liable for the VAT group’s liability. The Company’s contingent liability
at 30 September 2015 was approximately £5.5m (2014: £6.8m).
In addition, the Company is a guarantor on Group borrowing facilities. The borrowings under the facility at 30 September 2015 were
£459.0m (2014: £508.3m).
The Company has also provided guarantees in relation to certain operating liabilities of operating subsidiaries. All such liabilities are
expected to be paid by the relevant subsidiary in the normal course of business.
38. Other information
The fee for the audit of the Company’s annual financial statements was £0.2m (2014: £0.2m).
The average number of persons employed by the Company (including Directors) during the year was 33 (2014: 9).
Total staff costs (excluding charges for share-based payments) were £8.7m (2014: £7.1m).
SSP Group Annual Report and Accounts 2015 100
Financial statements
Notes to the Company financial statements continued
39. Group companies
In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries, associates and other investments (held directly and
indirectly by the Company) at the year end are as disclosed below.
Name
Country of
incorporation
Principal
activity (catering and/or
retail concessions unless
otherwise stated)
Class and percentage
of shares held (100%
ordinary shares* unless
otherwise stated)
Subsidiaries (all of which are included in the Group consolidation):
SSP Emirates LLC
SSP Australia Catering Pty Limited
SSP Österreich GmbH
SSP Belgium SPRL
Rail Gourmet Belgium NV
Rail Gourmet Services Belgium NV
Select Service Partner (Cambodia) Limited
SSP Canada Airport Services Inc.
SSP Canada Food Services Inc.
Select Service Partner Hainan Co. Limited
SSP Shanghai Co. Limited
SSP Catering Cyprus Limited
SSP Louis Airports Restaurants Limited
Monarch A/S
Select Service Partner Denmark A/S
Select Service Partner Nordic A/S
SSP Denmark Financing ApS
SSP Egypt JSC
Select Service Partner Eesti A/S
Select Service Partner Finland Oy
SSP Finland Financing Oy
Bars et Restaurants Aéroport Lyon Saint Exupéry SAS
Bars et Restaurants Aéroport de Province SAS
Les Boutiques Bonne Journée SAS
Abu Dhabi
Australia
Austria
Belgium
Belgium
Belgium
Cambodia
Canada
Canada
China
China
Cyprus
Cyprus
Denmark
Denmark
Denmark
Denmark
Egypt
Estonia
Finland
Finland
France
France
France
Les Buffets Boutiques Services des Autoroutes de France SAS
France
Les Buffets des Gares de France SAS
Restaurants et Services d'Autoroutes SAS
Société De Restauration Rapide Concédée
Select Service Partner SAS
Société D'Exploitation du Chalet de la Porte Jaune SAS
SSP France Financing SAS
SSP Orly SAS
SSP Roissy 2 SAS
Mitropa GmbH
SSP Deutschland GmbH
SSP Financing Germany GmbH
SSP Premium Gastronomie GmbH
Select Service Partner Restaurants Hellas SA
Select Service Partner Asia Pacific Limited
Select Service Partner Hong Kong Limited
SSP China Development Limited
SSP Hungary Catering Kft
RG Onboard Services (Ireland) Limited
Select Service Partner Ireland Limited
France
France
France
France
France
France
France
France
Germany
Germany
Germany
Germany
Greece
Hong Kong
Hong Kong
Hong Kong
Hungary
Ireland
Ireland
49% 1
49%1, 2
Inactive company
Inactive company
Inactive company
Holding and Management
Services company
Holding company
60%
Inactive company
Holding company
Holding company
Holding company
Inactive company
Holding company
Holding and Management
Services company
Holding company
3
SSP Group Annual Report and Accounts 2015
Financial statements
101
Name
SSP Investment Financing Ireland Unlimited Company
SSP Caribbean Jamaica Limited
Rail Gourmet Netherlands BV
SSP Nederland BV
Rail Gourmet Togservice Norge AS
Select Service Partner AS
SSP Norway Financing AS
Select Service Partner Russia LLC
Country of
incorporation
Ireland
Jamaica
Netherlands
Netherlands
Norway
Norway
Norway
Russia
Select Service Partner (Singapore) Pte Limited
Singapore
Principal
activity (catering and/or
retail concessions unless
otherwise stated)
Class and percentage
of shares* held (100%
ordinary shares unless
otherwise stated)
Financing company
3
Inactive company
Holding company
50% 1
Holding company
Foodlasa, SL
Select Service Partner SAU
Select Service Partner Spain Financing SL
SSP Airports Restaurants, SL
Scandinavian Service Partner AB
SSP Newco AB
SSP Sweden Financing AB
Rail Gourmet Holding AG
Select Service Partner (Schweiz) AG
SSP Taiwan Limited
Select Service Partner Co. Limited
Belleview Holdings Limited
Belleview Limited
Cretegame Limited
Mille's Cookies (Franchise) Limited
Millie's Cookies Limited
Millie's Cookies (Retail) Limited
Millie's Limited
O.B.S. Services Limited
Rail Gourmet Group Limited
Rail Gourmet Intl Limited
Rail Gourmet UK Holdings Limited
Rail Gourmet UK Limited
Select Service Partner Limited
Select Service Partner Retail Catering Limited
Select Service Partner UK Limited
SSP Air Limited
SSP Asia Pacific Holdings Limited
SSP Euro Holdings Limited
SSP Financing Limited
SSP Financing No. 2 Limited
SSP Financing UK Limited
SSP Group Holdings Limited
Whistlestop Airports Limited
Whistlestop Foods Limited
Whistlestop Operators Limited
Busy Bee Hartsfield-Jackson Concessions, LLC
Creative PTI, LLC
Harry’s Airport 6
Spain
Spain
Spain
Spain
Sweden
Sweden
Sweden
Switzerland
Switzerland
Taiwan
Thailand
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
US
US
US
Holding company
Inactive company
Holding company
Holding company
Dormant company
Dormant company
Agency company
Dormant company
Agency company
Agency company
Dormant company
Inactive company
Holding company
Dormant company
Holding and Management
Services company
Agency company
Dormant company
Agency company
Holding company
Holding company
Holding and Treasury
company
Financing company
Holding and Management
Services company
Holding company
Dormant company
Agency company
Agency company
Inactive company
Inactive company
49% 1
3
4
62.8%5
51%
102
Financial statements
Notes to the Company financial statements continued
39. Group companies continued
Name
Select Service Partner LLC
SSP America BOS, LLC
SSP America DFWI, LLC
SSP America Gladco, Inc
SSP America GSO, LLC
SSP America Houston, LLC
SSP America IAH 6
SSP America, Inc.
SSP America Investments, LLC
SSP America JFK, LLC
SSP America LAX, LLC
SSP America MCO, LLC
SSP America Memphis, LLC
SSP America Milwaukee, LLC
SSP America Minneapolis, LLC
SSP America MSN, LLC
SSP America MSP, LLC
SSP America PHX, LLC
SSP America RDU, LLC
SSP America SAN, LLC
SSP America SFO, LLC
SSP America SMF, LLC
SSP America Tampa, LLC
SSP America Texas, LLC
SSP America Texas, Inc.
SSP America (USA), LLC
SSP Financing US, LLC
SSP Four Peaks PHX, LLC
Associates:
Railrest SA 8
Cyprus Airports (F&B) Limited
MCS A/S
Avecra Oy 10
Qatar Airways SSP LLC 8
Aero Service Partners LLC 7
JDDA SSP 6, 8
SSP America BTR, LLC 11
Country of
incorporation
Principal
activity (catering and/or
retail concessions unless
otherwise stated)
Class and percentage
of shares* held (100%
ordinary shares unless
otherwise stated)
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
US
Belgium
Cyprus
Denmark
Finland
Qatar
US
US
US
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Inactive company
Holding company
90%
68%
82%
77%
61.5%
51%
77.65%
62.8%
70%
60%
Holding company
Financing company
3
3
69.885%7
49%
29.988%9
50%
40%
49%
49%
49%
51%
Inactive company
* Ordinary Shares includes references to equivalent in other jurisdictions.
1 SSP has control as defined by IFRS 10 Consolidated Financial Statements.
2 100% of the shares are held by Select Service Partner Co. Limited (Thailand).
3 Includes 100% of preference shares.
4 Holding held directly by the Company.
5 100% of the shares are held by SSP America RDU, LLC.
6 The principal place of business of the unincorporated entities listed above is 19465 Deerfield Avenue, Suite 105, Landsdowne, VA 20176 USA.
7 90% of the shares are held by SSP America PHX, LLC.
8 These undertakings have a 31 December year end.
9 49.98% of the shares are held by SSP Louis Airports Restaurants Limited.
10 This undertaking has a 31 March year end.
11 SSP does not have control as defined by IFRS 10 Consolidated Financial Statements.
Subsidiaries exempt from audit
The UK subsidiaries shown as dormant will take advantage of the audit exemption in Section 479 of the Companies Act 2006 for the year
ended 30 September 2015.
SSP Group Annual Report and Accounts 2015
Financial statements
103
Company information
SSP Group plc
169 Euston Road
London
NW1 2AE
+44 20 7543 3300
www.foodtravelexperts.com
Investor relations
+44 20 3714 5251
investor.relations@ssp-intl.com
Media relations
press.office@ssp-intl.com
Recruitment
www.sspcareers.com/UK
Customer service
www.eatonthemove.com
104
Notes
105
SSP Group Annual Report and Accounts 2015Corporate governance SSP Group plc
169 Euston Road
London
NW1 2AE
+44 (0)20 7543 3300
www.foodtravelexperts.com