SSP Group plc
Annual Report and Accounts 2020
CONTENTS
OUR BUSINESS AT A GLANCE
Strategic Report
IFC Our business at a glance
02
03
Chairman’s statement
Chief Executive’s statement
04 Our marketplace
06 Our business model
08 Our strategic priorities
10
11
12
Our stakeholders
Section 172 statement
Corporate Responsibility Report
20 Non-financial
information statement
21
30
33
Financial review
Key performance indicators
Risk management
and principal risks
Corporate governance
44 Board of Directors
46
56
62
Corporate Governance report
Audit Committee report
Statement by the Chair
of the Remuneration Committee
68 Annual report on remuneration
77
Directors’ remuneration policy
86 Directors’ report
92
Statement of Directors’
responsibilities
Financial statements
93
Independent auditor’s report
101 Consolidated income statement
102 Consolidated statement of other
comprehensive income
103 Consolidated balance sheet
104 Consolidated statement
of changes in equity
105 Consolidated cash
flow statement
106 Notes to consolidated
financial statements
150 Company balance sheet
151 Company statement
of changes in equity
152 Notes to the Company
financial statements
161
Company information
SSP IS A LEADING
OPERATOR OF FOOD
AND BEVERAGE OUTLETS
IN TRAVEL LOCATIONS,
PRINCIPALLY AIRPORTS
AND RAILWAY STATIONS.
All of our outlets, from quick service to fine dining, are
developed or tailored to be run in high-volume travel
locations to meet the evolving needs of our customers
and our clients.
Our people are the heart of our business. Our colleagues
around the world demonstrate knowledge, passion and
the highest possible standards in everything they do.
Prior to the onset of Covid-19, we had a very strong
track record of delivering profit growth since our IPO
in 2014.
Performance since IPO
2020 performance
has been significantly
impacted by Covid-19
with the almost total
shutdown of the
global travel market
in April and May and a
very slow and erratic
recovery thereafter.
Revenue (actual currency – £m)
2,379.1
+19.5%
2,564.9
+7.8%
2,794.6
+9.0%
1,433.1
-48.7%
1,990.3
+8.6%
1,832.9
+0.3%
£583k
2015
2016
2017
2018
2019
2020
Underlying operating profit/(loss)* (actual currency – £m )
195.2
+19.8%
221.1
+13.3%
162.9
+34.2%
97.4
+10.1%
121.4
+24.6%
-211.7
-195.7%
2015
2016
2017
2018
2019
2020
*Stated on a Pro forma IAS 17 underlying basis. Refer to section on Alternative
Performance Measures (APMs) on page 31 for further details
SSP Group plc Annual Report and Accounts 2020 01
WE ARE THE FOOD TRAVEL EXPERTS
Our purpose
Our values
To be the best part of a customer’s journey
by providing delicious food and drink for
people who are on the move.
We are one team…
working together and sharing
our best ideas to fulfil our
global potential.
Our ambition
To be the leading food and beverage operator
in travel locations worldwide, delivering for
all of our stakeholders.
We are results focussed…
delivering great food and service
for our customers and outstanding
results for our colleagues,
shareholders and clients.
We all make a difference…
respecting each other, acting
responsibly and being accountable
for the contributions that we make.
We are bold…
seizing opportunities, innovating
and quickly adapting every day.
We celebrate success…
recognising and valuing
everyone’s achievements.
550 +
brands
600 +
sites
2,700 +
units*
35
countries
* Trading or temporarily closed as at year end
North America: 19%*
UK (including Republic of Ireland): 30%*
Continental Europe: 37%*
Rest of the World: 14%*
* Percentage of Group total revenue in 2019
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 02
CHAIRMAN’S STATEMENT
The strength of the
business model, our
portfolio of long-
term contracts and
attractive brands,
and our highly skilled
team leave SSP well
placed to capitalise
on the recovery.
Decisive action to protect the business through the pandemic
Covid-19 has had an unprecedented impact on SSP and the wider travel industry. From the
outset, we took rapid and decisive action to protect the health and safety of our teams and
our customers, as well as to protect the business by reducing operating costs, minimising cash
usage and raising additional liquidity, to enable it to trade through a prolonged recovery.
Our strategic priority, in this period of great uncertainty, has been to establish a lean and
flexible organisation, whilst retaining the capability to reopen our outlets and rebound rapidly
as the travel sector reopens. The strength of the business model, our portfolio of long-term
contracts and attractive brands, and our highly skilled team leave SSP well placed to capitalise
on the recovery.
Outstanding commitment from an experienced and dedicated team
On behalf of the Board, I would like to take this opportunity to thank our teams around the
world for their support. The action taken to protect the business and prepare for our re-
launch has been achieved though the commitment and focus of all our dedicated colleagues.
Significant sacrifices have been made by those who have left the organisation and those
who have worked tirelessly to protect it. It remains our intention to re-open units quickly as
demand for travel returns and welcome colleagues back to SSP.
Dividends
After delivering five years of 22% average dividend growth per annum, the impact of the
pandemic has resulted in the business making a loss for the year. As such, no full year dividend
will be paid for the 2020 financial year.
Corporate Governance and the Board
Our strategy is underpinned by a commitment to a high standard of corporate governance,
and the members of the Board are responsible for ensuring we do so. We bring a diverse range
of skills and experience to sit alongside that of the Executive Committee. We regularly review
the Board composition to ensure we have the right balance of individuals with the right set
of skills, and this past year we made two additional appointments to strengthen the Board.
Judy Vezmar joined on 1 August and brings strong expertise in the field of data and analytics.
Tim Lodge joined on 1 October, bringing a wealth of financial expertise, as well as experience
in the food and beverage industry. I look forward to working with them and would like to thank
all Board members for their valuable contributions and oversight throughout the past year,
especially as we’ve navigated the challenges brought about by the pandemic.
Corporate Responsibility
Having engaged with our stakeholders to better understand their expectations, we have
re-launched our Corporate Responsibility strategy this year focussing on those areas where
SSP can have the greatest positive impact. Our principal focus will be on our people and
communities, the food and drink we serve, and our impact on the planet. This programme will
be spearheaded by the Group CEO, with oversight from the Board. Further information on
the progress we’ve made in the past year and our future focus can be found in the Corporate
Responsibility Report, and I would like recognise our teams who donated food and their own
time to support local relief efforts during the crisis.
Looking to the future
This has been an extraordinary year for our business, but I am confident that we have taken
all the necessary actions to ensure we weather this storm and put the business in a position
of strength as we prepare for a recovery. The first half of this new financial year is expected
to remain challenging, but looking into our second half and towards the summer, we expect
to see an increase in passenger numbers, and we will be ready to serve them. Longer term,
we remain confident that the travel market will recover, and as we continue to strengthen
our competitive position, we will return to delivering long-term sustainable growth for all of
our stakeholders.
Mike Clasper
Chairman
16 December 2020
SSP Group plc Annual Report and Accounts 2020 03
CHIEF EXECUTIVE’S STATEMENT
Our teams all around
the world have risen
to the challenge and
demonstrated their
professionalism,
resilience, team
spirit and ‘can do’
attitude every
single day. We have
strengthened our
competitive
advantages, and
we are in a strong
position to rebound
as travel recovers.
Overview
My first full year as CEO of SSP has seen both significant challenges and also considerable
learnings. We have worked decisively and flexibly to address the impact of the pandemic.
At the outset of the crisis, we took a cautious approach to the timing of the recovery.
We assumed it would be prolonged, and therefore proactively planned our actions accordingly.
We immediately raised additional liquidity and hibernated our units, whilst developing a
more flexible operating model that has enabled us to reopen in line with demand. Our teams
all around the world have risen to the challenge and demonstrated their professionalism,
resilience, team spirit and ‘can do’ attitude every single day. We have strengthened our
competitive advantages, and we are in a strong position to rebound as travel recovers.
I would like to personally thank my Executive team for their support and tenacity.
Our response to the crisis and preparing for the future
When the virus first emerged, our immediate priorities were to ensure the health and
safety of our colleagues and protect our business. We temporarily closed the majority of
our units, furloughing team members where schemes existed, and engaged with our clients
to renegotiate rents. We also reduced discretionary spend and capex to the minimum.
Our relentless focus on cash control has enabled us to minimise cash outflows and with
liquidity of more than £500m at the year end ,we have considerable headroom to trade
through the crisis.
After a near shutdown in April, demand gradually started to increase led by domestic rail and
air leisure travel. We responded quickly, reopening units systematically and profitably, and
by the end of the year, we had more than one third of our units open. During the pandemic,
we have looked to strengthen our relationships with our clients and have evolved our offer to
meet the needs of our customers. As the market recovers, we will be ready to reopen the rest
of our estate profitably, to re-hire our people and to provide food and beverages to travellers
around the world. With the benefit of all that we have learned through this crisis, we will start
to expand the business again.
Our People
Our people are at the heart of our business, and I have been hugely impressed by how they’ve
brought our values to life and the commitment they’ve shown throughout this challenging
year. Our colleagues have worked tirelessly to help protect the business and have made many
sacrifices, and I’d like to thank them for their dedication. I’d also like to acknowledge the strong
leadership shown by our Regional CEOs and their management teams who have been integral
to delivering our plans. Regrettably, due to the crisis, we’ve had to take some very tough
decisions, including the need to make colleagues redundant, but it remains our intention that
when we reopen our units we can welcome our colleagues back soon.
Corporate Responsibility
We have also taken the opportunity during this crisis to consult with stakeholders to
understand how their priorities have evolved through the pandemic, and it’s evident that
the social elements, including engaging with our people, diversity and inclusion, and health
and wellbeing are all areas of increased importance. As a result, we have refocused our
approach, prioritising these and other key areas, such as sustainable packaging, food waste
and responsible sourcing. This is an area I am personally leading, and which I feel strongly will
underpin our sustainable growth in the years to come.
Outlook
Whilst we expect passenger numbers to remain subdued over the winter, we are optimistic
that, alongside good progress with the vaccination programme, we will start to see a recovery
in the travel sector lead by domestic demand and international leisure travel more broadly.
We are ready to respond quickly. The actions we have taken and continue to take to rebuild the
business and strengthen our competitive advantages will position us to capitalise on future
market opportunities.
Simon Smith
Chief Executive Officer
16 December 2020
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 04
OUR MARKETPLACE
The global travel food and beverage market
We estimate that our core market, comprising food and beverage (F&B)
sales in airports and railway stations, was valued at approximately
£23bn in 2019. Ours is a very fragmented market, with only a small number
of large players operating on a global level, of which we are one. Many of
our competitors are small local operators.
What key channels and geographies
do we focus on?
In 2020, 60% of our revenue came from air,
whilst the rail sector accounted for 33%.
7%
60%
Our market
Rail sector
5%
31%
64%
33%
Air sector
Rail sector
Other
2019
(%)
2020
(%)
64
31
5
60
33
7
We operate across 35 markets, which we
group into four key divisions: 1) UK (UK and
the Republic of Ireland); 2) Continental
Europe (DACH, Frabel, Netherlands,
Spain and the Nordics); 3) North America
(USA and Canada) and 4) Rest of the World
(Eastern Europe, India, Asia Pac, Middle East
and South America). The split of revenue
between these markets is as follows:
13%
29%
14%
19%
30%
37%
19%
39%
2019
(%)
2020
(%)
30
37
19
14
29
39
19
13
UK
Continental Europe
North America
Rest of the World
Air sector
In the Rail sector, passengers in our
key European markets (UK, France and
Germany) were estimated to total 6bn
in 2019. Prior to Covid-19, passenger
numbers within these countries had
increased at an average annual rate of
c.2% since 2013, with moderate growth
forecast to continue in the medium term*.
We believe the following factors will drive
continued growth in passengers and the
food and beverage market in particular:
* ORR; Eurostat (2019)
Prior to the Covid-19 pandemic, air
passenger growth was forecast to
increase at c.4% per annum, according
to Airport Council International (ACI)*,
reaching more than double the 8.8bn
passengers (2018) by 2037.
We are confident that once the market
recovers, there will continue to be
growth in passengers and spend on food
and beverage, and this growth will be
underpinned by a number of key trends,
as follows:
* ACI World Traffic Forecast (2019)
SSP Group plc Annual Report and Accounts 2020 05
“ Demand for our services will rebound and
we are well-placed to deliver for all our
stakeholders as the travel sector recovers.”
Simon Smith
Chief Executive Officer
Covid-19 impact on SSP
COVID-19 – How has the
Our response
marketplace already changed
The Covid-19 outbreak and the strict
restrictions put in place to limit the
spread of the virus led to an almost
total shutdown of the travel market
worldwide. By April, we were forced
to close the majority of our units
in response to the dramatic fall in
passenger numbers, with only around
10% open during this time. As a result,
Group sales dropped to -95% in April
and May, recovering very slightly to
-90% in June.
Throughout the summer, restrictions
eased somewhat, people went back to
work (and back onto trains) and there
was a recovery in regional air travel,
especially in Europe and the UK during
the school holiday season. In response,
we were able to open more units to
capitalise on the increase in demand,
and at the end of September, sales
had improved to c.-76% of pre-Covid
levels, and we were operating
c.1,200 units.
Since the end of September, however,
there has been a re-emergence of
the virus in many countries, and
restrictions have tightened. This again
has impacted demand in the travel
sector, leading to a period of lower
sales and the temporary re-closure of
a number of units across the Group.
Continued investment in track
expansion, especially in high-speed
rail networks
Destination station development
strategies – improving retail, leisure
and business offerings
Infrastructure investments in
developing countries
Governments seeking to encourage
passengers to switch from road
to rail transport to reduce road
congestion and to address
environmental concerns
Globalisation of business and leisure
Rising disposable incomes,
especially in developing markets
Growth of short haul travel and
low-cost carriers
Infrastructure investments in
developing markets
Increased level of security and dwell
time at airports
Greater focus on non-aeronautical
revenues by airports
Reduced food and beverage service
on board
People and Communities
New H&S safety protocols created
and cascaded
Offices closed and colleagues
supported to work from home
Increased communication
to colleagues
Donations to food banks
and local hospitals; corporate
charity fundraising
Profit protection
Temporary closure of units
Colleagues furloughed globally
where schemes available although
redundancies have been necessary
Rents renegotiated: lower/flexible
rentals, Minimum Annual Guarantees
(MAGs) waived
Salary reductions across senior
management, Executive Committee
and Board
Careful interrogation of passenger
data and an evolved flexible operating
model to enable us to reopen more
units at lower levels of sales
Liquidity
Raised over £550m of new liquidity via
March equity placing (£209m), access
to CCFF (£300m) and additional local
facilities (£44m)
Focus on minimising cash outflows:
tight working capital management,
capex programme on hold and
suspension of returns to shareholders
A further small placing in June, allowing
investors to reinvest 2019 final
dividends to retain cash in the business
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 06
OUR BUSINESS MODEL
Our business model is focused on driving growth
by meeting the food and beverage needs of our
clients and customers in the complex and challenging
travel environment.
It is founded on five key elements, which have been key to creating value
for our stakeholders since IPO and have proved critical in helping us trade
through the Covid-19 crisis.
1.
Leading market
positions
2.
Food travel
expertise
3.
Long-term client
relationships
4.
Local insight and
international scale
We have leading positions in
some of the most attractive
sectors of the travel food
and beverage market
thanks to our extensive
brand portfolio (comprising
our own brands and
bespoke concepts as well as
franchised local and global
brands – see next page) and
established management
and operational teams
across the 35 countries in
which we operate.
Our strong market presence has
allowed us to reopen selectively
and profitably across many
locations, even at lower levels of
sales, ensuring we continue to
serve our customers and clients.
We provide a compelling
proposition for both clients
and customers based on our
food travel expertise.
This includes a deep
understanding of what our
customers are looking for
and an extensive offering of
concepts to meet these needs.
Managing high passenger
volumes and the complex
logistics that characterise
travel environments is an
essential element of our
business model.
These complexities include
longer operating hours, supply
chain and logistics constraints,
space limitations and peaks
and troughs in demand.
Our understanding and ability
to manage these complexities
allows us to deliver consistently
high quality food and beverage
offerings that fulfil the
requirements of clients and
customers. This expertise has
allowed us to adapt to a more
flexible operating model to
mitigate the impact of Covid-19.
Our principal clients are
the owners and operators
of airports and railway
stations, but we also have a
small presence in motorway
service areas, hospitals and
shopping centres.
We have excellent, long-
standing relationships with
many of our clients and have
maintained high success rates
in retaining our contracts.
The strong, local relationships
we’ve established with our
clients have been critical in
helping us trade through the
Covid-19 crisis, as we have
been able to negotiate more
favourable rent agreements,
which in turn has allowed us to
reopen more of our units and
serve more customers.
We have a deep knowledge
of the individual markets in
which we operate, alongside
significant 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 by creating
a ‘sense of place’ in the locations
where we operate.
Our international reach enables
us to benefit from economies
of scale with regard to central
functions and systems, as
well as sharing best practice
across regions, countries and
sites. This sharing of best
practice has been particularly
relevant in helping accelerate
our reopening programme and
roll-out of technology across
the Group.
SSP Group plc Annual Report and Accounts 2020 07
We have more than 550 brands in our portfolio,
from well-known grab & go sandwich shops and
cafés to bespoke high end bars and restaurants,
which means we can respond to the specific needs
of passengers as they travel around the world.
This large selection of brands helps us win and retain contracts, as it gives
clients confidence in our ability to cater to their customers with a great
selection of food and drink options. We differentiate our brands between
those we franchise and those we’ve created.
5.
Experienced
management team
Brands we franchise
Brands we’ve created
Local hero brands
Our own brands
Bringing in well-known local brands is one of
the best ways to evoke the true atmosphere
of the city that the travel hub serves.
We have been creating and running our own
brands for nearly 60 years, starting with Upper
Crust, first established in the 1960s.
We have highly experienced
colleagues with a broad
range of expertise across
the food and beverage,
travel and retail industries.
We employ dedicated teams
of senior managers focused on
business development, sales,
marketing and operations, who
work closely with our clients
to ensure their requirements
are met. They are supported
by experienced, locally based
operational teams who have
a track record of delivering
operational excellence and great
customer service.
Regrettably, this year we’ve had
to take a number of very difficult
decisions to protect our business
in response to Covid-19, including
making many roles redundant
across the organisation. However,
as far as possible, we have aimed
to retain our longest-serving
and most highly skilled talent
in anticipation of the recovery,
so that we are well placed to
rebound and mobilise quickly
when demand returns.
International brands
Bespoke concepts
Over many decades, we have partnered
with some of the world’s biggest names,
which trust us to serve their customers
to the highest standards.
We are experts at developing bespoke
concepts which we have created in
collaboration with clients, brand partners
and leading chefs to bring a ‘sense of place’
to the location we serve.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
08
OUR STRATEGIC PRIORITIES
Building on our competitive advantages to restore
the business to growth
As a result of the dramatic impact of Covid-19 on the travel sector, we have
taken decisive action to protect our business, whilst at the same time, we
have worked to develop our competitive advantages so that we are in the
best possible position to succeed when the market recovers. Our strategic
priorities will evolve as the business recovers, ensuring we deliver strong and
sustainable growth for the benefit of our stakeholders.
Organic growth
Cost efficiencies
Selective M&A
Focus on returns
£23bn market and growing
Multiple levers
Strong track record
Disciplined capital allocation
More space dedicated to F&B
Culturally embedded
Disciplined ROI
Market leading positions
Technology and automation
Strategic fit
Balance sheet efficiency
Returns to shareholders
International scale,
local expertise
Delivering better quality, more sustainable long term growth
Since IPO, this has been supported by our five lever framework to deliver growth and efficiencies
1. Optimise our offer
to benefit from the
positive trends in
the travel market
We aim to use our broad
portfolio of brands and
retailing skills to drive
profitable like-for-like
sales, ensuring that we
maximise the benefit
from the positive trends
in these travel markets.
2. Grow profitable
new space
3. Optimise gross
margin and leverage
scale benefits
4. Run an
efficient and
effective business
The travel food and
beverage market in
airports and railway
stations is characterised
by long-term structural
growth. It offers
excellent opportunities
for us to expand
our business across
the globe.
Key areas of focus
include range and
recipe rationalisation,
procurement disciplines,
and the management of
waste and losses.
We have a multi-year
programme of initiatives
to improve operating
efficiency, which has
been important to
the Group given the
historical backdrop
of ongoing labour
cost inflation.
5. Optimise
investment using
best practice and
shared resource
We continue to look at
how we can reduce cost
and drive simpler, more
efficient processes.
SSP Group plc Annual Report and Accounts 2020
09
Our strategic response to Covid-19
The impact of Covid-19 on our business
has required us to streamline our
operations and rebuild our fundamentals.
Having protected the business during
the worst part of the crisis, our strategic
focus is now to restore SSP to growth
and position us for future success as a
strengthened business, which will deliver
long-term sustainable growth for all
our stakeholders.
We’ve categorised our strategic
response to Covid-19 in three phases:
The first phase – Protection – covers
the spring and early summer of 2020,
when the virus first took hold and
spread rapidly around the world.
This resulted in strict government
restrictions which led to a sharp fall
in passenger numbers and revenue,
leading us to take all the necessary
measures to protect our business
from the crisis.
The second – Recovery – reflects the
period from summer onwards, as we
started to take the actions needed
to put us in the strongest position to
benefit from an eventual recovery.
The final phase – Sustainable
Growth – characterises the period of
sustained recovery and the steps we
will put in place to ensure we return to
delivering sustainable growth to the
benefit of all our stakeholders.
S
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a
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o
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i
o
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o
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n
SSP’s purpose
‘to be the best part of a
customer’s journey by
providing delicious food and
drink for those on the move'
Protection
Recovery
Sustainable Growth
Priorities
Priorities
Priorities
Ensure the health and
safety of our teams
and customers
Reduce costs
Protect liquidity
Establish a lean but
flexible organisation
Disciplined reopening of
units using new model
Build agility and resilience
to manage a prolonged
and erratic recovery
Identify market
growth opportunities
Build long-term
competitiveness and
customer relevance
Keep teams engaged
and motivated; retain
our talent
Embed CR further
within our
operations
Actions
Actions
Actions
Enhanced safety
protocols communicated
and implemented;
colleagues enabled to
work from home
Agreed flexible rents
with landlords
Closed units;
furloughed teams
Discretionary
spend and capex
reduced to minimum;
projects deferred
£550m new liquidity
created via placing
and loans
Re-organised structures
to right size the business
whilst retaining resource
to scale up quickly
Developed new unit
economics enabling us to
break even at lower levels
of sales
Protected/strengthened
liquidity whilst keeping
cash burn to a minimum
Accelerated roll out
of IT, technology and
automation as enablers
Redefined Corporate
Responsibility (CR) and
People strategies
Optimise existing space
and return to growing
profitable new space
Further develop customer
proposition to meet post-
Covid expectations
Optimise efficiency
and automation
High returning and
selective reinvestment
and disciplined M&A
Deliver against our CR and
People strategies
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
10
OUR STAKEHOLDERS
As a global business with operations in 35 countries, SSP has a wide and diverse group of stakeholders, on whom we rely for our success.
We define our stakeholders as those whom we affect and those who affect us. We have identified eight stakeholder groups: colleagues,
customers, clients, shareholders, brand partners and suppliers, communities, non-governmental organisations, and government and
regulators. We review these stakeholder groups on a regular basis.
We are committed to engaging with our different stakeholder groups, so that they can better understand our business, and we, in turn, can
understand what is important to them and can then take their views and expectations into account when taking business decisions. This has
been especially important this year as we have navigated through the Covid-19 crisis.
The table below gives a summary of our stakeholder groups, their expectations or material concerns, and how we have engaged with them
throughout the year.
Who are they?
Why do we engage?
How have we engaged?
Covid-19 impact
Our
colleagues
The people who
work at SSP
As a service provider, our teams are at the
heart of our business. We want to ensure they
are treated fairly, have the training they need
to do their job to the best of their ability and
the opportunity to develop their careers.
• Surveys
• Town Hall meetings
• Team briefings
• Conferences
• Internal channels
• Works councils
Our
customers
The people whom we
serve at our outlets
Understanding customer needs and trends
enables us to provide the choices they want;
their views also help us ensure our teams are
delivering the quality and service they expect.
• Customer surveys and
comments cards
• Feedback to our
customer care line
• Online review sites
• Internal comms programme
significantly enhanced
• More frequent online
briefings for all colleagues
• Collateral developed to
support those on furlough
• Support provided to those
made redundant
• More visible H&S information
• Adapting our offer to meet
changing needs
• Implementing contactless
order and pay methods
Our
clients
The people who run the
travel locations where our
units are located
Our business success is dependent on
retaining the space we have and winning new
space in travel locations worldwide. By better
understanding our clients, we can meet and
aim to exceed their expectations.
• Client surveys
• Regular emails/phone calls/
in person updates led by our
local business development
teams
• CEO level ‘top to top’ meetings
• Enhanced client
communications over actions
being taken
• Ongoing discussions to agree
more flexible rents and
opening/closing times
Our
shareholders
The people who own
shares in SSP Group plc
Our shareholders own our business and affect
its value. We rely on their support, and their
views are regularly discussed by our Board
of Directors.
• Investor roadshows
• Regular phone and face-to-
face meetings
• AGM
Our brand
partners and
suppliers
The people who trust us
with their brands or who
provide our products and
services
We have many long-standing relationships with
this group and if we’re successful, they also
benefit. Likewise, if we don’t understand what
happens throughout our supply chain, this can
carry a risk to our reputation.
• Regular email/phone dialogue
• Meetings
• Provision of training materials
on a specific topic, for
example, modern slavery
• Enhanced frequency of
meetings on impact of crisis
and actions being taken
• Additional engagement
regarding equity placing, ESG
and remuneration
• Additional communication
to discuss unit closure and
reopening plans, agree new
ranges in units, and secure
more favourable payment
terms to protect cash flow
Our
communities
The people who live in
those areas where we
operate
Many of those in our communities are our
customers and our employees. It’s important
we’re seen as a good employer and a
responsible business.
• Charity partnerships
• Programmes to get
disadvantaged people
into work
• Food and drink donations
• Enhanced efforts to support
local charities, organisations
and hospitals with food
donations and other
charitable contributions
NGOs
Non-governmental
organisations who
provide expert guidance
on key areas of our
sustainability strategy
Understanding NGO expectations has
contributed to positive progress against
key areas, such as animal welfare and food
waste. We take their views into account when
reviewing our sustainability strategy and
identifying commitments and KPIs.
• Informal and formal
correspondence
• Continued ongoing
engagement
Government
and regulators
The regional and
national governments
and agencies which set
the laws and policies
governing our business
To share our position on policy areas which
have the greatest impact on our business; to
better understand their priorities.
• Meetings
• Correspondence
• Additional engagement
(directly and via trade
associations) to call
for extra support
for businesses in the
travel sector
More information on our stakeholders can be found throughout the Annual Report.
SSP Group plc Annual Report and Accounts 2020 11
SECTION 172 STATEMENT
Each Director of the Board confirms that during the year under review, they have acted in the way they consider, in good faith, would be most likely
to promote the success of the Company for the benefit of its members as a whole, and in doing so, has had regard (amongst other matters) to:
• The likely consequences of any decision in the long term;
• The interests of the Company’s employees;
• The need to foster the Company’s business relationships with suppliers, customers and others;
• The impact of the Company’s operations on the community and the environment;
• The desirability of the Company maintaining a reputation for high standards of business conduct; and
• The need to act fairly as between members of the Company.
The principles underpinning Section 172 of the Companies Act 2006 (the ‘Act’) are embedded in the Board’s decision making and the Board
recognises the importance of understanding the views of the Group’s key stakeholders and having regard to those views in its discussions and
decision-making processes. A summary of the Group’s key stakeholders, their expectations and how the Group has engaged with them is set out
on page 10. Page 55 of the Corporate Governance Report sets out how the Board engages and is kept informed of key stakeholder interests and
the below table provides examples of how stakeholder interests and the matters set out in Section 172 of the Act were considered in key Board
discussions and decision-making in FY20.
Key
Long-term
Employees
Business relationships
Communities and the environment
Reputation for high standards of business conduct
Acting fairly between shareholders
March
Placing and
Subscription
June Placing,
Subscription
and Retail
Offer for
re-investment
of FY19 Final
Dividend
On 25 March 2020, the Company announced the successful completion of the non pre-emptive placing and subscription by certain directors and
senior management for an aggregate of c. 86.5m new ordinary shares in the capital of the Company. Together, the placing and subscription raised
gross proceeds of £216.2m.
In making its decision to approve the placing and subscription, the Board considered the purpose of the placing and subscription which was to
strengthen the Company’s balance sheet, working capital and liquidity position during a period of unprecedented disruption in the global travel
market as a result of the Covid-19 outbreak. In making its decision, the Board considered the benefit of the placing and subscription in the long
term and the need to protect the business, its colleagues, customers and partners as the Company dealt with the onset of Covid-19.The non pre-
emptive placing structure was chosen as it was an effective way to raise funds both from a cost and time perspective. However, mindful of their
duty to act fairly as between shareholders and of governance guidelines regarding non pre-emptive issues, members of the Board and the senior
management team consulted with the Company’s major institutional shareholders before approving the placing and subscription.
For further details of the placing and subscription see page 87.
On 4 June 2020, the Company announced the successful completion of a further non-pre-emptive placing and subscription by certain directors
and senior management and retail investors for an aggregate of c. 3.5m new ordinary shares in the capital of the Company. Together, these
actions raised gross proceeds of approximately £11m.
Following the onset of Covid-19 and its impact on the Company, the Directors and members of senior management engaged with regulators
and shareholders and assessed various options for the non-payment of the FY19 Final Dividend £26.8m (approved at the Company’s AGM in
February 2020). However, in light of the circumstances around the timing and shareholder approval of the FY19 final dividend, many of the
options proved to be unachievable.
Following further engagement with shareholders, lenders and regulators and with the continued aim of retaining cash within the Group, the
Board approved the June Placing, Subscription and Retail Offer to allow investors entitled to the FY19 Final Dividend payment an opportunity to
reinvest their cash dividend back in the business. In making this decision, the Board needed to balance the interests of shareholders (who were
entitled to the dividend), lenders (who were being asked to defer repayments and waive covenants) and the long term interests of the Company
(and therefore those of its colleagues, customers and business partners). It was felt that the placing fairly balanced these interests. For further
details of the placing, subscription and retail offer see page 87.
The proceeds allowed part of the FY19 Final Dividend payment to be effectively retained in the business to further enhance the Company’s cash
and liquidity position during the period of unprecedented disruption in the global travel market as a result of the Covid-19 outbreak.
Appointment
of Mike Clasper
as Independent
Non-Executive
Director and
Chairman
designate
On 1 November 2019, the Company announced its decision to appoint Mike Clasper to its Board as an Independent Non-Executive Director
and Chairman designate. This followed a thorough search process conducted with external support as set out in the Report on the Nomination
Committee on page 53.
In making its decision, Mike’s significant and relevant experience, in particular, deep expertise in the airport and aviation services industries
following his time as Chief Executive of BAA plc and his experience as Chair and Board member of main market listed plcs was considered. It was
agreed that Mike’s appointment would likely help the Company maintain a reputation for high standards of business conduct and promote the
success of the Company in the long term, particularly given Mike’s significant business experience and proven leadership track record.
Business
restructuring
process
On 1 July 2020, the Company announced its plans to reorganise the UK business to reflect the low level of UK passenger demand, and closure
of a substantial number of units in the UK, resulting from the significant impact of the Covid-19 pandemic on the travel industry and the Group’s
business. This led to the start of a collective consultation resulting in c. 5,000 roles becoming redundant from within the head office and
UK operations.
In making the difficult decision to approve the proposed reorganisation of the SSP UK business, the Board took into consideration the need
to protect the business and to substantially strengthen the Group’s financial position in order to deliver long term sustainable growth for the
benefit of all its stakeholders including its employees.
Covid-19
recovery
strategy
As the impact of Covid-19 became apparent, senior management and the Board recognised the need to take rapid and decisive action to protect
the business in the short term. However, the Board were also clear that in order to protect the interests of the Company in the long term (and those
of its colleagues), and to foster the Company’s business relationships with suppliers, customers and others, the Company needed to set a Covid-19
response strategy that not only dealt with immediate protective steps, but which also set out the steps to recovery and a return to the delivery of
sustainable growth. In devising this strategy, the Board was mindful of the Company’s role within the communities it operates in. For further details
of the agreed strategy see pages 8 to 9.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
12
CORPORATE RESPONSIBILITY REPORT
At SSP, we recognise the impact our business has on
others. Our social and environmental responsibilities
are integral to our business strategy, and we are
committed to playing a key role in addressing the
issues where we can make the greatest positive impact.
This year has presented some unprecedented challenges in the
implementation of many of our existing corporate responsibility (CR)
initiatives. The Covid-19 crisis has increased the level of activity on
issues like employee engagement and community partnerships as
our business and our teams responded directly to a very immediate
need brought on by the pandemic. In other CR areas, however, the
crisis had the opposite effect and meant that some established work
programmes had to be put on hold, notably on issues like plastic
reduction, energy efficiency and sustainable sourcing, due to the
fact that units were either closed or operating under very different
conditions to normal, as well as the fact many of our colleagues
were furloughed. As a result, we have not made the progress we
would have hoped in managing some issues. Our CR reporting this
year is influenced by this trend, with more focus on People and
Community issues.
In the latter part of the year, we have taken the opportunity to
review our Corporate Responsibility strategy, acknowledging that
stakeholder expectations had evolved since our strategy was
originally created, and particularly in light of the Covid-19 crisis.
We have gathered feedback from key stakeholders to understand in
greater depth how views and priorities have, or have not, changed.
Our key stakeholder groups include, amongst others, our colleagues,
our customers, our clients, suppliers and shareholders, as well as the
communities in which we operate. Our recent research had helped
us to understand that social issues now have increased importance
for our stakeholders. Within this, the wellbeing of people, diversity,
human rights across the supply chain and corporate culture are all
particular areas of focus. Environmental issues, in particular climate
change and plastics also remain key issues. For more information
about our wider engagement with stakeholders, please see page 10.
Reflecting our stakeholder views on social and environmental issues,
alongside our own business priorities, we have identified the issues
we believe are most material for our business and our stakeholders
(both now and in years ahead) and where we believe we can make the
biggest impact. These issues form the basis of our new CR framework
and are grouped under three pillars: People and Communities, What
we serve, and Our planet.
We concluded that two issues are so critical to the overall business
strategy that they should sit above and wrap round the CR strategy.
These are Safety (including colleague, customer and food safety) and
our People strategy.
Members of both the Group Board and the Executive Committee have
defined responsibility for each of our CR policies and commitments.
In the year ahead, our Group Executive Committee will lead the work
to agree the specific KPIs, targets and actions which will sit below
each of our CR commitments. Ongoing progress will be monitored
by the Group Executive Committee, with regular reports to the
Group Board.
SSP is committed to
supporting the UN Sustainable
Development Goals
Specific goals are signposted in the relevant sections of this report.
More detail, together with relevant policies and additional case
studies, is available at www.foodtravelexperts.com
Our revised Corporate Responsibility framework, as approved by our Group Board, is set out below:
People and Communities
What we serve
Protecting our planet
Colleague engagement and wellbeing
Inclusion, diversity and human rights
Community partnerships
What we serve
Nutritional balance
Sustainable sourcing
Animal welfare
Single-use plastic
Food waste
Carbon footprint
Underpinned by Group Safety Strategy and our People Strategy
SSP Group plc Annual Report and Accounts 2020 13
People and Communities
People are at the very heart of our business, and this pillar looks at
those directly employed by us or who work in our supply chain as
well as those living in the local communities in which we operate.
We strive to deliver an engaging, supportive and understanding
working environment for our colleagues, giving them the opportunity
to develop their skills and build their careers in an inclusive, non-
discriminatory culture where they feel valued, respected and part of
the team. We are committed to respecting the human rights of those
who work for us, both those directly employed by our business and
in our supply chain. We also aim to make a positive difference in our
communities around the world by supporting local initiatives.
Employee engagement
Related UN Sustainable
Development Goals
Our commitment
We value and respect our colleagues, caring for both their physical
and mental wellbeing. We work to create an environment where they
feel informed and engaged and know that we will support them to
develop their skills and achieve their full potential.
Our progress
Our Board and Executive team are committed to ensuring that
our colleagues are fully engaged with our business strategy and
objectives and understand the contribution they make to this.
We have a regular programme of briefings, huddles, employee
conferences and news updates using a number of different
channels – from face to face or virtual meeting to emails and
posters. Many of our markets have colleague forums or works
councils to give an opportunity for colleagues to raise any issues
or concerns they might have so that we can address them and
improve the colleague experience at SSP. We operate a European
Work Council with the objective of providing timely and meaningful
information and a forum for consultation to enhance the social
dialogue with our European colleagues. The forum addresses
transnational issues, which may affect employment, working
conditions and the interests of its employees.
One way in which we listen to our colleagues is through engagement
surveys. For example, this past year, SSP Finland conducted a
colleague satisfaction survey, which also gathered views on how
they were being impacted by Covid-19. In our UK business, our
surveys have been focused on specific issues, for example, to
gather feedback and input into designing our new head office
space, or to understand the views of colleagues returning to work
after furlough.
Following the launch of our new Group Values last year, the Board
agreed a programme of work to embed the values into our core
business culture. Our HR teams held workshops across our markets
to ensure that colleagues understood the new values and to listen
to their feedback. Colleagues (initially head office and operations
management) were introduced to the values and supporting
behaviours and took part in facilitated activities to talk through
each value and discuss what we should Stop/Start/Continue to
support the values. Everyone who attended was asked to make
their own personal commitment to living the values with follow up
in regular team meetings to agree team commitments and action
plans. We will continue to work to build awareness of the values and
integrate them into our business culture, for example, as part of
recognition schemes and performance reviews. Our Group CEO has
kept the Board updated on the progress of the roll-out of our Group
Values during his monthly CEO report.
During the latter part of the 2020 financial year, the Group
developed a revised People strategy, focused on retention,
engagement and development. This was presented to the Group
Executive Committee and Group Board following the year end and is
currently being launched throughout the business. The engagement
mechanisms discussed here and in the Corporate Governance
Report will enhance the Board’s ability to assess and monitor
culture throughout the Group.
Colleague engagement during
unprecedented times
Our Board and Group Executive team were clear that strong
colleague engagement should be our top priority during the
Covid-19 pandemic to ensure that colleagues had regular updates
on business performance and any changes that were being made
to help them manage what has been an incredibly challenging
time for all. Our Group CEO Simon Smith and Regional CEOs have
led regular leadership updates to our teams, across both our
management and operations populations. These are carried out as
interactive discussion sessions. We have also sought to maintain
regular team meetings and 1:1s for all colleagues, whether on
furlough or not, recognising the importance of continuing to stay
together as a team and keeping in touch with the business.
Our Group HR team created guidance materials to support
colleagues on specific issues they may be facing as a result of
the pandemic. Guides covered working from home, how to cope
with being furloughed, mental wellbeing, and leading a team
remotely. These resources were made available across all of our
global markets.
For those colleagues whose roles were regrettably made
redundant as a result of the crisis, we created a bespoke package of
digital tools to give them support in finding new roles. The guidance
covered topics ranging from managing change and wellbeing, to
marketing yourself and how to improve your CV. This content is
available to colleagues even after they leave SSP.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 14
CORPORATE RESPONSIBILITY REPORT CONTINUED
As part of our Board commitment to employee engagement, we
have appointed Per Utnegaard as SSP’s designated Non-Executive
Director for employee engagement. Per’s role focuses on ensuring
that we effectively engage with our colleagues, listen to their views
as well as giving them the opportunity to share feedback on the
topics which matter most to our colleagues and which are key to our
business. Per will keep the Board updated on these topics to ensure
that the Board understands both the views of colleagues and the
current culture within the Group. In addition, the Group CEO includes a
people section in his monthly CEO report to the Board which provides
an update on key colleague related matters. Going forward, both
avenues of feedback into the Board will allow the Board to better take
into account interests of colleagues as it develops business strategy
and takes key strategic decisions.
Per Utnegaard, Non-Executive Director
Designated NED for Employee Engagement
Whilst much of the colleague engagement in FY20 has been adapted
to the Covid-19 colleague experience, in the year ahead, we aim to
continue to strengthen our employee engagement activities with a
wider range of forums across all of our regions, giving colleagues at all
levels of seniority the opportunity to engage directly with our Board
and Executive team, both to learn more about our business strategy
and to share their own views with us.
Developing our people
We are committed to supporting our colleagues to develop their skills
and careers. The SSP Academy, our global online learning platform, is
at the heart of our learning and development strategy. The Academy
is available to colleagues in all our markets, in their language, and is
designed to help us support the development of our colleagues at all
levels, as well as delivering corporate and high risk training content in
all markets. We continue to extend the range of training provided via
the Academy.
As part of our Board commitment to develop high potential talent
within the business, during the year, we worked with Ashridge Hult
Business School to launch our new Global Leadership Programme.
The aim of the programme is to identify and develop high potential
talent to fulfil future larger leadership roles; to explore what great
leadership at SSP looks like now and in the future to ensure our
continued success; and to support our senior leaders to be successful
in an evolving and challenging world and to deliver for all of our
stakeholder groups. Early in 2020, we commenced our first cohort
of 20 delegates from across nine countries. Going forward, this
programme will also be reinforced by a core curriculum of leadership
and business skills for all colleagues.
We offer apprenticeship qualifications in many of our European
markets, including Germany, France, Greece, Norway and the UK.
These qualifications form a key part of our learning and development
strategy, giving our team members the opportunity to develop
their careers into junior managerial roles. In the UK, we increased
our apprenticeship portfolio and now offer over 13 different
apprenticeship programmes for our operations colleagues,
with further apprenticeships also available for head office staff
in a variety of departments such as IT, Project Management,
Business Administration, and Finance. Degree apprenticeships
are also available with enrolments supported for recognised high
performing managers.
Inclusion, diversity and human rights
Related UN Sustainable
Development Goals
Our commitment
We promote an inclusive, culture reflecting the diversity of our local
communities and the customers we serve. We respect and protect
human rights throughout our business and supply chain.
Our progress: Inclusion and diversity
Our Equality Policy outlines our expectation that all our employees should
be treated with respect and be able to work in an environment in which
they can realise their potential, free of harassment and discrimination in
any form. We provide training and guidance to all our colleagues to ensure
they understand and comply with this policy. One of the ways in which
we measure the success of this approach is by monitoring the number of
women in senior management roles and on our Board. This year, we were
pleased to welcome Judy Vezmar as a Non-Executive Director who brings
a wealth of valuable experience to our PLC Board.
As well as looking to promote diversity within our own business,
we also consider diversity as part of our business relationships.
SSP America works to support minority businesses through its
network of joint venture partnerships and our participation in the
Airport Minority Advisory Council (AMAC), where members of the SSP
America team have held leadership and advisory roles.
Across the Group, full and fair consideration is given to applications
for employment from people with disabilities. We are committed to
supporting disabled employees, including employees who become
disabled during the course of their employment with the Group, with
regard to training, career development and promotion.
Employees by gender*
Employees by gender*
Board of Directors
Board of Directors
Male
Male
71% (5)
71% (5)
Female
Female
29% (2)
29% (2)
Senior management
Senior management
77% (49)
77% (49)
23% (15)
23% (15)
All employees
All employees
48% (10,446)
48% (10,446)
52% (11,352)
52% (11,352)
* Stats as at 30 September 2020. As at 16 December 2020, the Board of Directors
gender breakdown is 75% male and 25% female following the appointment of Tim
Lodge to the Board on 1 October 2020.
The methodology for reporting Gender Diversity at a senior management level
has been revised this year to ensure compliance with the Corporate Governance
Code. These figures are now based on SSP Group’s submission to the Hampton
Alexander Report and comprises Senior Management (which is our Group Executive
Committee and Company Secretary as per the Code definition) and direct reports.
This has resulted in a year-on-year comparison which is not on a like-for-like basis
and therefore not reflective of the Group’s approach to recruitment and progression
policies. See above and page 53 for details of such policies.
SSP Group plc Annual Report and Accounts 2020
15
Our progress: Human rights
Our Supplier Code of Conduct and Human Rights Policy outlines our
commitment that the people working for SSP and within our supply
chain are to be treated with respect, and their health, safety and
basic human rights must be protected and promoted. We require
that our suppliers comply with all relevant local and national laws and
aim to meet the standards outlined in the Ethical Trading Initiative
Base Code, which SSP has adopted as our international standard.
This applies across our global business. As at 1 February 2020, 85%
of our existing global suppliers (by value) had signed up to our policy,
and the policy is part of the contract for all new vendors.
In order to understand more about how our suppliers are managing
human rights within their business, we require suppliers to share
ethical trade audits with us, often using the Supplier Ethical Data
Exchange (SEDEX) platform. Going forward, we will continue to work
with our country management teams, in particular in those countries
deemed to be higher risk for ethical trade and modern slavery, to
ensure that they are able to assess the risks in their supply chain and,
where appropriate, work with suppliers to improve performance.
In line with the requirements of the 2015 Modern Slavery Act, we
also operate a due diligence process to ensure that modern slavery
risks are closely monitored within our business and supply chain.
Further detail on our approach is provided in our separate Modern
Slavery statement, available at www.foodtravelexperts.com.
Anti-bribery and anti-corruption, prevention of facilitation of tax
evasion, whistleblowing and fraud
SSP has a Group-wide Anti-Bribery and Anti-Corruption Policy
to comply with the Bribery Act 2010, as well as a policy on the
prevention of facilitation of tax evasion. We periodically review our
procedures (including due diligence on new partners) to ensure
continued effective compliance in its businesses around the world.
The Group’s Whistleblowing Policy provides a framework to
encourage and give all individuals working at all levels of the Group,
including employees, consultants and contractors, confidence to
‘blow the whistle’ and report irregularities. Individuals are encouraged
to raise concerns with designated persons and/or through the
Country Whistleblowing Officer or confidential Group Helpline.
The Board (in conjunction with the Audit Committee) monitors
this policy and reviews the matters reported and the outcome of
any investigations.
The Audit Committee periodically reviews the Group’s policies and
procedures for preventing and detecting fraud, its systems, controls
and policies for preventing bribery and for preventing the facilitation
of tax evasion, its code of corporate conduct and business ethics
and its policies for ensuring that the Group complies with relevant
regulatory and legal requirements. The Audit Committee receives
updates on bribery and fraud trends and activity in the business,
if any, with individual updates being given to the Audit Committee
as needed.
Community partnerships
Our commitment
We support the communities in which we operate through
partnerships with charitable and other local organisations.
Our progress
Our Community Engagement Policy sets out our aims to make the
communities where we work better places to live and do business,
and encourage our colleagues to be involved with local communities
to their mutual benefit.
With operations in 35 countries, we are present in many communities.
Our teams across the world have partnerships with a wide range of
local and international charities, with each country team identifying
the charitable causes which are most relevant to their colleagues
and customers.
In North America, SSP has an extensive community engagement
programme supporting a wide range of charities, ranging from
children’s hospitals and hospices to charities supporting the
homeless. In India, our TFS team works with the K Corp Charitable
Foundation to support a number of charities on projects focused
on food, nutrition and hunger in India. SSP units across the UK raise
funds for the SSP Foundation, a UK registered charity which makes
grants to support employee nominated charities in the communities
where SSP operates, as well as providing funding for projects to
promote skills development for young people. In partnership with
the SSP Foundation, our SSP UK colleagues have been supporting
Macmillan Cancer Support since 2018. Colleagues put on regular
fundraising activities, ranging from green-themed fancy dress events
to Macmillan Coffee Mornings. To date, the partnership has raised
over £670,000.
SSP UK donated 100,000
Millies Cookies to NHS workers
Supporting our local communities
during the pandemic
During some of the darkest days of the Covid-19 crisis earlier this
year, SSP teams recognised the importance of reaching out to
support key workers and those in need in their local communities.
One example was the donation of 100,000 freshly baked Millies
milk chocolate cookies to NHS workers, arranged thanks to
a partnership between SSP UK, Delice de France, Electrolux
Professional and London-based events caterer Food Show.
The sweet treats were distributed to hospitals across London and
the South East. SSP UK also gave away nearly £15,000 worth of
food that would have otherwise reached its expiry date to charities
and food banks across the country.
In India, our TFS joint venture partners K Hospitality served more
than one million meals to frontline workers and those in need
through their Karuna Seva initiative. This is in no small part to all
those who came forward to volunteer and the great work of NGOs
and the Maharashtra government, who also supported the project.
Group CEO, Simon Smith commented, “I’m so proud of the many
efforts our colleagues have made to support those who need it
most during these difficult times. From donating leftover stock
from closed units to food banks and sending out treats to hospitals
to cooking meals for the homeless, our teams have gone above and
beyond to make a difference to their local communities. Thank you
for everything you’ve done and all you continue to do.”
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 16
CORPORATE RESPONSIBILITY REPORT CONTINUED
What we serve
We are passionate about providing quality products and services to
our customers and providing them with the information and choice
they need to make balanced nutritional choices. We are committed
to ensuring the sustainability of our product ingredients and our
supply chain.
Nutritional balance
Related UN Sustainable
Development Goals
Our commitment
We provide customers with the information and the menu choices
they need to select healthy options and to satisfy a wide range of
dietary needs.
Our progress
With such a wide range of brands across so many markets, we know
that we are well-positioned to help customers to make healthy
food choices. We are committed to taking health and nutrition into
account when we design our product ranges and menus with the
objective of offering customers a choice which includes healthier
options, together with nutritional information about the products we
are serving.
Some of our brands, such as Haven and Camden food co., have
been specifically designed to focus on providing menus with strong
health credentials. These menus have an emphasis on fresh fruit
and vegetables, salads and smoothies, with many items vegan or
vegetarian. This year, we were delighted when our Haven unit in Oslo
airport was awarded second place in the Norwegian Championship
Healthy Fast Food category for its smoothie bowl.
In February 2020, before the closure of many of our units due to the
Covid-19 crisis, we had plans in place for the rollout of a wider range
of healthy options across our key brands and markets, supported by
improved communication and labelling to help our customers make
healthy choices. Unfortunately, the Covid-19 crisis meant that this
programme has to be put on hold as units were closed and ranges
reduced, which has impacted the level of choice available. As we
expand our ranges again, health and nutrition will be a key factor in
our new product development plans.
Sustainable sourcing
Related UN Sustainable
Development Goals
Our commitment
We source our products and ingredients with due care for
the environment and the people involved in their production
and manufacture.
Our progress
Our Responsible Sourcing Policy outlines the standards which
we expect our purchasing teams to implement when sourcing
ingredients for our menus. Our purchasing teams are trained on
the policy requirements and the policy is a part of all standard
vendor contracts.
Our global purchasing teams have been focusing on driving
improvement in the sourcing of some of the ingredients core to our
business. One example is coffee, tea and hot chocolate, products
which are core to SSP’s ranges worldwide. We are committed to using
tea, coffee and hot chocolate produced in accordance with ethical
and sustainable standards, such as the Fairtrade or Rainforest
Alliance certification schemes. As of February 2020, 78% of the hot
beverages purchased for our proprietary brands were from certified
sources under schemes such as Fairtrade or Rainforest Alliance.
Our teams have also been working with suppliers to ensure that the
fish on our menus is from well-managed marine sources and that
the products we serve only use sustainably sourced palm oil. We will
continue to work with suppliers to drive improvement in these key
areas and it’s our aim to start reporting KPI data to demonstrate
our progress.
Animal welfare
Our commitment
We work with our suppliers to maintain high standards of animal
welfare across our global supply chain .
Our progress
Farm animal welfare is a key concern for SSP, our customers and
other stakeholders. Our animal welfare commitments are integrated
into our Responsible Sourcing Policy and we set an expectation that
all global suppliers meet or exceed the standards within the ‘Five
Freedoms’ concept proposed by the Farm Animal Welfare Council.
We also publish a separate Farm Animal Welfare Policy which outlines
the standards we want suppliers to work towards. This policy has
been extended to cover all of our European markets and we plan to
conduct training for our purchasing teams to help them ensure that
the policy is implemented through our supply chain.
We have set specific targets to drive performance improvement
on two key issues related to the welfare of chicken. Firstly, we have
set a target that 100% of the shell eggs and liquid egg products
used within our global proprietary brands should be from cage-free
sources by 2025. We are already making good progress towards this
objective in core markets including Germany, Sweden, Norway and
the UK.
SSP Group plc Annual Report and Accounts 2020 17
In order to help improve the conditions for broiler chickens across
Europe, SSP has committed to work with our suppliers to meet the
standards set out in the European Chicken Commitment (ECC) for
100% of the chicken meat we source for our proprietary brands
in Europe, by 2026.The ECC is a set of six aspirational standards
that focus on a transition to breeds with better welfare outcomes,
increased living space, greater environmental enrichment and more
humane stunning methods. Last year, our UK purchasing team had
started to work with key suppliers on the implementation of this
commitment and this work will resume in the year ahead and extend
across our wider European operations.
We continue to take part in the Business Benchmark for Farm Animal
Welfare (BBFAW), the investor-led global measure of corporate
practice and performance on farm animal welfare. In the 2019
Benchmark, we were pleased to improve our ranking in the Index.
BBFAW wrote to SSP commenting, “We are encouraged to see that
SSP Group plc has substantially improved its ranking in the 2019
Benchmark; this indicates that you have made notable improvements
in your farm animal welfare management practices and reporting
over the past year.” We will continue to work to strengthen our animal
welfare management practices and hope to further improve our
BBFAW ranking in the years ahead.
Safety
Safety is of paramount importance at SSP. It is imperative that our
food is safe to eat and the safety of our employees, customers and
the public is protected. Our Group Safety programme monitors
safety practices and incidents in all regions against a set of key
safety performance indicators. These cover health and safety, food
safety and fire safety and include all employees, temporary and
agency workers.
To harmonise safety operations in all units, we have developed
a framework of minimum standards for our country operations.
These Global Safety Standards must be implemented across all
regions of operation and in addition to any local legal, brand or client
requirements. The standards provide a framework of minimum
technical safety standards and arrangements for implementation
at country operational level. This includes self-audit and actions
templates, quarterly safety statistic reports and an escalation
process for serious safety incidents. Global Safety responsibilities
are defined at country, region and Group level to ensure effective
implementation, support and monitoring of the Global Safety
Standards. In order to drive continued improvement, safety data is
reported by all countries and reviewed by the Group Risk Committee
and Group Board.
This year, we have carried out a review of allergens standards within
the food safety part of the Global Safety Standards Self-Audit to
ensure compliance with the additional labelling requirements from
‘Natasha’s Law’ in the UK.
During the Covid-19 pandemic, our health and safety procedures
have been strengthened with additional safety measures put in place
and increased reporting to our Group Executive team and Board.
Additional training was provided for all country teams on steps to
take to keep colleagues and customers safe, with regular updates
reflecting the latest public health messaging and advice. We have
provided team members with personal protective equipment and
introduced additional cleaning regimes to further protect colleague
and customer safety.
Protecting our planet
We are committed to responsibly managing the environmental
impact of our business, focusing on reducing the carbon intensity
of our operations and products, and the levels of waste generated.
Our Environmental Policy sets out our commitment to responsibly
manage the environmental impact of our business. 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.
Carbon footprint
Related UN Sustainable
Development Goals
Our commitment
We work to reduce the carbon footprint of our business, improving
the energy efficiency of our operations and reducing the carbon
intensity of our menus through more plant-based meals.
Our progress
In recent years, we have had an active programme in place to establish
a culture of good energy management within our units, focusing
on embedding behavioural change and technological changes to
improve energy efficiency and thereby reduce the GHG emissions
from our operations. Changes have included the installation of LED
lighting and mini building management controls, such as ‘last man
out’ switches and temperature controls. These initiatives have
been rolled out across UK and key European markets. This year, we
completed a mini LED project at a select number of UK M&S units,
with the changes expected to deliver year-on-year energy savings
of over 14%. Energy efficiency is also a key consideration in our
capital projects investments as we look to introduce new equipment
that saves on both energy and maintenance. Our total energy
consumption this year was 285,176,022 kWh, which represented
a decrease of 18.5% compared to 2019 levels (349,945,716 kWh),
and was primarily due to the fact that so many of our units had to be
closed for part of the year.
We continue to closely monitor the greenhouse gas emissions
associated with our operations, and this data is reported in the table
on the next page. We have seen a significant reduction in overall GHG
emissions this year; however, our measure of intensity (emissions per
£ sales) is up 27% year-on-year. This increase is due to the fact that,
although many of our units were closed, there was still a requirement
for certain services or equipment to remain on, for example, security
lighting, alarms, and refrigerators, which meant that a low level
of energy was still used during this period. In the years ahead, we
will resume our work to reduce the greenhouse gas intensity of
our operations.
In addition to this, we also recognise the impact that meat production
has on global GHG emissions, and we are committed to playing
our part in addressing this issue through the promotion of more
plant-based menu options within our ranges. We know that many of
our customers are also looking for more meat-free options on our
menus, recognising that this can have both health and environmental
benefits. In recent years, we have responded to this trend with
the introduction of a wider range of vegetarian and vegan options
across many of our brands and markets. Many of our ranges have
been reduced to respond to trading conditions during the Covid-19
pandemic, which has had an impact on the level of choice available,
but, as we expand our ranges again, plant-based options will be a key
factor in our new range development.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 18
CORPORATE RESPONSIBILITY REPORT CONTINUED
Global greenhouse gas emissions data
Scope 1 emissions
Combustion of fuel
and operation of facilities
Scope 2 emissions
Electricity, heat, steam and cooling
purchased for own use
Total
Intensity measurement
2019
Tonnes of
CO2e
2020
Tonnes of
CO2e
11,313
6,406
102,132
113,445
71,552
77,958
Total emissions reported above
normalised grams per £ of turnover
42.45
grams/£
53.85
grams/£
Scope and methodology
We have reported on all the emission sources required under the Companies
Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and 2018.
These sources fall within the scope of 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 SECR (replacing guidance on Mandatory Greenhouse Gas Reporting
(MGHG)) for Scope 1 and Scope 2 emissions and the DEFRA Environmental
Reporting Guidelines. This submission meets minimum requirements relating
to gas, electricity, and transport fuel as well as providing an intensity ratio and
information relating to energy efficiency action.
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.
Food waste
Related UN Sustainable
Development Goals
Our commitment
We are cutting food waste at all stages of our business, and, wherever
possible, working to develop channels to ensure unsold food is
donated to those who need it.
Our progress
We work to reduce food waste wherever we can within our operations.
Country management teams have targets around food waste
reduction, with performance tracked at unit, country and Group level.
Waste has been a particular focus over the last six months as our
teams have had to adapt their operations in response to the Covid-19
crisis. Waste has been reduced by moving any perishable or unsold
ingredients and products from closed units and designing menus and
ranges carefully to minimise unsold food waste.
One way in which we are looking to reduce unsold food is through
partnerships with food markdown schemes, such as Too Good To Go
and Karma. These apps let customers know when food is available
to be purchased at reduced prices, so that they can come in before
closing and take a ‘mystery’ bag of food, which is going out of date
that day. We have been using these schemes across France, Norway,
Denmark and Germany and will look for further opportunities to
extend into the UK and other European markets.
Many of our country teams have partnerships with local charities so
that we can offer them donations of any foods which is unsold at the
end of the day. During the Covid-19 crisis these donations have been
more important than ever and our country teams have made great
efforts to reach out to those in need in their local communities and
donate what surplus food products they could.
Our team at Le Train Bleu
prepared food for those in need
Donating surplus food during the pandemic
During the pandemic, our global teams have been quick to reach
out to local charities to ensure that any surplus ingredients or food
products were donated to people in need. Our team at Le Train Bleu
in Gare de Lyon, Paris, teamed up with Restos du Coeur, a French
charity, which distributes food packages. Colleagues volunteered
their time and were able to use Le Train Bleu’s kitchen to produce
meals for homeless people and others in need. Between 15 May
and 25 June 2020, Le Train Bleu prepared between 700 and
900 meals per day.
SSP Spain donated food to the Red Cross and other small, local
NGOs. This comprised an incredible 990 kg of fresh vegetables,
670 kg of fresh fruit, 625 eggs, 835 yoghurts and nearly 135,000
pairs of gloves.
The SSP team at Ottawa airport teamed up with their local FOOD
SHARE outlet, which serves nearby Dundas and Mormont counties,
supporting those left without work or living on reduced wages.
The team donated around 300kg of fresh fruits and vegetables and
enough eggs, yogurt, juice and fruit to serve more than 300 people.
Meanwhile, at Seattle-Tacoma airport, we helped store food for a
local food bank in our commissary throughout the month of April,
as the charity was unable to accommodate all the donations in
their own facility.
SSP Group plc Annual Report and Accounts 2020 19
Single use plastic
Our commitment
We are replacing single-use plastic wherever we can in favour of more
environmentally-responsible alternatives.
Our progress
We know that single-use plastic is a major global environmental issue
and a key concern for our stakeholders. We are committed to moving
away from single-use plastic packaging wherever viable. All of our
markets globally have been tasked with developing a plan to do this,
starting with the removal of plastic straws and cutlery, identifying
alternative, more sustainable packaging materials, and also providing
incentives for our customers to use more reusable packaging, for
example, through the sale of reusable coffee cups and discounts for
customers who bring their own cups. In the majority of our European
markets, plastic cutlery, stirrers and straws have been replaced.
Our European teams have also made good progress towards
replacing PET salad containers, tumblers and similar items with those
made from recycled PET, which can itself be recycled after use.
In many markets, the Covid-19 pandemic has necessitated a
temporary move to use more single-use packaging as customers
and clients require more takeaway and disposable products. We are
however committed to improving the sustainability of our packaging
and will continue to focus on this area as Covid restrictions lift.
Simon Smith
Chief Executive Officer
16 December 2020
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 20
NON-FINANCIAL INFORMATION STATEMENT
In accordance with the requirements of section 414CB of the Companies Act 2006, the below table sets out where stakeholders
can find information relating to non-financial matters. Further information on some of these areas can be found on our website
(https://www.foodtravelexperts.com/international/).
Some of SSP’s
relevant policies
Principal risks relating to
these matters (pages 35 to 41)
Where to find out more about SSP’s
approach to these matters
Environmental
matters
(including the
impact of the
Company’s
business on the
environment)
• Environmental Policy
• Supplier Code of Conduct and
Human Rights Policy
• Responsible Sourcing Policy
• Farm Animal Welfare Policy
• Whistleblowing Policy
3.
Business environment and
geopolitical uncertainty
11. Benefits realisation from
efficiency programmes
Chairman’s statement –
Corporate responsibility
CEO’s statement –
Corporate responsibility
Our Stakeholders
Corporate Responsibility Report –
What we serve
Corporate Responsibility Report –
Protecting our planet
Financial review
See page 2
See page 3
See page 10
See page 16
See page 17
See page 21
Risk Management and Principal Risks
See pages 33-41
Employees
• Colleague Code of Conduct
• Equality Policy
• Global Safety Standards
• Whistleblowing Policy
6.
Senior management capability
and retention
Chairman’s statement – Corporate
responsibility
9.
Labour laws and unionisation
CEO’s statement – Our people
Our Marketplace – People and
communities
Our Stakeholders – Our colleagues
S172(1) Statement
Corporate Responsibility Report –
People and communities
See page 2
See page 3
See page 5
See page 10
See page 11
See pages 13-15
Corporate Responsibility Report – Safety See page 17
Risk Management and Principal Risks
See pages 33-41
Social matters
• Community
Engagement Policy
4.
6.
7.
8.
Retention of existing client
relationships
Chairman’s statement – Corporate
responsibility
Senior management capability
and retention
Our Marketplace – People and
communities
Regulatory compliance
Food safety and product
compliance
12. Changing client behaviours
Our Stakeholders
S172(1) Statement
Corporate Responsibility Report –
People and communities
Corporate Responsibility Report –
What we serve
See page 2
See page 5
See page 10
See page 11
See pages 13-15
See pages 16-19
Respect for
human rights
Anti-corruption
and anti-bribery
and prevention
of facilitation
of tax evasion
matters
Business model
Non-financial
KPIs
Principal risks
Risk Management and Principal Risks
See pages 33-41
7.
9.
Regulatory compliance
Labour laws and unionisation
Corporate Responsibility Report –
People and communities
See pages 13-15
Risk Management and Principal Risks
See pages 33-41
7.
Regulatory compliance
Corporate Responsibility Report –
People and communities
See pages 13-15
Risk Management and Principal Risks
See pages 33-41
• Equality Policy
• Supplier Code of Conduct and
Human Rights Policy
• Modern Slavery Statement
• Whistleblowing Policy
• Code of Conduct
• Anti-Bribery and Anti-Corruption
Policy
• Whistleblowing Policy
• Prevention of facilitation of Tax
Evasion Policy
3.
8.
Business environment and
geopolitical uncertainty
Food safety and product
compliance
9.
Labour laws and unionisation
Our Business Model
Our Strategic Priorities
See pages 6-7
See pages 8-9
Risk Management and Principal Risks
See pages 33-41
Corporate Responsibility Report –
Employees by gender
Corporate Responsibility Report –
What we serve
Corporate Responsibility Report –
Protecting our planet
See pages 13-15
See page 16
See page 17
Risk Management and Principal Risks
See pages 33-41
Risk Management and Principal Risks
See pages 33-41
SSP Group plc Annual Report and Accounts 2020 21
FINANCIAL REVIEW
We have responded rapidly to the pandemic,
raising additional liquidity and managing cash
flow very effectively.
Jonathan Davies
Chief Financial Officer
Revenue
Underlying operating (loss)/profit
Operating (loss)/profit
IFRS 16
2020
£m
1,433.1
(315.4)
(363.9)
Pro forma
IAS 171
2020
£m
1,433.1
(211.7)
N/A
IAS 17
2019
£m
2,794.6
221.1
219.2
IAS 17 change
Reported
(48.7)%
Constant
currency
LFL
(47.9)%
(50.8)%
(195.7)%
(195.7)%
N/A
1
Amounts are stated on a pro forma underlying IAS 17 basis, further detail is provided on pages 31-32.
Group performance
Revenue decreased by 47.9% on a constant currency basis,
comprising a like-for-like sales reduction of 50.8% offset by net
contract gains of 2.9%. At actual exchange rates, total revenue fell by
48.7%, to £1,433.1m.
During the third quarter, with the global lockdowns continuing, like-
for-sales in April and May were approximately 95% below last year,
improving slightly to 90% lower in June. Helped by a limited return of
some short haul air travel over the summer holiday period, the fourth
quarter saw a further gradual improvement in like-for-like sales,
which were around 80% lower than the prior year.
The Group’s strong sales performance during the early part of the
year has been overshadowed by the very severe impact of Covid-19.
Prior to seeing the initial impact from the virus in China towards the
end of January, we had enjoyed a good start to the financial year, with
like-for-like sales growth of 1.2% during the first quarter, in line with
our expectations, despite a number of external headwinds, including
the impact of the Boeing Max 737 groundings, the slowdown in
Chinese passenger numbers, the failure of Jet Airways in India and the
transport sector strikes in France.
In the second quarter, like-for-like sales decreased by 18.5%, with
the Group’s performance impacted significantly by the development
of Covid-19. We began to see a material impact on trading in our
Asia Pacific region (which accounted for around 8% of group sales)
from the escalation of the virus during late January and throughout
February. Trading then deteriorated rapidly across the entire group
during March as the impact of the pandemic spread across the world.
By the final few days of March, as lockdowns and travel restrictions
were implemented around the world, like-for-like sales had decreased
by over 90% across all regions.
Prior to the onset of Covid-19, the Group had also made good
progress in delivering additional sales growth from net contract
gains, particularly in North America and in Continental Europe,
reporting net gains of 5.7% for the first half. Furthermore, new
openings during the first half of 2020 and those planned for the
second half were expected to drive significant further net gains in the
remainder of the year, which were expected to be over 6% for the full
year, prior to Covid-19. The new openings during the second quarter
included outlets in Australia and Germany following the acquisitions
of the Red Rock operations in Perth and Melbourne airports and the
Station Food rail business in Germany. For the year as a whole, despite
the impact of Covid-19, net gains added 2.9% to prior year sales.
Trading results from outside the UK are converted into Sterling at
the average exchange rates for the period. The overall impact of the
movement of foreign currencies on revenue (principally the Euro,
US Dollar and pegged currencies, Norwegian Krone, Swedish Krona
and Indian Rupee) during 2020 compared to the 2019 average was a
reduction of 0.8%. However, this is solely a translation impact.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 22
FINANCIAL REVIEW CONTINUED
Underlying operating loss
The underlying operating loss for the year was £315.4m. On a pro
forma IAS 17 basis, the Group reported an underlying operating loss
of £211.7m, compared to an equivalent profit of £221.1m in the
prior year.
For the first half year, we estimated that the loss of sales as a result
of the rapid spread of Covid-19 was approximately £147m (compared
to our pre-Covid forecasts), and that this impacted operating profit
by around £65m. The relatively high drop through on the sales lost
due to Covid-19 in this period reflected the extreme speed with
which travel restrictions impacted our markets during March, limiting
our ability to reduce operating costs, particularly labour costs, at
very short notice and prior to the commencement of government
furlough support schemes, while we also suffered the impact of stock
write-offs as a result of the rapid closure of most of our outlets late in
the month.
For the second half year, the devastating and prolonged impact of
Covid-19 on our travel markets resulted in a much more significant
loss of sales, estimated at approximately £1,435m (down 86%
year-on-year) compared to our internal pre-Covid forecast for the
period. The equivalent impact on second half underlying operating
profit on a pro forma IAS 17 basis, was approximately £377m, a profit
conversion of around 26% on the reduction in sales. This lower profit
conversion on the lost sales compared to March reflected the speed
with which we were able to reduce our operating costs during the
“hibernation” period in April and May, when around 90% of our units
were closed, and the systematic approach applied in re-opening our
outlets during the summer, in particular the selective opening of units
in multi-unit locations, ensuring that we were able to trade profitably
even at lower levels of footfall. Our focus throughout this challenging
period has been on maximising sales per passenger and ensuring
that any units re-opened were making a positive contribution to cash
profit. Looking forward, sales in the first quarter of the new financial
year are expected to remain at similar levels to that seen in the final
quarter of the year, approximately 80% lower year-on-year, and
we are planning on the basis that sales will remain at similar levels
during the second quarter. As a consequence, we expect the profit
conversion on the lost sales to remain in the region of 25%, reflecting
the actions taken to reduce our operating costs as well as continued
government furlough support, which has been extended throughout
the first half in many markets.
Operating loss
On a reported basis, the operating loss was £363.9m, reflecting an
adjustment for the non-underlying operating items of £48.5m as
detailed on page 31 and described further below.
Non-underlying operating items
Items which are not considered reflective of the normal trading
performance of the business, and are exceptional because of their
size, nature or incidence, are treated as non-underlying operating
items and disclosed separately. In addition to a recurring adjustment
for the amortisation of acquisition-related intangible assets of £1.9m
(2019 £1.9m), the non-underlying operating loss this year includes
items specifically relating to the impact of Covid-19 on the business
amounting to £46.6m.
The non-underlying operating items that have arisen as a direct
consequence of Covid-19 are summarised below:
• Impairment of goodwill: as a result of past acquisitions, and in
particular the acquisition of the SSP business by EQT in 2006, the
Group holds a significant amount of goodwill on its consolidated
balance sheet. This is allocated on a country level and tested
annually for impairment by comparing the value held by each
country with the net present value of its expected future cash
flows. As a result of Covid-19, goodwill impairments totalling
£33.0m were identified, comprising write downs in Switzerland,
Germany and Singapore. Further details are provided in note 13
on page 124.
• Impairment of property, plant and equipment and right of use
assets: the impact of Covid-19 on the Group's operations is
expected to continue during the current year and beyond. As a
result, the Group has carried out a review for potential impairment
across the entire unit portfolio. The impairment review compared
the value-in-use of individual cash-generating units, based on
management’s assumptions regarding future trading performance
(taking into account the effect of Covid-19), to the carrying values
at 30 September 2020. Following this review, a charge of £76.6m
has been recognised, which includes an impairment of right of use
assets of £38.2m.
• Accelerated depreciation: As a result of a reassessment of the
lease term of certain units, accelerated depreciation of £6.2m has
been recorded on fixed assets to align their carrying value to their
expected useful economic life based on the revised lease term.
• Restructuring costs: as a result of the impact of Covid-19,
the Group has recognised a charge of £22.7m relating to its
restructuring programmes carried out across the group during the
second half of the year. The charge primarily relates to redundancy
costs. It also includes some costs related to the exit from certain
contracts, most notably at Sheremetyevo Airport in Russia.
• IFRS 16 rent credit: as part of its response to Covid-19, the Group
negotiated rent waivers with clients totalling £91.9m. The Group
applied the practical expedient issued by the International
Accounting Standards Board as a part of the Amendment to IFRS
16 to record this as a reduction in rent expense and an exceptional
item within the Consolidated Income Statement.
SSP Group plc Annual Report and Accounts 2020 23
Regional performance
The following shows the Group’s segmental performance. For full details of our key reporting segments, please refer to note 4 on page 115.
Revenue
Underlying operating (loss)/profit
IFRS 16
2020
£m
410.1
(28.7)
Pro forma
IAS 17
2020
£m
410.1
(12.4)
IAS 17
2019
£m
840.5
101.8
IAS 17 change
Reported
(51.2)%
Constant
currency
LFL
(51.1)%
(51.2)%
(112.2)%
(112.1)%
Note:
Statutory reported operating loss was £39.0m (2019: £100.3m profit) which includes an adjustment for the amortisation of acquisition-related intangible
assets of £1.5m (2019: £1.5m). It also includes adjustments for items specifically related to the impact of Covid-19 of £8.8m.
Revenue decreased by 51.1% on a constant currency basis, comprising a like-for-like reduction of 51.2% and net contract gains of 0.1%.
At actual exchange rates, revenue declined by 51.2% to £410.1m.
Prior to the impact of Covid-19 in March, like-for-like sales growth had been robust, driven by increasing passenger numbers. However, the
significant reduction in passenger numbers during March resulted in overall first half like-for-like sales declining by 5.2%. Net contract gains of
2.1% during the first half included contributions from the three Jamie Oliver outlets at Gatwick airport that we began operating last summer.
During the third quarter, the impact on passenger travel arising from Covid-19 resulted in the closure of almost all of our units in the UK.
In the fourth quarter there was a slight recovery in the air sector over the summer holiday season, however the UK Government’s quarantine
restrictions limited passenger numbers. The rail sector remained weak throughout the second half, although we had begun to see a slow
recovery during the fourth quarter, driven by a gradual return in commuter travel as people returned to the office. This recovery, however, was
curtailed by further government restrictions announced towards the end of September. Overall UK second half sales fell by 91.8%, comprising
a like-for-like sales decrease of 91.6% and net contract losses of 0.2%.
The underlying operating loss for the year for the UK was £28.7m and reported operating loss was £39.0m. Non-underlying operating items
comprised an impairment charge of £21.1m, accelerated depreciation of £6.2m, exceptional restructuring costs of £5.9m and an adjustment
for the amortisation of acquisition-related intangible assets of £1.5m. These were offset by IFRS 16 rent credits of £24.4m. On a pro forma IAS
17 basis, the underlying operating loss was £12.4m, which compared to an underlying operating profit of £101.8m last year
Revenue
Underlying operating (loss)/profit
IFRS 16
2020
£m
558.2
(148.1)
Pro forma
IAS 17
2020
£m
558.2
(103.2)
IAS 17 change
IAS 17
2019
£m
1,036.9
Reported
(46.2)%
Constant
currency
LFL
(44.7)%
(48.2)%
79.3
(230.1)%
(229.5)%
Note:
Statutory reported operating loss was £193.5m (2019: £78.9m profit) which includes an adjustment for the amortisation of acquisition related intangible
assets of £0.4m (2019: £0.4m). It also includes adjustments for items specifically related to the impact of Covid-19 of £45.0m.
Revenue decreased by 44.7% on a constant currency basis, comprising a like-for-like reduction of 48.2% and net contract gains of 3.5%.
At actual exchange rates, revenue declined by 46.2% to £558.2m.
During the first half, revenue decreased by 3.2% on a constant currency basis, comprising a like-for-like reduction of 10.7% and net contract
gains of 7.5%. The impact of Covid-19 on first half like-for-like sales was more significant in this region than in either the UK or North America,
with a number of countries in Continental Europe announcing that they were closing borders and restricting travel in early March following the
outbreak in Italy towards the end of February. Prior to the impact of Covid-19, like-for-like sales had been in line with our expectations, albeit
with a continuation of some of the headwinds from the second half of last year, including the national strikes in France during December and
January and the impact of major redevelopments in a number of airports, including Copenhagen, Malaga and Las Palmas.
Net contract gains during the first half remained very strong, driven by new outlets opened last year at Montparnasse Railway station and in
the new motorway service areas in Germany, as well as the Starbucks units in railway stations across the Netherlands. They also included the
impact of the acquisition of the Station Food rail business in Germany at the end of February.
As was the case in the other regions, like-for-like sales remained at very low levels during the third quarter, with the majority of our units closed
across this period. However the fourth quarter saw a stronger recovery in Continental Europe compared to the rest of the Group, with weekly
sales approximately 66% lower year-on-year, compared with the UK, North America and the Rest of the World, where weekly sales remained
around 80-85% lower year-on-year. This was helped by the limited return of some short haul air travel over the summer holiday period, by
a stronger recovery in rail passengers numbers in Germany and France compared to the UK, with more people returning to their normal
workplaces, and by the motorway business in Germany and France which, in line with government requirements, remained open throughout
the crisis. Overall Continental Europe second half sales fell by 77.1%, comprising a like-for-like sales decrease of 77.6% and net contract gains
of 0.5%.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 24
FINANCIAL REVIEW CONTINUED
The underlying operating loss for Continental Europe was £148.1m and reported operating loss was £193.5m. Non-underlying operating items
comprised an impairment charge of £62.2m, exceptional restructuring costs of £8.3m and an adjustment for the amortisation of acquisition-
related intangible assets of £0.4m. These were offset by an IFRS 16 concession credit of £25.5m.
On a pro forma IAS 17 basis, the underlying operating loss was £103.2m, which compared to an underlying operating profit of £79.3m last
year. The overall impact from Covid-19 in this region during the first half was much more significant than in others, partly due to the earlier
imposition of travel restrictions compared to the UK and North America, but also as a result of the longer lead times required to reduce labour
costs in response to a rapid reduction in sales. Prior to the impact of Covid-19, operating profit for the region had already been impacted by
transport strikes in France throughout December and January, the ongoing impact of the airport redevelopments in Denmark and Spain, and
significant pre-opening and integration costs from new contracts and the acquisition of the Station Food business in Germany.
Revenue
Underlying operating (loss)/profit
IFRS 16
2020
£m
274.9
(55.4)
Pro forma
IAS 17
2020
£m
274.9
(43.7)
IAS 17
2019
£m
533.4
41.9
IAS 17 change
Reported
(48.5)%
Constant
currency
LFL
(47.9)%
(53.1)%
(204.3)%
(204.6)%
Note:
Statutory reported operating loss was £63.3m (2019: £41.9m profit) which includes adjustments for items specifically related to the impact of Covid-19
of £7.9m.
Revenue decreased by 47.9% on a constant currency basis, comprising a like-for-like decrease of 53.1% offset by net contract gains of 5.2%.
At actual exchange rates, revenue declined by 48.5% to £274.9m.
Prior to the impact of Covid-19, like-for-like sales growth had been robust, benefiting from positive trends in airport passenger numbers in the
North American market. However, the significant reduction in passenger numbers during March resulted in overall first half like-for-like sales
declining by 6.5%. Net gains of 10.5% during the first half were driven by new openings in Ottawa, Seattle, Oakland and LaGuardia Airports.
Following the lockdowns during the third quarter, domestic air travel began to recover in many states over the summer, although international
travel remained largely closed. Overall, second half sales fell by 90.2%, comprising a like-for-like sales decrease of 91.5% and net contract
gains of 1.3%.
The underlying operating loss for North America was £55.4m and reported operating loss was £63.3m. Non-underlying operating items
comprised an impairment charge of £19.1m and exceptional restructuring costs of £2.1m, offset by IFRS 16 concession credits of £13.4m.
On a pro forma IAS 17 basis, the underlying operating loss was £43.7m, which compared to an underlying operating profit of £41.9m last year.
Revenue
Underlying operating (loss)/profit
IFRS 16
2020
£m
189.9
(55.6)
Pro forma
IAS 17
2020
£m
189.9
(24.8)
IAS 17
2019
£m
383.8
35.9
IAS 17 change
Reported
(50.5)%
Constant
currency
LFL
(49.9)%
(53.5)%
(169.1)%
(170.8)%
Note:
Statutory reported operating loss was £37.3m (2019: £35.9m profit) which includes adjustments for items specifically related to the impact of Covid-19
of £18.3m.
Revenue decreased by 49.9% on a constant currency basis, comprising a like-for-like fall of 53.5% offset by net contract gains of 3.6%.
At actual exchange rates, revenue declined by 50.5% to £189.9m.
The impact of Covid-19 on first half like-for-like sales was more significant in the Rest of the World region than in the others, falling by 12.3%,
reflecting the earlier escalation of the virus in China and across the Asia Pacific region from late January. Prior to the impact of Covid-19, like-
for-like sales growth in the Rest of the World had been steady, benefiting from an improving trend in India but impacted by the ongoing political
disruption in Hong Kong.
First half net gains included sales from new outlets in Cebu Airport in the Philippines and in Bangalore Airport in India, as well from the
acquisition of the Red Rock operations in Perth and Melbourne airports in Australia.
During the second half, whilst domestic air passenger levels had recovered strongly in China by the fourth quarter and were improving in
Thailand and India, international traffic remained low across the region. Overall, second half sales fell by 90.2%, comprising a like-for-like sales
decrease of 91.3% and net contract gains of 1.1%.
The underlying operating loss for the Rest of the World was £55.6m and reported operating loss was £37.3m. Non-underlying operating items
comprised an impairment charge of £7.2m and exceptional restructuring costs of £3.2m, offset by an IFRS 16 concession credit of £28.6m.
On a pro forma IAS 17 basis, the underlying operating loss was £24.8m, which compared to an underlying operating profit of £35.9m last year.
SSP Group plc Annual Report and Accounts 2020
25
Share of loss of associates
The Group’s share of losses from associates was £2.4m. On a pro forma IAS 17 basis, the Group’s share of losses from associates was £1.7m
(2019: £4.1m profit), the year-on-year reduction reflecting the impact of Covid-19 on our associate investments around the world.
Net finance costs
The underlying net finance expense was £54.0m including interest on lease liabilities of £27.8m. Reported net finance expense was £59.5m,
including an adjustment of £5.4m relating to non-cash interest charges arising from the adoption of the debt modification rules under IFRS 9.
On a pro forma IAS 17 basis, underlying net finance costs increased year-on-year to £26.2m (2019: £22.0m), primarily due to the higher net
debt compared to the prior year.
Taxation
The Group’s underlying tax credit for the year was £23.7m (2019: £45.1m charge), representing an effective tax rate of 6.4% (2019: 22.2%) of
underlying loss (2019: profit) before tax. On a reported basis, the tax credit for the period was £28.1m (2019: £43.7m charge).
On a pro forma IAS 17 basis, the Group’s underlying tax credit was £6.3m (2019: £45.1m charge), equivalent to an effective tax rate of 2.6%
(2019: 22.2%) of the underlying loss (2019: profit) before tax.
The Group’s tax rate is sensitive to the geographic mix of profits and losses and reflects a combination of higher rates in certain jurisdictions,
as well as the impact of losses in some countries for which no deferred tax asset is recognised. The change in the tax rate for the current year
compared to historical rates of around 22% is due to the impact of Covid-19 which has led to a significant change in the Group’s geographic mix
of profits and losses compared to prior years.
Non-controlling interests
The loss attributable to non-controlling interests was £22.7m. On a pro forma IAS 17 basis the loss attributable to non-controlling interests
was £9.6m (2019: £26.6m profit), with the year on year change largely reflecting the impact of Covid-19 on our partly-owned operations in
North America and in the Rest of the World.
Earnings/(loss) per share
The Group’s underlying loss per share was 68.0 pence per share, and its reported loss per share was 76.1 pence per share. On a pro forma
IAS 17 basis the underlying loss per share was 45.4 pence per share (2019: 29.1 pence earnings per share).
Dividends
There was no interim dividend declared during the financial year 2020 (2019: £25.8m). Additionally, the Directors will not be recommending a
financial year 2020 final dividend (2019: £26.8m) which will result in no ordinary dividends for the year (2019: £52.6m). Looking forward, the
Group will continue to be restricted from declaring or paying dividends until the expiry of certain restrictions that apply under the amended
debt arrangements with the Group’s lending group of banks and US private placement note holders. When these restrictions are lifted and
conditions improve, the Board will consider the best way to restart returning capital to shareholders.
Free Cash flow
The table below presents a summary of the Group’s free cash flow during the year:
Underlying operating (loss)/profit1
Depreciation and amortisation
Exceptional restructuring costs3
Working capital
Net tax
Other
Net cash flow from operations
Capital expenditure2
Acquisition of subsidiaries, adjusted for net debt acquired
Net dividends to non-controlling interests and from associates
Net finance costs
Free cash flow
1
Presented on an underlying pro forma IAS 17 basis (refer to page 31 for details).
2
Capital expenditure is net of capital contributions from non-controlling interests of £3.1m (2019: £9.0m).
3
Refer to the APMs section on pages 31-32 for further details.
2020
£m
(211.7)
113.5
(22.7)
(67.6)
(11.0)
2.0
(197.5)
(134.5)
(26.5)
(16.8)
(19.6)
(394.9)
2019
£m
221.1
105.3
–
3.7
(37.1)
8.2
301.2
(185.0)
(25.8)
(22.5)
(17.4)
50.5
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 26
FINANCIAL REVIEW CONTINUED
The Group’s net cash outflow during the year from operations was £197.5m, compared to a £301.2m net cash inflow last year. The principal
driver of this significant year on year change was the underlying operating loss of £211.7m, compared with a profit of £221.1m in the prior year,
reflecting the impact of Covid-19 as described earlier. Furthermore, the exceptional restructuring costs of £22.7m were all incurred as a direct
consequence of the pandemic, primarily reflecting the costs of redundancy programmes carried out across the Group during the second half
of the year.
The working capital outflow was £67.6m compared to a small cash inflow of £3.7m in the prior year. This cash outflow was primarily driven by
the extreme reduction in average daily sales following Covid-19. Nevertheless, this was a significantly better working capital out-turn than
anticipated at our interim results in June, driven by very tight management of working capital which has continued since the escalation of the
virus in March. Throughout this period, the Group has worked hard to manage its payments, agreeing rent waivers and deferrals with many of
our clients and taking advantage of government-approved payment deferral schemes around the world, particularly in relation to payroll taxes
and VAT.
Corporation tax payments were materially lower year-on-year at £11.0m (2019: £37.1m), the reduction reflecting considerably lower payments
on account (of tax due for the current year) compared to 2019. Indeed, during the second half we saw a net recovery of corporation tax (an
inflow of £9.1m) as we successfully applied for and received corporation tax repayments across a number of countries.
Capital expenditure was £134.5m, a reduction of £50.5m compared to the prior year. Following the Covid-19 escalation, we placed our capital
programme on hold pending a recovery in the travel sector and we were able to reduce our second half expenditure to £15.0m, in line with our
indications at the interim results in June. For the year ahead, we anticipate a further significant year on year reduction as we continue to work
with our clients to defer capital programmes until passenger numbers and sales show material signs of recovery.
Acquisitions of £26.5m primarily reflected the purchases of the Red Rock operations in Perth and Melbourne airports in Australia and of the
Station Food rail business in Germany during the first half. Net cash outflows to non-controlling interests and from associates amounted to
£16.8m, nearly all of which was incurred during the first half year prior to the onset of Covid-19.
Net finance costs paid of £19.6m were £2.2m higher than the prior year, mainly reflecting increased average levels of net debt and related
financing costs.
Net debt
Overall net debt increased by £208.6m to £692.0m on a pro forma IAS 17 basis, with the significant free cash outflow in the year of £394.9m
offset by the £208.6m equity issuance (net of related fees) in late March. We were also able to retain some of the cash related to the payment
of £26.8m in respect of the final 2019 dividend (declared and approved at the AGM in February 2020) through a further small equity placing,
retail offer and subscription raising net proceeds of £10.8m in June, as we gave investors the opportunity to reinvest the proceeds of that
dividend payment into new SSP shares. To further preserve liquidity for the Group as the impact of Covid-19 became apparent, we suspended
our previously announced share buyback programme having only incurred £1.7m on the purchase of shares.
The table below highlights the movements in net debt in the year on a pro forma IAS 17 basis. Note that the Group adopted IFRS 16 ‘Leases’
with effect from 1 October 2019 using the modified retrospective approach to transition which means that the prior year balances including
net debt have not been restated.
Net debt excluding lease liabilities at 1 October 2019 (IAS 17 basis)
Underlying free cash flow
March 2020 equity issue (net of fees paid)
June 2020 equity issue (net of fees paid)
Dividend paid
Share buyback
Impact of foreign exchange rates
Other
Net debt excluding lease liabilities at 30 September 2020 (IAS 17 basis)
Lease liabilities
Other
Net debt including lease liabilities at 30 September 2020 (IFRS 16 basis)
£m
(483.4)
(394.9)
208.6
10.8
(26.8)
(1.7)
(2.0)
(2.6)
(692.0)
(1,349.3)
0.7
(2,040.6)
SSP Group plc Annual Report and Accounts 2020 27
As noted above, the Group adopted IFRS 16 on 1 October 2019 and as a result now recognises lease liabilities, which are initially based on the
present value of the future payments required under each lease discounted at the incremental borrowing rate. The movement in the lease
liabilities from the transition date of 1 October 2019 to 30 September 2020 was as follows:
Beginning of the period
Lease liabilities on transition
Acquisitions
Additions
Interest charge in the period
Payment of lease liabilities
Remeasurement adjustments
Currency translation
End of the period
Year ended
30 September
2020
£m
–
(1,464.4)
(24.1)
(266.4)
(27.8)
200.4
227.2
5.8
(1,349.3)
Actions taken to strengthen liquidity and to secure covenant waivers
Since the onset of Covid-19, we have taken decisive action to protect cash, minimise costs and raise additional liquidity to allow us to operate
throughout even our most pessimistic trading scenario. This action to increase liquidity included a £209m (net of related fees) equity placing
and share subscription in late March 2020, followed shortly afterwards by securing access to the Bank of England’s Covid Corporate Financing
Facility (CCFF), under which facility we were permitted to draw up to £300m. In addition, the Group also secured access to a number of
additional smaller liquidity lines, including government-backed facilities in France, Spain and Switzerland, providing a further £44m.
As well as raising this additional funding, we have taken a number of further steps to protect liquidity. At the current very low levels of sales, the
current monthly cash burn of approximately £25-30m reflects the many management actions taken to minimise operating costs, as already
described. Furthermore, we have also taken action to defer all non-essential capital expenditure, to agree rent waivers and deferrals with our
clients, to suspend our previously announced share buyback programme and to negotiate with our lending banks a two year deferral of term
loan amortisation payments, amounting to approximately £63m, which were due to be paid in July 2020 and July 2021. The Board has also
announced that the Company will not pay a dividend in respect of the current financial year.
At the end of the year, the Group had approximately £520m of available liquidity, including cash of £185m and committed undrawn revolving
credit facilities of £150m, as well as a further £175m available to be drawn down under the CCFF. The £150m revolving credit facility is
committed until July 2022, while the Bank of England has confirmed that the Group can draw down the maximum £300m available to it under
the CCFF for a period extending through to February 2022.
Taking into account the current level of cash and available facilities and the monthly cash burn as described above, we are confident that we
have sufficient liquidity to operate even through a prolonged crisis and a slow recovery. Nevertheless, notwithstanding the recent positive
news on the development of potential vaccines, we recognise that the pace of the anticipated recovery in our markets remains uncertain, and
as such there may be a requirement to raise additional liquidity prior to the repayment of the CCFF in early 2022.
In addition to the action taken in the Spring to strengthen liquidity, the Group secured an agreement in May 2020 from SSP’s lending group of
banks and its US private placement note holders to waive existing financial covenants, testing both interest cover and leverage, for the two
testing periods covering the twelve months to 30 September 2020 and 31 March 2021. They agreed that these existing covenants would
be replaced between the date of the agreement and 30 September 2021 by two new covenants, each tested monthly, with the first of these
based on the Group demonstrating a minimum level of liquidity and the second based on the Group not exceeding a maximum level of net debt.
For the testing period ending 30 September 2021 both the existing and new covenants would be relevant, with the Group returning to the
existing covenants thereafter, once compliance with the existing covenants has been confirmed.
In order to provide the maximum financial flexibility for the Group through this exceptionally challenging period, we have now agreed further
covenant waivers and amendments covering the period up to March 2022. As was the case with the covenant amendments agreed in May,
the existing financial covenant testing leverage has been waived, until reinstated in March 2022, with the two temporary, monthly-tested
new covenants on minimum liquidity and maximum net debt introduced for a further six months from October 2021. For the testing period
ending 31 March 2022 both the existing and new covenants would be relevant, with the Group returning to the existing covenants thereafter,
once compliance with the existing covenants has been confirmed. In addition, we have agreed to an additional new covenant, testing minimum
EBITDA thresholds for the six months ending 30 September 2021 and 31 December 2021. Modified interest cover tests (calculated on a last
six months basis) will also be applied at these two testing dates. All of these new covenant thresholds have been based on our most pessimistic
trading scenario, which is described in more detail alongside the Board’s considerations in adopting the going concern basis of accounting in
note 1.2 on pages 106-107.
Impact of IFRS 16 ‘Leases’
As stated above, the Group adopted IFRS 16 ‘Leases’ with effect from 1 October 2019 using the modified retrospective approach to transition
which means that the prior year balances have not been restated. The new standard requires that the Group's leased assets are recorded as
right-of-use assets together with their corresponding lease liabilities. Interest expense is recognised on the lease liability and the right-of-use
assets are required to be depreciated on a straight-line basis over the lease term.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 28
FINANCIAL REVIEW CONTINUED
Income Statement impact
The impact of the implementation of IFRS 16 on the Income Statement for the year ended 30 September 2020 is as follows:
Revenue
Underlying operating (loss)/profit
Share of loss from associates
Finance income
Finance expense
Underlying loss before tax1
Year ended
30 September
2020
IAS 17
£m
Year ended
30 September
2020
IFRS 16
£m
IFRS 16
adjustment
£m
1,433.1
(211.7)
(1.7)
2.5
(28.7)
(239.6)
–
(103.7)
(0.7)
–
(27.8)
(132.2)
1,433.1
(315.4)
(2.4)
2.5
(56.5)
(371.8)
1
Stated on an underlying basis, which excludes non-underlying items as further explained in the section on Alternative Performance Measures (APMs) on
pages 31-32.
Balance Sheet impact
The impact of the implementation of IFRS 16 on the Balance Sheet as at 30 September 2020 is as follows:
Non-current assets
Right-of-use assets
Other non-current assets
Current assets
Trade and other receivables
Other current assets
Total assets
Current liabilities
Lease liabilities
Other current liabilities
Non-current liabilities
Lease liabilities
Other non-current liabilities
Total liabilities
Net assets
Total equity
As at
30 September
2020
IAS 17
£m
As at
30 September
2020
IFRS 16
£m
IFRS 16
adjustment
£m
–
1.271.2
1,294.9
1,294.9
9.3
1,280.5
132.4
216.7
349.1
(7.1)
1.9
(5.2)
1,271.2
1,304.2
2,575.4
125.3
218.6
343.9
1,644.0
1,275.3
2,919.3
–
(596.3)
(596.3)
(289.1)
5.9
(283.2)
–
(1,060.2)
(779.1)
(779.1)
(1,375.4)
268.6
268.6
1.5
(1,058.7)
(1,341.9)
(66.6)
(66.6)
(289.1)
(590.4)
(879.5)
(1,060.2)
(777.6)
(1,837.8)
(2,717.3)
202.0
202.0
Cash flow impact
There is no net impact on cash flows, however, there has been a change in classification of cash flows whereby an increase in net cash inflows
from operating activities has been offset by a decrease in net cash flows from financing activities.
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Further information on the impact of adoption of IFRS 16 can be found in note 1.
Year ended
30 September
2020
IAS 17
£m
(197.5)
(153.1)
307.5
(43.1)
Year ended
30 September
2020
IFRS 16
£m
2.4
(153.1)
107.6
(43.1)
IFRS 16
adjustment
£m
199.9
–
(199.9)
–
SSP Group plc Annual Report and Accounts 2020 29
Principal risks
Two new principal risks facing the Group have been added since last year regarding liquidity and funding and the impact of Covid-19.
The impact of these risks has been discussed above.
The Company's principal risks, together with the Group’s risk management process, are detailed on pages 33 to 41, and relate to the following
areas: the two new risks noted above, business environment and geopolitical uncertainty; retention of existing contracts; impact of Brexit;
senior management capability and retention; regulatory compliance; food safety and product compliance; labour laws and unionisation;
information security and stability; benefits realisation from efficiency programmes; changing client behaviours; outsourcing programmes; tax
strategy; maintenance and development of brand portfolio; and expansion into new markets.
Post balance sheet events
In December 2020, SSP Financing Limited secured an agreement from its lending group of banks and US private placement note holders to
waive the net debt cover financial covenant for the testing period covering the twelve months to 30 September 2021. Please refer to the going
concern section in note 1.2 on pages 106-107 for further details.
Alternative Performance Measures
The Directors use alternative performance measures for analysis as they believe these measures provide additional useful information on
the underlying trends, performance and position of the Group. The alternative performance measures are not defined by IFRS and therefore
may not be directly comparable with other companies' performance measures and are not intended to be a substitute for IFRS measures.
Further detail is provided on pages 31-32.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 30
KEY PERFORMANCE INDICATORS
Our strategic priorities based on our five lever framework are:
1 Optimising our offer to benefit from the positive trends in our markets and driving profitable LFL sales; 2 Growing profitable new space;
3 Optimising gross margins and leveraging scale benefits; 4 Running an efficient and effective business; and 5 Optimising investment
using best practice and shared resources.
Revenue (actual currency – £m)
Year-on-year revenue movement (constant currency – %)
2,379.1
+19.5%
2,564.9
+7.8%
2,794.6
+9.0%
1,433.1
-48.7%
1,990.3
+8.6%
1,832.9
+0.3%
£583k
4.3%
5.0%
11.7%
9.5%
7.8%
-47.9%
2015
2016
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
Strategic priorities 1 2
Definition – Revenue represents amounts for catering and retail
goods and services sold to customers excluding value added tax
and similar items.
Comment – Total revenue decreased by 48.7% to £1,433.1m (at
actual exchange rates) following the significant impact of Covid-19
on passenger numbers across all of our markets.
Strategic priorities 1 2
Definition – Revenue at constant currency eliminates the impact
of foreign exchange rates on reported revenue. Constant currency
is based on average 2019 exchange rates, weighted over the financial
year by 2019 results.
Comment – Revenue decreased by 47.9% in 2020 on a constant
currency basis, comprising like-for-like fall of 50.8% and net
contract gains of 2.9%.The overall impact on revenue of the
movement in currencies (principally the Euro, US Dollar, Swedish
Krona, Norwegian Krone and Indian Rupee) was -0.8%.
Like-for-like sales (%)
Underlying operating profit/(loss)* (actual currency – £m )
3.7%
3.0%
3.1%
2.8%
1.9%
-50.8%
2015
2016
2017
2018
2019
2020
Strategic priorities 1
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. Units temporarily closed as a
result of Covid-19 have not been excluded for the purposes of the
like-for-like calculation.
Revenue in outlets which have been open for less than 12 months
are excluded from like-for-like sales and classified as contract gains.
Prior period revenues in respect of closed outlets are excluded from
like-for-like sales and classified as contract losses.
Comment – Like-for-like sales fell by 50.8% due to the impact of
Covid-19. Following a good first quarter, like-for-like sales were
impacted by the spread of the virus across the world, resulting in the
effective shut down of the global travel market.
195.2
+19.8%
221.1
+13.3%
162.9
+34.2%
97.4
+10.1%
121.4
+24.6%
-211.7
-195.7%
2015
2016
2017
2018
2019
2020
*Stated on a Pro forma IAS 17 underlying basis. Refer to section on Alternative
Performance Measures (APMs) on page 31 for further details
Strategic priorities 1 2 3 4
Definition – Pro forma IAS 17 underlying operating profit / (loss)
represents revenue less operating costs which exclude a number
of items which are not considered reflective of the normal trading
performance of the business, and are considered exceptional
because of their size, nature or incidence. Refer to note 7 for further
details of non-underlying items.
Comment – Pro forma IAS 17 underlying operating loss for the
year was £211.7m, a decrease of 195.7% compared to the prior
year on both constant currency basis and at actual exchange
rates. Statutory operating loss was £363.9m (2019: £219.2m
profit), reflecting various non-underlying items totalling £48.5m
(2019: £1.9m) which have been discussed further in note 7.
SSP Group plc Annual Report and Accounts 2020 31
Alternative performance measures
The Directors use alternative performance measures for analysis as they believe these measures provide additional useful information on the
underlying trends, performance and position of the Group. The alternative performance measures are not defined by IFRS and therefore may
not be directly comparable with other companies’ performance measures and are not intended to be a substitute for IFRS measures.
Revenue growth
As the Group operates in over 30 countries, it is exposed to translation risk on fluctuations in foreign exchange rates, and as such the Group’s
reported revenue and operating profit will be impacted by movements in actual exchange rates. The Group presents its financial results on a
constant currency basis in order to eliminate the effect of foreign exchange rates and to evaluate the underlying performance of the Group’s
businesses. The table below reconciles reported revenue to constant currency sales growth, like-for-like sales growth, net contract gains/
(losses) and the impact of acquisitions where appropriate.
(£m)
2020 Revenue at actual rates by segment
Impact of foreign exchange
2020 Revenue at constant currency1
UK
410.1
0.6
410.7
Continental
Europe
North
America
558.2
15.5
573.7
274.9
3.2
278.1
RoW
189.9
2.5
Total
1,433.1
21.8
192.4
1,454.9
2019 Revenue at actual rates
840.5
1,036.9
533.4
383.8
2,794.6
Constant currency sales (fall)/growth
(51.1)%
(44.7)%
(47.9)%
(49.9)%
(47.9)%
Which is made up of:
Like-for-like sales growth2
Net contract gains3
(51.2)%
(48.2)%
0.1%
3.5%
(51.1)%
(44.7)%
(53.1)%
5.2%
(47.9)%
(53.5)%
(50.8)%
3.6%
2.9%
(49.9)%
(47.9)%
1
Constant currency is based on average 2019 exchange rates weighted over the financial year by 2019 results.
2
Like-for-like sales represent revenues generated in an equivalent period in each financial period in outlets which have been open for a minimum of
12 months. Units temporarily closed as a result of Covid-19 have not been excluded for the purposes of the like-for-like calculation. Like-for-like sales are
presented on a constant currency basis.
3
Net contract gains represent the net year-on-year revenue impact from new outlets opened and existing units permanently closed in the past 12 months.
Net contract gains/(losses) are presented on a constant currency basis.
Underlying profit measures
The Group presents underlying profit/(loss) measures, including operating profit/(loss), profit/(loss) before tax and earnings/(loss) per share,
which exclude a number of items which are not considered reflective of the normal trading performance of the business, and are considered
exceptional because of their size, nature or incidence. The table below provides a breakdown of the non-underlying items in both the current
year and the prior year.
Operating costs
Impairment of goodwill
Impairment of property, plant and equipment
Impairment of right-of-use assets
Depreciation
IFRS 16 rent credit
Restructuring expenses
Amortisation of intangible assets arising on acquisition
Finance expenses
Effective interest rate charge and debt modification loss
Unwind of discount on obligation to acquire additional share of subsidiary undertaking
Foreign exchange (losses)/gains on revaluation of obligation to acquire additional share of subsidiary undertaking
Other
Taxation
Tax credit on non-underlying items
Total non-underlying items
IFRS 16
2020
£m
IAS 17
2019
£m
(33.0)
(38.4)
(38.2)
(6.2)
91.9
(22.7)
(1.9)
(48.5)
(5.4)
–
–
(0.1)
(5.5)
4.4
(49.6)
–
–
–
–
–
–
(1.9)
(1.9)
(2.2)
(0.3)
(1.6)
–
(4.1)
1.4
(4.6)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 32
KEY PERFORMANCE INDICATORS CONTINUED
Further details of the non-underlying operating items have been provided in the Financial Review section on page 22.
Furthermore, a reconciliation from the underlying to the statutory reported basis is presented below:
Operating (loss)/profit (£m)
Operating margin
(Loss)/profit before tax (£m)
(Loss)/earnings per share (p)
2020 (IFRS 16)
Non-
underlying
items
Underlying
2019 (IAS 17)
Non-
underlying
items
Total
Underlying
(315.4)
(22.0)%
(371.8)
(68.0)
(48.5)
(3.4)%
(54.0)
(8.1)
(363.9)
(25.4)%
(425.8)
(76.1)
221.1
7.9%
203.2
29.1
(1.9)
(0.1)%
(6.0)
(1.0)
Total
219.2
7.8%
197.2
28.1
Furthermore, it should be noted that the Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the modified retrospective approach to
transition. In accordance with the standard, the prior year figures have not been restated and as a result comparison with the prior year is
distorted. However, in order to provide a meaningful comparison with prior year, which was accounted for under IAS 17 ‘Leases’, commentary
has been included in the Business Review, Financial Review and other sections with reference to underlying profit measures computed in
accordance with IAS 17. These are referred to as ‘Pro forma IAS 17’ measures. A reconciliation of key underlying profit measures to ‘Pro forma
IAS 17’ numbers is presented below:
Underlying operating loss
Underlying loss before tax
Underlying loss per share (p)
Net debt
Pro forma
IAS 17
2020
£m
(211.7)
(239.6)
(45.4)
Impact of
IFRS 16
2020
£m
(103.7)
(132.2)
(22.6)
IFRS 16
2020
£m
(315.4)
(371.8)
(68.0)
(692.0)
(1,348.6)
(2,040.6)
IFRS 16 increases the underlying operating loss, whereby the depreciation of the right-of-use assets of £305.3m is offset primarily by the
reduced lease expense of £201.6m, resulting in a net charge to underlying operating loss of £103.7m. The interest charge on the lease
liabilities of £27.8m and the loss from associates of £0.7m further increases the loss, giving the underlying loss before tax impact of £132.2m.
The impact of IFRS 16 on net debt is primarily the recognition of the lease liability balance.
SSP Group plc Annual Report and Accounts 2020 33
RISK MANAGEMENT AND PRINCIPAL RISKS
Effective risk management is key to supporting
the Group’s strategic objectives.
The Board has overall responsibility for the Group’s risk management
policies and internal control systems and is also responsible for
reviewing their effectiveness. The management of risks is delegated
to the business through a variety of committees that are responsible
for reviewing and managing the procedures. We recognise that the
procedures are designed to manage, rather than eliminate, the risk
of failure to achieve business objectives as they can only provide
reasonable, but not absolute, assurance against material errors,
losses, fraud or breaches of laws and regulations.
Furthermore, the Board is responsible for ensuring that the Group
maintains a strong capital base and adequate sources of funding at
all times, in order to pursue its strategy of growth and the creation
of long-term sustainable value for its shareholders. The Board has
taken care to ensure that all relevant risks have been appropriately
analysed and understood in the context of this strategy. The regional
businesses operate within a Group-wide risk management
framework, which allows the regional management teams to utilise
their knowledge of their local markets as effectively as possible to
deliver on the Group’s strategic priorities as set out on pages 8 and 9,
whilst operating within the risk tolerance levels set by the Board.
Risk management framework
The Group’s risk management framework is designed to ensure that
material 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 and emerging risks faced by the
Group. This process was in place throughout 2020 and up to the date
of approval of this Annual Report, which meets the requirements of
the guidance produced by the Financial Reporting Council.
However, while the Group has continued to embed internal control
and risk management further into the operations of the business and
to deal with any areas of improvement which come to management’s
and the Board’s attention, a key aspect of the last half year has been
considering the processes in light of Covid-19 and appropriate
adjustments given Covid-19’s impact on the Group (see page 36 for
details of emerging Covid-19 risks).
The Audit Committee has kept under review the effectiveness of the
system of internal controls 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 local
management teams maintain country and regional risk registers.
The regional/country registers cover the assessment of risks
(including social, environmental, governance and ethical matters),
any major changes in risks or new initiatives, and any current
as well as future mitigation activities, which are discussed by
the Executive Committee. The Group maintains a top down
consolidated risk register which covers risks to the overall Group.
Risks are evaluated in respect of their potential impact and
likelihood, and key risks are highlighted to the Risk Committee and
the Audit Committee;
• The Board discusses and agrees the principal risks that are
included in the Annual Report;
• An annual risk management action plan is put in place to further
enhance the Group’s risk management capability;
• The Group has established and rolled out a number of risk
management polices including a Colleague Code of Conduct,
a Whistleblowing Policy, an Anti-Bribery and Anti-Corruption
Policy, a Prevention of the Facilitation of Tax Evasion Policy, a
GDPR Compliance Policy, and various IT security polices, as well
as training thereof, all of which are refreshed on an ongoing
basis. Training has been provided to the Board and the senior
management, which covers the obligations and behaviours of a
UK listed company, including those relating to compliance, insider
trading and market abuse;
• The management of risk and compliance with associated policies
is considered as part of the Group’s performance management
systems; and
• The Board considers social, environmental, governance and ethical
matters in relation to the Group’s business as part of its Corporate
Responsibility Strategy and assesses these when reviewing
the risks faced by the Group. Further information regarding
environmental and ethical matters is available on pages 12 to 19.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 34
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
The table on pages 36 to 41 summarises the principal risks and
uncertainties to which the Group is exposed, and the actions taken
to mitigate them. Risks are identified as ‘principal’ based on the
likelihood of occurrence and the potential impact on the Group.
The principal risks are listed in order of priority.
Two new risks regarding liquidity and funding and impact of Covid-19
have been added to the principal risks since last year. Two risks,
relating to competitive intensity and business development
capability and investment, are no longer considered strategic risks,
and as such have been removed from the principal risks.
There were no changes to the Group’s internal controls over financial
reporting that occurred during the year ended 30 September 2020
that have materially affected, or are reasonably likely to materially
affect, the Group’s reported financial position.
Approach to risk management following the onset of Covid-19
The impact of Covid-19 has been significant on SSP and has been
detailed in various sections of the Strategic Report. As such, the
narrative below should be read in conjunction with other sections of
the Strategic Report to provide a better understanding of the risks
and our response to Covid-19.
Internal control framework
The Board has overall responsibility for the Group’s internal control
framework and reviewing its effectiveness. The Audit Committee
supports the Board generally in regularly reviewing the effectiveness
of the Group’s system of internal controls.
It became clear at the start of the second quarter of the financial
year that Covid-19 would become a global pandemic and would have
a severe impact on all our regions. The Group management took
decisive action to protect its staff and customers as well as the long-
term viability and survival of the business.
The regional and country management teams 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.
During 2020, the Board reviewed the effectiveness of the Group’s
risk management and internal controls systems. These reviews
included an assessment of internal controls, in particular operational
and compliance controls as well as their effectiveness, supported by
reports from the internal auditor as well as the external auditor on
matters identified in the course of their statutory audit work.
In addition during the year, Deloitte, as internal auditor, carried out a
Strategic Risk Assurance Review following the 2019 Risk Assessment
process to determine the extent to which the highlighted mitigation
activities had been implemented and to consider whether additional
assurance activity is appropriate from internal audit. They confirmed
that the mitigations for the strategic risks were being incorporated
as a part of the senior management’s key oversight processes
such as business performance and forecasting, Group Business
Development and Group Investment Committee processes and New
Plan initiatives.
From the outset of the pandemic, the Group established a Business
Continuity Committee, led by the Group HR Director, to provide
strategic leadership and to ensure the implementation of the
requisite processes to mitigate risks arising out of the various
potential Covid-19 scenarios. Group HR carried out a comprehensive
review of government guidelines on health and safety and social
distancing procedures to ensure customer and employee safety can
be ensured as offices and units started to reopen following the initial
closures. Liquidity and funding emerged as a significant risk during
the period.
SSP implemented various processes to effectively manage liquidity
pressures including utilising the government support schemes,
significant reduction in capital expenditure as well as implementation
of salary reductions across senior management. Further detail on the
impact of Covid-19 on our existing risks as well as mitigation plans
has been set out in the principal risks section on page 36.
SSP Group plc Annual Report and Accounts 2020 35
The Group’s risk management framework
Overall responsibility for the Company’s system of internal controls and risk management policies.
Board
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
• Receives and reviews detailed risk registers, Control
and financial controls.
Self-Assessment (CSA) results and internal audit reports.
• Assesses the integrity of the Group’s financial reporting.
Risk Committee
Executive Committee
Disclosure Committee
Top down
Oversight and
leadership of risk
management
approach
Meets quarterly and operates under the
management of the Audit Committee.
Chaired by the CFO and comprises
various senior management. Senior
representatives from Deloitte attend in
their internal audit capacity.
• Reviews and updates risk registers.
• Reviews operational risks, controls and KPIs
on an ongoing basis.
• Reviews results of the CSA process and
internal audit reports.
• Reviews the Group balance sheet.
• Reviews the Group’s information security
protocols.
• Assesses safety management reports
and initiatives.
• Reviews internal reports required by the
Group Anti-Bribery and Corruption Policy
and assesses further actions and controls.
• Reviews the Group’s strategy for privacy
and GDPR compliance.
• Reviews the Group’s activities in managing
the risk of modern slavery.
Meets monthly and is chaired by the CEO.
Composed of the Executive Directors and
senior management (comprising regional
CEOs and functional heads).
Composed of the CEO, CFO and
Company Secretary.
Meets on an ad hoc basis.
• Produces a detailed Budget annually
• Identifies information which requires
disclosure under the Listing Rules, Market
Abuse Regulations or the DTRs in a timely
manner, to ensure that such information
is properly considered and that such
consideration includes whether the
information should be disclosed.
in accordance with our financial
processes. This is reviewed and
approved by the Board.
• Keeps Budget under review pursuant
to operational reports on a weekly and
monthly basis in accordance with the
Group’s financial procedures manual.
• Identifies and executes, subject to
the necessary Board approvals, new
strategic business opportunities and
relationships.
• Identifies and executes, subject to the
necessary Board approvals, strategic
business acquisition and divestment
opportunities and major capital
expenditure proposals.
• Reviews the assessment of risks, as
well as current and future mitigation
activities at both the Group and regional/
country levels.
• The CEO and CFO report to the Board on
financial performance and key issues as
they arise.
Group Finance
Financial Reporting
Group Investment Committee
• Coordinates the risk management process (updates risk registers,
• Reviews and authorises material capital investments and
assesses risk ratings and documents mitigating controls).
• Conducts meetings with risk owners across the business.
• Coordinates and consolidates local risk registers.
• Along with the CEO and CFO, carries out regular trading and
financial reviews to monitor the ongoing operations of the Group.
acquisitions proposed by the business.
• Operates an annual post investment review process covering
all acquisitions and capital expenditure approved by the Group
Investment Committee.
Regional and Country Management
• Implements internal control and risk management practices locally and ensures compliance with the Group’s policies and procedures.
• Considers, updates and maintains local risk registers and risk maps.
• Completes the annual CSA process, and proposes and follows up on action points to address any control gaps.
• Submits requests for approval of controlled activities.
• Compiles reports and maintains registers as required (e.g. ABC, safety, modern slavery and other compliance matters).
• Carries out assurance activities to help inform the Board and committees of potential risk areas and mitigating controls.
Internal Audit
Bottom up
Identification,
assessment,
mitigation and
escalation
of risks
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 36
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Principal risks
Risks are identified as ‘principal’ on the basis of their likelihood of occurrence and their potential impact on the Group. Furthermore,
our strategic priorities based on our five lever framework laid out below form the basis of Group-wide risk identification, assessment
and discussions:
1 Optimising our offer to benefit from the positive trends in our markets and driving profitable LFL sales; 2 Growing profitable new space;
3 Optimising gross margins and leveraging scale benefits; 4 Running an efficient and effective business; and 5 Optimising investment
using best practice and shared resource.
The principal risks discussed in the table below are listed in order of priority. New risks have been added to the principal risks since last year
regarding liquidity and funding and the impact of Covid-19.
Risk increasing
Risk decreasing
No risk movement
Risk/Risk priority
Risk description
Mitigating factors
SSP has implemented effective processes to minimise
liquidity pressures; for example, a significant reduction
in capital spend and the furlough of colleagues, as well as
salary reductions have been implemented across senior
management.
Further, the Group did not declare an interim dividend,
postponed its share buyback programme and completed a
new equity placing in March 2020 (as well as a small placing
in June 2020 to retain some of the final 2019 dividend as
cash in the business).
Covenant amendments have been secured as further
detailed in the viability statement on pages 42-43, and in
the going concern note on pages 106-107. Management will
remain in close dialogue with both lenders and USPP note
holders and will seek further covenant amendments should
the need arise. Liquidity and covenants headroom is closely
monitored and stress tested.
SSP has also engaged in ongoing discussions with key
advisors and lenders about access to alternative sources of
finance in the future should this be needed in the medium to
longer term.
The Group has implemented short-term cost reductions and
a significant restructuring programme to reduce the cost
base, while also improving short-term liquidity by the use of
government support schemes, such as the UK’s Coronavirus
Job Retention Scheme, reduction in capex spend and
negotiating rent reliefs with its clients. There has also been
a reduction in product range to further reduce supply chain
complexity and costs.
The Group CEO and CFO continue to carry out focused
weekly trading reviews with country management teams.
Management have also put in place rolling forecasts in
place of quarterly forecasts to enable the Group to react to
changes as they occur.
At the outset of the Covid-19 pandemic, the
Group established a Business Continuity Committee to
ensure that the Group had all the proper processes in place
to mitigate the risks of a variety of Covid-19 scenarios.
This was led by the Group HR Director with input from our
internal auditor’s risk/crisis team.
Group HR has led a comprehensive review of government
guidelines on health and safety and social distancing
procedures to ensure customer and employee safety can be
ensured as offices and units start to reopen.
1 Liquidity and
funding
New risk
Strategic priorities
4
2 Impact of
Covid-19
New risk
Strategic priorities
4
Covid-19 has significantly reduced trading over an
extended and uncertain timeframe. An inability to
effectively respond and manage expenditure accordingly
would impact the Group’s ability to operate within
committed credit facilities.
The Group is reliant on the Covid Corporate Financing
Facility (CCFF), and an inability to refinance the facility or
draw down further funding tranches would further impact
the Group’s ability to operate within committed credit
facilities. The Group’s senior debt facilities, which mature
in July 2022, will also need refinancing or extending in
due course. There is also a risk of breaching covenants
on existing financing facilities unless covenant waivers
are secured from lenders. If the Group is unable to agree
covenant waivers there is a risk that the lenders could
require repayment of their financing commitments.
The pandemic has had a severe effect on the travel
sector, which has been effectively closed in many of SSP’s
markets, and there is a risk that the recovery in the travel
markets may be prolonged due to ongoing restrictions
for health and safety reasons and behavioural changes
which might impact passenger numbers. In the Air sector
most industry analysts expect that there will not be a
recovery to pre-Covid levels of activity until 2023 or 2024.
The principal reasons for this will be a potential loss of
business travel, as companies look to restrict travelling and
promote video-conferencing, which has proven effective
during the pandemic, and a reduction in long haul travel, as
a consequence of airline capacity reductions and safety
concerns. In the Rail sector, there may also be some longer
term impacts on passenger numbers as a consequence the
accelerated trend towards working from home, which has
proven effective for many firms and their employees, and
will affect commuter travel which is important for SSP’s
rail operations.
The risks to SSP are that passenger volumes may not
return to pre-Covid levels, and therefore impact sales
potential, leaving some outlets and contracts operating
at uneconomic levels of sales, given the fixed operational
cost base. There is also a risk that there is greater pressure
from clients to pay fixed minimum guaranteed rents,
even at lower passenger volumes, or open more outlets at
individual sites than is commercially optimal for SSP.
Furthermore there is a risk that some of the actions
taken by SSP to trade through the pandemic, notably the
organisational restructuring undertaken in many countries,
may leave the business under-resourced for a recovery in
demand and remove key management capabilities.
As a consequence of Covid-19 the Group has been required
to adopt new health and safety protocols and operational
standards (e.g. to meet social distancing regulations)
in order to protect its staff and customers. All of these
potentially lead to higher operational costs and carry
compliance risks.
SSP Group plc Annual Report and Accounts 2020
37
Risk/Risk priority
Risk description
Mitigating factors
The Group operates in the travel environment where
external factors such as the general economic and
geopolitical climate, levels of disposable income,
weather, changing demographics and travel patterns
could all impact both passenger numbers and consumer
spending. There is a risk that the Group is unable, or
poorly placed, to respond to these external events.
The travel environment is vulnerable to acts of
terrorism or war, an outbreak of pandemic disease, or
a major and extreme weather event or natural disaster
which could reduce the number of passengers in
travel locations.
Tourism and business travel have been materially
impacted by Covid-19 resulting in a direct business
impact due to the downturn in the global economy.
while also increasing the risk of economic downturn
in the global economy. The crisis will be more acute
in countries with a high level of debt and dependency
on tourism, e.g. Greece and Spain, and the timeline to
recovery in the travel sector is uncertain.
Further, Covid-19 has exacerbated risk to airline
stability, which had previously been increasing, e.g.
the failure of Jet Airways and impact of Boeing Max
737 grounding.
Increased protectionist trade policy and tariffs could
result in cost inflation, particularly in the US. Public
concern over climate change may impact air travel,
either directly or through government policies.
The Group’s operations are dependent on the terms
of airport and railway station concession agreements.
Growth (and maintenance of market share) is
dependent on the Group’s ability to retain existing
concession contracts and win new contracts from
either new or existing clients.
Covid-19 has resulted in a reduction in tenders, thus
reducing this risk in the short term. However, rent relief
negotiations may result in friction, especially for reliefs
sought beyond the near term. Unsuccessful rent relief
negotiations may force the Group to exit units that are
no longer viable.
Moreover, as trading recovers from Covid-19 impact,
there may be tensions over the timing of reinstatement
of suspended capital expenditure programmes given
the ongoing pandemic and unit closures.
Resource reductions made in response to Covid-19
may result in reduced operational standards, impacting
relationships with clients and franchise partners in the
medium term.
Brexit may have an adverse impact on the wider
economic environment in the UK and across the EU,
resulting in weaker consumer spending in the travel
food and beverage markets. It would also impact the
travel sector directly if any restrictions in the freedom
of industrial air travel between the UK and EU countries
come into force.
The potential depreciation of the pound could lead to
cost inflation pressures, particularly in the food
commodity markets.
Potential restrictions on mobility of EU nationals post-
Brexit may limit the availability of labour resource in
the UK in the long term.
These risks may be compounded in the case of
a ‘no deal’ Brexit which could further reduce the
attractiveness of the UK for investment.
3 Business
environment and
geopolitical
uncertainty
Strategic priorities
1 2
4 Retention
of existing
contracts
Strategic priorities
1 2
5 Impact of Brexit
Strategic priorities
1 3
The Group monitors the performance of individual
business units and markets regularly. The Executive
Directors review detailed weekly and monthly
information covering a range of KPIs, and monitor
progress on key strategic projects with local senior
management. Specific short- and medium-term actions
are taken to address any trading performance issues
which are monitored on an ongoing basis.
There has been greater focus on business continuity
planning and recovery. The Business Continuity plan has
been tested during this current crisis with staff working
from home and has proved to be effective.
The Group has been conducting research to understand
changing requirements of customers in light of the
pandemic to better tailor our offer to their needs.
The Group’s local management structures in all its major
geographies allow it to maintain strong relationships
with its clients and to monitor performance in close
partnership with its clients’ management teams.
Further, the Group has an established contact strategy
with key clients to establish and/or maintain ongoing
relationships. These are discussed between Group and
local management on a regular basis.
Management has actively engaged with clients on
a reopening programme to ensure that units can be
reopened profitably.
The Group conducts regular online and interview-
based client surveys to ensure any concerns are
being addressed.
The Group carefully monitors the ongoing negotiations
of the UK’s exit from the EU through its Brexit risk
mitigation committee.
The Group maintains a global portfolio and regularly
monitors the impact of foreign exchange fluctuations
on its cash flows, mitigating the impact from foreign
exchange risk.
The Group’s pricing and range initiatives are driven
by continuous monitoring of consumer spending
benchmarks.
Various gross margin initiatives, including recipe
re-engineering and procurement rationalisation
continue to be pursued, to mitigate the impact of
cost inflation.
The Group continues to develop its UK recruitment
strategy to ensure SSP is positioned as an attractive
employer in the UK during the store reopening
programme. There is also an ongoing focus on labour
flexibility and productivity to improve retention rates
post Brexit. An increased focus on technology initiatives
during the Covid-19 recovery stage will help reduce
demand for labour as units open.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
38
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Risk/Risk priority
Risk description
Mitigating factors
6 Senior
management
capability and
retention
Strategic priorities
4
7 Regulatory
compliance
Strategic priorities
1 2
The performance of the Group depends on its ability
to attract, motivate and retain key employees. The
skills developed in our business are highly attractive
to other companies, which regularly target our staff
for recruitment.
Given the impact of Covid-19 and the increasing risk
over staff retention, particularly for senior employees
with transferable skills, insufficient senior capability
risk has increased over the prior year. Additionally,
there continues to be a risk that the Group may not have
sufficient resources in various functions including in
legal, finance and IT, to meet the changing and complex
needs of an international business as it adapts and
recovers from the impact of Covid-19.
It may also be difficult to attract senior employees as
the travel food sector will be considered riskier in the
short to medium term.
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, labour, employment,
immigration, security and safety, bribery and
corruption, tax evasion, modern slavery, competition
and antitrust, consumer protection, data protection,
licensing requirements and related compliance. There
is a risk that the Group fails to comply with such laws
and regulations.
The UK Corporate Governance Code 2018, certain
amendments to the Companies Act and IFRS 16 are
applicable to SSP’s current financial year. These new
requirements create a disclosure and reporting risk in
the financial statements as well as reputational risk if
the new rules are not properly implemented.
Covid-19 has resulted in an additional compliance
burden due to the increased health and safety
protocols to be observed for colleagues and customers,
use of government support programmes (e.g. furlough
schemes) and an increased focus on good governance.
Reduced staffing and employees being placed on
furlough, and an increase in reliance on external
advisors, has also led to an increased compliance risk,
slightly offset by the extension of compliance deadlines
.
The Remuneration Committee reviewed the
remuneration for senior management in light of
Covid-19 with the aim of ensuring that the reward offer
is designed to attract, retain and motivate the key
personnel required to run the Group effectively. In light
of Covid-19 and the resulting increased recruitment
and retention risk, the Group has developed revised
incentive schemes for senior management, e.g. a revised
LTIP structure.
The Group also continues to review key roles and
succession plans at a country and at a Group level. The
Group carries out an annual talent mapping exercise
to identify candidates for future roles and continues
to invest in additional resources to support change
initiatives and career development programmes.
The Group has procedures and processes in place to
ensure compliance with local laws and regulations. The
Group may obtain external advice to supplement the
in-house legal and compliance team.
The Group has a number of key compliance polices
(e.g. Anti-Bribery and Anti-Corruption) for which
training has been rolled out internationally. This is
continually being reviewed and updated to improve
controls and monitoring. The Group’s procedures
under its compliance policies include regular reporting
by the businesses to the Risk Committee and regular
monitoring by internal audit. All alleged breaches of the
Group’s policies are investigated.
GDPR compliance is determined and managed locally
but is overseen by a steering committee, comprising
leadership from Group HR, Group IT, Commercial
and Legal. The Group’s Global Privacy development
programme is temporarily on hold in light of Covid-19,
however, with advice from its external advisors, the
Group has adopted a short-term simplified controls
programme for FY 2021.
Related to IFRS 16, a new software solution has been
implemented to ensure correct computation of the
impact on the financial statements. Increased frequency
of reviews from country CFOs have ensured that risks
related to completeness and accuracy of the numbers
is mitigated.
Following the onset of the Covid-19 pandemic, the
Group’s internal, legal and finance teams (supported
by the Business Continuity Committee) have worked
closely with the local business teams to assess the risk
of non-compliance with laws and contracts arising from
the crisis and to advise on mitigating actions (including
operational protocols to safeguard our various
stakeholders).
SSP Group plc Annual Report and Accounts 2020
39
Risk/Risk priority
Risk description
Mitigating factors
Food safety and integrity are vital for our business.
The preparation of food and maintenance of the
Group’s supply chain require a base level of hygiene,
temperature maintenance and traceability. Non-
compliance with food safety laws or failure to
effectively respond to a food safety incident, can
expose the Group to significant reputational damage
as well as possible food safety liability claims, financial
penalties and other issues.
Proper management of allergens remain in the industry
spotlight. From October 2021, foods that are pre-
packaged for direct sale in the United Kingdom will
need to have a label with a full ingredients list with
allergenic ingredients emphasised within it (commonly
referred to as ‘Natasha’s Law’).
An increase in NGO activism and UK public awareness
has seen increased pressure to reduce the use of
plastics in the food and beverage (F&B) industry.
Network Rail has stated that F&B units must be plastic-
free at their sites by 2020. Switching to non-plastic
alternative materials could have significant cost impact
on the business. There is also the risk of additional
levies being imposed by the government on the use
of plastic.
Approximately half of the Group’s employees are subject to
collective bargaining agreements. These are principally in
France, Germany, Spain, Denmark, Finland, Norway, Sweden
and the United States.
The Group is also subject to minimum wage requirements
and mandatory healthcare subsidisation in some of the
jurisdictions in which it operates, notably North America, the
United Kingdom and China. Furthermore, in the US, costs
have continued to increase due to the Fair Labor Standards
Act (‘FLSA’) as well as the immigration policy which has had
an adverse impact on the supply of labour. There is a risk that
the Group is unable to offset the cost impact of the above on
its overall labour costs,
There is also a risk that governments will seek further
employee protections as a result of Covid-19, which could
negatively impact the Group’s base costs.
There is a risk that the Group becomes exposed to
information security, cyber threats, e.g. threats detailed
in the Payment Card Industry Data Security Standards
(PCIDSS) as well as ransomware attacks, particularly in light
of increased homeworking of its head office staff.
The Group has commenced a major programme to
implement SAP Inventory and Finance systems which can
risk significant operational disruption. There is a risk that
the speed of implementation is negatively impacted by the
Covid-19 recovery process.
As the Group adapts to the post Covid-19 way of doing
business, there is likely to be an increased focus on
technology solutions and there is a risk that the Group is
unable to make the right investment of time, capital and
resource into such programmes.
Reduction in resource as part of Covid-19 response may
generally increase pressure on IT teams.
8 Food safety
and product
compliance
Strategic priorities
1 2
9 Labour laws
and unionisation
Strategic priorities
4
10 Information
security and
stability
Strategic priorities
4 5
The Group has implemented a global safety
management programme, setting minimum standards
of health and safety, fire safety and food safety across
all its operations and requiring periodic reporting
of performance and incident statistics. Within this
management programme are food safety standards
which include processes to monitor the supply chain and
to manage allergens. All SSP country operations are
required to report on all food safety incidents (including
allergens) on a periodic basis to the Risk Committee,
which reports on global safety performance to the Audit
Committee every six months.
SSP UK & Ireland currently controls allergen
management within the supply chain, supported by staff
training and unit audits. All operational staff undertake
allergen training as part of mandatory training upon
commencement of employment in unit. All units are
subject to an unannounced ‘Safe and Legal’ audit by
the Health and Safety team on a 12-monthly cycle. Full
technical guidance and clarity of scope of Natasha’s
Law is expected to be provided by the Food Standards
Agency. The UK allergens working group set up last year
is currently checking which products are in scope,
and sourcing an IT platform to support allergen data
and labelling.
Ongoing reviews of operations are being carried out
in the UK to determine plastic-free feasibility and
opportunities.
The Group works proactively with all of its unions to ensure
that the various collective bargaining agreements are
appropriate for the Group and therefore minimise
commercial risks.
The Group is continually reviewing the impact of changes in
remuneration structures in developing mitigating strategies
across the Group. The reviews include the ongoing impact of
the National Living Wage and the Apprenticeship Levy in the
United Kingdom, and the impact of healthcare legislation and
FLSA in the United States.
The Group’s strategic plan in response to Covid-19 includes
initiatives to improve labour efficiency and profitable
reopening of units with continued focus on roll-out of
technology solutions to such as self order Kiosks and order at
table to reduce costs.
Owing to the job losses due to Covid-19, there might be
increased labour supply in the short to medium term which
may mitigate some of the risk of the ongoing labour inflation.
The Group has developed extensive IT disaster recovery
and information security policies and practices, to ensure
that these meet the changing landscape. These are regularly
discussed and reviewed by the Risk and Audit Committees as
well as the Board.
The Group’s new Security operation centre became
operational in September 2020 (as part of the Company’s
Cyber Security Programme). This will help to reduce time to
detect and respond to incidents (spam, malware attacks,
phishing emails, etc.). Additional layers of protection to
prevent ransomware impacting critical files on servers have
been added. The Group has also rolled out cyber security
training across the business to reinforce data protection
responsibilities and cyber risks.
The Group’s segmental business model and IT systems
structure help to ensure that potential cyber attacks are likely
to remain isolated locally rather than impact the entire Group.
A clear governance and management structure has been
set up for the SAP project implementation including the
engagement of a SAP preferred partner for the roll-out
which has significant experience of implementing SAP at
large companies.
In light of the increased working from home by head office
colleagues, the Group has increased the roll-out of the new
modern workplace technology to improve security of our
laptops across the business (e.g. multi-factor authentication,
encryption of all data on hard disks, etc.).
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
40
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Risk/Risk priority
Risk description
Mitigating factors
11 Benefits
realisation
from efficiency
programmes
Strategic priorities
3 4 5
12 Changing client
behaviours
Strategic priorities
1 2
13 Outsourcing
programmes
Strategic priorities
5
14 Tax strategy
Strategic priorities
1 2
The Group is continuously seeking new programmes to
improve efficiency. There is a risk that these programmes
may be difficult to implement due to complexity, and
furthermore that they could fail to deliver the desired
benefits, e.g. labour efficiency and minimising waste
and loss.
The impact of Covid-19 restructuring has been significant
and may lead to loss of momentum on technology
enhancements and capital investment that are required for
sustainable growth. This may be compounded by the loss
of resource in areas such as commercial, waste and loss,
procurement and labour management.
Changing client requirements, such as splitting tenders
across two or more providers, seeking new income
streams through pouring rights agreements, partnering
with operators in joint ventures, developing third party
purchasing models and favouring franchise and local brand
operators or partnering directly with brand owners or
increased health and safety monitoring requirements,
may adversely affect the Group’s business and /or
profit margins.
Furthermore, new tender processes can be more
complex and demand increased rents. However, Covid-19
is expected to result in a reduction in new tenders and
increased flexibility as clients aim to get through the
downturn.
The Group may fail to execute outsourcing projects
effectively, resulting in business as usual being
disrupted and the introduction of new third party risks.
Furthermore, any benefits expected from the
outsourcing programme may not be realised.
Staff turnover at outsourcing partners may be
impacted by Covid-19.
The Group may suffer reputational damage if
customers, clients and/or suppliers believe that
the Group is engaged in aggressive or abusive
tax avoidance.
There is a risk that the Group may not be tax compliant
due to complicated local tax laws across different
geographical territories. Covid-19 support schemes
(e.g. furlough) have further increased the tax
compliance burden.
There is an increased focus on tax governance from the
tax authorities, including the integration of systems
with tax authorities. There continues to be more
investment from OECD into Base Erosion and Profit
Shifting (BEPS) related initiatives. There is a risk that
there could be wholesale changes to how taxation
systems work based on the data gathered in the future.
This is also driving digitisation resulting in a cost and
complexity impact.
The Group’s strategic plan in response to Covid-19 is being
implemented with focus on guiding the business strategy
through the Covid-19 period to ensure evaluation of the
overall cost structure. This includes various initiatives such
as simplification of product offering and profitable
reopening of units.
The Group has completed a detailed evaluation, planning and
partial implementation of its major change programmes,
and adapts and responds to feedback on an ongoing basis.
To aid these programmes, the Group continues to utilise
specialist expertise in the business where required, both at a
Group and at a country level.
Group IT also provides support for project management and
implementation, using agreed standard business processes
and controls.
The Group has in place a clear ‘SSP Value Proposition’ that it
presents to the client to address this risk.
Senior Group commercial management works closely with
country management teams to enhance and clarify the
Group’s proposition to its clients. There is greater
focus on developing internal concepts to reduce complexity
and costs.
The Group’s contact strategy with key stakeholders
and clients helps to mitigate this risk. This is informed by
its annual client survey, which is carried out by an
independent party.
The Group continues to utilise specialist resources in the
business to manage implementation and transition projects,
and it continues to use external advisors to provide input
into the management of risks in such projects.
The Group has temporarily scaled down some outsourced
resources to match reduction in business operations in light
of Covid-19. This process has been well managed.
There are also monthly and quarterly reviews with
outsourcing partners focusing on efficiency and costs to
ensure shared services are being appropriately managed.
Performance feedback is reported to the Executive
Committee and the Risk Committee on a regular basis.
The Group has a tax management policy which is based on
the Board’s guidance to adopt a low-risk tax strategy.
The Group also regularly reviews its tax priorities and has
done so in light of the Covid-19 pandemic (for example,
the Eat Out to Help Out scheme was successfully rolled
out at short notice). There is also increased oversight and
monitoring of key tax issues within divisions by the Group
tax team.
Increased disclosure of tax policy and tax payments in Group
financial documents.
SSP Group plc Annual Report and Accounts 2020
41
Risk/Risk priority
Risk description
Mitigating factors
15 Maintenance/
development of
brand portfolio
Strategic priorities
1 2
16 Expansion into
new markets
The Group’s success is largely dependent upon its ability to
maintain its portfolio of proprietary brands and the brands
of its franchisors, as well as the appeal of those brands to
clients and customers.
The loss of any significant partner brands, the inability to
obtain rights to new brands over time or the diminution in
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 risk has reduced over the prior year as, in light of
Covid-19, there have been no significant new brand
openings during the year. In the short term the need for new
brands has reduced due to the economic disruption caused
by Covid-19. There is however, a risk that some of our brand
partners may fail during the ongoing pandemic resulting
in adverse financial and reputational consequences for
the Group.
Historically, the Group’s strategy has involved
expanding its business in developing markets. The
political, economic and legal systems and conditions
in these markets are less predictable than in countries
with more developed institutional structures,
subjecting the Group to additional commercial,
reputational, legal and compliance risks.
However, this risk has reduced due to the ongoing
impact of Covid-19 as entering new markets in the
short to medium term is unlikely. However, Covid-19
may extend the time period over which new businesses
can reach profitability after the initial set-up.
Strategic priorities
1 2
In light of Covid-19, to provide greater support to the
regions, the top 10 franchise brand negotiations are being
handled by the Group centrally. There are also ongoing
negotiations with franchise brand partners to obtain better
terms, which have been accelerated due to the need to
respond to Covid-19.
The Group continues to work closely with its partner brands,
particularly in light of Covid-19, to maximise the roll-out
of operational efficiencies to ensure units are opening
profitably despite lower passenger numbers.
The Group will continue to carry out customer research into
passengers’ needs as necessary to ensure its brands and
concepts have the right offer in the post-Covid-19 world.
Finally, the Group continuously looks to strengthen the
depth and breadth of its brand partners as well as to reform
and strengthen its own proprietary brands.
The Group has strong management teams in developing
markets where this risk exists. In addition, the Group adopts
a joint venture model in certain new territories to provide
access to existing local infrastructure and expertise,
as well as to help mitigate the risk inherent on entering
new territories.
The Group has clearly defined authorisation procedures for
all contract investments, to ensure that they are consistent
with the objectives set by the Board and that they fully
consider and evaluate the risks inherent in expansion
into new locations and territories. The Group works with
in-house and external advisors to ensure the risks of doing
business in developing markets are identified and where
possible, mitigated before entering those markets. This
includes appropriate due diligence of potential joint venture
and other local partners.
The Group legal team works closely with country legal
and operational teams to support business development
activities and to ensure compliance with local requirements.
The risk of working in developing markets is also monitored
by the Risk Committee, Group Investment Committee and
the Audit Committee.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements
42
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Viability statement
SSP Group’s operations are managed on a regional basis and are
primarily focused on the airport and railway station food and
beverage sales markets. As detailed on page 4 (‘Our marketplace’),
those markets benefit from a number of long-term structural
growth drivers and we are confident that this will remain the case
looking forward, despite the impact of Covid-19 in the short and
medium term. Our business model is focused on meeting the food
and beverage needs of our clients and customers in the complex and
challenging environments in which we operate. As explained further
on page 4, SSP has a number of structural advantages that we believe
place us in a strong position to capitalise on the recovery in our
markets when it comes.
The UK Corporate Governance Code requires that the Board issue a
viability statement confirming that it has a reasonable expectation
that the Company can operate and meet its liabilities for the
foreseeable future. The Board is required to assess this viability over
a period of greater than twelve months, taking into account a number
of key factors, including its principal markets, its business model
and its strategy as outlined above, together with its current position
and principal risks and uncertainties.
As has been the case in previous years, the Directors have assessed
the Group’s prospects and viability over a five-year planning cycle.
As the business is now globally established within a fairly mature
yet dynamic market, the Directors believe that forward planning
over this longer time horizon is appropriate, particularly as this
period encompasses what is anticipated to be a full recovery in
passenger numbers across our principal markets following the
impact of Covid-19.
The assessment process and the impact of Covid-19
The Directors perform an assessment of the Group’s prospects
through its annual strategic and financial planning process.
This process is led by the CEO and CFO in conjunction with the
Executive Committee and the country management teams.
The results of the assessment are then summarised within the five-
year strategic plan (the Medium Term Plan or MTP), which is discussed
and approved by the Board annually. The most recent MTP, which
covers the period from 2021 to 2025, was approved in July 2020.
The impact of the global Covid-19 pandemic has created a level of
uncertainty in our markets which has been significant and far-
reaching. While the Directors firmly believe that the demand for travel
in all of our principal markets will return to pre-pandemic levels in the
medium term, the exact pace and timing of that recovery remains
uncertain. As such, the MTP included a number of scenarios reflecting
different rates of recovery for 2021 and 2022, and these scenarios
have been further refined over the subsequent five months as the
immediate impact of the virus, and the related government-imposed
lockdown restrictions, has become clearer. Unusually, and in contrast
to previous years, it has been easier to develop longer-term scenarios
based on external forecasts and assumptions around a recovery of
passenger numbers in the travel sector, than to develop short-term
scenarios, given the high levels of uncertainty surrounding current
national lockdowns and the pace of roll-out of vaccines and other
measures such as testing and tracing.
Since the global escalation of the virus in March, management’s
response has been to take decisive action to protect cash, minimise
costs and raise additional liquidity to allow us to operate throughout
even our most pessimistic trading scenario. This action to increase
liquidity included a £209m equity placing in late March 2020,
followed shortly afterwards by securing access to the Bank of
England’s Covid Corporate Financing Facility (CCFF), under which
facility we are permitted to draw up to £300m. In addition, the Group
also secured access to a number of additional smaller liquidity
lines, including government-backed facilities in France, Spain and
Switzerland, providing a further £44m.
As well as raising this additional funding, we have taken a number
of further steps to minimise operating costs while sales remain at
the current low levels. Furthermore, we have also taken action to
defer all non-essential capital expenditure, to agree rent waivers and
deferrals with our clients, to suspend our previously announced share
buyback programme and to negotiate with our lending banks a two-
year deferral of term loan amortisation payments. The Board has also
announced that the Company will not pay a dividend in respect of the
current financial year.
At the end of the reporting period, the Group had approximately
£520m of available liquidity, including cash of £185m and committed
undrawn revolving credit facilities of £150m, as well as a further
£175m available to be drawn down under the CCFF. The £150m
revolving credit facility is committed until July 2022, while the Bank of
England have confirmed that the Group can draw down the maximum
£300m available to it under the CCFF for a period extending through
to February 2022.
The Directors have reviewed the financial forecasts and funding
requirements, reflecting all of the mitigating actions outlined above.
Their assessment of viability is outlined below.
Assessment of viability
For 2021, the Directors have reviewed a base case scenario which
is consistent with the Board-approved 2021 Budget, adjusted for
the lockdown across England announced by the UK Government on
31 October, as well as significantly increased government-imposed
restrictions in many other parts of Continental Europe which are
likely to remain in place for the immediate future. The Budget reflects
our expectations of ongoing challenging trading conditions for the
remainder of this financial year, with sales recovering slowly during
calendar year 2021 to approximately 60% of pre-pandemic levels
by the end of this financial year. For 2022, the forecast assumes
a further gradual recovery, albeit ending the year still below pre-
pandemic levels. We assume a recovery to broadly 2019 levels
of sales by 2023, with organic growth in line with pre-pandemic
norms thereafter.
Due to the extreme level of uncertainty created by the global
Covid-19 pandemic, there remains a risk, notwithstanding the recent
positive news on the development of potential vaccines, that further
waves of the pandemic could affect our markets during 2021, leading
to travel restrictions being imposed at short notice and reducing
customer confidence in travel. Accordingly, a downside scenario has
also been modelled, applying severe but plausible assumptions to our
base case. This scenario assumes a further twelve week lockdown
(in addition to the November lockdown), lasting from December until
February. The downside scenario then assumes a gradual recovery,
SSP Group plc Annual Report and Accounts 2020 43
but at a much slower pace than envisaged in our Budget throughout
the second and third quarters of the current financial year. Only by
the fourth quarter do our downside sales assumptions converge with
those in our base case.
In both the base case and the downside case the Group would
continue to have sufficient liquidity headroom based on the cash
and available facilities as described above.
In addition to the action taken in the Spring to strengthen liquidity,
the Group secured an agreement in May 2020 from SSP’s lending
group of banks and its US private placement note holders to
waive existing financial covenants, testing both interest cover and
leverage, for the two testing periods covering the twelve months
to 30 September 2020 and 31 March 2021. They agreed that
these existing covenants would be replaced between the date of
the agreement and 30 September 2021 by two new covenants,
each tested monthly, with the first of these based on the Group
demonstrating a minimum level of liquidity and the second based
on the Group not exceeding a maximum level of net debt. For the
testing period ending 30 September 2021 both the existing and new
covenants would be relevant, with the Group returning to the existing
covenants thereafter, once compliance with the existing covenants
has been confirmed.
In order to provide the maximum financial flexibility for the Group
through this exceptionally challenging period, we have now agreed
further covenant waivers and amendments covering the period up
to March 2022. As was the case with the covenant amendments
agreed in May, the existing financial covenant testing leverage has
been waived, until reinstated in March 2022, with the two temporary,
monthly-tested new covenants on minimum liquidity and maximum
net debt introduced for a further six months from October 2021.
For the testing period ending 31 March 2022 both the existing and
new covenants would be relevant, with the Group returning to the
existing covenants thereafter, once compliance with the existing
covenants has been confirmed. In addition, we have agreed to an
additional new covenant, testing minimum EBITDA thresholds
for the six months ending 30 September 2021 and 31 December
2021. Modified interest cover tests (calculated on a last six months
basis) will also be applied at these two testing dates. All of these
new covenant thresholds have been based on our most pessimistic
trading scenario.
Although the Directors are confident that the Group has sufficient
headroom to stay within the applicable new covenants for at least
the next twelve months, they also recognise that there is likely to be
continued disruption to travel markets during 2021, notwithstanding
the recent vaccine developments, and as a consequence it is difficult
to predict with confidence the overall impact of Covid-19 on the
Group’s profitability in the twelve month period ending March 2022
at this stage. Given this level of uncertainty, there are scenarios in
which the Group could breach its existing interest cover and leverage
covenants at the end of March 2022 and September 2022 when
these tests are reinstated, as well as the minimum liquidity covenant
when the CCFF is expected to be repaid in the first quarter of 2022.
In such circumstances, the Directors took account of the fact that
they would be able to raise additional liquidity prior to the repayment
of the CCFF in early 2022, and that management would remain in
close dialogue with both lenders and noteholders, and would seek
further covenant waivers should the need arise. Nevertheless,
the possibility of a covenant breach during the first quarter of
calendar year 2022, together with the possible requirement to raise
additional liquidity when the CCFF is repaid at that time, cannot be
discounted, and as such represents a material uncertainty that may
cast significant doubt on the Group’s and the Company’s ability to
continue as a going concern.
The Directors have also performed a robust assessment of the
Group’s principal risks, which can be found on pages 35 to 41.
The risks are listed in order of priority. The risk descriptions explain
why the related risks are important, and the Directors believe that the
corresponding mitigating factors adequately address each risk, such
that any residual risk falls within the Board’s risk tolerance.
Due to the severe impact of the pandemic in the travel and hospitality
sector, two Covid-19 related risks, both of which are new additions
to the risk register, are the most significant risks facing the Group
at present. One of these reflects the operational challenges that
Covid-19 has presented, while the other highlights the financing
consequences, as outlined above.
One of the other key risks that the Group faces is Brexit. However, as
a result of the business operations extending across 35 countries,
the business is naturally hedged against a downturn and currency
fluctuations in any one specific market. An orderly exit from the
EU whereby a deal has been agreed is not expected to have a
significantly adverse impact that may otherwise arise under
a no-deal Brexit scenario.
Viability statement
After reviewing the current liquidity position, financial forecasts,
stress testing of potential risks and considering the uncertainties
described above, and based on the current funding facilities available,
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 five-year period of their assessment to September 2025.
Nevertheless, as described above, the risk of a covenant breach
cannot be discounted. Furthermore, if the impact of the pandemic
is more severe or prolonged than modelled by the Directors, this
could result in management action being required to secure ongoing
liquidity for the business.
Going concern
These financial statements have been prepared on a going concern
basis. As explained in note 1.2 on page 106, given the ongoing high
level of uncertainty around the exact timing of the recovery in our
markets as a result of the impact of Covid-19, there are scenarios in
which the Group could breach its existing interest cover and leverage
covenants at the end of March 2022 when these tests are reinstated,
as well as the minimum liquidity covenant when the CCFF is expected
to be repaid in the first quarter of 2022.
In adopting the going concern basis of preparation, the Directors
took account of the fact that they would be able to raise additional
liquidity during 2021, and that management would remain in close
dialogue with both lenders and noteholders, and would seek further
covenant waivers should the need arise. Nevertheless, the possibility
of a covenant breach during the first quarter of calendar year
2022, together with the possible requirement to raise additional
liquidity when the CCFF is repaid at that time, represents a material
uncertainty that may cast significant doubt on the Group’s and the
Company’s ability to continue as a going concern, and that it therefore
may be unable to realise its assets and discharge its liabilities in the
normal course of business.
After reviewing the most recent projections and the sensitivity
analysis and having carefully considered the material uncertainty
and the mitigating actions available, the Directors believe that it is
appropriate to prepare the financial statements on the going concern
basis. The financial statements do not contain any adjustments that
would be necessary if that basis were inappropriate.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statements 44
BOARD OF DIRECTORS
Mike Clasper
Chairman
N *
Mike joined the SSP Board as
an Independent Non-Executive
Director on 1 November 2019 and
was appointed Chairman following
the 2020 AGM in February 2020.
Mike has served on boards across a
wide range of businesses. He brings
significant and relevant experience,
in particular an expertise in the
airport and aviation services
industries following his time as
Chief Executive Officer of BAA plc.
Previous experience:
Mike has held various senior
executive positions including
Chief Executive Officer of BAA plc,
Operational Managing Director
of Terra Firma Capital Partners
Limited and President (Global
Home Care & New Business
Development) of Procter & Gamble
Limited. In addition, Mike has
held various non-executive roles
including Chairman of HM Revenue
& Customs and Which? Limited and
Senior Independent Director of
Serco Group plc and ITV plc.
External appointments:
Mike is currently Chairman of
Coats Group plc and Chairman
of Bioss International Ltd. Mike
is also a Trustee of Heart Cells
Foundation, a Governor of the
Royal Shakespeare Company (RSC)
and an Advisory Board member for
Arora International.
Qualifications:
Mike graduated from the
University of Cambridge with an
MA in Engineering.
Simon Smith
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. Jonathan brings extensive
financial experience to SSP and has
spent over 25 years working within
retail and FMCG companies.
Previous experience:
Jonathan began his career in
Unilever plc’s management
development programme before
joining OC&C, the strategic
management consultancy, as a
start-up in 1987, where he was
part of its rapid growth and
development to become a leading
international consulting firm. From
1995 to 2004 Jonathan worked for
Safeway plc, where he was Finance
Director on its Executive Board
between 1999 and 2004.
External appointments:
Jonathan is a Non-Executive
Director of Assura plc, where he is
Senior Independent Director and
Chairman of the Audit Committee.
Qualifications:
Jonathan holds a degree in
Chemistry from Oxford University
and an MBA from INSEAD Business
School, France.
Simon was appointed as Chief
Executive Officer in June 2019,
having joined SSP as Chief
Executive Officer of the UK &
Ireland region in 2014. Simon
brings significant business and
operational experience to the
Board and has more than 25
years’ experience in the retail and
catering sectors.
Previous experience:
Simon began his career at
Fenwicks before moving to Allders
Department Stores, and then
Safeway where he worked in both
commercial and marketing roles.
Before joining SSP, Simon was
at WHSmith for 10 years, most
recently as Managing Director
of WHSmith’s travel division.
He joined the travel division of
WHSmith in 2004 and held the
roles of Trading Director and
Chief Operating Officer before his
promotion to Managing Director.
During his tenure, the travel
division expanded to more than 20
new international markets across
Europe, India, the Middle East and
Asia Pacific.
In his previous role at SSP, in
addition to running the UK
business, Simon’s role broadened
internationally, and he took full
responsibility for the integration
and development of the Company’s
joint venture in India, Travel
Food Services.
Qualifications:
Simon holds a first class Economics
honours degree from Leeds
University.
Carolyn Bradley
Senior Independent
Non-Executive Director
A R *
N
Carolyn joined the SSP Board as
an Independent Non-Executive
Director in October 2018. Carolyn
has extensive experience in
marketing and, having worked in
the retail industry for over 30
years, brings a strong consumer
focus. Carolyn brings significant
board and board committee
advisory experience to the Board.
Previous experience:
Carolyn spent over 25 years at
Tesco, holding a number of roles
including Chief Operating Officer
for Tesco.com, Commercial
Director for Tesco Stores and
Tesco UK Marketing Director,
before being appointed Group
Brand Director in 2012. She was
also a Non-Executive Director of
Legal & General Group plc.
External appointments:
Carolyn is a Non-Executive
Director of Majid Al Futtaim
Retail LLC, Marston’s plc
(Senior Independent Director),
The Mentoring Foundation and
B&M European Value Retail S.A.
She is a trustee and Deputy
Chair of Cancer Research UK
and a member of the Advisory
Board of Cambridge Judge
Business School.
Qualifications:
Carolyn graduated from the
University of Cambridge with
an MA in English Literature.
Board Committees
A Audit Committee
R Remuneration Committee
N Nomination Committee
* Chair
SSP Group plc Annual Report and Accounts 2020 45
Ian Dyson
Independent
Non-Executive Director
A * R N
Ian joined the SSP Board as an
Independent Non-Executive
Director in April 2014. Ian brings
significant financial and business
experience to the Board.
Previous experience:
Ian was formerly Chief Executive
Officer (and then Non-Executive
Director) of Punch Taverns plc,
Chief Executive Officer of Spirit
Pub Company 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 International
Co. He joined Hilton from Le
Meridien, a division of Forte Group
plc, where he had been Finance
Director. Ian has also been a Non-
Executive Director of Misys plc.
His early career was spent with
Arthur Andersen where he was
promoted to partner of the firm
in 1994.
External appointments:
Ian is Senior Independent Director
of ASOS plc, and a Non-Executive
Director of Intercontinental
Hotels Group plc and Flutter
Entertainment plc (previously
known as Paddy Power Betfair plc).
Ian is also Chairman of the Audit
Committee of both ASOS plc and
Intercontinental Hotels Group plc.
Qualifications:
Ian qualified as a chartered
accountant in 1986.
Per Utnegaard
Independent
Non-Executive Director
A R N
Per joined the SSP Board as an
Independent Non-Executive
Director in July 2015. Per brings
considerable international business
experience to the Board. Per
was appointed as the Company’s
designated Non-Executive Director
for employee engagement in April
2019 and further details on this
role can be found on page 14.
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 Limited (a
subsidiary of Deutsche Post AG)
and various senior positions at TNT
Post Group.
Per has also been the Group
President and the CEO of Swissport
International Ltd, the Vice chairman
of Swissport International AG, the
Chairman of the Executive Board
of Bilfinger SE and a Non-Executive
Director of Xovis AG.
External appointments:
Per has been a Non-Executive
Director of Alvest Holding since
April 2019 and Saudi Ground
Services Company since May 2019.
He has also been a board member
of the Swiss University Sports
Federation since April 2016.
Qualifications:
Per graduated from Northern
Michigan University with a
Bachelor’s degree in Business
Administration and Marketing.
Judy Vezmar
Independent
Non-Executive Director
R
Judy joined the SSP Board as
an Independent Non-Executive
Director on 1 August 2020. Judy
has extensive knowledge of running
complex, international businesses,
and brings significant expertise
to the Board in the field of data
and analytics having held senior
leadership roles in the technology
sector for many years, both in the
US and internationally.
Previous experience:
Judy was previously Chief
Executive Officer of LexisNexis
International, a global provider
of legal, regulatory and business
information and analytics. Prior to
LexisNexis, Judy held a number of
executive leadership roles in sales,
marketing and strategy within the
Xerox Corporation in the United
States and Europe.
Judy was also a Non-Executive
Director of Rightmove plc from
February 2006 to May 2015,
serving on its Nomination, Audit
and Remuneration Committees.
External appointments:
Judy is currently a Non-Executive
Director and Chairman of the
Remuneration Committee of
Ascential plc and is also a business
advisor to Gypsy Bean Coffee
Roasters in Florida.
Qualifications:
Judy holds a degree in Marketing
and Business from B.S. Marian
University and an MBA from
Columbia University.
Tim Lodge
Independent
Non-Executive Director
A
Tim joined the SSP Board as an
Independent Non-Executive
Director on 1 October 2020. Tim
is an experienced public company
CFO with a strong financial,
accounting and audit committee
background. He has significant
international commercial
experience and a track record of
advising businesses with complex
global operations and supply chains
in the food and beverage sector.
Previous experience:
Tim brings relevant food and
beverage sector and supply chain
experience to the Board having
held various positions with Tate
& Lyle plc from 1988 to 2014,
including six years as chief financial
officer from 2008. He also more
recently held Chief Financial Officer
roles with COFCO International Ltd
and the Nidera group, part of the
COFCO International group.
External appointments:
Tim is currently a Non-Executive
Director and Chairman of the Audit
Committee of both Aryzta AG and
Arco Limited.
Qualifications:
Tim holds an MA in Classics from
the University of Cambridge and is
CIMA qualified.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 46
CORPORATE GOVERNANCE REPORT
The Board is responsible for leading the Company, for
overseeing the governance of the Group, and for setting
the tone for the Group’s culture, values and standards.
UK Corporate Governance Code
Last year the Board welcomed the changes to corporate governance
in the 2018 UK Corporate Governance Code (the ‘Code’), which is the
standard against which we are required to measure ourselves for year
ended 30 September 2020.
The Code can be found on the Financial Reporting Council’s website at
www.frc.org.uk. The table below and this Corporate Governance Report
(which forms part of the Directors’ Report), together with the Audit
Committee Report (pages 56 to 61, Statement by the Chairman of the
Remuneration Committee and Directors’ Remuneration Report (pages
62 to 85) and Strategic Report (pages 1 to 43), describes how the Board
has applied the main principles of good governance set out in the Code
during the year under review.
The Board considers that, save as disclosed below in respect of
an external Board Evaluation and as disclosed in the Directors’
Remuneration Report (see page 64) in respect of alignment of Executive
Director pension contributions to the workforce, for the year ended
30 September 2020, the Company has complied with all the relevant
provisions set out in the Code that are applicable to this reporting period.
In the 2019 Annual Report, we reported on some of the steps the
Company had taken to implement the Code ahead of its application from
1 October 2019. Since the start of FY19/20, we have continued to review
and update our governance framework to embed the new requirements
of the Code. In particular the Board has focused on refreshing and
reframing the Group’s Corporate Responsibility Strategy, a key part
of which has been considering how to best consider the interests of
our broad stakeholder group, including colleagues, customers, clients,
shareholders, brand partners and suppliers, communities, NGOs
and governments and regulators when making business decisions.
Further details on this can be found on pages 10 to 12.
Another key area for the Group, particularly considering the impact
of Covid-19 on the business, has been the development of workforce
engagement processes and fostering a culture that aligns to the
Company’s purpose, values and strategy (see pages 7 and 13 for further
information on this).
How we govern the Company
Our governance structure comprises the Board and various committees
(detailed below), supported by the Group’s standards, policies and risk
management and internal control framework, which are described in
more detail in this report.
The Board leads the Group’s governance structure and is assisted by
three principal committees (Audit, Nomination and Remuneration), each
of which is responsible for reviewing and dealing with matters within its
own Terms of Reference. The minutes of all committee meetings are
circulated prior to scheduled Board meetings.
The Company also has several executive management and business
committees (Disclosure, Group Risk, Corporate Responsibility and Group
Executive). These consider various specific matters for recommendation
to the Board and its principal committees or to deal with day-to-day
matters within the authority granted by the Board. Directors who are not
members of individual Board committees may be invited to attend one or
more meetings of those committees during the year.
The Chairman of each of the principal committees attends the AGM
to respond to any shareholder questions that might be raised on
committee activities.
The Group General Counsel and Company Secretary acts as Secretary to
all Board committees.
Our governance structure is supported by the Group’s standards, policies
and internal controls, which are described in more detail throughout the
Annual Report.
Corporate Governance Code summary
Board
leadership and
Company purpose
The Board’s overarching role is to promote the long-term sustainable success of the Company, generating value for
shareholders and contributing to the wider society. Having established the Company’s purpose, values and strategy, the
Board is now focused on ensuring that these matters and its culture are aligned.
For details see pages 1 to 3 (culture, purpose and values), pages 1, 10, 11 and 55 (stakeholder engagement) and page 52
(AGM resolution update).
Division of
responsibilities
The Board has a clear division of responsibilities between Board and business leadership and established lines of
authority for each of the Board’s committees. Governance arrangements are in place to ensure Code compliance.
For details see pages 47 to 48 (composition, leadership and responsibilities).
Composition,
succession
and evaluation
The Board and Nomination Committee undertake regular composition reviews and succession planning. The Board
undertakes an annual review of its effectiveness and that of its committees and individual Directors.
For details see page 49 (Board effectiveness) and pages 53 to 54 (Nomination Committee activities).
Audit, risk and
internal control
The Board, supported by the Audit Committee, is responsible for establishing appropriate risk management and internal
control procedures, a key part of which is the identification and mitigation of risks in the context of the business as a whole.
For details see page 60 (risk management and internal control) and pages 56 to 61 (Audit Committee).
Remuneration
The Board, supported by the Remuneration Committee, ensures that the Company’s remuneration policies and practices support
strategy and promote long-term sustainable success. Executive remuneration is set in alignment with Company purpose and
values and is clearly linked to the successful delivery of our long-term strategy.
For details see pages 62 to 85 (Directors’ Remuneration Report and Remuneration Committee’s chair’s statement).
SSP Group plc Annual Report and Accounts 2020 47
The Company’s governance framework
Shareholders and other stakeholders
Investor Relations
Board of Directors
Strategic development, purpose, values and culture,
corporate governance, risk management
Group CEO and
Group CFO
operational and
financial governance
Audit Committee
Financial reporting,
risk management
internal controls, audit
functions
Committees
Remuneration
Committee
Remuneration Policy,
reward alignment
with strategy and
culture, workforce
remuneration policies
Nomination Committee
Board appointments,
succession planning,
Board skills, diversity
Company Secretary
Advises Board on
governance, manages
information flow
between Board,
committees and
management
Risk Committee
Assesses and monitors
internal control and risk
management
Disclosure Committee
Oversees the disclosure
of market sensitive
information and other
public announcements
Corporate
Responsibility
Committee
Advises on CR strategy
Group Executive Committee
Day-to-day operational management and implementation of strategy
The Board
Board changes and composition
The Board has seen significant change over the last two years.
Following Kate Swann’s departure with effect from 31 May 2019,
Simon Smith was appointed as the new Group CEO with effect from
1 June 2019. Vagn Sørensen retired as Chairman of the Board with
effect from the conclusion of the 2020 AGM. Mike Clasper joined
the Board as an Independent Non-Executive Director and was also
appointed as Chairman of the Nomination Committee, both with
effect from 1 November 2019. Mike was subsequently appointed
as Chairman of the Board following the conclusion of the 2020 AGM.
The Board also welcomed the appointments of Judy Vezmar and
Tim Lodge with effect from 1 August 2020 and 1 October 2020
respectively. Judy and Tim were appointed as Independent Non-
Executive Directors and Judy serves as a member of the Board’s
Remuneration Committee with Tim serving as a member of the
Board’s Audit Committee.
As at 30 September 2020, the Board was made up of seven
members, comprising the Chairman, two Executive Directors and
four Non-Executive Directors. As at the date of this report, the Board
comprises eight members following the appointment of Tim Lodge to
the Board with effect from 1 October 2020.
Carolyn Bradley, Ian Dyson, Per Utnegaard, Judy Vezmar and
Tim Lodge 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 (in light of
the Corporate Governance Code requirements on independence), as
was Mike Clasper on his appointment. The Board considers that the
Non-Executive Directors bring their own senior level of experience
gained in their own fields.
Carolyn Bradley is the Company’s Senior Independent Director.
The role of the Senior Independent Director includes acting as
a sounding board for the Chairman, providing support to the
Chairman and acting as an intermediary for the Non-Executive
Directors, where necessary. The Board considers that Carolyn has
the appropriate experience, knowledge and independence for the
Senior Independent Director role, having held non-executive roles
in various FTSE 250 and 100 companies since 2014 including as
senior independent director at Marston’s PLC since 2017. The Board
also considers that she has the appropriate experience to chair
the Remuneration Committee, having served on the remuneration
committees of other listed company boards for more than 12 months
prior to her date of appointment as Chair of the Remuneration
Committee. Further details on Carolyn’s experience can be found in
the Director biography section on page 44.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 48
CORPORATE GOVERNANCE REPORT CONTINUED
Per Utnegaard was appointed as the designated Non-Executive
Director for engagement (‘ENED’) with the Company’s workforce in
April 2019. Per is responsible for gathering the views of all colleagues
and representing these views at Board level. Per’s role is to facilitate
effective engagement with all colleagues and strengthen the link
between workers and the boardroom. An engagement plan was
underway, however given the Covid-19 pandemic and the various
restructures around the organisation, this has now been revised.
Agreed activity will be rolled out over the course of FY20/21 and
reported on in the 2021 Annual Report. Further information on the
role of the ENED can be found on page 14.
Biographical details of each of the Directors currently in office
are shown on pages 44 and 45. The Company’s policy relating
to the terms of appointment and the remuneration of both the
Executive and Non-Executive Directors is detailed in the Directors’
Remuneration Report.
Responsibilities
The Board is accountable to shareholders for managing the
Company in a way which promotes its long-term sustainable success,
generating value for shareholders and contributing to wider society.
In carrying out that role it is primarily responsible for:
• Determining the strategic development of the Group and
overseeing the implementation of such strategy by the Group CEO;
• establishing and promoting the Group’s purpose, values and
strategy and ensuring that these and its culture are aligned;
• Ensuring that the Company’s obligations to its shareholders and
stakeholders are understood and met (and in doing so ensuring
effective engagement with, and encouraging participation from,
these parties);
• Monitoring the Company’s culture and reviewing
whistleblowing reports;
• Ensuring that the Company’s workforce policies and practices are
consistent with the Company’s values and support its long term
sustainable success; and
• The Group’s systems of risk management and internal control and
for reviewing the effectiveness of such systems (with the support
of the Audit Committee which oversees the risk management
process and oversees internal controls on the Board’s behalf).
Details of the Group’s systems of risk management and internal
control (including financial controls, controls in respect of the
financial reporting process and operational and compliance
controls) can be found in the Strategic Report on pages 32 to 34,
and Audit Committee Report on pages 56 to 61.
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 is implemented throughout the Group.
Together with the Group CEO 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 in a timely manner to allow
Directors to be properly briefed in advance of meetings.
The roles of the Chairman, Group CEO and Senior Independent
Director are separate and clearly defined in accordance with the
division of responsibilities set out in writing and agreed by the Board.
A copy of the division of responsibilities is available on the Company’s
investor relations website (www.foodtravelexperts.com).
Board meetings
The Board manages the business of the Company through a formal
schedule of matters reserved for its decision and in doing so it
receives routine financial and operating reports to allow it assess
progress against the above responsibilities. The schedule is reviewed
annually and it was last amended in September 2019.
The significant matters reserved for its decision include:
• The overall management of the Company;
• Approval of the business model and commercial strategy
and operating and capital expenditure budgets;
• Oversight of financial reporting and controls including
approval of the Annual Report, financial statements, and
dividend policy;
• Control, audit and risk management, corporate governance;
• Material agreements, acquisitions and disposals and non
recurring projects and treasury matters;
• Board membership, appointments, executive
remuneration and review of Remuneration Policy; and
• Corporate responsibility.
The Board has a forward looking timetable to ensure that it
allocates sufficient time to key areas of business and to allow
sufficient time for debate and challenge. The agenda is run
with flexibility to adjust the agenda as needed (for example
during the Covid-19 pandemic).
Please see page 86 for details of the powers conferred on the
Directors in relation to issuing or buying back shares.
The Board’s annual business includes:
• Group CEO’s reports, including business reports;
• Group CFO reports, including financial results, capital
structure and investor relations updates;
• Strategy setting and updates, including in-depth sessions on
specific areas of the business and strategic initiatives;
• Stakeholder engagement;
• Assessment of progress made by the Group against its
Corporate Responsibility Strategy;
• Assessment and monitoring of the Company’s culture;
• Talent review and succession planning;
• Consideration of potential acquisitions and
substantial contracts;
• Governance and compliance matters including risk
management and assessment; litigation update,
health and safety, whistleblowing and the Annual Report;
• Financing arrangements, dividend policy; and
• Composition, conflicts and Board Evaluation.
SSP Group plc Annual Report and Accounts 2020 49
Meeting attendance during the year
The Board meets regularly during the year, as well as on an ad hoc basis, as required by business need. The Board met 12 times between
1 October 2019 and 30 September 2020 and attendance at these meetings is shown in the table below. The increased number of meetings
compared to previous years reflects the increased role taken by the Board at the outset of the Covid-19 crisis.
The following table shows the attendance of Directors at meetings of the Board, Audit, Nomination and Remuneration Committees in the year
ended 30 September 2020:
Name
Board
Audit Committee
Nomination Committee
Remuneration Committee
Mike Clasper*
(Board and Nom Co Chair)
Vagn Sørensen**
Simon Smith
Jonathan Davies
Carolyn Bradley
(Rem Co Chair)
11 of 11
3 of 4
12 of 12
12 of 12
12 of 12
Ian Dyson (Audit Co Chair)
11 of 12
Per Utnegaard
Judy Vezmar***
12 of 12
1 of 1
–
–
–
–
4 of 4
4 of 4
4 of 4
–
5 of 5
1 of 3
–
–
6 of 6
6 of 6
6 of 6
–
–
–
–
–
5 of 5
5 of 5
5 of 5
1 of 1
*
**
Mike Clasper was appointed to the Board and Nomination Committee from 1 November 2019. Mike attended all 11 Board meetings
and all 5 Nomination Committee meetings held following his appointment.
Vagn Sørensen retired from the Board following the conclusion of the 2020 AGM in February 2020. Vagn attended 3 out of 4 Board meetings, and
1 out of 3 Nomination Committee meetings held prior to his retirement from the Board. Vagn did not attend all of the meetings for reasons concerning
potential conflict of interest regarding the appointment of his successor.
*** Judy Vezmar was appointed to the Board and Remuneration Committee from 1 August 2020. Judy attended the 1 Board meeting and 1 Remuneration
Committee meeting held following her appointment.
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.
Director effectiveness and training
The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Company. In this light, and 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. Directors are also provided with updates as necessary
on relevant legal, regulatory and financial developments, changes
in best practice and environmental, social and governance matters,
delivered by the General Counsel and Company Secretary and others.
Meetings between the Non-Executive Directors, both with and
without the presence of the Chairman and the Group CEO, are
scheduled in the Board’s annual programme. Board meetings are
also held at Group business locations when possible to help all Board
members gain a deeper understanding of the business, and to
provide senior managers from across the Group with the opportunity
to present to the Board, as well as to meet and interact with the
Directors on more informal occasions. This has been somewhat
curtailed in the second half of FY19/20 given the Covid-19 pandemic
and most Board meetings during this period have taken place
online, but it is hoped that this valuable practice will resume when
circumstances allow.
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 Group Executive Committee 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
(including environmental, social and governance risks) and operating
issues facing the Group. On joining the Board, Judy Vezmar and
Tim Lodge both received initial tailored inductions to ensure that
they understand the main areas of business activity and the key
risks and issues facing the Group. Judy and Tim’s induction will
continue over the next year with meetings with the Board members
and other key senior executives and advisors. It is hoped that
site visits to key locations within the Group can be planned in the
latter half of FY20/21 but this is dependent on the status of the
Covid-19 pandemic.
The Chairman ensures that the Board maintains an appropriate
dialogue with shareholders and further details of the shareholder
engagement programme are set out on page 54.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 50
CORPORATE GOVERNANCE REPORT CONTINUED
Accordingly, a formal internally facilitated evaluation was carried
out over the course of July, August and September 2020. The Board
intends to undertake an independent formal external Board
Evaluation in 2021.
Scope and nature of review
The evaluation process was coordinated and directed by the
Chairman with the support of the Company Secretary. A detailed
questionnaire was circulated to each member of the Board and the
Company Secretary and individual feedback formed the basis of
in-depth interviews with the Chairman, the Senior Independent
Director, the Company Secretary and each of the Directors.
The Chairman also undertook a rigorous review with each of the
Directors to assess their performance and commitment to the role
and to provide feedback on fellow Board members’ performance.
The Chairman then led a discussion with the Senior Independent
Director, the Company Secretary and the Chair of each committee
to consider responses and the action points and recommendations
to the Board. The findings were presented to the Board at its
September 2020 meeting.
The discussion of the performance of each of the Chairman, the
Group CEO and the Senior Independent Director was also undertaken
by the Non-Executive Directors (without the Chairman being present
for the Chairman’s evaluation, without the Group CEO being present
for the Group CEO’s evaluation and without the Senior Independent
Director being present for the Senior Independent Director’s
evaluation) as part of the September 2020 Board meeting.
Findings of review
The findings of the evaluation were considered by the Board and
confirmed the important role performed by the Board in supporting
management through the unprecedented and rapidly escalating
impact of the Covid-19 pandemic on the Company. Additionally the
culture and dynamic of the Board was considered to be constructive
with open and inclusive dialogue between the Non-Executive and
Executive Directors, all of which has been enhanced by the recent
changes in both Chairman and Group CEO.
Succession planning and culture
Succession planning is a matter for the whole Board, rather than
for a committee. During the year ahead, the Board will continue
to focus on its succession planning and talent review cycle (in
conjunction with the Nomination Committee) to assess and ensure
the readiness of internal candidates for all key roles across the
business. The Company’s Articles of Association provide that at
every Annual General Meeting (‘AGM’), 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 AGM after
their appointment.
The Articles of Association limit the number of Directors to not less
than two, save where shareholders decide otherwise. The Articles
of Association may be amended by special resolution of the
shareholders. Non-Executive Directors are normally appointed
(subject to annual re-election by shareholders at the AGM) for an
initial term of three years which is reviewed and may be extended
for a further three years. The Board may then invite Non-Executive
Directors to serve for a further additional period.
The Board is committed to leading from the top when it comes to
governance, values, culture and leadership, recognising that these are
key considerations for a strong sustainable business. The Company’s
values and culture are a key feature of the Board’s discussions and
the Board will continue to work with the management team to align
culture and behaviours with the Company’s purpose, values and
strategies. As part of this work, the Company has been developing
a new ‘People strategy’, which puts in place plans for retention,
engagement and development of our people with a strong emphasis
on culture. Further details on the People strategy are provided on
page 13.
Board Evaluation
The Chairman is responsible, with assistance from the Nomination
Committee, for ensuring that the Company has an effective Board
with an appropriate range of skills, expertise and experience.
Every year, a performance evaluation of the Board, its committees,
the Chair and the individual Directors is carried out to ensure
that they continue to be effective, that each of the Directors
demonstrates commitment to his or her respective roles and has
sufficient time to meet his or her commitment to the Company.
The Board Evaluation process allows the Chair to consider the
composition and diversity of the Board and its committees.
Review process
An independent formal external Board Evaluation is required under
the Code to be conducted at least every three years and, as noted in
the Company’s 2019 Annual Report, it was intended that an external
evaluation would take place during FY19/20. As a result of the
outbreak of Covid-19 and the significant challenges this had caused
the Company and its management team, it was agreed at the Board
meeting in July 2020 that the external evaluation process would be
postponed until 2021.
SSP Group plc Annual Report and Accounts 2020 51
The main areas considered during the Board Evaluation were (i) the size and composition of the Board, (ii) the skills and experience of each
of the Directors, (iii) the contribution of the Directors, (iv) shareholder and wider stakeholder engagement and (v) the performance of the
committees. The outcomes and recommendations from the 2020 evaluation process are set out in the table below.
Key area
Outcomes and recommendation
Board size, composition,
diversity and skillset
Good progress made with regard to the size and composition of the Board.
A review of Non-Executive Director succession planning, together with a skill mapping exercise should be undertaken to
identify any gaps/areas for development to maximise Board effectiveness.
Nomination Committee to agree a Board diversity statement and formal policy for adoption by the Board. Furthermore,
following recent structural changes to the business in light of Covid-19 and an increased focus on diversity generally,
Nomination Committee to revisit its Equality Policy and agree updated Group wide diversity policies for adoption by the Board.
Strategy
The Group’s strategy continues to be clearly defined and well communicated.
Board to continue to consider length of strategy meetings to allow time for the Board to consider and discuss wider-ranging
issues and provide for more extensive debate.
Further consideration to be given to engaging and consulting with the Non-Executive Directors in advance of any
strategy meeting.
Non-Executive Director
interaction with
Executive Committee
and senior management
Subject to Covid-19 constraints, identify further opportunities for interaction with wider management to be built into the
annual Board calendar.
Resume (where possible) overseas Board meetings/visits at least twice per year and use these as opportunities to introduce
the Board to local management and talent. In addition, all the Non-Executive Directors should consider, whenever appropriate,
using any other overseas business travel they have planned to also carry out independent, informal visits to
SSP business units.
Risk management
and other matters
Further focus to be given to these areas and, in particular, to develop the quality of reporting on health and safety matters
including food safety.
Audit/Rem Committee
skillset/experience
The Audit and Remuneration Committee skillsets and experience to be further reviewed during the skill mapping exercise
referred to above.
Individual Director
performance reviews
Further consideration to be given to the format of the individual Director performance reviews to ensure that they are an
effective assessment tool.
Update on 2019 Board Evaluation
Key area
Outcomes and recommendation
Update
Board size and
composition
The Nomination Committee should continue to determine the optimal size
and composition of the Board and the expertise and skillset of the Directors
needed for the Board to operate effectively.
Board size and composition improved
with the appointments of Mike Clasper,
Judy Vezmar and Tim Lodge.
Succession planning
The Board and the Nomination Committee should continue to focus on
greater transparency, forward planning and effective communication
around succession planning.
Succession planning has improved over
the course of FY19/20 with the Director
appointments referred to above and
the processes and planning that were
involved in this regard.
Strategy
Governance
of Board and
committee
meetings
Remuneration
Committee
The Board should consider the option of holding a dedicated annual strategy
event or extending the strategy event to allow more time for the Board to
consider and discuss wider-ranging issues and provide for more debate.
The Chairman should ensure the length of meetings allows sufficient
time for thorough discussions and that Board papers are issued in a
timely manner.
Ongoing.
Ongoing.
The current Chair of the Remuneration Committee has taken positive steps
to address the issues arising from the significant vote against the FY 18/19
Remuneration Report including engaging with shareholders. This will continue
to be monitored throughout FY 19/20.
Ongoing engagement with shareholders
regarding remuneration matters.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 52
CORPORATE GOVERNANCE REPORT CONTINUED
Director performance
As part of the Board Evaluation process, the performance of each of
the individual Directors was considered. Following the evaluation of
the Chairman, the Group CEO and the Senior Independent Director, the
Non-Executive Directors consider that each of the Chairman, the Group
CEO and the Senior Independent Director is effective. The Non-Executive
Directors consider that the Chairman provides effective leadership of the
Board and exerts the required levels of governance and control. They also
consider that the Group CEO has provided effective management of
the business since his appointment to the role on 1 June 2019 and that
the Senior Independent Director continues to perform well. The Non-
Executive Directors will continue to review the roles of the Chairman, the
Group CEO and the Senior Independent Director in the year ahead.
Further, the Chairman considers that (i) each Director is effective,
demonstrates commitment to his or her respective role and has sufficient
time to meet his or her commitment to the Company and (ii) 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. Any specific areas for development for the individual
Directors were fed back to the respective Directors as part of the 2020
Board Evaluation process.
Shareholder feedback
The Board gathered feedback from shareholders following the outcome
of the vote to approve the Remuneration Report at the 2020 AGM and it
was clear that a key area of concern related to the leaving arrangements
for our former Group CEO, Kate Swann. The Board agreed that Kate’s
employment would end on 31 May 2019 as it recognised the importance
of a smooth transition and believed that the most appropriate time for our
current Group CEO to take over the business would be following the half
year results announcement. Termination arrangements were agreed with
this as the priority.
The Board recognises the importance of engaging with the Group’s
shareholders and last year undertook extensive consultation around the
operation of our Remuneration Policy and our approach to disclosure
in the Annual Report. Following these consultations, the Committee
has substantially improved its approach to disclosure in the Directors’
Remuneration Report. We remain keen to encourage an ongoing dialogue
with our shareholders and value active participation in that process.
We have worked with our shareholders on our new Remuneration Policy as
further described in the Statement by the Chairman of the Remuneration
Committee and the Directors’ Remuneration Report on pages 62 to 85.
External Board appointments
As part of their ongoing development, both the Group CEO and the
Group CFO may each seek one, external non-executive role on a
non-competitor board, for which they may retain 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. There were no additional external appointments
undertaken by any Board members throughout the FY19/20 year.
Conflicts of interest
Each Director has a duty under the Companies Act 2006 to avoid
a 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. 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 12 months. The Board
considered and authorised each Director’s reported actual and potential
conflicts of interest at its September 2020 Board meeting.
Committees of the Board
Principal committees
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 updated
for the 2018 Code, are available from the General Counsel and
Company Secretary and also on the Company’s website. The Terms
of Reference are reviewed annually and updated where necessary.
• Membership and details of the principal committees are shown on
pages 44 to 45, 49, 53 to 54, 56 to 61 and 62 to 85.
• Details of the attendance of the committee members at
each meeting are set out in the table on page 49 above.
The Directors’ Nomination Committee Report is set out
on pages 55 to 56 and includes details of the Nomination
Committee’s activities during the year.
• The General Counsel and Company Secretary acts as
Secretary to all Board committees.
• The Audit Committee’s Report is set out on pages 56 to 61
and includes details of the Audit Committee’s responsibilities
and activities during the year.
• The Directors’ Remuneration Report is set out on pages 62 to 86
and includes details of the Remuneration Committee’s activities
during the year and the Company’s policy on remuneration.
Executive management and business committees
The Company has also established the following management
and or business committees, which are not considered principal
Board committees.
Group Executive Committee
The Group Executive Committee is made up of the Executive Directors
and senior management (comprising regional Chief Executive
Officers and functional heads). The Executive Committee is chaired
by the Group CEO and meets on a monthly basis. It is responsible for
developing and executing the Group’s strategy, 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 Group Risk Committee is responsible for risk management. It is
made up of the Group CFO and senior management. It meets quarterly
and reports to the Audit Committee. Further details of the Risk
Committee are set out in the Strategic Report on pages 32 and 34.
Disclosure Committee
The Disclosure Committee is responsible for overseeing the disclosure
of information by the Company to meet its obligations under the Market
Abuse Regulation and the Financial Conduct Authority’s Listing Rules and
Disclosure Guidance and Transparent Rules. It is made up of the Group
CEO, the Group CFO and the General Counsel and Company Secretary.
It meets on an ad hoc basis and reports to the Board.
Executive CSR Steering Committee
The Corporate Responsibility Steering Committee, which is chaired by
the Group CEO, is responsible for guiding the ongoing development of
our strategy and monitoring performance against our KPIs.
SSP Group plc Annual Report and Accounts 2020 53
Nomination Committee Report
The following section constitutes the Directors’ Nomination
Committee Report.
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 the 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 and sets measurable
objectives and the policy for Board and senior management 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 Director appointments and maintains oversight of a
diverse pipeline for succession, although the Board itself is responsible
for succession generally. In addition, the Nomination Committee
advises the Board on significant developments in the law and practice
of corporate governance within its area of expertise.
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. The 2019 Board Evaluation highlighted Board size,
composition and succession planning as areas for development, and
these continued to be areas of focus for the Board and the Nomination
Committee during FY19/20. Both the Nomination Committee and the
Board have continued to consider the leadership needs of the Group,
together with the skills and experience needed from its Directors
going forward. The Committee oversaw the process of identifying and
recommending the appointment of Judy Vezmar and Tim Lodge to the
Board. Earlier in the year, the Committee, led by the Senior Independent
Director, oversaw the process of identifying and recommending
the appointment of Mike Clasper as an Independent Non-Executive
Director and Chairman designate.
The 2020 Board Evaluation recognised that considerable progress
had been made during the year with regard to Board size, composition,
diversity and skillset, with the various Board appointments. Whilst it
was acknowledged that the gender, diversity and experience of the
Board could be further strengthened, it was agreed that this should
form part of a plan going forward which would be subject to the
speed and level of business recovery. Further details about how the
evaluation was conducted and its outcomes can be found on page 50.
As noted in the Corporate Responsibility Report, the Group is
committed to equal opportunities and non-discrimination throughout
the business, including in its approach to appointing Board members.
Diversity and inclusion are key areas for the Board. Our Equality Policy
outlines our expectation that all of our colleagues should be treated
with respect and be able to work in an environment in which they can
realise their potential, free of harassment and discrimination in any
form, regardless of their gender, race, religion, disability, age or sexual
orientation. We provide training and guidance to our colleagues to
ensure they understand and comply with this policy. All decisions
relating to employment practices will be objective, free from bias and
based solely upon work criteria and individual merit.
One of the ways in which we measure the success of our approach
to diversity and inclusion is by monitoring the number of women in
senior management roles. As noted on page 14, as at 30 September
2020, 29% of our Board of Directors were female and 23% of senior
management roles filled by women. In addition, we also seek to
support minority groups within our business, for example through SSP
America’s partnership with www.diversityjobs.com. With regard to the
Hampton Alexander Review, the Board is committed to improving our
current Board gender balance.
The Group believes that diversity, including gender and race diversity,
but also diversity of experience and backgrounds, is important not only
in the business generally, but also with respect to each Board member.
In order to help ensure the Board has the appropriate balance of skills
and attributes required for effective decision making and strategy,
Board appointments are made on merit with due regard to diversity.
The Company (and therefore the Nomination Committee) currently
does not have set targets for the composition of the Board, the view
being that all employees should have an equal chance of progressing
their careers within the Company and so that the most appropriate
people are appointed to the Board.
The Company acknowledges that whilst it does have an Equality
Policy in place, there is work to be done regarding updating this
policy and the way it is implemented, along with the wider Group’s
diversity and inclusion policies and procedures, in each case, to reflect
in particular the Company’s new values and updated Corporate
Responsibility Strategy. Diversity and inclusion will be a focus area
for the Nomination Committee during FY20/21 and has formed a
part of the Company’s new People strategy. As part of its ongoing
work regarding diversity and inclusion and given the recent changes
to the Board, the Nomination Committee will develop a written Board
diversity statement or policy for adoption by the Board over the course
of the FY 20/21 year. Additionally, following recent structural changes
to the business in light of Covid-19 and an increased focus on diversity
and inclusion generally, the Nomination Committee will review the
existing diversity policies with a view to developing new and updated
Group wide policies, to be adopted by the Board over the course of
the year. Following this process, we will provide an update in our 2021
Annual Report including on the Group’s policies on diversity inclusion,
the policies’ objectives and linkage to Company strategy and details
on how it has been implemented and the progress made on achieving
the objectives.
Membership as at 30 September 2020
Chairman: Mike Clasper
Members: Ian Dyson, Carolyn Bradley, Per Utnegaard.
Changes: Mike Clasper became a member with effect from
1 November 2019 and succeeded Vagn Sørensen as Chairman
of the Committee with effect from 1 November 2019.
Details of the committee meetings held and attendance of the
committee members at each meeting are set out in the table
on page 49.
Activities of the Nomination Committee
Matters the Nomination Committee considered during the
year include:
• Assessing the composition of the Board and its committees;
• Talent management and succession planning;
• The appointment of Mike Clasper as an Independent
Non Executive Director and Chairman designate of
the Company;
• The renewal of Ian Dyson’s letter of appointment;
• The appointment of Judy Vezmar and Tim Lodge as
Independent Non-Executive Directors;
• Reviewing the outcomes and actions of the 2019
Board Evaluation and linking this into Board composition
and succession planning; and
• Carrying out the annual review of its Terms of Reference.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 54
CORPORATE GOVERNANCE REPORT CONTINUED
Board appointment process
The Company adopts a formal, rigorous and transparent procedure
for the appointment of new Directors and senior executives
with due regard to diversity. Prior to making an appointment, the
Nomination Committee will evaluate the balance of skills, knowledge,
independence, experience and diversity on the Board and, in 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.
During FY19/20, the Committee approached Russell Reynolds (which
has no other connection with the Company) to assist with the search to
identify suitable candidates to join the Board. The Committee prepared
detailed role specifications including the expected time commitment
and duties to be performed, following a review of the required skills,
knowledge, experience and diversity to enhance the composition of
the Board. Mike Clasper, as Chairman of the Committee, submitted
a short-list of candidates to the other members of the Nomination
Committee and the Group CEO. Following a thorough review process
which considered the time commitments of the roles against other
demands on the candidates’ time, the Board’s approach to diversity
and the geographic representation amongst the Board, the Committee
recommended that both Judy Vezmar and Tim Lodge be appointed
to the Board as Non-Executive Directors of the Company. The Board
accepted the recommendations and, accordingly, Judy and Tim were
appointed as Non-Executive Directors with effect from 1 August 2020
and 1 October 2020 respectively.
In the year ahead, the Nomination Committee will continue to assess
the Board’s composition and how it may be enhanced. The Committee
will consider diversity (gender, ethnicity and experience) and
geographic representation, and will use independent consultants
as appropriate to ensure a broad search for suitable candidates.
Shareholder relations
The Company values the views of shareholders and recognises their
interests in the Group’s strategy and performance.
Substantial shareholdings
Details of the substantial shareholdings can be found on page 89
of the Directors’ Report.
Rights and obligations attaching to shares
Details of the rights and obligations attaching to shares can be found
on page 88 of the Directors’ Report.
Communicating with shareholders
The Company places considerable importance on communication
with its shareholders, including its private shareholders. The Group
CEO and the Group CFO 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 Group CEO and the Group CFO, as well as by the Chairman and the
Senior Independent Director, 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. This includes the maintenance of a
regular dialogue between the Board (including the Chairman) and
senior management, and major shareholders. As part of this dialogue,
the Executive Directors and the Director of Corporate Affairs
regularly meet with institutional investors to make presentations on
the Company’s results. Further information on how we engage with
shareholders and how we have continued to engage with shareholders
throughout the Covid-19 pandemic can be found on page 10.
The Chairman of each of the committees engages with shareholders
in relation to significant matters related to their areas of responsibility
and this communication has continued despite Covid-19. For example,
see page 64 for an update on how Carolyn Bradley, as Chairman of
the Remuneration Committee, engaged with shareholders regarding
remuneration related matters throughout the year. The AGM
provides an opportunity for all shareholders to meet the Board and
raise any questions that they may have. Further information on the
arrangements for the 2021 AGM can be found on page 90. The Notice
of AGM is circulated to shareholders at least 20 working days prior to
the AGM, and it is Company policy not to combine resolutions to be
proposed at general meetings insofar as they relate to separate issues.
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 AGM.
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 2020 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 announcements are also published on
the Company’s website, together with other announcements and
documents issued to the market, such as trading updates and
presentations. The website also provides shareholders and the wider
stakeholder community with an archive of information on the Company,
including governance details, policies and up-to-date share price
information. Enquiries from shareholders may also be addressed to the
Group’s investor relations function through the contacts provided on
the Group’s website.
SSP Group plc Annual Report and Accounts 2020 55
Stakeholder engagement and Board decision making
A summary of the Group’s key stakeholders, their expectations and how the Group has engaged with them is set out on page 10. The below table
sets out how the Board engages and is kept informed of key stakeholder interests and page 11 provides specific examples of how stakeholder
interests and the matters set out in Section 172 of the Act were considered in key Board discussions and decision-making in FY19/20.
Our stakeholders
How the Board is kept informed
Our colleagues
The Board is provided with regular updates regarding the Group’s employees. For example, the results of engagement
surveys and proposed recommendations are reported to the Board as are succession planning, culture, and talent
development initiatives.
Colleagues across the business were consulted as part of a programme to review and relaunch our Group Values. Each country
was asked to hold focus group sessions to gather feedback from colleagues across different levels. The feedback formed the
basis for a new set of five Group Values which were reported to the Board.
The review of workforce engagement policies and procedures, monitoring of culture and whistleblowing reports are built into
the Board’s corporate calendar.
Per Utnegaard was appointed as the designated Non-Executive Director responsible for workforce engagement and further
information on this is set out on page 14.
The Group encourages employees to become shareholders by participating in the Company’s UK and International Share
Incentive Plans. The Board is updated on the plans and approves the terms on an annual basis.
Our customers
The Board receives regular updates on customers from the Executive Directors, members of the Executive Committee and the
Group Commercial and Business Development teams.
The Board is informed of sales performance, customer and market insights, including evolving needs and trends. This assists the
Board in developing and maintaining its understanding of the Group’s customers as well as potential issues and opportunities.
Our clients
The Board receives regular updates on the Group’s clients from the Executive Directors, through updates from members of the
Executive Committee and the Group Commercial and Business Development teams.
For example, the Board is regularly informed of the pipeline of business including any renewals, new wins or losses and any client
or country specific issues or opportunities.
Our shareholders
See above under the ‘Shareholder Relations’ section on page 54.
Our brand
partners and
suppliers
The Board receives regular updates on brand partners and suppliers from the Executive Directors, through updates from
members of the Group Executive Committee and the Group Commercial and Business Development teams.
The Board is kept informed of key changes to brand partner and supplier relationships and on supply chain logistics and
opportunities for value creation in the supply chain. There is also a modern slavery compliance process in place which is signed
off by Board.
Our communities
Half yearly corporate responsibility reports which cover the Group’s activities with its communities and environment are built
into the Board’s corporate calendar.
The Board is kept informed of these activities primarily through the Group CEO who chairs the Corporate Responsibility
Steering Committee, and is responsible for guiding the ongoing development of our strategy and monitoring performance
against our KPIs. The work of the SSP Foundation is also reported to the Board and further information on this can be
found on page 15.
NGOs
The Group regularly engages with NGOs who provide guidance on key areas of our sustainability strategy and the Group’s work
on ESG matters.
Understanding NGO expectations has contributed to positive progress against key areas, such as animal welfare and food
waste. The Board is kept updated on this and of the views of NGOs in the Corporate Responsibility reports and strategy.
Government and
regulators
The Board is regularly updated by the Company Secretary and General Counsel, other specialists within the business and also
external advisors on the activities and actions of government bodies and regulators relevant to the Company’s business and the
legal and regulatory landscape within which it operates.
Regular corporate governance and regulatory development updates are provided to the Board.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsCorporate governanceStrategic Report 56
AUDIT COMMITTEE REPORT
The Committee has
continued to play
a key role in SSP’s
governance and
risk management
structure, providing
important challenge
and oversight on
behalf of the Board.
Unlike in previous
years, this oversight
has taken place
against the backdrop
of the Covid-19
pandemic and its
unprecedented
impact on
the business.
Ian Dyson
Chairman, Audit Committee
16 December 2020
Dear Shareholder
On behalf of the Audit Committee (the ‘Committee’), I am pleased to present its report for the
year ended 30 September 2020.
During the year, the Committee has continued to play a key role in assisting the Board in
discharging its oversight responsibility. As in previous years, its focus has been on monitoring
the integrity of the Group’s financial reporting, internal control and risk management
systems, reviewing the effectiveness of internal and external audit programmes, overseeing
business conduct and ethics and ensuring that the Group’s processes and controls prevent
the facilitation of tax evasion. Unlike in previous years however, this activity has taken place
against the backdrop of the Covid-19 pandemic, and its unprecedented impact on the
business, its finances and its people.
The development of Covid-19 obviously introduced a significantly heightened level of risk
in a number of areas, in particular in relation to the health and safety of our colleagues and
customers, to our ability to operate our units and to the financial performance of the business,
Maintaining sufficient liquidity and covenant headroom has emerged as a significant new risk
for the Group, particularly when planning for a range of scenarios amid ongoing uncertainty
around the precise timing of the recovery in our markets. Further details of these risks and
their mitigating controls are set out on pages 33 to 37 of this report.
As the impact of Covid-19 on the Group became apparent, the Committee worked with the
Board and management to adapt normal financial and operational controls and governance
processes such that they remained effective and appropriate for the new business
environment. Such adjusted controls were kept under regular review by our Risk Committee,
our internal audit function and by the Committee. In addition, our finance teams across the
Group have had to quickly adapt to the restrictions that remote working imposed, ensuring
that the Group’s financial control environment was maintained despite the challenges
presented. This year, the decision was made to delay our interim results (by three weeks) and
full year results (by four weeks) in line with advice from the UK regulator to extend reporting
timescales to allow time to deal with the challenges facing companies adversely impacted
by Covid-19.
Alongside its impact on the operations of the Group, the emergence of Covid-19 has also
increased the degree and complexity of judgemental decisions that needed to be reflected
in our financial statements. Furthermore, this year saw the first time application of IFRS
16, which has had a very material impact on the financial statements, and also involved
the exercise of judgement in several areas, notably in the assessment of lease term where
termination options are included in a number of property leases. The Audit Committee
has played an important role in challenging management on the appropriateness of the
judgements made. In addition, the Committee has focused on the completeness and accuracy
of the initial recognition of right-of-use (ROU) assets and lease liabilities on transition to
IFRS 16 and the key management judgements to compute these balances. Covid-19 has
provided a specific trigger for impairment of fixed assets and ROU assets. Together with
the recoverability of goodwill, the Committee also reviewed the exercise performed by
management to determine the recoverability of these assets for all material cash-generating
units (CGUs). Review of going concern and viability assessment has also remained a key area
of focus.
The Committee seeks to balance independent oversight of matters within its remit, with
providing support and guidance to management. I am confident that the Committee,
supported by members of senior management as well as the internal and external auditors,
has carried out its duties effectively and to a high standard during the year, particularly given
the challenging circumstances following the emergence of Covid-19.
Composition and meetings
The Committee held four meetings during the year and comprises myself and two other
independent Non-Executive Directors namely, Per Utnegaard and Carolyn Bradley.
Attendance at these meetings is shown on page 49. As Chairman, I have recent and relevant
financial experience through my past roles as a Chief Executive Officer and Group Finance
Director of publicly quoted companies. Since the financial year end, Tim Lodge, has been
appointed to the Board and as a member of the Committee. Tim brings a wealth of public
company financial and audit committee experience that will serve the Committee well as the
Group navigates its way through the pandemic and our recovery from it. The expertise and
experience of the members of the Committee (including Tim Lodge) is summarised on pages
44 and 45 and reflects the competence of the Committee as a whole relevant to the sector.
The Company Secretary, Helen Byrne, acts as Secretary to the Committee.
SSP Group plc Annual Report and Accounts 2020 57
At the Committee’s request, the Chairman of the Board, the Group
Chief Financial Officer and senior members of the SSP Group
finance and business controls departments attend meetings of the
Committee, together with senior representatives from the internal
and external auditors. The Committee holds private sessions with the
internal and external auditors without management being present.
I regularly keep in touch with the Group Chief Executive Officer, the
Group Chief Financial Officer and the Company Secretary. I also meet
privately with both the internal and external auditors and provide
regular updates to the Board on the key issues discussed at the
Committee’s meetings.
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. The Committee is further supported by the Risk Committee
which meets quarterly and is chaired by the Group CFO.
The Audit Committee’s performance evaluation was undertaken as
part of the wider Board Evaluation process set out on pages 50 and
51 of the Corporate Governance Report.
The terms of reference of the Committee can be found at
www.foodtravelexperts.com.
In addition to the above, the Committee reviewed the following
matters during the year:
• assessments of impairment of goodwill, intangible assets
and assets held within cash-generating units as a result of
Covid-19 pandemic;
• adoption of IFRS 16, key judgements and impact of concession
accounting on rent waivers during the year;
• updates on tax matters, including the Group’s tax strategy;
• appropriateness of statements on going concern, liquidity and
viability, reflecting the impact of Covid-19;
• proposals for the scope of minimum financial controls reviews
and for the proposed internal audit activity in 2021;
• the effectiveness of health and safety measures, including
specifically an evaluation of the Group’s controls in respect of
allergens; and
• the Audit Committee’s terms of reference and the Committee’s
overall performance and composition.
A fuller description of the operation of the Committee during
the year is set out in this report. I will be available at the 2021
Annual General Meeting (AGM) to answer any questions from
shareholders about the work of the Committee.
Overview of the year
During the year, the Audit Committee has:
• 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. In 2020, two new risks were added regarding
liquidity and funding and the impact of Covid-19. Other areas
of particular focus included the impact of Brexit, which has
continued to be a high risk area for the UK business, information
security and stability, and compliance with various pieces of
legislation (for example, GDPR, the Criminal Finances Act, the
Modern Slavery Act and the Bribery Act);
• agreed the scope of both the external and internal annual
audit programmes, reviewed the outputs and monitored the
effectiveness of the internal and external audit process, and
evaluated the internal audit strategic risk assurance process
and its role;
• reviewed and monitored the external auditor’s independence
and objectivity; the policy on engagement with the external
auditor to supply non-audit services has remained unchanged;
• overseen the relationship with the external auditor and made
recommendations to the Board in relation to reappointment,
remuneration and terms of engagement;
• monitored the integrity of the Group’s financial statements
and continued to challenge the assumptions and judgements
made by management in determining the financial results of the
Group, including ensuring that the disclosures in the financial
statements were appropriate, particularly following the
emergence of Covid-19;
• overseen the process for determining whether the Annual
Report and Accounts presented a fair, balanced and
understandable assessment of the Group’s position and
performance, business model and strategy; and
• evaluated and approved the going concern assumption and
longer-term viability statements, especially taking into account
the guidance issued by the Investment Association and the
Financial Reporting Council (FRC).
SSP Group plc Annual Report and Accounts 2020Financial statementsStrategic ReportCorporate governance 58
AUDIT COMMITTEE REPORT CONTINUED
Financial reporting
As part of our work to ensure the integrity of financial reporting, the Committee focused on the following areas during the year:
Area
Background
Committee’s activities and conclusions
Goodwill and
intangible assets
Cash-generating
units impairment
assessment
The Group has a significant goodwill balance, mainly representing
the consideration paid in excess of the fair value of the identified
net assets acquired in relation to the 2006 acquisition of the SSP
business by EQT Partners, through the purchase of various Compass
Group plc subsidiaries, by various subsidiaries of SSP Group plc. The
net assets acquired included intangible assets relating to the Group’s
own brands, and franchise rights in respect of third party brands that
were identified and valued at the date of acquisition. The goodwill
and intangible assets balance also includes amounts recognised on
acquisitions during the current and previous financial years.
The Committee recognises that there is a risk that an asset can
become impaired, for example, due to changes in market conditions.
As a result, the Group monitors the carrying values of goodwill and
intangible assets to ensure that they are recoverable and any specific
indicators of impairment are discussed by the Executive Directors
with both operational and financial management at Group and
in country.
Due to Covid-19, there has been an additional trigger for impairment
in the current year.
Cash-generating units (CGUs) are required to be tested for
impairment annually if there is a trigger for impairment. Historically,
SSP has been profitable and there has been no specific trigger for
impairment. However, in the current year Covid-19 has resulted in a
specific trigger for impairment. Management has determined a CGU
to be a site, e.g. an airport or a rail station.
Similar to the goodwill impairment assessment, management have
exercised significant judgement during the process relating to
discount rates, future growth rates and cash flows. Management
have carefully considered the impact of Covid-19 in each CGU.
Taxation
The Group operates, 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 Committee recognises that management judgement is required
in determining the amount and timing of recognition of tax benefits
and an assessment of the requirement to make provisions against
the recognition of such benefits.
Going concern
and viability
statement
In order to support its going concern assessment, the Group carries
out reviews of its available resources and cash flows regularly with a
more detailed viability assessment carried out on an annual basis.
Covid-19 has had a material impact on the Group’s operations
and cash flows. There is considerable uncertainty surrounding
the ongoing impact of the pandemic. In making the going concern
assessment, the Directors have modelled two scenarios for the
period to March 2022 with the base case scenario reflecting
the Budget for 2021 adjusted for the lockdown across England
announced by the UK Government on 31 October, as well as
significantly increased government-imposed restrictions in many
other parts of Continental Europe. The downside scenario shows a
further 12-week lockdown and a much slower recovery.
The Committee reviewed the goodwill impairment assessment
prepared by management and challenged the key assumptions,
including the impact of Covid-19 on the forecasted sales and EBITDA
and the appropriateness of discount rates used.
The forecasts used by the management were much more
conservative compared to the prior year. The discount rates have
increased by c. 2% on average reflecting the increased market risk
and volatility of cash flows. As a result, total goodwill impairment
of £33.0m has been recognised in the current year. The Committee
agreed with this conclusion. The disclosure is set out in note 13.
The Committee challenged key judgements made by the
management. Due to the significant increase in the discount rates,
along with challenging key inputs, we reviewed management’s
benchmarking exercise against a comparator group of companies
which was compiled based on externally available data. The discount
rates were noted to be in a similar range and as such we deemed these
to be reasonable. We also challenged the consistency of forecasting
assumptions used in this exercise against those used for the goodwill
impairment exercise. Whilst the CGU impairment exercise was
carried out at a much more granular level and management have
exercised judgement based on their knowledge of specific cash flows
for each site, we noted that overall the forecasting assumptions were
consistent with forecasts used for the goodwill impairment and going
concern exercises.
Total impairments recognised related to fixed assets and ROU assets
are £38.4m and £38.2m respectively. The impairment primarily
arose on those sites which were expiring in the next two to three
years and as such there was not sufficient time to allow for recovery
to normal level of sales and profitability. We also noted that quite a
few sites which were marginal in prior periods were also impaired due
to further reduced profitability as a result of Covid-19.
Further details on impairments have been set out in notes 12 and 14.
The Committee reviewed the Group’s tax strategy and received
reports and presentations from the Head of Tax, setting out the tax
strategy and highlighting the principal tax risks that the Group faces
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.
The Committee challenged management’s trading and liquidity
forecasts for both the base case and the downside scenario, focusing
on the reasonableness of the pace of recovery of passenger numbers,
continued and timely access to finance such as the Bank of England’s
Covid Corporate Financing Facility (CCFF) and the ability to meet its
existing financial covenants.
We noted that whilst the Group has managed to obtain waivers
to September 2021, there are scenarios in which the Group could
breach its existing interest cover and leverage covenants at the end
of March 2022, as well as the minimum liquidity covenant when the
CCFF is expected to be repaid in the first quarter of 2022.
However, following the review, the Committee was satisfied and
recommended to the Board that the Directors should continue to
adopt the going concern assumption, notwithstanding that material
uncertainty exists that may cast significant doubt on the Group’s and
the Company’s ability to continue as a going concern.
SSP Group plc Annual Report and Accounts 2020 59
Area
IFRS 16
Background
Committee’s activities and conclusions
The Group adopted IFRS 16 ‘Leases’ with effect from 1 October
2019 using the modified retrospective approach to transition.
Adoption of the new standard has had a material impact on the
Group’s financial statements, with right-of-use (ROU) assets of
£1,468.9m recognised on transition together with lease liabilities of
£1,464.4m. Management has made key assumptions in computing
these balances at a lease level which are inherently judgemental.
Even minor changes in key assumptions made related to discount
rates, future rental payments and lease term could result in a
material change to the balances.
The Committee has closely reviewed management’s key assumptions
and accounting judgements on IFRS 16 at each Audit Committee
meeting held during the year with a specific Audit Committee
meeting held in April to solely discuss IFRS 16 and its impact on the
half year and full year financial statements.
We reviewed management’s approach to ensure that the opening
ROU assets and lease liability recognised at the transition date was
complete and accurate. Controls put in place included an audit carried
out by the Group Finance department on all material territories in
addition to reviews by local senior finance management.
Key challenges for this year included the impact of rent waivers
granted by landlords in the current year and the application of IASB
concession accounting which can only be applied if strict criteria
are met. We probed management’s approach for recognising these
concessions as such rather than as contract modifications.
Other key judgements around lease term, capitalisation of specific
contracts and computation of discount rates were reviewed by the
Committee in the prior year and deemed to be reasonable. There has
been no change in management approach on these assumptions in
the current year.
Overall, the Committee is satisfied that the balances recognised
at transition, the key assumptions made during the year, closing
balances and key disclosures included in the financial statements are
materially correct.
The Audit Committee noted the guidance issued by the FRC in
relation to the use of APMs and considered whether the performance
measures used provided meaningful insights for shareholders into
the Group’s results. The Committee also reviewed the treatment of
items considered for separate disclosure in the Annual Report and
Accounts, ahead of their approval by the Board. The Committee also
continued to support the judgements made by the management
regarding those items considered as exceptional and requiring
separate disclosure.
The Committee concluded that clear and meaningful descriptions
had been provided for the APMs used and that the relationship
between these measures and the statutory IFRS based measures
was clearly explained. It was also concluded that the Committee
supported the considered understanding of the financial statements,
and that the APMs had been accorded equal prominence with
measures that are defined by, or specified under, IFRS.
The Committee reviewed the ‘Pro forma IAS 17’ disclosures added
in the current year and concluded that these were reasonable to
include during the first year of adoption of IFRS 16 for comparability,
however, would no longer be required going forward as the
comparatives will be under IFRS 16.
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 an operational level;
• a verification process dealing with the factual content of the
reports; and
• a comprehensive review by the Directors and the senior
management team.
Alternative
performance
measures
In addition to IFRS based performance measures, the Directors also
use alternative performance measures (‘APMs’) to provide additional
useful information on the underlying trends, performance and
position of the Group (see page 31). These measures are not defined
nor specified under IFRS and therefore are not intended to be a
substitute for the same.
Further, as this is the year of transition to IFRS 16, management have
presented ‘Pro forma IAS 17’ numbers together with the statutory
numbers to demonstrate comparability with the prior period.
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 coordination 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 external auditor.
SSP Group plc Annual Report and Accounts 2020Financial statementsStrategic ReportCorporate governance 60
AUDIT COMMITTEE REPORT CONTINUED
Risk management and internal control
The Board has overall responsibility for risk management and internal
control systems, and for reviewing their effectiveness. This process
is overseen by the Committee on the Board’s behalf. It is increasingly
important that this is carried out in the context of the social,
environmental and ethical matters relating to the Group’s business.
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, but not absolute assurance against material
misstatement, loss, fraud or breaches of law and regulations.
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 financial
management on a weekly and monthly basis. Key financial and
operational measures are reported on a weekly and monthly basis,
and are measured against both budget and reforecasts in these
meetings. This process has been adapted where needed by the
CEO and CFO to reflect the nature of reporting required during the
Covid-19 pandemic.
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 their local risk registers and risk maps to ensure
that the key strategic, operational, financial, as well as emerging 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 risks, as well as current and future mitigation activities
at both the Group and regional/country levels. The Committee
reviewed this process and a summary of the risk registers during
the year.
Following this process, a summary of the principal risks and
uncertainties which are currently judged to have the most significant
impact on the Group’s long-term performance is set out on pages
19 to 24.
The Committee reviewed the effectiveness of the Group’s financial
and other internal control systems through the annual Control
Self-Assessment process, as well as the reports of the internal
and external auditors during the year. It subsequently reported on
these matters to the Board to allow it to carry out its review (see
pages 33-34).
Internal audit
Deloitte acts as internal auditor to the Group, and the partner
responsible reports directly to the Audit Committee, in addition to
being a permanent member of the Risk Committee. Internal audit
plays an important role in assessing the effectiveness of internal
controls through a programme of reviews based on a continuing
assessment of business risks across the Group.
Internal audit is in regular dialogue with the regional Chief Financial
Officers and the Group Chief Financial Officer, to discuss the output
from the assurance work and acquire an update on the business risks
across the Group. Where control deficiencies are noted through the
assurance work performed, Deloitte will perform follow-up reviews
and visits.
The 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 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.
As a result of Covid-19, its impact on SSP’s operations and majority
of the staff being on furlough, the planned internal audit programme
for the year was largely postponed. In addition, the Control Self-
Assessment (CSA) was replaced with a ‘Minimum Financial Controls’
(MFC) exercise which focused on a smaller number of key controls
expected to be in place across all local finance operations. The output
of the exercise was reviewed by the Committee which ensured that
any proposed action was timely and commensurate with its level of
risk, whether real or perceived.
Despite the challenges arising from Covid-19, it was noted that there
were no significant weaknesses identified in the year that would
materially impact the Group as a whole. The Committee continues
to closely monitor the impact of Covid-19 and will ensure the
resumption of full scope of internal audit and CSA programmes at the
appropriate time once the outlook has improved. For the current year,
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 audit process through the quality and depth of
findings and recommendations. During 2020, the Committee also
carried out a formal assessment of the internal audit process,
using questionnaires completed by senior finance personnel both
at Group and in country, along with key members of the business
controls, legal and tax departments. The survey covered areas such
as organisation, purpose and remit, process management, quality of
the team, knowledge and expertise, and communication of results
and recommendations. The survey indicated an overall satisfaction
with the internal audit process, including Deloitte’s interactions
with the local teams as well as their understanding of the business
and the issues it faces. The Committee discussed the results of the
survey with Deloitte and was satisfied with the internal audit process.
The results and feedback from the survey were incorporated into the
next year’s internal audit plan.
SSP Group plc Annual Report and Accounts 2020 61
External audit
The effectiveness of the external audit process and independence
of KPMG LLP (KPMG), the Group’s external auditor, is key to ensuring
the integrity of the Group’s published financial information. Prior to
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 external auditor
that flowed from their audit work.
During the 2020 financial year, the Committee carried out an
assessment of the external audit process, including KPMG’s role in
that process. 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. The results and feedback from the survey
were incorporated in the next year’s external audit plan.
In 2015, the Group tendered its external audit appointment and
as a result, KPMG was reappointed as external auditor. The audit
partner for the year ended 30 September 2020 was Nicholas Frost.
Under the Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2014 (the “CMA Order”)
the Group is required to put its external audit process out to tender
again by no later than 2025 and intends to do so in line with those
regulations. The Committee confirms it is in compliance with the
provisions of the CMA Order.
Auditor independence and non-audit services policy
The Committee has adopted a formal policy governing the
engagement of the external auditor to provide non-audit services,
taking into account the relevant ethical guidance on the matter.
This policy is reviewed annually by the Committee, which 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, .e.g. audit related services, the engagements
for non-audit services that are not prohibited are still subject to
formal review by the Committee based on the level of fees involved,
with reference to the 70% cap that applies. 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.
The Group had updated its non-audit services policy in the prior
year to ensure it remained in line with the latest ethical guidance.
There were no further changes made during the year.
Details of fees payable to the external auditor are set out in note 6
on page 118. In 2020, non-audit fees represented approximately
20% of the audit fee. KPMG has provided services to certain Group
companies and the non-audit fees in 2020 included £0.1m of fees for
assurance work in relation to turnover certificates, which are needed
to comply with certain local regulations.
The external auditor reported to the Committee on its independence
from the Group and confirmed it had complied with the independence
requirements as set out by the APB Ethical Standards for Reporting
Accountants. The Committee is satisfied that KPMG has adequate
policies and safeguards in place to ensure that auditor objectivity and
independence are maintained.
FRC Correspondence
During the year, the UK regulator (FRC) reviewed the SSP Annual
Report and Accounts 2019 and asked the business to consider a
number of technical disclosure matters. The Committee has reviewed
the letter from the FRC and SSP’s response. As a result, SSP have
clarified and enhanced some disclosures in this Annual Report and
Accounts. The enquiry was closed.
Ian Dyson
Chairman, Audit Committee
16 December 2020
SSP Group plc Annual Report and Accounts 2020Financial statementsStrategic ReportCorporate governance 62
STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
Our new
Remuneration
Policy supports the
evolving strategic
priorities of
the Group.
Carolyn Bradley
Chair, Remuneration Committee
16 December 2020
Introduction
On behalf of the Board and the Remuneration Committee, I present the Directors’
Remuneration Report for the year ended 30 September 2020, which contains:
• The updated Directors’ Remuneration Policy, to be put to a shareholder vote at the
2021 AGM.
• The annual remuneration report, describing how the existing policy has been applied
in the 2020 financial year and how the updated policy will be implemented in the 2021
financial year.
Response to Covid-19
Prior to the onset of Covid-19, the business was on track to deliver another solid set of
financial results. However, by the second quarter, the impact of the Covid-19 outbreak in Asia
and the strict restrictions put in place there and elsewhere in the world became apparent and
travel almost immediately ground to a halt. By April, sales were down 95% across the Group.
When the virus first emerged, our immediate priority was to ensure the health and safety
of our colleagues and customers, and to protect our business for the future. We introduced
heightened safety protocols to ensure we could keep our colleagues and customers safe.
Costs were significantly reduced, and by April we had secured approximately £750m of
liquidity through an equity placing as well as accessing Government loan schemes, enabling
us to trade through a prolonged recovery. The Board and Senior Management took significant
salary reductions and our Group CEO proposed to waive his bonus for 2020. We were able
to retain some of the cash related to the payment of the final 2019 dividend as we gave
shareholders the opportunity to reinvest the proceeds of that dividend payment into new
SSP shares.
Where we needed to close our units, we sought to protect as many jobs as possible through
utilising any available job support schemes. It is with regret that the prolonged nature of this
crisis resulted in us having to take the difficult decision to restructure in order to protect the
business, leading to considerable job losses.
The Committee would like to take this opportunity to thank our colleagues, both on the front
line and those in our support functions. Our team members demonstrated our Values by
resiliently continuing to provide services to the travelling public, many of whom have been
key workers. Our management team have worked incredibly hard to ensure the safety and
wellbeing of our colleagues and to protect the business for the future.
By the end of the third quarter, restrictions had begun to ease in a number of countries
and we began to re-open units using a new flexible operating model. By year end, we were
operating c. 1,200 of our units profitably across the Group and sales had recovered slowly to
approximately 24% of pre-Covid levels. A significant focus on cash preservation enabled the
Group to minimise the cash outflow in the second half of the year and by the end of the year,
SSP had some £520m of liquidity.
Since the year end, the re-instatement of local and national lockdowns, notably in the UK and
Continental Europe, has resulted in further volatility in passenger numbers which we expect
to continue through the second quarter of the new financial year. We are optimistic that, allied
to the rollout of the Covid-19 vaccination programmes, we will see the start of a recovery
in the second half of the year. We are ready to respond quickly. The actions we are taking to
rebuild the business will put us in a strong position to capitalise on the recovery as well as
future opportunities, enabling us to deliver long term sustainable growth for the benefit of all
our stakeholders.
It is against this backdrop that the Committee considered remuneration out-turns and our
new policy. In doing so, we have sought to balance alignment with our shareholders, workforce
and wider stakeholders, while ensuring our policy will support the rebuilding of the business
and long term sustainable growth.
SSP Group plc Annual Report and Accounts 2020 63
Executive pay – response to Covid-19
Salary reductions
As announced on 25 March 2020, significant salary reductions were
made across all senior management, the Group Executive and Group
Board. Salaries were reduced by 30% from April 2020. NED fees
were also reduced by 30% during this time. For September, SSP’s
management and Board agreed to a salary/fee reduction of 10%.
Bonus waived
For the year ended 30 September 2020, the Group CEO was eligible
to receive a bonus based 80% on underlying operating profit and
20% on performance against strategic objectives. The Group CFO
was also eligible to receive a bonus based on underlying operating
profit and strategic objectives, assessed using the Group’s
Management Bonus Plan matrix structure which has been operated in
prior years and which applies to our management population.
The underlying operating profit threshold was not met and the
decision was taken to not pay a bonus to our wider management
team, a decision which the Committee believed appropriate in the
current conditions. On this basis, no bonus was earned by Jonathan
Davies in the year, despite the fact that his strategic objectives were
satisfied (as set out later in the report).
The Group CEO would have been entitled to a potential annual bonus
under the strategic element. However, Simon Smith volunteered
to waive his bonus for this year and this waiver was agreed by the
Committee and the Board. Notwithstanding that the bonus had been
waived, the outcome of this element has been provided in this report.
In line with our Policy, we assessed our Executive Directors’ strategic
performance based on the targets set at the start of the year, against
which robust performance was still delivered. However, as the crisis
hit, the business’ priorities changed drastically and our Executive
Directors performed outstandingly to protect the business through
their decisive and immediate actions.
No LTIP pay-out
The performance conditions for the 2017 PSP were not met, and
therefore the award has lapsed in full and no shares will vest this year.
Remuneration Policy Review
The Remuneration Policy ("Policy") was last approved by shareholders
at the 2018 AGM and is due for renewal this year. We have taken
this opportunity to reflect on our approach to executive pay in
the context of the ongoing external uncertainty and our evolving
business strategy.
Taking into account the long-term strategic needs of the business
and the views of our shareholders, the Committee proposes to make
the following changes to the Policy.
Our evolving pay governance
Last year, we made a number of good governance changes ahead
of our Policy review. These changes included the following:
• Strengthened annual bonus deferral by introducing the
requirement for 33% of any bonus earned to be deferred into
shares for three years regardless of whether the minimum
shareholding requirement is met.
• Improved the transparency of the annual bonus target disclosure.
• Pensions for any new Executive Directors aligned with the rate for
the wider workforce.
• Minimum shareholding requirements for the CEO and CFO
increased to 250% and 200% of salary respectively
• Introduced post-employment shareholding requirements for
Executive Directors.
In reviewing our Policy we have continued to be mindful of good
governance practice and will be making further changes to align
pension to workforce, as described on page 64.
Restricted Share Plan
We have thought very carefully about the pay model to best support
the business going forward. SSP faces some significant challenges as
we work to restore and grow shareholder value in a highly uncertain
environment. The conclusion we have come to is that the restricted
share model best supports the recovery of the business.
We are therefore proposing to replace the Performance Share Plan
("PSP") with a new Restricted Share Plan ("RSP") under which our
Executive Directors will receive a more modest award (than under the
PSP) subject to performance underpins. We believe that a restricted
share plan is the right approach to support the business for the
following reasons:
• Supports dynamic and responsive management actions as the
external environment develops – We want management to take
the right actions to rebuild the business to deliver long term
sustainable growth over what is expected to be a prolonged and
potentially volatile recovery cycle. The Committee believes that
the proposed RSP will support management in its execution and
delivery of this.
• Target setting – The environment remains highly uncertain in terms
of trajectory of recovery. Passenger numbers (PAX) at the sites
at which SSP operates is a key driver of profit growth and in the
current environment, we cannot forecast how PAX will recover
and, when it does, if this recovery would mirror SSP’s portfolio of
locations and units. That gives us challenges with setting three year
targets which with the benefit of hindsight may be set too low or
too challenging. The restricted share model rewards management
for taking the right actions to deliver long term sustainable growth
over the recovery cycle rather than hitting a specific target in
three years.
• More modest reward with performance underpins – The more
modest reward is strongly aligned with our shareholders'
experience and rewards participants for restoring the Group's
share price which feels appropriate to the current circumstances.
We will also operate a performance underpin to ensure there
is no payment for failure and that overall levels of vesting
are reasonable.
• Retention across the wider management team – The operation
of the restricted share plan will be aligned across the wider
management team. The restricted share model is simple and
transparent, and although the upside is more modest, it is
expected to better support retention and be appropriately
motivating at below board level where there is a risk that
management with transferable skills may move to less hard-
hit sectors.
The maximum award under the proposed policy will be 100% of
salary for the CEO and 75% of salary for the CFO, which represents a
50% reduction from the maximum level of awards under the current
PSP, reflecting shareholder expectations when moving to a restricted
share model. Vesting will be subject to a performance underpin which,
for the first award is detailed on page 71. Awards will be subject
to a three year vesting period and two year holding period, so that
the total time horizon before any potential sale of shares is five years,
in line with best practice.
To support our restricted share model approach we are asking
shareholders to approve the plan rules of the Restricted Share Plan
at the AGM.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 64
STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
CONTINUED
Engagement with shareholders
As part of our Policy review, we wrote to shareholders representing
c. 80% of our shareholder base to understand their views on
our new Directors’ Remuneration Policy. We welcomed the level
of engagement received and I am pleased to say that we were
able to engage with shareholders representing c.70% of our
shareholder base. Our shareholders were understanding of the
challenges that the business has faced during this difficult year
and valued our management team’s successful handling of the
crisis. Overall, engagement around the new RSP plan was positive
and our shareholders understood the strategic rationale for its
implementation, and the difficulties that would arise under other long
term incentive structures in the current environment.
We have welcomed their feedback on our proposals and have taken
into account their comments as part of the process. We remain
committed to keeping an open and transparent dialogue with
shareholders on executive compensation at SSP.
We hope you will support our Directors’ Remuneration Policy
and Directors’ Remuneration Report at the forthcoming AGM.
Carolyn Bradley
Chair, Remuneration Committee
16 December 2020
Pensions policy
As part of our Policy review we are committing to reducing pensions
for incumbent Executive Directors to the rate applied to the majority
of the wider workforce from the end of the 2022 calendar year, in line
with the Investment Association guidance. Prior to Covid-19 we had
begun to review the pension provisions available for our UK based
colleagues. This unfortunately had to be paused due to changing
priorities as a result of the pandemic. This review will confirm the
rate available to the wider workforce and therefore the rate that the
Executive Directors will be aligned to from the end of 2022.
Board changes
As announced on 1 November 2019, Mike Clasper succeeded Vagn
Sørensen as Chairman of the Company following the 2020 Annual
General Meeting. His fee was set at £275,000. Further, as announced
on 31 July 2020, Judy Vezmar joined the Board during the year as an
Independent Non-Executive Director and a Remuneration Committee
member. Post year end, as announced on 1 October 2020, Tim Lodge
was appointed to the Board as an Independent Non-Executive
Director and Audit Committee member. Each receives a base
fee of £51,000.
Salaries for the 2021 financial year
This year, there will be no salary increases for our Executive Directors.
Operation of the annual bonus plan for 2021 financial year
This year we are proposing to simplify the structure of the
Management Bonus Plan and have revised the performance metrics
to align with our recovery strategy. The structure for our CEO and
CFO will now be aligned, with 80% based on financial and 20% based
on strategic objectives.
Taking into account the significant market uncertainty, this is a
challenging year to set financial targets. As a Committee we consider
that it is still appropriate for a significant portion of the bonus to be
based on financial measures. We consider EBITDA and Net Debt to be
the key measures for management to focus on in the short to medium
term. We have thought carefully about how best to adapt the target
setting framework to this uncertain environment. In that context,
our annual bonus policy allows for us to account for some external
factors, including reference to passenger numbers (PAX) and revenue
achieved, in determining a suitable bonus outcome. The Committee
anticipates that it will apply a greater than normal level of judgement
and discretion when considering outcomes for the year.
SSP Group plc Annual Report and Accounts 2020
65
REMUNERATION AT A GLANCE
Remuneration outcomes for the year ended 30 September 2020
The table below provides a high level overview of what our Executive Directors earned in 2020.
Fixed pay (salary, pension and benefits)
Annual bonus
PSP vesting (2017 award)
As discussed in the Chair’s statement, the Covid-19 outbreak has
had an unprecedented impact on the travel industry and on SSP’s
business in all geographies. Remuneration outcomes for the year
are as follows:
• From 1 April to 31 August 2020 Directors received 70% of their
usual salary/fees. This increased to 90% from 1 September
to 30 September as the Group was able to return more of its
colleagues to work.
• Annual bonus payout for the 2020 financial year is zero for both
Executive Directors, with trading conditions meaning that the
Group did not achieve the threshold operating profit target.
Simon Smith achieved a portion of his strategic objectives, which
resulted in a formulaic payout of 12% of maximum opportunity.
However, he proposed to the Committee that this would be
waived, which the Committee approved.
Simon Smith
Jonathan Davies
£720k
£0
£0
£520k
£0
£0
Three year TSR performance
140
120
100
80
60
40
20
0
30/09/2017
30/09/2018
30/09/2019
30/09/2020
SSP Group
FTSE 250
Equity exposure of our Executive Directors
Our Executive Directors strongly align themselves with the long-term success of the Group through their high personal shareholdings.
Simon Smith
250%
308%
168%
476%
200%
2020 Minimum shareholding requirement
Actual shareholding
Interests in unvested/
unexercised share awards
Jonathan Davies
600%
147%
747%
As at 30 September 2020
Overview of implementation of Policy in 2021
A summary of the proposed packages for Executive Directors in the 2021 financial year in comparison to packages for the 2020 financial year
is set out below.
Element of remuneration
Base salary
Pension
Simon Smith
£650,000
2021 financial year
Jonathan Davies
£467,600
Simon Smith
£650,000
2020 financial year
Jonathan Davies
£467,600
20% of base salary
21% of base salary
20% of base salary
21% of base salary
Annual bonus maximum
175% of base salary
125% of base salary
175% of base salary
125% of base salary
Annual bonus targets
PSP annual award
RSP annual award
Profit, Net Debt
and strategic
n/a
Profit, Net Debt
and strategic
Profit
and strategic
Profit
and strategic
n/a
200% of base salary
150% of base salary
100% of base salary
75% of base salary
n/a
n/a
Shareholding requirement
250% of base salary
200% of base salary
250% of base salary
150% of base salary
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 66
REMUNERATION AT A GLANCE CONTINUED
Proposed changes to the Directors’ Remuneration Policy
A summary of the proposed changes to the Group’s Remuneration Policy is set out below. The new policy has been written to include
developments that were made in the two previous financial years, such as the introduction of mandatory bonus deferral, post-employment
shareholding requirements and post-vest holding periods. The full policy is shown on pages 77 to 85.
Pension
Benefits
Annual bonus
Long Term Incentive
Shareholding requirements
Base Salary
2017 Policy
• Executive
Director
salaries are
set taking into
consideration
individual skills
and the size
and complexity
of the role
• Base salaries
normally
reviewed with
effect from
1 June
• Executive
Director
pension
contributions
of up to 35% of
base salary
• Newly
appointed
Director
pension
contributions
of up to 20%
of base salary
• Executive
Directors
receive a
tailored
package of
core benefits
including life
insurance,
car allowance
and healthcare
• Executive Directors can
be awarded a maximum
bonus of up to 200%
of base salary
• Performance is
measured relative to
targets in key financial,
operational and/or
strategic objectives
over the financial year.
• Malus and clawback
conditions apply
Proposed changes for 2020 Policy review
• No change
• Newly
• No change
•
appointed
Director
pension
contributions
aligned to
the wider
workforce rate
Incumbent
Executive
Directors will
be aligned
with the wider
workforce
rate by the end
of the 2022
calendar year
As per 2017 Policy
with the following
amends:
• Executive Directors
required to defer at
least 33% of annual
bonus for three years
into shares
•
If the shareholding
requirement is not met,
Executive Directors
required to defer 50%
of annual bonus for
three years into shares
• Remuneration
Committee
has discretion
over outcomes
•
Implementation for
2021 financial year -
CEO and CFO's bonus
structures will now
be aligned, with the
majority based on
financial objectives and
a minority based on
strategic objectives
• Group CEO: 200% of salary
• Group CFO: 125% of salary
• Non-executive Directors:
100% of base fee
• Directors have until the
third anniversary of their
appointment to build up
shareholding requirement
As per 2017 Policy with the
following amends:
• Group CEO: 250% of salary
• Group CFO: 200% of salary
Post-employment
shareholding
requirements introduced.
• Performance
Share Plan in
which Executive
Directors can be
awarded up to
200% of salary
• Awards subject
to financial
performance
conditions
assessed over
three year
performance
period (usually
EPS and TSR)
• Malus and clawback
conditions apply
• Restricted
Share Plan in
which Executive
Directors can be
awarded up to
100% of salary
•
Implementation for
2021 financial year
– Normal award
levels are 100% of
salary for the CEO
and 75% of salary
for the CFO
• Awards subject
to performance
underpins to ensure
the Company does
not pay for failure
• Awards vest after
three years and are
subject to a two
year holding period
• Remuneration
Committee
has discretion
over outcomes
SSP Group plc Annual Report and Accounts 2020 67
CORPORATE GOVERNANCE CODE PROVISION 40 DISCLOSURE
When developing the proposed Remuneration Policy and considering its implementation for 2021, the Committee was mindful of the UK
Corporate Governance Code and considers that the executive remuneration framework appropriately addresses the following factors:
Clarity
• The Committee is committed to providing open and transparent disclosures regarding our executive
remuneration arrangements.
• We have consulted with our shareholders in order to formulate the proposals in our new Remuneration Policy.
• We have sought to explain the changes to our proposed Remuneration Policy in a way that highlights their
alignment to our strategic ambitions as well as good governance practices under the UK Corporate Governance
Code and investor guidance.
Simplicity
• Remuneration arrangements for our Executives and our wider workforce are simple in nature and well
understood by both participants and shareholders.
• Our new restricted share plan is a simple model that aligns our senior management team to the experience of
our shareholders.
• For the 2021 financial year, we have also aligned the bonus structures for our Group CEO and Group CFO which
provides further consistency and simplicity in our pay arrangements.
Risk
• The Committee considers that the structure of incentive arrangements does not encourage inappropriate
risk-taking.
• Our annual bonus is based on a balance of metrics which take into account our strategic plan and external
expectations. Targets are set to ensure that maximum can only be earned for delivering truly exceptional
performance while not encouraging risk-taking.
• Our new RSP has more modest award levels relative to the out-going PSP and is subject to performance
underpins which ensure that there is no payment for failure.
• Annual bonus deferral, the RSP post-vesting holding period and our in-employment and post-employment
shareholding requirements provide a clear link to creating sustainable, long-term value for shareholders.
• Malus and clawback provisions also apply to our incentive arrangements, and the Committee has overarching
discretion to adjust formulaic outcomes to ensure that they are appropriate after assessing performance in
the round.
Predictability
• The new RSP increases the predictability of outcomes in line with recovery strategy and minimises the
potential of unintended outcomes.
• Our Policy contains details of opportunity levels under various scenarios for each component of pay.
Proportionality
• The Committee believes that the proposed RSP incentivises management to take the right actions for
sustainable value in the current environment.
• The Committee considers performance from a range of perspectives. Poor financial performance is
not rewarded.
Alignment to culture
• Any financial and strategic targets set by the Committee are designed to drive the right behaviours across
the business.
• The new RSP model encourages our executives to focus on making the right decisions for the long-term
sustainable performance of the business.
• When developing the 2021 Remuneration Policy the Committee reviewed our approach to remuneration
throughout the organisation to ensure that arrangements are appropriate in the context of our Values and
approach to reward for the wider workforce.
• We have committed to aligning executive pensions with the wider workforce rate.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 68
ANNUAL REPORT ON REMUNERATION
Single total figure of remuneration – Executive Directors (audited)
The following table provides a summary single total figure of remuneration for 2019/20 and 2018/19 for the Executive Directors.
All figures
shown in
£’000
Salary
and feesa
Benefits
Pension
Annual
Bonus
Long-term
incentivesc, d
Total fixed
Remuneration
Total variable
Remuneration
Other
Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Executive Directors
Simon Smithb
563
430
27
17 130
90
Jonathan
Davies
405
968
459
889
17
44
16
98
96
33 228
186
–
–
–
529
468
997
–
–
261
933
– 1,194
–
–
–
–
–
720
537
–
790
720 1,327
520
571
– 1,401
520 1,972
– 1,240 1,108
– 2,191 1,240 3,299
a
Salary and fees – this represents the base salary or fees paid in respect of the relevant financial year. For Executive Directors this was reduced for a
portion of the year due to the impact of Covid-19 as described below.
b
Simon Smith – amounts of pay shown for Simon Smith in 2019 shows remuneration earned from his appointment to the Board on 20 November 2018.
c
Long-term incentives 2020 – no shares vested under the 2017 LTIP awards, therefore there is no value attributable to share price appreciation over the
performance period. The Committee did not exercise any discretion with regards to the vesting of the 2017 LTIP awards.
d
Long-term incentives 2019 – the value for 2019 is in respect of the awards granted in 2016. The value presented in the single total figure of remuneration
table in the 2019 Annual Report on Remuneration has been adjusted to show the final outcome of the vesting of the awards granted in 2016 (along with
accrued dividend equivalents) at the mid-market closing share price on the date of vesting of £6.6568.
Additional disclosures in respect of the single figure table
Base salary
Executive Director base salaries in 2019/20 (audited)
Simon Smith
Jonathan Davies
From 1 June 2020
a
From 1 June 2019
£650,000 per annum
£650,000 per annum
£467,600 per annum
£467,600 per annum
Change
0%
0%
a
Salary was reduced during the year as described below due to the impact of Covid-19.
During the 2020 financial year, the Group furloughed the majority of its workforce and utilised wage subsidy schemes available across the
regions in which it operates to preserve cash and protect the business. As a result of this, many of our colleagues received reduced pay during
the year.
In light of this, the Remuneration Committee and the Chairman agreed that it was appropriate for the Board of Directors to receive a reduced
salary/fee for a portion of the year. From 1 April 2020 to 31 August, Directors received 70% of their usual base salary/fee, reflecting a 30%
reduction. As trading conditions began to improve towards the end of the financial year, and the Group was able to return more colleagues
to work, the Committee and the Board considered it appropriate to continue the reduction, but at a lower level. As such from 1 September to
30 September, Directors received 90% of their usual base salary/fee, reflecting a 10% reduction.
The figures shown in the Single Total Figure of Remuneration table above reflect these changes. The amount of remuneration received
by Non-Executive Directors is set out on page 72.
Benefits
During the year, Simon Smith and Jonathan Davies received benefits totalling £27k and £17k respectively. These benefits included
participation in the UK SIP, private medical insurance (for the executive and their family), life insurance, car allowance, company fuel card and
home to work travel (including associated tax paid).
Details of shares held by Executive Directors under the UK SIP are set out below:
Total SIP shares held at
1 October 2019
Shares acquired during
financial year
Matching shares awarded
during financial year
Simon Smith
Jonathan Davies
1,766
2,829
449
471
204
204
Total SIP
shares held at
30 September 2020
2,419
3,504
SSP Group plc Annual Report and Accounts 2020 69
Pensions
The table below sets out the pension arrangements for our Executive Directors that were in force during the year. Pension arrangements for
Executive Directors were based on their full base salary and do not reflect the salary reductions described above, in line with the approach
taken for the rest of the Group’s management.
Director
Simon Smith1
Jonathan Davies
Pension type
Pension level (% base salary)
Cash in lieu of pension/defined contribution
Cash in lieu of pension
20%
21%
1
Simon Smith is a member of the UK defined contribution pension scheme and receives a mix of employer pension contributions into the Group’s pension
scheme and a cash supplement in lieu of pension such that his total annual pension remuneration amounts to 20% of base salary.
Annual bonus
The bonuses for the year ended 30 September 2020 assessed underlying operating profit as the financial target. Bonuses for both Simon
Smith and Jonathan Davies assessed a mix of financial performance and strategic objectives.
For Simon Smith, 80% of his total bonus opportunity was determined by the financial target, with the remaining 20% opportunity determined
by achievement of key strategic objectives. Jonathan Davies’ bonus was determined under the Management Bonus Plan matrix structure that
applied to the broader management team, whereby the financial element of the bonus was based on 100% underlying operating profit and a
personal performance factor, based on the achievement of objectives, is then applied to determine the actual pay out.
Based on the frameworks described above, Simon Smith and Jonathan Davies earned bonuses as set out in the table below. Further details of
financial and strategic performance is also set out below.
Annual bonus payout in 2019/20 (audited)
Simon Smitha
Jonathan Davies
Maximum bonus opportunity
Bonus earned (% of maximum)
Actual bonus (£)
a
Bonus payment was waived.
175%
12%
£0
125%
0%
£0
Taking into account pay conditions and bonus outcomes across the wider workforce, Simon Smith volunteered to waive the 12% of maximum
bonus opportunity earned in respect of the 2020 financial year and this waiver was agreed by the Remuneration Committee. Due to the
different bonus structure that applied to Jonathan Davies during the financial year, no bonus was earned. The Committee concluded that this
bonus outcome was appropriate in the context of the wider employee and shareholder experience.
Had any annual bonus been payable to Executive Directors, one third of this would have been deferred into the Group’s shares for three years,
in line with changes made in the 2019 financial year.
A full breakdown of performance against financial and non-financial targets is set out below.
In line with our Policy, we have assessed our Executive Directors' performance against strategic objectives based on the targets set at the start
of the year. However, as a result of the global pandemic, management's priorities for the year changed significantly versus these objectives.
The performance outcomes for the 2020 financial year reflect the decisive action taken by leadership to place the business into ‘hibernation’
at the onset of the crisis. We believe that the Group took the right actions during the year to protect the business and ensure liquidity, setting
the stage for an effective recovery as soon as is possible. The Committee believes that our Executive Directors demonstrated capability and
excellent leadership in an unprecedented time for the travel sector.
Financial performance
The table below sets out a summary of performance against the financial target, underlying operating profit. The underlying operating profit
targets for the year are set based on the Group’s budgeted performance. Budgeting is a rigorous process which starts from the bottom up,
reviewing the expected performance of each region in which the Group operates against the external opportunities and challenges within
them, and the Group’s five-year plan.
Targets set at the start of the 2019/20 financial year (£m)
2020 performance (£m)1
Threshold
(30% of maximum)
Target/budget
(50% of maximum)
Maximum
(100% of maximum)
Underlying operating profit
224.6
231.5
243.1
-211.7m
1
2020 Performance shows pro-forma IAS 17 underlying operating profit performance.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 70
ANNUAL REPORT ON REMUNERATION CONTINUED
Strategic objectives
A summary of our Executive Directors’ performance against strategic objectives is shown below.
Simon Smith – Group CEO
Objective (20% maximum)
Targets
Performance assessment
Strategic Initiatives
• Complete commercial plan in North America, deep dive
in an airport delivering improved EBITDA ARO yield.
• Deep dives completed in 7 airports (above stretch).
• Develop efficiency programmes for technology
• Order at table trialled successfully in three regions,
and automation in key markets.
ahead of the stretch target.
• Covid-19 response has resulted in accelerated rollout.
• Complete profitable LFL trials in key regions and
develop action plans.
• Activity stopped in March due to Covid-19 priorities.
• Trials completed in 3 key regions.
People, Capability
and Infrastructure
• Launch and complete the first year of the Global
Leadership Programme for regional and country
leadership teams.
• Activity stopped in March due to Covid-19 priorities.
• First cohort partially completed but paused due to
Covid-19 priorities and second cohort scheduled, but
not completed.
• Complete review of the Group CSR strategy.
• Activity stopped due to Covid-19 priorities,
• Embed the Group’s refreshed Values.
but now being revisited.
• Background analysis completed and shared
with Board.
• Values launched and cascaded globally.
• Values demonstrated throughout the handling
of the Covid-19 crisis.
Taking into account performance against strategic objectives, Simon Smith achieved 12% of bonus for this element, which was voluntarily waived
by Simon, a decision then approved by Committee.
Objective
Strategic Initiatives
Financing
Targets
Performance assessment
Jonathan Davies – Group CFO
• Deliver Group-wide procurement savings including
new purchasing deals, marketing income, recipe
and menu optimisation, production equipment
and energy efficiency.
• Deliver targeted Group-wide efficiency savings
through planning, reviewing and monitoring of
programmes across the business.
•
Implement finance, cash management and
inventory systems project.
• On track to achieve stretch target pre-Covid-19.
• By March, savings of 88% of stretch target had been
identified and agreed.
• On track to achieve stretch target pre-Covid-19.
• Additional savings £1.5m ahead of budget identified
by end of January 2020.
• Programme on track to meet deadline for delivery
•
of country pilot on time and within budget.
International roll-out programme planned and
presented to Steering Committee and GEC.
• Raise further debt to maintain target balance
sheet leverage within planned interest costs.
• Specific targets deemed no longer relevant
due to Covid-19.
• Achieve target returns on capital investment.
• Deemed no longer relevant due to Covid-19.
• Evaluate and execute M&A projects to deliver
• M&A projects successfully executed for
returns above target criteria.
Station Food (Germany), Red Rock (Australia)
and Togservice (Nordics).
Taking into account performance against strategic objectives, the Committee decided that Jonathan Davies’ performance factor was 0.8. As the
financial targets for the Group's operating profit were not met, this performance factor resulted in a nil pay-out.
Scheme interests awarded during the financial year
SSP Performance Share Plan awards (audited)
The following PSP awards were made to the Executive Directors in the 2019/20 financial year.
Type of award Date of award
Simon Smith
Nil Cost Options
21/11/2019
Jonathan Davies
Nil Cost Options
21/11/2019
Number
of awards
granted
205,533
110,893
Face value
(£) at date
of grant
1,300,000
701,400
Face value %
of salary
Award receivable
for minimum
performance
End of
performance period
200%
150%
25% 30 September 2022
25% 30 September 2022
The closing price on the day before grant was used to calculate the number of shares over which each award was granted (£6.3250 for
21 November 2019 award). Awards will vest subject to the achievement of the performance conditions which will be measured at the time the
Group publishes its full year financial results for the 2022 financial year and completion of a three-year vesting period. The awards will vest
subject to achieving two performance measures, namely earnings per share (EPS) target (75% weighting) and relative total shareholder return
(Relative TSR) target (25% weighting). The performance targets for these awards granted are summarised on page 75. Following vesting,
awards will be subject to an additional two year holding period.
SSP Group plc Annual Report and Accounts 2020 71
Implementation of Remuneration Policy in the year ending 30 September 2021
This section provides an overview of how the Committee is proposing to implement the Group’s Remuneration Policy in the year ending
30 September 2021, subject to its approval at the 2021 AGM.
Base salary
Base salaries as at 1 October 2020:
Simon Smith: £650,000
Jonathan Davies: £467,600
Benefits
Pensions
Base salaries for Executive Directors will be reviewed with effect from 1 June 2021, in line with the Group’s usual timetable.
As communicated on his appointment, the Committee intends to keep Simon Smith’s package under review subject to his
development and performance in role and the continued growth of the Group.
Executive Director benefits will continue to include private healthcare (for the executive and their family), life insurance,
car allowance or a company car, company fuel card, travel to and from work (including associated tax paid) and participation
in the UK SIP.
Simon Smith: 20% of base salary
Jonathan Davies: 21% of base salary
New appointments: aligned with the wider workforce
The Committee is committed to aligning Executive Director pensions with wider workforce by the end of 2022.
Annual Bonus
Maximum opportunity:
Simon Smith: 175% of base salary
Jonathan Davies: 125% of base salary
Targets:
Bonuses will continue to be based on both financial and non-financial performance. For 2020/21 the financial targets
will be EBITDA and Net Debt, aligning with immediate business priorities. Specific targets and details of non-financial
objectives will be disclosed in the 2020/21 Annual Report when they are no longer considered to be commercially sensitive.
The Committee intends to take into account some external factors including reference to passenger numbers (PAX) and
revenue achieved in its determination of bonus outcomes. At year end, the Committee will be responsible for looking at
performance in the round and applying judgement to ensure that the outcome is appropriate to the external environment,
management's achievements and shareholders' experience.
Executive Directors will be required to defer 33% of any bonus received into the Group’s shares. For Executive Directors,
40% bonus will be subject to Group EBITDA performance, 40% will be subject to Net Debt and the remaining 20% will be
subject to the achievement of key strategic objectives. Jonathan Davies’ bonus structure has been amended to mirror that
of the Group CEO. His bonus was previously calculated using the MBP matrix described in our 2018/19 Annual Report.
Restricted
Share Plan
The Committee intends to make the first awards under the Restricted Share Plan shortly after the completion of the 2021 AGM
(subject to shareholder approval of the plan).
Simon Smith
Jonathan Davies
Face value
(% of salary)
100%
75%
These awards will vest on the third anniversary of the date of grant. Vested awards will be subject to a two year holding
period. If the Company does not meet one or more of the performance underpins over the relevant vesting period then the
Committee would consider whether it was appropriate to adjust (including to zero) the level of pay-out under the award
to reflect this. For the first awards under the plan the performance underpins will be:
1. The Company has taken the right actions to strengthen its competitive advantages and position the group for long term
sustainable growth .
2. The Company has achieved the principal strategic and financial annual objectives over the 3 year period, notably:
• Revenue growth, given the available passengers numbers during the period
• Efficient conversion of revenue into profit and cash
3. The Company has made progress on SSP’s Corporate Responsibility Strategy.
In assessing the extent to which the performance underpins have been satisfied, the Committee will consider a range of
quantitative and qualitative benchmarks to inform its decision. Should any of the underpins not be met, the Committee would
consider whether a discretionary reduction in the number of shares vesting was required.
To align the interests of Executive Directors with those of shareholders, they are required to build and maintain significant
holdings of shares in the Group over time. The minimum shareholding requirement for Executive Directors is:
• Group CEO: 250% of base salary
• Group CFO: 200% of base salary
In addition to the above, Executive Directors will be required to maintain their full minimum shareholding requirement for
one year post-cessation of employment, and hold 50% of the requirement for a second year.
Minimum
Shareholding
Requirement
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 72
ANNUAL REPORT ON REMUNERATION CONTINUED
Non-Executive Director Remuneration
Single total figure of remuneration – Non-Executive Directors (audited)
Salary
and fees
Benefits
4
Pension
Annual
Bonus
Long-term
incentives
Total fixed
Remuneration
Total variable
Remuneration
Other
Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Non-Executive Directors
Vagn Sørensen1
81
195
Mike Clasper2
144
Carolyn Bradley
Ian Dyson
Per Utnegaard
Judy Vezmar3
62
54
44
7
–
63
61
49
–
392
368
–
–
–
–
4
–
4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
81
144
62
54
48
7
195
–
63
61
49
–
396
368
–
–
–
–
–
–
–
–
–
–
–
–
–
–
81
195
144
62
54
48
7
–
63
61
49
–
396
368
1
Vagn Sørensen did not stand for re-election at the 2020 AGM. Amounts shown reflect fees paid for the period of the year that he was a director.
2
Mike Clasper was appointed to the Board on 1 November 2019 and became Chairman on 26 February 2020. Amounts shown reflect fees paid for the
period of the year that he was a Director.
3
Judy Vezmar was appointed to the Board on 1 August 2020. Fees shown reflect fees paid for the period of the year that she was a director.
4
Benefits 2020 – this comprises the reimbursement of expenses for travel to and from Board meetings.
As set out on page 68, in light of wider workforce pay conditions and the overall shareholder experience it was agreed that Non-Executive
Directors would receive 70% of their usual fee, reflecting a 30% reduction, between 1 April 2020 and 31 August 2020. From 1 September
to 30 September, Non-Executive Directors received 90% of their usual fee, reflecting a 10% reduction.
Following the review of Non-Executive Director fees during the year ended 30 September 2020, it was determined that there would be
no change to the fees set on 1 July 2019 which are as set out below. The Company will review these fees in accordance with the terms of the
Non-Executive Director appointment letters, and will undertake a review each year. A review may not result in an increase in fees.
Chairman of the Board
Board member
Additional fee for Senior Independent Director
Additional fee for Chairman of Audit/Remuneration Committee1
1
In addition to any additional fee for acting as the Senior Independent Director.
2020 fees
£275,000
£51,000
£10,000
£11,000
Tim Lodge was appointed to the Board on 1 October 2020 as an Independent Non-Executive Director and Member of the Audit Committee.
From this date Tim will receive the base Board Member fee of £51,000 per annum. Tim did not receive any remuneration in respect of the
2020 financial year.
SSP Group plc Annual Report and Accounts 2020 73
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 period from Admission on 15 July 2014 to 30 September 2020.
TSR performance since admission
350
300
250
R
S
T
200
150
100
50
0
SSP
FTSE 250
15/07/2014
Admission
30/09/2014
30/09/2015
30/09/2016
30/09/2017
30/09/2018
30/09/2019
30/09/2020
Chief Executive Officer remuneration outcomes
Chief Executive Officer
2014
2015
2016
2017
2018
20191
20192
2020
CEO Name
K. Swann
K. Swann
K. Swann
K. Swann
K. Swann
K. Swann
S. Smith
S. Smith
Single figure of remuneration
£4.5m
£2.5m
£2.6m
£7.4m
£6.0m
£5.3m
£0.8m
£0.7m
Annual bonus payable (as a %
of maximum opportunity)
Long-term incentive vesting
out-turn (as a % of maximum
opportunity)
100%
100%
100%
100%
100%
100%
98.6%
n/a
n/a
n/a
100%
100%
100%
100%
0%
0%
1
Reflects period spent in role as Group CEO from 1 October 2018 to 31 May 2019.
2
Reflects period spent in role as Group CEO from 1 June 2019 to 30 September 2019.
No long-term incentive plan awards vested in 2014, 2015 or 2016. Performance conditions were not met for the award due to vest in the 2021
financial year and therefore this award will lapse.
In accordance with UK regulations, for the year ended 30 September 2019 the PSP value in the single total figure of remuneration, was an
estimated value. This has now been updated to include the final level of vesting achieved and the share price on the date of vesting.
Total remuneration for 2014 includes additional awards of cash and shares made on IPO by the Company and the previous
majority shareholder.
Year-on-year change in pay for Directors compared to the average employee
Jonathan
Davies
Vagn
Sørensen3
Average
Employee
Michael
Clasper2
Carolyn
Bradley1
Simon
Smith1
Resolution
Ian Dyson
Per
Utnegaard
Base salary / fees
Benefits
Annual Bonus
0%
(8%)
31%
60%
(12%)
10%
(100%)
(100%)
(100%)
–
–
–
(59%)
(12%)
(1%)
(10%)
–
–
–
–
–
–
–
–
Judy
Vezmar2
–
–
–
1 Director was appointed to the Board during the 2019 financial year and therefore table is comparing full year remuneration for the 2020 financial year
with a pro-rata total for the previous year.
2 Director was appointed to the Board during the 2020 financial year and therefore there is no prior-year remuneration for comparison.
3 Director left during the 2020 financial year and therefore table is comparing pro-rata remuneration with a full year total for the previous year.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance
74
ANNUAL REPORT ON REMUNERATION CONTINUED
Relative importance of the spend on pay
The table below shows the total spend on employee pay in the 2019 and 2020 financial years and the total expenditure on dividends.
Total Staff Costs1
Dividends
Special Dividend
2020
£518.6
£26.8m
£0m
2019
Percentage change
£809.3m
£51.0m
£149.8m
(36%)
(47%)
(100%)
1 This figure is inclusive of wage subsidies received, such as the Coronavirus Job Retention Scheme in the UK.
CEO Pay Ratio
In accordance with the Companies (Miscellaneous Reporting) Regulations 2018, the table below sets out the Group’s CEO pay ratios for the
year ended 30 September 2020. This compares the Chief Executive’s total remuneration with the equivalent remuneration for the employees
paid at the 25th (P25), 50th (P50) and 75th (P75) percentile of SSP Group’s workforce in the United Kingdom. The total remuneration for each
quartile employee, and the salary component within this, is also outlined in the table below.
Year
2020
Method
Option B
Base Salary
Total Pay and Benefits
25th Percentile
pay ratio
50th Percentile
pay ratio
75th Percentile
pay ratio
48:1
£14,942
£15,203
47:1
£15,274
£15,573
33:1
£21,989
£22,461
The pay ratios above are calculated using the actual earnings for UK employees. The CEO’s Single Total Figure of Remuneration is £720k,
as shown on page 68.
SSP have chosen Option B, using the most recent Gender Pay Gap data to identify the employees at the 25th, 50th and 75th pay percentiles
in our UK employee population. As SSP have a large number of employees in the UK, of which a large portion work seasonal or part time hours,
Option B was selected as it is the most practical way to produce the percentile calculations.
Total remuneration for UK full-time equivalent employees on 30 September 2020 has been calculated in line with the single figure
methodology and reflects actual earnings received in the 2020 financial year. No elements of pay have been omitted. The majority of SSP’s UK
employee population are hourly paid operations colleagues. Given this workforce profile, two of the three CEO pay ratio reference points fall in
this population and there is limited difference in the pay at each percentile. All payments have been calculated on a full-time equivalent basis.
Due to the impact of Covid-19 on the Group’s trading in the UK, the majority of UK colleagues were furloughed utilising the Coronavirus Job
Retention Scheme. The Committee believes it is appropriate for the CEO pay ratio to reflect the pay reductions taken by colleagues. This also
maintains comparability with the Group CEO’s pay as he received a reduced base salary for a portion of the year.
The Committee believes that the median pay ratio is notably lower than it would be in a normal year. This is due to the fact that the CEO received
no variable pay in the financial year. In addition, P25, P50 and P75 were all furloughed for a portion of the year and therefore the total pay and
benefits received by these colleagues is lower that it would be in a normal year. It is likely that any year-on-year change in the pay ratio will be
driven by our CEO’s variable pay, and not by changes to pay and benefits structures for UK Employees. Pay rates for all employees are set by
reference to a range of factors, such as market practice, experience and performance in role.
Fees from external directorships
Jonathan Davies is a Non-Executive Director of Assura plc and retained a fee of £58,225 in respect of that directorship.
Statement of Directors’ shareholding and share interests (audited)
Shareholding Guidelines require Executive Directors to build up over time a personal shareholding in the Company equivalent in value to
250% of base salary for the Group CEO and 200% of base salary for the Group CFO. Executive Directors 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.
SSP Group plc Annual Report and Accounts 2020 75
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. The table below shows details of the Directors’ shareholdings as at 30 September 2020.
Director
Simon Smithc
Jonathan Davies
Mike Clasperc
Carolyn Bradleyc
Ian Dyson
Per Utnegaardd
Judy Vezmarc
Shareholding
guidelines as a %
of salary/fees
Shareholding
as a % of salary/
fee achieveda
250%
200%
100%
100%
100%
100%
100%
308%
600%
33%
18%
128%
66%
0%
Shares owned
outright at
30 September
2020b
869,616
1,218,305
40,000
5,756
33,776
14,666
0
Interests in
unvested PSP
awards at
30 September
2020
473,228
298,954
–
–
–
–
–
Notes:
a
For the purposes of determining Directors' shareholding requirements, the individual’s salary/fee and the three month average share price to
30 September 2020 (£2.3027) have been used. Further, the total shareholding used to calculate the shareholding percentage for Executive Directors
excludes Matching Shares issued under the UK Share Incentive Plan that remain subject to holding conditions (609 for Simon Smith and 738 for Jonathan
Davies as at 30 September 2020).
b
Shares owned outright at 30 September 2020’ includes shares held by persons connected with a Director. It also includes Partnership Shares purchased,
Matching Shares awarded and Dividend Shares purchased, under the UK Share Incentive Plan.
c
The Director has until the third anniversary of their date of appointment to meet their Minimum Shareholding Requirement.
d
Per Utnegaard’s shareholding on 30 September 2020 was below that of his Minimum Shareholding Requirement due to fluctuations in the Group’s
share price.
Interests in Unvested PSP awards at 30 September 2020
Interests in unvested PSP awards’ refers to Performance Share Plan awards granted in, November 2017, November 2018, May 2019, June
2019 and November 2019. The performance conditions for each award are described in the table below.
Performance period
Performance
condition and
weighting
Maximum target
(100% vesting)
Threshold target
(25% vesting)
1 October 2017 to
30 September 2020
1 October 2018 to
30 September 2021
1 October 2019 to
30 September 2022
Compound EPS
growth
(75%)
Relative TSR vs
comparator group
(25%)
Compound EPS
growth
(75%)
Relative TSR vs
comparator group
(25%)
Compound EPS
growth
(75%)
Relative TSR vs
comparator group
(25%)
12% p.a.
Upper-quartile
12% p.a.
Upper-quartile
12% p.a.
Upper-quartile
7% p.a.
Median
7% p.a.
Median
7% p.a.
Median
Vesting is calculated on a straight-line basis between maximum and threshold targets. There is no vesting for performance below the
threshold target.
A three-month average share price prior to the start and end of the performance period will be used to calculate TSR. The TSR comparator
Group is as follows:
Autogrill
Compass Group
Dignity
Go-Ahead Group
Halfords Group
Inchcape
J Sainsbury
Kingfisher
Next
Ocado Group
Marks and Spencer Group
The Restaurant Group
UDG Healthcare
WHSmith
Whitbread
Dixons Carphone
Domino’s Pizza Group
InterContinental Hotels
Group
Marston’s
Sports Direct International
Wm Morrison Supermarkets
Mitchells & Butlers
Stagecoach Group
Dunelm Group
First Group
JD Sports Fashion
J D Wetherspoon
N Brown Group
National Express
Tesco
TUI AG
Unvested awards under the Company’s share plans will be satisfied by the transfer of existing shares held by the Company’s employee benefit
trust (EBT), market purchased shares (which will be held by the EBT) or the issue of new or treasury shares within limits agreed by shareholders
when the plans were approved. These limits comply with the Investment Association’s guidelines which require that no more than 10% of a
company’s issued share capital be issued in accordance with all employee share plans in any 10-year period, with no more than 5% issued in
accordance with discretionary employee share plans.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 76
ANNUAL REPORT ON REMUNERATION CONTINUED
Movement in Directors’ shareholdings from 30 September 2020
At 16 December 2020, other than as set out below, there had been no movement in Directors’ shareholdings and share interests from
30 September 2020.
Director
Simon Smith
Jonathan Davies
Shares owned outright at
16 December 2020
Shares owned outright at
30 September 2020
869,865
1,218,552
869,616
1,218,305
Change
249
247
Note:
Shares owned outright’ includes shares held by persons connected with a Director. It also includes Partnership Shares purchased, Matching Shares
awarded and Dividend Shares purchased, under the UK Share Incentive Plan.
The Remuneration Committee in 2020
Consideration by the Directors of matters relating to Directors’ remuneration
The 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.
External advice
During the year ended 30 September 2020, the Committee received independent advice on executive remuneration matters from Deloitte.
Deloitte received £120,350 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, tax services and Risk Management services.
The Committee appointed Deloitte to the role of independent advisor to the Committee in 2014. 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.
The Committee also received independent advice from FIT Remuneration Consultants to provide additional advice into its review of the
Group’s new long term incentive. FIT Remuneration Consultants received £28,255 in fees for these services. FIT Remuneration Consultants
are 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, FIT Remuneration Consultants did not provide the Company with any other services.
Deloitte remain as the formally appointed independent advisers to the Remuneration Committee.
Statement of shareholder voting
Votes cast at the AGM in February 2020 in respect of the approval of the Directors’ Remuneration Report and in respect of the approval of the
Directors’ Remuneration Policy are given below:
Resolution
To approve the
Directors’
Remuneration
Report
To approve the
Directors’
Remuneration
Policy
Meeting
February
2020 AGM
February
2018 AGM
Votes for
% for
Votes
against
% against
Total shares
voted
% of issued
share capital
voted
Votes
withheld
217,989,435
68.96% 98,134,556
31.04% 316,123,991
70.66% 65,619,420
263,554,350
77.05% 78,502,459
22.95% 342,056,809
71.35% 52,329,530
Following the 2020 AGM, the Board gathered feedback from shareholders following the outcome of the vote to approve the Remuneration
Report to understand the concerns of those who were unable to approve the report. Throughout the process we greatly appreciated the level
of engagement from our shareholders. It was clear that the key area of concern related to the leaving arrangements for our former Group CEO.
The Board recognises the importance of engaging with the Group's shareholders and in recent years has substantially improved its approach
to disclosure in the Directors' Remuneration Report.
In addition, as part of our Policy review, we wrote to shareholders representing over 80% of our shareholder base to understand their views
on our new Directors' Remuneration Policy. We welcomed the level of engagement received and I am pleased to say that we were able to
engage with shareholders representing c.70% of our shareholder base. We have welcomed their feedback on our proposals and have taken
into account their comments as part of the process. We remain committed to keeping an open and transparent dialogue with shareholders on
executive compensation at SSP.
SSP Group plc Annual Report and Accounts 2020 77
DIRECTORS’ REMUNERATION POLICY
This part of the Directors’ Remuneration Report sets out the Directors’ Remuneration Policy as determined by the Remuneration Committee
(the ‘Committee’. In accordance with Section 439A of the Companies Act 2006, a binding shareholder resolution to approve this policy will
be proposed at the 2021 Annual General Meeting of the Company. The policy will apply to payments made to Directors after the 2021 AGM,
subject to shareholder approval of the policy.
The previous Directors’ Remuneration Policy was approved at the AGM in February 2018 and a full version of this policy is available in the
Group’s 2017/18 Annual Report.
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.
The Policy was developed over the course of 2020. The Committee undertook a thorough review of arrangements in the context of our
business strategy. The Committee consulted extensively with shareholders and considered all feedback received when developing the
proposals set out below. Input was received from the Chair and management while ensuring that conflicts of interest were suitably mitigated.
The Committee also considered carefully corporate governance developments, particularly in the area of pensions. Input was provided by the
Committee's appointed independent advisors throughout the process.
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. A summary of the changes made and how they compare to our current Remuneration Policy is set
out on page 66.
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.
Operation
Maximum potential value
Performance metrics
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.
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.
None
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; and
• Where a salary has fallen significantly below
market positioning.
There is no maximum increase or opportunity.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 78
DIRECTORS’ REMUNERATION POLICY CONTINUED
Executive Directors
Pension
To provide an income following retirement and assist the Executive Director in building wealth for their future.
Operation
Maximum potential value
Performance metrics
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.
None
Company contributions or cash allowance provided
for Executive Directors will be in line with the rate
applicable to the wider workforce. The definition
of the wider workforce will be as determined by the
Committee. For example, colleagues employed in
the same country as the Director in question.
Incumbent Executive Directors, appointed prior to
the introduction of this remuneration policy, may
continue to receive pension contributions or a cash
allowance at the applicable rate under a previous
remuneration policy.
Pensions for incumbent Executive Directors will
be aligned to the wider workforce rate by the end
of 2022.
Currently our Executive Directors receive pension
contribution / cash allowance as follows:
• Group CEO, Simon Smith: 20% of base salary
per annum.
• Group CFO, Jonathan Davies: 21% of base salary
per annum.
Benefits
To provide appropriate benefits as part of a remuneration package that assists in recruiting, rewarding and retaining Executive Directors.
Operation
Maximum potential value
Performance metrics
Car allowance of up to £13,000 per annum.
None
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.
Executive Directors who participate in All-
Employee Share Plans can contribute up to the
relevant limits set out in the country plan.
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, and life assurance, business travel.
Travel benefits, including (but not limited to) car
allowance, company car, driver, the cost of fuel
for private mileage, 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, subsistence costs and tax equalisation
arrangements.
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.
Executive Directors may participate in
All-Employee Share Plans on the same basis
as other employees.
SSP Group plc Annual Report and Accounts 2020 79
Executive Directors
Annual bonus
To reward performance on an annual basis against key annual objectives.
Operation
Maximum potential value
Performance metrics
The maximum Annual Bonus opportunity is 200% of
base salary per annum.
For 2020/21 maximum annual opportunities are:
• Group CEO, Simon Smith – 175% of salary
per annum.
• Group CFO, 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 performance. Below this level, no
bonus will be paid.
To earn a maximum bonus there must
be outperformance against stretching
objectives.
Performance objectives will normally 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 paid once the results for the year have
been audited. If an Executive Director has not met
their Minimum Shareholding Requirement, 50%
of any bonus earned will normally be deferred into
the Group’s shares. If the Minimum Shareholding
Requirement has been met, 33% of any bonus
earned will normally be deferred into the Group’s
Shares. The remaining amount will be paid in cash.
The Committee may exercise its discretion to adjust
bonus outcomes (up or down) where it believes
that this is appropriate, including but not limited to
where outcomes are not reflective of the underlying
performance of the business or the level of payout
does not reflect the experience of the Group’s
shareholders, employees or other stakeholders. Any
application of the Committee’s discretion would be
within the limits of the overall Remuneration Policy.
The Committee may reduce bonus outcomes or claw
back vested awards up to three years from the date
of vest (in part or in full) in the event of:
• A material misstatement in the Company’s annual
financial statements.
• A material failure of risk management.
• Serious reputational damage to a member of the
Group or relevant business unit.
• An error in the calculation of any performance
conditions which results in overpayment.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 80
DIRECTORS’ REMUNERATION POLICY CONTINUED
Executive Directors
Restricted Share Plan (RSP)
The RSP rewards our Executive Directors for driving the sustainable longer term growth of the Company and shareholder value. Awards are share
based to align the interests of Executive Directors with those of shareholders.
Operation
Maximum potential value
Performance metrics
The maximum award that may be made to
Executive Directors is up to 100% of salary per
annum under the rules of the plan in respect
of any financial year of the Company.
Performance underpins may be
based around the Group’s key
financial and/or strategic measures.
The Committee may use different
performance underpins for future
awards if the Committee deems this
to be appropriate.
If any of the underpins are not met
the Committee would consider
whether it was appropriate to scale
back the number of shares that vest
(including to nil).
The Committee will normally disclose
performance underpins in advance of
each annual grant.
The Committee would seek to
consult with its major shareholders
as appropriate on any proposed
material changes.
Awards may be made to Executive Directors in the
form of conditional share awards, nil cost options,
forfeitable shares or equivalent rights.
Awards will be subject to performance underpins,
assessed over a period of three financial years.
Awards will normally be subject to a three year
vesting period and any vested shares will normally
be subject to a further post-vest holding period of
two years.
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.
The Committee may exercise its discretion to
adjust vesting outcomes where it believes that
this is appropriate, including but not limited to:
where vesting outcomes are not reflective of
the underlying performance of the business,
the underpins selected on award are no longer
suitable, or the level of vesting does not reflect
the experience of the Group’s shareholders,
employees or other stakeholders. Any application
of the Committee’s discretion would be within the
limits of the overall Remuneration Policy.
The Committee may lapse unvested awards or
claw back vested awards up to three years from
the date of vest (in part or in full) in the event of:
• A material misstatement in the Company’s annual
financial statements.
• A material failure of risk management.
• Serious reputational damage to a member of the
Group or relevant business unit.
• An error in the calculation of any performance
conditions which results in overpayment.
Minimum Shareholding Requirement
Aligns the interests of Executive Directors with shareholders and encourages commitment to the company
Operation
Maximum potential value
Performance metrics
Executive Directors are expected to build and
maintain a holding in the Company’s shares as
follows:
N/A
N/A
• Group CEO: 250% of base salary
• Group CFO: 200% of base salary
Executive Directors have three years from the
date of their appointment to the Board to build
and maintain this holding.
Executive Directors will normally be expected to
maintain their shareholding for a period of time
post-cessation of employment. Normally this
requirement will be for an Executive Director to
maintain their full shareholding requirement for
one year post-employment, and 50% of their
shareholding requirement for a second year.
The Committee may waive this requirement for
certain exceptional personal circumstances.
SSP Group plc Annual Report and Accounts 2020 81
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.
Operation
Maximum potential value
Performance metrics
N/A
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 are reviewed periodically
and take 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.
Non-Executive Directors are expected to build
and maintain a holding in the Company's shares
of 100% of their base fee. Non-Executive
Directors have three years from the date of their
appointment to the Board to build and maintain
this holding. The Committee may waive this
requirement for certain exceptional personal
circumstances.
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 77 to 81
The RSP will be operated in accordance with the plan rules. In accordance with the rules of the RSP, any performance underpin may be substituted or
varied if the Committee considers it appropriate, provided that the amended performance underpin is in its opinion reasonable and not materially less
difficult to satisfy. The plan rules also provide that the Committee may adjust awards (as it reasonably considers appropriate) 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 and clawback applies where stated in the above table. Other elements of remuneration are not subject to recovery provisions.
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 AGM on 3 March 2015 (the date the Company’s first shareholder-approved Directors’ Remuneration Policy came into effect);
(ii)
before the policy set out above came into effect, provided that the terms of the payment were consistent with the shareholder-approved
Remuneration Policy in force at the time they were agreed; or
(iii) 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.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 82
DIRECTORS’ REMUNERATION POLICY CONTINUED
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.
• The Committee retains the ability to adjust the targets and/or set different measures and alter weightings for the annual bonus if events
occur (e.g. material divestment of a Group business, capital transactions or changes to accounting standards) which cause it to determine
that an adjustment or amendment is appropriate so that the conditions achieve their original purpose.
Restricted Share Plan
Restricted Share Plan awards are subject to performance underpins. Underpins are chosen to ensure that the financial health and reputation
of the Company are strong and that the Company is making progress on its strategic objectives.
For awards proposed in the 2021 financial year, the underpins will be linked to the creation of sustainable growth and strategic objectives
including progress made on the Company’s Corporate Responsibility Strategy priorities.
The Committee retains the ability to adjust any underpin measures if events occur (e.g. material divestment of a Group business, capital
transactions or changes to accounting standards) which cause it to determine that an adjustment or amendment is appropriate so that the
underpin conditions achieve their original purpose.
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 where they operate.
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: Simon Smith
CFO: Jonathan Davies
£2,594k
£2,025k
25%
£2,919k
33%
32%
28%
40%
£807k
100%
44%
39%
31%
28%
Minimum
Target
Maximum
Maximum
+ 50% share
price
appreciation
Long-term incentives
Annual bonus
Fixed pay
£1,518k
23%
38%
£1,226k
29%
24%
£583k
£1,694k
Long-term incentives
31%
35%
Annual bonus
Fixed pay
100%
48%
38%
34%
Minimum
Target
Maximum
Maximum
+ 50% share
price
appreciation
Component
‘Minimum’
‘Target’
‘Maximum’
Fixed remuneration
Base salary
Annual base salary for the 2020 financial year**
‘Maximum + 50%
share price
appreciation’
Pension
Benefits
Chief Executive Officer: 20% of salary; Chief Financial Officer: 21% of salary
Taxable value of annual benefits provided in the year ended 30 September 2020
Annual bonus
Maximum opportunity
Chief Executive Officer: 175% of salary; Chief Financial Officer: 125% of salary**
Vesting
0% of maximum
opportunity
50% of maximum
opportunity
100% of maximum
opportunity
Restricted share plan
Maximum opportunity
Chief Executive Officer: 100% of salary; Chief Financial Officer: 75% of salary**
Vesting
0% vesting
100% vesting
100% vesting
100% vesting +
50% share price
appreciation
** Based on contractual base salary as at 1 October 2020.
SSP Group plc Annual Report and Accounts 2020
83
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 policy table on pages 77 to 81.
• 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 utilising any of the Company's share plans 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 RSP grant of 100% of annual salary, as stated in the policy table on pages 77 to 81. 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.
Simon Smith and Jonathan Davies’ 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.
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.
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:
Simon Smith
Jonathan Davies
Date of commencement of contract
Notice period for Director
Notice period for Company
1 June 2019
15 July 2014
9 months
9 months
12 months
12 months
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.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance
84
DIRECTORS’ REMUNERATION POLICY CONTINUED
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.
Mike Clasper
Ian Dyson
Per Utnegaard
Carolyn Bradley
Judy Vezmar
Tim Lodge
Effective date of appointment letter
1 November 2019
15 July 2014
1 July 2015
1 October 2018
1 August 2020
1 October 2020
Current term expires
31 October 2022
14 July 2023
30 June 2021
30 September 2021
31 July 2023
30 September 2023
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.
Payment in lieu
of notice
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.
Annual bonus
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.
Restricted Share Plan awards 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 underpins have been satisfied.
Vested awards will normally continue to be subject to the two year post-vesting holding 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.
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 underpins at that time or the Committee’s assessment of the likely satisfaction of the
performance underpins 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.
SSP Group plc Annual Report and Accounts 2020
85
Takeovers and other corporate events
Under the RSP (or legacy awards made under the PSP), on a takeover or voluntary winding-up of the Company, 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 or underpins 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 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 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.
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 Directors’ 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.
During the year, information around the salary reductions taken by our leadership team was cascaded to the wider organisation through
internal announcements and business updates. The Group complies with local regulations and practices regarding employee consultation
more broadly.
Consideration of shareholder views
The Committee consulted with the Group’s largest shareholders when developing the above policy. 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.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsStrategic ReportCorporate governance 86
DIRECTORS’ REPORT
This section of the Annual Report includes additional information
required to be disclosed under the Companies Act 2006 (the ‘Act’),
the 2018 UK Corporate Governance Code (the ‘Code’), the Disclosure
Guidance and Transparency Rules (the ‘DTRs’) and the Listing Rules of
the Financial Conduct Authority (the ‘LRs’). The Code can be found on
the Financial Reporting Council’s website at www.frc.org.uk.
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 43;
• The Corporate Governance Report on pages 46 to 55;
• The Audit Committee Report on pages 56 to 61;
• The Directors’ Remuneration Report on pages 62 to 85;
• Post balance sheet events on page 149; and
• The Company’s subsidiaries outside the United Kingdom
on pages 156 to 160.
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 2020, together with information
on the approach of the Company to corporate governance and the
constitution, and the 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
limited by shares. The Company’s registered office and principal place
of business is at Jamestown Wharf, 32 Jamestown Road, London,
United Kingdom, NW1 7HW.
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’.
Dividends
There was no interim dividend declared during the FY20 financial
year (2019: £25.8m). Additionally, the Directors will not be
recommending a FY20 final dividend (2019: £26.8m) which will
result in no ordinary dividends for the year (2019: £52.6m). In light of
ongoing macro-economic uncertainty and the significant impact that
Covid-19 has had, and continues to have, on the Group, the Board has
decided not to declare or recommend (respectively) these dividends
to preserve cash in the business and maximise its financial resilience.
Further, the Group is currently restricted from declaring or paying
dividends until the expiry of certain restrictions that apply under
the amended debt arrangements with the Group’s lending group of
banks and US private placement holders during the covenant waiver
period and for a period afterwards until any additional fees accrued
during the waiver period are paid in full. When these restrictions are
lifted and conditions improve, the Board will consider the best way to
restart return of capital to shareholders.
On 26 February 2020 shareholder approval was given at the Annual
General Meeting for a return of 6 pence per share to shareholders
which was the equivalent of £26.8m in aggregate (the ‘FY19 Final
Dividend’). The FY19 Final Dividend was paid on 4 June 2020
(deferred from 27 March 2020). With the continued aim of retaining
cash within the business to maximise its financial resilience and to
offset the cash outflow from the payment of the FY19 Final Dividend,
on 3 June 2020 the Company announced the June Placing (defined
below) to allow those investors entitled to the FY19 Final Dividend
the opportunity to reinvest it in the Company. The proceeds from
the offering allowed a proportion of the FY19 Final Dividend to be
retained in the business. For further information see June Placing,
Subscription and Retail Offer for re-investment of FY19 Final
Dividend below.
During the year, the trustees of each of the employee benefit trusts
which operate in connection with the Company’s share plans waived
their rights to receive dividends on any shares held by them. Details of
the trusts can be found in note 25 of this report. The amount of
dividends waived during the year ended 30 September 2020 in
relation to the trusts was £40,438.56.
Share capital
At 30 September 2020 there were 537,859,931 ordinary shares of
117/200 pence in issue (comprised of 537,596,432 ordinary shares with
one vote each and 263,499 held in treasury, which are non-voting),
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 25 to the
financial statements on pages 138 and 139.
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 at a 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 2020 AGM:
Issuing shares
The Directors were granted authority to allot shares in the Company
and to grant rights to subscribe for or to convert any security into
shares in the Company:
(a) up to a nominal amount of £1,617,939; and
(b) comprising equity securities up to a nominal amount of
£3,235,879 such amount to be reduced by any allotments
made under (a) above, in connection with an offer by way of a
rights issue.
The authorities conferred on the Directors to allot securities under
paragraphs (a) and (b) will expire on the date of the 2021 AGM, or
close of business on 26 May 2021, whichever is sooner, (the ‘Expiry
Date’). The Directors will be seeking a new authority at the 2021
AGM for the Directors to allot shares and to grant subscription and
conversion rights to ensure that the Directors continue to have
the flexibility to act in the best interests of shareholders when
opportunities arise, by issuing new shares or granting such rights.
SSP Group plc Annual Report and Accounts 2020 87
The Directors were also given authority to allot equity securities for
cash or to sell ordinary shares as treasury shares for cash subject
to certain limitations, such authority to apply until the Expiry
Date. The Directors will seek to renew this authority at the 2021
AGM. See the Placings section below for details of how the above
authorities were used in the year.
Issuing shares pursuant to share schemes
During the 2020 financial year, a total of 3,032,564 ordinary shares
in the Company were issued to satisfy (a) Matching Share awards
under the Company’s UK SIP and International SIP and (b) the vesting
of awards under the Company’s Performance Share Plan (‘PSP’).
The relevant PSP awards were those that vested in November 2019
and May, June and July 2020, based on performance conditions
satisfied as at the end of the 2019 financial year. As noted on pages
63 and 65, there was no vesting of PSP awards granted in November
2017 and due to vest in November 2020. It is noted that ordinary
shares issued to satisfy awards under employee share schemes do
not count against the allotment authorities granted by shareholders
in accordance with the Act.
Placings
March Placing and Subscription
On 25 March 2020, the Company agreed the terms and announced
the successful completion of the non pre-emptive placing of
86,195,459 new ordinary shares in the capital of the Company
(with an aggregate nominal value of £935,220.73) (the ‘March
Placing Shares’) at a price of 250 pence per March Placing Share
(the ‘March Placing Price’) (the ‘March Placing’). On the same date,
the Company agreed the terms of and announced the subscription
by certain directors and members of the senior management team
of the Company for an aggregate of 304,000 new ordinary shares
in the capital of the Company (with an aggregate nominal value of
£3,298.40) (the ‘March Subscription Shares’), at the March Placing
Price, pursuant to subscription letters entered into with the Company
(the ‘March Subscription’).
Together, the March Placing and March Subscription of in aggregate
86,499,459 new ordinary shares raised gross proceeds of
approximately £215.5m and £760,000 respectively. The March
Placing Price represented a premium of 6.2 per cent to the closing
share price of 235.5 pence on 24 March 2020 and a discount of
7.7 per cent to the middle market price at the time at which the
Company agreed the March Placing Price. The March Placing Shares
and the March Subscription Shares issued together represented
approximately 19.3% of the existing issued ordinary share capital
of the Company prior to the March Placing and March Subscription.
The Company acknowledged at the time that the March Placing
and the March Subscription were on a non-pre-emptive basis and
it is noted that they took place before the Pre-Emption Group
published revised guidance on 1 April 2020 encouraging investors
to support issuances by companies on a non-pre-emptive basis of
up to 20% of their issued share capital. Members of the Board and
the senior management team consulted with the Company’s major
institutional shareholders before launching the March Placing and
March Subscription.
The purpose of the March Placing and March Subscription was
to strengthen the Company’s balance sheet, working capital and
liquidity position during a period of unprecedented disruption in the
global travel market as a result of the Covid-19 outbreak, and the
net proceeds were used accordingly. The March Placing structure
was chosen as it minimised cost, time to completion and use of
management time at an important and unprecedented time for
the Company.
June Placing, Subscription and Retail Offer for re-investment
of FY19 Final Dividend
On 3 June 2020 the Company agreed the terms, and subsequently
on 4 June 2020, the Company announced the successful completion
of the non-pre-emptive placing of 3,382,255 new ordinary shares
in the capital of the Company (with an aggregate nominal value of
£36,697.46) (the ‘June Placing Shares’) at a price of 315.2 pence
per June Placing Share (the ‘June Placing Price’) (the ‘June Placing’).
On 3 June 2020 the Company agreed the terms, and subsequently
announced on 4 June 2020 the successful completion of the
subscription by certain Directors and members of the senior
management team of the Company for an aggregate of 31,739 new
ordinary shares in the capital of the Company (with an aggregate
nominal value of £344.37) (the ‘June Subscription Shares’), at the
June Placing Price, pursuant to subscription letters entered into with
the Company (the ‘June Subscription’). In addition, retail investors
subscribed in an offer made by the Company via the PrimaryBid
platform for an aggregate of 61,394 new ordinary shares in the
capital of the Company (with an aggregate nominal value of £666.12)
(the ‘Retail Shares’) at the June Placing Price (the ‘Retail Offer’), the
terms of which were agreed on 3 June 2020 and as announced on
4 June 2020.
Together, the June Placing, June Subscription and Retail Offer of, in
aggregate, 3,475,388 new ordinary shares, raised gross proceeds
of approximately £10.6m, £0.1m and £0.2m respectively. The June
Placing Price was equal to the mid-market closing price of the
Company’s shares on 3 June 2020. The June Placing Shares, June
Subscription Shares and Retail Shares issued together represented
approximately 0.7 per cent of the existing issued ordinary share
capital of the Company prior to the June Placing, June Subscription
and Retail Offer.
Following the onset of Covid-19 and its impact on the Company,
the Directors and members of senior management engaged with
shareholders and assessed various options for the non-payment of
the FY19 Final Dividend, including cancelling it, requesting waivers of
it and deferring it. However, in light of the circumstances around the
timing and shareholder approval of the FY19 Final Dividend, many of
the options proved to be unachievable.
Therefore, following further engagement with shareholders and with
the continued aim of retaining cash within the Group, the Company
conducted the June Placing, June Subscription and Retail Offer to
raise funds to offset the cash outflow from the payment of the FY19
Final Dividend. The June Placing, June Subscription and Retail Offer
were solely intended to give investors entitled to the FY19 Final
Dividend payment an opportunity to reinvest their cash dividend
back in the business. Investors were not permitted to apply for an
allocation of shares that exceeded the value of their FY19 Final
Dividend entitlement.
The net proceeds from the June Placing, June Subscription and
Retail Offer therefore allowed approximately £10.8m of the FY19
Final Dividend payment to be effectively retained in the business to
further enhance the Company’s cash and liquidity position during the
period of unprecedented disruption in the global travel market as a
result of the Covid-19 outbreak.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportCorporate governance 88
DIRECTORS’ REPORT CONTINUED
Three-year statement
Over the three-year period preceding the placings, subscriptions
and retail offer referred to above, the Company has only issued new
shares for the purpose of fulfilling its obligations under employee
share schemes.
Buyback of shares
The Directors were granted authority to make market purchases
of the Company’s own shares on behalf of the Company up to a
maximum of approximately 10% of the Company’s issued share
capital. This standard authority is renewable annually and the
Directors will seek to renew this authority at the 2021 AGM.
On 20 November 2019 the Company launched its first on-market
share buyback programme pursuant to the authority granted at
the AGM in 2019. Under the programme between 21 November
and 5 December 2019, the Company bought back in aggregate
263,499 ordinary shares for a total consideration of approximately
£1.7m (excluding expenses). Given the Covid-19 pandemic the
share buyback programme has been suspended since the start
of 2020. Repurchased shares under the buyback programme
represented approximately 0.06% of the issued share capital of the
Company immediately prior to the commencement of the buyback
programme. All of the repurchased shares were transferred into
treasury. The purpose of the buyback programme was to reduce the
Company’s issued share capital as part of its commitment to maintain
an efficient balance sheet.
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 United Kingdom or by writing
to the Company Secretary. The key points are summarised below.
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 or by proxy 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.
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 LRs,
the City Code on Takeovers and Mergers or any other regulations.
The Directors are not aware of any agreements between holders of
the Company’s shares that may result in restrictions on the transfer
of securities or on voting rights at any meeting of the Company.
Dealings subject to Market Abuse Regulation
Pursuant to the Market Abuse Regulation and the Group’s securities
dealing policy, Directors, 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 over shares held by relevant participants under the
Company’s various share plans carry no rights until the shares are
issued to participants or their nominees.
The Trustees of the Company’s employee benefit trusts are
entitled to vote on unallocated shares held in the trust fund from
time to time but they may consider, in their absolute discretion, any
recommendations made to them by the Company before doing so.
However, the trustee of the SSP Group plc Share Plans Trust does
not seek to exercise voting rights on existing shares held in the Share
Plans Trust (see note 25 for further details on the employee benefit
trusts). In respect of allocated shares held by the Trustees as nominee
(including the Trustees of the Company’s Share Incentive Plans), they
must seek instructions from participants on how they should exercise
their voting rights before doing so on their behalf.
SSP Group plc Annual Report and Accounts 2020 89
Notification of major shareholdings
Information provided to the Company pursuant to the DTRs is published on a Regulatory Information Service and on the Company’s website.
As at 30 September 2020, the following notifications of major shareholdings of 3% or more have been received by the Company under DTR 5.
Name
HSBC Holdings PLC
BlackRock, Inc.
APG Asset Management Limited
Marathon Asset Management LLP
Parvus Asset Management Europe Limited
Artemis Investment Management LLP
Schroders plc
JP Morgan Asset Management (UK) Limited and
JP Morgan Investment Management Inc
No. of ordinary shares
and voting rights notified*
% of the Company’s
voting rights*
53,836,798
44,927,739
31,561,081
24,167,130
27,751,072
22,621,923
23,720,071
17,000,000
10.01%
8.35%
7.05%
5.43%
5.20%
5.06%
4.99%
3.58%
The following notifications were received after 30 September 2020 and before 16 December 2020:
Name
Norges Bank
BlackRock, Inc.
HSBC Holdings PLC
* At the date of disclosure.
So far as the Company is aware, no other person held a notifiable
interest in the ordinary share capital of the Company.
The holdings and voting rights shown above are correct at the date of
notification. It should be noted that these holdings may have changed
since the Company was notified, including as result of the March
Placing and March Subscription that took place in March 2020 and
the June Placing, June Subscription and Retail Offer that took place in
June 2020 and given that notification of any change is not required
until the next notifiable threshold is crossed.
Directors
Particulars of the Directors in office as at the date of this report
are listed on pages 44 and 45. There were various changes to the
composition of the Board throughout FY19/20. These changes are
set out in the footnotes to the meeting attendance table on page 49.
The table sets out all persons who were Directors of the Company
during FY19/20.
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 a recommendation by the Nomination Committee in
accordance with its Terms of Reference and 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 LRs and related legislation. In accordance with the Code, all
Directors stand for election at the Annual General Meeting (‘AGM’)
following their appointment, and stand for re-election on an annual
basis at each AGM thereafter.
No. of ordinary shares and
voting rights notified
% of voting rights as at the
date of this report
17,108,217
39,039,324
39,716,201
3.18%
7.26%
7.38%
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 74. 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 2020 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 continues to be reviewed by the Board.
Directors’ indemnities
The Company has made qualifying indemnity provisions, as defined
by section 236 of the Act, of which the Directors had the benefit
of during the financial year ended 30 September 2020 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.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportCorporate governance 90
DIRECTORS’ REPORT CONTINUED
Awards under employee share schemes
Details of the Group’s employee share schemes and awards made
during the year and held by Executive Directors as at 30 September
2020 are set out in the Annual Report on Remuneration on
pages 65 to 76.
Details of awards made during the year and held by employees as at
30 September 2020 under the Performance Share Plan are disclosed
in note 26 and note 39 to the consolidated financial statements on
pages 139 and 155 respectively.
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 LRs 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 2020, the Company had no
controlling shareholders.
Annual General Meeting
Details of the arrangements for the 2021 AGM will be set out in the
Notice of Meeting, which, along with other relevant documentation, is
enclosed with this Annual Report or available on the Group’s website
at www.foodtravelexperts.com (for those shareholders who have
chosen to communicate with the Company by electronic means).
Shareholders who wish to ask a question of the Board relating to the
business of the AGM can do so by submitting questions in advance
of the AGM, details for how to do this (and deadlines for submitting
questions) are set out in the Notice of Meeting. The results of the
voting will be announced to the London Stock Exchange and made
available to shareholders on the Group’s website after the meeting.
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
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 AGM specifies
deadlines for exercising voting rights and appointing a proxy or
proxies to vote in relation to resolutions to be put to the AGM.
Change of control
Contracts
There are a number of contracts entered into by members of the
Group 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, officer
or employee that would provide compensation for loss of office or
employment resulting from a takeover, except that provisions of the
Company’s employee share plans may cause options and awards
granted under such plans to vest on a takeover.
The Group’s main credit facilities, being the committed bank facilities
dated 16 June 2014 entered into by SSP Financing Limited, a wholly
owned subsidiary of the Company (‘SSP Financing’) (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
not be fewer than 10 business days after the date of the notice).
SSP Financing also entered into: (i) a note purchase agreement on
9 August 2018 (‘2018 NPA’) in respect of a US$175m issue of US
private placement notes (the ‘2018 Notes’) (as amended from time
to time); and (ii) a note purchase agreement on 11 April 2019 (‘2019
NPA’) in respect of a US$199.5m and €58.5m issue of US private
placement notes (‘2019 Notes’) (as amended from time to time).
The 2018 NPA and 2019 NPA (‘NPAs’) each contain a change of
control provision whereby if any one person or a group of persons
acting in concert gain Control of the Company (as defined in the
NPAs), then the Company and SSP Financing must give written notice
of this to the holders of the 2018 Notes and 2019 Notes (‘Notes’).
The written notice shall contain an offer by SSP Financing to prepay
the entire unpaid principal amount of the Notes held by each holder
together with interest thereon.
Articles of Association
The Articles of Association of the Company may be amended by a
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 2020, 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 the 2021 AGM that a precautionary authority be granted of up
to £25,000 in aggregate. Details are included in the 2021 Notice
of AGM.
Environmental, social and governance risks
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 and social performance.
The Corporate Responsibility Report on pages 12 to 19 reports
on environmental and social matters, including the impact of the
Group’s businesses on the environment and the steps we are taking
to mitigate this impact. The Corporate Responsibility Report also
reports on the Group’s annual quantity of greenhouse emissions in
tonnes of carbon dioxide, the Group’s employees, and on social and
community issues.
SSP Group plc Annual Report and Accounts 2020 91
Employee engagement and
business relationships
Understanding the views and values of all the Group’s stakeholders,
including employees, suppliers, customers and other business
relationships is critical to the Group’s success. Examples of how
the Directors have engaged with employees and had regard to
employee and other stakeholder interests and the effect of that
regard, including on the principal decisions taken by the Company, are
detailed throughout this report and specific examples can be found
on page 11.
Details of how information is communicated to employees and how a
common awareness of the financial and economic factors affecting
the performance of the Company is achieved amongst the employee
population can be found on pages 10 to 19.
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 in note 29 to
the consolidated financial statements on pages 142 to 146.
Branch disclosure
The Company does not have any branches outside the UK.
Future Developments and Research
and Development
Details regarding likely future development in the business of
the Group can be found in the Strategic report on pages 1 to 19.
The Group does not undertake material levels of research and
development activity.
Disclosures required under
UK Listing Rule 9.8.4
There are no disclosures required to be made under UK Listing Rule
9.8.4 which have not already been disclosed elsewhere in this report.
Details of long term incentive plans can be found in the Directors’
Remuneration Report on pages 62 to 85 and details of dividends
waived by shareholders can be found on page 86. Details on Director
salary reductions can be found in the Statement by the Chairman of
the Remuneration Committee and Directors’ Remuneration Report
on pages 62 to 85. Furthermore, details of the March and June
Placings and the June Subscription and Retail Offer can be found
above on page 87.
Going concern
The financial information in these financial statements has been
prepared on a going concern basis, the assessment of which is set
out on pages 42 and 43 along with the Board’s assessment of the
prospects and viability of the Group.
Auditor
The auditor, KPMG LLP, has indicated its willingness to continue in
office, and a resolution that it will be reappointed will be proposed at
the 2021 AGM.
Statement of disclosure of information
to auditors
Insofar as each Director in office on the date of approval of this
report is aware, there is no relevant audit information of which the
Company’s external 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 external 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.
Approved by the Board and signed on its behalf by:
Helen Byrne
General Counsel and Company Secretary
16 December 2020
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportCorporate governance 92
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 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 International Financial Reporting Standards as adopted by
the European Union (IFRSs as adopted by the EU) and applicable law. The Directors have elected to prepare the parent company financial
statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101
Reduced Disclosure Framework.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and parent company, and of their profit or loss for that period. In preparing each of the Group and parent company
financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether they have been prepared in accordance with IFRSs as adopted by the EU or applicable UK accounting standards in the case of
the parent company;
• assess the Group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the parent company, or to cease operations, or
have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent company, and enable them to ensure that
its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group, and to prevent and detect fraud and
other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the Annual Financial Report
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• the Strategic Report and the Directors’ Report includes a fair review of the development and performance of the business and the position
of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, to be fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Company’s and the Group’s position and performance, business model and strategy.
Simon Smith
Chief Executive Officer
16 December 2020
Jonathan Davies
Chief Financial Officer
16 December 2020
SSP Group plc Annual Report and Accounts 2020 93
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SSP GROUP PLC
Overview
Materiality:
Group financial
statements as a whole
£9.0m (2019: £9.5m)
0.6% of total Group revenue
(2019: 4.8% of Group profit before tax)
Coverage
79% of total Group revenue
(2019: 78% of Group profit before tax)
Recurring risks
Recoverability of goodwill and
indefinite life intangible assets
Recoverability of parent’s
investment in subsidiary
undertaking
Event driven
Going Concern
The impact of uncertainties due to
the UK exiting the European Union
on our audit
Recoverability of site assets
Initial recognition of ROU assets
and lease liabilities on transition
to IFRS 16
vs 2019
◀▶
◀▶
New
New
1. Our opinion is unmodified
We have audited the financial statements of SSP Group plc (“the
Company”) for the year ended 30 September 2020 which comprise
the consolidated income statement, the consolidated statement of
other comprehensive income, the consolidated balance sheet, the
consolidated statement of changes in equity, the consolidated cash
flow statement, company balance sheet and company statement
of changes in equity, and the related notes, including the accounting
policies in note 1 and 34.
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
2020 and of the Group’s loss 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 (IFRSs as adopted by the EU);
• The parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS101 Reduced Disclosure Framework; 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.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit evidence we
have obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report to the
Audit Committee.
We were first appointed as auditor by the Directors on 20 September
2006. The period of total uninterrupted engagement is for the 15
financial years ended 30 September 2020. We have fulfilled our
ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including the FRC
Ethical Standard as applied to listed public interest entities. No non-
audit services prohibited by that standard were provided.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportFinancial statements 94
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SSP GROUP PLC CONTINUED
2. Material uncertainty related to going concern
We draw attention to note 1.2 in the financial statements which indicates that the ability of the Group and parent Company to continue as a
going concern is dependent on the external lenders not calling the debts owing to them in the event of the Group breaching its covenants once
access to the Covid Corporate Financing Facility (“CCFF”) is withdrawn in February 2022 and original covenants are reinstated in March 2022,
as well as its ability to raise additional funding once the CCFF is withdrawn in February 2022.
The Group’s forecasts, taking into account committed facilities including the CCFF and the Group’s estimates of the Covid-19 impact, under
both the base case and severe but plausible downside scenarios, indicate sufficient liquidity and revised covenant compliance for at least
12 months from the date of these financial statements.
However, we note that the Group is forecasting a breach of covenants once the CCFF is repaid in February 2022 and original covenants are
reinstated in March 2022, under both scenarios, as well the possible need for additional funding once the CCFF is withdrawn in February 2022.
Whilst the directors believe that the Group would continue to have the support of its shareholders and the banks in these circumstances there
is no certainty that this would be the case.
These events and conditions, along with the other matters explained in note 1.2, constitute a material uncertainty that may cast significant
doubt on the Group’s and the parent Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The risk
Disclosure quality
There is little judgement involved in
the directors’ conclusion that risks and
circumstances described in note 1.2 to the
financial statements represent a material
uncertainty over the ability of the Group and
parent Company to continue as a going concern
for a period of at least a year from the date of
approval of the financial statements.
However, clear and full disclosure of the facts
and the directors’ rationale for the use of the
going concern basis of preparation, including
that there is a related material uncertainty,
is a key financial statement disclosure and so
was the focus of our audit in this area. Auditing
standards require that to be reported as a key
audit matter.
Our response
We assessed the accuracy and completeness of the matters covered in the
Going Concern disclosure by:
Our sector experience – We assessed and challenged the key assumptions in
the forecasts used by the Directors by benchmarking these against external
forecasts and our sector knowledge.
Our debt market experience – We used our debt market experience
in assessing the likelihood of covenant waivers and renewed financing
being available.
Sensitivity analysis – We considered sensitivities over the inputs to the cash
flow forecasts which determine the level of available financial resources
indicated by the Group’s financial forecasts, taking account of reasonably
possible (but not unrealistic) adverse effects that could arise from these
risks individually and collectively. In particular, we assessed the Group’s
severe but plausible downside forecasts based on the risks resulting from
the Covid-19 pandemic.
Evaluating assumptions – We challenged the key assumptions in the
forecasts used by the Directors in assessing the Going Concern assumptions
and considering the reasonableness of their risks and sensitivities to these
assumptions.
Funding assessment – We obtained and inspected the signed banking
agreement, approved revised covenant terms and Covid Corporate Financing
Facility (CCFF) facility agreement, a commercial paper issued to eligible
larger businesses who are experiencing disruption as a result of the Covid-19
pandemic, to ascertain the committed level of financing available to the
Group and parent Company, the duration of the facilities and related covenant
requirements. We have also assessed the evidence available to support
whether the covenants will be met over the forecast period.
Historical comparisons – We have considered the historical accuracy of the
Group’s cash flow forecasts and growth rates by assessing the accuracy of
previous forecasts to actuals.
Our results
We found the going concern disclosure including a material uncertainty to
be acceptable (2019 result: We found the going concern disclosure with no
material uncertainty to be acceptable).
SSP Group plc Annual Report and Accounts 2020 95
3. Key audit matters: including our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which
had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. Going concern is a significant key audit matter and is described in section 2 of our report. We summarise below other key audit matters,
in arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public interest
entities, our results from those procedures. These matters were addressed, and our results are based on procedures undertaken, in the
context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently
are incidental to that opinion, and we do not provide a separate opinion on these matters.
The risk
Our response
The impact of
uncertainties due to
the UK exiting the
European Union on
our audit
Refer to page 37 of
Risk Management
and Principal Risks
and page 57 Audit
Committee Report
Unprecedented levels of uncertainty
All audits assess and challenge the
reasonableness of estimates, in particular
as described in our Recoverability of
goodwill and indefinite life intangible assets,
Recoverability of site assets (including
property, plant and equipment and ROU assets)
and Recoverability of parent’s investment
in subsidiary undertaking KAMs below, and
related disclosures and the appropriateness of
the going concern basis of preparation of the
financial statements (see above). All of these
depend on assessments of the future economic
environment and the Group’s future prospects
and performance.
In addition, we are required to consider the
other information presented in the Annual
Report including the principal risks disclosure
and the viability statement and to consider the
directors’ statement 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 position and performance,
business model and strategy.
Brexit is one of the most significant economic
events for the UK and its effects are subject
to unprecedented levels of uncertainty of
consequences, with the full range of possible
effects unknown.
We developed a standardised firm-wide approach to the consideration of the
uncertainties arising from Brexit in planning and performing our audits.
Our procedures included:
Our Brexit knowledge – We considered the directors’ assessment of Brexit-
related sources of risk for the Group’s business and financial resources
compared with our own understanding of the risks. We considered the
directors’ plans to take action to mitigate the risks.
Sensitivity analysis – When addressing the recoverability of goodwill and
indefinite life intangible assets, recoverability of site assets (including
property, plant and equipment and ROU assets) and recoverability of
parent’s investment in subsidiary undertaking, and other areas that depend
on forecasts, we compared the directors’ analysis to our assessment of the
full range of reasonably possible scenarios resulting from Brexit uncertainty
and, where forecast cash flows are required to be discounted, considered
adjustments to discount rates for the level of remaining uncertainty.
Assessing transparency – As well as assessing individual disclosures as part
of our procedures on recoverability of goodwill and indefinitely life intangible
assets, recoverability of site assets (including property, plant and equipment
and ROU assets) and recoverability of parent’s investment in subsidiary
undertaking, we considered all of the Brexit related disclosures together,
including those in the strategic report, comparing the overall picture against
our understanding of the risks.
Our results
As reported under our Recoverability of goodwill and indefinite life intangible
assets, Recoverability of site assets (including property, plant and equipment
and ROU assets) and Recoverability of parent’s investment in subsidiary
undertaking, we found the resulting estimates and related disclosures in
relation to goodwill and indefinite life intangibles, site assets and parent’s
investment and disclosures in relation to going concern to be acceptable.
However, no audit should be expected to predict the unknowable factors or all
possible future implications for a company and this is particularly the case in
relation to Brexit.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportFinancial statements 96
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SSP GROUP PLC CONTINUED
Recoverability of
goodwill and indefinite
life intangible assets
Goodwill and indefinite
life intangible assets
£683.8m (2019:
£706.0m)
Refer to page 58 Audit
Committee Report,
Note 1.15 and Note
13 Accounting policies
and financial disclosure
Recoverability of site
assets
Property, plant and
equipment – £437.2m
(2019: £466.5m)
ROU assets –
£1,271.2m (2019: £nil)
Refer to page 58 Audit
Committee Report,
Note 1.15, Note 12 and
Note 14
The risk
Our response
Subjective estimate
Our procedures included:
The recoverable amount of goodwill and
indefinite life intangible assets is inherently
judgemental due to the subjectivity and
uncertainty involved in selecting the
appropriate key assumptions, such as the
discount and long-term growth rates, and
preparing future discounted cash flows.
SSP Group plc is subject to internal and external
factors, which may influence its trading in the
short-term, as well as the Group’s long-term
strategy. These primarily include passenger
travel trends, Covid-19, economic and political
uncertainty, tendering and competition.
The effect of these matters is that, as part
of our risk assessment, we determined that
the carrying value of goodwill and indefinite
life intangible assets has a high degree of
estimation uncertainty, with a potential range
of reasonable outcomes greater than our
materiality for the financial statements as
a whole. The financial statements (note 13)
disclose the sensitivity estimated by the Group.
Our sector experience – We considered the consistency of the Group’s
forecasts with our understanding of the business, including changes in
the business, in assessing whether these matters had been appropriately
captured in the impairment models.
Our valuation expertise – We used our valuation experience in assessing
the appropriateness of the methodology and assumptions. Our valuation
specialists assisted us in assessing the discount rate assumptions used by
the Group.
Benchmarking assumptions – We challenged and compared the Group’s
assumptions to externally derived data, industry norms and our expectation
based on our knowledge and experience of the Group, in relation to key inputs
such as projected market growth and revenue growth rates.
Sensitivity analysis – We have used KPMG’s proprietary data analytics
software tool to prepare multiple scenarios sensitising assumptions in
combination to assess their impact on the recoverability of the assets.
Historical comparison – We evaluated the historical accuracy of the Group’s
forecasts by comparing previous budgets to actual results.
Comparing valuations – We compared the results of discounted cash flows
against the Group’s market capitalisation, after adjusting for its net debt to
assess the reasonableness of those cash flows.
Assessing transparency – We considered the adequacy of the Group’s
disclosure of the key risks and sensitivity around the outcome, and whether
that disclosure reflected the risks inherent in the valuation of goodwill and
indefinite life intangible assets.
Our results
We found the carrying amount of goodwill and indefinite life intangible assets
in the Group’s financial statements to be acceptable.
Subjective estimate
Our procedures included:
The outbreak of Covid-19 has led to a material
decline in passenger volumes which in turn has
adversely impacted business performance.
Assessing the recoverability of site assets
relies on a number of assumptions around
future trading performance, such as future
sales growth rates and discount rates, that
involve a high degree of estimation uncertainty.
Consequently, we determined that the
carrying value of site assets has a high degree
of estimation uncertainty, with a range
of reasonable outcomes greater than our
materiality for the financial statements as
a whole. Note 12 discloses the sensitivities
estimated by the Group. This risk is new in the
current year due to the increased economic
uncertainty and changes in passenger trends.
Our sector experience – We used our experience and understanding of the
Group, retail and travel sectors to challenge the key assumptions used to
develop the Group’s forecasts, and whether these had been appropriately
and consistently captured in the impairment models.
Our valuation expertise - We used our valuation experience in assessing
the appropriateness of the methodology and assumptions. Our valuation
specialists assisted us in assessing the discount rate assumptions used by
the Group.
Sensitivity analysis – We have prepared multiple alternate scenarios
sensitising key assumptions individually and in combination to assess their
impact on the recoverability of the assets.
Historical comparison – We evaluated the historical accuracy of the Group’s
forecasts by comparing budget to actual results.
Test of details – We assessed the consistency of site assets included in the
Group’s CGU impairment exercise with those in accounting records, including
the impact of newly created ROU assets arising during the period, as a
consequence of the new leasing standard adopted in the year.
Assessing consistency - We ensured consistency, where relevant, of forecast
financial information with other forecasting exercises across the Group
including the assessment of the recoverability of goodwill and intangible
assets impairment and going concern cash flows forecasts.
Assessing transparency - We also considered the adequacy of the Group’s
disclosure of the key risks and sensitivity around the outcome, and whether
that disclosure reflected the risks inherent in the valuation of the site assets.
Our results
We found the carrying amount of site assets in the Group’s financial
statements to be acceptable.
SSP Group plc Annual Report and Accounts 2020 97
Initial recognition
of right-of-use (‘ROU’)
assets and lease
liabilities on transition
to IFRS 16
ROU assets at
1 October 2019 –
£1,468.9m
Lease Liabilities at
1 October 2019 –
£1,464.5m
Refer to page 59 Audit
Committee Report and
Note 1.3 Accounting
policies and financial
disclosure
The risk
Our response
Subjective estimate
Our procedures included:
Following the adoption of IFRS 16,
the accounting for lease liabilities and
corresponding assets has changed with the
Group bringing onto its balance sheet £1.5
billion of lease liabilities and £1.5 billion of
right-of-use assets at 1 October 2019. There
is a risk that existing leases are not completely
identified, and that transition date recognition
and measurement adjustments are not
accurately recorded.
Furthermore, to determine the future lease
liability and base for calculating the right-of-
use asset, the Group has made a number of
assumptions about individual leases including
lease term and discount rate.
Due to it being the first year of application and
the magnitude of the balance, there is a risk
that inaccurate input of the key data elements
or incorrect selection of assumptions such as
changes in discount rate applicable, could result
in a material misstatement.
The effect of these matters is that, as part
of our risk assessment, we determined that
the lease liability and corresponding right-of-
use asset has a potential range of outcomes
greater than our materiality for the financial
statements as a whole.
Assessing methodology and assumptions – We have challenged key
judgements made by management in preparing the transition adjustments,
specifically lease term, discount rate and variable rates. This included
considering the appropriateness of the selection of accounting policies based
on the requirements of the accounting standard, our business understanding
and industry practice.
Our valuation expertise – Our valuation specialists assisted us in assessing
the discount rate assumptions used by the Group on transition.
Test of details – For a sample of leases, we have tested the accuracy of the
underlying data used in preparing the transition balances through agreeing
information to the original contracts.
Test of details – We have tested the completeness of the leases identified
on transition by inquiring with management and assessing consistency with
revenue generated and rental expenses incurred which may suggest a lease
contract is in place.
Re-performance – For a sample of leases, we have manually recalculated the
lease liability using the underlying data inputs.
Assessing transparency – We considered the adequacy of the Group’s
disclosures in respect of the transition to IFRS 16.
Our results
We found the lease liabilities and right-of-use assets at 1 October 2019
to be acceptable.
Recoverability of
parent’s investment
in subsidiary
undertaking
Investment in
subsidiary – £947.8m
(2019: £946.1m)
Notes 31 and Note 35
Accounting Policies
and financial disclosure
Low risk, high value
Our procedures included:
The carrying amount of the parent company’s
investment in its single subsidiary represents
91% (2019:100%) of the company’s total
assets. Its recoverability is not at a high
risk of significant misstatement or subject
to significant judgement. However, due to
its materiality in the context of the parent
Company financial statements, this is
considered to be the area that had the greatest
effect on our overall parent company audit.
Tests of detail – We compared the carrying amount of the investment book
value to the underlying aggregate recoverable amount of the Group’s CGUs,
after adjusting for net debt. Our procedures over those CGUs are described
in our Recoverability of goodwill and indefinite life intangible assets
KAM above.
Test of detail – We compared the carrying amount of the investment to the
market capitalisation for the Group (after adjusting for net debt).
Our results
We found the Group’s assessment of the recoverability of the investment in
subsidiary to be acceptable (2019: acceptable).
We continue to perform procedures over deferred taxes in the US. However, following assessment of the 2019 forecasts in the US, we no
longer consider the estimation to be judgemental or complex. As a result, we have not assessed this as one of the most significant risks in our
current year audit and, therefore, it is not separately identified in our report this year as a key audit matter.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportFinancial statements 98
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SSP GROUP PLC CONTINUED
4. Our application of materiality and an
overview of the scope of our audit
Materiality
Materiality for the Group financial statements as a whole was set at
£9.0m (2019: £9.5m), determined with reference to a benchmark of
total Group revenue of £1,433.1m (2019: Group profit before tax of
£197.2m), of which it represents 0.6% (2019: 4.8% of Group profit
before tax).
We consider total Group revenue to be the most appropriate
benchmark for the year ended 30 September 2020 (compared
to Group profit before tax used for the year ended 30 September
2019), as it provides a more stable measure than Group profit before
tax following the impact of Covid-19 on the Group’s performance
during the year.
Materiality for the parent company financial statements as a whole
was set at £3.2m (2019: £7.6m), determined with reference to
component materiality (2019: total assets). In 2020, this is lower than
the materiality we would otherwise have determined by reference to
total assets, of which it represents 0.3% (2019: 0.8%).
We reported to the Audit Committee any corrected or uncorrected
identified misstatements exceeding £0.45m (2019: £0.5m), in
addition to other identified misstatements that warranted reporting
on qualitative grounds.
Scope
Of the Group’s 88 (2019: 87) reporting components, we subjected 18
(2019: 19) to full scope audits for Group purposes.
The components within the scope of our work accounted for the
percentages illustrated below.
The remaining 21% (2019: 22%) of total Group revenue, 20%
(2019: 22%) of total Group profit before tax and 19% (2019: 19%)
of total Group assets is represented by 70 (2019: 68) reporting
components, none of which individually represented more than
3% (2019: 4%) of any of the total Group revenue, Group profit
before tax or total Group assets. For these residual components, we
performed an analysis at an aggregated Group level to re-examine
our assessment that there were no significant risks of material
misstatement within these.
Total Group Revenue
£1,433.1m (2019: £2,794m)
Group materiality
£9.0m (2019: £9.5m)
£9.0m
Whole financial statements materiality (2019: £9.5m)
£6.3m
Range of materiality at 18 components (£0.5m to £6.3m) (2019: £0.3m to 7.6m)
Total Group Revenue
Group materiality
£0.45m
Misstatements reported to the audit committee (2019: £0.5m)
Total Group revenue
Total Group profit before tax
Total Group assets
79%
(2019: 78%)
80%
(2019: 78%)
81%
(2019: 81%)
■ Full scope for Group audit purposes 2020 ■ Full scope for Group audit purposes 2019 ■ Residual components
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 materiality, which ranged from £0.5m to
£6.3m (2019: £0.3m to £7.6m), having regard to the mix of size and
risk profile of the Group across the components. The work on 14
(2019: 19) of the Group’s 18 (2019: 19) components was performed
by component auditors and the rest, including the audit of the parent
Company, was performed by the Group audit team.
On account of the travel restrictions in place during the performance
of the audit, the Group team has not visited any component auditor
and instead held virtual conference meetings with all component
auditors (2019: the Group audit team visited 5 of the 12 component
locations). At these meetings the Group team discussed the
audit strategy, the ongoing audit efforts and focus areas, and the
findings reported to the Group audit team were discussed in more
detail. Any further work required by the Group audit team was then
performed by the component auditor.
SSP Group plc Annual Report and Accounts 2020 99
5. We have nothing to report on the other
information in the Annual Report
The directors are responsible for the other information presented
in the Annual Report together with the financial statements.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion
or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic
report and the directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements
audit, we have nothing material to add or draw attention to in
relation to:
• the directors’ confirmation within the Viability statement on page
42 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency and liquidity;
• the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated; and
• the directors’ explanation in the Viability statement of how they
have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Under the Listing Rules we are required to review the Viability
statement. We have nothing to report in this respect.
Our work is limited to assessing these matters in the context of only
the knowledge acquired during our financial statements audit. As we
cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgments
that were reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee as to the
Group’s and Company’s longer-term viability.
Corporate governance disclosures
We are required to report to you if:
• we have identified material inconsistencies between the
knowledge we acquired during our financial statements 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 position and performance,
business model and strategy; or
• the section of the annual report describing the work of the Audit
Committee does not appropriately address matters communicated
by us to the Audit Committee.
We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the
provisions of the UK Corporate Governance Code specified by the
Listing Rules for our review.
We have nothing to report in these respects.
6. We have nothing to report on the other
matters on which we are required to report
by exception
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.
We have nothing to report in these respects.
7. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 92,
the directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group and
parent Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate
the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
SSP Group plc Annual Report and Accounts 2020Corporate governanceFinancial statementsStrategic ReportFinancial statements 100
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
SSP GROUP PLC CONTINUED
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations (irregularities) is from the events and transactions
reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-
detection of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
controls. We are not responsible for preventing non-compliance
and cannot be expected to detect non-compliance with all laws
and regulations.
8. The purpose of our audit work and to
whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions we
have formed.
Nicholas Frost
(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London, E14 5GL
16 December 2020
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or other irregularities (see below), or error, and
to issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from
fraud, other irregularities or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
Irregularities – ability to detect
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the directors (as required by auditing standards) and
from inspection of the Group’s regulatory and legal correspondence
and discussed with the Directors and other management the policies
and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout
our team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified
the following areas as those most likely to have such an effect:
health and safety, anti-bribery and employment law recognising the
nature of the Group’s activities. Auditing standards limit the required
audit procedures to identify non-compliance with these laws and
regulations to enquiry of the Directors and other management
and inspection of regulatory and legal correspondence, if any.
Through these procedures, we became aware of actual or suspected
non-compliance and considered the effect as part of our procedures
on the related financial statement items. The identified actual or
suspected non-compliance was not sufficiently significant to our
audit to result in our response being identified as a key audit matter.
SSP Group plc Annual Report and Accounts 2020 101
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2020
Revenue
Operating costs
Operating (loss)/profit
Share of (loss)/profit of associates
Finance income
Finance expense
(Loss)/profit before tax
Taxation
(Loss)/profit for the year
(Loss)/profit attributable to:
Equity holders of the parent
Non-controlling interests
(Loss)/profit for the year
(Loss)/earnings per share (pence):
– Basic
– Diluted
2020
Underlying1,2
£m
1,433.1
(1,748.5)
(315.4)
(2.4)
2.5
(56.5)
(371.8)
23.7
(348.1)
(334.7)
(13.4)
(348.1)
(68.0)
(68.0)
Notes
4
6
15
9
9
10
25
5
5
2020
Adjustments
£m
2020
Total
£m
2019
Underlying1,2
£m
2019
Adjustments
£m
–
1,433.1
2,794.6
(48.5)
(48.5)
–
–
(5.5)
(54.0)
4.4
(49.6)
(40.3)
(9.3)
(49.6)
(1,797.0)
(2,573.5)
(363.9)
221.1
(2.4)
2.5
(62.0)
(425.8)
28.1
(397.7)
(375.0)
(22.7)
(397.7)
(76.1)
(76.1)
4.1
2.3
(24.3)
203.2
(45.1)
158.1
131.5
26.6
158.1
29.1
28.7
–
(1.9)
(1.9)
–
–
(4.1)
(6.0)
1.4
(4.6)
(4.6)
–
(4.6)
2019
Total
£m
2,794.6
(2,575.4)
219.2
4.1
2.3
(28.4)
197.2
(43.7)
153.5
126.9
26.6
153.5
28.1
27.7
1 Presented on an underlying basis, which excludes non-underlying items as further explained in note 7.
2 The Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the modified retrospective approach to transition and in accordance with the standard
the Group’s financial results for the prior periods have not been restated. As a result, with the exception of revenue, the statutory results shown above
for the year ended 30 September 2020 are not directly comparable with the prior periods. To provide a meaningful comparison with the prior periods
an alternative presentation of the Group’s results under IAS 17 ‘Leases’, the previous accounting standard, is shown in note 2.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 102
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the year ended 30 September 2020
Other comprehensive income/(expense)
Items that will never be reclassified to the income statement:
Remeasurements on defined benefit pension schemes
Tax (charge)/credit relating to items that will not be reclassified
Items that are or may be reclassified subsequently to the income statement:
Net gain/(loss) 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 income statement
Tax credit relating to items that are or may be reclassified
Other comprehensive (expense)/income for the year
(Loss)/profit for the year
Total comprehensive (expense)/income for the year
Total comprehensive (expense)/income attributable to:
Equity holders of the parent
Non–controlling interests
Total comprehensive (expense)/income for the year
Notes
2020
£m
2019
£m
23
1.2
(2.5)
4.2
(19.7)
(1.8)
1.6
0.5
(16.5)
(397.7)
(414.2)
(386.1)
(28.1)
(414.2)
25
(6.2)
1.9
(4.3)
16.0
(5.9)
3.8
0.2
5.5
153.5
159.0
129.1
29.9
159.0
SSP Group plc Annual Report and Accounts 2020
103
CONSOLIDATED BALANCE SHEET
as at 30 September 2020
Non-current assets
Property, plant and equipment
Goodwill and intangible assets
Right-of-use 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
Lease liabilities
Provisions
Non-current liabilities
Long-term borrowings
Post-employment benefit obligations
Lease liabilities
Other payables
Provisions
Derivative financial liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Capital redemption reserve
Merger relief reserve
Other reserves
Retained losses
Total equity shareholders‘ funds
Non-controlling interests
Total equity
Notes
12
13
14
15
16
18
17
18
19
20
21
22
24
20
23
22
21
24
29
16
25
25
25
25
25
25
2020
£m
437.2
731.2
1,271.2
12.2
49.8
73.8
2019
£m
466.5
747.1
–
17.3
28.2
54.3
2,575.4
1,313.4
23.5
10.1
125.3
185.0
343.9
38.7
0.8
205.4
233.3
478.2
2,919.3
1,791.6
(158.2)
(399.0)
(20.9)
(289.1)
(12.3)
(879.5)
(718.1)
(18.6)
(1,060.2)
(4.0)
(21.4)
(5.1)
(10.4)
(1,837.8)
(2,717.3)
202.0
5.8
472.7
1.2
206.9
3.1
(128.8)
(551.9)
(30.9)
–
(4.6)
(716.2)
(587.9)
(19.6)
–
(4.1)
(29.9)
(4.6)
(13.7)
(659.8)
(1,376.0)
415.6
4.8
461.2
1.2
–
12.9
(559.6)
(152.1)
130.1
71.9
202.0
328.0
87.6
415.6
These financial statements were approved by the Board of Directors on 16 December 2020 and were signed on its behalf by:
Jonathan Davies
Chief Financial Officer
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
104
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2020
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve
£m
Merger
relief
reserve
£m
Other
reserves
£m
Retained
earnings/
(losses)
£m
Balance at 1 October 2018
4.8
461.2
1.2
Profit for the year
Other comprehensive income/
(expense) for the year
Capital contributions from
non-controlling interests (note 25)
Reclassification of obligation to
purchase subsidiary
Dividends paid to equity shareholders
(note 11)
Dividends paid to non-controlling
interests (note 25)
Purchase of additional stake in
subsidiary
Transactions with non-controlling
interests
Share-based payments
Tax on share-based payments
At 30 September 2019
Loss for the year
Other comprehensive expense for
the year
Capital contributions from non-
controlling interests (note 25)
Acquisition of shares in partly owned
subsidiary from non-controlling
interest (note 25)
Equity issues (note 25)
Share buyback
Dividends paid to equity
shareholders (note 11)
Dividends paid to non-controlling
interests (note 25)
Share-based payments
Tax on share-based payments
Other movements
At 30 September 2020
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.8
461.2
1.2
–
–
–
–
–
–
–
–
1.0
11.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
206.9
–
–
–
–
–
–
Total
parent
equity
£m
382.7
126.9
2.2
–
–
(13.0)
(71.5)
–
6.5
–
126.9
(4.3)
–
10.4
(10.4)
–
–
8.3
0.7
–
–
(200.8)
(200.8)
–
–
–
8.2
(0.2)
–
8.3
0.7
8.2
(0.2)
Non-
controlling
interests
£m
81.8
26.6
3.3
9.0
–
–
Total
equity
£m
464.5
153.5
5.5
9.0
–
(200.8)
(24.7)
(24.7)
(8.3)
–
(0.1)
0.6
–
–
8.2
(0.2)
12.9
(152.1)
328.0
87.6
415.6
–
(375.0)
(375.0)
(22.7)
(397.7)
(9.8)
(1.3)
(11.1)
(5.4)
(16.5)
–
–
–
–
–
–
–
–
–
–
–
30.5
30.5
(4.3)
(4.3)
(0.7)
(5.0)
–
219.4
(1.7)
(26.8)
(1.7)
(26.8)
–
–
–
219.4
(1.7)
(26.8)
–
–
(20.4)
(20.4)
2.0
0.5
(0.9)
2.0
0.5
(0.9)
–
–
3.0
71.9
2.0
0.5
2.1
202.0
5.8
472.7
1.2
206.9
3.1
(559.6)
130.1
SSP Group plc Annual Report and Accounts 2020 105
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 September 2020
Cash flows from operating activities
Cash flow from operations
Tax paid
Net cash flows from operating activities
Cash flows from investing activities
Dividends received from associates
Interest received
Purchase of property, plant and equipment
Purchase of other intangible assets
Acquisition in the year, net of cash and cash equivalents acquired
Investment in associate
Net cash flows from investing activities
Cash flows from financing activities
Equity funding from shareholders
Equity raising expenses
Share buyback
Receipt of bank loans
Repayment of borrowings
Drawdown on revolving credit facility
Repayment of revolving credit facility
Receipt of USPP debt
Drawdown on Covid Corporate Financing Facility
Purchase of additional 16% stake in TFS
Repayment of finance leases and other loans
Payment of lease liabilities - principal
Payment of lease liabilities - interest
Refinancing fee paid
Acquisition of shares in partly owned subsidiary from non-controlling interest
Interest paid excluding interest on lease liabilities
Dividends paid to equity shareholders
Dividends paid to non-controlling interests
Capital contributions from non-controlling interests
Net cash flows from financing activities
Net (decrease)/increase 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
Notes
27
15
12
13
32
15
25
25
20
20
20
20
20
22
22
25
11
25
25
2020
£m
13.4
(11.0)
2.4
3.6
2.4
(120.3)
(17.3)
(21.5)
–
2019
£m
338.3
(37.1)
301.2
5.2
2.4
(175.9)
(18.1)
(3.4)
(3.0)
(153.1)
(192.8)
227.2
(7.8)
(1.7)
32.1
–
–
(97.5)
101.8
125.0
–
–
(172.6)
(27.8)
–
(5.0)
(22.0)
(26.8)
(20.4)
3.1
107.6
(43.1)
233.3
(5.2)
185.0
–
–
–
–
(32.0)
27.5
–
239.8
–
(22.4)
(3.2)
–
–
(1.3)
–
(18.5)
(200.8)
(24.7)
9.0
(26.6)
81.8
147.8
3.7
233.3
Prior year comparatives have not been restated for IFRS 16 ‘Leases’. Additional information about the impact of IFRS 16 is included in note 1.
A reconciliation of net debt movements in the year has been provided in note 28.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
106
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 its 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 £0.1m.
The financial statements are prepared on the historical cost basis,
except in respect of financial instruments (including derivative
instruments) and defined benefit pension schemes which are
measured at fair values, as explained in the accounting policies below.
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 are prepared on a going concern basis.
The Board has reviewed the Group’s trading forecasts, incorporating
the impact on SSP of Covid-19, as part of the Group’s adoption of the
going concern basis, in which context the Directors have reviewed
cash flow forecasts prepared for a period of 16 months from the date
of approval of these financial statements, with a number of different
scenarios considered. Having carefully reviewed these forecasts, the
Directors have concluded that it is appropriate to adopt the going
concern basis of accounting in preparing these financial statements
for the reasons set out below.
Since the onset of Covid-19, management has taken decisive action
to protect cash, minimise costs and raise additional liquidity to
allow the Company to operate throughout even its most pessimistic
trading scenario. This action to increase liquidity included a £209m
(net of related fees) equity placing and share subscription in late
March 2020, followed shortly afterwards by securing access to
the Bank of England’s Covid Corporate Financing Facility (CCFF),
under which facility the Group was permitted to draw up to £300m.
In addition, the Group also secured access to a number of additional
smaller liquidity lines, including government-backed facilities in
France, Spain and Switzerland, providing a further £44m.
At the end of the year, the Group had approximately £520m of
available liquidity, including cash of £185m and committed undrawn
revolving credit facilities of £150m, as well as a further £175m
available to be drawn down under the CCFF. The £150m revolving
credit facility is committed until July 2022, while the Bank of England
has confirmed that the Group can draw down the maximum £300m
available to it under the CCFF for a period extending through to
February 2022.
In making the going concern assessment, the directors have modelled
a number of scenarios for the period to March 2022. The base case
scenario is consistent with the Board-approved 2021 Budget,
adjusted for the lockdown across England announced by the UK
Government on 31 October, as well as significantly increased
government-imposed restrictions in many other parts of Continental
Europe which are likely to remain in place for the immediate future.
Our Budget reflects our expectations of ongoing challenging
trading conditions for the remainder of this financial year, with sales
recovering only gradually in calendar year 2021 and remaining well
below pre-pandemic levels for the duration of the going concern
period. While the recent positive news on the development of
potential vaccines is extremely encouraging, the Directors recognise
that the pace of the anticipated recovery in sales and passenger
numbers in our markets remains uncertain.
In light of the considerable uncertainty surrounding the ongoing
impact of Covid-19, a downside scenario has also been modelled,
applying severe but plausible assumptions to the base case.
This scenario assumes a further twelve week lockdown (in addition
to the November lockdown), lasting from December until February.
The downside scenario then assumes a gradual recovery, but at a
much slower pace than envisaged in our Budget throughout the
second and third quarters of the current financial year. Only by the
fourth quarter do our downside sales assumptions converge with
those in our Budget.
In both the base case and the downside case the Group would
continue to have sufficient liquidity headroom based on the cash and
available facilities as described above.
In addition to the action taken in the Spring to strengthen liquidity, the
Group secured an agreement in May 2020 from SSP’s lending group
of banks and its US private placement note holders to waive existing
financial covenants (‘existing covenants’), testing both interest
cover and leverage, for the two testing periods covering the twelve
months to 30 September 2020 and 31 March 2021. They agreed
that these existing covenants would be replaced between the date of
the agreement and 30 September 2021 by two new covenants (‘new
covenants’), each tested monthly, with the first of these based on the
Group demonstrating a minimum level of liquidity and the second
based on the Group not exceeding a maximum level of net debt.
For the testing period ending 30 September 2021 both the existing
and new covenants would be relevant, with the Group returning to
the existing covenants thereafter once compliance with the existing
covenants had been confirmed.
In order to provide the maximum financial flexibility for the Group
through this exceptionally challenging period, we have now agreed
further covenant waivers and amendments covering the period up
to March 2022. As was the case with the covenant amendments
agreed in May, the existing financial covenant testing leverage has
been waived, until reinstated in March 2022, with the two temporary,
monthly-tested new covenants on minimum liquidity and maximum
net debt introduced for a further six months from October 2021.
For the testing period ending 31 March 2022 both the existing and
new covenants would be relevant, with the Group returning to the
existing covenants thereafter, once compliance with the existing
covenants has been confirmed. In addition, we have agreed to an
additional new covenant, testing minimum EBITDA thresholds
for the six months ending 30 September 2021 and 31 December
2021. Modified interest cover tests (calculated on a last six months
basis) will also be applied at these two testing dates. All of these
new covenant thresholds have been based on our most pessimistic
trading scenario.
Although the Directors are confident that the Group has sufficient
headroom to stay within the applicable new covenants for at least
the next twelve months, they also recognise that there is likely to be
continued disruption to travel markets during 2021, notwithstanding
the recent vaccine developments, and as a consequence it is difficult
to predict with confidence the overall impact of Covid-19 on the
Group’s profitability in the twelve month period ending March 2022
at this stage. Given this level of uncertainty, there are scenarios in
which the Group could breach its existing interest cover and leverage
covenants at the end of March 2022 when these tests are reinstated,
as well as the minimum liquidity covenant when the CCFF is expected
to be repaid in the first quarter of 2022.
SSP Group plc Annual Report and Accounts 2020 107
In adopting the going concern basis of preparation, the Directors
took account of the fact that they would be able to raise additional
liquidity prior to the repayment of the CCFF in early 2022 , and that
management would remain in close dialogue with both lenders and
noteholders, and would seek further covenant waivers should the
need arise. Nevertheless, the possibility of a covenant breach during
the first quarter of calendar year 2022, together with the possible
requirement to raise additional liquidity prior to the repayment of
the CCFF at that time, cannot be discounted, and as such represents
a material uncertainty that may cast significant doubt on the Group’s
and the Company’s ability to continue as a going concern, and that
it therefore may be unable to realise its assets and discharge its
liabilities in the normal course of business.
After reviewing the most recent projections and the sensitivity
analysis and having carefully considered the material uncertainty and
the mitigating actions available as set out in the previous paragraph,
the Directors believe that it is appropriate to prepare the financial
statements on the going concern basis. The financial statements do
not contain any adjustments that would be necessary if that basis
were inappropriate.
1.3 New accounting standards adopted by the Group
There have been significant changes to accounting under IFRS which
have affected the Group’s financial statements. New standards
and interpretations effective for periods commencing on or after
1 January 2019 and therefore applicable to the Group’s financial
statements for the financial year ended 30 September 2020 are
listed below:
• IFRS 16 ‘Leases’.
• Covid-19-related rent concessions (amendment to IFRS 16).
• IFRIC 23 ‘Uncertainty over income tax treatments’.
• Amendments to IFRS 9 ‘Prepayment features with
negative compensation’.
• Amendments to IAS 28 ‘Long term interests in associates and
joint ventures’.
• Amendments to IAS 19 ‘Plan amendment, curtailment
or settlement’.
• Annual improvements to IFRS 2015-2017 cycle.
The nature and effect of the changes to the Group’s accounting
policies as a result of the adoption of IFRS 16 is set out below.
The adoption of the other standards and interpretations listed above
has not led to any changes to the Group’s accounting policies or had
any other material impact on the financial position or performance of
the Group.
IFRS 16 ‘Leases’
The Group adopted IFRS 16 ‘Leases’ with effect from 1 October 2019
using the modified retrospective approach to transition. The new
standard requires that the Group’s leased assets are recorded as
right-of-use assets together with their corresponding lease liabilities.
Adoption of the new standard has had a material impact on the
Group’s financial statements, with right-of-use assets of £1,468.9m
recognised on transition together with lease liabilities of £1,464.4m.
As at 30 September 2020 the right-of-use assets were £1,271.2m
and the lease liabilities were £1,349.3m.
The Group’s lease portfolio consists of approximately 1,500 leases
which are within the scope of IFRS 16, principally for concession
contracts, offices, warehouses, vehicles and equipment for which the
Group has been collating data for a number of years in preparation for
the new standard. This data has been used in conjunction with a lease
accounting tool implemented for the Group to provide the accounting
entries required under IFRS 16.
On transition, the lease liabilities have been measured at the
present value of the remaining lease payments, discounted using
the incremental borrowing rate on the date of transition. The right-
of-use assets have been measured at the carrying amounts that
would have been in place had the standard been applied since the
commencement of each lease, discounted using the incremental
borrowing rate at the date of transition. The weighted average
incremental borrowing rate applied to the Group’s lease portfolio on
1 October 2019 was 1.62%.
On transition the Group elected not to reassess whether a contract
is, or contains, a lease, instead relying on the assessment already
made in applying IAS 17 ‘Leases’ and IFRIC 4 ‘Determining whether
an Arrangement contains a Lease’. In addition, the Group applied the
following available practical expedients permitted by the standard:
• the exclusion of leases relating to low-value assets (less than
£5,000 when new);
• the exclusion of short-term leases, being those with a lease term of
12 months or less;
• the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease; and
• reliance on its assessment of whether leases are onerous
immediately prior to the date of transition.
The impact of the adoption of IFRS 16 on the opening balance sheet
as at 1 October 2019 is shown in the table below. Further details on
right-of-use assets by class are shown in note 14.
Right-of-use assets
Other receivables
Other payables
Provisions
Lease liabilities
As at
30 September
2019
£m
–
118.4
(201.3)
(34.5)
Impact of
IFRS 16
£m
1,468.9
(10.9)
2.6
3.8
Restated as at
1 October
2019
£m
1,468.9
107.5
(198.7)
(30.7)
–
(1,464.4)
(1,464.4)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 108
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
A reconciliation of operating lease commitments disclosed in the Group’s 2019 Annual Report and Accounts to the lease liability recognised as
at 1 October 2019 is shown below:
Operating lease commitments disclosed at 30 September 2019
Discounted using the lessee’s incremental borrowing rate at 1 October 2019
Leases committed not yet started
Short-term and low-value leases recognised on a straight-line basis as an expense
Lease liability recognised as at 1 October 2019
£m
(2,000.2)
117.4
289.4
129.0
(1,464.4)
Under IFRS 16, the operating lease expense previously recorded in operating costs has been replaced by a depreciation charge, which is higher
in the current period than the operating lease expense recognised under IAS 17, the previous accounting standard for leases, and a separate
interest expense, recorded in finance expense. This significantly impacts certain line items in the Group’s consolidated income statement
and distorts comparisons with prior periods because in accordance with the standard, as a result of the Group transitioning to IFRS 16 using
the modified retrospective approach, prior periods have not been restated. However, in order to provide a meaningful comparison with prior
periods, the Group’s financial results for the year ended 30 September 2020 have also been presented in accordance with IAS 17. The results
for the year ended 30 September 2020 under IAS 17 are referred to as ‘Pro forma IAS 17’. Note 2 includes a consolidated income statement
showing the results for the year ended 30 September 2020 both as reported under IFRS 16 and on a pro forma IAS 17 basis together with
growth rates versus the prior period on a like-for-like basis under IAS 17.
A summary of the impact of the adoption of IFRS 16 on the Group’s underlying results for the year ended 30 September 2020 compared to the
pro forma IAS 17 results is shown in the table below:
Underlying1 operating loss
Underlying* loss before tax
Underlying* loss per share (pence)
Pro forma
IAS 17
2020
£m
(211.7)
(239.6)
(45.4)
Impact of
IFRS 16
£m
(103.7)
(132.2)
(22.6)
IFRS 16
2020
£m
(315.4)
(371.8)
(68.0)
1 Stated on an underlying basis, which excludes non-underlying items detailed in note 7.
There is no net cash flow impact arising from the adoption of the
new standard. As discussed in the going concern section above,
the Group’s principal debt covenants, which are net debt to EBITDA
and interest cover, have been waived for 30 September 2020,
31 March 2021 and 30 September 2021 (in the case of net debt only)
and replaced by new covenants based on minimum liquidity and a
maximum consolidated net debt levels as well as (from 30 September
2021) minimum EBITDA and modified interest cover. These new
covenants are measured on a historical accounting standards basis
and are therefore unaffected by the adoption of IFRS 16. The Group
does not intend to alter its approach going forward as to whether
assets should be leased or bought.
an asset in a similar economic environment with similar terms and
conditions. The lease liability is subsequently measured at amortised
cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index
or a rate or a change in the Group’s assessment of whether it will
exercise an extension or termination option. When the lease liability
is remeasured, a corresponding adjustment is made to the right-of-
use asset. Variable lease payments are recognised as an expense
in the income statement in the period they are incurred. For short
term leases and low value assets, the Group recognises the lease
payments as an operating expense on a straight-line basis over the
term of the lease.
From 1 October 2019, the Group’s lease accounting policy is
as follows:
The Group recognises a right-of-use asset and a lease liability at
the lease commencement date. The right-of-use asset is initially
measured at cost, comprising the initial amount of the lease liability
plus any initial direct costs incurred and any lease payments made at
or before the lease commencement date, less any lease incentives
received. The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to the
earlier of the end of the useful life of the asset or the end of the lease
term. The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement date,
discounted using the incremental borrowing rate being the rate that
the lessee would have to pay to borrow the funds necessary to obtain
Covid-19-related rent concessions
The Group has applied Covid-19-Related Rent Concessions –
Amendment to IFRS 16 issued on 28 May 2020. The Group applies
the practical expedient allowing it not to assess whether eligible rent
concessions that are a direct consequence of the Covid-19 pandemic
are lease modifications. The Group applies the practical expedient
consistently to contracts with similar characteristics and in similar
circumstances. The amendment has been applied retrospectively
and has no impact on retained earnings at 1 October 2019. For rent
concessions in leases to which the Group chooses not to apply the
practical expedient, or that do not qualify for the practical expedient,
the Group assesses whether there is a lease modification.
SSP Group plc Annual Report and Accounts 2020 109
Policies applicable before adoption of IFRS 16 on 1 October 2019
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.
Contingent rent which is dependent on variable factors, such as unit
sales, is recognised in the period in which it is incurred.
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.
1.4 Accounting standards issued but not yet effective
The following amended standards and interpretations are not
expected to have a significant impact on the Group’s consolidated
financial statements:
• Amendments to references to the conceptual framework in
IFRS standards
• Amendments to IFRS 3 ‘Definition of a business’
• Amendments to IAS 1 and IAS 8 ‘Definition of material’
• Amendments to IFRS 9, IAS 39 and IFRS 7 ‘Interest rate
benchmark reform’
• Classification of liabilities as current or non-current
(Amendments to IAS 1)
• Sale of Contribution of Assets between an investor and its
Associate or Joint Venture (amendments to IFRS 10 and IAS 28)
• IFRS 14 ‘Regulatory Deferral Accounts’
• IFRS 17 ‘Insurance Contracts’
• Onerous Contracts - Cost of fulfilling a Contract (Amendments to
IAS 37)
1.5 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
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 are
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 investees‘ future cash flows and the fair value less costs
of disposal.
1.6 Foreign currency
Transactions in foreign currencies are translated to the respective
functional currencies of Group entities at the foreign exchange
rate 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 other comprehensive income. 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,
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
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.
1.7 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:
(b) 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
(c) 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.
1.8 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
and doubtful debts. The allowance for doubtful debts is recognised
based on an expected loss model which is a probability weighted
estimate of credit losses.
The Group applies the simplified approach and records lifetime
expected credit losses for trade and other receivables. The basis
on which expected credit losses are measured uses historical cash
collection data for periods of at least 24 months wherever possible.
The historical loss rates are adjusted where macro-economic,
industry specific factors or known issues to a specific debtor are
expected to have a significant impact when determining future
expected credit losses. For the 2020 financial year, less reliance has
been placed on historical cash collection data due to the uncertainty
caused by Covid-19, and instead the Group has focused on reviewing
receivables in the context of their macro-economic circumstances
and the government support packages available to them. Trade and
other receivables are fully written off when each business unit
determines there to be no reasonable expectation of recovery.
Other financial assets
Other financial assets comprise money market funds that are not
readily convertible to cash. These are held on the balance sheet at
amortised cost.
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 deposits
and liquid investments, 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. Where a modification to the terms
of existing borrowings has taken place, the difference between the
current carrying amount of borrowings and the modified net present
value of future cash flows is taken to the income statement.
1.9 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.
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 other comprehensive
income 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 specified above, 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).
1.10 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.
For the comparative 2019 reporting period, which has been prepared
under the requirements of IAS 17 ‘Leases’, leases in which the Group
assumed substantially all the risks and rewards of ownership of the
leased asset have been 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.
SSP Group plc Annual Report and Accounts 2020 111
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
• Leasehold buildings
• Plant and machinery
• Fixtures, fittings, tools and equipment
Leasehold buildings are included above to show the policy in effect
for the comparative reporting period prior to transition to IFRS 16.
50 years
the life of the lease
3 to 13 years
3 to 13 years
1.11 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. The consideration transferred in the
acquisition is measured at fair value as are the identifiable assets
and liabilities acquired. The excess of the fair value of consideration
transferred over the fair value of net assets acquired is accounted
for as goodwill. Any goodwill that arises is tested annually for
impairment. Transaction costs are expensed as incurred.
Non-controlling interests arising from acquisition are accounted for
based on the proportionate share of the fair value of identifiable
net assets. Subsequent to acquisition, the carrying amount of
non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests‘ share of subsequent
changes in equity. Total comprehensive income is attributed to
non-controlling interests even if this results in the non-controlling
interests having a deficit balance.
1.12 Acquisitions and disposals of non-controlling interests
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.
1.13 Goodwill and intangible assets
Goodwill
Goodwill is allocated to groups of cash-generating units (CGUs) as this
is the lowest level within the Group at which the goodwill is monitored
for internal management purposes. Goodwill is not amortised but is
tested annually for impairment, or when impairment triggers have
been identified, at the level at which it is allocated when accounting
for business combinations. Goodwill is stated at cost less any
accumulated impairment losses.
Indefinite life intangible assets
Indefinite life intangible assets relate to brands recognised on
acquisition of the SSP business in 2006. Indefinite life intangible
assets are treated as having an indefinite life due to the nature of
those assets along with continued investment by the Group, and
are tested annually for impairment or when impairment triggers
have been identified, at the level at which they are allocated when
accounting for business combinations. .
Definite life and software intangible assets
Definite life intangible assets, consisting mainly of brands and
franchise agreements and software, that are acquired/purchased
by the Group are stated at cost less accumulated amortisation and
accumulated impairment losses. Expenditure on internally generated
goodwill and brands is recognised in the income statement as an
expense is incurred.
Amortisation
Amortisation is charged to the income statement on a straight-line
basis over the estimated useful lives of intangible assets (between 3
and 15 years) unless such lives are indefinite. Other intangible assets
are amortised from the date they are available for use.
1.14 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.
1.15 Impairment excluding inventories and deferred tax assets
Financial assets
A financial asset not carried at fair value through the income
statement 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 in each period at the same time.
The recoverable amount of an asset 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 (or group of units) on a pro rata basis. Any subsequent reduction
in an impairment loss in respect of goodwill is not reversed.
For other assets, any subsequent reduction in 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.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
112
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
1. Accounting policies continued
1.16 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.
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.
1.17 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 an appropriate rate.
1.18 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 ‘Operational segments‘,
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.
1.19 Revenue
Revenue represents amounts for retail goods and catering services
supplied to third party customers (predominantly passengers)
excluding discounts, value-added tax and similar sales taxes.
Sale of goods
Revenue is recognised at the point that control of the good is passed
to the customer. This is deemed to be at the at the point of sale of
food, beverage and retail goods.
Provision of catering services
Revenue is recognised over time, as the services are provided to
the customer.
1.20 Supplier income
The Group enters into agreements with suppliers to benefit from
promotional activity and volume growth. Supplier incentives, rebates
and discounts are recognised within cost of sales as they are earned.
1.21 Underlying items
Underlying items are those that, in management‘s judgement, 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.
Non-underlying and exceptional items
The Group makes reference to non-underlying items in presenting
the Group’s statutory profitability measures. These comprise one-off
exceptional items, and other recurring non-exceptional items. Non-
underlying items are items not considered reflective of the normal
trading performance of the business. Exceptional items are non-
recurring items of expense or income which are exceptional because
of their size, nature or incidence and as such have been presented
separately. Examples of exceptional items include restructuring
expenses and impairment of goodwill, property plant and equipment
and right-of-use assets.
1.22 Finance income and expense
Finance income comprises interest receivable on funds invested
and net foreign exchange gains that are recognised in the income
statement. Finance expense comprises interest payable, finance
charges on shares classified as liabilities, unwinding of the discount
on lease liabilities, the unwinding of the discount on provisions
and net foreign exchange losses that are recognised in the income
SSP Group plc Annual Report and Accounts 2020 113
statement. Interest income and interest expense are recognised in
the income statement as they accrue, using the effective interest
method. Foreign currency gains and losses are reported on a
net basis.
1.23 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.
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.
1.24 Share capital
Where the Company purchases its own share capital (treasury
shares), the consideration paid, including any directly attributable
incremental costs, is deducted from equity attributable to the
Company’s equity holders until the shares are cancelled or reissued.
Where such shares are subsequently sold or reissued, any
consideration received net of any directly attributable incremental
transaction costs and the related income tax effects, is included in
equity attributable to the Company’s equity holders.
1.25 Government grants
Income received in the form of government grants is accounted for
under IAS 20 ‘Government grants’ and recognised in the income
statement in the period in which the associated costs for which the
grants are intended to compensate are incurred. The grant income
is recognised as a reduction in the corresponding expense in the
income statement.
Where a government or a government guaranteed bank loan has been
received with below-market interest rates, the loan is accounted for
initially at fair value discounted at market rates with the difference
between the cash received and the fair value at market rates being
recognised as deferred income. The unwind of the discount and the
deferred income are released to and netted in finance charges in the
income statement, on a straight-line basis over the duration of loan.
Other than the changes discussed in 1.2, the accounting policies
adopted are consistent with those of the previous year.
2. Pro forma consolidated income statement
As referred to in note 1, the Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the modified retrospective approach to transition.
In accordance with the standard, prior periods have not been restated and as a result comparisons with prior periods are distorted.
However, in order to provide a meaningful comparison with prior periods which were accounted for under IAS 17 ‘Leases’, the table below
shows the Group’s underlying financial results for the year ended 30 September 2020 presented in accordance with IAS 17 under the
heading ‘Pro forma underlying IAS 17’:
Revenue
Operating costs
Operating (loss)/profit
Share of (loss)/profit of associates
Finance income
Finance expense
(Loss)/profit before tax
Taxation
(Loss)/profit for the year
(Loss)/profit attributable to:
Equity holders of the parent
Non-controlling interests
(Loss)/profit for the year
(Loss)/earnings per share (pence):
– Basic
– Diluted
2020
Underlying
IFRS 16
£m
1,433.1
(1,748.5)
(315.4)
(2.4)
2.5
(56.5)
(371.8)
23.7
(348.1)
(334.7)
(13.4)
(348.1)
(68.0)
(68.0)
2020
Impact of
IFRS 16
£m
2020
Pro forma
Underlying
IAS 17
£m
2019
Underlying
IAS 17
£m
Year-on-year
change
IAS 17
%
–
1,433.1
2,794.6
103.7
103.7
0.7
–
27.8
132.2
(17.4)
114.8
111.0
3.8
114.8
(1,644.8)
(2,573.5)
(211.7)
221.1
(1.7)
2.5
(28.7)
(239.6)
6.3
(233.3)
(223.7)
(9.6)
(233.3)
(45.4)
(45.4)
4.1
2.3
(24.3)
203.2
(45.1)
158.1
131.5
26.6
158.1
29.1
28.7
(48.7)%
36.1%
(195.7)%
(141.5)%
8.7%
(18.1)%
(217.9)%
114.0%
(247.6%)
(270.2)%
(136.1)%
(247.6)%
(256.0)%
(258.2)%
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 114
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
3. Significant 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.
Key sources of estimation uncertainty
Impairment of assets in CGUs
The Group is required to test the assets (both property, plant and equipment and right-of-use assets) within a cash-generating unit (CGU) for
impairment annually if there is a trigger for impairment. The Group has identified each operating site, such as an airport or rail station, as a CGU
for the purpose of the impairment review, on the basis that within one site the units are interdependent because the market dynamics (and
thus cash inflow and outflows) in one unit could impact other units. The economic impact of Covid-19 has been identified as a specific trigger
for impairment and as such all CGUs within the Group have been tested for impairment.
The recoverable amount of a CGU is determined from value in use calculations. The key assumptions for these calculations are discount
rates and cash flow forecasts. The cash flow forecast period is based on length of the lease term of contracts held within a site. The values
applied to the key assumptions in the value in use calculations are derived from a combination of internal and external factors, based on
past experience together with management‘s future expectations about business performance. The pre-tax discount rates used reflect
the time value of money and are based on the Group‘s weighted average cost of capital, adjusted for specific risks relating to the country in
which the CGU operates. Inputs into the discount rate calculation include a country risk-free rate and inflation differential to the UK, country
risk premium, market risk premium and company specific premium. Note 12 provides further details of impairment reviews performed and
associated sensitivities.
Impairment of goodwill and intangible assets
The Group recognises goodwill and indefinite life 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 as well as when there is a specific trigger for impairment. For other intangible assets, reviews are
performed if events or circumstances indicate that this is necessary. As discussed above for impairment of assets in CGUs, the economic
impact of Covid-19 has been identified as a specific trigger for impairment.
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 and associated sensitivities are set out in note 13 to these financial statements.
Critical accounting judgements
Initial recognition of right-of-use assets and lease liabilities on transition to IFRS 16
The Group adopted IFRS 16 ‘Leases’ with effect from 1 October 2019. The new standard requires that the Group’s leased assets are recorded
as right-of-use assets together with their corresponding lease liabilities. Adoption of the new standard has had a material impact on the
Group’s financial statements, with right-of-use assets of £1,468.9m recognised on transition together with lease liabilities of £1,464.4m.
On transition, the lease liabilities have been measured at the present value of the remaining lease payments, discounted using the incremental
borrowing rate on the date of transition. The right-of-use assets have been measured at the carrying amounts that would have been in place
had the standard been applied since the commencement of each lease, discounted using the incremental borrowing rate (IBR) at the date
of transition.
The lease term is determined as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it
is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group exercises judgement on whether or not such options will be exercised for the leases which directly impacts on the length of the
lease term and as such the quantum of the lease liability and ROU asset recognised at transition. In making the judgement, the Group considers
several factors including: profitability of the underlying assets, costs to exit, importance of the site in gaining further business with clients and
forecasted capital expenditure. In overall terms, automatic renewal is not reasonably certain.
Similarly, the Group exercises judgement on computation of the IBR which is used to measure lease liabilities. The local currency interbank
swap rate is used as a reference rate which takes into consideration the currency that the lease originates in and the lease term. This is
adjusted by the group financing margin, as a proxy for the cost of financing.
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 determination is uncertain. As a result the Group recognises
tax liabilities based on estimates of whether additional taxes 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, and have been calculated using the single best estimate of likely outcome approach. Management takes
advice from in-house tax specialists and professional tax advisors, and uses previous experience to inform its judgements. To the extent that
the outcome differs from the estimates made, tax adjustments may be required in future periods.
SSP Group plc Annual Report and Accounts 2020 115
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, taking account of
current levels of profitability and forecasts prepared for budgets and the Group‘s Medium Term Plan (as referred to in the viability statement in
the risk management section of the Strategic Report).
4. 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,
Western Europe and Southern Europe; North America includes operations in the United States and Canada; and RoW includes operations in
Eastern Europe, the Middle East, Asia Pacific, India and Brazil. These segments comprise countries which are at similar stages of development
and demonstrate similar economic characteristics.
The Group‘s management assesses the performance of 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 of costs associated with the Group‘s head office function and the
depreciation of central assets. Revenue is measured in a manner consistent with that in the income statement.
2020 (IFRS 16)
Revenue
Underlying operating loss
Non-underlying items (note 7)
Operating loss
2020 (Pro forma IAS 17)
Revenue
Underlying operating loss
2019 (as reported under IAS 17)
Revenue
Underlying operating profit/(loss)
Non-underlying items (note 7)
Operating profit/(loss)
UK
£m
410.1
(28.7)
(10.3)
(39.0)
Continental
Europe
£m
North
America
£m
558.2
(148.1)
(45.4)
(193.5)
274.9
(55.4)
(7.9)
(63.3)
Non-
attributable
£m
Total
£m
–
1,433.1
(27.6)
(3.2)
(30.8)
(315.4)
(48.5)
(363.9)
RoW
£m
189.9
(55.6)
18.3
(37.3)
410.1
(12.4)
558.2
(103.2)
274.9
(43.7)
189.9
(24.8)
–
1,433.1
(27.6)
(211.7)
840.5
101.8
(1.5)
100.3
1,036.9
79.3
(0.4)
78.9
533.4
41.9
–
41.9
383.8
35.9
–
35.9
–
(37.8)
–
(37.8)
2,794.6
221.1
(1.9)
219.2
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.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 116
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
4. Segmental reporting continued
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
2020
£m
859.8
456.7
116.6
2019
£m
1,800.2
853.9
140.5
1,433.1
2,794.6
The following amounts are included in underlying operating profit:
2020 (IFRS 16)
Depreciation and amortisation1
2020 (pro forma IAS 17)
Depreciation and amortisation1
2019 (as previously reported under IAS 17)
Depreciation and amortisation1
Continental
Europe
£m
U K
£m
North
America
£m
(78.3)
(183.7)
(72.7)
Non-
attributable
£m
Total
£m
(6.1)
(418.8)
RoW
£m
(78.0)
(15.4)
(42.4)
(33.4)
(16.2)
(6.1)
(113.5)
(15.2)
(35.6)
(31.3)
(18.6)
(4.6)
(105.3)
1 Excludes amortisation of acquisition-related intangible assets and accelerated depreciation as detailed in note 7.
A reconciliation of underlying operating (loss)/profit to (loss)/profit before and after tax is provided as follows:
Underlying operating (loss)/profit
Non-underlying operating costs (note 7)
Share of (loss)/profit from associates
Finance income
Finance expense
Non-underlying finance expense (note 7)
(Loss)/profit before tax
Taxation
(Loss)/profit after tax
2020
(IFRS 16)
£m
(315.4)
(48.5)
(2.4)
2.5
(56.5)
(5.5)
(425.8)
28.1
(397.7)
2019
(IAS 17)
£m
221.1
(1.9)
4.1
2.3
(28.4)
–
197.2
(43.7)
153.5
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.
SSP Group plc Annual Report and Accounts 2020 117
5. Earnings per share
Basic earnings per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the result for the year attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year adjusted by potentially dilutive outstanding share options.
Underlying earnings per share is calculated the same way except that the result for the year attributable to ordinary shareholders is adjusted
for specific items as detailed in the below table.
On 26 April 2019, the Group paid a special dividend of £149.8m to shareholders. In order to maintain the comparability of the Company‘s
share price before and after the special dividend, a share consolidation was undertaken on 15 April 2019, with shareholders receiving 20 new
ordinary shares in exchange for every 21 existing ordinary shares. The 2019 weighted average number of ordinary shares outstanding for the
period was adjusted for the share consolidation from the date the special dividend was paid.
(Loss)/profit attributable to ordinary shareholders
Adjustments:
Non-underlying operating costs (note 7)
Net revaluation and unwind of discount on obligation to acquire shareholdings from non–controlling interest
Non-underlying finance costs (note 7)
Tax effect of adjustments
Less non-underlying costs attributable to non-controlling interest
Underlying (loss)/profit attributable to ordinary shareholders
Basic weighted average number of shares
Dilutive potential ordinary shares
Diluted weighted average number of shares
Earnings per share (pence):
– Basic
– Diluted
Underlying earnings per share (pence):
– Basic
– Diluted
IFRS 16
2020
£m
(375.0)
48.5
–
5.5
(4.4)
(9.3)
IAS 17
2019
£m
126.9
1.9
1.9
2.2
(1.4)
–
(334.7)
131.5
492,458,604 452,360,460
–
5,953,867
492,458,604 458,314,327
(76.1)
(76.1)
(68.0)
(68.0)
28.1
27.7
29.1
28.7
The number of ordinary shares in issue as at 30 September 2020 was 537,596,432 which excludes treasury shares (2019: 444,852,520).
The Company also holds 263,499 shares in treasury.
Potential ordinary shares can only be treated as dilutive when their conversion to ordinary shares would decrease earnings per share or
increase loss per share. As the Group has recognised a loss for the period, none of the potential ordinary shares are considered to be dilutive.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 118
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
6. Operating costs
Cost of food and materials:
Cost of inventories consumed in the period
Labour cost:
Employee remuneration
Overheads:
Depreciation of property, plant and equipment1
Depreciation of right-of-use assets
Amortisation of intangible assets
Impairment of property, plant and equipment
Impairment of right-of-use assets
Impairment of goodwill
Profit on lease disposal
Other exceptional costs
Rentals payable under leases
IFRS 16 rent credit
Other overheads
IFRS 16
2020
£m
IAS 17
2019
£m
(431.1)
(806.7)
(518.6)
(809.3)
(111.0)
(305.3)
(10.6)
(38.4)
(38.2)
(33.0)
0.3
(22.7)
(149.2)
91.9
(231.1)
(98.3)
–
(8.9)
–
–
–
–
–
(551.8)
–
(300.4)
(1,797.0)
(2,575.4)
1 Capped to the life of the related unit lease where relevant.
The Group’s rentals payable consist of fixed and variable elements depending on the nature of the contract and the levels of revenue earned
from the respective sites. £110.6m of the expense relates to variable elements, and the remaining £38.6m is rent from short-term leases.
These payments are not capitalised under IFRS 16.
The fixed element of rent during the year was £229.4m on a pro forma IAS 17 basis (2019: £350.5m).
Employee remuneration is shown net of government grants received in the year of £79.4m. These grants relate to support packages made
available by several national governments in response to the Covid-19 pandemic, such as the UK Government’s Coronavirus Job Retention
Scheme. In addition, government support has been paid directly to employees in certain countries in response to Covid-19. Other forms of
government support for operating expenditure totalled £20.3m. This is primarily attributable to business rates relief in the UK (£9.1m), and
rent relief in Denmark (£3.7m) and Norway (£1.3m).
Non-underlying items within operating costs are detailed in note 7.
Auditor‘s remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Audit related services
2020
£m
2019
£m
0.5
1.0
0.3
1.7
0.3
1.0
0.3
1.6
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 to be disclosed on a consolidated basis.
SSP Group plc Annual Report and Accounts 2020 119
7. Non-underlying items
Operating costs
Impairment of goodwill
Impairment of property, plant and equipment
Impairment of right-of-use assets
Depreciation
IFRS 16 rent credit
Restructuring expenses
Amortisation of intangible assets arising on acquisition
Finance expenses
Effective interest rate charge and debt modification loss
Equity issue
Unwind of discount on obligation to acquire additional share of subsidiary undertaking
Foreign exchange (losses)/gains on revaluation of obligation to acquire additional share
of subsidiary undertaking
Taxation
Tax credit on non-underlying items
Total non-underlying items
There were no exceptional items in the prior year.
Exceptional
2020
£m
Non-
exceptional
2020
£m
Total non-
underlying
items
2020
£m
(33.0)
(38.4)
(38.2)
(6.2)
91.9
(22.7)
–
(46.6)
–
(0.1)
–
–
–
–
–
–
–
–
(1.9)
(1.9)
(5.4)
–
–
–
(33.0)
(38.4)
(38.2)
(6.2)
91.9
(22.7)
(1.9)
(48.5)
(5.4)
(0.1)
–
–
(0.1)
(5.4)
(5.5)
4.4
(49.6)
2019
£m
–
–
–
–
–
–
(1.9)
(1.9)
(2.2)
–
(0.3)
(1.6)
(4.1)
1.4
(4.6)
Impairment of goodwill
Goodwill is not amortised but is tested annually for impairment, by calculating the value in use of groups of cash-generating units to determine
the recoverable amount. Due to the reduction in short-term trading resulting from Covid-19, and an increase in the discount rate used in
calculating the value in use for each CGU, impairments of £33.0m have been recognised. Further information is provided in note 13.
Impairment of property, plant and equipment and right-of-use assets
The impact of Covid-19 and and national restrictions imposed in response to the pandemic are considered an impairment trigger.
The recoverable amounts of all CGUs have been calculated and reviewed against the carrying value of assets held, resulting in impairments of
£38.4m for property, plant and equipment and £38.2m for right-of-use assets. Further detail is provided in note 12.
Depreciation
As a result of reassessment of the lease term of certain units, accelerated depreciation has been recorded on fixed assets to align the carrying
value of such assets to their expected useful economic life based on the revised lease term.
IFRS 16 rent credit
During the year, the Group successfully negotiated several rent waivers with clients, totalling £91.9m, as part of its response to the Covid-19
pandemic. The Group applies the practical expedient issued as a part of the Amendment to IFRS 16 to record this as a reduction in rent
expense and an exceptional item within the consolidated income statement.
Restructuring expenses
As a result of the impact of Covid-19, the Group has recognised a charge of £22.7m relating to its restructuring programmes carried out across
the group during the second half of the year. The charge primarily relates to redundancy costs. It also includes some costs related to the exit
from certain contracts, most notably at Sheremetyevo Airport in Russia.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 120
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
7. Non-underlying items continued
Amortisation of intangible assets
Underlying operating profit excludes non-cash accounting adjustments relating to the amortisation of intangible assets arising on acquisition
of the SSP business in 2006.
Interest expense from amendment and extension of borrowings under IFRS 9
The Group adopted IFRS 9 ‘Financial Instruments’ on 1 October 2018. As a result of the transition, and changes in the Group’s effective interest
rate, borrowings were reduced by £7.7m. These reductions are unwound as part of the effective interest rate expense which is recognised in
the income statement. For the year ended 30 September 2020, this charge was £2.0m (2019: £2.2m).
On 29 May 2020, as part of the Group’s debt refinancing, a non-substantial modification to the bank facility debt occurred, further details of
which are provided in note 20. As a result of the modification, a one-off loss of £3.4m was recognised in the income statement.
8. 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
2020
2019
Number of employees
29,516
164
2,093
31,773
36,817
166
2,566
39,549
The decrease in the average number of employees year-on-year reflects the impact of redundancies arising out of the Group’s restructuring
programme to reduce its cost base in response to reduced trading levels resulting from Covid-19 restrictions.
The aggregate payroll costs of the Group were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payments (note 26)
2020
£m
(445.3)
(59.2)
(12.1)
(2.0)
2019
£m
(693.3)
(93.2)
(14.6)
(8.2)
(518.6)
(809.3)
SSP Group plc Annual Report and Accounts 2020 121
9. Finance income and expense
Finance income:
Interest income
Total finance income
Finance expense:
Total interest expense on financial liabilities measured at amortised cost
Lease interest expense
Debt modification loss
Effective interest rate
Net change in fair value of cash flow hedges utilised in the year
Unwind of discount on provisions
Net interest expense on defined benefit pension obligations
Foreign exchange losses on revaluation of obligation to acquire additional share in subsidiary undertaking
Unwind of discount on obligation to acquire additional share in subsidiary undertaking
Other net foreign exchange losses
Other
Total finance expense
Non-underlying items within finance income and expense are detailed in note 7.
10. Taxation
Current tax expense:
Current year
Adjustments for prior years
Deferred tax credit/(expense):
Origination and reversal of temporary differences
Recognition of deferred tax assets not previously recognised
Changes in tax rates
Adjustments for prior years
Total tax credit/(charge)
Tax rate
IFRS 16
2020
£m
IAS 17
2019
£m
2.5
2.5
(22.8)
(27.8)
(3.4)
(2.0)
(1.6)
(0.4)
(0.2)
–
–
(0.3)
(3.5)
(62.0)
2020
£m
0.6
(0.7)
(0.1)
29.0
–
0.5
(1.3)
28.2
28.1
6.6%
2.3
2.3
(18.1)
–
–
–
(3.8)
(0.4)
–
(1.6)
(0.3)
(0.7)
(3.5)
(28.4)
2019
£m
(47.0)
0.7
(46.3)
(0.6)
1.5
(0.4)
2.1
2.6
(43.7)
22.2%
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
122
10. Taxation continued
Reconciliation of effective tax rate
The tax credit (2019: expense) for the year is different to the standard rate of corporation tax in the UK of 19.0% (2019: 19.0%) applied to the
loss (2019: profit) before tax for the year. The differences are explained below:
(Loss)/profit before tax
Tax credit/(charge) using the UK corporation tax rate of 19.0% (2019: 19.0%)
Losses on which no deferred tax was recognised
Temporary differences on which no deferred tax was recognised
Non-deductible goodwill impairment
Non-deductible expenses
Tax impact of share of profits/losses of non-wholly owned subsidiaries1
Adjustments for prior years
Secondary irrecoverable taxes
Withholding taxes
Recognition of deferred tax assets not previously recognised
Changes in tax rates
Effect of tax rates in foreign jurisdictions
Total tax credit/(charge)
2020
£m
(425.8)
80.9
(35.5)
(19.9)
(6.3)
(5.7)
(2.8)
(2.0)
(0.4)
(0.2)
–
0.5
19.5
28.1
2019
£m
197.2
(37.5)
(1.9)
0.6
–
(2.7)
3.0
2.2
(2.8)
(2.0)
1.7
(0.4)
(3.9)
(43.7)
1 This relates to the fact that certain subsidiaries in the US are not wholly owned and whose profits or losses are taxed at the level of the subsidiaries’
shareholders. Therefore the Group is not subject to tax on the profits or losses attributable to its non-controlling interests.
The Group‘s tax rate is sensitive to the geographic mix of profits and reflects a combination of higher rates in certain jurisdictions, as well
as the impact of losses in some countries for which no deferred tax asset is recognised.
The change in the tax rate for the current year compared to historic rates of around 22% is due to the impact of Covid-19 which has led to a
significant change in the Group’s geographic mix of profits and losses compared to prior years. In particular, the tax rate in the current year has
been negatively impacted by higher levels of losses in countries for which no deferred tax asset has been recognised, as well as the impairment
of goodwill, for which no tax deduction is available.
Factors that may affect future tax charges
The Group expects the tax rate in the future to continue to be affected by the geographical mix of profits and the different tax rates that will
apply to those profits, as well as the Group’s ability to recognise deferred tax assets on losses in certain jurisdictions.
11. Dividends
Interim dividend paid in the year of £nil per share (2019: 5.8p)
Special dividend paid in the year of £nil per share (2019: 32.1p)
Prior year final dividend of 6.0p per share paid in the year (2019: 5.4p)
2020
£m
–
–
(26.8)
(26.8)
2019
£m
(25.8)
(149.8)
(25.2)
(200.8)
The prior year final dividend of 6.0p per share was approved at the Group’s Annual General Meeting in February 2020 and was paid in June
2020 for a total payment of £26.8m. No dividend for the 2020 financial year is proposed.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 123
12. Property, plant and equipment
Cost
At 1 October 2018
Additions
Disposals
Effects of movements in foreign exchange
Other movements1
At 30 September 2019
Additions
Disposals
Acquisitions from business combinations
Reclassifications
Effects of movements in foreign exchange
Other movements1
At 30 September 2020
Depreciation
At 1 October 2018
Charge for the year
Disposals
Reclassifications
Effects of movement in foreign exchange
At 30 September 2019
Charge for the year
Impairments
Disposals
Effects of movements in foreign exchange
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
Land, buildings
and leasehold
improvements
£m
Equipment,
fixtures and
fittings
£m
230.2
50.3
(11.9)
13.4
2.0
284.0
30.9
(8.4)
0.1
7.3
(12.6)
–
301.3
770.7
125.6
(35.4)
7.2
3.7
871.8
89.4
(45.4)
9.8
(7.3)
(7.5)
3.2
Total
£m
1,000.9
175.9
(47.3)
20.6
5.7
1,155.8
120.3
(53.8)
9.9
–
(20.1)
3.2
914.0
1,215.3
(128.8)
(500.7)
(629.5)
(26.5)
11.1
1.4
(6.9)
(149.7)
(35.4)
(13.2)
8.4
6.1
(71.8)
35.6
0.2
(2.9)
(539.6)
(75.6)
(25.2)
45.4
0.7
(98.3)
46.7
1.6
(9.8)
(689.3)
(111.0)
(38.4)
53.8
6.8
(183.8)
(594.3)
(778.1)
117.5
134.3
319.7
332.2
437.2
466.5
1 Included in other movements is £3.2m (2019: £5.9m) in respect of increases to the restoration costs provision (see note 20).
At 30 September 2019, the net carrying amount of equipment, fixtures and fittings held under finance leases was £0.5m. Depreciation for
the year on these assets was £0.4m. The leased equipment acted as security against lease obligations. Upon transition to IFRS 16 the Group
recognised all leased assets as right-of-use assets.
Impairment of property, plant and equipment and right-of-use assets
The Group tests assets for impairment when impairment triggers are identified. The economic impact of Covid-19 has been identified as
a specific trigger for impairment, resulting in impairment charges of £38.4m to property, plant and equipment and £38.2m to right-of-
use assets.
The Group has identified each operating site, such as an airport or rail station, as a cash-generating unit (CGU) for the purpose of the
impairment review, on the basis that within one site the units are interdependent because the market dynamics (and thus cash inflow and
outflows) in one unit could impact other units.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
124
12. Property, plant and equipment continued
The recoverable amount of a CGU is determined from value in use calculations. The key assumptions for these calculations are discount rates
and cash flow forecasts. The cash flow forecast period is based on length of the lease term of contracts held within a site. The values applied to
the key assumptions in the value in use calculations are derived from a combination of internal and external factors, based on past experience
together with management‘s future expectations about business performance. The pre-tax discount rates used reflect the time value of
money and are based on the Group‘s weighted average cost of capital, adjusted for specific risks relating to the country in which the CGU
operates. Inputs into the discount rate calculation include a country risk-free rate and inflation differential to the UK, country risk premium,
market risk premium and company specific premium.
Sensitivity analysis
Whilst management believe the assumptions are realistic, it is possible that additional impairments would be identified if any of the above
sensitivities were changed significantly. A sensitivity analysis has been performed on each of these key assumptions with the other variables
held constant. An increase in the discount rate by 1% would result in additional impairments of £0.4m and £1.7m in property, plant and
equipment and right-of-use assets respectively. A reduction in EBITDA of 10% in each forecast year would result in additional impairments of
£4.8m and £11.7m in property, plant and equipment and right-of-use assets respectively.
13. Goodwill and intangible assets
Indefinite life
intangible
assets
£m
Definite life
intangible
assets
£m
Goodwill
£m
Software
£m
Cost
At 30 September 2018
Additions
Business acquisitions
Disposals
Reclassifications
Effects of movement in foreign exchange
At 30 September 2019
Additions
Business acquisitions
Disposals
Reclassifications
Effects of movement in foreign exchange
At 30 September 2020
Amortisation
At 30 September 2018
Charge for the year
Disposals
Effect of movements in foreign exchange
At 30 September 2019
Charge for the year
Impairments
Disposals
Effect of movements in foreign exchange
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
646.4
58.0
–
0.3
(0.3)
–
1.6
648.0
–
12.9
–
–
(2.1)
658.8
–
–
–
–
–
–
(33.0)
–
–
(33.0)
625.8
648.0
–
–
–
–
–
58.0
–
–
–
–
–
58.0
–
–
–
–
–
–
–
–
–
–
58.0
58.0
66.6
–
2.2
–
–
0.2
69.0
–
–
–
–
0.1
69.1
(55.5)
(2.7)
–
–
(58.2)
(2.8)
–
–
(0.2)
(61.2)
7.9
10.8
Total
£m
834.2
20.8
2.5
(0.8)
–
2.6
859.3
17.3
12.9
(0.2)
–
(2.4)
63.2
20.8
–
(0.5)
–
0.8
84.3
17.3
–
(0.2)
–
(0.4)
101.0
886.9
(47.5)
(103.0)
(6.2)
0.5
(0.8)
(54.0)
(7.8)
–
0.2
0.1
(8.9)
0.5
(0.8)
(112.2)
(10.6)
(33.0)
0.2
(0.1)
(61.5)
(155.7)
39.5
30.3
731.2
747.1
Indefinite life intangibles comprise SSP’s brands, which are protected by trademarks and for which there is no foreseeable limit to the period
over which they are expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of
these brands and the level of marketing support provided. The nature of the food and beverage industry is that obsolescence is not a common
issue, with our major brands being originally created over 20 years ago. Although performance has been impacted by Covid-19, this is a short-
term impact and the Group anticipates all brands will return to previous trading levels in the near future.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 125
Goodwill and indefinite life intangible assets are allocated to groups of cash-generating units (CGUs). Details of goodwill and indefinite life
intangible assets allocated to groups of CGUs are provided in the table below:
UK & Ireland
Rail Gourmet UK
North America
France
Belgium
Spain
Germany
Switzerland
Finland
Norway
Sweden
Denmark
Greece
Egypt
Hungary
Australia
Singapore
Hong Kong
China
Thailand
India
Goodwill
2020
£m
104.1
2019
£m
104.0
59.4
15.0
65.0
8.3
48.3
33.6
27.9
22.2
64.8
51.2
25.5
5.0
14.8
1.1
10.4
–
27.6
0.6
12.0
29.0
59.4
15.7
63.4
8.1
47.1
46.0
43.7
21.7
70.1
49.0
24.8
4.8
15.1
1.2
–
0.2
28.7
0.6
13.0
31.4
Indefinite life
intangible assets
2020
£m
55.5
–
–
2.5
2019
£m
55.5
–
–
2.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
625.8
648.0
58.0
58.0
The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. This resulted in an
impairment charge of £33.0m in the year (2019: £nil), reflecting the adverse impact of Covid-19 on the Group’s anticipated short to medium-
term performance.
The recoverable amounts of a group of CGUs (i.e. a country) 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 for these calculations are shown below:
UK & Ireland
Continental Europe
North America
Rest of the World
2020
2019
Terminal
growth rate
2.0%
Discount
rate
10.5%
Terminal
growth rate
2.0%
Discount
rate
6.2%
2.0%-2.9% 8.9%-16.2%
2.0%-2.2% 6.3%-12.6%
2.0%
10.4%
2.0%
6.8%
2.0-4.8% 8.7%-19.1%
2.0%-4.1% 6.2%-19.5%
The values applied to the key assumptions in the value in use calculations are derived from a combination of internal and external factors,
based on past experience together with management‘s future expectations about business performance. The discount rates reflect the
time value of money and are based on the Group‘s weighted average cost of capital, adjusted for specific risks relating to the country which
represents a group of CGUs. Inputs into the discount rate calculation include a country risk-free rate and inflation differential to the UK,
country risk premium, market risk premium and company specific premium. The increase in discount rates from 2019 reflects the additional
risks the Group faces in relation to Covid-19.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 126
13. Goodwill and intangible assets continued
Sensitivity analysis
Whilst management believe the assumptions are realistic, it is possible that additional impairments would be identified if any of the above
sensitivities were changed significantly. A sensitivity analysis has been performed on each of these key assumptions with the other variables
held constant. An increase in the discount rate by 1% would result in additional impairments of £29.1m, a reduction in the growth rate by
1% would result in additional impairments of £22.5m, and a reduction in EBITDA of 10% in each forecast year would result in additional
impairments of £82.8m.
14. Right-of-use assets
Land,
buildings and
leasehold
improvements
£m
Equipment,
fixtures and
fittings
£m
Concessions
contracts
£m
Beginning of the period
Right-of-use assets on transition
Acquisitions
Additions
Depreciation charge in the period
Remeasurement adjustments
Impairments
Currency translation
At 30 September 2020
Adoption of IFRS 16 ‘Leases’
–
1,441.4
24.1
247.9
(298.8)
(130.2)
(38.2)
(7.0)
1,239.2
–
26.5
–
17.7
(5.9)
(6.7)
–
(0.8)
30.8
Total
£m
–
1,468.9
24.1
266.4
(305.3)
(136.9)
(38.2)
(7.8)
–
1.0
–
0.8
(0.6)
–
–
–
1.2
1,271.2
As detailed in note 1, the Group adopted IFRS 16 ‘Leases’ with effect from 1 October 2019 using the modified retrospective approach to
transition. Note 2 provides a pro forma consolidated income statement to provide a meaningful comparison of the current and prior year.
The majority of the right-of-use assets are associated with leased concession units, which are predominantly located in train stations and
airports. The remaining right-of-use assets relate to land and buildings in the form of warehouses and offices, and a small asset relating to
vehicles and equipment.
Impairment of right-of-use assets and sensitivity analysis
Details of the impairment methodology and sensitivity analysis for right-of-use assets are provided in note 12.
15. Investments in associates
The Group uses the equity accounting method to account for its associates, the carrying value of which was £12.2m as at 30 September 2020
(2019: £17.3m). The following table summarises the movement in investments in associates during the year:
At 1 October 2019
Additions
Share of (losses)/profits for the year
Dividends received
Currency adjustment
At 30 September 2020
2020
£m
17.3
1.8
(2.4)
(3.6)
(0.9)
12.2
2019
£m
10.6
7.3
4.1
(5.2)
0.5
17.3
There were £1.8m of non-cash additions in the year, including a £1.4m conversion of a short-term repayable loan into equity in the Group’s
French associate undertaking, Epigo SAS. In 2019, non-cash additions were £4.3m, which mostly related to a further conversion of a short-term
repayable loan into equity in Epigo SAS.
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. Details of the Group‘s interests in associates are
shown in note 44.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 127
16. 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 losses carried forward
Pensions
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 losses carried forward
Pensions
IFRS 16 temporary differences
Other
Assets
2020
£m
–
13.8
3.1
19.8
0.7
15.6
53.0
(3.2)
49.8
2019
£m
–
11.8
4.5
3.9
1.4
9.3
30.9
(2.7)
28.2
Liabilities
2020
£m
(8.8)
(0.8)
–
–
–
(4.0)
(13.6)
3.2
(10.4)
2019
£m
(8.0)
(1.7)
–
–
–
(6.7)
(16.4)
2.7
(13.7)
30 September
2019
£m
Recognised
in income
statement
£m
Recognised
in reserves
£m
Currency
adjustment
£m
30 September
2020
£m
(8.1)
10.2
4.5
3.8
1.5
–
2.6
14.5
(0.6)
2.7
(2.1)
15.6
0.9
16.1
(4.4)
28.2
–
–
0.5
–
(1.9)
–
(2.6)
(4.0)
(0.1)
0.1
0.2
0.4
0.2
–
(0.1)
0.7
(8.8)
13.0
3.1
19.8
0.7
16.1
(4.5)
39.4
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 and other temporary differences
Gross value of
temporary differences
2020
£m
5.0
510.5
43.8
559.3
2019
£m
3.7
272.3
8.9
284.9
Assets
2020
£m
1.0
106.1
17.8
124.9
2019
£m
0.7
59.8
1.9
62.4
Liabilities
2020
£m
2019
£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 in ownership rules. Of the total unprovided deferred tax on tax
losses, £6.3m of this (2019: £1.7m) will expire at various dates between 2021 and 2025.
£8.7m of the Group’s unrecognised deferred tax assets relate to trapped interest losses in the UK, with the balance relating to unrecognised
deferred tax assets in overseas jurisdictions, mainly the US, France and Germany, as well as smaller amounts in a number of other countries.
The largest proportion of the unrecognised deferred tax assets relate to carried forward losses in territories where operations have been
making tax losses for some time, or where use of those losses is not anticipated in the medium term. Profitability forecasts are reviewed
carefully and used as the basis for considering the recognition of deferred tax assets.
There are unremitted earnings in overseas subsidiaries of £26.3m (2019: £26.7m) which would be subject to additional tax of £4.9m
(2019: £4.9m) if the Group chooses to remit those profits back to the UK. No deferred tax liability has been provided on these earnings because
the Group is in a position to control the reversal of the temporary difference and it is probable that such differences will not reverse in the
foreseeable future.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 128
17. Inventories
Food and beverages
Other
18. Trade and other receivables
Trade receivables
Other receivables¹
Prepayments and accrued income
Of which:
Non-current (other receivables)
Current
2020
£m
19.3
4.2
23.5
2020
£m
18.8
136.3
44.0
199.1
73.8
125.3
2019
£m
33.4
5.3
38.7
2019
£m
66.1
118.4
75.2
259.7
54.3
205.4
1 Other receivables include long-term security deposits of £28.9m (2019: £30.1m) relating to some of the Group’s concession agreements, £27.3m of
capital contributions due from non-controlling interest equity shareholders in the Group’s US subsidiaries (2019: £nil)2, sales tax receivable of £17.1m
(2019: 9.9m), £9.1m social security taxes recoverable (2019: £nil) and purchasing income of £5.6m (2019: £18.4m).
2 No amount was recorded in the prior year or opening balances as the contributions were recorded on a cash receipts basis instead of when the NCI
shareholders became liable for payment. The receivables balance at 30 September 2019 should have been £24.3m and at 1 October 2018 £19.1m, with
the other side being posted to NCI. The directors have not restated prior periods as they have assessed this as not material to those periods.
The value of contract assets was not material at the reporting date.
19. Cash and cash equivalents
Cash at bank and in hand
Cash equivalents
20. Short-term and long-term borrowings
Current liabilities
Bank loans
Covid Corporate Financing Facility (CCFF)
Finance leases
Non-current liabilities
Bank loans
US Private Placement notes
Finance leases
2020
£m
141.9
43.1
185.0
2020
£m
(34.3)
(123.9)
–
2019
£m
186.2
47.1
233.3
2019
£m
(128.2)
–
(0.6)
(158.2)
(128.8)
(377.0)
(341.1)
–
(718.1)
(343.4)
(243.9)
(0.6)
(587.9)
Bank loans held through the Group’s UK subsidiary SSP Financing Limited
As at 30 September 2020, the Group had Facility A borrowings of £112.4m. This debt matures on 15 July 2022 and accrues cash-pay interest
at the relevant benchmark rate plus a margin of 1.25% per annum as at 30 September 2020. Facility A debt requires a mandatory payment of
11.7% of the debt annually in July.
As at 30 September 2020, the Group had Facility B borrowings of £270.7m. This debt matures on 15 July 2022 and accrues cash-pay interest
at the relevant benchmark rate plus a margin of 1.5% per annum as at 30 September 2020.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020
129
As at 30 September 2020, the Group’s revolving credit facility was undrawn. This £150m committed facility expires on 15 July 2022.
When drawn, this facility accrues cash-pay interest at the relevant benchmark rate plus a margin of 1.0% per annum as at 30 September 2020.
A commitment and utilisation fee also applies to this facility.
As at 30 September 2020, interest rate swaps hedge the floating rate exposure until 15 July 2022, to match the debt profile (see note 27 for
details of the Group’s interest rate profile).
Under the financing agreement, the Group has to comply with covenants at interim and year end relating to net debt cover and interest cover.
These covenants are normally tested biannually but were waived for the year ended 30 September 2020. These were replaced with monthly
Minimum Liquidity and Consolidated Maximum Net Debt covenants. Bank loans are shown net of unamortised arrangement fees totalling
£2.1m as at 30 September 2020 (2019: £3.3m).
2020 debt modification
The Group adopted IFRS 9 ‘Financial Instruments’ in the previous financial year, with the standard introducing new guidance with regard to debt
modifications whereby all modifications, irrespective of their significance, result in a revaluation of the carrying value of borrowings. IFRS 9
was adopted using the modified transition approach with adjustments arising from adoption of the standard reflected in the opening balance
sheet on 1 October 2018. As a result, the Group’s facility borrowings were reduced by £7.7m with the other side of this adjustment made to
opening retained earnings, as shown in the statement of changes in equity. This was in addition to a £1.2m reduction to borrowings from the
Group’s previous effective interest rate calculation. These reductions are unwound as part of the effective interest rate expense which is
recognised in the income statement. For the year ended 30 September 2020, this charge was £2.0m (2019: £2.2m).
On 29 May 2020, as part of the Group’s debt refinancing, a non-substantial modification to the bank facility debt occurred where the
requirement for the 2020 July annual mandatory payment of 11.7% of Facility A borrowings was waived to the facility’s maturity date.
Furthermore, the margin rates applicable on Facility A and Facility B were raised from 1.0% and 1.25% to 1.25% and 1.5% respectively.
From the beginning of financial year 2021 these rates increased to 2.0% and 2.25% respectively. For non-substantial debt modifications
under IFRS 9, the difference between the modified future cash flows, discounted at the original effective interest rate applied, and the current
carrying value of the debt is recognised as a gain or loss in the income statement with the other side applied to the reduction being unwound
through the effective interest rate expense.
As a result of the modification, a one-off loss of £3.4m was recognised in the income statement. The remaining amount to be unwound through
effective interest rate expense at 30 September 2020 was £1.2m (2019: £6.7m) with the bank loans being shown net of this balance.
Bank loans – held through subsidiaries in France, India, Spain and Switzerland
In addition to the loan held by the Group’s subsidiaries in India, the Group’s subsidiaries in France, Spain and Switzerland secured access and
drew upon a number of additional smaller liquidity lines during April and May 2020. These are summarised as follows:
France
As at 30 September 2020, the Group had borrowings in France of £22.7m (EUR25.0m). This debt matures on 23 March 2026 and accrues
cash-pay interest at 1.0% per annum as at 30 September 2020. Payment of the principal debt starts in 2022 at a rate of £4.5m (EUR5.0m)
per annum.
The majority of the borrowings are guaranteed by the French government, which allowed the subsidiary to obtain a below-market interest
rate and is accounted for as a government grant under IAS 20 – Accounting for Government Grants and Disclosures. The loan is recognised
initially at fair value, discounted at market rates with the difference between the cash received and the fair value at market rates being
recognised in deferred income. The discount is unwound and the deferred income is released and netted together in finance charges in the
income statement over the duration of the loan. The net impact to the income statement was £nil during the year ended 30 September 2020.
The carrying amount of the borrowings was £19.5m as at 30 September 2020.
India
As at 30 September 2020, the Group had borrowings in India of £1.4m. (INR129.0m) This debt matures on 12 December 2023 and accrues
cash-pay interest at 8.3% per annum with effect from October 2020. The subsidiary also had £0.2m of overdrafts.
Spain
As at 30 September 2020, the Group had borrowings in Spain of £8.2m (EUR9.0m). This debt matures on 22 April 2024 and accrues cash-pay
interest at the relevant benchmark rate plus a margin of 1.6% per annum as at 30 September 2020. Payment of the principal debt starts in
2021 at a rate of £2.7m (EUR3.0m) per annum.
As of 30 September 2020 the borrowing entity in Spain also held a £9.0m (EUR10.0m) revolving credit facility with £1.8m (EUR2.0m) drawn
upon. This committed facility expires on 24 April 2021. When drawn, this facility accrues cash-pay interest at the relevant benchmark rate plus
a margin of 1.5% per annum as at 30 September 2020. A commitment and utilisation fee also applies to this facility.
Switzerland
As at 30 September 2020, the Group had borrowings in Switzerland of £0.4m (CHF0.5m). This debt matures on 1 May 2025 and is interest free.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 130
20. Short-term and long-term borrowings continued
US Private Placement (USPP)
As at 30 September 2020, the Group had US Private Placement note drawings of £342.6m. All notes drawn carry a fixed rate of interest.
The following notes were drawn as at 30 September 2020:
Drawn
Oct 2018
Oct 2018
Jul 2019
Oct 2018
Oct 2018
Oct 2018
Jul 2019
Dec 2019
Dec 2019
Currency
Amount in currency
Coupon
US$
GBP
US$
US$
GBP
US$
EUR
US$
US$
40,000,000
21,000,000
66,500,000
40,000,000
21,000,000
40,000,000
58,500,000
66,500,000
66,500,000
5.35%
3.85%
5.06%
5.50%
4.06%
5.60%
3.11%
5.25%
5.35%
Maturity
Oct 2025
Oct 2025
Jul 2026
Oct 2028
Oct 2028
Oct 2030
Jul 2031
Dec 2027
Dec 2029
USPP debt is shown net of unamortised arrangement fees totalling £1.5m as at 30 September 2020 (2019: £1.7m).
Covid Corporate Financing Facility (CCFF)
As at 30 September 2020, the Group had Commercial paper issuances through the CCFF of £125.0m. All issuances carry a below-market fixed
interest rate. The following paper was issued as at 30 September 2020:
Issued amount
£50,000,000
£50,000,000
£25,000,000
Value date
3 Apr 2020
29 Jun 2020
24 Sept 2020
Maturity
5 Oct 2020
19 Mar 2021
19 Mar 2021
Interest rate
0.69%
0.64%
0.64%
The benefit of the low interest rate is accounted for as a government grant under IAS 20 – Accounting for Government Grants and Disclosures.
The loan is recognised initially at fair value, discounted at market rates with the difference between the cash received and the fair value at
market rates being recognised in deferred income. The discount is unwound and the deferred income is released and netted together in
finance charges in the income statement over the duration of the loan. The net impact to the income statement was £nil during the year ended
30 September 2020. The carrying amount of the borrowings was £123.9m as at 30 September 2020.
21. Trade and other payables
Trade payables
Other payables*
Other taxation and social security
Accruals and deferred income
2020
£m
(92.1)
(97.7)
(23.0)
(190.2)
(403.0)
2019
£m
(146.9)
(201.3)
(23.2)
(184.6)
(556.0)
* Including non-current payables amounting to £4.0m (2019: £4.1m).
Other payables include capital creditors of £19.0m (2019: £57.7m), accrued holiday pay of £17.1m (2019: £19.8m), employee related costs of
£29.2m (2019: £64.6m) and sales tax of £7.9m (2019: £21.9m).
The value of contract liabilities was not material at the reporting date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 131
22. Lease liabilities
Beginning of the period
Lease liabilities on transition
Acquisitions
Additions
Interest charge in the period
Payment of lease liabilities
Remeasurement adjustments
Currency translation
At 30 September 2020
Of which are:
Current lease liabilities
Non-current lease liabilities
At 30 September 2020
Adoption of IFRS 16 ‘Leases’
2020
£m
–
(1,464.4)
(24.1)
(266.4)
(27.8)
200.4
227.2
5.8
(1,349.3)
(289.1)
(1,060.2)
(1,349.3)
As detailed in note 1, the Group adopted IFRS 16 ‘Leases’ with effect from 1 October 2019 using the modified retrospective approach to
transition. Note 2 provides a pro forma consolidated income statement to provide a meaningful comparison of the current and prior year.
Covid-19 practical expedient
The Group has applied Covid-19-Related Rent Concessions – Amendment to IFRS 16 issued on 28 May 2020. This practical expedient allows
the impact on lease liability of temporary rent reductions/waivers affecting rent payments due on or before June 2021, to be recognised in
the income statement in the period they are received, rather than as lease modifications, which would require the remeasurement of the lease
liability using a revised discount rate with a corresponding adjustment to the right-of-use asset.
The Group has applied this practical expedient to all Covid-19 rent reductions/waivers that meet the requirements of the amendment. This has
resulted in an exceptional item in the form of a credit in the income statement of £91.9m for the year ended 30 September 2020. This is also
reflected in the remeasurement adjustment line in the movement of the lease liability above.
£2.4m of fixed rent which was originally due in the year, has been deferred to a period beyond 30 September 2020 due to Covid-19.
Therefore these payments are still included in the lease liability balance at the end of the period.
Other information relating to leases
Note 29 presents a maturity analysis of the undiscounted payments due over the remaining lease term for these liabilities.
The total cash outflow for leases in the year was £350.5m, with £200.4m being the payment of lease liabilities. The remaining rent payments
are not capitalised under IFRS 16, with £38.6m relating to short-term leases and £111.5m to variable leases. There was an immaterial cash
outflow for low-value leases.
The Group received immaterial income from subleasing right-of-use assets during the year.
As at 30 September 2020, the Group had £13.0m of leases which had been committed to but which had not yet started. Such leases are not
included in the Group’s lease liabilities as at 30 September 2020.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 132
23. 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 £11.6m (2019: £14.1m) 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 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)
2020
£m
(6.8)
(11.8)
(18.6)
2019
£m
(7.7)
(11.9)
(19.6)
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 £1.1m in contributions to its defined benefit plans in 2021. As at 30 September 2020, the
weighted average duration of the defined benefit obligation was 15.9 years (2019: 16.6 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 participates in the Railways Pension Scheme (RPS) via the Rail
Gourmet UK Limited Shared Cost Section (RG section), which is a final salary scheme and provides benefits linked to salary at retirement or
earlier date of leaving service. The RG section covers permanent managerial, administrative and operational staff of Rail Gourmet UK Limited
and is closed to new entrants.
The RG scheme was subject to its last full actuarial valuation by a qualified actuary as at 31 December 2016. These results have been used by a
qualified independent actuary in the valuation of the scheme as at 30 September 2019 for the purposes of IAS 19 ‘Employee Benefits’.
In 2016, it was agreed with the Trustees of the RPS that, from 1 January 2016, the employing company contributions would be 18.3% of
pensionable pay (with members paying 12.2%). In addition, it was agreed that from 1 January 2016 the employing company would make
monthly lump sum contributions of £2,700. The most recent funding valuation of the RG scheme, as at 31 December 2016, showed a
funding level of 103.6%. Accordingly, the contributions that are being paid by the employing company are in respect of future service
of current members.
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 65:
Male pensioner now aged 65
Female pensioner now aged 65
Male pensioner now aged 45
Female pensioner now aged 45
2020
1.5%
3.1%
2.4%
3.0%
2019
1.9%
3.2%
2.0%
3.0%
2020
2019
20.9
22.9
23.5
26.8
20.3
22.2
23.3
25.5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 133
Sensitivity analysis
Changes at the reporting date to one of the relevant actuarial assumptions by 1.0%, holding other assumptions constant, would have affected
the defined benefit obligation by the amounts shown below:
As at 30 September 2020
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
6.9
(1.6)
(0.7)
(3.1)
(1.2)
(8.9)
1.5
–
4.0
1.2
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 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
Property investments are held at fair value, which has been determined by an independent valuer.
The fair value of the scheme assets and the present value of the scheme 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 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
2020
38.4%
17.9%
22.4%
36.6%
2.6%
86.3%
13.7%
2020
£m
39.8
(46.6)
(6.8)
2020
£m
(0.4)
(0.1)
(0.5)
2019
38.0%
83.6%
17.6%
40.6%
3.8%
85.7%
14.3%
2019
£m
40.1
(47.8)
(7.7)
2019
£m
(0.5)
–
(0.5)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 134
23. Post-employment benefit obligations continued
Changes in the present value of the scheme liabilities are as follows:
Scheme liabilities at 1 October 2019
Current service cost
Past service cost
Employee contributions
Interest on pension scheme liabilities
Remeasurements:
– arising from changes in demographic assumptions
– arising from changes in financial assumptions
– arising from changes in experience adjustments
Benefits paid
Currency adjustment
Scheme liabilities at 30 September 2020
Changes in the fair value of the scheme assets are as follows:
Scheme assets at 1 October 2019
Interest income
Employer contributions
Employee contributions
Remeasurement: return on plan assets excluding interest income
Benefits paid
Curtailment
Currency adjustment
Scheme assets at 30 September 2020
The following amounts have been recognised directly in other comprehensive income:
Remeasurements
2020
£m
(47.8)
(0.4)
–
–
(0.8)
(1.3)
(1.4)
3.0
1.6
0.5
2019
£m
(41.8)
(0.5)
(0.1)
(0.1)
(1.1)
–
(6.8)
0.2
2.0
0.4
(46.6)
(47.8)
2020
£m
40.1
0.7
0.4
–
0.9
(1.6)
(0.1)
(0.6)
39.8
2020
£m
1.2
2019
£m
39.1
1.1
0.4
0.1
1.9
(2.0)
(0.2)
(0.3)
40.1
2019
£m
(4.7)
(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 and have been updated for the period ended 30 September 2020 by a qualified independent actuary.
There have been no changes to scheme contributions to preserve equity in the year.
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
2020
2.2%
0.9%
0.8%
1.6%
2019
2.2%
0.9%
0.6%
1.6%
The discount rate used to calculate the defined benefit obligation at March 2020, for inclusion in the Group’s interim announcement, had
increased due to the uncertainties presented by Covid-19. At 30 September 2020 the discount rate has reduced to a level more comparable
with the prior year.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 135
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
2020
22.6
24.2
2019
22.5
24.1
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 2020
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
0.5
0.1
(0.7)
(0.5)
(0.4)
(0.6)
(0.1)
0.6
0.4
0.4
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 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 1 October 2019
Current service cost
Contributions
Interest on pension scheme liabilities
Remeasurements:
– arising from changes in financial assumptions
– arising from changes in experience adjustments
Acquisition
Currency adjustment
Deficit in the schemes at 30 September 2020
The following amounts have been charged in arriving at profit 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
2020
£m
(11.8)
2020
£m
(11.9)
(0.2)
0.5
(0.1)
0.2
(0.2)
–
(0.1)
(11.8)
2020
£m
(0.2)
(0.1)
(0.3)
2020
£m
–
2019
£m
(11.9)
2019
£m
(10.3)
–
0.6
(0.2)
(1.1)
(0.4)
(0.6)
0.1
(11.9)
2019
£m
–
(0.2)
(0.2)
2019
£m
(1.5)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 136
24. Provisions
At 30 September 2019
Transition to IFRS 16
At 1 October 2019
Created in the year
Unwind of discount
Utilised in the year
At 30 September 2020
Represented by:
Current
Non-current
Onerous lease
contracts
£m
Restoration
costs
£m
Restructuring
charges
£m
Site exit
costs
£m
(3.8)
3.8
–
–
–
–
–
–
–
–
(15.5)
–
(15.5)
(3.2)
(0.4)
3.1
(16.0)
(2.3)
(13.7)
(16.0)
–
–
–
(7.3)
–
–
(7.3)
(7.3)
–
(7.3)
–
–
–
(0.7)
–
–
(0.7)
(0.7)
–
(0.7)
Other
£m
(15.2)
–
(15.2)
(5.2)
–
10.7
(9.7)
(2.0)
(7.7)
(9.7)
Total
£m
(34.5)
3.8
(30.7)
(16.4)
(0.4)
13.8
(33.7)
(12.3)
(21.4)
(33.7)
Provision for onerous contracts are 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 ten years. Upon transition to IFRS 16, onerous contract provisions that related to
operating leases were derecognised and accounted for as part of the related right-of-use asset.
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 typically vary between one and
ten years in length.
Provisions for restructuring charges and site exit costs are estimated amounts due to be incurred as part of the Group’s response to Covid-19.
Further details are provided in note 7.
Other provisions include the estimated cost of an ongoing free travel provision provided to employees of Travellers Fare Limited, an historic
acquisition (now part of Select Service Partner UK Limited). The benefit is a lifetime benefit and has been calculated using life expectancies
and discounted to a present value using a suitable discount rate. The remaining amount represents probable expected costs in legal and
related matters and are not material individually.
25. Capital and reserves
Share capital and share premium
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
At 30 September 2019
Ordinary shares issued as part of the March equity placement
Ordinary shares issued as part of the June equity placement
Ordinary shares issued in relation to the Group’s share incentive plans
Effect of the share buyback (see below)
At 30 September 2020
Comprised of:
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
Number of
shares
Share
capital
£m
Share
premium
£m
444,852,520
86,499,459
3,475,388
3,032,564
(263,499)
4.8
1.0
–
–
–
461.2
0.7
10.8
–
–
537,596,432
5.8
472.7
537,596,432
5.8
472.7
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.
March equity placement
On 25 March 2020, the Company announced that it had raised new equity by agreeing to allot and issue 86,195,459 new ordinary shares (of
nominal value 1 17/200 pence each) to investors at 250 pence per share, by way of a share placing. Due to the size of the transaction, and the
short timeframe required as part of the Company’s response to the Covid-19 pandemic, the placing was effected by the Company’s placing
agent subscribing for shares in a subsidiary of the Company for an amount broadly equal to the proceeds of the placing, and then transferring
those shares to the Company in exchange for the allotment of the Company’s new shares to investors. The Company raised gross proceeds of
£215.5m and incurred issue costs and other related fees of £7.6m.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 137
The excess of the gross proceeds raised over the nominal value of the shares issued, and the issue costs and other related fees incurred from
the placing, are both recorded in the merger relief reserve within other reserves, in accordance with Section 612 of the Companies Act 2006.
Concurrent to the placing, certain Directors of the Company and members of the senior management team of the Group subscribed in cash
at 250 pence per share for an aggregate 304,000 new ordinary shares (of nominal value of 1 17/200 pence each), raising additional proceeds
of £0.8m and incurring £0.1m of issue costs. The excess of the proceeds raised over the nominal value of the shares issued and issues costs
incurred is recorded in share premium, in accordance with section 610 of the Companies Act 2006.
June equity placement
On 4 June 2020, the Company raised equity by agreeing to allot and issue 3,382,255 new ordinary shares (of nominal value 1 17/200 pence each)
to investors at 315.2 pence per share through a further share placing. Gross proceeds raised were £10.7m and issue costs and other related
fees of £0.1m were incurred.
Concurrent with the placing, certain Directors of the Company and members of the senior management team of the Group subscribed in cash
at 315.2 pence per share for an aggregate 31,739 new ordinary shares (of nominal value of 1 17/200 pence each). In addition, retail investors
subscribed in cash at 315.2 pence per share to a further, in aggregate, 61,394 new ordinary shares (of nominal value 1 17/200 pence per share),
raising in total gross proceeds of £0.2m.
The excess of the gross proceeds raised over the nominal value of the shares issued, and the issue costs and other related fees incurred from
the June placing, subscription and retail offer, are recorded in share premium, in accordance with section 610 of the Companies Act 2006.
Employee benefit trust
The SSP Group plc Share Incentive Plan was established in 2014, in connection with the Company‘s UK Share Incentive Plan (UK Trust). The SSP
Group plc Share Plans Trust was established in 2018, in connection with the Company‘s share option plans including the Performance Share
Plan (Share Plan Trust). Details of the Company‘s share plans are set out in the Directors‘ Remuneration Report on page 75 as part of the Annual
Report on Remuneration.
As at 30 September 2020, the Trustees of the UK Trust and the Share Plan Trust respectively held 30,037 (2019: 2,253) and 606,492
(2019: 177,850) ordinary shares of the Company with a combined value of £1.1m (2019: £1.1m).
Reserves
Details of reserves (other than retained earnings) are set out below:
At 1 October 2018
Net loss on hedge of net investments in foreign operations
Current tax credit on loss on hedge of net investment
in foreign operations
Decrease in non-controlling interest equity
Reclassification of obligation to purchase subsidiary
Other foreign exchange translation differences
Current tax charge on gains arising on exchange translation
differences
Effective portion of changes in fair value of cash flow
hedges
Cash flow hedges – reclassified to income statement
Tax credit on cash flow hedges
At 30 September 2019
Excess proceeds over share capital of the March 2020
equity placement, net of fees incurred
Net gain on hedge of net investments 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 income statement
Tax credit on cash flow hedges
At 30 September 2020
Capital
redemption
reserve
£m
1.2
–
–
–
–
–
–
–
–
–
1.2
–
–
–
–
–
–
–
Translation
reserve
£m
9.1
(4.3)
0.8
–
–
12.7
(0.9)
–
–
–
17.4
–
4.2
(15.9)
1.6
–
–
–
1.2
7.3
Cash flow
hedging
reserve
£m
(2.7)
–
–
–
–
–
–
(5.9)
3.8
0.3
(4.5)
–
–
–
–
(1.8)
1.6
0.5
(4.2)
Merger relief
reserve
£m
–
–
–
–
–
–
–
–
–
–
–
206.9
–
–
–
–
–
–
206.9
Other
reserve
£m
(19.4)
–
–
9.0
10.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
(11.8)
(4.3)
0.8
9.0
10.4
12.7
(0.9)
(5.9)
3.8
0.3
14.1
206.9
4.2
(15.9)
1.6
(1.8)
1.6
0.5
211.2
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 138
25. Capital and reserves continued
Capital redemption reserve
The capital redemption reserve relates to the cancellation of the deferred ordinary shares in 2015.
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.
Merger relief reserve
On 25 March 2020 the Company undertook an equity placement which was effected by the Company’s placing agent subscribing for shares in
a subsidiary of the Company for an amount broadly equal to the proceeds of the placing, and then transferring those shares to the Company in
exchange for the allotment of the Company’s new shares to investors.
The excess of the gross proceeds raised over the nominal value of the shares issued of £214.5m, and the issue costs and other related
fees incurred from the placing of £7.6m, are both netted and recorded in the merger relief reserve, in accordance with Section 612 of the
Companies Act 2006.
Other reserve
The other reserve consists of the initial recognition of a financial liability to purchase a further 16% of TFS, in order to take the Group’s
shareholding to 49%, and the impact when the obligation was settled in April 2019. This resulted in the majority of the decrease to other
reserves of £8.3m with the other side going to non-controlling interests. The remaining balance was then reclassified to retained earnings.
Non-controlling interests
At 1 October 2019
Share of (loss)/profit for the year
Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Purchase of non-controlling interest in subsidiary
Purchase of additional 16% stake in TFS
Other
Currency adjustment
At 30 September 2020
2020
£m
87.6
(22.7)
(20.4)
30.5
(0.7)
–
3.0
(5.4)
71.9
2019
£m
81.8
26.6
(24.7)
9.0
–
(8.3)
(0.1)
3.3
87.6
The increase in capital contributions in the year has been detailed in note 18.
Prior to 6 February 2020 the Group held a 50% interest in Rail Gourmet Togservice Norge AS (RGT), a subsidiary of the Group. On 6 February
2020, the Group purchased the 50% interest in RGT it did not own, taking its ownership to 100%. The consideration paid for the additional
50% interest was NOK60m (£5.0m). The difference between the cash consideration paid and RGT’s closing non-controlling interest balance of
£0.7m is recognised in retained earnings.
The Group has two subsidiaries with a material non-controlling interest, Mumbai Airport Lounge Services Private Ltd (‘MALS’) and Travel Food
Services Chennai Private Ltd (‘Chennai’). The principal place of business for both subsidiaries is India. See note 44 on pages 157 and 160 for
further details of registered office and ownership percentages of each of these companies.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 139
Summarised financial information, before inter-company eliminations, is as follows:
Income statement
Revenue
(Loss)/profit after tax
NCI share of (loss)/profit
Total comprehensive (loss)/income
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
NCI share of equity
Cash flow
MALS
2020
£m
MALS
2019
£m
Chennai
2020
£m
Chennai
2019
£m
11.8
(0.7)
(0.5)
(2.3)
35.1
28.4
(19.4)
(26.8)
13.5
22.9
4.1
3.5
5.5
4.7
23.1
(6.7)
(0.1)
16.3
11.5
1.6
0.8
0.6
11.1
27.9
(13.4)
(8.0)
9.0
22.5
6.5
3.9
7.4
5.0
25.2
(12.2)
(1.2)
8.6
Net increase/(decrease) in cash and cash equivalents
8.7
(0.8)
4.4
4.3
26. Share-based payments
The Group has granted equity-settled share awards to its employees under the Performance Share Plan (PSP), the UK Share Incentive Plan
(UK SIP) and the International Share Incentive Plan (International SIP).
Details of the terms and conditions of each share-based payment plan and the Group’s TSR comparator group are provided on pages 73
and 75 respectively, as part of the Annual Report on Remuneration.
Performance Share Plan
The PSP awards are based on two independent performance conditions, which 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 £2.0m in 2020 (2019: £9.0m) in respect of the PSP.
Outstanding at 1 October 2019
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at 30 September 20201
Exercisable at 30 September 2020
Weighted average remaining contracted life (years)
Weighted average fair value of awards granted (£)
1 This includes the dividend equivalent shares which have been awarded in line with the terms of the rules of the PSP.
The exercise price for the PSP awards is £nil.
2020
Number of
shares
2019
Number of
shares
6,341,808
8,029,631
2,204,924
2,363,443
(2,498,277)
(3,041,440)
(116,641)
(1,009,826)
5,931,814
6,341,808
540,167
193,461
1.3
6.62
1.1
5.37
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 140
26. Share-based payments continued
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
Risk free rate
Expected volatility
Expected life (years)
Vesting period (years)
2020
6.52
–
0.6%
23.1%
3.0
3.0
2019
6.75
–
0.9%
23.6%
3.0
3.0
Expected correlation between the share price of TSR comparators
28.2%
24.5%
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
The UK Share Incentive Plan (‘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 a three-year period. The UK SIP has been in place since December 2014.
For each 12-month plan period from January 2016 to December 2020, the actual entitlement to matching shares was fixed at one matching
share for every two partnership shares purchased. For the period from January 2015 to December 2015, the actual entitlement was fixed at
one matching share for every one partnership share purchased. The Group incurred a charge of £0.1m in respect of the matching element of
the UK SIP in 2020 (2019: £0.1m).
International Share Incentive Plan
The International Share Incentive Plan (‘ISIP’) 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 a three-year period. The ISIP has been in place since September 2015.
For each 12-month plan period from November 2016 to October 2020, the actual entitlement to matching shares was fixed at one matching
share for every two partnership shares purchased. For the period from November 2015 to October 2016, the entitlement was fixed at one
matching share for every one partnership share purchased. The Group did not incur a charge in respect of the matching element of the ISIP in
2020 (2019: £0.1m).
27. Cash flow from operations
(Loss)/profit for the year
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation
Profit on disposal of leases
Non-cash change in lease liabilities
Impairments
Share-based payments
Finance income
Finance expense
Share of loss/(profit) of associates
Taxation
Decrease/(increase) in trade and other receivables
Decrease/(increase) in inventories
(Decrease)/increase in trade and other payables (including provisions)
Cash flow from operations
Note
12
14
13
7
26
9
9
15
10
2020
IFRS 16
£m
(397.7)
111.0
305.3
10.6
(0.3)
(91.9)
109.6
2.0
(2.5)
62.0
2.4
(28.1)
82.4
77.2
15.5
(161.7)
13.4
2019
IAS 17
£m
153.5
98.3
–
8.9
–
–
–
8.2
(2.3)
28.4
(4.1)
43.7
334.6
(30.4)
(3.6)
37.7
338.3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020
141
During the year the Group benefited from government support packages related to Covid-19, whereby tax payments of £10.4m were deferred
to aid cash flow.
The cash inflow in trade and other receivables during the year is higher than the decrease in the trade and other receivables in the consolidated
balance sheet from 2019 to 2020. This is primarily due to the recognition of £27.3m capital contribution receivables from non-controlling
interest equity shareholders towards the end of the 2020 financial year, of which cash had not been collected as at 30 September 2020.
The other side to this adjustment is recognised in non-controlling interests in equity. Furthermore, transition to the IFRS 16 opening balance
sheet led to a reduction of receivables of £11.0m. Due to the Group using the modified retrospective approach to transition, the prior periods
have not been restated for this opening balance sheet transition.
28. Reconciliation of net cash flow to movement in net debt
Gross debt
At 1 October 2018
Transition to IFRS 9 (non-cash movement)
Net increase in cash and cash equivalents
Cash inflow from drawdown of revolving credit facility
Cash outflow from other changes in debt
Cash inflow from drawing of USPP notes
Payment of lease liabilities and other loans
Cash inflow from investment in other financial assets
Currency translation gains/(losses)
Other non-cash movements
At 1 October 2019
Transition to IFRS 16 (non-cash movement)
Net decrease in cash and cash equivalents
Cash outflow from repayment of revolving credit
facility
Cash inflow from other changes in debt
Cash inflow from receipt of USPP note
Cash inflow from drawing of CCFF
Cash outflow from payment of lease liabilities
New lease liabilities and amendments
Currency translation (losses)/gains
Other non-cash movements
At 30 September 2020
Cash and cash
equivalents
£m
147.8
–
81.8
–
–
–
–
–
3.7
–
233.3
–
(43.1)
–
–
–
–
–
–
(5.2)
–
Bank and
other
borrowings
£m
(480.8)
7.7
–
(27.5)
32.0
–
2.7
(5.1)
1.6
(2.2)
US Private
Placement
notes
£m
–
–
–
–
–
(239.8)
–
–
(5.9)
1.8
Leases
£m
Total gross
debt
£m
Net debt
£m
(1.7)
(482.5)
(334.7)
–
–
–
–
–
0.5
–
–
–
7.7
–
(27.5)
32.0
7.7
81.8
(27.5)
32.0
(239.8)
(239.8)
3.2
(5.1)
(4.3)
(0.4)
3.2
(5.1)
(0.6)
(0.4)
(471.6)
(243.9)
(1.2)
(716.7)
(483.4)
–
–
97.5
(32.1)
–
(125.0)
–
–
(1.7)
(2.3)
–
–
–
–
(101.8)
–
–
–
4.9
(0.3)
(1,464.4)
(1,464.4)
(1,464.4)
–
–
–
–
–
200.4
(89.9)
5.8
–
–
97.5
(32.1)
(101.8)
(125.0)
200.4
(89.9)
9.0
(2.6)
(43.1)
97.5
(32.1)
(101.8)
(125.0)
200.4
(89.9)
3.8
(2.6)
185.0
(535.2)
(341.1)
(1,349.3)
(2,225.6)
(2,040.6)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 142
29. Financial instruments
(a) Fair values of financial assets and liabilities
All financial assets and financial liabilities are carried at amortised cost, except for derivatives which are held at fair value through the
income statement.
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:
Financial assets measured at amortised cost
Cash and cash equivalents
Trade and other receivables
Total financial assets measured at amortised cost
Non-derivative financial liabilities measured at amortised cost
Bank loans
Covid Corporate Financing Facility (CCFF)
US Private Placement notes
Lease liabilities
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
2020
£m
185.0
155.1
340.1
(411.3)
(123.9)
(341.1)
Fair
value
2020
£m
185.0
155.1
340.1
(417.8)
(125.0)
(342.6)
Carrying
amount
2019
£m
233.3
184.5
417.8
Fair
value
2019
£m
233.3
184.5
417.8
(471.6)
(481.5)
–
–
(243.9)
(245.6)
(1,349.3)
(1,349.3)
–
–
–
(1.2)
–
(1.2)
(380.0)
(380.0)
(532.8)
(532.8)
(2,605.6)
(2,614.7)
(1,249.5)
(1,261.1)
(5.1)
(5.1)
(5.1)
(5.1)
(4.6)
(4.6)
(4.6)
(4.6)
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.
Lease liabilities
Fair value is based on the present value of the future lease payments, discounted at the rate implicit in the lease or, where this is not known, the
incremental borrowing rate.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020
143
(b) Credit risk
Concentrations of credit risk with respect to trade receivables are limited, due to the Group’s customer base being large and diverse, with no
single debtor representing more than 6.4% (2019: 3.9%) of the total balance. The ageing of trade receivables at the balance sheet date was
as follows:
Total trade receivables
Less: loss allowance
Of which:
Not yet due
Overdue, between 0 and 6 months
Overdue, more than 6 months
Loss allowance
The movement in the loss allowance in respect of trade receivables during the year was as follows:
At 1 October 2019
Charged in the year
Reversed in the year
Utilised in the year
Currency adjustment
At 30 September 2020
2020
£m
28.3
(9.5)
18.8
11.0
7.7
9.6
(9.5)
18.8
2020
£m
(6.2)
(7.9)
0.6
3.8
0.2
(9.5)
2019
£m
72.3
(6.2)
66.1
38.6
24.2
9.5
(6.2)
66.1
2019
£m
(3.9)
(2.6)
–
0.6
(0.3)
(6.2)
Expected credit losses
The Group applies the simplified approach and records lifetime expected credit losses for trade receivables. Loss allowances have been
recognised for trade receivables that have been identified as credit impaired. In addition, due to the financial uncertainty arising from
Covid-19, expected credit loss rates have been increased for all other trade receivables. The Group has assessed customer balances in relation
to their operating sector (such as air or rail), whether the customer has access to some form of government support scheme, receivable ageing
and other indicators of risk to recoverability.
Receivables excluding trade receivables
Expected credit losses for other receivables were negligible at 30 September 2019. Due to the uncertainties caused by Covid-19, the Group
has recorded expected credit losses of £1.5m in relation to other receivables at 30 September 2020.
(c) 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
2020
£m
58.1
67.4
11.3
6.6
39.0
182.4
2.6
185.0
2019
£m
131.4
17.4
14.5
9.9
24.7
197.9
35.4
233.3
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
144
29. Financial instruments continued
(d) 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.
In response to the Covid-19 pandemic, the Group implemented a set of measures to conserve cash and create approximately £750m of
liquidity by April 2020 through new equity and debt. These measures included: (i) completion of equity placings and share subscriptions in
March 2020, which raised £208.6m of net cash proceeds, and a subsequent placing, share subscription and retail offer in June 2020 which
raised additional net cash proceeds of £10.8m and allowed investors to reinvest their 2019 dividend payment into new shares and retain
cash in the business; (ii) secured access to the UK Government’s CCFF programme which gave access to £300m of liquidity in March 2020; (iii)
secured waivers of the Group’s existing covenant tests until September 2021; (iv) suspension of the Group’s share buyback programme to
conserve cash; and (v) the foregoing of interim dividends.
On 29 May 2020, in order to help the Group’s liquidity position, a non-substantial modification to the bank facility debt occurred where
the requirement for the 2020 July annual mandatory payment of 11.7% of Facility A borrowings was waived to the facility’s maturity date.
Further detail is provided in note 20.
At the end of the reporting period, the Group had approximately £520m of available liquidity, including cash of £185m and committed undrawn
revolving credit facilities of £150m, as well as a further £175m available to be drawn down under the CCFF.
The following are the remaining contractual maturities of financial liabilities at the reporting date.
Non-derivative financial liabilities
Bank loans
Covid Corporate Financing Facility (CCFF)
US Private Placement notes
Lease liabilities
Trade and other payables
Derivative financial liabilities
Interest rate swaps used for hedging
Non-derivative financial liabilities
Bank loans
Finance lease liabilities
US Private Placement notes
Trade and other payables
Derivative financial liabilities
Interest rate swaps used for hedging
Carrying
amount
£m
Contractual
cash flows
£m
(411.3)
(123.9)
(341.1)
(1,349.3)
(380.0)
(435.2)
(125.0)
(454.6)
(1,429.3)
(380.0)
(5.1)
(4.6)
(2,610.7)
(2,828.7)
Carrying
amount
£m
Contractual
cash flows
£m
(471.6)
(1.2)
(243.9)
(532.8)
(530.5)
(1.4)
(366.5)
(532.8)
(4.6)
(4.6)
(1,254.1)
(1,435.8)
1 year
or less
£m
(42.6)
(125.0)
(16.4)
(294.3)
(376.0)
(2.4)
(856.7)
1 year
or less
£m
(136.2)
(0.8)
97.0
(529.7)
(1.4)
(571.1)
2020
1 to
<2 years
£m
(362.9)
–
(14.3)
(257.8)
(0.8)
(2.1)
(637.9)
2019
1 to
<2 years
£m
(37.9)
(0.3)
(13.6)
(3.1)
(1.7)
(56.6)
2 to
<5 years
£m
>5 years
£m
(20.2)
–
(39.1)
(594.8)
(0.1)
(9.5)
–
(384.7)
(282.4)
(3.1)
–
–
(654.2)
(679.7)
2 to
<5 years
£m
(356.4)
(0.3)
(40.7)
–
(1.5)
(398.9)
>5 years
£m
–
(409.2)
–
–
(409.2)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 145
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 2020 was as follows:
Cash at bank and in hand
Sterling
Other currencies
2020
£m
21.5
163.5
185.0
2019
£m
86.5
146.8
233.3
The Group uses currency denominated borrowings to hedge the exposure of a portion of its net investment in overseas operations (with non-
Sterling functional currency) against changes in value due to changes in foreign exchange rates. An economic relationship has been identified
as both the net investment in overseas operations, and the currency denominated borrowings used as the related hedging instrument, are
subject to currency risk, and changes in foreign exchange rates would cause their values to move in opposite directions .
As at 30 September 2020, the fair value of bank loans and US Private Placement debt used as hedging instruments was £545.3m
(2019: £447.5m). Of this, £213.7m was in respect of Euro exposure, £274.9m in respect of the US Dollar exposure, £32.2m in respect of Norwegian
Krone exposure and £24.5m for Swedish Krona exposure. This increased during the year due to the issuance of US Private Placement debt where
the equivalent of £101.8m was drawn in non-Sterling currencies (see note 20 for details).
There were no reclassifications from foreign currency translation reserve and net investment hedge ineffectiveness was £nil during the year.
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 2020, after taking into account interest rate swaps and
before adjustments for unamortised bank fees of £3.6m (2019: £5.0m) and government grants of £4.3m (2019: £nil) received in the form of
beneficial interest rates, was as follows:
Currency
Sterling
Euro
US Dollar
Swedish Krona
Norwegian Krone
Swiss Franc
Indian Rupee
Floating-rate liabilities
Fixed-rate liabilities
Total
2020
£m
(43.2)
(60.1)
(8.5)
(7.7)
(10.1)
–
(1.6)
2019
£m
(132.1)
(39.2)
(7.2)
(5.9)
(8.7)
–
(1.7)
2020
£m
(262.2)
(186.3)
(266.3)
(16.8)
(22.2)
(0.4)
–
2019
£m
(145.8)
(169.6)
(173.3)
(17.6)
(26.1)
–
–
2020
£m
(305.4)
(246.4)
(274.8)
(24.5)
(32.3)
(0.4)
(1.6)
2019
£m
(277.9)
(208.8)
(180.5)
(23.5)
(34.8)
–
(1.7)
(131.2)
(194.8)
(754.2)
(532.4)
(885.4)
(727.2)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 146
29. Financial instruments continued
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. An economic relationship between the interest
rate swaps and floating-rate liabilities has been identified, as both are subject to changes in interest rates that would cause their values to
move in opposite directions. 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 £5.1m as at 30 September 2020 (2019: £4.6m).
In 2020, a charge of £1.8m (2019: charge of £5.9m) 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 2020, a credit of £1.6m (2019: credit of £3.8m) 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 9).
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 2020, 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
2020
£m
2.2
(2.3)
2019
£m
3.8
(3.8)
(e) 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 25), retained earnings, and net debt (see
below). The funding requirements of the Group are met by a mix of long-term borrowings, medium-term borrowings, short-term borrowings
(under its RCF) and available cash.
In May 2020 the Group secured an arrangement from its lending group of banks and US Private Placement noteholders to waive existing
financial covenants covering the two testing periods to 30 September 2020 and 31 March 2021. It has been agreed that these covenant tests
will be replaced by between now and 30 September 2021 by two new covenant tests, each tested monthly, with the first of these based on
SSP demonstrating a minimum level of liquidity and the second based on the Group not exceeding a maximum level of debt.
Subsequent to the year end, the Group also agreed further covenant waivers covering the twelve months to September 2021. As was the
case with the covenant amendments agreed in May, the existing financial covenant testing leverage has been waived, to be replaced between
September 2021 and March 2022 by the two new covenants testing minimum liquidity and maximum net debt. An additional new covenant will
also apply during this six month period, testing minimum EBITDA thresholds for the six months ending 30 September 2021 and 31 December
2021. Modified interest cover tests (calculated on a last six months basis) will also be applied at these two testing dates.
As mentioned in the review of liquidity risk, the Group implemented a number of actions in response to the Covid-19 pandemic. These included
equity placings in March and June in order to raise cash proceeds, while also allowing investors to reinvest their 2019 dividend payment into
new shares to retain cash in the business. The Group’s share buyback scheme was suspended, and no dividend payment has been proposed for
the 2020 financial year.
30. 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
2020
£m
47.3
2019
£m
62.5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 147
31. Related parties
Related party relationships exist with the Group‘s subsidiaries, associates (note 15), key management personnel, pension schemes (note 23)
and employee benefit trust (note 25).
Subsidiaries
Transactions between the Company and its subsidiaries, and transactions between subsidiaries, have been eliminated on consolidation
and are not disclosed in this note. Where the Group does not own 100% of its subsidiary, significant transactions with the other investors in
the non-wholly owned subsidiary (‘investor’), other than those listed in note 25, are disclosed within this note (in the table below). Sales and
purchases with related parties are made at normal market prices.
Associates
Significant transactions with associated undertakings during the year, other than those included in note 15, are included in the table below.
Related party transactions
Purchases from related parties1
Management fee income
Other income
Other expenses2
Amounts owed by related parties at the end of the year
Amounts owed to related parties at the end of the year
Operating lease commitments
2020
£m
(1.7)
2.2
1.1
(11.2)
3.6
(6.1)
–
2019
£m
(3.0)
2.6
1.6
(14.2)
10.1
–
(18.5)
1 The majority of purchases from related parties relates to purchases from The Minor Food Group PCL (£0.9m; 2019: £0.9m) which owns 51% of Select
Service Partner Co. Limited.
2 The majority of other expenses relate to £11.2m rent from Midway Partnership LLC (2019: £8.9m concession fees with various parties).
Bank guarantees
The Group has provided a number of guarantees to third parties and has given guarantees to partners of consolidated non-wholly owned
subsidiaries in respect of obligations of its non-wholly owned subsidiaries, relating to, for example, concession agreements, franchise
agreements and financing facilities. In addition, certain subsidiaries benefit from guarantees provided by the Group‘s non-controlling interest
partners to similar third parties (in respect of obligations of the subsidiaries). These guarantees are consistent with those provided in the
normal course of business in respect of the Group‘s wholly owned subsidiaries. At 30 September 2020 the value of these guarantees was
£119.0m. The Group does not expect these guarantees to be called on and as such no liability has been recognised in the financial statements.
Remuneration of key management personnel
The remuneration of key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS
24 ‘Related Party Disclosures‘. The Group considers key management personnel to be the Chief Executive Officer, Chief Financial Officer,
Non- Executive Directors and the Group Executive Committee.
Short-term employee benefits
Post-employment benefits
Share-based payments
2020
£m
(5.0)
(0.6)
(0.8)
(6.4)
2019
£m
(6.5)
(0.4)
(1.5)
(8.4)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
148
32. Business combinations
Business combinations 2019/2020
During the year ended 30 September 2020, the Group purchased 100% of the share capital of two companies and the trade and assets
comprising part of the business of two other companies for a total consideration, net of cash and cash equivalents acquired, of £21.5m.
These transactions were deemed to be business combinations within the scope of IFRS 3 ‘Business Combinations’.
A summary of the details of these acquisitions are shown in the table below:
Business/Company
Land’s End Pasty
Red Rock’s F&B business in Melbourne airport
WA Airport Hospitality Pty Ltd
Station Food GmbH
Acquisition method
Sector
Country
Acquisition date
Trade and assets
Trade and assets
Share capital
Share capital
Rail
Air
Air
Rail
UK
1 October 2019
Australia
23 December 2019
Australia
Germany
23 January 2020
29 February 2020
The acquisitions are in line with the Group’s strategy to grow its geographic footprint and expand its operations in the UK, Australia
and Germany.
These acquisitions are individually not material but are material in aggregate.
A summary of the aggregate effect of acquisitions completed in 2020 are shown below:
Property, plant and equipment
Right-of-use assets
Inventories
Trade and other receivables
Cash
Trade and other payables
Lease liabilities
Fair value of the assets acquired
Goodwill
Cash consideration
Reconciliation of consideration to the consolidated cash flow statement:
Cash consideration
Less: cash and cash equivalents acquired
Cash consideration, net of cash and cash equivalents acquired
£m
9.8
24.1
0.3
0.6
1.0
(2.1)
(24.1)
9.6
12.9
22.5
22.5
(1.0)
21.5
The Board believes that the excess consideration paid over fair value of the net identifiable assets is best considered as goodwill
on acquisition, representing the operating synergies, derived from adding scale and other benefits to our local existing operations.
Goodwill recognised is not deductible for tax purposes.
For the year ended 30 September 2020, the acquisitions in aggregate contributed £6.6m to revenue and £2.7m to operating losses from the
dates of acquisition. If the acquisitions had occurred at the beginning of the year, their contribution to revenue and operating loss would have
been £16.0m and £3.3m respectively.
Total transaction costs and expenses incurred of £0.6m have been included in other overheads within the income statement and primarily
related to professional fees for reviews and due diligence of these deals.
Business combinations 2018/2019
The Group made no material, individual or in aggregate, business combinations during the year ended 30 September 2019.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDSSP Group plc Annual Report and Accounts 2020 149
33. Post balance sheet event
In December 2020, SSP Financing Limited secured an agreement from its lending group of banks and US private placement note holders to
waive the net debt cover financial covenant for the testing period covering the twelve months to 30 September 2021. Please refer to going
concern section on page 106 for further details.
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 150
COMPANY BALANCE SHEET
As at 30 September 2020
Fixed assets
Investments
Current assets
Debtors due within one year
Liabilities falling due within one year
Creditors
Net current (liabilities)/assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Treasury shares
Capital redemption reserve
Merger relief reserve
Profit and loss account
Total equity shareholders‘ funds
Notes
35
36
37
38
38
38
38
38
38
2020
£m
947.8
947.8
2019
£m
946.1
946.1
98.5
0.3
(10.1)
88.4
1,036.2
5.8
472.7
(1.7)
1.2
206.9
351.3
1,036.2
(90.7)
(90.4)
855.7
4.8
461.2
–
1.2
–
388.5
855.7
These financial statements were approved by the Board of Directors on 16 December 2020 and were signed on its behalf by:
Jonathan Davies
Chief Financial Officer
Registered number: 5735966
SSP Group plc Annual Report and Accounts 2020
151
COMPANY STATEMENT OF CHANGES IN EQUITY
As at 30 September 2020
At 1 October 2018
Profit for the year
Issue of ordinary shares under share
option schemes
Share-based payments
At 30 September 2019
Loss for the year
Equity issue
Share buyback
Dividends paid to equity shareholders
(note 38)
Share-based payments
At 30 September 2020
Share
capital
£m
4.8
Share
premium
£m
461.2
–
–
–
4.8
–
1.0
–
–
–
–
–
–
461.2
–
11.5
–
–
–
Capital
redemption
reserve
£m
Merger
relief
reserve
£m
Treasury
shares
£m
Profit and
loss account
£m
1.2
–
–
–
1.2
–
–
–
–
–
–
–
–
–
–
–
206.9
–
–
–
–
–
–
–
–
–
–
(1.7)
–
–
Total
equity
£m
811.7
236.6
(200.8)
8.2
855.7
(12.4)
219.4
(1.7)
(26.8)
2.0
1,036.2
344.5
236.6
(200.8)
8.2
388.5
(12.4)
–
–
(26.8)
2.0
351.3
5.8
472.7
1.2
206.9
(1.7)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 152
NOTES TO COMPANY FINANCIAL STATEMENTS
34. Accounting policies
SSP Group plc (the Company) is a company incorporated in the UK.
These statements 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
These financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(FRS 101) under the historical cost accounting rules.
As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions:
• the cash flow statement and related notes;
• disclosures in respect of transactions with wholly owned subsidiaries;
• disclosures in respect of capital management;
• disclosures required by IFRS 13 ‘Fair Value Measurement‘ and IFRS 7 ‘Financial Instrument Disclosures‘; and
• the effects of new but not yet adopted IFRSs.
Where relevant, equivalent disclosures have been given in the consolidated financial statements. The principal accounting policies adopted
are the same as those set out in note 1 to the consolidated financial statements except as noted below. 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 £0.1m unless
otherwise stated.
Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own income statement. The loss
for the financial year (2019: profit) is disclosed in note 38 to these accounts. The Company has no other recognised gains or losses in the
current or preceding year and, therefore, no statement of comprehensive income is presented.
Going concern
SSP Group plc is the ultimate parent company of the SSP Group. The Board has reviewed the Group’s trading forecasts, incorporating the
impact on SSP of Covid-19, as part of the Group’s adoption of the going concern basis, in which context the Directors have reviewed cash flow
forecasts prepared for a period of 16 months from the date of approval of these financial statements, with a number of different scenarios
considered. Having carefully reviewed these forecasts, the Directors have concluded that it is appropriate to adopt the going concern basis of
accounting in preparing these financial statements for the reasons set out below. See pages 42 and 43 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
income statement.
Taxation
The charge for taxation is based on the results for the year and takes into account taxation deferred because of temporary 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 temporary
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 101.
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.
SSP Group plc Annual Report and Accounts 2020 153
35. Investments in subsidiary undertakings
Cost
At 1 October 2019
Additions
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
Shares in Group
undertaking
£m
946.1
1.7
947.8
947.8
946.1
Impairment
The Directors have assessed whether the Company‘s fixed asset investments require impairment under the accounting principles set out in
FRS 101. In making this assessment, the relationship between the Company’s market capitalisation and the carrying value of its investments
has been considered, in addition to the disruption attributable to the Covid-19 pandemic and the effect of this on future trading.
The assessment did not result in any impairment in 2020 (2019: £nil).
36. Debtors
Due within one year
Amount receivable from Group undertakings
Other debtors
Deferred taxation
37. Creditors
Due within one year
Amounts payable to Group undertakings
Accruals and deferred income
Trade and other payables
Other taxation and social security
2020
£m
97.9
0.4
0.2
98.5
2020
£m
(2.6)
(3.9)
(0.6)
(3.0)
(10.1)
2019
£m
–
0.1
0.2
0.3
2019
£m
(84.4)
(2.6)
(0.8)
(2.9)
(90.7)
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements
154
NOTES TO COMPANY FINANCIAL STATEMENTS CONTINUED
38. Capital and reserves
Share capital and share premium
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
At 30 September 2019
Ordinary shares issued as part of the March equity placement
Ordinary shares issued as part of the June equity placement
Ordinary shares issued in relation to the Group’s share incentive plans
Effect of the share buyback
At 30 September 2020
Comprised of:
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
Reserves
At 1 October 2018
Profit for the year
Dividends paid to equity shareholders
Share-based payments
At 30 September 2019
Loss for the year
Excess of proceeds over share capital of the March 2020 equity
placement, net of fees incurred
Effect of the share buyback
Dividends paid to equity shareholders
Share-based payments
At 30 September 2020
Number of
shares
Share
capital
£m
Share
premium
£m
444,852,520
86,499,459
3,475,388
3,032,564
(263,499)
4.8
1.0
–
–
–
461.2
0.8
10.7
–
–
537,596,432
5.8
472.7
537,596,432
5.8
472.7
Treasury
shares
£m
Capital
redemption
reserve
£m
Merger
relief
reserve
£m
Profit and
loss account
£m
–
–
–
–
–
–
–
(1.7)
–
–
(1.7)
1.2
–
–
–
1.2
–
–
–
–
–
–
–
–
–
–
–
206.9
–
–
–
1.2
206.9
344.5
236.6
(200.8)
8.2
388.5
(12.4)
–
–
(26.8)
2.0
351.3
Total
£m
345.7
236.6
(200.8)
8.2
389.7
(12.4)
206.9
(1.7)
(26.8)
2.0
557.7
Capital redemption reserve
The capital redemption reserve relates to the cancellation of the deferred ordinary shares in 2015.
Merger relief reserve
On 25 March 2020 the Company undertook an equity placement which was effected by the Company’s placing agent subscribing for shares in
a subsidiary of the Company for an amount broadly equal to the proceeds of the placing, and then transferring those shares to the Company in
exchange for the allotment of the Company’s new shares to investors.
The excess of the gross proceeds raised over the nominal value of the shares issued of £215.5m, and the issue costs and other related
fees incurred from the placing of £7.6m, are both netted and recorded in the merger relief reserve, in accordance with Section 612 of the
Companies Act 2006.
Profit and loss account
The Company‘s loss for the financial year was £12.4m (2019: profit of £236.6m).
Dividends
Interim dividend paid in the year of £nil per share (2019: 5.8p)
Special dividend paid in the year of £nil per share (2019: 32.1p)
Prior year final dividend of 6.0p per share paid in the year (2019: 5.4p)
2020
£m
–
–
(26.8)
(26.8)
2019
£m
(25.8)
(149.8)
(25.2)
(200.8)
The prior year final dividend of 6.0p per share was approved at the Group’s Annual General Meeting in February 2020 and was paid in June
2020 for a total payment of £26.8m. No dividend for the 2020 financial year is proposed.
SSP Group plc Annual Report and Accounts 2020
155
39. 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 Annual Report
on Remuneration on pages 73 and 75.
PSP
Outstanding at 1 October 2019
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at 30 September 2020
Exercisable at 30 September 2020
Weighted average remaining contracted life (years)
Weighted average fair value of awards granted in the year (£)
Expense recognised for the year (£m)
The exercise price for the PSP is £nil.
Information on awards granted in the year can be found in note 26 to the Group accounts.
UK SIP
See note 26 to the Group accounts for information on awards granted under the UK SIP in 2020.
2020
Number of
shares
2019
Number of
shares
1,605,885
2,516,276
582,880
450,418
(729,984)
(990,897)
(15,093)
(369,912)
1,443,688
1,605,885
157,643
61,584
1.3
5.81
0.4
0.9
5.12
2.0
40. Directors‘ remuneration
The remuneration of the Directors of the Company is disclosed in note 31 to the Group accounts and in the Annual Report on Remuneration on
on pages 68 and 72. Details of PSP awards made to Executive Directors are given on page 70.
41. Related parties
The Company has identified the Directors of the Company and the Group Executive Committee as related parties for the purpose of FRS 101.
Details of the relevant relationships with these related parties are disclosed in note 31 to the Group accounts.
The Company has no transactions with or amounts owed to or from subsidiary undertakings that are not 100% owned either directly by the
Company or by its subsidiaries.
42. Contingent liabilities
The Company is a member of a VAT group and consequently is jointly liable for the VAT group‘s liability. At 30 September 2020 the VAT group
was in a repayment position, therefore the Company‘s contingent liability was £nil (2019: £4.4m).
In addition, the Company is a guarantor for the Group’s bank facilities, CCFF and US Private Placement borrowings. The borrowings under the
facilities at 30 September 2020 were £885.4m (2019: £725.5m).
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.
43. Other information
The fee for the audit of the Company‘s annual financial statements was £0.4m (2019: £0.2m).
The average number of persons employed by the Company (including Directors) during the year was 68 (2019: 60).
Total staff costs (excluding charges for share-based payments) were £8.9m (2019: £14.4m).
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceStrategic ReportFinancial statements 156
NOTES TO COMPANY FINANCIAL STATEMENTS CONTINUED
44. 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.
Group companies included in the consolidation are those companies controlled by the Group. Control exists when the Group has the power to
direct the activities of an entity so as to affect the return on investment. In certain cases an entity may be consolidated when the percentage of
shares held may be less than 50% as the Group has the power to control such activities.
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Name
China
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Part A – Subsidiaries
Name
Subsidiaries (all of which are included
in the Group consolidation):
Australia
SSP Australia Airport Concessions Pty Ltd
Level 3, 69 Christie Street, St Leonards, NSW 2065,
Australia
Holding
company
SSP Australia Airport F&B Pty Ltd
Level 3, 69 Christie Street, St Leonards, NSW 2065,
Australia
SSP Australia Catering Pty Limited3
Level 3, 69 Christie Street, St Leonards, NSW 2065,
Australia
WA Airport Hospitality Pty Limited
Level 3, 69 Christie Street, St Leonards, NSW 2065,
Australia
Austria
SSP Österreich GmbH
Office Park 3/Top 144, 1300 Wien-Flughafen, Austria
Bahrain
SSP Bahrain WLL
Falcon Tower, Office 614. Building No 60, Road 1701,
Block 317, Diplomatic Area, Manama,
Kingdom of Bahrain
Belgium
Rail Gourmet Belgium NV
Prins Bisschopssingel, 36-3 B-3500, Belgium
Rail Gourmet Services Belgium NV
Prins Bisschopssingel, 36-3 B-3500, Belgium
Inactive
company
Inactive
company
SSP Aérobel SPRL
Rue des Frères Wright, 8 Boite 12, 6041 Charleroi,
Belgium
SSP Belgium SPRL
Korte Ambachtstraat 4, 9860, Oosterzele, Belgium
Bermuda
Bermuda Travel Concessions, LLC
4 Burnaby Street, Hamilton, Bermuda HM 11
Inactive
company
Brazil
SSP DFA Restaurantes Brasil Ltda
Avenida das Américas, 3434, Building 02, Office 301, Zip
Code 22.640-102
Cambodia
Select Service Partner (Cambodia) Limited
No 4B, Street Vat Ang Taming, Sangkat Kakab,
Khan Poh Sen Chey, Phnom Penh
Inactive
company
49%1.7
Canada
SSP Canada Airport Services Inc.
30th Floor, 360 Main Street, Winnipeg MB R3C 4G1,
Canada
SSP Canada Food Services Inc.
McLachlan Brown Anderson Solicitors, 938 Howe
Street,10th Floor, Vancouver BC V6Z 1N9, Canada
SSP Québec Food Services Inc.
2200-1010 rue Sherbrooke O Montréal (Québec)
H3A2R7, Canada
Select Service Partner Hainan Co. Limited6
2/F, Departure Halls, Passenger Terminal Building,
Haikou Meilan International Airport, Hainan,
Haikou 571126, China
SSP Shanghai Co. Limited6
Intl Airside and Intl Departure Area Landside, 3/F,
Pudong Int’l Airport Terminal, No.6000, Yingbin Road,
Pudong New District, Shanghai, China
Cyprus
SSP Catering Cyprus Limited
67 Limassol Avenue, Vision Tower 1st Floor, 2121
Aglantzia, Nicosia, Cyprus, P.O.Box 14144, CY-2154
Aglantzia, Nicosia, Cyprus
SSP Louis Airport Restaurants Limited
67 Limassol Avenue, Vision Tower 1st Floor, 2121
Aglantzia, Nicosia, Cyprus, P.O.Box 14144, CY-2154
Aglantzia, Nicosia, Cyprus
Denmark
Monarch A/S
Lufthavnsboulevarden 14, 1. sal, 2770, Kastrup,
Denmark
Select Service Partner Denmark A/S
Lufthavnsboulevarden 14, 1. sal, 2770, Kastrup,
Denmark
SSP Denmark Financing ApS
Lufthavnsboulevarden 14, 1. sal, 2770, Kastrup,
Denmark
Egypt
SSP Egypt JSC
Cairo International Airport, Airmall Building, 1st Floor,
Cairo, Egypt
Estonia
Select Service Partner Eesti A/S
Veerenni 38, Tallinn 10 138, Estonia
Holding and
Management
Services
company
Holding
company
60%
Holding
company
51%
51%
Finland
Select Service Partner Finland Oy
Helsinki Airport, Vantaa, FI-01530, Finland
50%1
France
Bars et Restaurants Aéroport Lyon Saint Exupéry SAS
Immeuble l’Arc, BP 197, Lyon Saint Exupéry Aéroport,
69125, Lyon, France
Les Buffets Boutiques et Services des Autoroutes
de France SNC
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
Inactive
company
Select Service Partner SAS
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
SSP Aéroports Parisiens SASU
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
16
SSP France Financing SAS
Immeuble le Virage, 5, Allée Marcel Leclerc, CS60017
13417 Marseille Cedex 08, France
Holding
company
SSP Group plc Annual Report and Accounts 2020 Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Name
Malaysia
Select Service Partner Malaysia SDN BHD
C-2-3A, TTDI Plaza, Jalan Wan Kadir 3,
Taman Tun Dr Ismail, 60000 Kuala Lumpur
Mauritius
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
157
Name
SSP Paris SASU
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
SSP Province SAS
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
Germany
SSP Deutschland GmbH
The Squaire 24, 60549 Frankfurt am Main, Germany
SSP Financing Germany GmbH
The Squaire 24, 60549 Frankfurt am Main, Germany
Holding
company
Station Food GmbH
The Squaire 24, 60549 Frankfurt am Main, Germany
Greece
Select Service Partner Restaurants Hellas SA
Athens International Airport, Building 17
Office 2/06-01, 190 19 Spata, Greece
Hong Kong
Select Service Partner Asia Pacific Limited
Unit 1702-05, Wing On Kowloon Center,
345 Nathan Road, Yau Ma Tei, Kowloon,
Hong Kong, S.A.R. China
Select Service Partner Hong Kong Limited
Unit 1702-05, Wing On Kowloon Center,
345 Nathan Road, Yau Ma Tei, Kowloon,
Hong Kong
SSP China Development Limited6
Unit 1702-05, Wing On Kowloon Center,
345 Nathan Road, Yau Ma Tei, Kowloon,
Hong Kong
Hungary
SSP Hungary Catering Kft
Liszt Ferenc International Airport, Terminal 2B,
1185 Budapest, Hungary
India
BLR Lounge Services Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Mumbai Airport Lounge Services Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Travel Food Services Chennai Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Travel Food Services (Delhi) Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Travel Food Services (Delhi Terminal 3) Private
Limited
New Udaan Bhawan, Opposite Terminal 3, IGI Airport,
New Delhi, 110 037, India
Travel Food Services Kolkata Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Travel Food Services Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate,
Dr. Annie Besant Road, Worli, Mumbai, 400018 India
Ireland
Holding and
Management
Services
company
Holding
company
3
34.3%10
21.756%1,15
49%1,10
49%1,10
29.4%1,11
49%1,10
RG Onboard Services (Ireland) Limited
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Inactive
company
Select Service Partner Ireland Limited
6th Floor, 2 Grand Canal Square, Dublin 2, Ireland
Israel
Select Service Partner Israel Ltd
Derech Menachem Begin 132, Azrieli One Center, Round
Building, 6701101, Tel Aviv, Israel
Luxembourg
SSP Luxembourg SA
Aeroport de Luxembourg, L-1110 Luxembourg
Travel Food Services Global Private Ltd
Intercontinental Trust Limited, Level 3,
Alexander House, 35 Cybercity, Ebene, Mauritius
Inactive
company
49%1,10
Holding
company
Netherlands
Rail Gourmet Netherlands BV
Herikerbergweg 238, Luna ArenA,
1101 CM Amsterdam, the Netherlands
SSP Nederland BV
Leidseveer 2, 3511 SB, Utrecht, Netherlands
Norway
Rail Gourmet Togservice Norge AS6
Tøyenbekken 21, Oslo, 0188, Oslo, Norway
Select Service Partner AS
Henrik Ibsens veg 7, 2060 Gardermoen, Norway
SSP Norway Financing AS
Henrik Ibsens veg 7, 2060 Gardermoen, Norway
Holding
company
Oman
Gourmet Foods LLC
PO Box 3340, Ruwi, Sultanate of Oman, 112, Oman
Holding
company
24.01%1,12
Philippines
Select Service Partner Philippines Corporation
JME Building No. 35, Calbayog Street, Barangay,
Highway Hills, City of Mandaluyong, NCR, Second
District, Philippines
SSP-Mactan Cebu Corporation6
Terminal 1 Mactan Cebu International Airport,
Pusok, Lapu-Lapu City, Cebu 6015, Philippines
Russia
Holding
company
52%
26%1,8
Select Service Partner Russia LLC6
141400, Moscow region, Khimki,
Sheremetyevo Airport, Premises 3, Russia
Inactive
company
Singapore
Select Service Partner (Singapore) Pte Limited
112 Robinson Road, #05-01, 068902, Singapore
Spain
Foodlasa, SLU
Camino de la Zarzuela, 19-21, 2ª plta., 28023,
Madrid, Spain
Select Service Partner SAU
Camino de la Zarzuela, 19-21, 2ª plta., 28023,
Madrid, Spain
Select Service Partner Spain Financing SLU
Camino de la Zarzuela, 19-21, 2ª plta., 28023,
Madrid, Spain
SSP Airport Restaurants SLU
Camino de la Zarzuela, 19-21, 2ª plta., 28023,
Madrid, Spain
Holding
company
Inactive
company
Holding
company
49%1
Sweden
Scandinavian Service Partner AB
Arlanda Airport, P.O Box 67, S-19045, Stockholm
Arlanda, Sweden
SSP Newco AB
Arlanda Airport, P.O Box 67, S-19045, Stockholm
Arlanda, Sweden
SSP Sweden Financing AB
Arlanda Airport, P.O Box 67, S-19045, Stockholm
Arlanda, Sweden
Switzerland
Rail Gourmet Holding AG
Bahnhofstrasse 10, CH-6300, Zug, Switzerland
Holding
company
Select Service Partner (Schweiz) AG
Shopping center/Bahnhofterminal, 8058 Zurich-
Flughafen, Switzerland, PO Box: Postfach 2472
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsFinancial statementsStrategic Report 158
NOTES TO COMPANY FINANCIAL STATEMENTS CONTINUED
44. Group companies continued
Name
Taiwan
SSP Taiwan Limited
1F, No.13, Ln. 84, He 1st Rd, Keelung City,
Jhongjheng District, 202, Taiwan, Republic of China
Thailand
Select Service Partner Co. Limited6
88 The Parq Building, 11th Fl. Ratchadaphisek Road,
Klongtoey Subdistrict, Klongtoey District, Bangkok
Metropolis Thailand
United Arab Emirates
SSP Emirates LLC
Mussafah, SH MBX Area ME11, Building 85, Mezzanine
floor, Hamed Al-Kurby Building, P.O. Box 133357 Abu
Dhabi, United Arab Emirates
United Kingdom
Belleview Holdings Limited
Jamestown Wharf, 32 Jamestown Road, London,
United Kingdom, NW1 7HW
(‘SSP Group Head Office’)
Belleview Limited
SSP Group Head Office
Cretegame Limited23
SSP Group Head Office
Millie’s Cookies (Franchise) Limited
SSP Group Head Office
Millie’s Cookies Limited
SSP Group Head Office
Millies Limited
SSP Group Head Office
Millie’s Cookies (Retail) Limited
SSP Group Head Office
Rail Gourmet Group Limited
SSP Group Head Office
Rail Gourmet UK Holdings Limited
SSP Group Head Office
Rail Gourmet UK Limited
SSP Group Head Office
Select Service Partner Limited
SSP Group Head Office
Select Service Partner Retail Catering Limited
SSP Group Head Office
Select Service Partner UK Limited
SSP Group Head Office
SSP Air Limited
SSP Group Head Office
SSP Asia Pacific Holdings Limited
SSP Group Head Office
SSP Bermuda Holdings Limited
SSP Group Head Office
SSP Euro Holdings Limited
SSP Group Head Office
SSP Financing Limited
SSP Group Head Office
SSP Financing No. 2 Limited
SSP Group Head Office
SSP Financing UK Limited
SSP Group Head Office
SSP Group Holdings Limited
SSP Group Head Office
SSP South America Holdings Limited
SSP Group Head Office
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
49%1
51%21
Inactive
company
Inactive
company
Inactive
company
Inactive
company
Agency
company
Inactive
company
Agency
company
Holding
company
Holding and
Management
Services
company
Agency
company
Inactive
company
Agency
company
Holding
company
Holding
company
Holding
company
Holding and
Treasury
company
Financing
company
Holding and
Management
Services
company
Holding
company
Holding
company
3
4
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Inactive
company
Inactive
company
Inactive
company
Inactive
company
Name
Whistlestop Airports Limited
SSP Group Head Office
Whistlestop Foods Limited
SSP Group Head Office
Whistlestop Operators Limited
SSP Group Head Office
United States of America
ATL Dine and Fly, LLC
1210 Peachtree Street, NE, Atlanta, GA 30361,
United States
CBC SSP America DAL, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
CBC SSP America DFW, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Creative PTI, LLC
CT Corporation System, 160 Mine Lake Court,
Suite 200, Raleigh NC 27615-6417, United States
Flavor of ATL, LLC
CT Corporation System, 289 S Culver Street,
Gwinnett, Lawrenceville GA 30046, United States
Inactive
company
Harry’s Airport20
111 Monument Circle, Suite 2700, Indianapolis,
IN 46204, United States
Jackson Airport Concessions, LLC
CT Corporation System, 1200 S. Pine Island Road,
Plantation FL 33324, United States
Select Service Partner LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America AZA, LLC
CT Corporation System, 3800 N Central Avenue,
Suite 460, Phoenix AZ 85012, United States
SSP America BOS, LLC
CT Corporation System, 155 Federal Street,
Ste 700, Boston MA 02110, United States
SSP America CID, LLC
CT Corporation System, 400 E Court Ave,
Des Moines IA 50309, United States
Inactive
company
Inactive
company
Inactive
company
SSP America CVG, LLC
306 W Main Street, Suite 512, Frankfort KY 40601
United States
SSP America DEN, LLC
The Corporation Company, 1675 Broadway –
Suite 1200, Denver CO 80202, United States
Inactive
company
Inactive
company
SSP America DFW, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
SSP America DFWI, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
SSP America EWR, LLC
Corporation Trust Centre, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America Gladco, Inc
CT Corporation System, 600 N 2nd Street, Suite 401,
Harrisburg, PA 17101-1071, United States
SSP America GSP, LLC
2 Office Park Court, Suite 103, Columbia SC 29223,
United States
SSP America HOU, LLC
1999 Bryan Street, Suite 900, Dallas TX 75201,
United States
Inactive
company
Inactive
company
49%1
49%1
62.8%17
51%
60%
90%
90%
60%
SSP America Houston, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Inactive
company
SSP America IAH20
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
70.7%
SSP Group plc Annual Report and Accounts 2020 159
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Name
SSP America, Inc.
CT Corporation System, 818 W 7th Street,
Suite 930 Los Angeles, CA 90017, United States
SSP America IND, LLC
150 West Market Street, Suite 800, Indianapolis,
IN 46204, United States
Inactive
company
SSP America JFK, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America KCGI JFK T7, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America LAX, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America LGA, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801 United States
SSP America MCO, LLC
CT Corporation System, 515 East Park Avenue,
Tallahassee, FL 32301, United States
SSP America MCO II, LLC
CT Corporation System, 1200 South Pine Island Road,
Plantation, FL 33324, United States
Inactive
company
SSP America MDW, LLC
CT Corporation System, 208 SO Lasalle Street,
Suite 814, Chicago, IL 60604, United States
SSP America Milwaukee, LLC
CT Corporation System 301 S. Bedford Street,
Suite 1, Madison WI 53703, United States
SSP America Minneapolis, LLC
6121 Excelsior Blvd., Suite 101B, St. Louis Park,
MN 55416, United States
SSP America MSN, LLC
CT Corporation System 301 S. Bedford Street,
Suite 1, Madison WI 53703, United States
SSP America MSP, LLC
1010 Dale Street N, St Paul, MN 55117-5603,
United States
SSP America MSY, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Inactive
company
SSP America OAK, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America OKC, LLC
1833 South Morgan Road, Oklahoma City,
OK 73128, United States
Inactive
company
SSP America PDX, LLC
CT Corporation System, 780 Commercial Street SE,
Suite 100, Salem OR 97301, United States
SSP America PHX, LLC
3800 N. Central Avenue, Suite 460, Phoenix,
AZ 85012, United States
SSP America PHX T3, LLC
3800 N. Central Avenue, Suite 460, Phoenix,
AZ 85012, United States
SSP America PIE, LLC
CT Corporation System, 1200 South Pine Island Road,
Plantation, FL 33324, United States
SSP America PVD, LLC
450 Veterans Memorial Parkway, Suite 7A,
East Providence RI 02914 United States
Inactive
company
SSP America RDU, LLC
CT Corporation System, 160 Mine Lake Court,
Suite 200, Raleigh NC 27615-6417, United States
SSP America SAN, LLC
CT Corporation System, 818 W 7th Street,
Ste 930 Los Angeles CA 90017, United States
82%
55%
51%
70%
65%
51%
61.5%
51%
90%
80%
65%
80%
77.65%
57.65%
80%
62.8%
70%
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Inactive
company
Name
SSP America SAT, LLC
1999 Bryan Street, Suite 900, Dallas County,
Dallas TX 75201, United States
SSP America SEA, LLC
CT Corporation System, 711 Capitol Way S,
Ste 204, Olympia, WA 98501-1267, United States
SSP America SEA II, LLC
CT Corporation System, 711 Capitol Way S,
Ste 204, Olympia, WA 98501-1267, United States
Inactive
company
SSP America Services, Inc,
820 Bear Tavern Road, West Trenton NJ 08628,
United States
Management
Services
company
SSP America SFO, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America SFO II, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Inactive
company
SSP America SJC, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America SLC, LLC
1108 East South Union Avenue, Midvale, UT 84047,
United States
Inactive
company
SSP America SMF, LLC
CT Corporation System, 818 W 7th Street,
Ste 930 Los Angeles CA 90017, United States
SSP America SNA, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Inactive
company
SSP America Tampa, LLC
CT Corporation System,1200 S Pine Island Road,
#250, Plantation FL 33324, United States
SSP America Texas, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Holding
company
SSP America Texas, Inc.
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
51%
65%
55%
60%
52%
SSP America (USA), LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Holding
company
3
SSP D&B DFW, LLC
1999 Bryan Street, Suite 900, Dallas County,
Dallas TX 75201, United States
SSP Four Peaks PHX, LLC
CT Corporation System, 3800 N Central Avenue,
Suite 460, Phoenix AZ 85012, United States
SSP Hudson SAT, LLC
1999 Bryan Street, Suite 900, Dallas County,
Dallas TX 75201, United States
Inactive
company
60%
69.885%19
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsFinancial statementsStrategic Report 160
NOTES TO COMPANY FINANCIAL STATEMENTS CONTINUED
44. Group companies continued
Part B – Associates
Part C – Other Investments
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
50%2
Name
India
KCorp Charitable Foundation22
Shop 1, Floor G, Rashid Mansion, Dr., Annie Besant
Road, Lotus Junction, Worli, MUMBAI Maharashtra
400018 India
Notes
* Ordinary shares includes references to equivalent in other jurisdictions.
1 SSP has control over the relevant activities of these entities including establishing
budgets and operating plans, appointment of key management personnel and ongoing
review of performance and reporting procedures, and as such meets the consolidation
requirements of IFRS 10 ‘Consolidated Financial Statements’.
2 SSP does not have control as defined by IFRS 10 ‘Consolidated Financial Statements’.
3
Includes 100% of preference shares.
4 Holding held directly by the Company.
5 This undertaking has a 31 March year end.
6 These undertakings have a 31 December year end.
7 100% of the shares are held by Select Service Partner Co. Limited (Thailand).
8 50% of the shares are held by Select Service Partner Philippines Corporation.
9 49.98% of the shares are held by SSP Louis Airports Restaurants Limited.
10 100% of the shares are held by Travel Food Services Private Ltd.
11 60% of the shares are held by Travel Food Services Private Ltd.
12 49% of the shares are held by Travel Food Services Global Private Ltd.
13 90% of the shares are held by Travel Food Works Private Ltd.
14 49% of the shares are held by Travel Retail Services Private Ltd.
15 44.4% of the shares are held by Travel Food Services Private Ltd.
16 91% of the shares are held by the other shareholder as bare nominee.
17 100% of the shares are held by SSP America RDU, LLC.
18 50% of the Class A shares are held by SSP America, Inc.
19 90% of the shares are held by SSP America PHX, LLC.
20 The principal place of business of the unincorporated entities in the USA is 20408
Bashan Drive, Suite 300, Ashburn, VA 20147, USA.
21 2% of the shares are held by the other shareholder as bare nominee.
22 This company has no share capital but it has corporate members which include Travel
Food Services Private Ltd, Travel Food Services Chennai Private Ltd, Travel Food
Services Kolkata Private Ltd, Travel Food Services (Delhi) Private Ltd and Travel Retail
Services Private Ltd.
23 This company has changed its name to Procurement 2U Limited effective
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
49%
29.988%9
50%2
50% 2
50% 2
21.609%14
21.609%14
21.609%14
21.609%14
25%
49%2
Name
Belgium
Railrest SA6
Rue De France 95, Be-1070 Brussels, Belgium
Cyprus
Cyprus Airports (F&B) Limited
Larnaca International Airport, 6650, Larnaca, Cyprus
Denmark
Motorvejscenterselskabet af 1990 A/S
c/o Circle K Danmark A/S, Borgmester Christiansens
Gade 50, 2450 København SV
France
Epigo SAS
Continental Square I, Batiment Uranus, 3 place de
Londres, Aeroport Paris-Charles de Gaulle, 93290,
Tremblay-en-France, France
Epigo Présidence Sarl
Continental Square I, Batiment Uranus, 3 place de
Londres, Aeroport Paris-Charles de Gaulle, 93290,
Tremblay-en-France, France
Management
Services
company
India
FLFL Travel Retail Bhubaneswar Private Limited5
Knowledge House, Shyam Nagar, Off. JVLR.
Jogeshwari (East), Mumbai, 400 060, India
FLFL Travel Retail Guwahati Private Limited5
Knowledge House, Shyam Nagar, Off. JVLR.
Jogeshwari (East), Mumbai, 400 060, India
FLFL Travel Retail Lucknow Private Limited5
Knowledge House, Shyam Nagar, Off. JVLR.
Jogeshwari (East), Mumbai, 400 060, India
FLFL Travel Retail West Private Limited5
Knowledge House, Shyam Nagar, Off. JVLR.
Jogeshwari (East), Mumbai, 400 060, India
Muffin Design Solutions Private Limited
No F-7 NVT Arcot Vaksanna Sarjapur, Attibelle Road,
Sariapur, Bangalore, KA 562125, India
Design and
architectural
services
Travel Food Works Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate, Dr.
Annie Besant Road, Worli, Mumbai, 400018 India
Travel Retail Services Private Limited
Block A, South Wing,1st floor, Shiv Sagar Estate, Dr.
Annie Besant Road, Worli, Mumbai, 400018 India
Qatar
Qatar Airways SSP LLC5
Second Floor, Building No: 272, Street No. 310, Al-
Matar St., Area No. 45, P.O Box: 47644, Doha
United States of America
Midway Partnership, LLC6
CT Corporation System, 208 SO Lasalle Street,
Suite 814, Chicago, IL 60604, United States
SSP America BTR, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP Hudson Pie Concessions, LLC
Corporation Service Company, 1201 Hays Street,
Tallahassee, FL 32301
44.1%2, 13
23 October 2020.
49%
50%2, 18
51%2
50%2
SSP Group plc Annual Report and Accounts 2020
161
COMPANY INFORMATION
Forward-looking statements
These reports and financial statements contain certain forward-looking statements which are subject to assumptions, risks and
uncertainties, and 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 this Annual Report and include statements regarding the current intentions, beliefs or expectations of the Directors,
the Company or the Group 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 Group’s strategy and
other future events or prospects are forward-looking statements. Nothing in this Annual Report should be construed as a profit forecast.
SSP Group plc
Jamestown Wharf
32 Jamestown Road
London
NW1 7HW
+44 20 7543 3300
www.foodtravelexperts.com
Company number: 5735966
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
SSP Group plc Annual Report and Accounts 2020Strategic ReportCorporate governanceFinancial statementsFinancial statementsStrategic Report SSP Group plc
Jamestown Wharf
32 Jamestown Road
London
NW1 7HW
+44 20 7543 3300
www.foodtravelexperts.com
Company number: 5735966