The best part
of the journey
Annual Report and Accounts
2022
Our brand portfolio
We have a wide portfolio of
brands, which include those we
have created ourselves as well
as those we franchise, to cater
to our clients’ and customers’
needs. These brands range from
well-known grab ‘n’ go sandwich
shops and cafés, to bespoke
high end bars and restaurants,
which means we can respond
to the specific needs of our
customers as they travel around
the world. This strong brand line
up is key to our ability to win
and retain contracts, as it gives
clients confidence that we can
cater for their customers with
a great selection of food and
drink options.
Brands we franchise
Brands we have created
International brands
International brands
National brands
National brands
Local heroes
Bespoke concepts
Our global reach
We operate in 35 countries
and territories, across four
key operating regions
(or reportable segments):
North America
Continental Europe
UK & Ireland
Rest of the World
For more information about
our operating regions, see
pages 34-41.
C.550
brands and bespoke concepts
C.35,000
colleagues at year end
35
countries
C.2,600
units
C.600
locations across the world
2022 highlights
Financial
Operational
Sustainability
£2.2bn
revenue
C.500
units opened and reopened
£91.5m
operating profit on a reported
basis under IFRS 16
90%
H2 revenue versus 2019, up from
64% in H1
33%
of all own brand meals are
plant-based or vegetarian
36%
reduction in our Scope 1 and 2
carbon dioxide equivalent (CO2e)
emissions vs our 2019 baseline
C.£700m
available liquidity at year end
C.52%
increase in colleague numbers
compared to FY21
76%
positivity score in our global
colleague engagement survey
Who we are
We are the food travel experts.
Operating in 35 countries
globally, we are experts in
creating and running food and
drink outlets in locations where
people are on the move.
Whether they’re flying abroad
on holiday or commuting to work
by train, we make sure the food
and drink experience we offer
meets the needs of our many
different customers.
Contents
Overview
GF
Our brand portfolio
Our global reach
2022 highlights
Our purpose and strategic
framework
01
02 Our purpose in action
Strategic report
06 Chair’s statement
08 CEO’s statement
10 CEO’s Q&A
12 Understanding our market
16 Business model
18
Our purpose, vision
and strategy
52
53
32 Key performance indicators
34 Regional reviews
42
Stakeholder engagement
and Section 172 statement
Q&A with ENED
Non-financial information
statement
Task Force on Climate-related
Financial Disclosures
Risk management and
principal risks
68 Viability statement
70 Financial review
58
54
Corporate governance report
82 Governance at a glance
84 Letter from the Chair
86
Compliance with the UK
Corporate Governance Code
Board of Directors
88
90 Group Executive Committee
Board Leadership and
92
Company purpose
96 Purpose and Culture
100
Key Board Activities in the
2022 financial year
102 Leadership in action
104 Nomination Committee Report
114 Audit Committee Report
Directors’ Remuneration
120
Report
145 Directors’ Report
149
Statement of Directors’
Responsibilities in respect
of the Annual Report
and Accounts and the
financial statements
Financial statements
152
Independent auditor’s report to
the members of SSP Group plc
Consolidated Income
Statement
Consolidated Statement of
other Comprehensive Income
162
163
167
166
164 Consolidated Balance Sheet
Consolidated Statement
165
of Changes in Equity
Consolidated Cash Flow
Statement
Notes to Consolidated
Financial Statements
208 Company Balance Sheet
209 Company Statement
of Changes in Equity
Notes to Company
Financial Statements
210
219 Glossary
220 Company Information
More information
www.foodtravelexperts.com
Find out more in our
Sustainability Report.
Our purpose and
strategic framework
Our purpose is to be the best
part of the journey. This drives
our culture as an organisation as
we aspire to be the world’s best
travel food and beverage
company.
Our strategy remains to grow
our market-leading positions in
the food travel sector globally.
To this aim, our strategic
priorities reflect our focus on
delivering a leading customer
proposition aligned to our
clients’ needs and goals and
on ensuring we have skilled and
engaged colleagues. At the same
time, we continue to drive
performance through our proven
economic model, focused on
winning new business, growing
like-for-like revenue, driving
efficient profit conversion and
generating a strong cash flow
in order to deliver long-term
sustainable growth.
Embedding sustainability into
our business forms a critical part
of our strategy, encompassing
our core strategic priorities and
ensuring we deliver long-term
success for the benefit of all
our stakeholders.
Our purpose
To be the best part of the journey.
Our vision
To be the world’s best travel food
and beverage company.
Our strategy
To grow our market-leading
positions in the food travel
sector in international markets.
To deliver this, we are focused
on three strategic priorities,
encompassed by sustainability:
S U S TAINABILITY
I O N
S I T
O
P
SKILLED A
N
D
E
N
G
The best
part of the
journey
A
G
E
D
C
O
L
L
E
A
G
U
E
S
ER P R O
M
O
T
S
U
C
G
N
D
A
E
I
L
L
O
N
G-TERM GROWT H A N D R
R N S
U
T
E
Find out more on our purpose, vision and strategy on pages 18-31.
SSP Group plc Annual Report and Accounts 2022
01
OverviewCorporate governanceFinancial statementsStrategic report
Our purpose in action
The best
part of the
journey
02
SSP Group plc Annual Report and Accounts 2022
The best
part of the
journey
Our purpose is to be the best part
of the journey. From providing great
experiences for our customers on their
travel journeys to providing rewarding
and fulfilling career journeys for our
colleagues, our purpose drives our
culture as an organisation.
By delivering our purpose, vision and strategy, we will create value for all our
stakeholders, including:
Customers
By offering great tasting, nutritious and
sustainable food and drink for people
on the move.
Brand partners
By being their preferred partner
for operating in the travel sector.
Colleagues
By being a great place to work where
everyone can fulfil their potential.
Suppliers
By building mutually-beneficial
relationships.
Clients
By delivering exceptional service
to their passengers.
Communities, NGOs and society
By positively impacting our planet
and wider society.
Investors
By generating sustainable long-term
profitable growth and returns.
Governments and regulators
By supporting local economies and
contributing our experience and expertise
to areas of policy development.
Find out more about how we engage with
our key stakeholders on pages 42-51.
SSP Group plc Annual Report and Accounts 2022
03
OverviewCorporate governanceFinancial statementsStrategic report 04
SSP Group plc Annual Report and Accounts 2022
Strategic report
Contents
Strategic report
06 Chair’s statement
08 CEO’s statement
10
CEO’s Q&A
12 Understanding our market
16 Business model
18
Our purpose, vision
and strategy
32 Key performance indicators
34 Regional Reviews
42
Stakeholder engagement
and Section 172 statement
54
52
53
Q&A with ENED
Non-financial information
statement
Task Force on Climate-related
Financial Disclosures
Risk management and
principal risks
68 Viability statement
70 Financial review
58
SSP Group plc Annual Report and Accounts 2022
05
OverviewCorporate governanceFinancial statementsStrategic report Chair’s statement
“We remain confident in the
ongoing resilience of the Group’s
business model and continue
to see significant potential for
both near and long-term growth
and returns.”
06
SSP Group plc Annual Report and Accounts 2022
Dear Shareholder,
It’s been an important year for SSP as the travel sector started to
emerge from the Covid-19 pandemic. Despite facing huge uncertainty
and volatile markets, as well as the unexpected impacts of Omicron,
the war in Ukraine, substantial inflationary pressures on food and
energy costs and a scarcity of labour in many regions, our business
has had an exceptional year.
In response to the strong rebound in passenger demand driven
by domestic and leisure travel, our leadership teams took all the
necessary action to capitalise on this recovery to drive better than
anticipated financial performance, mobilising units quickly and safely,
often at times ahead of the competition, which has enabled us to
deliver food and beverage services to the travelling customer and
build back sales to c.92% of pre-Covid levels by the end of the
fourth quarter.
In addition to reopening the business, we have continued to renew
and extend contracts as well as winning important new business to
add to our pipeline. Our robust ongoing management of inflationary
pressures and a continued focus on operating efficiency has enabled
us to deliver £127m EBITDA in H2, taking full year EBITDA to £142m
(both on a pre-IFRS 16 basis).
At the same time, we have invested back into the business to drive
greater competitiveness in our customer proposition, our people,
our digital capabilities and our sustainability programme, all of which
underpin the delivery of long-term sustainable growth.
Our teams have delivered fantastic results this year despite a
challenging backdrop, and with this in mind, the Board has supported
appropriate rewards for this performance.
Our Purpose and Strategy
Our purpose is to be the best part of the journey, and this supports
our vision to be the best travel food and beverage provider in the
world for all our stakeholders. Coming out of the pandemic, we have
renewed our focus on delivering a leading customer proposition
aligned to our clients’ needs and goals and developing a skilled and
engaged workforce. At the same time, we continue to focus on
delivering long-term growth and returns, driven by our proven
economic model.
We continue to build on our sustainability strategy, which addresses
the areas most relevant to our business and stakeholders, and we
have made rapid progress towards embedding this deeply into the
way we do business.
Find out more about our strategic framework on pages 18-31.
People and Culture
We are delighted that the recovery in travel has enabled us to welcome
colleagues back from furlough, re-employ former colleagues and hire
new colleagues all over the world as the business has recovered. We
have around 35,000 colleagues currently employed. Having a skilled,
committed and engaged workforce is critical to our success and, on
behalf of the Board, I would like to thank all our colleagues for their
tremendous efforts throughout what has, once again, been a very
challenging year.
Corporate Governance and the Board
Our strategy is underpinned by a commitment to operate to a high
standard of corporate governance. This year, we have sought to
broaden the skills and experience of the Board and, in addition to the
appointment of our new Group CEO, we have also welcomed two new
Non-Executive Directors, Kelly Kuhn and Apurvi Sheth to the Board.
We now have a full, and importantly, more diverse team in place to
assist in our decision-making.
More information on our Board composition and changes through the year
can be found on page 106.
Thank you
On behalf of the Board, I’d like to thank not only the Group Executive
Committee, but also our thousands of colleagues across the world
for the commitment, skill and hard work they’ve shown this past year.
It is down to their efforts and the support of our clients and brand
partners which has enabled us to deliver a strong trading
performance with revenues now close to 2019 levels.
I would also like to thank our shareholders for their support and
confidence. Last but not least, I would like to thank our valued
customers for choosing SSP as part of their travels.
Mike Clasper
Chair
5 December 2022
Over the past year we have put significant focus on developing
capability through a number of new training schemes, launched and
embedded our Diversity, Equity & Inclusion strategy and worked to
develop our employer brand, to ensure that we continue to attract
and retain the best talent. As a Board we also increased our focus
on workforce engagement and have been pleased to get back into
the business again after Covid, meeting with teams across several
markets, including France, the UK and the US. Judy Vezmar, our
Independent Non-Executive Director for Workforce Engagement,
held additional in-person and virtual meetings with colleagues across
the world. Her feedback to the Board from these sessions has been
insightful as the Board seeks to ensure stakeholder views are taken
into account in its strategic decision-making.
In addition, we welcomed Patrick Coveney to the business as Group
CEO in March. Since joining, he has undertaken a comprehensive
induction, meeting with colleagues, clients and partners across
20 countries. We are delighted to have him in the business, and
he is already making a very positive impact. I’d also like to take this
opportunity to thank Jonathan Davies, Deputy Group CEO and CFO,
for his leadership during the months before Patrick joined and during
his induction period.
To find out more on our People Strategy and Culture and Patrick Coveney’s
induction, see pages 96-97 and page 109 respectively.
Sustainability
Running a sustainable business with sustainable outcomes for
people and the planet is being increasingly embedded into the way
we do business. Last year we took a step-change in our approach with
the launch of our new sustainability strategy. The strategy focuses
on the most important issues for our business and stakeholders
across the pillars of serving our customers responsibly, protecting
our environment, and supporting our colleagues and communities.
We also set clear and measurable targets to 2025, as well as our
ambition to achieve net zero carbon emissions by 2040.
This year, we have brought in specialist dedicated resources to
strengthen our capability and processes in this area of the business.
We’re making good progress against our targets and have made great
strides with our net zero ambition by completing the mapping of our
total carbon footprint across our value chain. This has given us detailed
visibility of exactly where our emissions lie, enabling the development
of our plan for reducing them by 2040. Our food is central to this –
from how we source our ingredients, design our recipes and menus,
to helping our customers to make healthier and sustainable choices.
We are pleased to be publishing our first standalone Sustainability
Report, alongside the Annual Report and Accounts this year.
SSP Group plc Annual Report and Accounts 2022
07
OverviewCorporate governanceFinancial statementsStrategic report CEO’s statement
“All my experiences to date have
confirmed my expectations that
SSP is a fabulous business with
a great future.”
08
SSP Group plc Annual Report and Accounts 2022
Overview
I was delighted to have the opportunity to join SSP as Group CEO in
March. I have invested much of my time since then getting out into the
business, seeing as many markets and meeting as many colleagues,
clients, customers, and brand partners as I could over my first six
months. My experiences visiting nearly 20 markets have confirmed
my expectations that SSP is a fabulous business with a great future.
I have been warmly welcomed by everyone and my thanks go to the
leadership team, and our Deputy Group CEO and CFO, Jonathan
Davies in particular, for supporting my transition into the business,
making it as smooth and expedient as possible. I can honestly say
that I have loved every minute.
Strong momentum after a challenging year
Despite what has been another very challenging year with the advent
of Omicron resulting in a prolonged period of travel restrictions and
immediately followed by the outbreak of war in Ukraine, the business
has performed strongly. From a low point in December and January
(when revenues were just 57% of 2019 levels) we have navigated
a strong recovery in demand and re-opened nearly all our outlets,
leading to Group revenues in H2 at c.90% of 2019 levels. At the same
time, we have dealt with labour shortages and supply side challenges,
as well as inflationary pressures across all areas of the business.
Disciplined management of the unit re-opening programme, with
simplified menus focused on travellers’ needs, delivered a strong
revenue performance. We have also managed the cost base tightly,
including renegotiating rental contracts and achieving waivers of
minimum rent clauses. On top of this, we have actively mitigated high
levels of cost inflation, carefully balancing our customer offer with
profit protection. The result has been a strong conversion of revenue
to profit, well ahead of the expectations at the start of the year, which
has seen us deliver £127m EBITDA in H2, taking full year EBITDA
to £142m (both on a pre-IFRS 16 basis). A strong focus on cash and
working capital has delivered free cash flow of c.£52m, leaving net
debt at £296.5m and leverage at 2.1x net debt to EBITDA (both on
a pre IFRS 16 basis), and with over £700m of available liquidity.
Critically, we have maintained and further strengthened relationships
with clients and brand partners winning and retaining important
new business to add to an already very strong pipeline of new units
to mobilise over the next three years. During the last financial year,
we invested c.£150m in capital expenditure and we are planning to
increase this in 2023 as we accelerate our opening programme.
The skill and judgement exercised by the management team,
together with the hard work and commitment of colleagues across
the business, has enabled the Group to deliver an exceptional trading
performance during 2022. I would like to thank everyone across the
business for their tremendous contribution over the year.
Strong foundations
With market-leading positions in countries across the world,
we continue to build on our strong foundations, taking advantage of
the considerable structural growth potential. More and more people
across the world want to travel and demand for food and beverage
solutions at those travel locations is becoming ever more important.
We have many competitive strengths that we continue to build on,
to drive further growth. Highlighting just a few that have already
really made a real impression on me:
– Our leadership team which has led the business with integrity
through Covid-19. They have kept our people together, enhanced
engagement levels, and though their efforts have been able to
bring colleagues back to work and welcome new colleagues as
the business has opened up again.
– Our wide range of innovative concepts that cater brilliantly to the
differing needs of customers and clients as they travel across our
different markets.
– The strength of our relationships with clients, brand partners and
our joint venture partners, which in many cases were strengthened
during the Covid-19 period.
– The momentum we are able to maintain through winning new
business, which gives us a strong pipeline
– Our strong economic model, which has driven excellent profit
conversion and cash flow as the business has recovered, well ahead
of expectations at the start of the year. Liquidity is strong and the
balance sheet is quickly deleveraging back towards the target
range by the end of the year.
Well positioned for sustainable growth into the future
Starting with a purpose of being the best part of the journey, our
vision is to be the world’s best travel food and beverage company,
delivering for all our stakeholders.
Our competitive strengths, and the attractive fundamentals of our
marketplace, position us well to deliver long-term sustainable growth.
Our strategy to grow our market-leading positions in the food travel
sector globally reflect our key priorities: the delivery of leading
customer propositions, skilled and engaged colleagues and long-term
growth and returns through our proven economic model. Sustainability
encompasses our core strategic priorities, and we are committed to
embedding this into the way we do business every day. All of this will
deliver long-term success for the benefit of all our stakeholders.
Geographically, we are continuing to pivot more towards higher-
growth markets, most particularly North America, but also gaining
increasing share in selected Asia-Pacific markets. In pursuing these
opportunities, we will continue to apply the same capital discipline
that has characterised SSP’s approach to investment for many years.
Continuous reinvestment into our competitive strengths including
customer proposition development and the rapid digitalisation of our
business, from consumer facing order and pay technology through to
the back of house processes, will make us more competitive, as will
our focus on engaging and developing our people.
Crucially, all of this will be delivered sustainably. We’ve made a step
change by implementing a new sustainability strategy and challenged
ourselves to deliver purposeful outcomes in three key areas: serving
our customers responsibly, protecting our environment, and
supporting our colleagues and communities. We are making rapid
progress in understanding our journey to net zero by 2040 and,
working with our consumers, clients, brand partners and suppliers,
we are starting to put in place real actions that will reduce CO2 levels
year-on-year. We are proud to be releasing our first standalone
Sustainability Report in January, which describes in detail our
sustainability strategy and key initiatives.
Actively facing into challenges
As an industry, we’re facing significant macro-economic challenges
and SSP is not immune to these. Our approach is to tackle these head
on to mitigate the impact on our business. For example, against a
backdrop of lower levels of labour availability, we’ve worked hard to
meet the growing and fluctuating demand across many geographies.
We have been re-opening outlets at pace, and this proactive approach
of looking after our customers and our clients has strengthened our
reputation and relationships.
The sector is also facing cost inflationary pressures, particularly
within labour and cost of goods, and we’ve mitigated the impact of
these pressures through productivity initiatives and through pricing
where this has been necessary. We anticipate that this inflationary
pressure will increase into next year, and we’ll continue to tackle
it effectively.
Outlook
Travel demand has continued to strengthen during the first eight
weeks of the new financial year. Building on our strong performance
over the last twelve months, as we look ahead to the 2023 financial
year, whilst there remains considerable uncertainty in the macro-
economic environment, we remain confident in the recovery and have
plans to accelerate the mobilisation of our pipeline, with increased
planned capital investment.
Our flexible and resilient business model will enable us to continue
to offset cost inflation, manage supply chain and labour volatility,
and optimise profitability and returns as travel demand continues
to recover. I believe that the combination of our unique competitive
strengths and our clear strategy set us on the path for sustainable
growth and returns for many years ahead.
Patrick Coveney
Group CEO
5 December 2022
SSP Group plc Annual Report and Accounts 2022
09
OverviewCorporate governanceFinancial statementsStrategic report CEO’s Q&A
Q
What are your first impressions
of SSP?
Since joining in March, I’ve been to around 20 markets (some multiple
times) to visit our teams and outlets, and I’ve now met with thousands
of colleagues as well as customers, clients, brand partners and joint
venture partners across the world. What’s clear is that SSP is a great
business, with strong foundations and an economic model that
delivers significant cash flow and returns. As ever, there’s even more
we can do. Looking at our strengths, we have incredible teams with
a huge amount of passion. We operate great brands across multiple
formats, enjoy strong relationships with our clients and benefit from
excellent local and global partnerships. We have a strong track record
of winning new business and delivering excellent returns, and I’ve
been very impressed by the discipline and expertise that goes into
the evaluation of every new business investment.
Looking ahead, I think there are a number of opportunities to become
an even better business, for example, a more targeted approach to
geographic development and building on our strong portfolio of brands
and concepts. We can drive further innovation in our proposition to
cater for the needs of multi-generational travellers, which is
fundamental to driving like-for-like sales growth. Furthermore, we
can invest more into the fabric of our units and the tools we use to
make our customer and colleague experience even better and to drive
like-for-like sales.
Q
How do you intend to change
the strategy?
We have a very clear and robust economic model for delivering
growth and returns focused on new business growth, driving
profitable sales, conversion and cash flow generation. This is not
going to change. However, when I think about our strategy, I think
about steering our geographic focus and building on our competitive
strengths. We have huge potential for growth in North America and
Asia as our market share is relatively low in those geographies.
So, I want us to accelerate our growth in those markets specifically,
whilst ensuring we still go after selective growth in the UK, Europe
and the Middle East. I also see a significant opportunity for us to
be a bigger player in convenience retail, building on our extensive
experience in these formats, such as our M&S Simply Food outlets
in the UK and our Point outlets across the Nordic countries, as well
as many of our own concepts.
We have some deep competitive strengths, and I want to see
us continue to invest and build on these. This will support not only
like-for-like growth but put us in the best possible position to win and
retain contracts. The work we are doing on gaining greater client and
consumer insight is helping us to deliver formats, brands, and menus
that meet the needs of our clients and consumers. We are
accelerating our digital capabilities, putting more investment into
our people programmes and doing what we need to deeply embed
sustainability into the way we do business and critically to reduce
carbon emissions.
Q
Where are the greatest growth
opportunities for SSP?
We are in an industry with potential for long-term structural growth
and there’s a lot to go after on new business, especially in North
America and Asia. For example, we’re only in 30 of the top 80 airports
in North America, with less than 10% overall market share in the air
channel. We’ve been growing rapidly but clearly there is scope to go
much further and faster.
The Asian market is also hugely exciting. Look at India, where we’re
already the major player through our TFS joint venture. Only three
or four per cent of the population have ever flown, and this is set
to more than double by 2030. There is huge investment in airport
infrastructure to meet this increasing demand, so it’s a really exciting
market for us to be in. There’s also big growth potential in Thailand
and Malaysia, where we’ve only just started to mobilise units
following significant wins in Kuala Lumpur and Kuching.
You can read more about the trends influencing our strategy on pages 14-15.
10
SSP Group plc Annual Report and Accounts 2022
Q
Do you see more opportunity for M&A,
especially given other consolidation in
the sector?
We have a track record of creating shareholder value from infill
M&A activity, and it’s an important part of our investment strategy.
Thanks to the 2021 Rights Issue, we have a very strong balance sheet,
and whilst our priority is organic growth, infill M&A activity can be a
good way to accelerate our ambitions, if there is a good strategic fit.
As ever, any opportunities we explore for capital deployment will
be evaluated in a very disciplined way.
“We have some deep competitive
strengths, and I want to see us continue
to invest and build on these. ”
Patrick Coveney
Group CEO
Q
There are a number of challenges
facing the business, not least inflation,
challenges to consumer confidence
and labour shortages. How is
SSP responding?
As a whole industry, we are facing widespread and increasing
inflationary pressures impacting our supply chain, labour and energy
costs, and we are tackling these directly with a number of measures
to mitigate the impact. These include range rationalisation, menu
engineering, energy efficiency measures, greater use of digital and
where necessary, significant pricing initiatives.
However, it’s important to remember and be sensitive to the fact that
our customers are also experiencing pressure on their disposable
incomes. We need to be sure we’re on the side of the customer and
make sure that we offer a wide variety of products at various price
points to meet their needs.
Labour shortages are also an issue the hospitality sector is facing,
particularly in the US and pockets of the UK, and we talk about this
later in the report in our market trends section. Having operations
across 35 countries means we have plenty of experience in dealing
with this and we know better than most how to manage it. I think the
team has done a brilliant job staffing up units to date and, where there
have been challenges, we’ve adapted and put measures in place to
attract more colleagues, such as putting on transport to some of
our more remote locations, implementing ‘refer a friend‘ incentive
schemes and offering retention bonuses.
SSP Group plc Annual Report and Accounts 2022
11
OverviewCorporate governanceFinancial statementsStrategic report Understanding our market
Global market size
Our core market is food and beverage
provision in travel-related locations
worldwide, principally within the air
and rail channels.
Total market in 2019¹
Autogrill
SSP
Areas
Lagardère
Others
£23bn
Pre-pandemic, our market was valued (by revenues) at
approximately £23 billion (2019), of which approximately
80% represents the airport sector and 20% the rail sector.
In 2022, 66% of our business was in the air sector and 28% was
in the rail sector, with around 6% from other areas, including MSAs,
in-flight catering, retail, lounge and on-board rail catering.
Our market remains very fragmented, with the top four participants
having a little over a third of the sales, and a long tail of local and
single brand participants typically competing within regional
travel markets.
66%
percentage of our business in the air sector
28%
percentage of our business in the rail sector
6%
percentage of our business in other areas, including motorway
service areas (MSAs), in-flight catering, retail, lounges and on-board
rail catering
12
SSP Group plc Annual Report and Accounts 2022
Our market has seen a strong recovery since 2020.
This year, we have seen significant growth in passenger numbers
and this is set to increase, with air passenger traffic in all
geographies expected to be back at 2019 levels by 2024, and rail
passenger traffic at 2019 levels by 2025. This recovery in the travel
sector has been led by leisure, domestic and short-haul travel,
where we believe we are well placed to benefit from the shape
of recovery due to our exposure to each of the returning passenger
segments. Business and long-haul demand is also recovering,
albeit at a slower pace.
The markets in which we operate are fundamentally attractive
and air and rail travel markets will deliver long-term growth, albeit
from a lower base, as the global economy recovers and an increasing
proportion of the world’s population is willing and able to travel.
As we look to the medium term, the strongest growth will be found
in North America and Asia as Europe air growth slows relative to
APAC (with Europe’s growth between 2014-2019 slowing to 2% in
2025-2030 while APAC is set to remain at c. 7% and North America
at 5%)2.
We expect the growth in our markets will be underpinned by
longer-term trends that were evident prior to the pandemic, such
as the trend towards increased eating out-of-home (including eating
‘on the move’) and investment in travel infrastructure and capacity
expansion, in part supported by government policy.
Clearly consumers and businesses are facing multiple economic
headwinds which are most pronounced in the UK and Europe.
However, we believe that our markets are fundamentally more
resilient to those pressures on consumer spending that many other
consumer sectors. This is underpinned by the fact that the recovery
has been driven by leisure travellers, who contribute approximately
70% of our revenues.
We recently commissioned research into the behaviours, spending
patterns and expectations of leisure travellers which demonstrate
this resilience, with 70-80% of flights being made by people earning
above medium income, travel being the main priority for
discretionary spending, and on average an intention to travel more
in the coming year.3 This is allied to the fact that food and beverage
experiences are now felt to be an increasingly important part of
the travel journey.
Although we remain confident in a full recovery in travel, there
continues to be uncertainty in the short term given the ongoing
travel restrictions in markets, such as China. Geo-political issues,
including the war in Ukraine, are impacting directly on regional
travel and contributing to global economic pressures, especially
in terms of rising inflation.
1
SSP FY2019 (excluding Other Channel); Autogrill 2019 (excluding Motorways); Areas (Elior)
2018 (excluding motorways); Lagardère Travel Retail 2019 (estimated food service revenue).
2 Internal estimates based on third-party research commissioned by the Company in 2022.
3 Third-party research commissioned by the Company in 2022.
Air
Rail
We expect air passenger numbers for SSP to recover to broadly
2019 levels by 20244. Air travel recovery is being driven primarily
by leisure and domestic/regional travel.
We expect the following trends that drove the growth
in air travel prior to Covid-19 to continue:
– more airports are being built and more space is being allocated
to food and beverage and with greater prominence, especially
in the space beyond security controls. This is coupled with
significant terminal refurbishments
– increased spending power and desire to travel among the
rapidly growing middle classes (particularly within the Asia
Pacific region)
– the removal or reduction of in-flight catering leading
passengers to consume more food and beverages pre-flight
– increased air-side dwell time due to increased airport security
requirements and airport investments to improve speed of
processing security clearance.
We expect rail passenger numbers for SSP to recover to around
90-95% of 2019 levels by 20246. We have seen a steady recovery
in rail travel in both Continental Europe and in the UK, initially led
by leisure travel followed by a return of many commuters back
to offices. That said, there will be a continued impact from hybrid
working on passenger numbers, accounting for the slower
recovery compared with air travel.
We expect that growth will continue to be driven by the
following pre-Covid-19 factors:
– continued investment in track expansion, especially high-speed
networks and train capacity
– station development strategies to improve food and beverage
offers
– infrastructure investments in developing countries
– governments encouraging people to switch from road to rail
– customers ‘trading up’ in their food and beverage purchases.
Find out more about the key trends impacting our markets post-
Covid-19 on pages 14-15.
6.7%5
historical annual growth rate from 2009 to 2019
2-3%7
historical annual growth rate from 2011 to 2019 in key European
markets
4 SSP Rights Issue Prospectus, 17 March 2021.
5 Sources: ORR, Eurostat, ACI, Airport Commercial Revenues Study (2018/19).
6 SSP Rights Issue Prospectus, 17 March 2021.
7 Sources: ORR, Eurostat, ACI, Airport Commercial Revenues Study (2018/19).
SSP Group plc Annual Report and Accounts 2022
13
OverviewCorporate governanceFinancial statementsStrategic report Understanding our market
continued
Key trends in our markets
There are a number of key trends that
influence and impact our sector and
our business. We have a long history
of monitoring and adapting to these
trends, ensuring we evolve to meet
ever-changing stakeholder
expectations.
Evolving tastes and preferences
We operate in a dynamic sector, in which the needs of our
customers are constantly evolving. Customers are increasingly
focused on their wellbeing and expressing a desire for ‘better for
you’ options. They are more educated than ever, and they are well
aware of the importance of eating a healthy diet. They are looking
for clear nutritional information, an offer that caters for a wide
range of dietary needs, and – most importantly – food that is
appealing and doesn’t leave them feeling that they must sacrifice
taste for healthfulness. Overall, the ‘whole person’ approach
has become a central element influencing customers, who are
looking for nourishing, whole foods in line with the quest to live
healthier lifestyles.
Concern about issues like environmental degradation, climate
change and resource depletion is also growing, which has led to the
rise in customers seeking out plant-based alternatives, even if not
strictly vegetarian or vegan.
Given the cost of living pressures in many markets, customers are
looking for value for money; however, they are also ready to pay
a premium for high-quality services and products when travelling,
with 61% of passengers considering that their vacation starts
as soon as they leave home.
How we’re responding
– Adapting our ranges to include healthier options: We continue to
innovate and deliver offers that cater to the tastes of consumers,
satisfying a diverse range of dietary needs as well as providing
healthier and more sustainable options. This includes developing
innovative new concepts with wellness at the core, such as
Haven in the Nordics, Ida & Frida in Germany and #Nourish
in India, as well as building partnerships with wellness brands,
such as Exki in France. We’re also introducing new ‘better for you’
ranges across our core brands.
– Plant-based alternatives: We are constantly adapting our offer
to provide healthier lifestyle choices suited to different dietary
needs, including plant-based diets. By the end of 2022, 33%
of meals offered by our own brands globally were plant-based
and/or vegetarian. In addition, 85% of our own brands in North
America, Europe and UK&I that serve coffee offer non-dairy
milk alternatives, such as soy or almond milk.
Sustainability
Businesses are under increased pressure from consumers,
shareholders, partners, and colleagues to address their
environmental impact and play a positive role in contributing
to a sustainable future.
In the food sector, the questions of food waste and sustainable
diets are central to addressing our customers’ concerns. They
want to know how food is produced, transported and processed,
and they are looking to limit their own environmental impact,
avoid animal suffering, and help tackle climate change.
People are increasingly worried about how their choices and
purchases affect individuals and communities, both locally and
across the world. There is a growing interest in local sourcing,
and working with local suppliers offers practical benefits too,
particularly as supply chain disruptions have led to product
shortages.
The pandemic further exposed inequalities affecting different
groups within society, and there is an increasing expectation that
businesses should play a part in supporting people affected by
disadvantage and in advocating for a fairer system.
How we’re responding
– Sustainability is a core component in our business strategy:
We are fully embedding sustainability into the way we do
business and have re-articulated our strategic priorities,
ensuring sustainability is elevated as a key component.
– Targets for 2025: focused on key sustainability issues,
including 100% cage-free eggs for our own brands, 100%
certified tea, coffee, hot chocolate, and seafood and fish for
our own brands, eliminating unnecessary single-use plastic
packaging and making all our own brand packaging recyclable,
reusable or compostable.
– Net zero by 2040 ambition: We have set an ambitious target
to achieve net zero carbon emissions (Scopes 1, 2 and 3) by 2040.
In support of this, we have mapped our Scope 3 footprint and are
finalising our science-based targets in line with a 1.5 °C scenario.
Our plan to reduce emissions associated with our food includes
developing more climate-friendly menus and increasing local
and seasonal sourcing.
The proliferation of digital technology
Attraction and retention in the hospitality sector
The pandemic has accelerated the adoption of digital technologies
Recruitment in the retail and hospitality sector has become
across all age groups, with the democratisation of remote
increasingly competitive, as many workers moved to different
working, and the usage of technologies to perform daily activities.
sectors when government restrictions led to the closure of
As their lives become busier and more complex, customers are
actively looking for products and services that enable simpler,
faster, and more reliable experiences. They want to be in control
of their full customer experience and increasingly rely on ‘one stop
shop‘ apps to simplify their journey. What used to be separate
stages of a customer journey are increasingly being rolled into
a single, seamless, tech-enabled interaction. Technology also
restaurants, pubs, bars, hotels and other hospitality venues.
As the sector has bounced back strongly, there has been an
urgent need to fill these positions to serve returning customers.
In the UK, the hospitality sector had the highest proportion of
vacancies of any industry in 2022. We have observed the same
trend across Europe, the United States and Australia. The
allows customers to browse menus, customise orders, and track
competition for talent is intense, requiring businesses to offer
preparation and delivery, for a more personalised experience.
a whole range of compelling benefits to match colleagues’ growing
expectations. Compensation is no longer enough to attract
talented recruits, who are now also increasingly focused on
wellbeing, work-life balance, and development opportunities.
Digital technology has also reinvented the way we work and
collaborate, calling for an adaptation of the workspace. With
colleagues coming back to the workplace while still for looking
flexibility, businesses are expected to adapt to and maintain
hybrid working patterns.
How we’re responding
How we’re responding
– Putting technology at the core of the customer experience:
– Building our internal recruitment capability and employer
We have implemented multiple self-order solutions, including
mobile and kiosk-based order and payment across our F&B
outlets and self-checkouts in our retail stores. We are also
trialling checkout-free technology and looking at other
automation solutions, including delivery robots. The aim is to
offer the travelling customer more control over their airport
experience and increase speed and convenience.
brand across the Group: We have improved our in-house
capability to source both mid and senior level candidates.
We have also increased the size of our Group recruitment team
to account for additional demand in hiring. In parallel, we’re
developing our employer brand to enhance our employer profile
across our channels, which will include the launch of our global
careers website in 2023.
– Rolling out our Modern Workplace Programme: With the return
– Introducing new attraction and retention incentives:
of our colleagues to offices, we equipped our support functions
and operations management with a suite of Microsoft 365 tools
including Microsoft Teams and SharePoint, enabling colleagues
to work and collaborate smoothly be it remotely, in the office,
or using a hybrid model.
Throughout 2022 we have been focused on making
improvements to pay and benefits to remain competitive
and position ourselves as an employer of choice. Within the UK,
we have also rolled out a referral scheme which has been a key
enabler in supporting our workforce growth.
Find out more about how we are delivering for our
customers and clients on pages 20-21.
Find out more about our Sustainability Strategy
on pages 28-31 and in our 2022 Sustainability Report.
Find out more about our customer-facing digital solutions
Find out more about our colleague initiatives
on pages 20-21.
on pages 22-23.
14
SSP Group plc Annual Report and Accounts 2022
Key trends in our markets
Evolving tastes and preferences
Sustainability
We operate in a dynamic sector, in which the needs of our
customers are constantly evolving. Customers are increasingly
focused on their wellbeing and expressing a desire for ‘better for
you’ options. They are more educated than ever, and they are well
aware of the importance of eating a healthy diet. They are looking
for clear nutritional information, an offer that caters for a wide
range of dietary needs, and – most importantly – food that is
Businesses are under increased pressure from consumers,
shareholders, partners, and colleagues to address their
environmental impact and play a positive role in contributing
to a sustainable future.
In the food sector, the questions of food waste and sustainable
diets are central to addressing our customers’ concerns. They
appealing and doesn’t leave them feeling that they must sacrifice
want to know how food is produced, transported and processed,
taste for healthfulness. Overall, the ‘whole person’ approach
has become a central element influencing customers, who are
looking for nourishing, whole foods in line with the quest to live
healthier lifestyles.
Concern about issues like environmental degradation, climate
and they are looking to limit their own environmental impact,
avoid animal suffering, and help tackle climate change.
People are increasingly worried about how their choices and
purchases affect individuals and communities, both locally and
across the world. There is a growing interest in local sourcing,
change and resource depletion is also growing, which has led to the
and working with local suppliers offers practical benefits too,
rise in customers seeking out plant-based alternatives, even if not
particularly as supply chain disruptions have led to product
strictly vegetarian or vegan.
shortages.
Given the cost of living pressures in many markets, customers are
The pandemic further exposed inequalities affecting different
looking for value for money; however, they are also ready to pay
groups within society, and there is an increasing expectation that
a premium for high-quality services and products when travelling,
businesses should play a part in supporting people affected by
with 61% of passengers considering that their vacation starts
disadvantage and in advocating for a fairer system.
as soon as they leave home.
How we’re responding
How we’re responding
– Adapting our ranges to include healthier options: We continue to
– Sustainability is a core component in our business strategy:
innovate and deliver offers that cater to the tastes of consumers,
satisfying a diverse range of dietary needs as well as providing
healthier and more sustainable options. This includes developing
innovative new concepts with wellness at the core, such as
Haven in the Nordics, Ida & Frida in Germany and #Nourish
in India, as well as building partnerships with wellness brands,
such as Exki in France. We’re also introducing new ‘better for you’
ranges across our core brands.
We are fully embedding sustainability into the way we do
business and have re-articulated our strategic priorities,
ensuring sustainability is elevated as a key component.
– Targets for 2025: focused on key sustainability issues,
including 100% cage-free eggs for our own brands, 100%
certified tea, coffee, hot chocolate, and seafood and fish for
our own brands, eliminating unnecessary single-use plastic
packaging and making all our own brand packaging recyclable,
– Plant-based alternatives: We are constantly adapting our offer
reusable or compostable.
to provide healthier lifestyle choices suited to different dietary
– Net zero by 2040 ambition: We have set an ambitious target
needs, including plant-based diets. By the end of 2022, 33%
of meals offered by our own brands globally were plant-based
and/or vegetarian. In addition, 85% of our own brands in North
America, Europe and UK&I that serve coffee offer non-dairy
milk alternatives, such as soy or almond milk.
to achieve net zero carbon emissions (Scopes 1, 2 and 3) by 2040.
In support of this, we have mapped our Scope 3 footprint and are
finalising our science-based targets in line with a 1.5 °C scenario.
Our plan to reduce emissions associated with our food includes
developing more climate-friendly menus and increasing local
and seasonal sourcing.
The proliferation of digital technology
The pandemic has accelerated the adoption of digital technologies
across all age groups, with the democratisation of remote
working, and the usage of technologies to perform daily activities.
As their lives become busier and more complex, customers are
actively looking for products and services that enable simpler,
faster, and more reliable experiences. They want to be in control
of their full customer experience and increasingly rely on ‘one stop
shop‘ apps to simplify their journey. What used to be separate
stages of a customer journey are increasingly being rolled into
a single, seamless, tech-enabled interaction. Technology also
allows customers to browse menus, customise orders, and track
preparation and delivery, for a more personalised experience.
Digital technology has also reinvented the way we work and
collaborate, calling for an adaptation of the workspace. With
colleagues coming back to the workplace while still for looking
flexibility, businesses are expected to adapt to and maintain
hybrid working patterns.
Attraction and retention in the hospitality sector
Recruitment in the retail and hospitality sector has become
increasingly competitive, as many workers moved to different
sectors when government restrictions led to the closure of
restaurants, pubs, bars, hotels and other hospitality venues.
As the sector has bounced back strongly, there has been an
urgent need to fill these positions to serve returning customers.
In the UK, the hospitality sector had the highest proportion of
vacancies of any industry in 2022. We have observed the same
trend across Europe, the United States and Australia. The
competition for talent is intense, requiring businesses to offer
a whole range of compelling benefits to match colleagues’ growing
expectations. Compensation is no longer enough to attract
talented recruits, who are now also increasingly focused on
wellbeing, work-life balance, and development opportunities.
How we’re responding
– Putting technology at the core of the customer experience:
We have implemented multiple self-order solutions, including
mobile and kiosk-based order and payment across our F&B
outlets and self-checkouts in our retail stores. We are also
trialling checkout-free technology and looking at other
automation solutions, including delivery robots. The aim is to
offer the travelling customer more control over their airport
experience and increase speed and convenience.
– Rolling out our Modern Workplace Programme: With the return
of our colleagues to offices, we equipped our support functions
and operations management with a suite of Microsoft 365 tools
including Microsoft Teams and SharePoint, enabling colleagues
to work and collaborate smoothly be it remotely, in the office,
or using a hybrid model.
How we’re responding
– Building our internal recruitment capability and employer
brand across the Group: We have improved our in-house
capability to source both mid and senior level candidates.
We have also increased the size of our Group recruitment team
to account for additional demand in hiring. In parallel, we’re
developing our employer brand to enhance our employer profile
across our channels, which will include the launch of our global
careers website in 2023.
– Introducing new attraction and retention incentives:
Throughout 2022 we have been focused on making
improvements to pay and benefits to remain competitive
and position ourselves as an employer of choice. Within the UK,
we have also rolled out a referral scheme which has been a key
enabler in supporting our workforce growth.
Find out more about how we are delivering for our
customers and clients on pages 20-21.
Find out more about our Sustainability Strategy
on pages 28-31 and in our 2022 Sustainability Report.
Find out more about our customer-facing digital solutions
on pages 20-21.
Find out more about our colleague initiatives
on pages 22-23.
SSP Group plc Annual Report and Accounts 2022
15
OverviewCorporate governanceFinancial statementsStrategic report Business model
Competitive advantages
What we do
Leading market positions
We have leading positions in some of the most attractive sectors
of the travel food and beverage market, underpinned by our
extensive brand portfolio (comprising our own brands and
bespoke concepts as well as franchised local and global brands)
and established management and operational teams across the
35 countries in which we operate.
Food travel expertise
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,
an extensive offering of brands and concepts to meet these
needs, and a knowledge of how to operate in complex travel
environments which are logistically demanding. Our deep
understanding of travel food and beverage has enabled
us to adapt our operating model so that we can operate our
units at lower passenger levels whilst still ensuring a great
customer experience.
Long-term client relationships
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.
Skilled and engaged colleague base
Our c.35,000 colleagues have a broad range of skills and
experience spanning the food and beverage, travel and retail
industries. In all our key markets, 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 teams who have a track record of
delivering operational excellence and great customer service.
Local insight and international scale
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 our customers’
tastes and needs, as well as allowing us to maintain close
relationships with clients and brand partners and to create
a ‘sense of place’ in the locations which we operate.
We work collaboratively
with clients…
Our clients are primarily airports and railway
stations seeking to develop the right range of
food, beverage and retail brands and services
at their locations to satisfy the needs of the
travelling customer. We work closely with
our clients to understand the needs of their
passengers so we can develop innovative
concepts and brands to match their
requirements. Our economic goals are aligned
through the payment of concession fees
which are based on the revenues generated
by our units.
… to develop and deliver great
food solutions…
We tailor our food and beverage outlets
to the requirements of each travel location
we serve. This is made possible as a result of
our extensive brand portfolio, which includes
brands we own, concepts we create and by
partnering with a number of local hero and
international third-party brands to whom
we pay a franchise fee, which is typically
a percentage of revenue. The menu items
we serve and products we sell are primarily
sourced from local suppliers and wholesalers
that distribute them to our units.
… through our colleagues who
serve our customers
Our local management teams, unit managers
and wider teams are committed to providing
a great customer experience to all who pass
through our units. The quality of our offer and
high service standards puts us in a strong
position to maintain and extend our current
contracts as well as win new business.
You can read more about the markets in which
we operate on pages 34-41.
16
SSP Group plc Annual Report and Accounts 2022
Aligned to our strategy which creates value for all our stakeholders
S U S TAINABILITY
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You can read more about our strategy on
pages 18-31, our KPIs on pages 32-33 and our
key relationships with stakeholders and the
value we create for them on pages 42-51.
SSP Group plc Annual Report and Accounts 2022
17
OverviewCorporate governanceFinancial statementsStrategic report
Our purpose, vision and strategy
Our purpose
To be the best part of the journey.
As ‘food travel experts’, we are passionate about offering great-
tasting, nutritious food that is good for people and the planet.
Our vision
To be the world’s best travel food and beverage
company
To be the leaders in our sector we need to deliver value for all our
stakeholders in a way that ensures long-term sustainable growth.
Creating value for our stakeholders
Our values and culture
Our values play a key role in delivering our purpose, vision and
strategy. They were developed in consultation with our teams across
the world. They guide our culture, behaviours and decisions, helping
ensure we act in the best interests of our stakeholders, the
environment and our business.
We are one team
We are results
focused
We all make a
difference
We are bold
We celebrate
success
We want to deliver a great experience and create value for all our
stakeholders, including:
We uphold these values through our culture (see pages 96-97) and the
sustainable commitments we make to our stakeholders (see pages 43-51).
Our customers by offering
great tasting, nutritious and
sustainable food and drink
for people on the move
Our colleagues by being a great
place to work where everyone
can fulfil their potential
Our clients by delivering
exceptional service to
passengers
Our investors by generating
sustainable long-term profitable
growth and returns
Our brand partners by being
their preferred partner for
operating in the travel sector
Our suppliers by building
mutually-beneficial relationships
Communities, NGOs and society
by positively impacting our
planet and wider society
Government and regulators
by supporting local economies
and contributing our experience
and expertise to areas of
policy development
Find out more about how we engage with our stakeholders
on pages 42-51.
Find out more about how we are living our values on pages 22-23.
Our competitive strengths
Our core market is the provision of catering services in travel-related
locations, primarily in airports and railway stations. We benefit from,
and are able to leverage, our key competencies and competitive
strengths to deliver our vision and strategy. These strengths include:
– Leading market positions
– Food travel expertise
– Long-term client relationships
– Skilled and engaged colleague base
– Local insight and international scale
Find out more about our strengths in our Business model on page 16.
18
SSP Group plc Annual Report and Accounts 2022
Our strategy
Our strategic priorities
To deliver our purpose and vision, we are focused
on growing our market-leading positions in the food
travel sector in international markets.
Our strategic priorities are aimed at delivering a leading customer
proposition aligned to our clients’ needs and goals and ensuring we
have skilled and engaged colleagues. At the same time, we continue
to drive performance through our proven economic model, focused
on winning new business, growing like-for-like revenue, driving efficient
profit conversion and generating a strong cash flow in order to deliver
long-term sustainable growth. Sustainability is a key element to our
long-term success, encompassing our three core strategic priorities.
Leading customer proposition
– Leading brands and innovative
concepts
– Great value, taste, quality
and service
– Digital customer solutions
– Long-term, mutually beneficial
client relationships
Find out more on page 20.
Associated KPIs:
– Like-for-like revenue
– Net gains
Associated risks:
1, 7
S U S TAINABILITY
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journey
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Remuneration linked to performance
See how delivery of our strategy is reflected in our executive
remuneration.
Find out more in our Directors’ Remuneration Report on pages 120-146.
Skilled and engaged
colleagues
– Attraction and retention
– Inclusion and engagement
– Training and development
– Safety and wellbeing
Find out more on page 22.
Associated KPIs:
– Colleague positivity score
– Women in senior leadership
roles
Associated risks:
2, 4, 7
Long-term growth and returns
– New business development
– Like-for-like revenue growth
– Profit conversion
– Cash flow generation
Associated KPIs:
– Revenue
– Like-for-like revenue
– Underlying operating profit
– Underlying operating margin
– Operating cash flow
– Net gains
Associated risks:
1, 3, 5, 6, 9, 10
Find out more on page 24 and Financial Review on page 70.
Sustainability
– Serving our customers
responsibly
– Protecting our environment
– Supporting our colleagues and
communities
– Upholding high standards of
governance
Associated KPIs:
– Colleague positivity score
– Women in senior leadership
roles
– Scope 1 and 2 CO2e emissions
Associated risks:
3, 8
Find out more on page 28 and in our Sustainability Report.
Risks
1.
Business environment,
geo-political uncertainty and
terrorism threat
2. Availability of labour
and wage inflation
3. Supply chain disruption and
product cost inflation
4.
Sufficient senior capability
at Group and country level
Impact of Covid-19
5.
6. Compliance
7. Health and food safety
8. Sustainability
9. Information security and stability
10. Mobilisation of pipeline
SSP Group plc Annual Report and Accounts 2022
19
OverviewCorporate governanceFinancial statementsStrategic report
Our purpose, vision and strategy
continued
Leading customer
proposition
Through our deep customer insights,
food travel expertise and extensive
portfolio of brands and innovative
concepts, we deliver a leading customer
proposition aligned to our clients’ needs
and goals.
Strategic priorities
– Using customer insights to build leading brands and create
innovative concepts
– Offering great value, taste, quality and service
– Rolling out digital technologies that improve the customer
experience
– Evolving our offer to sustain long-term mutually beneficial
client relationships
Key highlights from 2022
– Commissioned a Global Trends report to feed into new product
development, tenders, brand and concept development, client
partner updates, and brand planning
– Started working with a leading food insights provider to access
a new ‘food trends hub‘, a portal providing insight on a wide variety
of food and drink trends from across the globe
– Strengthened our customer and commercial capability with the
expansion of our Group customer team
– Implemented Reputation across more than 500 UK units, a
‘customer listening’ solution giving us real time information about
the customer experience so we can take action to improve our
customer experience as appropriate
Priorities for 2023
– Commission a global customer insights and segmentation survey,
covering 17,000 customers across 25 key markets
– Undertake our long-standing annual client survey (paused during
Covid) enabling us to gather critical feedback from our clients
which ensures we deliver a service which meets and exceeds
their expectations
– Conduct digital research to better understand our customers’
attitudes to digital and ensure our digital products contribute
to building a more convenient, frictionless customer experience
Link to relevant KPIs
– Like-for-like revenue
– Net gains
20
SSP Group plc Annual Report and Accounts 2022
Our approach
Leading brands and innovative concepts
We are focused on who our customers are and what they want from
us, taking advantage of our food travel expertise to gain competitive
advantage. We put the voice of the customer at the heart of what we
do in order to become the best part of their journey.
To make better informed decisions on our brands and how we operate
them, we need to invest in customer insights and trends, making sure
we embed these insights throughout the business. Our broad
portfolio of global, regional and local brands, to which we are
constantly adding new and innovative concepts, enables us to meet
both client and customer expectations. The scale of our business
provides us with access to a wealth of customer insights, which
we use to inform our range and menu choices and to develop our
customer propositions.
Great value, taste, quality and service
We continue to innovate and deliver offers that cater to the tastes
of customers satisfying a diverse range of dietary needs as well
as providing healthier and more sustainable options. This includes
developing new menus, with a focus on unique culinary experience,
wellness, local sourcing and sustainability, as well as enhancing
product ranges.
More than ever, customers are seeking out value for money, so we
ensure that we sell items across all price points, adopting a good,
better, best approach across our portfolio so that we can cater to all
requirements. The customer experience is paramount to us, and we
know this starts with the service they receive from our colleagues.
This year, we launched a new training module around how to deliver
excellent customer service, which will be rolled out globally in 2023.
It’s critical that our food is safe to eat and the safety of our customers
and the public is protected. We focus on maintaining the highest
standards of food safety, aligned to the Hazard Analysis Critical
Control Point (HACCP) management system, an internationally-
recognised standard. For customer safety, we work to ensure full
compliance with all government requirements and guidelines
(including the various Covid-19 protocols that have been in place
over the last two years).
Digital customer solutions
To better serve the needs of our customers, we are rolling out digital
technologies, such as order and payment systems, kiosks and order
at table, to give them full control over what they order and how and
when they pay. We have ensured that we also offer relevant add-ons,
such as water bottles they can purchase as part of their meal to take
aboard a flight. In addition, this year, we launched our first self-serve
Camden food co. express unit using Zippin technology at John F.
Kennedy International Airport in New York, and plans are underway
to roll out this technology more widely.
Long-term mutually beneficial client relationships
Evolving our brand portfolio is critical to retaining our existing
business with our clients and also winning new business. By delivering
the best customer offer, we increase spend, which in turn benefits
our clients to whom we pay concession fees. The strong relationships
we have established with our clients have been critical over the past
year as we have been able to negotiate more favourable rental
agreements which has enabled us to re-open more units and serve
more customers.
Find our KPIs on pages 32-33 and our Principal Risks on pages 58-67.
Strategy in action
Innovative brand concepts to meet client needs
and customer preferences
Over the last year, we have continued to invest in our customer
proposition, launching a number of exciting new brands and
innovative concepts in collaboration with our clients.
At Vienna Airport, we joined forces with world-renowned chef
Wolfgang Puck to offer guests a unique culinary experience
at our new restaurant, ‘Wolfgang Puck Kitchen & Bar’. The menu is
characterised by Wolfgang’s signature approach to building a culinary
bridge between local specialities and healthy Californian food.
In Sweden, we launched Eatery, a casual dining concept offering
fresh local products, and Jureskogs, which serves healthy and tasty
fast food.
Enhancing the customer experience
with digital solutions
Our customers and our clients increasingly want digital solutions
to provide a quicker, easier and more efficient experience, while
still benefitting from the great service provided by our colleagues.
This year, we introduced our first ever ‘contactless’ retail concept
in partnership with Zippin at John F. Kennedy Airport, New York.
Zippin’s new technology for our Camden food co. express unit offers
a grab ‘n’ go food and beverage selection using Artificial Intelligence
to enable an entirely contactless shopping experience. Customers
tap their credit card as they enter, and begin picking items off
shelves. The items and costs are logged by the technology, and
when the customer leaves, the total amount spent is automatically
charged to the card.
Using insight to improve our offer
Listening to our customers helps us adapt and improve our offer.
Over the past year, we have invested in dedicated resources to
listen to customers, which has allowed us to take action to respond
to their needs. Through ‘Reputation’, our customer insight tool in
the UK, we continually seek to learn about the experience of our
customers and identify how we can make their journey smoother.
In 2022, by analysing customer feedback gathered through
Reputation, we identified opportunities for improvements. As a
result, we have launched new and improved food ranges in Upper
Crust, Camden food co. and Ritazza, giving our customers better
value for money and offering great quality food.
SSP Group plc Annual Report and Accounts 2022
21
OverviewCorporate governanceFinancial statementsStrategic report Our purpose, vision and strategy
continued
Skilled and engaged
colleagues
The talent and dedication of colleagues
are crucial to SSP’s success. We are
focused on ensuring SSP is a great place
to work where everyone can fulfil their
potential. At SSP, we truly believe we
can be the best part of our colleagues’
career journeys.
Strategic priorities
– Enhancing our approach to attraction and retention
– Building a culture of inclusion and engagement
– Investing in training and development
– Promoting safety and wellbeing
Key highlights from 2022
– Creation of a new service delivery framework (High Five) and
associated training video, now available in five languages. We also
tested supplementary ‘Going the Extra Mile‘ training materials,
delivered to 600 colleagues
– Established our ‘People Community of Practice’ sessions to discuss
progress, overcome obstacles and share knowledge
– Partnered with WiHTL (Welcoming Everyone in Hospitality, Travel
and Leisure), a multi-stakeholder group devoted to increasing
diversity and inclusion across our sector and launched an accelerator
programme for female leaders in partnership with WiHTL
– Refreshed our compliance training for all colleagues
Priorities for 2023
– Launch our global careers website, which will advertise vacancies
across all markets and provide a more fluid candidate experience
– Introduce a series of leadership programmes including our new
Global Senior Leadership programme and Team Leader
development programme.
– Continue to launch global DE&I colleague-led networks,
encouraging collective learning
Link to relevant KPIs
– Colleague positivity score
– Women in senior leadership roles
22
SSP Group plc Annual Report and Accounts 2022
Our approach
We are a people business, and our diverse teams are at the heart
of everything we do, serving our customers across six continents
and 35 countries in over 50 languages and local dialects. At year end,
we employed around 35,000 colleagues across the world, of whom
87% were team members or supervisors, 8% were Operations
Management and 5% were Support Function colleagues. Our Group
People Strategy was launched in 2021 and focuses on four key pillars,
underpinned by our values. In 2022, we further developed the
strategy and worked to embed it across our global business.
Attraction and retention
In response to a challenging labour market, particularly for customer-
facing colleagues, we have enhanced our processes to ensure we
continue to attract, recruit and retain our talent. To support our
growth, we have implemented extensive recruitment, induction and
skills training for new colleagues across our key markets. We also
established a dedicated Group Employer Brand team.
Inclusion and engagement
During the year, we developed a holistic DE&I approach and added
resources at Group level to drive forward this agenda. We launched
our Global Inclusion Council and established a number of colleague-
led advisory groups at Group and country level throughout the year.
We are proud of our track record on gender diversity. As at
30 September 2022, our Board was made up of four male and four
female directors. In addition, 36% of the Group Executive Committee
and their direct reports were female. With regards to engagement,
we carried out our second global engagement survey at the end of the
first half and were pleased with an 83% response rate (10% higher
than in 2021) and 76% positivity score.
Training and development
Our training and development offering is built around four key areas:
1) knowledge & skills training to help colleagues do their job well;
2) personal development to help them be even better; 3) structured
training to prepare them for future roles; and 4) mandatory and
compliance training to keep everyone safe and legal. This year,
we implemented a number of new initiatives across the business to
support these aims. This included the roll-out of our People Leaders
Programme and an increased focus on development, supported by
more engaging and accessible training materials.
Safety and wellbeing
As our unit reopening programme has gathered pace, we have
focused on both the safety of our colleagues and on re-engaging
them within the business. During the year, we further reinforced
our approach with an updated Group Safety Policy and a new app
to facilitate incident reporting. We also appointed a new Group Head
of Safety and established our Global Safety Forum which meets
quarterly and includes representatives from all our businesses.
We have placed increased focus on our wellbeing agenda and
organised a number of campaigns and local events throughout
the year to raise awareness. This included ‘How are you really doing‘,
our month-long global campaign for mental health awareness.
Find out about how we’re supporting our colleagues and communities
in our Sustainability Report.
Find out about how we’ve delivered against our diversity policies
and targets on pages 110 and 111.
Strategy in action
Setting and embedding our DE&I framework
Across our global business, we provide networks for our colleagues
to connect, engage and share experiences. Examples include our UK
Menopause Network, Women in Tech network and LGBT+ networks.
We also raise awareness of diversity issues and provide our
colleagues with the tools and resources they need to drive change.
For example, in 2022 we ran a month-long ‘Break the Bias’ campaign
to coincide with International Women’s Day, and celebrated LGBT+
Pride month in June.
To facilitate an inclusive culture based on education and
understanding, we have also recently developed a video in a suite
of DE&I learning materials, which outlines why DE&I is important at
SSP and how colleagues can play their part. The video was launched
in the UK and will be rolled out in local languages to all our 35
countries throughout 2023.
Up-skilling our line manager population
In 2022, we collaborated with a learning and development partner
to create and test a new suite of core Leadership Skills ‘bitesize’
workshops aimed at first line managers. These sessions have been
designed specifically for SSP to support line managers with key
leadership skills so that they can engage, communicate, motivate
and develop their teams.
In total, 38 workshops were held across four markets (UK, US,
APAC and Nordics) with more than 800 colleagues in attendance.
The feedback from colleagues was very positive, with attendees
particularly welcoming the interactivity of the session and the
focus on new management approaches, encouraging them to
apply changes to everyday work situations.
Listening, engaging and acting:
responding to colleague views
Last year, we conducted our first global engagement survey.
Following colleague feedback, we implemented a number of
plans and initiatives across the business in response to colleagues’
demand for more learning and development opportunities.
This included the roll-out of our new People Leaders Programme
and an increased focus on development.
In 2022, we conducted our second global engagement survey,
which provided unique insights into key topics including attraction
and retention, engagement and inclusion, development, safety and
wellbeing, enablement, and customer and community. We were
strongly encouraged by the improvements in both the response
and positivity rates, compared to 2021, with 83% of our colleagues
choosing to respond (+10%) and an overall positivity rate of 76% (+1%).
SSP Group plc Annual Report and Accounts 2022
23
OverviewCorporate governanceFinancial statementsStrategic report Our purpose, vision and strategy
continued
Long-term growth
and returns
Leveraging our international scale and
building on our proven track record, we
are focused on generating long-term
sustainable growth and returns across
our business.
Economic model
4
Cashfl o w
generatio n
1
N
de
e
w b
el
o
v
u
s
i
p
n
e
m
s
e
s
n
t
Sustainable
high returns
C
P
o
r
n
o
v
fi
e
r
t
sio
n
3
L ik e-for-like
v e n ue growth
r e
2
Our economic levers
1. New business development
– Contract renewals and extensions
– Mobilisation of existing pipeline
– New contract wins
– Disciplined M&A
2. Like-for-like revenue growth
– Brand portfolio enhancement
– Range and menu optimisation
– Customer research and insights
– Implementation of digital customer solutions
3. Profit conversion
– Gross margin optimisation
– Labour and overhead efficiency
– Managing rent and franchise fees
– Technology and automation
4. Cash flow generation
– A high conversion of profitability to cash
– Re-investing to enhance our competitive strengths
– Prioritising organic expansion
– Allocating cash to maintain a strong balance sheet
and create shareholder value
24
SSP Group plc Annual Report and Accounts 2022
Our approach
We have a well-established financial model, which has underpinned
our performance and helped us to deliver a long-track record of
shareholder value prior to Covid-19.
Our strategy for growth and returns
We are a leading player in the large but fragmented travel catering
market and are well positioned to capitalise on the long term growth
of passengers in the travel sector.
Our economic model represents the way we do business and drives
value for all stakeholders including customers, clients, colleagues,
brand partners, suppliers and investors.
Getting it right for all these groups creates sustainable momentum
and drives performance in the business.
We are continuously improving the business to deliver long-term
competitive advantage.
Key highlights from 2022
– Strong revenue momentum; fourth quarter revenue back to 92%
pre-2019 levels and H2 revenue back to 90%
– Underlying EBITDA of £142.0m (on a pre-IFRS 16 basis)
– Reported profit before tax of £21.5m
– Mitigated a rise in inflationary pressures in the second half through
productivity initiatives and pricing.
– Delevered the balance sheet with leverage reduced to 2.1x Net
Debt:EBITDA.
Priorities for 2023
– Drive profitable like-for-like sales
– Mobilise new contracts; retain and extend existing contracts
– Accelerate new business growth
– Continue to enhance our competitive strengths in our customer
proposition, digital capability, sustainability and culture
Link to relevant KPIs
– Revenue
– Like-for-like revenue
– Underlying operating profit
– Operating cash flow
– Net gains
Find our KPIs on pages 32-33 and our Principal Risks on pages 58-67.
1
2
Like-for-like revenue growth
We seek to optimise the customer proposition and drive like-for-like
revenues through increasing customer capture rates and spend.
Our broad brand portfolio, to which we are constantly adding new
and innovative concepts, enables us to meet both client and customer
expectations. The scale of our business provides us with access to a
wealth of consumer insight, which we use to inform our range and menu
choices. We cater for a diverse range of customer tastes and dietary
needs as well as providing healthier and more sustainable options.
We are seeking to strengthen and evolve our brand portfolio. We have
made good progress in creating new own brands to meet current
market trends, such as Soul + Grain, launched in the UK early in 2022
and Koh Hop Bar in Thailand. We have also significantly enhanced
product ranges at a number of our well-known existing own brands,
such as Upper Crust, based on extensive research and analysis.
We have seen a huge acceleration in digital engagement over the last
few years and it is now an important part of our customer proposition.
Customers are now comfortable using technology to order which
provides them with a more seamless experience in addition to
generating operating efficiencies and increasing spend per transaction.
Building on our competitive advantages to deliver our growth
objectives
A leading customer
proposition
Our digital capability
People and culture
Sustainability at the core
New business development
We have a strong track record of delivering profitable new space and
in the three years prior to Covid-19, we added around 5-6% of revenue
from net gains annually. We invest in those contracts that have the
right strategic fit and are expected to deliver financial returns in line
with our criteria. Selective and disciplined infill M&A is an important
part of our strategy to gain market scale.
Our focus during Covid-19 was on optimising our existing estate. As
passenger numbers return to nearer pre-Covid-19 levels, our business
development priorities are:
Contract renewals and extensions
We have maintained high retention rates on contracts, in line with
our historical levels.
We have also sought to extend and renew contracts on favourable
terms and/or with greater downside protection on minimum
guaranteed rents.
Mobilisation of the existing pipeline
Due to the strength of the recovery, our new business pipeline
continues to be mobilised at pace, with the opening programme
expected to accelerate into the current financial year.
Furthermore, we are generating additional sales from the units which
were opened just before or during Covid-19, and which therefore had
not yet traded for a full year, or had only operated at lower than
normal volumes.
New space growth
We see considerable opportunity to further build on our strong
platforms in our large developed markets, notably in North America
where we have a low market share and a unique business model.
We are also looking to expand rapidly in the Asia Pacific region and
we will target selective growth across the rest of the Group.
To meet our customers’ needs, we are also looking to expand our
convenience offer, and to explore hybrid formats through new
partnerships.
Client expansion projects and the development of new infrastructure
are expected to be a long-term feature of our industry. Our strong
financial position and track record of delivery for clients put us in a
very strong position to capitalise on these growth opportunities.
Our priorities for growth
Rapid growth in North
America and Asia Pacific
Targeted growth in the
UK, Europe and EEME
SSP Group plc Annual Report and Accounts 2022
25
OverviewCorporate governanceFinancial statementsStrategic report Our purpose, vision and strategy
continued
Long-term growth
and returns
continued
3
4
Cash flow generation
A focus on the management of cash is engrained throughout the
business, from our stock flow processes to the rigour we apply to
investment decisions. As passenger numbers are continuing to grow,
we are achieving a strong conversion of profitability to free cash flow
and expect to become increasingly cash generative in the coming years.
We continuously reinvest the cash we generate into our business,
to build on and enhance our competitive strengths, which underpin
our capability to deliver sustainable growth.
We prioritise investing in organic growth, where this meets
our investment criteria, as this creates the most value for our
shareholders. We have considerable opportunities in the coming
years to expand, as we take advantage of the structural growth
across our markets.
Creating shareholder value is extremely important to us. As travel
continues to recover in the coming years, we expect to de-lever the
balance sheet over time. Maintaining balance sheet efficiency will
continue to be an important part of our financial strategy, and we
are committed to returning to our medium-term leverage target
(in the range of c.1.5x – 2.0x Net Debt:EBITDA, on a pre-IFRS 16 basis).
The Board recognises the importance of dividends and other capital
returns to shareholders and keeps timing on restarting these under
regular review.
Capital allocation model
Uses of cash and balance sheet efficiency
1. Organic investment
Significant structural growth
opportunities around the world
2. M&A
Infill M&A opportunities
Balance sheet
efficiencies
Target leverage:
c.1.5x – 2.0x
3. Dividend
Target pay-out ratio of
30-40%
4. Capital returns to shareholders
Through share buybacks or special
dividends
Profit conversion
Running efficient operations is one of our core competencies and
deeply embedded in our culture. Optimising gross margins, leveraging
the international scale of our business and running an efficient and
effective business with rigorous attention to managing the key
costs of food, labour, concession rentals and overheads are core
to our approach.
During Covid-19, our focus was on simplifying our operations,
reducing our cost base and making it more flexible. Due to this focus,
we have emerged from Covid-19 as a stronger business. As we grow,
we are disciplined in the way we add back cost.
Currently, the industry is facing significant inflationary pressures,
and our approach is to mitigate these by taking action, including menu
and range engineering and making greater use of technology.
The key areas that we focus on to maintain an efficient business are:
Gross margin optimisation
We continue to re-engineer our customer offer to optimise gross
margins by keeping unnecessary complexity out of our product
ranges, whilst providing the right level of customer choice to cater
to a diverse range of customer preferences. Food cost will continue
to be tightly managed to ensure we retain a focus on quality alongside
creating savings through volume purchasing and focusing on
sustainable sourcing and production efficiency, including through
using automated technology and reducing waste.
Rent negotiation and flexibility
In our contracts, we seek to minimise concession rental costs and
remove minimum guarantees, or make them variable in line with
passenger numbers. We are also working with our franchise brand
partners to reduce costs and identify opportunities for simplification
and standardisation, building on our long-standing relationships and
the learnings from Covid-19.
Labour and overhead efficiency
We will continue to drive labour efficiency, conscious of the pressures
on labour rates and availability in certain regions. This will mean a
continued focus on staff scheduling and kitchen productivity, as well
as using digital order and pay technology to drive service levels and
efficiency. We seek to have the right level of overhead costs in the
business, focusing on taking out unproductive overhead and
simplifying management processes. Allied to this, we are increasingly
seeking to reduce the energy costs in units and switch to sustainably
sourced alternatives, using technology to support management
processes and outsourcing back-office activities where that
makes sense.
Key levers to drive strong operational discipline
These levers are enabled by a focus on technology and automation.
Gross margin optimisation
Rent negotiation and flexibility
Labour and overhead efficiency
26
SSP Group plc Annual Report and Accounts 2022
Strategy in action
Rigorous capital
management
process overseen
by the Investment
Committee
Review all proposed
investments >£50k
Allocate capital to ensure
best returns
Target discounted payback
period 3-4 years
Ensures consistent
approach to investments
across the Group
Mobilising our existing pipeline in North America
Due to Covid-19, the opening of many of the units we won during
or prior to Covid-19 was delayed. This year, we accelerated the
mobilisation programme of our existing pipeline.
In the USA, there were a number of units won prior to Covid-19,
which had yet to open until this year. For example, at Seattle-Tacoma
International Airport, one of the US’s busiest airports, SSP America
was awarded multiple contracts to develop and operate a total
of 16 units from 2017 to 2019. These units were in addition to the
portfolio of 12 brands already in operation. Likewise, at LaGuardia
Airport in New York City, we were pleased to finally open new units,
which we won in 2018 and 2019 following a multi-billion-dollar
transformation of the airport.
Retaining and extending contracts
Historically, we have consistently demonstrated high contract
retention levels of around 80%, but they’ve been even higher during
Covid-19, with many clients preferring to extend contracts rather
than conduct a full tender process.
One of our most important retentions over the past year was at
Arlanda Airport in Stockholm where we secured 21 units across all
five of Arlanda’s terminals, building on our long-standing relationship
with our client Swedavia. As part of our renewed partnership, our
new outlets will be a curated mix of renowned international brands,
bespoke concepts tailored exclusively for the airport, and on-trend
local names, designed to appeal to a new generation of traveller.
The new units are scheduled to begin opening from summer 2023.
Maintaining a rigorous capital management
process
We have a rigorous capital management process which is overseen
by our Investment Committee and constitutes one of our key
strengths. All potential investments above £50,000 are reviewed
by the Investment Committee, enabling a structured approach to
allocating the Group’s resources to ensure strong returns. The
Committee expects projects to adhere to strict investment hurdles,
with a targeted discounted payback period of three to four years.
SSP Group plc Annual Report and Accounts 2022
27
OverviewCorporate governanceFinancial statementsStrategic report Our purpose, vision and strategy
continued
Sustainability
Following the launch of our new
sustainability strategy in 2021,
sustainability is now a key element
of our strategic framework, touching
all aspects of our business and
contributing to our long-term success.
Our sustainability strategy
S e r ving our
o m e rs responsibly
t
s
u
c
Governance
P
r
e
n
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e
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m
g
e
o
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n
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m
o
d p
o lle a gues and c
p orting an
Our focus areas
Serving our customers responsibly
– Offering healthier lifestyle choices and satisfying dietary needs
– Sourcing our ingredients and products responsibly and
sustainably
– Supporting animal welfare
Protecting our environment
– Pursuing net zero carbon emissions
– Reducing, reusing and recycling our packaging
– Reducing food waste
Supporting our colleagues and communities
– Treating all our colleagues with care and respect
– Promoting and protecting safety and wellbeing
– Embracing diversity and protecting human rights
– Supporting our communities
28
SSP Group plc Annual Report and Accounts 2022
Our approach
Having developed our sustainability strategy in 2021, our focus
in 2022 has been on further embedding sustainability and building
the governance structures, strategic management and capabilities
across our business to drive progress.
Our key focus areas
Our strategy focuses on three priorities: serving our customers
responsibly, protecting our environment, and supporting our
colleagues and communities. These are supported by clear and
measurable targets to 2025, as well as our ambition to achieve net
zero carbon emissions (Scopes 1, 2 and 3) by 2040. We are making
steady progress against our targets and commitments, details
of which can be found in our 2022 Sustainability Report.
While all the issues and targets in our strategy are important, we are
particularly focused on where we can drive change in the food travel
sector. For SSP, this is all about the food we serve. So, we are dedicating
extra focus and resources to how we source our ingredients, design our
menus and help our customers to make healthier and more sustainable
choices. In parallel, we will continue our efforts to deliver progress
against our other key issues and targets, embedding sustainable
decision-making into our core processes and ways of working.
Upholding high standards of governance
Our Sustainability Strategy and targets are underpinned by a clearly
defined governance and management structure, to help ensure the
appropriate level of accountability from the Board, down to our
operating markets.
In 2022, we appointed a new Group Head of Sustainability, reporting
to the Corporate Affairs Director, and established a central
sustainability team and Group Sustainability Steering Committee.
We also have a number of core Group policies that express the high
standards we are committed to upholding, such as our Environment
Policy, Responsible Sourcing Policy and Farm Animal Welfare Policy
– all of which are available on our website.
Key highlights from 2022
– 67% of tea, coffee and hot chocolate for our own brands is
certified to standards such as Rainforest Alliance and Fairtrade
– Around 80% of our own brand customer-facing packaging is free
of unnecessary single-use plastic and approximately 85% is
recyclable, reusable or compostable
– 36% reduction in our Scope 1 and 2 CO2e emissions (vs our 2019
baseline) and completed the mapping our Scope 3 emissions
(see pages 30-31 for details)
Priorities for 2023
– Validation of our net zero targets by the Science-Based Targets
Initiative.
– Further embed sustainability and climate-risk considerations
into our core business risk management framework.
– Pilot initiatives leading up to carbon neutral units in some of our
key locations.
Link to relevant KPIs
– Colleague positivity score
– Women in senior leadership roles
– Scope 1 and 2 CO2e emissions
Find our KPIs on pages 32-33 and our Principal Risks on pages 58-67.
Find more detailed information in our 2022 Sustainability Report.
Strategy in action
Offering healthier and sustainable food choices
To meet evolving customer needs and drive progress against our
net zero ambition, we are designing menus which provide healthier
and more sustainable options. By the end of 2022, 33% of meals
offered by our own brands globally were plant based or vegetarian.
While this exceeds our target for at least 30% by 2025, this global
figure is primarily driven by a small number of markets, such as
India, that have reached more than 40%. We are therefore
continuing our focus in other markets to increase our offerings
of plant-based and vegetarian options.
To further accelerate progress, we are developing a new ‘People &
Planet Menu Framework’. This draws on existing best practice from
around our global business and provides clear guidelines and defined
criteria for creating healthier and more sustainable menus. It is also
informed by the best practice EAT-Lancet Planetary Health Diet.
We plan to roll-out the framework globally in 2023.
Supporting animal welfare
We are committed to sourcing 100% cage-free eggs globally for
all our own brands by 2025. By the end of 2022, we achieved 34%
globally, including 12 markets that reached 100%.
While we are making good progress, some of our markets are
experiencing challenges with this target, particularly in our Rest
of the World operating region, due to a limited number of cage-free
egg supplies.
As a result, in 2022, we worked with an animal welfare NGO, the
Lever Foundation, to help support our teams in overcoming these
challenges. They were able to support us in providing supplier
directories for each of our markets, as well sharing research on
consumer trends and commitments being made by other food
companies in the region.
Tackling food waste and alleviating food poverty
Reducing food waste directly contributes to our net zero ambition
and has social benefits in helping to alleviate food poverty. One of
the ways we do this is through selling surplus food at the end of the
day via apps like Too Good To Go. By the end of 2022, Too Good To
Go was live across 11 markets in Europe, as well as the UK. Across all
11 markets in 2022, over 387,000 meals have been saved from going
to landfill. This is equivalent to around 968 tonnes of CO2e emissions.
We also support charities around the world helping to alleviate food
poverty, including Food Banks Canada and the ‘Robinhood Army’
in India. In addition, the SSP Foundation (a UK registered charity)
made a grant to FareShare in 2022, the UK’s largest charity fighting
hunger and food waste. This was used to fund a new lorry which will
distribute the equivalent of two million meals a year.
SSP Group plc Annual Report and Accounts 2022
29
OverviewCorporate governanceFinancial statementsStrategic report Our purpose, vision and strategy
continued
Sustainability
Our journey to net zero
We are committed to achieving net zero
carbon emissions across our value chain
(Scopes 1, 2 and 3) by 2040.
Our journey to net zero
The impacts of climate change are increasingly being seen in
every region around the world. This is a global issue that requires
collaborative, widespread action by all stakeholders including
governments, businesses, consumers, NGOs and communities.
We’re dedicated to doing all we can to play our part.
In 2021, we set our net zero ambition for 2040 and signed a Letter of
Commitment to the Science Based Targets Initiative (SBTi) Business
Ambition for 1.5°C. To make this a reality, in 2022, we worked with a
specialist consultancy to map our Scope 3 footprint and develop our
roadmap to 2040, aligned to a 1.5°C scenario. This included defining
our baseline for 2019, selected due to it being the last year we were
fully operating before the Covid-19 pandemic (see chart on the
following page for details of the 2019 baseline).
We are focused on achieving at least a 90% reduction of absolute
Scope 1, 2 and 3 emissions by 2040 from our 2019 baseline year,
with no more than 10% residual emissions reduction through carbon
removal. We are now in the process of finalising our science-based
targets and submitting them for validation by the SBTi.
Reducing our direct emissions
We have been measuring our direct Scope 1 and 2 emissions for many
years – the majority of this relates to purchased energy for our units.
We saw a significant drop in absolute Scope 1 and 2 emissions in 2020
and 2021, due to many of our units being closed during the Covid-19
pandemic. Our data for 2022 presents a closer picture of our
footprint, compared to our 2019 baseline (although it is still not
yet a like-for-like comparison).
In 2022, we were pleased to see a 36% reduction absolute in Scope 1
and Scope 2 emissions (vs our 2019 baseline). Our total energy
consumption also reduced by 31%, and we estimate that the proportion
of our total energy from renewable sources in 2022 was 42%. The
reductions were largely driven by changes in our operating units and
improvements in data quality, with far fewer estimations. We also saw
the realisation of some of our energy efficiency projects implemented
prior to the Covid-19 pandemic, such as in the US, UK and Germany.
For 2023, we have a number of investment projects planned to
upgrade our lighting, refrigeration and other equipment with lower
energy models. We are also planning to pilot initiatives leading up
to carbon neutral units in some of our key locations, against the PAS
2060 internationally recognised standard. Alongside this, we will
continue to work to increase our use of renewable energy and embed
a culture of energy awareness and climate literacy across our business
through new training, awareness campaigns and engagement.
Scope 1 & 2 carbon dioxide equivalent (CO2e) emissions and energy use data for period 1 October 2020 to 30 September 2021
Emissions from activities for which the Company own or control including
combustion of fuel and operation of facilities (Scope 1) (tonnes (t) CO2e)
Emissions from purchase of electricity, heat, steam and cooling
purchased for own use (Scope 2, location-based) (tCO2e)
Total gross Scope 1 and Scope 2 emissions (tCO2e)
Energy consumption used to calculate above emissions (kWh)
Current reporting year 2022
Comparison reporting year 2021
UK and offshore
Global (excluding
UK and offshore)
UK and offshore
Global (excluding
UK and offshore)
2,153
13,270
526
6,170
8,343
10,496
50,497
63,767
4,795
5,321
35,543
41, 713
47,999,615
190,957,984
25,095,895
126,164,894
CO2e intensity: total emissions reported above normalised grams per £ of turnover
Energy intensity: energy consumption reported kWh per £ of turnover
18.01
0.08
39.94
0.12
32.63
0.15
62.85
0.19
Methodology: SSP is required to report its global and UK energy use and CO2e emissions in accordance with the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. The data detailed in the above table represents emissions
and energy use for which the Company is responsible and is incorporated by reference in the Directors’ Report. We have followed the
Greenhouse Gas Reporting Protocol – Corporate Standard (2015 revised edition) and our reporting is consistent with the Environmental
Reporting Guidelines: Including streamlined energy and carbon reporting guidance (March 2019). We include our global electricity, natural gas,
owned transport and refrigerant use (where data is available) and associated emissions. For Scope 2, we report ‘location based’ emissions which
are calculated using UK DEFRA 2022 Emission Factors and, for other countries, using International Energy Agency (IEA) 2020 Emission Factors.
Restatements: In 2022, we worked with a specialist consultancy to improve the quality and completeness of our emissions and energy
use data. As a result, we have restated some of our data for 2021, 2020 and 2019 to reflect these improvements and changes to our market
footprint. The restated figures for the 2021 reporting year are set out in the table above and the restated total Scope 1 and 2 figures for our
2020 and 2019 reporting years are set out in the KPI table on page 33. Full details of all restated figures, previously reported data and the
reasons for each change can be found on pages 74-75 of our 2022 Sustainability Report.
Find more detailed information on our CO2e reporting criteria, boundaries, methodology and restatements on pages 73-74 of our 2022 Sustainability Report.
30
SSP Group plc Annual Report and Accounts 2022
Our 10-point plan to reduce emissions by 2040:
1.
Engage, support and collaborate with our brand partners to
reduce emissions and increase offerings of plant-based and more
climate friendly menu options
Continue to increase our own-brand offerings of plant-based and
more climate friendly menu options
Help our customers to choose more climate-friendly options,
such as through product promotions, information and labelling
Explore and test new technologies and innovations in the food
sector, as they become available, such as novel proteins and
plant-based alternatives
Continue to optimise energy efficiency and increase our use
of renewables
Employ sustainability criteria in the design and construction
of our units
Engage, support and collaborate with our suppliers to reduce
emissions
Continue to transition to sustainable packaging and to reduce
food waste
Increase local and seasonal sourcing and key ingredients with
sustainability certifications
2.
3.
4.
5.
6.
7.
8.
9.
10. Build skills and capabilities across our business and share best
practice to embed climate-smart practices and accelerate progress
Reducing our value chain emissions
With nearly 90% of our total footprint in our value chain (Scope 3)
emissions, the vast majority (78%) relate to the food, beverages
and products we purchase for resale. In this category, meat, fish,
pre-packed food and dairy represent the greatest proportion.
Reducing these emissions will be a significant undertaking and
require close collaboration with our suppliers and brand partners.
Our approach is focused on how we source our ingredients, design
our menus, and help our customers to make climate-friendly choices.
We have targets to increase our range of plant-based and vegetarian
meal options and making available non-dairy milk alternatives across
our own brands. This is also the case for many of our brand partners.
We are also looking at how we can design other dishes to be more
climate-friendly, such as by using lower-impact ingredients.
In addition, Scope 3 capital goods represent around 6% of our total
carbon footprint. To reduce these emissions, we are focused on
working with partners that employ green building standards;
procuring materials that minimise the environmental impact; reusing
and repurposing elements of existing units in refurbishments; and
installing energy-efficient lighting and equipment.
Tonnes CO2e
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Baseline
(2019)
Projected
business
volume
growth
Scope 3 953,843 tCO2e/89.1%
Scope 2 101,642 tCO2e/9.5%
Scope 1 15,266 tCO2e/1.4%
1
2 3 4
5
6
7
8
9
10
Residual
emissions
Projected reductions from each point on our plan
Find our reporting on Task Force on Climate-related Financial Disclosures (TCFD) on pages 54-57 and further details of our net zero strategy on pages 29-32
of our 2022 Sustainability Report.
SSP Group plc Annual Report and Accounts 2022
31
OverviewCorporate governanceFinancial statementsStrategic report Key performance indicators
Financial KPIs
Revenue
(actual currency: £m)
2022
2021
2020
2019
2018
-41.8%
834.2
-48.7%
1,433.1
+162%
2,185.4
+9.0%
2,794.6
+7.8%
2,564.9
Like-for-like revenue
(%)
2022
2021
2020
2019
2018
-41.0%
-50.8%
+1.9%
+2.8%
+154.7%
Definition – Revenue represents amounts for catering and retail
goods and services sold to customers excluding value added tax
and similar items.
Comment – Total revenue increased by 162% to £2,185.4m,
driven by the significant recovery of passenger numbers across
all our markets.
Definition – Like-for-like revenue represents 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 purpose of the calculation.
Comment – Like-for-like revenues growth was 154.7%. This is due to
the reopening of units which had temporarily closed due to Covid-19.
Link to strategic pillars
Link to strategic pillars
Net gains
(actual currency: £m)
0.4%
2022
2021
2020
2019
2018
Pre-IFRS 16 underlying operating profit/(loss)
(actual currency: £m)
4.0%
2.9%
2022
2021
2020
2019
2018
5.6%
5.1%
30.3
-209.0
-211.7
221.1
195.2
Definition – Revenue in outlets which have been open for less than
12 months are 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 – Net gains improved to 4% due to the mobilisation of new
units in the year, following the recovery of the business from Covid-19.
Link to strategic pillars
Definition – Underlying operating profit/(loss) on a pre-IFRS 16 basis
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 6 for further
details of non-underlying items.
Comment –Underlying operating profit on a pre-IFRS 16 basis was
£30.3m, an increase of 114% over the prior year at actual exchange
rates. Reported operating profit was £91.5m (2021: £309m loss).
Link to strategic pillars
Free cash flow
(actual currency: £m)
2022
2021
2020
-881%
2019
2018
Underlying operating profit margin
(actual currency: £m)
189%
52.0
85%
-58.1
-394.9
-34%
50.5
-12%
76.6
2022
2021
2020
2019
2018
1.4%
-25.1%
-14.8%
7.9%
7.6%
Definition – Free flow represents net cash flow from operations after
capital expenditure, tax and net cash flow to and from non-controlling
interests and associates.
Definition – Underlying operating profit margin represents underlying
operating profit on a pre-IFRS 16 basis as a percentage of revenue.
Comment – Free cash flow was £52.0m, an increase of £110.1m
compared to the prior year.
Comment – Underlying operating profit margin improved to 1.4%,
reflecting the businesses return to operating profits. However,
the effects of Covid-19 still impacted operating profit margins.
Link to strategic pillars
Link to strategic pillars
32
SSP Group plc Annual Report and Accounts 2022
Non-financial KPIs
Colleague positivity score
(%)
Women in senior leadership roles
(%)
2022
2021
2020
n/a
2019
n/a
2018
n/a
-48.7%
76.5%
75.1%
2022
2021
2020
2019
2018
+9.0%
+7.8%
36%
31%
22%
23%
24%
Definition – Positivity score in our global colleague engagement
survey.
Definition – Executive Committee and their direct reports (including
CEO and Deputy Group CEO and CFO and their direct reports).
Comment – 76% of the colleagues who chose to participate in our
Global Engagement Survey responded positively to the colleague
engagement survey questions. Given our first global engagement
survey took place 2021, this is our baseline year so we have no data
for prior years. Each year, we will undertake an engagement survey
in each market, publish the headline results and use them to direct
local and Group-wide actions across key areas
Link to strategic pillars
Comment – In 2021, we committed that by 2025, 33% of our
Executive Committee and their direct reports will be women.
Link to strategic pillars
You can find our progress against our diversity targets on pages 110-111.
Carbon dioxide equivalent (CO2e) emissions
(tonnes of CO2e)
Our strategic pillars
2022
15,423
2021
6,696
2020
2019
(baseline)
2018
9,564
15,266
n/a
40,338
58,840
74,263 tCO2e
34.1g per £ revenue
47,034 tCO2e
56.9g per £ revenue
59,355
68,919 tCO2e
47.6g per £ revenue
101,642
116,908 tCO2e
43.8g per £ revenue
Leading customer proposition
Skilled and engaged colleagues
Long-term growth and returns
Scope 1 Scope 2 (location-based)
Sustainability
Definition – Total gross Scopes 1 and 2 tonnes of CO2e emissions.
Find out more about our strategy on pages 18-31.
Comment – We saw a significant drop in emissions in 2020 and 2021,
due to many of our units being closed during the Covid-19 pandemic.
Our data for this year presents a truer picture of our footprint
(although it is still not yet a like-for-like comparison). In 2022, we
worked with a specialist consultancy to improve the quality and
completeness of our data. As a result, we have re-stated the above
data for 2021, 2020 and 2019 baseline to reflect these improvements
and changes to our market footprint. 2018 data is excluded as we
have set 2019 as our baseline year for our net zero target.
In 2022, we were pleased to see an overall reduction in absolute
emissions (vs 2019) of 36%. By 2040, we aim to achieve net zero
carbon emissions (Scopes 1, 2 and 3). In support of this, we mapped
our Scope 3 emissions in 2022 and are in the process of finalising
our targets in line with a 1.5°C scenario and submitting them to the
Science-Based Targets Initiative for validation.
Link to strategic pillars
You can find our statutory CO2e reporting table and details of our net zero
ambition and Scope 3 emissions on pages 30-31.
Find detailed information on our reporting criteria, boundaries, methodology
and restatements on pages 73-74 of our 2022 Sustainability Report.
SSP Group plc Annual Report and Accounts 2022
33
OverviewCorporate governanceFinancial statementsStrategic report
Regional reviews
North America
“The SSP America team’s sights are
firmly set on the future as we leverage
initiatives developed during Covid-19
to help us achieve our growth plan and
remain focused on bringing local and
authentic brands to the airports we
serve. Simultaneously, we have
increased our focus on sustainability
and strengthened our relationships
with our brands, joint venture and
airport partners.”
Michael Svagdis
CEO North America
Regional highlights
£455.4m
Revenue
£17.3m
Operating profit
C.5,000
Colleagues
£18.4m
Underlying operating profit
C.350
Units
C.40
Locations
1 By total passenger boardings.
34
SSP Group plc Annual Report and Accounts 2022
Regional developments
Expanding our footprint in Houston
Building on the success of our operations at George Bush
Intercontinental Airport in Houston (IAH), we were selected as
part of an ambitious project to enhance the airport’s world-class
experience. Through this ten-year contract, we will open 16
additional F&B units in the new Mickey Leland International
Terminal, in addition to the four units we currently operate.
Travellers will be able to choose from a unique range of local,
regional and national concepts. The local concepts include
Houston landmarks such as The Annie Café & Bar, The Kitchen
and Common Bond Bakery and Café, complemented by national
favourites like Chili’s and MOD Pizza.
Digital is central to this partnership, as we will be implementing
new technologies such as self-ordering kiosks. We are also
investigating opportunities to implement gate service and
advanced ordering systems. A major growth opportunity for SSP
America as we further develop our relationship with the airport,
this new win will also create over 300 new jobs for local residents.
Key brands
Market overview and context
North America is a large and fast-growing F&B market driven by
passenger growth and the increasing demand for larger F&B spaces
in airports.
The only sector in which SSP is present in North America is the
air sector, where we are the second largest F&B airport operator.
At the year end, we were present in 30 of the top 80 airports in North
America¹, having grown at a compound annual growth rate of 15%
in the five years pre-Covid-19. North America remains an extremely
attractive growth market for SSP, given its size and our track record
of organic growth.
There are major growth opportunities for SSP in this region as we
have proven our expertise in partnering with well known ‘downtown’
brands to give passengers a ‘taste of place’ in the airport locations
we serve.
Performance
During the first quarter, the sales recovery in North America
remained strong, as the region continued to benefit from improving
domestic passenger numbers. These strengthened through the
December holiday period despite the emergence of Omicron.
However, sales softened considerably in January, as the new Covid-19
variant led to flight cancellations and high sickness levels in several
US states.
This was followed by a sharp rebound in sales across February and
March as case numbers reduced and demand for domestic leisure
travel picked up again. Throughout the spring and summer, demand
continued to recover, driven by domestic and leisure travel, and at
the end of the fourth quarter, sales were broadly back to 2019 levels.
For more financial information, see the Financial Review on pages 70-79.
Share of global SSP revenue
Air/rail mix
North America 21%
Air 100%
Rail 0%
Other 0%
SSP Group plc Annual Report and Accounts 2022
35
OverviewCorporate governanceFinancial statementsStrategic report Regional reviews
Continental Europe
36
SSP Group plc Annual Report and Accounts 2022
“Our teams have done a tremendous job
to re-open units, remobilise and meet
the significant increase in passenger
levels, especially throughout the
summer months. At the same time,
we have successfully extended key
contracts, for example at Arlanda and
Oslo Airports, and won important new
business, including at Berlin and
Reykjavik Airports. With sales
surpassing 2019 levels in a number
of our markets, we are well placed to
continue our strong growth trajectory
into 2023.”
Jeremy Fennell
CEO Nordics and Continental Europe
Regional highlights
£867.9m
Revenue
£82.0m
Operating profit
C.11,800
Colleagues
£22.6m
Underlying operating profit
C.1,100
Units
C.300
Locations
Regional developments
Consolidating our retail presence in the Nordics
Following a competitive tender process, we were selected by
Avinor to roll out 19 retail units in the top four airports across
Norway, comprising Bergen, Trondheim, Stavanger and Oslo, and
we will be opening 17 Point outlets and two bespoke concepts in
these locations. The Point concept was created by SSP Norway in
2006 to respond to the needs of the travelling customer, providing
easy access to travel essentials, magazines and newspapers as
well as good value hot food and drinks.
With a strong focus on sustainability and local products, these
outlets will offer a true Norwegian experience on the go. All units
will also use locally sourced meat and fish to reduce food miles.
To make the customer experience smoother, self-service options
will be available while one of the outlets will be entirely digitalised
and self-service. With 40 million travellers transiting through
these airports every year, this win exemplifies the strong
partnership we have developed with Avinor over the years.
Market overview and context
Continental Europe is a significant market for SSP, accounting
for 40% of our global revenue. We have a strong presence in many
of the European markets we operate in, with leading market positions
in Spain, France, Belgium, Germany, Denmark, Sweden and Norway.
Across the region, we operate in both air and rail, with 57% of our
business in the former and 32% in the latter. We also operate in a
number of motorway service areas, most notably in Germany. Across
Continental Europe, SSP has a 15% share in the air market and 5%
share in the rail market, with strong potential to grow.
Performance
Sales in Continental Europe recovered strongly in the first quarter
of the financial year, helped by the extended European summer
holiday season, before Omicron impacted trading between November
and January as travel restrictions were re-imposed across our
European markets.
As restrictions were gradually lifted during February and March,
sales continued to strengthen in all our key markets. Trading was
especially strong over Easter, in particular in our Spanish airports
which benefitted from the pent-up demand for holidays.
Summer trading was exceptionally strong due to pent-up demand
for leisure travel across the continent and extended into September
across our European markets with revenues at the end of the fourth
quarter around 98% of 2019 levels across the division.
For more financial information, see the Financial Review on pages 70-79.
Share of global SSP revenue
Air/rail mix
Key brands
Continental Europe 40%
Air 57%
Rail 32%
Other 11%
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Regional reviews
UK and Ireland
38
SSP Group plc Annual Report and Accounts 2022
“This year, we have placed significant
focus on improving our customer
insights capability to develop new
and improved offerings based on
key trends. Having the ability to see
feedback in real time is helping our
teams deliver a better experience for
the passengers we serve. Additionally,
we’ve been proud to launch a number
of innovative new concepts throughout
the past twelve months, including
The Fallow at Dublin Airport and Soul
& Grain at London’s Victoria Station.”
Richard Lewis
CEO UK & Ireland
Regional highlights
£614.9m
Revenue
£27.7m
Operating profit
C.8,800
Colleagues
£23.5m
Underlying operating profit
C.450
Units
C.200
Locations
Regional developments
Exciting new openings at Dublin Airport
In 2022, we announced a number of new openings at Dublin airport,
where we secured 27 units as part of a wider transformation
project run by the airport. With a clear focus on sustainability
and local sourcing as well as new technologies, the new units
contribute to creating a true sense of place while delivering the
best customer experience. Digital ordering and pay solutions will
be available at all our units, guaranteeing a seamless customer
experience throughout the passengers’ journey.
The first phase of the transformation plan has seen the opening
of a mix of international brands and bespoke concepts, including
Whiskey Bread, a whiskey bar and restaurant showcasing the
outstanding products of two local Dublin producers, and The
Fallow, a casual dining concept, serving local and international
beers, cocktails and a signature food collection. The project will
complete by the end of 2023.
Key brands
Market overview and context
SSP is the biggest food and beverage provider in travel locations in
the UK and Ireland. More than half of our business comes from the rail
channel with the remainder from air and other locations. The UK market
is highly fragmented and competitive with many high street brands
operating in travel locations.
Prior to Covid-19, the UK market experienced strong, sustained
growth, driven by a number of factors across rail and air, including
government investment in the railways, mainline rail station
redevelopments, and infrastructure investment in airports leading
to longer dwell times, which has resulted in more passengers wanting
to eat and drink pre-flight.
Whilst these positive growth trends continue, the sector was also
impacted by a number of challenging factors this year, including
disruption experienced by airlines and airports as they sought to
ramp up operations in line with passenger demands, industrial action
on the railways leading to train service cancellations and inflationary
pressures on the cost base.
Performance
UK and Ireland travel recovered sharply over the course of the financial
year and sales averaged 73% of 2019 levels.
Throughout the year, we saw steadily improving rail commuter
numbers, and air passenger numbers were boosted by an extended
European summer holiday season in the first quarter. While sales
remained resilient in December despite the emergence of the
Omicron variant, the re-imposition of working from home guidance
led sales to weaken in January, before a steady recovery during
February and March as Covid-19 restrictions were eased.
Summer trading was extremely strong, and in air we observed a
significant increase in leisure travel as passenger numbers during
the summer season surged to 2019 levels (or even exceeded these)
in some airports. This helped boost sales in the fourth quarter, with
revenue at c.85% of 2019 levels at the end of quarter, despite the
impact of industrial action in the rail sector.
For more financial information, see the Financial Review on pages 70-79.
Share of global SSP revenue
Air/rail mix
UK and Ireland 28%
Air 39%
Rail 55%
Other 6%
SSP Group plc Annual Report and Accounts 2022
39
OverviewCorporate governanceFinancial statementsStrategic report Regional reviews
Rest of the World
40
SSP Group plc Annual Report and Accounts 2022
“As we were navigating the remaining
regional travel restrictions impacting
openings this year, it is thanks to the
great work of our teams that we
continued delivering top-quality service
to our clients and customers. I am proud
of our SSP colleagues who made it
possible for us to reach 95% of pre-
Covid-19 trading levels at the end of Q4.
As we’ve started to see a fast recovery
in some regions, our teams also
continued mobilising contracts in key
locations, highlighting our resilience
as a team and as a business.”
Mark Angela
CEO Asia Pacific, India, EEME (as at 30 September 2022)
Regional highlights
£247.2m
Revenue
£14.6m
Operating profit
C.9,000
Colleagues
£13.5m
Underlying operating profit
C.700
Units
C.70
Locations
Regional developments
A fast growing market in Malaysia
From a standing start of only one unit in 2019 through our joint
venture with TFS, we have now successfully secured a total of
31 units across three airports in Malaysia, including six lounges.
We will open a diverse portfolio of brands during 2023, including
Hard Rock Café, Subway, Jamie Oliver, Coffee Bean and Tealeaf,
and local favourite brands including Old Town White Coffee and
Yakun. Building on our global experience in lounge operations,
we will also be opening high-quality, iconically designed lounges,
including First and Business class lounges in Kuala Lumpur
International Airport.
With six international airports and 16 domestic airports across the
country, these new wins will propel Malaysia to a leading market
position within the SSP Asia Pacific region.
Key brands
Market overview and context
Our Rest of the World region includes the Middle East, Asia and
Australia. Our first entry in the Asian market dates from 1995, and
we are now present in a total of 17 countries across the Rest of the
World region.
The focus of this region is predominantly in Air, with a presence in 67
airports. In India, where we operate a Joint Venture with TFS, we are
also present in rail stations and MSAs. We also have a successful
lounge business in this territory. In 2022, we entered the rail market
in Australia with the opening of three units at Sydney Central station.
We see significant scope to grow further business in the Rest of the
World region.
Performance
Compared to our other three regions, the sales recovery in the
Rest of the World markets at the start of the financial year was
much slower, impacted by ongoing lockdowns across the region.
The emergence of Omicron and re-imposition of significant travel
restrictions in markets such as India and China further delayed the
recovery across December and January, although the impact was
partially mitigated by stronger trading in our Eastern Europe and
Middle East region, where holiday destinations such as Egypt traded
particularly well.
In the third quarter, we began to see a more material improvement in
passenger numbers, particularly in Australia, Thailand, India, Greece
and Egypt. By the end of the fourth quarter, sales for the region were
95% of 2019 levels, despite ongoing very low levels of travel in
several markets, notably China and Hong Kong, where restrictions
have remained largely in place.
Find out more financial information in the Financial Review on pages 70-79.
Share of global SSP revenue
Air/rail mix
Rest of the World 11%
Air 98%
Rail 1%
Other 1%
SSP Group plc Annual Report and Accounts 2022
41
OverviewCorporate governanceFinancial statementsStrategic report Stakeholder engagement
and Section 172 statement
42
SSP Group plc Annual Report and Accounts 2022
Listening to our stakeholders helps us better understand their
views and concerns and enables us to respond to them appropriately.
It gives us valuable inputs into, and feedback on, our strategic
approach, and helps ensure stakeholder views are taken into account
in our decision-making.
We aim to maintain proactive, open and two-way dialogue with
stakeholders to listen, understand and respond to their views and
concerns. This enables us to meet the evolving expectations placed
upon us as a multinational business and creates shared value for both
our business and our stakeholders.
We engage with a wide range of our stakeholders at local, regional
and global levels. Our Board also has a continuing programme of
direct engagement with key stakeholders, including market visits
to our international operations and activities carried out by our
designated Non-Executive Director for Workforce Engagement
(ENED), Judy Vezmar.
Find details of our ENED Engagement on page 52.
Our key 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.
In 2022, we reviewed our key stakeholder groups, and while they
remain broadly the same to those we reported in 2021, we have
combined ‘Communities’ and ‘NGOs’ into one group, as their views
largely match up. We have also recognised that this group
incorporates the views of wider society too, including the media and
general public. This has resulted in eight key stakeholder groups, as
summarised on the next page.
During the year, the Board undertook a detailed review of our
stakeholders and the effectiveness of our engagement mechanisms.
This included details of an independent materiality assessment
conducted by a specialist third party to identify the relative
importance of different topics raised by our stakeholders in
engagement activities throughout the year. Identifying the most
material issues for each stakeholder group helps ensure we keep
pace with emerging expectations.
The Board review noted that SSP has a well-established programme
of stakeholder engagement, and we are making good progress on
better understanding the views of our stakeholders and incorporating
those views into decision-making. In addition to discussions at Board
level, stakeholder issues are regularly discussed and considered
by the Group Executive Committee, and mechanisms are in place
for identifying and addressing key issues. A number of key
recommendations were agreed as part of the Board review,
including increasing the Chair’s interaction with major shareholders
to understand their views on governance and performance against
the strategy.
Section 172(1) statement
In performing their duties during our financial year 2022, the Directors have had regard to the matters set out in Section 172 of the Companies
Act 2006.
Each Director of the Board confirms that, during the year, 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 (among other matters) to:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company’s employees
(c) the need to foster the Company’s business relationships with suppliers, customers and others
(d) the impact of the Company’s operations on the community and the environment
(e) the desirability of the Company maintaining a reputation for high standards of business conduct
(f) the need to act fairly as between members of the Company.
Find details of how the Board has taken section 172(1) matters into consideration in its decision-making on pages 100-101.
Our stakeholder groups at a glance
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
(www.foodtravelexperts.com/international/). Due diligence processes implemented for each policy are contained within each
respective policy’s documentation.
Customers
Colleagues
Clients
Investors
Why we engage
Understanding customer needs
and trends enables us to provide
the food and beverage choices
they want.
Why we engage
As a service provider, we are
a people business and our
colleagues are crucial to
SSP’s success.
Why we engage
Our business success
is dependent on retaining
and winning new space in
our clients’ travel locations.
Why we engage
We need to understand the
needs of those who invest
in and lend to SSP to maintain
their confidence.
Value created
High-quality products and
brands, with a wide range of
food and beverage choices to
meet diverse preferences.
Value created
A great place to work where
everyone can fulfil their
potential, with an inclusive,
engaging and values-based
culture.
Value created
Delivering on mutual service and
performance goals and offering
a high-quality customer
experience for travellers.
Value created
Opportunity to generate
attractive returns on investment
and sustainable long-term
profitable growth.
Find out more on page 44.
Find out more on page 45.
Find out more on page 46.
Find out more on page 47.
Brand partners
Suppliers
Why we engage
We work with our partners
to optimise the brand offer for
our clients and customers.
Value created
The preferred partner for
brands looking to operate
in the travel sector.
Why we engage
Good relationships with
our suppliers are essential
to ensuring an efficient and
secure supply chain.
Value created
Long-lasting and mutually
beneficial relationships across
our supply chain.
Communities, NGOs
and society
Governments
and regulators
Why we engage
We play an important role
in communities where we
operate which enables us to act
as a good corporate citizen.
Why we engage
We seek to be part of
the debate that shapes
the regulatory environment
in which we operate.
Value created
Job opportunities, charitable
support and food donations,
and sustainability initiatives.
Value created
Supporting local economies and
contributing our expertise to
areas of policy development.
Find out more on page 48.
Find out more on page 49.
Find out more on page 50.
Find out more on page 51.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Stakeholder engagement
and Section 172 statement
continued
Customers
Understanding customer needs and trends enables us to provide the
food and beverage choices they want. Their views also help us ensure
our teams are delivering the quality and service they expect.
Business engagement
The scale of our business provides us with access to a wealth
of consumer insights, which we use to inform our range and menu
choices and to develop our customer propositions and brand
portfolio. Our customer engagement and listening channels include:
– Customer surveys and online reviews
– Customer care lines to provide direct feedback and address any
issues in service delivery or quality
– Direct engagement and dialogue with customers by our colleagues
We continue to implement new insight tools and customer listening
platforms, which include the adoption of a new digital customer
listening solution, called ‘Reputation’, across all our UK units.
Board engagement
The Board receives regular updates on customers from the
Executive Directors and Group Executive Committee, as appropriate.
They are also kept informed of sales performance, customer and
market insights, including evolving needs and trends. This helps
the Board understand our customers and track potential issues
and opportunities.
In addition, our Board Directors have the opportunity to meet directly
with our customers during site and market visits.
Material issues raised by our customers in 2022
– Convenience, quality service and seamless digital solutions
– Quality products and value for money
– Honesty, integrity and transparency
– Healthier food and dietary needs
– Sustainability and environmental concerns
Actions taken in 2022 in response
In 2022, we further invested in resources, capabilities and tools
to better understand our customers’ attitudes and evolving
preferences. This included the expansion of our dedicated Group
Customer and Commercial function.
In response to customer feedback, we continued to invest in our
customer proposition, launching a number of exciting new brands
and innovative concepts across the Group. We also rolled out and
improved customer-led ordering and payment technology and
increased our range of healthier and sustainable choices.
Find out about how we are responding to customer insights on page 20-21.
Priorities for 2023
– Commission a global customer insights and segmentation trends
survey, covering 17,000 customers, across 25 key markets in
64 air and rail key locations
– Expand the coverage of customer listening and utilise insights
to improve product offering and customer service
– Build and strengthen our understanding of macro and food &
beverage trends at a global and regional level to improve new
product development and performance in our markets
– Continue to grow the Insight function in the regions and the
wider Group team
Responding to customer trends in Germany
In Germany, we re-launched our Ida & Frida brand in 2021 with
a clearly defined focus on wellness and sustainability and have
continued to build on this in 2022. A key focus has been to respond
to the growing trend among customers for more plant-based diets,
driven by health and environmental concerns.
The refreshed brand focuses on providing healthier fast food,
with a wide range of vegan and vegetarian options that suit the
tastes of health-conscious travellers. By the end of 2022, over
70% of products on the menu were plant-based or vegetarian.
These generate over 80% of the total sales, a testament to
the quality and popularity of the offerings.
All coffee served is organic and Fairtrade certified and customers
can choose non-dairy milk alternatives too. The brand also has
100% sustainable packaging, and unsold food is made available
at the end of the day on the discount app, Too Good To Go, helping
to reduce both food waste and alleviate food poverty.
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SSP Group plc Annual Report and Accounts 2022
Colleagues
Listening and responding to feedback from our colleagues helps
us attract and retain diverse and talented people. Engaging with
colleagues is an essential way to nurture our culture and ensure
SSP is a great place to work for all.
Business engagement
Ensuring we have open engagement, where we can listen and learn
from our colleagues and act on the insights they give us is crucial
to the development of our culture and people strategy.
We have a wide range of engagement channels across the Group,
including:
– market and site visits by our Group Executive Committee to meet
local colleagues
– Group and regional town hall meetings and listening sessions
– meetings with works councils, trade unions and the European
Works Council
– independently-managed Speak Up and whistleblowing channels
– our annual global engagement survey, followed by feedback on
results, listening sessions and action plans to address issues
– networks and communities, including our Global Inclusion Council
Board engagement
Our designated Non-Executive Director for Workforce Engagement,
Judy Vezmar, directly engages with a diverse spectrum of colleagues
around the business and provides feedback to the Board on this
engagement.
The Board also receives detailed updates on workforce engagement
twice a year, including outcomes from the global engagement survey.
The People Strategy is presented annually and the Board reviews a
dashboard of workforce-related matters twice a year along with
reports from our Speak-Up channels.
The Board also meets colleagues during site and market visits. In the
2022 calendar year, this included induction visits by the Group CEO
to 20 countries, as well as site visits by the other Non-Executive
Directors to a total of seven countries.
Find out about our ENED Engagement on page 52.
Material issues raised by our colleagues in 2022
– Engagement and development
– Diversity, equity and inclusion
– Good career opportunities
– Remuneration and benefits
– Cost of living
– Job security
– Health, safety and wellbeing
– Sustainability/environmental impacts
– Community support and charitable giving
Actions taken in 2022 in response
In response to colleagues’ feedback from the 2021 Engagement
Survey, we implemented a number of initiatives around learning and
development across the business. This included a roll-out of our new
People Leaders Programme and an increased focus on development.
In addition, we established a new Global HR Community of Practice
to encourage collective learning and development and piloted a
performance coaching programme for senior leaders.
We were therefore pleased to see an improvement in the positivity
rates for questions relating to these areas in the 2022 survey.
This included a 5% increase in positive responses to the question
on access to training and a 17% increase in the question regarding
development conversations with their manager.
We have also taken numerous actions to support our colleagues who
are experiencing an increase in the cost of living with a mix of global,
regional and local initiatives.
Find out more about how we’re supporting our colleagues on pages 38-47
of our 2022 Sustainability Report.
Priorities for 2023
– Align our internal communications strategy to our purpose and
people strategy
– Continue to focus on DE&I strategies and improving our Employer
Value Proposition to attract and retain the best talent
– Work on improving our colleague survey to gain a better insight
from our colleagues and build meaningful actions from the results.
Facilitating leadership engagement across the business
We ensure our leaders regularly engage with colleagues across the
business through a number of channels. Two-way communication
is essential as we want our colleagues to feel empowered to share
their concerns and questions while leadership teams aim to keep
their teams informed of latest business updates.
Through SharePoint messages, our Group and Regional CEOs
provide regular updates on key business activity, celebrating the
work of colleagues and sharing latest news in the region. In 2022,
we have made our leadership engagement programme more
interactive by launching dynamic, accessible formats including
video messages.
For example, in addition to a bi-monthly leadership town hall,
our Group CEO shares a monthly update on our Group intranet site.
Through these updates, colleagues can directly interact with the
leadership team, ask questions and share any concerns.
SSP Group plc Annual Report and Accounts 2022
45
OverviewCorporate governanceFinancial statementsStrategic report Stakeholder engagement
and Section 172 statement
continued
Clients
Our business success depends on retaining and winning new
space in our clients’ travel locations. By understanding our clients’
requirements, we can offer them tailored solutions which drive
revenue and ensure we remain the operator of choice.
Business engagement
We have excellent, long-standing relationships with many of our
clients and have continual two-way engagement with them at all
levels to develop, maintain and optimise our offer and performance
in line with their expectations. This includes both formal reviews
and ongoing dialogue as part of our day-to-day business.
We also engage with clients through tenders for new business,
contract negotiations and renewals. In 2022, this included tenders
at Berlin airport in Continental Europe, Houston airport in North
America and Kuala Lumpur and Kuching airports in Asia Pacific.
We also commission independent client surveys to measure
satisfaction levels and gain insights into the issues that are most
important to them. These were paused during Covid-19, but we
have a new survey planned for 2023.
Board engagement
The Board receives updates on client engagement from the Executive
Directors and Group Executive Committee (including through the
regular CEO update). It is also regularly informed of the pipeline of
business coming on stream, including any renewals, new wins or
losses and any client or country specific issues or opportunities.
In addition, the Board ratifies tenders of a certain size and directly
meets client representatives as part of their market and site visits.
This included meeting clients in Paris and New York during the year.
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SSP Group plc Annual Report and Accounts 2022
Material issues raised by our clients in 2022
– Operational excellence and relationships
– Brand portfolio and bespoke concepts that deliver sustainable sales
– Product offer and customer experience and satisfaction
– Labour management, employee engagement and development
– Financial stability and investment in business development
– Sustainability and environmental concerns
Actions taken in 2022 in response
In 2022, we continued to strengthen our client relationships,
responding to their feedback and expectations with our strong
brand portfolio, customer proposition and operational performance.
Our high-success rates in retaining and winning new contracts in
2022 are testament to the positive impact of these efforts.
Additionally, as we continued to recover from the pandemic, we took
part in negotiations and kept an open dialogue with our clients to
agree flexible rent terms and minimum guarantee concession fee
waivers, enabling us to keep units open throughout the year.
Our new sustainability strategy and targets, launched in 2022, also
directly respond to growing client expectations regarding issues such
as plastics and sustainable packaging, energy efficiency and carbon
emissions. We take a partnership approach to addressing
sustainability concerns with our clients.
Find out about our new business wins in 2022 in our long tern growth
and returns strategic priority on pages 24-27.
Priorities for 2023
– Continued focus on our client relationships, brand portfolio,
customer insights and operational performance to drive high
retention rates and to secure profitable new business
– Continued delivery of our sustainability strategy
– New client survey planned for the first half of 2023 to measure
satisfaction levels and deliver plans to drive loyalty
Building on our relationship with Helsinki-Vantaa Airport
After a competitive tender, we were selected to open a food
court at Helsinki-Vantaa Airport in Finland as part of a significant
redevelopment programme by the airport. The food court will
feature three franchise brands and three bespoke concepts
developed in line with our client’s expectations and customers’ taste.
We have a long history as a trusted partner at Helsinki-Vantaa
Airport, reflecting the high-quality of our operations and the hard
work of our team over many years. Specifically created as part of
the airport’s redevelopment, the food court will feature a number
of digital innovations including order at table and online payment,
meeting our client requirement for an easy and convenient
passenger experience.
In line with our sustainability goals, most of the meat and fish served
will be sourced in Finland to reduce food-miles, and breads and
pastries will be baked on site at our bakery. Local sourcing was an
important component of our proposal as our client reaffirmed their
commitment to sustainability as part of this expansion.
Investors
We need to understand the needs of those who invest in and lend
to SSP to maintain their confidence and support.
Business engagement
Maintaining a quality two-way communication with investors and
lenders is essential to attract and retain a high-quality stable investor
register. It is essential to keep our investors informed on performance,
strategy and governance. This engagement also helps us understand
and address any challenges or questions they might have on our
performance and strategy, including in relation to sustainability
and environmental, social and governance issues.
We hold one-to-one and group calls and meetings and presentations
with investors and lenders. These are led by our Group CEO and
Deputy Group CEO and CFO and provide a space to discuss financial
updates. This includes investor roadshows following the preliminary
and interim results. On a quarterly basis, our Deputy Group CEO and
CFO and Corporate Finance Director hold calls with lender groups
to outline performance and answer any questions.
Our Head of Investor Relations and Corporate Affairs Director
have regular calls, email exchanges and meetings with shareholders
to update them on business performance and respond to their
queries. In addition, our Corporate Affairs Director and Group Head
of Sustainability engage directly with investor ESG analysts and
ratings agencies. Our Corporate Finance Director engages directly
with Lenders via regular one-to-one meetings, calls and email
correspondence with relationship management teams and credit
analysts on an ad hoc basis. The focus during the year was the
extension of our principal banking facilities, secured after a process
involving active dialogue with most of our banking lenders.
Board engagement
Each year, we hold our Annual General Meeting, which gives the Board
the opportunity to present to attending shareholders and answer
their questions.
Our Board, including our Chair and Remuneration Committee Chair,
is consulted on relevant issues including our sustainability and
remuneration policies and contributes to feedback to proxy agencies
ahead of the AGM. Our Board also participates in investor meetings
and presentations, as required. For specific queries, Board members
join direct calls with investors.
Our Board receives updates on shareholder and lender activity
from the relevant Directors and members of the Group Executive
Committee. At every Board meeting, they review market commentary,
shareholder analysis and the views of sell-side research analysts.
Material issues raised by our investors and lenders in 2022
– Trajectory and dynamics of recovery of the travel industry
– Strategic direction
– Sources and uses of cash, profit performance and balance sheet
flexibility
– Pace and geography of new business additions
– Inflationary cost pressures, price increases and labour shortages
– Changes in the competitive environment
– Executive remuneration
– Brands and consumer proposition including digital technology
– Climate-related risks and opportunities/energy use
– Food waste
– Animal welfare
– Business ethics (e.g. anti-bribery, data privacy, tax transparency)
Actions taken in 2022 in response
In spring 2022, in line with our proactive investor engagement
approach, our CEO met with six of our top ten investors (covering
45% of the shareholder base). Following the interim results, our
Group CEO and Deputy Group CEO and CFO met with more than
30 investors (covering 60% of the shareholder base).
We followed a similar proactive approach with ESG analysts and
proxy advisors for our key shareholders to discuss our approach
to sustainability and respond to detailed questions.
We also undertook extensive engagement on executive
remuneration with the involvement of proxy advisors and
shareholders ahead of the Annual General Meeting (AGM) to
understand any concerns. Our Remuneration Committee Chair was
actively involved in this process. We also engaged with dissenting
shareholders following the AGM to understand their concerns.
We proactively engaged with lenders in relation to the 12-month
extension of Senior Banking Facilities to January 2025, and engaged
with DBRS, our private Ratings Agency, to ensure our continuing
recovery is reflected in our private credit rating.
Find more about our shareholder engagement in the Corporate Governance
Report on pages 98-99.
Priorities for 2023
– Proactive investor engagement, increasing face time meetings
with our investors
– Continue improving our performance in key ESG investor ratings
and benchmarks
– Further engagement with leading lenders and further
engagement with DBRS to ensure our continuing recovery
is reflected in our rating
SSP Group plc Annual Report and Accounts 2022
47
OverviewCorporate governanceFinancial statementsStrategic report Stakeholder engagement
and Section 172 statement
continued
Brand partners
We work with our partners to optimise the brand offer for our clients
and customers and to ensure alignment with quality, performance
and sustainability standards, while enabling brands to be introduced
to the travel sector.
Business engagement
We maintain close relationships with our brand partners to ensure
we are proposing the best offer for customers while preserving our
brand partners’ standards and identity.
We communicate regularly with our brand partners at Group and
local levels to foster effective partnerships. Locally, our business
development teams regularly engage with local hero brand partners,
especially during the negotiation and extension of key brand
agreements, making sure contract terms are suited to the travel
sector and that supply chains and product ranges are fit for purpose.
From a Group perspective, our Head of Brand Portfolio manages our
relationships with brands such as Starbucks and Burger King at an
international level. This ensures our partners have a dedicated point
of contact they can engage with regularly to discuss local contracts,
upcoming tenders, as well as potential brand strategies. This involves
discussions around the brands’ sustainability credentials and
available digital innovations.
We also review our partners’ evolving brand requirements on a
regular basis to ensure we are meeting their policy requirements.
Board engagement
Our Board is kept informed of key changes to brand partner
relationships. For example, they are updated on the status of major
new brand partners or extensions of existing arrangement and they
receive an overview of our brand partnerships as part of the
Customer Plan presented by the Chief Customer Officer.
Our Board also receives regular updates on brand partners from
Executive Directors and the Group Executive Committee, including
from our Group CEO.
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SSP Group plc Annual Report and Accounts 2022
Material issues raised by our brand partners in 2022
– Delivering brand standards and a high-quality customer experience
through operational excellence
– Renewing existing business and securing new locations
– Sustainable ingredients and packaging
– Climate change, energy use and renewables
– Customer safety/food safety (including allergens)
– Business ethics/corporate behaviour
– Diversity, equity and inclusion
Actions taken in 2022 in response
We partnered with a number of new brands this year such as Greggs
in the UK and Four Fingers in Malaysia, and renowned chefs, including
Wolfgang Puck in Austria.
We have been working with a number of our brand partners to deliver
our sustainability strategy. For example, as part of a tender won at
Berlin Airport Terminal 1 in 2022, we worked with Burger King to
propose a high share of their vegan options using meat alternatives.
Additionally, we met with some of our key brand partners to discuss
our shared net zero ambition.
Regularly engaging with our brand partners also enables us to
anticipate any new requirements or brand updates which would
require some changes in our policies and contracts. In 2022, for
example, we have implemented changes in our product ranges to
align with Starbucks’ new Food Ingredients and Nutrition Guardrails.
We have also increased our focus on digital with the implementation
of innovative technologies in partnership with our brand partners.
Priorities for 2023
– Consistent operational delivery of brand standards
– Continued delivery of contract retention and new business
for profitable brand partners
– Renewal of franchise agreements with profitable brand partners
and securing new relationships with tender winning brands
Working with Starbucks EMEA for the launch of digital
pay solutions at Gatwick Airport and two UK stations
We regularly engage with our partner Starbucks EMEA and have
worked with their digital team to launch a trial of My Starbucks®
Rewards and Mobile Order & Pay at the Starbucks store in Gatwick
Airport and two stations.
Starbucks® Rewards is a loyalty scheme enabling customers
to earn points through their Starbucks® UK App or card while the
Mobile Order & Pay gives customers the option to order in advance
on their Starbucks® UK App and pick up their drinks directly at
the counter.
This trial is part of our ongoing work to best meet the evolving
needs of our customers for increased convenience, connection
and personalisation.
Suppliers
Maintaining good relationships with our suppliers is essential
to ensure an efficient and secure supply chain and to understand
consumer trends.
Business engagement
To maintain consistent standards across our operations, we keep
our suppliers informed on our supply chain and food safety standards
and policies. We also share our strategic agenda on areas such as our
values and sustainability.
We keep an open, ongoing dialogue with our suppliers through regular
formal and informal meetings, calls and correspondence. This is
reinforced during tenders and contract negotiations which require
dedicated engagement to establish contract terms and conditions.
Additionally, we undertake regular communications with our
suppliers and, where needed, carry out site visits, quality and
performance reviews. This has become more important than ever in
the current inflationary market. Many of our markets organise yearly
supplier conferences, and suppliers often have a presence at our
leadership conference as well.
Our contracted suppliers are required to sign up to our key policies
or to demonstrate equivalent standards of their own and have access
to guidance and training materials on our standards and policies. We
also engage with suppliers’ Supplier Ethical Data Exchange (SEDEX)
assessments, as we discuss the outcomes of ethical trade audits and
associated corrective actions.
Board engagement
Our Board receives updates on suppliers from the Executive Directors
and Group Executive Committee (including as part of the regular
CEO update). This included a deep dive on procurement and capital
expenditure from the Chief Procurement Officer focusing on current
challenges, including the impact of Covid-19 and inflationary pressures.
Our Board is also kept informed of key changes to supplier
relationships, supply chain logistics and opportunities for value
creation in the supply chain and signs off our modern slavery
compliance process.
Material issues raised by our suppliers in 2022
– Inflationary pressures
– Product quality and food safety (including allergens)
– Logistics and supply chain disruption/product availability
– Sustainable ingredients and sourcing
– Single use plastics, recyclable, reusable or compostable packaging
– Animal welfare
– Climate change/carbon emissions
– Human rights
– Business ethics (e.g. data privacy, anti-bribery and corruption)
Actions taken in 2022 in response
Our sustainability strategy includes targets around sustainable and
ethical sourcing and supplier compliance with our ethical business
policies. We also engaged with suppliers to encourage them to join the
SEDEX platform and conducted reviews of over 100 supplier ethical
trade audits, along with corrective action plans.
In light of increasing inflation, we have taken a number of mitigating
steps, including working with suppliers to identify alternatives to
ingredients impacted by price increases and supply issues to ensure
supply chain continuity, increasing our focus on waste reduction
plans, re-engineering supply chain logistics, including forward buying
where possible, price renegotiations, and working with our suppliers
to deliver revenue generating initiatives. The Chief Procurement
Officer, along with his regional procurement teams, actively monitors
the management and mitigation of our response to current supply
chain pressures to ensure disruption is keep to a minimum. The
central purchasing team has been bolstered by the appointment
of an equipment specialist, who has a remit to source equipment that
supports our sustainability agenda as well as simplifying operations.
Find out more on our mitigation of supply chain issues on page 63.
Priorities for 2023
– Develop new, integrated Supplier Code of Conduct to better
engage suppliers on our requirements and expectations
– Continue to engage contracted suppliers to sign-up to our policies,
with the aim of reaching 100% by 2025.
Working with our suppliers to trial eco-friendly
cleaning products
Working with our suppliers to source sustainable products and
ingredients is essential to meet our sustainability targets and our
net zero ambition. For that reason, we regularly engage with our
suppliers to develop sustainable product alternatives.
In 2022, we started a trial with one of our suppliers to test
eco-friendly cleaning products in some of our UK units. Our partner
supplier provides products that only use natural plant-based
ingredients and no chemicals and which use less packaging, thereby
limiting their impact on the environment.
The trial took place between July and August 2022 and resulted
in a reduction of 2.1 tonnes of carbon dioxide equivalent (CO2e)
emissions. We continue working with our supplier with the aim
to trial these products in additional markets.
SSP Group plc Annual Report and Accounts 2022
49
OverviewCorporate governanceFinancial statementsStrategic report Stakeholder engagement
and Section 172 statement
continued
Communities, NGOs and society
We play an important role in the communities where we operate and
in which many of our colleagues and customers are based. Engaging
with and supporting them as well as NGOs on key societal issues is
part of being a good corporate citizen.
Business engagement
Our Community Engagement Policy sets out our approach to support
the communities where we operate.
Material issues raised by communities, NGOs and society in 2022
– Food poverty and food waste
– Healthy and sustainable diets
– Community support and charitable giving
– Humanitarian support relating to the Russia-Ukraine conflict
– Animal welfare
– Biodiversity loss and deforestation
– Food agriculture water scarcity and stewardship
We work in partnership with 27 charities globally, supporting them
through a combination of fundraising, volunteering, cause-related
marketing, financial and food donations. In addition, our UK business
contributes funding towards the SSP Foundation, a UK-registered
charity. The Foundation makes grants to support local charities
nominated by colleagues, as well as those focused on alleviating
food poverty among our local communities.
As well as our charity partnerships, we also proactively engage with
NGOs on key issues. For example, in 2022, we met with the Lever
Foundation on the important issue of farm animal welfare.
We regularly engage with NGOs and other investor advisory bodies in
response to requests for information on our activities in certain areas
(e.g. regarding cost of living, diversity and animal welfare).
Board engagement
Our Community Engagement Policy is reviewed by the Board every
two years, the last time being April 2021. Our Group CEO is responsible
for overseeing the implementation and management of this policy
and keeping the Board advised on compliance.
Our Board also receives updates on issues of importance being raised
by NGOs and local communities and how we’re responding as part of
the bi-annual sustainability update. Key community and NGO issues
are also covered in updates through the Group and Regional CEOs,
as is the work of the SSP Foundation.
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SSP Group plc Annual Report and Accounts 2022
Actions taken in 2022 in response
As a food business, working to alleviate food poverty for our local
communities is central to our approach. In 2022, we continued building
upon our existing community programmes and establishing new
partnerships with food poverty charities. For example, in Canada we
established a new partnership with the Canadian food banks network.
The UK-based SSP Foundation also made over 180 grants with a total
value of more than £365,000 to a range of both local and national
charities (June 21 to June 22). This included sizeable grants to
Macmillan Cancer Support, the British Red Cross Ukrainian refugee
appeal, FareShare, the UK’s largest charity fighting hunger and food
waste, and the Trussell Trust, the largest network of food banks
in the UK.
In addition, we supported our local communities when faced with
natural disasters and political upheaval. For example, when a typhoon
devastated parts of the Philippines and volcanic eruption caused the
displacement of thousands in Palma, our local team stepped up to
support local relief measures.
Priorities for 2023
– Conduct a formal review and update of our Community
Engagement Policy
– Continue our ongoing work with food poverty charities across
our regions, including establishing new partnerships where needed
– Continue engaging with animal welfare NGOs on this important
issue, including seeking their input for a review of our Farm Animal
Welfare Policy.
Supporting Ukraine humanitarian response
In response to the Russia-Ukraine conflict, our teams across Europe
mobilised their efforts to raise funds in support of humanitarian
efforts set up to help Ukrainian refugees.
We held fundraising events for national appeals across a number
of our markets, and, with many refugees arriving at key travel
locations where we operate, we were also able to provide them
with direct donations of food, vouchers and other essential items.
In Germany, for example, as significant numbers of refugees, mainly
women and children, were arriving at Berlin train station, colleagues
were there to help. Over the course of the first weekend, our team
at the station produced, packaged and distributed over 11,000
meals and drinks.
The SSP Foundation (a UK registered charity) made a £25,000 grant
to the British Red Cross appeal. In addition, at Group-level we made
a donation of £100,000 to support aid efforts, directed to a number
of charities including the UN Refugee Agency (UNHCR).
Governments and regulators
We seek to be part of the debate that shapes the regulatory
environment in which we operate. We contribute our experience
and expertise to relevant areas of policy development and seek
to support national strategies and objectives where appropriate.
Business engagement
In line with regulatory requirements, we comply with statutory
reporting and data submission requirements, such as our gender
pay gap report, payment reporting and modern slavery statement.
We also participate in consultation, submissions and government
reviews, as required.
Monitoring emerging regulations also helps us adapt our policies
and anticipate any changes in requirements that would impact our
business. We work to stay informed on government proposals and
recommendations for future regulation, including responding to
consultations where appropriate and participating in government
roundtables.
In our markets, we also regularly engage with governments,
regulators and local authorities, noting that in a number of markets,
our clients are government bodies. They require us to keep them
informed of operations occurring in airports and stations in their
jurisdictions. This includes maintaining ongoing dialogues with
our tax regulators throughout the business.
Board engagement
Our Board receives updates by the General Counsel and other
specialists including external advisors on the activities of government
bodies and regulators. During the year, this included updated training
on the Market Abuse regulation, TCFD requirements as well as the
upcoming regulatory changes to audit and assurance requirements.
Furthermore, regular corporate governance updates are also
provided to the Board.
On specific occasions, Board members may be asked to engage
directly with governments and regulators, as requested.
Our Deputy Group CEO and CFO is also a long standing member
of the Bank of England Decision Maker Panel as well as a Business
Contact Advisor.
Material issues raised by governments and regulators in 2022
– Business ethics and corporate behaviour
– Food safety and allergens
– Healthy lifestyle and dietary needs
– Climate-related risks and opportunities
– Biodiversity loss and deforestation
– Plastics and sustainable packaging
Actions taken in 2022 in response
In the past year, we implemented nutritional labelling in the UK in
accordance with ‘Natasha’s Law‘, clarifying the presence of allergens
in pre-packed food.
Richard Lewis, CEO for SSP UK & Ireland, also attended a roundtable
with the Secretary of State for Health along with other business
leaders. We were pleased to be able to contribute to the debate on
how the UK Government and ‘out of home’ sector can work together
to deliver improved health outcomes for customers.
Our Group Head of Sustainability and Group Director for Food &
Beverage also attended the inaugural roundtable for the Life Climate
Smart Chefs project. This project, funded the LIFE Programme of the
European Union, aims to contribute to the development and
implementation of the EU Climate Policy and Farm to Fork Strategy.
We engaged external consultants to assist us with our obligations
under TCFD requirements. This included undertaking a detailed
analysis against two potential climate scenarios to understand the
impact on our business, strategy and financial planning (see pages
54-57 for more information).
Priorities for 2023
– Prepare for potential new regulations that could impact
our business and the food sector in general
– Ongoing monitoring of emerging regulation, proposals
and recommendations
SSP Group plc Annual Report and Accounts 2022
51
OverviewCorporate governanceFinancial statementsStrategic report Q&A with ENED
Leadership in action
Judy Vezmar was appointed as
designated Non-Executive Director
for Workforce Engagement (ENED)
in February 2021. In this critical role,
Judy engages with a diverse spectrum
of colleagues, allowing her to support
the Board in their understanding of
the views of our colleagues across
the business.
Q
How has your interaction with
colleagues expanded this year as the
business has continued to rebound
from the effects of Covid-19?
Q
What impact has the workforce
insight you have gained through
your engagement had on Board
decision-making?
We are a global company of around 35,000 colleagues. In my role
as ENED, I feed back to the Board, both through scheduled agenda
items at meetings and more informally, through the experiences
and interactions that I’ve had over the course of the year. Part of my
role is ensuring colleague views are considered in all Board decisions,
regardless of whether they are the key stakeholder. This year, I was
able to share insights about the talent across many levels of the
business that we would normally not have a chance to experience
first-hand so readily as Board members. For example, the
understanding I have gained in my conversations with colleagues
has brought to light the need to put greater emphasis on global
talent opportunities and potential movements around the world.
This insight has supported the Board in developing our People
strategy which in turn helps to strengthen our talent base and
give colleagues expanded opportunities.
This year colleague engagements have expanded as we find
ourselves slowly emerging from the constraints of lockdowns.
Both face-to-face and through multimedia, I had many opportunities
to be able to cross time zones and listen to and have conversations
with colleagues around the world that reflect our geographic and
demographic diversity. For example, it was enormously gratifying
to participate in a leadership meeting with the Asia Pacific team.
Experiencing how they used technology in a virtual meeting to
bring together eight markets combining recognition, development,
best practices and shared learnings in real time was fantastic.
Engagements I’ve had with colleagues of all levels across support
centres, rail and air businesses has brought another perspective to
the Board. In all meetings with our colleagues, we go to great lengths
to ensure everyone feels it is a ‘safe zone’. This gives us a chance
to have very open conversations and take back the best ideas and
the biggest concerns. We also aim to have conversations without
management present to further encourage open conversations.
Q
How does your work as ENED help
the Board in understanding, assessing,
and monitoring Company culture?
I also have had the benefit of exploring feedback from our global
colleague engagement survey which has been translated into many
different languages around the world. This survey allows us to take
the pulse in cultures, assessing the different dynamics and gaining
a deeper understanding of issues and opportunities seen by
colleagues. I use the opportunity of the ENED role to have that
dialogue in different markets and with different groups to better
understand some of the nuances and to see what opportunities
we have globally.
Q
What skills do you bring to the role
of designated Non-Executive Director
for workforce engagement?
Q
What are your plans for next year
and what areas would you like to focus
on more when meeting colleagues?
Here at SSP, our Board takes the role of employee NED very
seriously. We all highly value our colleagues and so everyone wants
to do this role! I was delighted to have been selected based upon
the experiences that I’ve garnered over the course of my leadership
career. I have worked in the United States, in Europe and across
markets around the world leading groups of individuals in customer-
facing roles. That kind of experience is invaluable and helps one
develop a cultural sensitivity for colleagues and the challenges
faced in different markets.
The year ahead fills me with so much excitement! We will have had
more time to see how the strategies and direction set by our CEO
have taken shape. I am looking forward to seeing the colleague
engagement survey action plans in place in the different markets
and to hearing feedback from our colleagues to make sure our plans
are effective. Of course I am particularly excited about expanding
face-to-face meetings around the world and gaining insights that
we are able to feed into our Board decision-making.
52
SSP Group plc Annual Report and Accounts 2022
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 (including links to the policies) can be found on
our website (www.foodtravelexperts.com). A description of each of the policies listed below is set out on pages 60 and 61 of the Sustainability
Report. Due diligence processes implemented for each policy are contained within each respective policy’s documentation.
Environmental
matters
(including the
impact of the
Company’s
business on the
environment)
Some of SSP’s relevant policies
– Environmental Policy – sets out the Group’s commitment to responsibly
managing the environmental impact of our business.
– Ethical Trade Code of Conduct and Human Rights Policy – Sets out our
expectations for the business in respect of a variety of issues including
human rights, ethical conduct, safety and environmental issues.
– Responsible Sourcing Policy – Defines the standards for our purchasing
and menu development teams to meet when sourcing ingredients for our
proprietary brands.
– Farm Animal Welfare Policy – Sets the farm animal welfare standards
for our European and UK suppliers of meat, dairy and egg products.
– Speak Up Policy – Sets out how concerns about suspected wrongdoing
or dangers at work can be raised, how they will be investigated and
protection and support for those that raise concerns.
Principal
risks
(58-67)
1, 8
Where to find out more about SSP’s approach to these matters
and the outcome of the application of the related policies
Strategic priorities – Sustainability and Journey
to Net Zero – pages 28-31
Stakeholder engagement – pages 43-51
TCFD – pages 54-57
Key Board activities – pages 102-103
Sustainability Report – SSP website
Employees
– Colleague Code of Conduct – Sets out the principles and standards that
are expected of all colleagues, including guidance on how to identify and
deal with important ethical issues
2, 4
– Diversity, Equity and Inclusion Policy – Sets out our commitment to
encouraging diversity, equity and inclusion among our workforce,
partners and communities, eliminating unlawful discrimination.
– Global Safety Policy – Describes our commitment to managing safety
and sets out our Global Safety Standard and responsibilities.
– Speak Up Policy
– Data Privacy Policies – Contains our policies on data retention and
managing privacy issues
Social matters
– Community Engagement Policy – Sets out our intent to make the
communities in which we work better places to live and do business, and
to support local communities for their mutual benefit.
– Diversity, Equity and Inclusion Policy
– Board Diversity Policy – Sets out the Board’s approach to diversity.
– Ethical Trade Code of Conduct and Human Rights Policy
– Modern Slavery Statement – Sets out the steps we have taken
to prevent modern slavery in our business and supply chains
– Speak Up Policy
Strategic priorities – skilled and engaged
colleagues, Sustainability – pages 22-23, 28-29
Stakeholder engagement – page 45
Corporate Governance Report – pages 82-113,
120-144
Risk Management Framework – pages 58-61
Directors’ Report – page 145-148
Sustainability Report – SSP website
2, 4,6,
7, 8
Strategic priorities – skilled and engaged
colleagues, Sustainability – pages 22-23, 28-31
Stakeholder Engagement – pages 45, 50
Sustainability Report – SSP website
2, 6, 8
Strategic priorities – skilled and engaged
colleagues, Sustainability – pages 22-23, 28-29
Stakeholder engagement – pages 45, 50
Nomination Committee Report – pages 104-113
Sustainability Report – SSP website
– Colleague Code of Conduct
– Anti-Bribery and Anti-Corruption Policy – Sets out our policy against
6
Risk Management Framework – page pages
58-61
bribery and corrupt practices and the standards and procedures required
for policy and legal compliance in the countries where we operate.
– Speak Up Policy
– Prevention of facilitation of Tax Evasion Policy – Sets out our policy
against tax evasion and the procedures required for policy and legal
compliance
Corporate Governance Report: culture – pages
84-85, 96-97
Audit Committee Report – pages 115, 118
Respect for
human rights
Anti-corruption
and anti-bribery
and prevention
of facilitation
of tax evasion
matters
Business model
Non-financial
KPIs
Business model – pages 16-17
Strategy – pages 18-29
1, 2, 3,
7, 8
Key Performance Indicators – pages 32-33
Strategic Priorities – pages 18-29
Key Performance Indicators – pages 32-33
Sustainability Report – pages 14-16
6. Compliance
7. Health and food safety
8. Sustainability
9. Information security and stability
10. Mobilisation of pipeline
SSP Group plc Annual Report and Accounts 2022
53
Business environment, geo-political uncertainty and terrorism threat
Risks
1.
2. Availability of labour and wage inflation
3. Supply chain disruption and product cost inflation
4.
5.
Sufficient senior capability at Group and country level
Impact of Covid-19
OverviewCorporate governanceFinancial statementsStrategic report Task Force on Climate-related
Financial Disclosures
We recognise that climate change, and
the transition to net zero, presents a
fundamental challenge to our business
and wider stakeholders. So, providing
consistent and reliable climate-related
information is crucial.
In accordance with Listing Rule 9.8.6 R, we have adopted the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). To meet these requirements, we have updated
our governance, strategy, risk management, and metrics and
targets to meet these requirements, where needed. This is an
iterative process and we are committed to continuous improvement.
We will review how we identify and manage climate-related risks
and work to enhance our disclosure each year.
TCFD index
TCFD recommendations
Governance
a) Board oversight
b) Management’s role
Strategy
a) Climate-related risks and
opportunities
b) Impact on business, strategy
and financial planning
c) Strategy resilience
Risk management
a) Risk identification and
assessment processes
Reference
Consistency
AR p28,54, 82-95;
SR p53-56
AR p54, 82-85;
SR p53-56
Consistent
Consistent
AR p55-57, 60-66
Consistent
AR p56-57
Partially
consistent
AR p56-57
Consistent
AR p55, 58-61
Consistent
b) Risk management processes
AR p55, 58-61
Partially
consistent
AR p55-61
Consistent
c) Integration into overall risk
management
Metrics and targets
a) Climate-related metrics
b) Scope 1, 2 and 3 GHG
emissions and related risks
AR p30-33, 56-57;
SR p14-15, 18-37
AR p30-33;
SR p31-32
c) Climate-related targets and
performance
AR p56-57;
SR p14-15, 18-37
Key: AR: Annual Report, SR: Sustainability Report
Board oversight
Our Board has oversight of our climate-related risks and opportunities
and reviews our Group Sustainability Strategy, targets, metrics and
performance at least twice a year. In 2021, they approved our strategy
and targets, including for net zero carbon emissions by 2040.
In 2022, the Board received two comprehensive updates on our
sustainability programme, as well as a deep dive review of the
Group’s climate strategy and roadmap to net zero. The latter
covered details of the work undertaken in 2022 with a specialist
consultancy to map the Group’s Scope 3 emissions and develop
science-based targets, aligned to a 1.5°C scenario.
The Audit Committee reviews the Group Risk Register each year,
including details of the risk impact, likelihood and mitigating actions
for the Principal Risk for sustainability outlined on page 66. They also
received two detailed updates on TCFD in 2022, with presentations
from a specialist third party on details of the risks and opportunities
identified and climate change scenario analysis undertaken.
Management
Our response to the climate-related risks and opportunities is
primarily driven through our Sustainability Strategy (see page 28).
The strategy, including the assessment and management of
climate-related risks and opportunities is embedded across
relevant business functions and operating regions, from Group
to market-level.
Once the strategy is set by the Board, the Group CEO has overall
responsibility for delivering our sustainability commitments,
including our climate change commitments, and the Corporate Affairs
Director leads the programme. Accountability for risk management
and business strategy, including climate-related risks, sits with
the Deputy Group CEO and CFO, and key members of the Group
Executive act as leads for specific issues, as well as having
accountability for delivery in their relevant functions or operating
regions. The Board, Audit Committee, Group Executive Committee
(chaired by the Group CEO), and the Risk Committee, chaired by
the Deputy Group CEO and CFO, all receive regular updates on
sustainability and climate matters and have the opportunity to
challenge our progress on managing climate-related risk and
broader sustainability targets.
Partially
consistent
Partially
Consistent
Partially
consistent
In 2022, we appointed a new Group Head of Sustainability,
reporting to the Corporate Affairs Director, and established a
central sustainability team, which has ownership of delivering our
climate commitments. In addition, we have a Group Sustainability
Steering Committee, that meets monthly and comprises members
of the functional leadership teams, including from the procurement,
commercial, human resources, legal and finance functions, which
have responsibility for specific targets and focus areas.
Our disclosure is partially consistent with Strategy (b), as we present financial impacts in a
mainly qualitative way and have not yet linked these financial impacts into financial planning.
It is also partially consistent with Risk Management (b) as it will take the next 12 months to fully
integrate this into overall risk management. In addition, Metrics & Targets (a), (b) and (c) are
partially consistent as we are yet to report on all metrics and internal measures used to
manage our material climate risks and opportunities.
We have dedicated sustainability leads and working groups, who
lead carbon reduction activity in each of our four operating regions.
They meet with the Group sustainability team at least twice a year
to review performance data, including for carbon emissions, and
progress against targets.
Governance
In 2022, we formalised our sustainability governance and management
framework, including for climate-related risks and opportunities.
A detailed graphic of our framework and key responsibilities can
be found on page 55 of our 2022 Sustainability Report.
In addition, we communicate progress against our targets and
details of our net zero roadmap to colleagues across the business
through our international communication channels. For example,
we had a dedicated session on our journey to net zero at our Global
Leadership Conference in October 2022.
54
SSP Group plc Annual Report and Accounts 2022
Strategy and risk management
In 2021, we developed our new Sustainability Strategy, as detailed
on page 28 and covered in detail in our stand-alone Sustainability
Report. Sustainability forms a critical part of our Group strategy,
encompassing our core strategic priorities and ensuring we deliver
long-term success for the benefit of all our stakeholders.
Climate-related risks and opportunities
In 2022, we worked with an external consultancy to identify the
climate-related risks and opportunities for our business.
To identify these risks and opportunities, we established a working
group which reviews our existing Risk Management methodology and
strategic risks, and built-in climate-related considerations in line with
TCFD recommendations. The working group comprised relevant
senior colleagues from Finance, Risk, Legal and Sustainability
departments, as well as our external consultants.
The risk and opportunity identification process involved a review
of our existing risks, benchmarking to understand the approach by
peers, and a consideration of relevant emerging regulation. An initial
long list of 12 risks and three opportunities was created. These were
ranked by the working group based on perceived impact, likelihood
and velocity. Five risks and one opportunity were deemed as most
material to our business (see table on the next page).
These material risks were ratified in consultation with SSP leadership
from the Finance, Legal, Procurement, Sustainability and Commercial
functions, as well as members of the Executive Committee, including
the Deputy Group CEO and CFO, and the Risk and Audit Committees.
Once approved, where appropriate, the material risks and opportunity
were integrated into the Group’s Principal risks and were therefore
subject to the same review and approval process as the remainder
of the Group’s risks.
Climate scenarios
Net zero scenario
Global warming is limited to below 2°C above pre-industrial levels
(ideally 1.5°C).
Underpinned by a range of external scenario data, including:
– NGFS Net Zero 2050 scenario
– RCP1.9 and RCP2.6
– IEA Energy Technology Perspective Beyond 2°C Scenario
– CCC UK 6th Carbon Budget
The material risks cover those that are transitional and physical in
nature and could have a significant effect on our operations, strategy
and financial planning if they are not managed appropriately. In
contrast, material opportunities may positively contribute to our
financial performance over time, in the event they can be realised.
We commissioned analyses of each risk and opportunity against
two potential climate scenarios (as detailed below) to understand
and quantify the potential financial impact across short, medium,
and long-term time horizons. These horizons for 2025, 2030 and 2040,
are in line with timeframes in our wider sustainability strategy and
likely interim targets in our net zero roadmap.
The analysis drew upon internal and external data sources, such
as carbon pricing projections, consumer trends, potential future
surcharges on use of single use plastics, business growth forecasts
and carbon emissions data across Scopes 1, 2 and 3. For each, we
assessed the potential level of impact if the risk or opportunity is
realised and the likelihood of it occurring under each of the climate
scenarios and time horizons.
Risk management and principal risks
To ensure that material climate-related risks and opportunities
identified through this process are considered within our wider
risk management process, we have embedded them within relevant
principal risks. For example, Risk 5 relating to reduced availability
of climate sensitive raw materials due to increased frequency of
extreme weather events and chronic risks, is considered as part of
our Principal Risk 3 regarding supply chain disruption (see page 63).
This approach will help ensure that we mitigate, transfer, accept,
or control these risks through the same processes as any other
strategic risk.
Climate inaction scenario
Global temperatures rise by 3.5 – 4.5°C, with no climate change mitigation.
Underpinned by a range of external scenario data, including:
– NGFS Current Policies Scenario
– RCP8.5
– IEA Energy Technology Perspective Reference Technology Scenario.
Greater transitional risks
Greater physical risks
SSP Group plc Annual Report and Accounts 2022
55
OverviewCorporate governanceFinancial statementsStrategic report Task Force on Climate-related
Financial Disclosures
continued
Our material climate-related risks and opportunities
Risk/Opportunity
Risk 1 (transition):
Increased costs of energy and key raw materials due to introduction of
carbon pricing or taxes in regions within SSP’s operations and supply chain.
Our strategic response:
We have a target to achieve net zero emissions across our value chain
(Scopes 1, 2 and 3) by 2040. In support of this, we are setting science-based
targets in line with a 1.5°C scenario.
Risk 2 (transition):
Risk of legislation which prevents the sale of single use plastic products
or products in plastic packaging.
Our strategic response:
We have a target to eliminate unnecessary single-use plastic and move 100%
of our own brand packaging to be recyclable, reusable or compostable by 2025.
Risk 3 (transition):
Risk of changes in travel trends leading to a reduction in passenger numbers.
Our strategic response:
Our business planning process considers passenger numbers and travel trends
to inform our medium-term financial plan.
Scenario
1.5-2°C
3.5-4.5°C
1.5-2°C
3.5-4.5°C
1.5-2°C
3.5-4.5°C
Risk 4 (transition):
Risk of reputational impact, resulting in loss of clients and thus revenue from
failure to realise sustainability commitments and decarbonise operations and
the supply chain in line with net zero expectations.
1.5-2°C
3.5-4.5°C
Our strategic response:
Sustainability forms a critical part of our Group strategy and focuses on the
most material issues for our business and stakeholders, supported by clear
and measurable targets.
Risk 5 (physical):
Reduced availability of climate sensitive raw materials due to increased
frequency of extreme weather events and chronic risks.
1.5-2°C
3.5-4.5°C
Our strategic response:
With c.550 brands in our portfolio and operating in 35 countries, our ingredients
and raw materials come from highly diversified supply chains. As part of our risk
mitigation, all countries must have contingency plans in place for substitute
suppliers if a core product is unavailable. This will also be linked to an overall
country contingency plan that may include a reduction in product range in times
of widespread availability issues.
Opportunity 1:
Opportunity to grow potential revenues from ‘conscious consumers’, including
taking advantage of diversifying markets and changing consumer demands.
1.5-2°C
3.5-4.5°C
Our strategic response:
Our sustainability strategy includes targets to encourage and respond to
changing customer demands. This includes 2025 targets for 30% of own-brand
meals to be plant-based or vegetarian and 100% of coffee, tea, hot chocolate, and
fish and seafood for our own brands to be certified to sustainability standards,
such as Fairtrade. We are also focused on designing more climate-friendly menu
options and helping our customers to choose them, through actions such as
product promotions, information and labelling.
Key
L: Low
M: Medium
H: High
Find details of our Risk Management and Principal Risks on pages 58-67.
56
SSP Group plc Annual Report and Accounts 2022
Level of likelihood/impact
Short term
(2025)
Medium term
(2030)
Long term
(2040)
H
M
L
L
L
L
M
L
M
M
M
L
H
M
L
L
H
L
H
H
M
H
M
L
H
M
M
L
H
L
H
H
M
H
M
L
Key findings from our scenario analysis
The scenario analysis identified that, generally, transition risks are
more material in the shorter term, compared with physical risks
which become more material in the medium and long term.
Under the net zero scenario, the most material transition risks
identified were:
– Increased energy and supply chain costs because of increasing
carbon prices;
– Potential reduced revenues because of changing travel trends,
in particular in the UK and EU countries as passenger growth slows
in this scenario;
– Reputational impact if SSP does not meet climate commitments
in line with client expectations.
The opportunity relating to changing consumer preferences is
greater under a net zero scenario, and this could be increased further
as the analysis currently only considers SSP own brands.
Under the Climate Inaction scenario, physical risks are more material,
but some transition risks are still present:
– Physical risks could be greater in the long term, reducing yield of
crops and therefore availability of key raw materials such as wheat,
coffee, tea, pulp, and potatoes. This could increase purchasing costs.
– Reputation risk could still be high in a Climate Inaction scenario
given the existing expectations around climate and that many
of our clients have already made climate commitments.
While this analysis has shown that transition to a net zero scenario
presents a higher financial risk to our business in the short to medium
term, we are fundamentally committed to our target of being a net
zero business by 2040 and recognise our strategic commitment
to moving towards this higher risk scenario.
Please refer to the table on the opposite page for our strategic
responses to these risks.
The insights gained from scenario modelling have demonstrated
that we have existing strategic responses to help mitigate each of
the most material, climate-related risks and opportunities identified.
This gives us confidence that, if we continue to deliver against our
internal and external targets, then our strategy will be resilient.
We recognise that, as we fully integrate these findings into our
financial planning processes, that we may need to adapt some targets
or internal controls. We also understand the need to review our
material climate-related risks and opportunities and build upon our
existing mitigation strategies to ensure the continued resilience of
our business to climate change.
Metrics and targets
Several of our primary climate-related risks and opportunities are
covered by our target to achieve net zero emissions across our value
chain (Scopes 1, 2 and 3) by 2040. To achieve this, we have developed
near and long-term targets in line with the latest guidance from the
Science-Based Targets Initiative (SBTi) and the Greenhouse Gas
Protocol, and are in the process of submitting to the SBTi for
validation.
In line with the requirements of SBTi net zero commitments, our
metrics and targets include all material Scope 1, 2 and 3 emissions.
We have undertaken an assessment to determine the materiality
of Scope 3 emissions and identified which categories should
be included.
O
v
e
r
v
i
e
w
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e
i
F
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
Our net zero target will directly support the mitigation of the risk
relating to carbon pricing (Risk 1) and the risk of losing business due
to inaction on climate (Risk 4). It also supports the opportunity to
engage climate-conscious customers (Opportunity 1).
Other sustainability targets and metrics that address or support
our most material climate-related risks and opportunities include:
– By 2025, at least 30% of meals offered by our own brands
to be plant-based and/or vegetarian (Opportunity 1)
– By 2025, 100% of all own brand units in the UK, North America
and Continental Europe (40% in the Rest of the World) that serve
coffee to offer non-dairy milk alternatives (Opportunity 1)
– By 2025, eliminate unnecessary single-use plastic and move
100% of our own brand packaging to be recyclable, reusable
or compostable (Risk 2)
– By 2025, have programmes in place across all our markets
to reduce food waste through prevention, reuse, recycling and
partnerships for discounting and donating surplus food (Risk 2)
We do not have external metrics and targets on Risk 3 or Risk 5,
as these are commercially sensitive, but both of these risks are
monitored and managed through internal KPIs, and built into
business planning and functional budgets.
In the interest of keeping reporting consistent and concise, we are
reporting all metrics and KPIs on progress against these targets
within our Sustainability Report.
Find details of our performance against our targets and metrics and our
methodology in our 2022 Sustainability Report.
Next steps
We have made good progress on our approach and reporting
in alignment with TCFD recommendations and are committed to
continuing to strengthen this in subsequent years. We will establish
a Climate Risk Steering Committee to:
– Review financial quantification of risks and opportunities, and
ensure these are fully embedded in financial planning processes
– Manage future TCFD reporting, review progress against data
improvement recommendations and respond to future
climate-related reporting requirements
– Further embed climate-related considerations into our business
and strategic decision-making, financial planning and governance
and risk management frameworks
– Review and refine our climate scenario modelling as appropriate
to align with latest climate science, available data sets and best
practice guidelines
– Annually assess material risks and opportunities to ensure they
remain appropriate in the context of an ever-changing business
and physical environment, and take account of improved data
or modelling which may become available
– Identify activities that manage and mitigate climate-related risks
and build climate change resilience across our business
SSP Group plc Annual Report and Accounts 2022
57
Risk management and principal risks
Overview
The Group’s risk management framework is designed
to ensure that material risks throughout the business
are identified, analysed and effectively managed on
an ongoing basis, through a series of processes
designed to monitor, manage and ultimately mitigate
risks. As explained in this section of the Annual Report,
risk management is embedded within the business
as a key part of operating the business effectively.
Identifi c a ti o
n Prioritis
a
t
i
o
n
M
o
n
it
o
ring M itigation
Approach
Identification
– Review the prior year risks to
determine whether these are still
valid and whether any emerging
risks should be considered
– Consider major changes and
initiatives
– Consider processes that are
complex, changing, new or have
historical issues
Monitoring
Develop an action plan for any
medium or high rated risks without
appropriate mitigating activities.
This includes:
– What action will be taken?
– Who is responsible for this?
– When will the new activity
be implemented?
Prioritisation
Prioritise risks based on impact
and likelihood:
– Impact: If the risk arises, what is
the impact on the achievement of
the country, region and Group’s
objectives and financial targets?
– Likelihood: What is the likelihood
that the specific risk will occur?
Mitigation
Country management identifies
current mitigation activities
for operational risks:
– What activity is undertaken
and is this managing the risk?
– Who performs the activity and is
this the right person to undertake
this activity?
– When is this undertaken and is the
frequency appropriate to manage
the risk?
Strategic Risks
Operational Risks
Interviews are held with Executive
Committee Directors (and teams)
to update the Strategic Risk
Register
Operational Risk Registers are
updated by Regional/Country
Management
58
SSP Group plc Annual Report and Accounts 2022
Risk Management Framework
An overview of our governance structure is set out on page 61 and
in accordance with the Corporate Governance Code, the Board
(supported by the Audit Committee) has overall responsibility for the
Group’s internal control framework and reviewing its effectiveness.
The Board confirms that there is an ongoing process for identifying,
evaluating and managing significant and emerging risks faced by the
Group. Part of this process is the Board reviews of the effectiveness
of the Group’s risk management and internal controls systems. These
reviews include an assessment of internal controls, in particular
operational and compliance controls and are supported by reports
from the internal auditor as well as the external auditor on matters
identified in the course of their statutory audit work. As part of its
review during the year, the Audit Committee received an update on
the operation of key controls to the extent not the subject of a
specific agenda item. These updates highlighted any challenges
during the year as well as key changes in process, in particular the
extent to which activities had fully returned to pre-Covid-19 capacity
or had been altered as a result of dealing with Covid-19.
Following its review of the internal controls and risk management
system, taking into account the updates and adjustments as the
Group moves forward with rebuilding post-Covid-19, the Board
agreed that they remained effective and that the Board and
Executive Committee would continue to look at how reporting could
be further improved to assist with the review process going forward,
including through deep dives throughout the year on key risk areas.
During the year, the Group has continued to right-size the controls
processes as the Group has recovered from Covid-19, taking the time
to assess what changes should be built into processes long term.
These are improvement steps, and there have been no changes to
the Group’s internal controls over financial reporting that occurred
during the year ended 30 September 2022 that have materially
affected, or are reasonably likely to materially affect, the Group’s
reported financial position.
In addition to the detail set out on page 61, key features of the Group’s
risk management and internal control processes are as follows:
– The Group conducts an annual Risk Assessment to identify
principal risks and local management teams maintain country and
regional risk registers. The regional/country registers cover the
assessment of risks, any major changes in risks or new initiatives,
and any current as well as future mitigation activities 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. This includes the consideration of
climate-related risks and opportunities.
– An annual risk management action plan is put in place to further
enhance the Group’s risk management capability.
– The regional and country management teams are responsible
for implementing internal control and risk management practices
within their own businesses, for ensuring compliance with the
Group’s policies and procedures on an ongoing basis and for
highlighting emerging risks.
– A key part of the Group’s mitigation processes is its various risk
management policies which are rolled out across the Group and
are supported by training tailored to different levels of the Group.
These policies include a Colleague Code of Conduct, a Speak Up
Policy, an Anti-Bribery and Anti-Corruption Policy, a Prevention
of the Facilitation of Tax Evasion Policy, a GDPR Compliance Policy,
Modern Slavery Policy, Group Authorisation Policies and various
IT security polices, as well as training thereof, all of which are
refreshed as appropriate. 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 Risk Committee
receives regular reporting on topics covered by these policies
including compliance reports and updates on training uptake.
– The Audit Committee periodically reviews the Group’s policies and
procedures including those for preventing and detecting fraud, its
systems, controls and policies for preventing bribery (including due
diligence on new partners) and for preventing the facilitation of tax
evasion. The Audit Committee (and Board, as applicable) 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. During the year, the Audit Committee’s terms of reference
were updated to reflect its role reviewing policies and processes
for identifying sustainability and climate-related risks (and
opportunities) and managing their impact on the Group.
– The Group’s Speak Up Policy provides a framework to encourage
and give all individuals working at all levels of the Group, including
colleagues, 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. This year, updates have focused on the integration
of local European laws as they are enacted to implement the
European Directive on Whistleblowing.
– The management of risk and compliance with associated policies
is considered as part of the Group’s performance management
systems.
– Our Group Safety Forum, chaired by the Group Head of Safety and
teamed by H&S experts throughout our business, has a remit to
monitor and assess our implementation of global safety standards
and compliance with regulations and will be supported going
forward by an Executive Safety Committee, chaired by the Chief
People Officer, which will undertake quarterly regional reviews of
performance against our safety processes and agenda. For details
on our safety governance framework see page 43 of our
Sustainability Report.
– Our sustainability framework helps us to consider how our key
areas of non-financial performance sit alongside our financial
performance and objectives and help us to drive and deliver
long-term value. It also ensures that the Board and the business
considers risk from both a financial and non-financial perspective.
For example, during the year, the increased focus on the
sustainability of our performance has led the business and Board
to consider the risks to long and short-term value and opportunities
related to delivering our net zero roadmap and reducing our carbon
footprint. Incorporation of environmental, social and governance
matters in our risk considerations helps us develop a more
sustainable strategy that delivers more rounded success and
value creation. For more information see pages 28-31 and
our Sustainability Report.
Principal Risks
The principal risks and uncertainties to which the Group is exposed
are summarised on pages 62-67, along with the actions taken to
mitigate them and details of the risk trend over the year. Risks are
identified as ‘principal’ based on the likelihood of occurrence and
the potential impact on the Group. Those with higher probability
and greater impact on strategy, reputation, operations and financial
performance receive the highest risk rating. These have been
reviewed and agreed with the Board (having being considered
by the Group Executive Committee and Audit Committee).
One new risk relating to ‘Mobilisation of Pipeline’ has been added
to the principal risks since last year. The specific Brexit risk has
been deleted and its impact included in the ‘Availability of labour’
and ‘Supply chain disruption’ risks. The ‘Food safety and product
compliance‘ risk has been incorporated into a broader ‘Health and
food safety’ risk.
In the prior year the Group disclosed 18 principal risks. In the current
year the disclosure has been limited to the 10 principal risks noted
below. The other eight prior year risks are now designated ‘Other
risks‘ and continue to be assessed and considered by the Board on
an annual basis together with the principal risks, however they have
not been judged to be sufficiently high risk to warrant disclosure in
the annual report and accounts.
In addition to the principal risks outlined on pages 62-67, each local
business maintains a register of operational risks which are monitored
and reviewed internally throughout the year.
1
2
3
3
5
5
9
10
Likelihood
8. Sustainability
9. Information security and stability
10. Mobilisation of pipeline
Link to strategic priorities
Principal risks are identified,
assessed and discussed in relation
to their linkage with our strategic
priorities set out below:
1. Leading customer proposition
2. Skilled and engaged colleagues
3. Long-term growth and returns
4. Sustainability
6
4
7
8
t
c
a
p
m
I
Risks
1.
Business environment,
geo-political uncertainty
and terrorism threat
2. Availability of labour
and wage inflation
3. Supply chain disruption
4.
and product cost inflation
Sufficient senior capability
at Group and country level
Impact of Covid-19
5.
6. Compliance
7. Health and food safety
SSP Group plc Annual Report and Accounts 2022
59
OverviewCorporate governanceFinancial statementsStrategic report Risk management and principal risks
continued
Emerging risks
SSP defines emerging risks as those whose timing and impact are
not entirely certain for the Group but which may over time be a risk
to the delivery of the Group’s strategy. We have well established
processes for identifying and monitoring emerging risks through
horizon scanning and our embedded risk management framework,
both at Group and regional levels.
At a regional level, a bottom-up approach is adopted whereby incidents
and trends are monitored within the business and discussed at regional
risk committees and Executive Committees (as applicable). Depending
on the perceived impact and probability of the risks, these are
escalated to the Group CEO and Deputy Group CEO and CFO through
weekly trading updates and subsequently the Group Executive and
Risk Committees, where appropriate. Regional management closely
monitors these risks and periodically updates Group management.
At a Group level, a top-down approach is adopted through the annual
risk assessment exercise during which emerging risks are discussed
with senior regional management (CEOs and CFOs) and Group
management (Finance, HR, Procurement and Legal department
heads). Identified risks are reviewed and approved by the Group
Executive Committee, before being submitted to the Audit
Committee and the Board.
Risk appetite
The risk appetite is the level of risk that the Group is willing to accept
in the day-to-day business operations and in seeking to realise our
strategic priorities. It is also an important element of our culture
and values, as we seek to balance activity to drive our purpose with
protecting the business and doing the right thing.
The Board determines the risk appetite of the Group in order
to ensure that the potential impact of current and emerging risks
is considered and appropriately managed so as to increase the
likelihood that the Group’s business objectives can be achieved,
whilst minimising the threat of adverse impact to the financial
and operational performance and prospects of the Group.
Risk appetite therefore informs the expected behaviours from our
Board, senior executives and our colleagues. Risk appetite can vary
depending on the nature of the risk and the relationship with other
risks, and is rarely static, particularly given a number of the Group’s
principal risks derive from factors outside the direct control of the
Group, e.g. the global inflationary environment. The Group has a very
low appetite for certain risks such as ‘Health and food Safety’,
‘Compliance with legislation’ and ‘Liquidity and Funding’ and efforts
are made to minimise these risks. The Group has a higher appetite
for risks such as the ‘Mobilisation of pipeline’ where the risk directly
pertains to realising our objective of increasing growth and returns.
Case Study: Modern Slavery Risk
Modern Slavery risks are managed by a working group with
representatives from the Group Sustainability, Procurement and
Legal teams, with ultimate responsibility for the Modern Slavery
Statement sitting with the Board.
Every year, in preparing its Modern Slavery Statement
(see www.foodtravelexperts.com), the Group considers the
risks presented by modern slavery within its business, identifying
high risk regions and industries which require greater scrutiny.
As set out in the Sustainability Report (see page 49), we expect
all our contracted suppliers to sign up to our Ethical Trade Code of
Conduct and Human Rights Policy which make it clear than modern
slavery is not tolerated in any form.
Key engagement with stakeholders on Modern Slavery risks takes
place between our procurement teams and suppliers as well as our
colleagues to ensure implementation on our polices in this area.
Effectiveness of our policies is measured through our suppliers’
ethical trade audits as well as colleagues training completion rates.
Short term Mobilisation
of Pipeline
Medium
term
Climate
Change
Long term Structural
changes to
the travel
sector
In the short term, the Mobilisation of Pipeline
is our most significant emerging risk. This risk
has increased in importance during the year
as the business has re-opened and begun to
spend more focus on the fit-out of the pipeline
in an inflationary price environment. The
implementation of the capital expenditure
programme is overseen by the Regional CEOs
and the Group Investment Committee.
Climate change has been identified as one of
our most significant medium-term emerging
risks. It has various aspects but primarily
relates to the failure to adequately consider
and respond to the physical and transition
risks associated with climate change,
including the impact on our units such as
damage or closure, disruption to our supply
chain, increased food security challenges
and increased pressure of compliance with
regulatory requirements.
See page 54 for more information on our
consideration of climate risk and its potential
impact on the business and its results.
Consistent with the prior year, from a
long-term perspective, there may be
structural changes to the travel sector driven
by consumer behaviour, e.g. aversion to air
travel due to its impact on the environment,
increased remote working, greater road travel
as adoption of electric vehicles increases.
These also present opportunities for the
Group, which if not capitalised on, will have
a severe adverse impact on the business.
See pages 56-57 for more information on how
we are addressing these structural changes
and putting in place mitigating action.
As above, all of these risks are monitored and discussed at senior
management level to consider appropriate mitigations.
60
SSP Group plc Annual Report and Accounts 2022
The Group’s risk management framework
Overall responsibility for the Group’s system of internal controls and risk management policies. Receives updates on key risk matters
including Safety
Board
– Reviews risk management policies and processes (including as to sustainability and climate-related matters) and financial controls
(providing a reasonable basis for the Board to make judgements on an ongoing basis as to the Group’s financial position and prospects
– Receives and reviews detailed risk registers, Control Self-Assessment (CSA) results and internal audit reports
– Assesses the integrity of the Group’s financial reporting, including as to tax compliance and reporting
– Reports to the Board on relevant matters arising (including from internal and external audit reports)
Audit Committee
Risk Committee
Meets quarterly and operates under
the oversight of the Audit Committee.
Chaired by the Deputy Group CEO and
CFO and comprises various senior
management. Attended by Deloitte
as internal audit.
– Reviews and updates risk registers,
operational risks, controls and KPIs,
including emerging risks
– Oversees internal audit process
– Reviews the Group balance sheet
– Reviews the Group’s information
security protocols
– Assesses safety management reports
and initiatives (including for allergens)
– Reviews internal compliance reports
(including re ABC, modern slavery,
GDPR) and assesses further actions
and controls
– Considers risks associated with new
country entry
– Oversees management of climate
related risks and opportunities
Financial Reporting
– Coordinates the risk management
process (updates risk registers,
coordinates local registers, assesses
risk ratings and documents mitigating
controls)
– Conducts meetings with risk owners
and consolidates local risk registers
– With CEO and Deputy Group CEO and
CFO, conducts regular trading, financial
and risk reviews to monitor the ongoing
operations of the Group
– Carries out balance sheet reviews with
the local teams
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Executive Committee
Meets monthly and is chaired by the
Group CEO. Composed of the Executive
Directors and senior management
(comprising regional CEOs and
functional heads).
– Produces annual budget for Board
review and approval
– Reviews budget pursuant to weekly
and monthly reports
– Identifies and executes, subject to
any necessary Board approvals, new
strategic business opportunities,
M&A opportunities and major capital
expenditure proposals (including new
country entry)
– Reviews risk assessment, as well as
current and future mitigation activities,
and committee members report on
emerging risks and opportunities in
their area of responsibility
– Executive Directors report to Board on
financial performance and key issues
as they arise
Treasury Committee
Meets quarterly, is chaired by the Deputy
Group CEO and CFO and monitors a wide
range of treasury matters and activities:
– Agrees and implements the Group’s
treasury policies
– Oversees the cash forecasting process
– Monitors financial risks including
interest rate risk, FX risk, liquidity risk
– Considers other topical/ad hoc items
(such as lender covenants, Libor
reform, guarantee capacity)
Disclosure Committee
Composed of the Group CEO, Deputy
Group CEO and CFO and Company
Secretary.
Meets on an ad hoc basis.
– 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
Group Investment Committee
– Reviews and authorises material
capital investments and acquisitions
– Operates a post-investment review
process
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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, including in relation to emerging risks
– 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, which are reviewed by Group compliance and relevant functional heads
– Works with our outsourced loss prevention analysts to investigate and remedy any queries raised
– Compiles reports and maintains registers as required (e.g. ABC, safety, sustainability and other compliance matters)
– Attends Group Risk Committee where control challenges identified through CSA/CC or Internal Audit
– Performs a programme of testing a set of key controls based on a continuing assessment of business risks across the Group
– Carries out assurance activities to help inform the Board and committees of potential risk areas and mitigating controls
Internal Audit
SSP Group plc Annual Report and Accounts 2022
61
OverviewCorporate governanceFinancial statementsStrategic report
Risk management and principal risks
continued
1. Business environment, geo-political
uncertainty and terrorism threat
Executive responsibility for this risk:
Group CEO, Deputy Group CEO and CFO, Regional CEOs
Link to strategy
Trend
Risk description
The Group operates in the travel environment where external factors such
as the general economic and geo-political climate, levels of disposable
income, changing demographics and travel patterns could all impact both
passenger numbers and customer spending.
The travel environment is vulnerable to acts of terrorism or war, further
outbreaks of pandemic disease, or a major and extreme weather event
or natural disaster which could reduce the number of passengers in travel
locations.
Strike action in the travel sector, e.g. by rail or airline staff, can have a
knock-on impact on traveller numbers. In the medium term, changes in travel
trends arising from sustainability concerns may lead to a reduction in
passenger numbers.
Mitigating factors
The Group monitors the performance of individual business units and
markets regularly. The Executive Directors review detailed weekly and
monthly performance, 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.
Should passenger numbers fall significantly, we remain able to actively
manage the number of open units as we have done successfully throughout
the pandemic.
The business has a range of mitigating actions for increasing costs, such
as menu engineering; however, we have a proven track record of being able
to pass on inflationary costs through increased pricing.
Risk trend
During the year we have seen global inflation rates at levels not seen
in the past 50 years. The price inflation is primarily caused by increasing
commodity/energy prices, the war in Ukraine and to a lesser extent,
supply chain disruption. It is affecting all goods and services.
Following the recovery from the pandemic the Group has returned to a formal
reforecasting process on a quarterly basis and in addition has re-implemented
its medium-term planning process. Overall passenger numbers for FY23 are
assumed to be slightly behind the previous forecasts partly due to the wider
economic environment.
Inflation is forecast to stay elevated over the next 12-18 months and, as a
result, consumers and businesses are actively monitoring and reducing their
discretionary spending, which is likely to include the number of flights booked
in that period and also the spend per passenger in the rail business.
Partly as a result of Covid-19, a larger proportion of our unit rents are now
based on passenger numbers and therefore provide downside protection
in the event of a significant fall in passenger numbers.
Whilst the risk of terrorism remains, there has not been a coordinated
campaign focused on the global travel sector in the past year. Therefore,
it caused a limited impact on passenger numbers.
As a consequence of the drop of real wages, the strike risk has increased and
we have seen strikes across Europe in Air (France, Spain, Germany) and Rail
(UK) which depressed revenues in the weeks the strike actions took place.
This risk will remain heightened as long as inflation remains at historically
high levels.
Greater focus on business continuity planning (supply chain) and recovery.
Our IT disaster recovery plan has been tested during this current crisis with
colleagues working from home and has proved to be effective.
62
SSP Group plc Annual Report and Accounts 2022
2. Availability of labour and wage inflation
3. Supply chain disruption and product
cost inflation
Executive responsibility for this risk:
Country CEOs
Executive responsibility for this risk:
Regional CEOs, Chief Procurement Officer
Link to strategy
Trend
Link to strategy
Trend
Risk description
The Group ‘s revenue is dependent on availability of frontline colleagues
and skilled labour to run our units. Covid-19 has had a near-term impact on
the hospitality sector resulting in frontline staff and skilled labour shortages
across the Group. This is a result of the shift in the workforce to other sectors
(e.g. online or service centre operations).
There is also a risk that SSP will be unable to recruit sufficient resources
to support planned growth in a timely manner.
Mass migration and population movements in both the UK (Brexit) and the US
(immigration policy) continue to contribute to these supply shortages.
Risk description
The Group’s revenue is derived from supply of menu items to customers.
Therefore the Group is exposed to both short- and medium-term availability
risks in respect to food and beverages and other consumables. There is also
a risk that our margins are not maintained due to product cost inflation.
The Group’s future growth forecast is underpinned by capital expenditure
on our secured pipeline. This capital expenditure is also exposed to inflation
risk as there is delay between the investment case approval and the build out.
As a result, original returns on investment may no longer be achievable.
Certain capital items must be obtained from brand partners which
increases their availability risk.
Risk trend
Early in the financial year this risk was particularly pronounced as the
business recovered from the pandemic. This has resulted in high wage
inflation adversely impacting margins as well as causing delays to the unit
reopening programme.
As the unit reopening programme has progressed and colleagues have been
recruited to service our peak summer period, this risk has decreased to a
similar level as last year.
The impact of the cost of living crisis also puts pressure on wages, with
colleagues go forward salary expectations being benchmarked against
the prevailing inflation rate.
Certain countries (e.g. the US) continue to see a significant impact from the
labour availability risk and are continuing to focus on recruitment and retention.
Mitigating factors
Our People function is continuing to support the development of mitigating
strategies for labour cost inflation across the Group.
Various incentives are being offered to retain existing frontline staff.
Each business area is closely monitoring their market by location and
by competitive set to ensure we remain in the right market position.
The well-established HR forums both locally and globally will partner the
business to ensure we activate either defensive or proactive steps to ensure
business continuity.
Greater use of technology in areas like digital ordering and payment in
addition to menu simplification and extended grab ‘n’ go ranges have reduced
the demands on colleagues’ time.
In the medium term, there are a number of supply chain risks potentially
arising from the climate agenda:
– risk of these costs increasing from the introduction of carbon pricing
or carbon taxation
– risk of legislation which prevents the sale of single use plastic products
or products in plastic packaging resulting in increased cost
– reduced availability of climate sensitive raw materials due to increased
frequency of extreme weather events.
Risk trend
The war in Ukraine has caused a global supply decline for various products
including key ingredients such as sunflower oil. This, along with increasing
commodity/energy prices and logistics costs, has resulted in product cost
inflation well above that seen in the recent past.
A proportion of the secured pipeline was approved prior to Covid-19, and
therefore there is a more significant delay than usual between the approval
and the build out. Costs are expected to be higher than initially included in
the investment case due to inflation in building costs.
For branded units, certain key items (e.g. fryers and griddles) must
be obtained from the brand partners and the lead time has increased
to up to nine months.
Mitigating factors
The Group has conducted extensive menu engineering to mitigate the impact
of lack of availability and rising prices, such as substitutions (e.g. salad instead
of fries). As we recover from Covid-19, menus are being kept in control such
that the simplicity in the supply chain is maintained.
For most key ingredients in the key markets we have at minimum two suppliers.
We have approached clients to obtain economic benefits to offset increases
in build costs, which have included additional capital expenditure
contributions, extended lease terms, or rent free periods.
For partner supplied capital expenditure, long lead time items are being
pre-ordered well in advance of unit construction.
The business has increased awareness and is actively planning for the
climate-related risks noted.
SSP Group plc Annual Report and Accounts 2022
63
OverviewCorporate governanceFinancial statementsStrategic report
Risk management and principal risks
continued
4. Sufficient senior capability at Group and
country level
5. Impact of Covid-19
Executive responsibility for this risk:
Chief People Officer
Executive responsibility for this risk:
Group CEO, Deputy Group CEO and CFO, Regional
CEOs
Link to strategy
Trend
Link to strategy
Trend
Risk description
The Group may not have sufficient depth of management or the right
capability at a senior level, particularly in markets where talent retention
or recruitment is becoming increasingly challenging, to drive through the
benefits of strategic change initiatives such as:
– operational efficiencies
– IT developments
– supporting the growth and development of the business
The Group does not have sufficient resources to meet the changing and
complex needs of an international and growing business, e.g. Business
Development, Legal, People/HR, IT.
Risk trend
Talent retention is increasingly challenging in the current market and there
is a risk that senior management may leave the business. There has been a
structural shift in the recruitment market post-Covid-19, with many people
leaving the hospitality sector or looking for a better work-life balance, which
has caused a significant level of turnover throughout the sector and created
retention and recruitment pressures.
This retention risk is currently elevated as management has been stretched
through Covid-19 and the pace induced by the reopening of the business could
lead to additional pressure on management teams.
The positive impact of a number of significant hires, including our new Group
CEO, contributes to offsetting this risk. The positive sector and business
outlook should reduce concerns of senior leadership and therefore reduce
the likelihood of further resignations.
Mitigating factors
Group HR is evaluating remuneration to ensure that senior staff remain
motivated and fairly compensated.
Annual talent planning process (started in 2016) continues and is more
embedded.
Group HR focus to benchmark internal pay rates vs external to ensure that
new talent can continue to be attracted to work in this sector and for SSP.
Specific retention measures have been put in place for high risk colleagues.
This will remain under review.
Group HR will keep the key senior organisation structure under review
for the next 12-18 months.
Risk description
The emergence of a more serious Covid-19 variant could expose the Group
to several risks including, but not limited to:
– significant and prolonged economic impact due to reimposed travel
restrictions and economic downturn
– staff absences due to illness or self-isolation requirements
In addition, there may be long-term impacts of Covid-19 such as:
– long-term structural changes, e.g. working from home, permanent decline
in long-haul business travel
– staff moving out of the Food & Beverage industry completely, as seen in the
US or the UK
Risk trend
In general, the Covid-19 variants have become more infectious and less deadly
and a reversal of that trend is not expected. In addition, the good progress of
vaccine rollouts has reduced the potential impact of new variants. Therefore
the risk of future travel restrictions is reduced compared to the prior year.
We continue to see staff absences due to Covid-19 infections which adds
to the labour availability risk noted above.
In certain countries (e.g. mainland China and Hong Kong), the continued
adoption of a zero Covid-19 strategy is having a significant adverse impact
on the Group’s revenues in those countries as well as constraining passenger
numbers across APAC as these countries contribute significantly to the
overall passenger numbers in the region.
The structural changes noted above have all been observed during the year,
with the continued use of ‘hybrid’ working models having an impact on rail
commuter traffic and, as a result, on our revenues from that segment.
Mitigating factors
Partly as a result of Covid-19, a larger proportion of our unit rents are now
based on passenger numbers and therefore provide downside protection
in the event of a significant fall in passenger numbers.
Our experience in dynamically opening and closing units depending
on restrictions would enable us to hibernate the business more efficiently
should this be required.
There continues to be greater focus on business continuity planning and
recovery. The Business Continuity plan was tested during this current crisis,
with staff working from home, and proved to be effective.
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SSP Group plc Annual Report and Accounts 2022
6. Compliance
7. Health and food safety
Executive responsibility for this risk:
Deputy Group CEO and CFO, General Counsel and
Company Secretary, Regional CEOs
Executive responsibility for this risk:
Regional CEOs, Chief People Officer
Link to strategy
Trend
Link to strategy
Trend
Risk description
Failure to effectively manage risks associated with compliance with relevant
legislation and regulatory requirements, including as relates to anti-bribery
and corruption, facilitation of tax evasion, modern slavery, privacy, and
corporate legislation resulting in liability, fines, statutory liability and
reputational harm (excluding Health and Safety and ESG regulations which
are separately identified as a risk).
Increased regulatory and statutory requirements could also require
modification to business practices, increased costs of compliance and
increased insurance scrutiny and cost.
Risk trend
There is a potential risk of non-compliance with privacy laws, in particular
the General Data Protection Regulation (GDPR). The GDPR compliance
programme was temporarily suspended as a result of the Covid-19 disruption.
Increased environmental activism could result in disruption if SSP were found
to be in breach of its environmental responsibilities.
There is an increased litigation risk as a result of Covid-19, the implementation
of Fair Labour Standards Act (FLSA), and potential contractual breaches due
to delayed payment of fees resulting in material settlements, fines, penalties
and reputational harm.
Reduced staffing through redundancy and furlough, and an increase in
reliance on external advisors, has led to increased risk, slightly offset by the
extension of compliance deadlines due to Covid-19.
Mitigating factors
Increased investment in related resource including CoSec, sustainability
and GDPR. External-facing GDPR solutions have been put in place, ensuring
compliance with any external requests.
The Group’s Risk Committee works with the Legal, HR and Supply Chain
functions to oversee activity in managing compliance risks including the
Modern Slavery Act.
Compliance training is now part of our new starter plan. Group Legal and HR
are reviewing the scope and content of ongoing refresher compliance training.
Facilitation of Tax Evasion reporting and training is incorporated into ABC
reporting and training. ABC controls are incorporated into minimum controls
programme.
The use of the GAP system has continued in FY2022. A summary of GAP
matters is provided to the risk committee on a six-monthly basis.
During the year, the Group relaunched its Group Privacy Programme
following the recruitment of the Group Privacy Manager.
Resource is added as necessary to address any potential or actual disputes.
Close monitoring of working hours of management is in place in the US
to ensure overtime is paid where colleagues have worked excess hours.
Risk description
The preparation of food and maintenance of the Group’s supply chain
requires a base level of hygiene, temperature maintenance and traceability.
Non-compliance with food safety laws can expose the Group to significant
reputational damage as well as possible food safety liability claims, financial
penalties and other issues.
There is a risk that customers or colleagues may be harmed or injured whilst
on SSP premises.
Risk trend
Because of our re-opening programme, an increased proportion of the
Group’s colleagues are new hires who may not be familiar with the relevant
regulations and the Group’s internal guidelines and processes, which
increases the risk of non-compliance.
In the UK, the requirements of Natasha’s Law were implemented in 2021,
and now form part of the ‘business as usual’ operations reducing this risk.
In the US, the Food and Drug Administration (FDA) has re-commenced
inspections for food manufacturers, and visited some of our units.
In April 2022, the Group implemented new legislation in England which
requires calorie labelling on menus, labels and SELs under The Calorie
Labelling (Out of Home Sector) (England) Regs 2021.
There have been no particular changes in respect of the health risk regarding
customers or colleagues.
Mitigating factors
The Group has a global safety management programme in place, 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.
During the year, the Group appointed a new Group Head of Safety to oversee
compliance with food safety regulations and ensure greater consistency with
Health and Safety (H&S) standards across the Group.
Annually, all countries have to complete a full self-assessment across all fire,
people, product and safety measures.
All SSP country operations are required to report on all food safety incidents
(including allergens) on a six-monthly basis to the Risk Committee. The ways
of reporting are currently being reviewed with trials taking place to provide
electronic reports as opposed to Word or Excel reports.
All UK operational staff undertake allergen training as part of mandatory
training upon commencement of employment in unit, which they have to
renew every year.
As part of our procurement-led ‘Make or Buy’ project, we are considering
whether the food safety, contamination and allergens risks can be better
managed by buying prepared food from third parties.
SSP Group plc Annual Report and Accounts 2022
65
OverviewCorporate governanceFinancial statementsStrategic report
Risk management and principal risks
continued
8. Sustainability
9. Information security and stability
Executive responsibility for this risk:
Group CEO, Corporate Affairs Director,
Chief Procurement Officer
Executive responsibility for this risk:
Chief Digital and Technology Officer
Link to strategy
Trend
Link to strategy
Trend
Risk description
There is increased expectation from stakeholders (including customers,
clients, brand partners, investors, NGOs, regulators, communities,
competitors, colleagues and suppliers) that SSP needs to understand
and act on its key sustainability issues.
Sustainability issues are increasingly being legislated on, including
Streamlined Energy and Carbon Reporting (SECR) regulations and Task
Force for Climate-related Financial Disclosures (TCFD). It requires constant
vigilance to stay abreast of, and respond to changing requirements, both
ensuring action is taken and mandatory disclosures are made.
Failure to keep pace with our competitors in this area, including our rating
in ESG indices, may reduce our competitiveness and market position.
Risk trend
We communicated our Sustainability Programme (strategy and targets)
externally, meaning we can now be held more accountable for progress
or lack thereof.
Following the recovery from Covid-19, sustainability is higher on the agenda
of external stakeholders and the level of scrutiny is becoming ever higher.
However, ESG analysts recognise our progress in this area.
We have analysed the internal data available for sustainability measures
such as GHG reporting, and whilst it is fit for purpose and in many cases the
availability of more detailed data is outside our control (e.g. energy usage in
certain airports which is not reported to us by the client), we believe this data
collection process can be improved.
Mitigating factors
The Group Executive Committee and issue owners (HR, Procurement and
Commercial) oversee our sustainability activity. The Audit Committee and the
Risk Committee oversee the work being completed in respect of the TCFD
project and disclosures.
In 2022, we recruited a Group Head of Sustainability and built our internal
capabilities across our markets.
Key processes and controls are in place to manage specific sustainability
risks across key topics including policies, audits, training and briefings.
Benchmarking against competitors and ESG Index ratings is being
updated periodically.
Processes have been improved to respond to current legal disclosure
requirements under SECR.
We worked with EY to assist with our TCFD disclosures, specifically to support
on defining the business risks and the modelling of the risks’ financial impact.
Alongside the ARA, we have issued our first standalone Sustainability Report,
which will allow us to communicate in more detail on our sustainability targets
and progress.
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SSP Group plc Annual Report and Accounts 2022
Risk description
Cyber security continues to be a risk for SSP, heightened by the usage of
third-party providers and legacy platforms. The Group is exposed to cyber
security threats and disruption including:
– malicious activity resulting in compromise of systems and data
– service impact or financial loss
– potential fines
– reputational damage as a result of data loss.
Failure to have appropriate due diligence processes to identify and act on
security issues internally and within our supply chain could potentially result
in reputational damage; service disruption and data loss. As SSP does not rely
on customer data in its core operations, service disruption and reputational
damage are the primary concerns regarding risk and impact. Given SSP’s
regional business model, cyber attacks are more likely to be isolated rather
than impacting the whole Group.
Risk trend
Third parties and franchise partners are increasingly adopting mature
security assurance practices and SSP is under increased scrutiny and
continued assessment of its security posture.
DDOS attempts continue to increase in terms of number and sophistication
although during the year, the Group IT function has been generally successful
in defending the Group from these attempts.
The lack of security monitoring, resource and skills within our regions
increases the risk of compromise and security incidents but also means there
is an additional reliance on UK-based security resource. This can result in an
inconsistent approach to security across business.
Mitigating factors
Our Annual Cyber Security Programme continues to deliver improvements
to SSP’s overall security posture.
Our Cyber Security Strategy has been refreshed with a focus on ‘fixing
the basics’ and ‘enabling the future’, including the planned introduction
of a security governance framework.
SSP’s security operations centre has been expanded to cover the APAC
and Nordics region and is planned for implementation in Europe and North
America in 2023. This provides increased detection and response capabilities
for security incidents (spam, malware attacks, phishing emails, etc.).
A vulnerability management solution has been implemented, providing
visibility of SSP’s most vulnerable assets. Continuous improvement activities
are being progressed, including a global Multi Factor Authentication rollout,
firewall audits and security tooling maintenance.
Our internal cyber security awareness training has been refreshed. We have
strengthened our IT team with a particular focus on improving our Cyber
Security skills base.
10. Mobilisation of pipeline
Executive responsibility for this risk:
Regional CEOs
Link to strategy
Trend
Risk description
The Group has a significant pipeline of units to design, construct, fit out and
open. This process is subject to a number of risks, particularly in new locations
and markets, including:
– availability of materials: the process can be delayed depending on
the availability of raw materials and key plant and equipment items
– construction labour and management availability: risk of staff and
contractors shortages
– availability of staff: risk of staff shortages.
Risk trend
As a consequence of Covid-19, the Group’s pipeline of new units is much higher
than the historical average. We are also planning record capital expenditure
for 2023.
Trying to achieve this in a tight labour market, with very high global inflation
and significant delays to some capital items which need to be obtained from
brand partners (such as fryers, ovens, refrigeration, etc) will be challenging
in the short term.
Mitigating factors
Most countries have highly experienced teams that can deliver these types
of projects.
Unit mobilisation is a key topic on each of the trading calls with country
and regional management and delays are actively monitored in this forum.
Resources are redeployed across the Group where necessary.
Long lead time items are being ordered well ahead of planned unit construction.
Whilst capital expenditure might be higher than originally budgeted due
to the global inflationary environment, this can be offset by increased
contributions from clients, or potential renegotiations of commercial terms,
e.g. extending contract terms.
SSP Group plc Annual Report and Accounts 2022
67
OverviewCorporate governanceFinancial statementsStrategic report 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 pages 12-15 (‘Understanding
our market’), the markets in which we operate benefit from a number
of long-term structural growth drivers and we are confident that this
will remain the case looking forward. 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 16, SSP has a number of competitive
advantages that we believe place us in a strong position to capitalise
on the future growth in our markets.
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.
The Directors have assessed the Group’s prospects and viability over
a planning cycle ending in 2025. The Directors believe that forward
planning over this 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, and covers the period in which the roll-out of the
Group’s secured new business pipeline is expected to be completed.
This three-year period also aligns to the Group’s annual strategic
review exercise conducted within the business and reviewed by
the Board.
The assessment process
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 the Deputy CEO and CFO in conjunction
with the Executive Committee and the country management teams.
The results of the assessment are then summarised within the
strategic plan (the Medium Term Plan or ‘MTP’), which is discussed
and approved by the Board annually. The most recent MTP, which
included detailed forecasts for the period from 2023 to 2025,
was approved in July 2022.
In conjunction with the MTP, the Directors have assessed the
prospects of the Group by reference to its current financial position,
its recent and historical financial performance, its business model
and strategy, and the principal risks and mitigating factors described
on the preceding pages. The Board regularly reviews financial
headroom and cash flow projections to ensure that the business
retains sufficient liquidity to meet its liabilities in full as they fall due.
At 30 September 2022, the Group had c.£826m outstanding under
its borrowing arrangements and c.£708m of available liquidity,
including cash of c.£544m. The gross borrowings include US Private
Placement notes of c.£379m with maturities between October 2025
and July 2031 and drawn bank facilities totalling approximately
£380m. These bank facilities, which include a committed undrawn
revolving credit facility of £150m, have a maturity date in January
2025, having been successfully extended for twelve months in
August 2022. In their review of viability, the Directors have assumed
that they would be able to negotiate a further amendment of these
facilities during the 2023 financial year, which would extend the
maturity date beyond the period of assessment.
Based on the Group’s financing and available liquidity and
assuming a further extension of its bank facilities as outlined above,
the Directors have reviewed the financial forecasts and funding
requirements looking forward. Their assessment of viability
is outlined below.
Assessment of viability
For 2023, the Directors have reviewed a base case scenario which
is based on the Board-approved 2023 Budget, adjusted to reflect
the impact of current trading over the autumn. With revenue having
recovered to over 90% of 2019 levels by September 2022, this base
case scenario for 2023 reflects an expectation of a further slow but
steady improvement in revenue compared to 2019 levels in most of
our key markets. By 2024, the forecast assumes that like-for-like
sales and operating profits have recovered to broadly 2019 levels,
supplemented by the ongoing mobilisation of our secured new
business pipeline
With some uncertainty surrounding the economic and geopolitical
environment over the next twelve months, as well as the ongoing
impact from Covid-19, a downside scenario has also been modelled,
applying severe but plausible assumptions to the base case. This
downside scenario reflects a very pessimistic view of the travel
markets for the next twelve months, assuming sales that are
approximately 10% lower compared to 2019 levels than in the base
case scenario. In 2024 and 2025, revenue is assumed to be lower
in the downside scenario by approximately 8% compared to the
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.
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SSP Group plc Annual Report and Accounts 2022
Governance and Assurance
As noted above, the Board reviews and approves the medium-term
plan on which this Viability statement is based. The Board also
considers the period over which it should make its assessment of
prospects and the Viability statement. The Audit and Risk Committee
supports the Board in performing this review. Details of the Audit and
Risk Committee’s activity in relation to the Viability statement are
set out in the Audit and Risk Committee report in this Annual Report.
Viability statement
After reviewing the current liquidity position, financial forecasts and
considering the uncertainties described above, the Directors have
a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the three year
period of their assessment to September 2025.
Going concern
As a consequence of the work performed to support the Viability
statement above, the Directors also considered it appropriate to
adopt the going concern basis in preparing the financial statements
and notes which are shown on pages 162-213.
Following its Rights Issue in 2021, the Group must comply with
monthly covenants specifying a minimum level of liquidity of £150m
and a maximum level of consolidated net debt on a pre-IFRS 16 basis
of £800m. The Group will next be tested on its leverage covenant at
March 2023, with a maximum leverage multiple of nine times EBITDA
applicable, with further amended leverage tests then applied for the
periods ending 30 June 2023 (maximum 5.0 times) and 30 September
2023 (maximum 3.5 times), before reverting to the original leverage
covenant (maximum 3.25 times) from the testing period ending
31 March 2024. Similarly, the interest cover test will be re-instated for
the testing period ending 31 March 2023 (minimum cover of 1.0 times
EBITDA on a pre-IFRS 16 basis) before returning to the original
covenant level (minimum 4.0 times) for the testing period ending
30 September 2023. In both its base case and its severe but plausible
downside case scenarios, the Group would have headroom against
all of these covenant tests at all testing dates during the period
of assessment.
In addition to the uncertainty posed by the current macro-economic
and geo-political environment, the Directors recognise that other
risks exist which could have an impact on the viability of the Group.
As a result, the Directors place a high degree of importance on
maintaining an effective Group-wide risk management framework,
which ensures a disciplined approach to risk taking. Such an approach
ensures that the upside potential of all relevant risks is understood
and capitalised upon as directed by the Board, whilst the downside is
appropriately mitigated. The Group’s risk management process and
its effectiveness thereof are detailed on pages 58-61.
The Directors have also performed a robust assessment of
the Group’s principal risks, which can be found on pages 58-67.
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.
SSP Group plc Annual Report and Accounts 2022
69
OverviewCorporate governanceFinancial statementsStrategic report Group performance
Revenue
Underlying operating profit/(loss)
Operating profit/(loss)
2022
£m
2,185.4
31.7
91.5
2021
£m
834.2
(323.3)
(309.2)
Year-on-year
change vs 2021
(%)
162%
109.8%
129.5%
Underlying operating profit was £30.3m (2021: £209.0m loss) on a pre-IFRS 16 basis.
Revenue in 2019 was £2,794.6m.
Revenue
Although Covid-19 continued to have a significant impact on the
Group’s trading performance during the year, revenue in our major
markets continued to recover well. Total Group revenue of £2,185.4m
increased by 162% compared to 2021 and averaged 78% of 2019
levels (up from 30% in the previous financial year).
During the first half year, trading strengthened during the autumn
(October and November averaged 66% of 2019 levels) before the
spread of the Omicron variant around the world and the subsequent
government restrictions imposed during December and January
inevitably had an impact on passenger numbers in many of our
markets, with revenue in this period dropping back to 57% of 2019
levels. From February, as government restrictions were gradually
lifted around the world, we saw sales continue to trend positively
again, averaging 61% of 2019 levels in February and 74% in March.
During the second half year, Group revenue continued to strengthen,
averaging 87% of 2019 levels in the third quarter and 92% across the
fourth quarter, with the half as a whole averaging 90% of 2019 levels.
This progressive improvement was driven by a continued strong
recovery in passenger numbers in the majority of our markets, led by
domestic and leisure travel across both the Air and Rail sectors, with
business and commuter travel also recovering, albeit more slowly.
This revenue performance includes the benefit from net contract
gains and price increases compared to the same period in 2019.
Financial review
“We’ve delivered a strong recovery
and a return to operating profit for
the year.”
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SSP Group plc Annual Report and Accounts 2022
– IFRS 16 rent credit: as part of its response to Covid-19, the Group
renegotiated rent agreements with its clients, including a number
of temporary waivers for the period up to the end of September
2022 totalling £23.0m (2021: £92.0m). In respect of these waivers,
prior to 30 June 2022, the Group has 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 (rather than a modification of a right of use asset)
and as a non-underlying item within the consolidated income
statement. Waivers obtained subsequent to 30 June 2022 have
been recognised as a lease modification.
– Restructuring and site exit costs: the Group recognised a charge
of £2.9m (2021: £21.3m) relating to its restructuring costs
(primarily in respect of site exits) carried out during the year.
– Fees related to extension of bank facilities: in August 2022, the
maturity date of the Group’s main bank facilities was extended by
one year from 15 January 2024 to 15 January 2025. In consideration
for this extension, the Group incurred fees totalling £1.3m and this
cost has been recognised as a non-underlying expense in the year.
In the prior year, with effect from completion of its Rights Issue in
April 2021, the Group’s main bank facilities were extended from
15 July 2022 to 15 January 2024, secured alongside waivers and
amendments to its principal covenants under both its main bank
facilities and US private placement notes until 2024. In
consideration for these extensions and amendments, the Group
incurred fees totalling £5.4m, and this cost was recognised as
a non-underlying expense in 2021.
– Other non-underlying expenses: in the current year these items,
primarily relating to legal fees, amounted to £2.3m. In the prior
year items totalling £2.7m comprised a recurring adjustment for
the amortisation of acquisition-related intangible assets of £1.9m
and other legal costs of £0.8m.
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Operating profit/loss
Underlying operating profit for the year was £31.7m, compared to an
equivalent loss of £323.3m in 2021. On a pre-IFRS 16 basis, the Group
reported an underlying operating profit of £30.3m (2021: underlying
operating loss of £209.0m) and underlying EBITDA of £142.0m (2021:
underlying EBITDA loss of £108.3m).
On a reported basis, the operating profit for the year was £91.5m,
reflecting a net credit of £59.8m for the non-underlying operating
items. The equivalent operating loss for the prior year was £309.2m.
Throughout the year, the impact on the underlying operating profit
from the lower sales compared to 2019 continued to be mitigated
by the extent of our operating cost reductions, other government
support measures, and our ongoing success in negotiating rent
concessions, principally via waivers of minimum guaranteed rents.
During the second half year, as sales recovered to 90% of pre-
pandemic levels, we saw a significant improvement in our underlying
operating profit performance, reflecting the operating leverage in
our business, as well as our ongoing management of inflationary cost
pressures through productivity and pricing initiatives.
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.
The non-underlying operating items included in the net credit
of £59.8m (2021: £14.1m) are summarised below:
– Impairment of property, plant and equipment and right-of-use
assets: the Group carried out a review of impairment indicators
at the period end and determined that certain cash generating
units had a potential impairment of assets. Full impairment
tests were therefore carried out on these cash generating units.
This impairment review compared the value-in-use of individual
cash-generating units, based on management’s updated
assumptions regarding future trading performance (taking into
account the forecast recovery from Covid-19) to the carrying
values of the associated assets. Following this review, an
impairment charge of £18.2m (2021: £24.4m) has been recognised,
which includes the impairment of right-of-use assets of £6.1m
(2021: £12.5m). The £18.2m is net of the reversal of certain
impairments recognised in 2020 and 2021 totalling £4.2m.
– Gain on de-recognition of leases: as a consequence of certain
contract renegotiations and government intervention in certain
jurisdictions, a number of previously impaired leases have now been
rebased such that the minimum guaranteed rental commitments
are now calculated on a ‘per passenger’ basis, i.e. the fixed minimum
annual guarantees have been removed from the contracts.
Accordingly, these lease payments now fall outside the scope
of IFRS 16 and the leases have been derecognised in the period,
resulting in a gain of £61.5m (2021: £2.3m).
SSP Group plc Annual Report and Accounts 2022
71
Financial review
continued
Regional performance
This section summarises the Group’s performance across its four operating segments. For full details of our key reporting segments,
please refer to note 3 on pages 175-176.
North America
Continental Europe
Revenue
Underlying operating profit/(loss)
Operating profit/(loss)
2022
£m
455.4
18.4
17.3
2021
£m
194.2
(48.7)
(51.0)
Year-on-year
change vs 2021
(%)
134.5%
137.8%
133.9%
Revenue
Underlying operating profit/(loss)
Operating profit/(loss)
2022
£m
867.9
22.6
82.0
2021
£m
360.5
(134.3)
(119.0)
Year-on-year
change vs 2021
(%)
140.7%
116.8%
168.9%
Underlying operating profit was £17.4m (2021: £31.4m loss) on a pre-IFRS 16 basis.
Revenue in 2019 was £533.4m.
Underlying operating profit was £19.8m (2021: £85.7m loss) on a pre-IFRS 16 basis.
Revenue in 2019 was £1,036.9m.
Revenue of £455.4m increased by 134.5% compared to 2021, and
averaged 85% of 2019 levels for the year. During the first quarter, the
sales recovery in North America was strong, as the region benefited
from improving domestic passenger numbers, which continued to
strengthen through the December holiday period despite the
emergence of Omicron. Sales then softened considerably in January,
as the new Covid-19 variant led to flight cancellations and high
sickness levels in several US states, followed by a sharp rebound
in sales across February and March as case numbers reduced and
demand for leisure travel increased. First half sales averaged 74%
of 2019 levels.
During the second half, the recovery in North America continued
to gather pace, with third quarter sales averaging 91% of 2019 levels
and the fourth quarter strengthening to 98%, driven by a sustained
recovery in domestic air travel, despite labour availability remaining
a challenge in this market for much of the summer.
The underlying operating profit for North America was £18.4m and
reported operating profit was £17.3m. Non-underlying operating
items comprised an impairment charge of £6.4m, offset by IFRS 16
concession credits of £5.3m. On a pre-IFRS 16 basis, the underlying
operating profit was £17.4m, which compared to an equivalent loss
of £31.4m last year.
Revenue of £867.9m increased by 140.7% compared to 2021 and
averaged 84% of 2019 levels. Sales in Continental Europe recovered
strongly last autumn, helped by the extended European summer
holiday season, before Omicron impacted trading in the period from
November to January as travel restrictions were re-imposed across
our European markets. As restrictions were gradually lifted during
February and March, sales began to strengthen again, leaving first
half sales at 70% of 2019 levels on average.
During the third quarter, sales strengthened significantly to
93% of 2019 levels, initially boosted by very strong trading in our
Spanish airports during the Easter holiday period and thereafter
by a sustained recovery in leisure travel across the entire region.
In the fourth quarter, sales averaged 95% of 2019 levels, driven by
increasing numbers of both air and rail passengers over the summer
holiday season.
The underlying operating profit for Continental Europe was £22.6m
(2021: £134.3m loss) and reported operating profit was £82.0m
(2021: £119.0m loss). Non-underlying operating items comprised
an impairment charge of £5.9m, offset by a gain on lease disposal
of £59.7m and an IFRS 16 rent concession credit of £5.6m. On a
pre-IFRS 16 basis, the underlying operating profit was £19.8m, which
compared to an underlying operating loss of £85.7m last year.
72
SSP Group plc Annual Report and Accounts 2022
UK (including Republic of Ireland)
Rest of the World
Revenue
Underlying operating profit/(loss)
Operating profit/(loss)
2022
£m
614.9
23.5
27.7
2021
£m
190.0
(52.2)
(57.4)
Year-on-year
change vs 2021
(%)
223.6%
145.6%
148.3%
Revenue
Underlying operating profit/(loss)
Operating profit/(loss)
2022
£m
247.2
13.5
14.6
2021
£m
89.5
(51.1)
(33.7)
Year-on-year
change vs 2021
(%)
176.2%
126.4%
143.3%
Underlying operating profit was £25.9m (2021: £31.1m loss) on a pre-IFRS 16 basis.
Revenue in 2019 was £840.5m.
Underlying operating profit was £13.8m (2021: £24.3m loss) on a pre-IFRS 16 basis.
Revenue in 2019 was £383.8m.
Revenue of £614.9m increased by 223.6% compared to 2021 and
averaged 73% of 2019 levels. In the early months of the year, UK sales
continued to recover strongly, with steadily improving Rail commuter
numbers and Air passenger numbers boosted by an extended
European summer holiday season. While sales remained resilient
in December despite the emergence of the Omicron variant, the
re-imposition of working from home guidance at the end of the
Christmas and New Year holiday period resulted in sales weakening
considerably in January, before a steady recovery during February
and March as Covid-19 restrictions were eased. Overall first half
sales were 60% of 2019 levels.
In the second half, UK trading in both Air and Rail continued to
strengthen, with the third quarter running at 82% of 2019 levels
and the fourth quarter improving to 85%, despite the impact
of the industrial action in the rail network over the summer.
The underlying operating profit for the financial year for the UK was
£23.5m compared to a loss of £52.2m in the prior year, with a reported
operating profit of £27.7m (2021: £57.4m loss). Non-underlying
operating items comprised an impairment charge of £4.1m, offset
by a gain on lease disposal of £0.7m and an IFRS 16 rent concession
credit of £7.6m. On a pre-IFRS 16 basis, the underlying operating
profit was £25.9m, which compared to an underlying operating loss
of £31.1m last year.
Revenue of £247.2m increased by 176.3% compared to 2021 and
averaged 64% of 2019 levels. Compared to our other three regions,
the sales recovery in the Rest of the World markets during the first
half of the year was much slower, impacted during the autumn by the
continued lockdowns in one or two markets, notably Australia and
Thailand, and thereafter by the emergence of Omicron and the
re-imposition of significant travel restrictions in many other markets,
notably India and China. First half sales for the region in aggregate
were 43% of 2019 levels.
In the second half of the year sales recovered strongly in most of our
markets, with the third quarter running at 75% of 2019 levels and the
fourth quarter improving to 88%. Sales in China and Hong Kong have,
however, remained at low levels throughout the second half, reflecting
the ongoing lockdowns and travel restrictions in those markets.
Furthermore, the loss of Chinese travellers has continued to negatively
impact passenger numbers across the entire Asia Pacific region.
The underlying operating profit for the Rest of the World was
£13.5m (2021: £51.1m) and reported operating profit was £14.6m
(2021: £33.7m). Non-underlying operating items comprised an
impairment charge of £1.8m and exceptional restructuring costs of
£2.9m, offset by an IFRS 16 rent concession credit of £4.7m and a gain
on disposal of leases of £1.1m. On a pre-IFRS 16 basis, the underlying
operating profit was £13.8m, which compared to an equivalent loss
of £24.3m last year.
SSP Group plc Annual Report and Accounts 2022
73
OverviewCorporate governanceFinancial statementsStrategic report Non-controlling interests
The profit attributable to non-controlling interests was £20.1m (2021:
loss of £5.0m). On a pre-IFRS 16 basis there was a profit attributable
to non-controlling interests of £24.2m (2021: £2.1m), with the
year-on-year change reflecting a significantly improved performance
from our partly-owned operations in North America and in the Rest
of the World.
Loss per share
The Group’s underlying loss per share was 7.7 pence per share
(2021: 46.5 pence per share), and its reported loss per share was
1.3 pence per share (2021: 51.3 pence per share). On a pre-IFRS 16
basis the underlying loss per share was 4.5 pence per share
(2021: 31.9 pence per share).
Dividends
Under the terms of the current financing arrangements with the
Group’s lending group of banks and US Private Placement note
holders, the Company is currently restricted from declaring or paying
dividends until the expiry of certain restrictions that apply during the
covenant waiver and amendment period. As such, no interim dividend
was declared during the 2022 financial year and the Directors will not
be recommending a final dividend for the year, which will result in no
ordinary dividends for the year (2021: £nil).
The Board recognises the importance of dividends and other capital
returns to shareholders and, given current planning assumptions,
would anticipate the resumption of ordinary dividend payments,
beginning with a payment in respect of the 2023 financial year.
Financial review
continued
Share of profit of associates
The Group’s share of profits from associates was £6.6m
(2021: £2.3m profit). On a pre-IFRS 16 basis, the Group’s share
of profits from associates was also £6.6m (2021: £1.7m profit).
Net finance costs
The underlying net finance expense for the year was £81.5m,
which included interest on lease liabilities of £37.9m.
Reported net finance expense was £72.9m, including an adjustment
of £8.6m relating to non-cash net debt modification gains primarily
arising from the non-underlying unwind of prior year debt
modification losses.
On a pre-IFRS 16 basis, underlying net finance costs remained
consistent with the prior year at £43.6m (2021: £43.7m).
Taxation
The Group’s underlying tax credit for the year was £0.9m
(2021: £50.6m credit), representing an effective tax rate of 2.1%
(2021: 12.9%) of underlying loss before tax. On a reported basis,
the tax charge for the year was £15.3m (2021: £48.9m credit).
On a pre-IFRS 16 basis, the Group’s underlying tax expense was
£4.6m (2021: £30.6m credit), equivalent to a negative effective tax
rate of 68.7% (2021: a positive effective tax rate of 12.1%) of the
underlying loss 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 tax rates for the
current and the prior year compared to historical, pre-pandemic rates
of around 22% are due to the impact of Covid-19 which has led to a
significant change in that geographic mix.
The varying pace of recovery around the Group means that some
countries have returned to taxable profits during the year more
quickly than others. The small underlying tax credit for the year
reflects a combination of tax charges for those countries, offset by
the impact of the continued non-recognition of deferred tax credits
for others. In addition, the Group’s effective tax rate has benefited in
the prior year from a credit of £13.0m in relation to the remeasurement
of UK deferred tax assets. This follows the enactment of legislation
in 2021 to increase the main rate of corporation tax in the UK to 25%
from April 2023.
74
SSP Group plc Annual Report and Accounts 2022
Net debt
Overall net debt decreased by £11.5m to £296.5m on a pre-IFRS 16
basis, with the reduction of £52.0m as a result of the free cash inflow
in the year of offset by non-cash increases of £40.5m, including
a £45.8m increase as a result of changes in foreign exchange rates
following the weakening of Sterling during the year. On a reported
basis under IFRS 16, net debt was £1,150.7m.
The table below highlights the movements in net debt in the year
on a pre-IFRS 16 basis.
Net debt excluding lease liabilities at 1 October 2021
(pre-IFRS 16 basis)
Free cash flow
Impact of foreign exchange rates
Other non-cash changes1
Net debt excluding lease liabilities
at 30 September 2022
Lease liabilities
Other
£m
(308.0)
52.0
(45.8)
5.3
(296.5)
(854.6)
0.4
Net debt including lease liabilities at 30 September 2022
(1,150.7)
1
Other non-cash changes represent £3.1m of losses recognised on debt modifications and
revised estimated future cash flows, offset by an effective interest rate gain of £13.7m and a
charge of £5.3m relating to the repayment/modification of below market interest rate
government loans.
Available liquidity
At 30 September 2022, the Group had available liquidity of £708.2m,
including cash of approximately £543.6m and a committed undrawn
revolving credit facility of £150.0m, and smaller undrawn local
facilities totalling £14.6m.
Free cash flow
The table below presents a summary of the Group’s free cash flow
during the year:
Underlying operating loss1
Depreciation and amortisation
Exceptional restructuring costs3
Working capital
Net tax
Capital expenditure2
Acquisition of subsidiaries, adjusted for
net debt acquired and acquisition of
non-controlling interest
Net dividends to non-controlling
interests and from associates
Net finance costs
Other
Free cash flow
2022
£m
30.3
111.7
(3.6)
116.7
(2.3)
(148.9)
(1.4)
(14.5)
(40.5)
4.5
52.0
2021
£m
(209.0)
100.7
(18.4)
171.7
1.1
(69.4)
(0.4)
(2.6)
(32.9)
1.1
(58.1)
1 Presented on an underlying pre-IFRS 16 basis (refer to pages 76-79 for details).
2
Capital expenditure is net of capital contributions from non-controlling interests of £10.7m
(2021: £5.2m).
3 Refer to the APMs section on pages 76-79 for further details.
The Group generated a free cash inflow of £52.0m, a significant
improvement from the £58.1m outflow in the prior year, primarily
reflecting the Group’s return to operating profitability during the
year, particularly during the second half year as sales recovered
towards pre-pandemic levels.
The significant working capital inflow of £116.7m also benefited from
the steady recovery in sales across the year (increasing from around
50% of 2019 levels in September 2021 to over 90% by September
2022) while we continue to benefit in several areas of the business
from improved payment terms with both partners and clients.
Capital expenditure was £148.9m, a significant increase compared
to the £69.4m in the prior year as we continued to restart our capital
expenditure programmes across the Group.
Net finance costs paid of £40.5m were £7.6m higher than the prior
year, mainly reflecting increased interest payments in respect of the
Group’s US Private Placement notes following the Rights Issue in 2021.
SSP Group plc Annual Report and Accounts 2022
75
OverviewCorporate governanceFinancial statementsStrategic report Financial review
continued
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.
(£m)
2022 Revenue at actual rates by segment
Impact of foreign exchange
2022 Revenue at constant currency1
2021 Revenue at constant currency1
Constant currency sales increase
1. Revenue measures
As the Group operates in 35 countries, it is exposed to translation
risk on fluctuations in foreign exchange rates, and as such the Group’s
reported revenue and operating profit or loss will be impacted by
movements in actual exchange rates. The Group regularly 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.
North
America
455.5
(38.0)
417.5
207.2
101.5%
Continental
Europe
867.9
13.7
881.6
360.5
144.7%
UK
614.9
0.7
615.6
190.1
224.0%
RoW
247.2
(3.8)
243.4
93.1
171.6%
Total
2,185.4
(27.0)
2,158.4
850.9
158.7%
1 Constant currency is based on average 2021 exchange rates weighted over the financial year by 2021 results.
76
SSP Group plc Annual Report and Accounts 2022
2. Non-underlying profit items
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
Gain on lease disposal
IFRS 16 rent credit
Restructuring costs and site exits
Debt amendment expenditure and extension of bank facilities
Other legal costs
Amortisation of intangible assets arising on acquisition
Finance expenses
Debt modification loss and effective interest rate charge
Retrospective USPP interest charge
Taxation
Tax charge on non-underlying items
Total non-underlying items
Non-underlying items
IFRS 16
2022
£m
–
(12.1)
(6.1)
61.5
23.0
(2.9)
(1.3)
(2.3)
–
59.8
8.6
–
8.6
IFRS 16
2021
£m
(26.4)
(11.9)
(12.5)
2.3
92.0
(21.3)
(5.4)
(0.8)
(1.9)
14.1
(31.0)
(1.2)
(32.2)
(16.2)
(1.7)
52.2
(19.8)
Further details of the non-underlying operating items have been provided in the Financial Review section on page 71. Furthermore, a
reconciliation from the underlying to the statutory reported basis is presented below:
Operating profit/(loss) (£m)
Operating margin
Loss before tax (£m)
Loss per share (p)
2022 (IFRS 16)
Non-underlying
Items
59.8
2.7%
68.4
6.4
Underlying
31.7
1.5%
(43.2)
(7.7)
Total
91.5
4.2%
25.2
(1.3)
2021 (IFRS 16)
Non-underlying
Items
14.1
1.7%
(18.1)
(4.8)
Underlying
(323.3)
(38.8)%
(393.1)
(46.5)
Total
(309.2)
(37.1)%
(411.2)
(51.3)
SSP Group plc Annual Report and Accounts 2022
77
OverviewCorporate governanceFinancial statementsStrategic report Financial review
continued
3. Pre-IFRS 16 basis
The Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the
modified retrospective approach to transition. Following the year of
transition, we have decided to maintain the reporting of our profit and
other key KPIs like net debt on a pre-IFRS 16 basis. This is because the
pre-IFRS 16 profit is consistent with the financial information used
to inform business decisions and investment appraisals. It is our view
that presenting the information on a pre-IFRS 16 basis will provide
a useful and necessary basis for understanding the Group’s results.
As such, commentary has also been included in the Business Review,
Financial Review and other sections with reference to underlying
profit measures computed on a pre-IFRS 16 basis.
A reconciliation of key underlying IFRS 16 profit measures
to ‘Pre-IFRS 16’ numbers is presented below:
Revenue
Operating costs
Operating loss
Share of profit/(loss)
of associates
Finance income
Finance expense
Loss before tax
Taxation
Loss for the period
Loss attributable to:
Equity holders of the parent
Non-controlling interests
Loss for the period
Loss per share (pence)1:
– Basic
– Diluted
Year ended
30 September 2022
Impact of
IFRS 16
£m
–
(1.4)
(1.4)
–
–
37.9
36.5
(5.5)
31.0
25.4
5.6
31.0
Notes
3
5
Underlying
IFRS 16
£m
2,185.4
(2,153.7)
31.7
8
8
4
4
6.6
4.9
(86.4)
(43.2)
0.9
(42.3)
(60.9)
18.6
(42.3)
(7.7)
(7.7)
Underlying
Pre-IFRS 16
£m
2,185.4
(2,155.1)
30.3
6.6
4.9
(48.5)
(6.7)
(4.6)
(11.3)
(35.5)
24.2
(11.3)
(4.5)
(4.5)
Year end
30 September 2021
Impact of
IFRS 16
£m
–
(114.3)
(114.3)
0.6
–
(28.4)
(142.1)
20.0
(122.1)
(101.4)
(20.7)
(122.1)
Underlying
IFRS 16
£m
834.2
(1,157.5)
(323.3)
2.3
2.6
(74.7)
(393.1)
50.6
(342.5)
(323.9)
(18.6)
(342.5)
(46.5)
(46.5)
Underlying
Pre-IFRS 16
£m
834.2
(1,043.2)
(209.0)
1.7
2.6
(46.3)
(251.0)
30.6
(220.4)
(222.5)
2.1
(220.4)
(31.9)
(31.9)
78
SSP Group plc Annual Report and Accounts 2022
IFRS 16 increases the underlying operating profit, whereby the
depreciation of the right-of-use assets of £170.0m is offset primarily
by the reduced rent expense of £154.8m and a gain on lease disposals
of £16.6m, resulting in a net charge to underlying operating loss of
£1.4m. This loss, together with the interest charge on the lease
liabilities of £37.9m, give the underlying loss before tax impact
of £36.5m. The impact of IFRS 16 on net debt is due to the recognition
of the lease liability balance.
Pre-IFRS 16 underlying EBITDA is a key measure of profitability for
the Group. A reconciliation to pre-IFRS 16 underlying operating loss
for the period is presented below:
Pre-IFRS 16 underlying EBITDA
Depreciation of property, plant and equipment
Amortisation of intangible assets
Adjustment for amortisation of intangible assets arising on acquisition
Pre-IFRS 16 underlying operating loss for the period
Year ended
30 September
2022
£m
142.0
(97.9)
(13.8)
–
Year ended
30 September
2021
£m
(108.3)
(90.9)
(11.7)
1.9
30.3
(209.0)
Furthermore, a reconciliation from pre-IFRS 16 underlying profit/(loss) for the period to the statutory loss for the period is as follows:
Pre-IFRS 16 underlying operating loss for the period
Depreciation of right-of-use assets
Fixed rent on leases
Gain on lease disposal
Non-underlying operating gain/(expense) (note 6)
Share of profit from associates
Finance expense
Non-underlying finance expense (note 6)
Taxation
Profit/(loss) after tax
Year ended
30 September
2022
£m
30.3
(170.0)
154.8
16.6
59.8
6.6
(81.5)
8.6
(15.3)
Year ended
30 September
2021
£m
(209.0)
(245.7)
119.5
11.9
14.1
2.3
(72.1)
(32.2)
48.9
9.9
(362.3)
Liquidity
Liquidity remains a key KPI for the Group. Available liquidity at 30 September 2022 was £708.2m, comprising cash and cash equivalents
of £543.6m, undrawn revolving credit facility of £150.0m and smaller undrawn local facilities of £14.6m.
The Strategic Report, as set out on pages 6-79, has been approved by the Board.
On behalf of the Board
Jonathan Davies
Deputy Group CEO and CFO
5 December 2022
SSP Group plc Annual Report and Accounts 2022
79
OverviewCorporate governanceFinancial statementsStrategic report 80
SSP Group plc Annual Report and Accounts 2022
Corporate governance
Contents
Corporate governance
82 Governance at a glance
84
86
Letter from the Chair
Compliance with the UK
Corporate Governance Code
Board of Directors
88
90 Group Executive Committee
Board leadership and
92
Company purpose
Key Board activities in the
2022 financial year
100
102 Leadership in action
104 Nomination Committee Report
114 Audit Committee Report
Directors’ Remuneration
120
Report
145 Directors’ Report
149
Statement of Directors’
Responsibilities in respect
of the Annual Report
and Accounts and the
financial statements
SSP Group plc Annual Report and Accounts 2022
81
OverviewCorporate governanceFinancial statementsStrategic report Governance at a glance
Governance in the year
Strong leadership – new Group CEO
We were delighted to be joined by Patrick Coveney as Group CEO
on 31 March 2022. Patrick’s strong and strategic leadership and
firm commitment to delivering sustainable value for our customers,
colleagues, clients and other stakeholders has been clear since his
arrival at SSP. Since joining, Patrick has visited c.20 countries
around the world and has quickly developed a deep understanding
of the business and the markets in which we operate and built
strong relationships with our key stakeholders as well as with
the rest of the Board.
More information on Patrick’s induction, as well as the induction for our
two new Non-Executive Directors, Apurvi Sheth and Kelly Kuhn, can be
found on pages 108 and 109. Further details on Patrick’s first eight
months at SSP can be found in the strategy section on pages 8-11.
Engaging with our teams and stakeholders
Our colleagues are central to our continued sustainable resilience
and success and, as restrictions on travel eased through 2022,
both our Executive and Non-Executive Directors have welcomed
the opportunity to once again meet with colleagues in person.
These engagements complement our other channels of colleague
engagement and develop the Board’s understanding of our
colleagues and our culture.
We are proud of our engagement with our broader stakeholder
groups and, during the year, the Board led an independent
assessment of the effectiveness of these engagement
mechanisms. This assessment strengthened the Board’s
understanding of the views and concerns of our key stakeholders,
ensuring that it is well placed to identify and respond to new issues
as they arise.
Further details on our engagement with stakeholders can be found
on pages 42-51 and details of the Board’s interaction with colleagues
can be found on pages 52.
Reframing strategic ambitions
During the year, the Board and the Group Executive Committee spent
time considering the articulation of our strategy to better reflect
our focus on delivering a leading customer proposition aligned to
our clients’ needs and goals and developing a skilled and engaged
workforce. At the same time, we continue to drive performance
through our proven economic model, focused on growing like-for-like
sales, winning new business, driving efficient conversion and
generating a strong cash flow in order to deliver long-term
sustainable growth. Sustainability is now a key element to our
long-term success, encompassing our three core strategic priorities.
Diversity and Inclusion
The Board remains committed to ensuring that the Group is an
inclusive organisation, reflecting all aspects of diversity. This year
the Board formally amended its Board Diversity Policy, committing
to maintain at least 40% gender diversity on the Board and at least
one woman in a senior board position.
Fostering an inclusive workplace, where colleagues can be
themselves is an ongoing focus for the Board, and this year we
continued to promote diversity throughout the organisation including
through new initiatives such as our Group Inclusion Council.
More information on our strategic framework can be found on page 19
Further details on our diversity and inclusion commitments can be found
on pages 110 and 111.
Delivering sustainable success through improved governance
The Board believes that a robust governance framework supports
future growth. Given the importance of our Sustainability strategy
to the delivery of the overall strategy, during the period the Board
approved an improved governance model which includes regular
updates to the Board and Audit Committee on progress against
targets and a dedicated management Sustainability Committee,
chaired by our new Group Head of Sustainability and supported
by topic specific working groups.
Full details of the steps we have taken in embedding our sustainability
strategy can be found on pages 28-31 and in our inaugural
Sustainability Report.
82
SSP Group plc Annual Report and Accounts 2022
Governance in numbers
Board Independence as at 30 September 2022:
Board Gender Representation as at 30 September 2022
Chair (Independent on appointment) 1
Executive Directors 2
Independent Non-Executive Directors 5
Number of Board members
Senior positions on the Board
Male 4 (50%)
Female 4 (50%)
Male 3 (75%)
Female 1 (25%)
Board Nationality as at 30 September 2022
Board Ethnicity Representation as at 30 September 2022
UK 4 (50%)
Ireland 1 (12.5%)
USA 2 (25%)
Singapore 1 (12.5%)
White British or other White
(including minority-white groups)
7/8
Asian/Asian British
1/8
87.5%
12.5%
Board skills and experience
Executive & strategic leadership
HR/People
Financial accounting, corporate finance
Governance
Consumer/retail
F&B
Risk & compliance (including Health & Safety)
IT/Digital
Travel/airports/rail
Sustainability (including climate and diversity)
International experience
M&A
Independent Directors’ Tenure as at 30 September 2022
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Expired term
Unexpired term
Carolyn Bradley (SID, Rem Chair)
Mike Clasper (Chair)
Judy Vezmar (ENED)
Tim Lodge (Audit Chair)
Kelly Kuhn
Apurvi Sheth
SSP Group plc Annual Report and Accounts 2022
83
OverviewCorporate governanceFinancial statementsStrategic report
Letter from the Chair
Mike Clasper,
Chair
“By leading with purpose, over the course
of the last year the Board has demonstrated
its resilience to a rapidly changing external
environment. We have re-engaged with the
business and our stakeholders, using our strong
governance framework to enable SSP to deliver
for its stakeholders.”
Dear Shareholder,
I am pleased to present this year’s Corporate Governance Report.
It has been another busy year for the Board, as we welcomed
Patrick Coveney as Group CEO and Kelly Kuhn and Apurvi Sheth as
Non-Executive Directors. This year we continued to show resilience
in the face of a number of ongoing economic and social challenges
and this resilience has been underpinned by our continued focus on
embedding the highest standards of governance. I would like to thank
my Board colleagues for their considerable commitment and support
during the year, particularly in the management of risks and
opportunities facing the business and their insights as we have
developed our strategy to grow in a volatile post-Covid world
The strong performance delivered this year against a challenging
backdrop is a testament to the dedication and hard work of our
Group CEO, Deputy Group CEO and CFO and the Group Executive
Committee and our colleagues around the world. In particular, on
behalf of the Board, I would like to thank Jonathan Davies, Deputy
Group CEO and CFO. His support has been invaluable in navigating
a tumultuous year and providing the guidance needed to ensure
a smooth leadership transition.
We were delighted to welcome Patrick Coveney to the business as
Group CEO on 31 March 2022. Since joining, Patrick has immersed
himself in the business, meeting with colleagues, clients and
customers in both our established and our emerging markets –
visiting nearly 20 countries in which we operate in his first eight
months and with more visits planned in FY23. These visits, as part
of our wider induction programme, have enabled Patrick to rapidly
gain an in-depth understanding of the Group, the markets in which
we operate and our culture. The Board has welcomed the way in which
Patrick has already built strong relationships across our stakeholder
groups, meeting with colleagues, clients, joint venture partners and
brand partners.
For more information on the Group CEO’s induction, see page 109.
We endeavour to promote a culture of integrity and openness and we
believe that the Board has a critical role in developing a strong culture.
Through the year we have supported the business as it has continued
to promote an open and collaborative culture across the Group,
where colleagues are valued irrespective of their background,
empowered to fulfil their potential, and contribute to delivering
our purpose and strategy.
Number of
meetings
attended⁵
9/9
Number of
additional
meetings held
3/3
Meeting attendance
Director
Mike Clasper
Patrick Coveney1
Simon Smith2
Jonathan Davies
Carolyn Bradley
Ian Dyson3
Tim Lodge
Judy Vezmar
Apurvi Sheth4
Kelly Kuhn4
Date appointed
1 November 2019
31 March 2022
20 November 2018
16 June 2014
1 October 2018
4 April 2014
1 October 2020
1 August 2020
1 January 2022
1 January 2022
5/5
1/2
9/9
9/9
5/5
9/9
9/9
7/7
7/7
1 Patrick Coveney was appointed to the Board on 31 March 2022.
2 Simon Smith resigned from the Board on 24 December 2021.
3 Ian Dyson resigned from the Board on 4 February 2022.
4 Kelly Kuhn and Apurvi Sheth were appointed to the Board on 1 January 2022.
5
Our usual September meeting was held at the beginning of the October. This was to
accommodate the New York site visit and was included for consistency with prior years.
84
SSP Group plc Annual Report and Accounts 2022
1/1
0/1
3/3
3/3
0/1
2/3
3/3
2/2
2/2
Our People Strategy supports us in promoting this desired culture
through the organisation in line with our values and purpose. It is
focused on attraction and retention; inclusion and engagement;
training and development; and safety and wellbeing. We are
committed to providing career development paths throughout the
organisation, from new recruits to senior management. We have also
increased our focus on safety this year, with updated reporting into
the Board and investment in a new and developed health and safety
structure at the centre, with additional targeted resource, and
increased momentum building across the Group. Our colleagues
wellbeing is paramount, and we have also taken numerous actions
to support our colleagues who are experiencing an increase in the
cost of living with a mix of global, regional and local initiatives.
Diversity, Equity and Inclusion (DE&I) remains high on the Board
agenda. I truly believe that a diversity of backgrounds, culture and
business experiences help substantially to inform the strategic
judgements that lead to long-term success. This has never been more
salient than in today’s volatile and unpredictable world. We are
pleased to have exceeded the gender target set by the FTSE Women
Leaders Review (formerly the Hampton Alexander Review) with 50%
female board representation, and met the Parker Review ethnicity
target for Board diversity. To build on this, we recently adopted a new
Board Diversity Policy to ensure we maintain this progress, with new
targets of at least 40% female representation as well as at least one
woman holding a senior Board position. We have also met our 2025
target of 33% women in senior leadership. We recognise that
nurturing a diverse and inclusive culture is about more than meeting
targets and this year we have continued to promote a diverse and
inclusive workplace in the broadest sense with new initiatives, such
as the launch of our Group Inclusion Council. We recognise that there
is always more to be done on this front and look forward to driving
this agenda forward in FY2023.
As restrictions on travel eased in the spring, the Board has welcomed
the opportunity to meet with colleagues face to face once again and
to see and assess first-hand how our desired culture is embedded on
the ground. The two-way dialogue with our colleagues on site visits
has increased the Board’s understanding of colleague sentiment and
culture and is supported by the work carried out by Judy Vezmar, our
ENED, who provides feedback to the Board after each interaction.
For more information on culture see pages 96 and 97, our approach
to safety and wellbeing on pages 22 and 23, our cost of living initiatives
on page 121, our approach to DE&I on pages 110 and 111 and the ENED’s
activities on page 52.
The Board is responsible for overseeing the delivery of the Group’s
Sustainability Strategy and, over the year, the Board has not only
developed its targeted sustainability related discussions, but
broadened its decision-making generally to take into account
sustainability related matters.
We launched our sustainability targets last year with bold ambitions
and the Board has been impressed by the strength and speed at
which the business teams have embraced the strategy and its
implementation through the business. Sustainability, our delivery
against targets, consideration of climate impacts and our commitment
to net zero by 2040 will continue to be a focal point for the Board as
we look forward to FY23 and beyond.
More details on our Sustainability Strategy can be found on pages 28-31
and in our dedicated Sustainability Report.
Our updated articulation of our strategic priorities better reflects
focus on delivering a leading customer proposition aligned to our
clients’ needs and goals, building a great place to work for our
colleagues and delivering growth and performance for all our
stakeholders. Understanding the concerns and needs of our
stakeholders is central to our success. The Group maintains
a continuous dialogue with stakeholders to ensure the Board
understands their priorities and key drivers.
In the year, we undertook a rigorous assessment of our stakeholders
and the effectiveness of our engagement mechanisms to make sure
they were a robust way of identifying the key issues for each of our
stakeholder groups. This process has allowed us to keep abreast of
new issues and areas of focus. We have also continued to invest in our
resources in order to better understand our stakeholders, including
through the strengthening of the capability of our customer and
sustainability teams.
More information on stakeholder engagement can be found on pages 28-31
and more information on our strategy can be found on pages 18-29.
Following a robust and inclusive recruitment process undertaken
during the second half of the 2021 calendar year, on 1 January 2022,
we welcomed Kelly Kuhn and Apurvi Sheth to the Board as
Independent Non-Executive Directors. With their experience working
in the food and beverage and travel sectors respectively, and
extensive global expertise, they have brought added breadth of
experience and diversity, adding huge value to the Board.
At our 2022 Annual General Meeting, Ian Dyson left the Board,
having served for more than seven years, and we would like to
thank him for his strong contribution, particularly as he led the
Audit Committee through the last few challenging years. He was
succeeded as Chair of the Audit Committee by Tim Lodge as part of
our Board succession plan. Tim brings a wealth of recent and relevant
experience with a strong financial and audit background and a keen
focus on governance, risk and compliance. We believe that our
refreshed Board has the right balance of skills, experience, and
diversity to help drive the Company forward to promote long-term
sustainable success.
Each year we undertake an annual Board evaluation to ensure that
the Board as a whole, its committees and each Director are continuing
to operate and perform effectively and to identify areas for
continued development and future focus. We were pleased with the
results of the internal review, which demonstrated that we continue
to operate effectively and we welcomed the suggested areas for
improvement, which we will consider and build into our future plans.
Finally, we believe we have the right people in place on our Board,
with a rich diversity of thought and skills, who are working together
in mutual respect. Our inclusive approach enables constructive
discussion and helps us ensure each decision we make is for the
benefit of the long-term sustainable success of the Company.
More information on our Board Evaluation can be found on pages 112 and
113 and on the skills and composition of our Board on page 83.
Helen Byrne, our Group General Counsel and Company Secretary,
has informed the Board of her intention to retire with effect from
the conclusion of the 2023 AGM. Helen has guided us through many
significant changes and challenges over many years, including our
successful IPO in 2014. On behalf of the Board, I would like to thank
her for her longstanding dedication and wise counsel to the Board and
the business. Helen will be succeeded by Fiona Scattergood, Group
Legal Director, as part of our internal talent succession planning.
More information on our talent review and development processes can
be found on page 107.
I am pleased to now present the following Corporate Governance
Report and look forward to building on our solid governance
framework to support the business as it strives to meet its strategic
aims of delivering long-term value creation for all stakeholders.
Mike Clasper
Chair of the Board
5 December 2022
SSP Group plc Annual Report and Accounts 2022
85
OverviewCorporate governanceFinancial statementsStrategic report The Board believes that good governance is key
to supporting performance and the delivery of
long-term sustainable success for the Company
and its stakeholders. The page on the right and this
Corporate Governance Report (which forms part
of the Directors’ Report), together with the Strategic
Report (pages 6-79) describe how the Board has
applied the main principles of good governance set
out in the UK Corporate Governance Code 2018
(the ‘Code’) during the year under review. The Code
can be found on the Financial Reporting Council’s
website at www.frc.org.uk.
Having carefully considered each provision, the Board considers that
for the year ended 30 September 2022, the Company has complied
with each provision set out in the Code with the exception of
provision 38 relating to the alignment of Executive Director pension
contributions to the workforce.
In FY21, the Board committed to aligning Executive Director pensions
by the end of 2022. This has now been actioned and, with effect from
31 December 2022, the Deputy Group CEO and CFO will receive a
payment in lieu of pension equal to 3% of salary in line with the rate
for the majority of UK employees. The Group CEO’s pension has been
set at 3% of salary since his appointment in March 2022.
More information on the pension arrangements for the Executive Directors
can be found in the Directors’ Remuneration Report on pages 120-144.
Last year, we also commented on the form of Board Evaluation
relating to individual Directors (regarding provision 21). This year
as part of the internal board review, the Board carried out a specific
review of the Chair, and the Chair held review sessions with each
of the Directors.
More information on the evaluation process can be found on page 112
and 113.
The table opposite sets out where to find more information on how
we have complied with the Code.
Compliance with the UK Corporate
Governance Code
86
SSP Group plc Annual Report and Accounts 2022
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. In doing so, a key focus is the
development, promotion and monitoring of a culture throughout
the organisation which is aligned to the Company’s purpose, values
and strategy.
References for further details
A Board effectiveness – pages 112-113
B
Culture, purpose, values and strategy – pages 18-33 and 96-97
Governance framework – pages 92-95
Risk framework and principal risks and control – pages 58-69
C
D Stakeholder engagement – pages 42-52
E Workforce policies and practices – pages 22-23, and 45
Division of responsibilities
The Board has a clear division of responsibilities between the
leadership of the Board and executive leadership of the business.
Committee terms of reference determine the authority of each
of the Board’s Committees.
Role of Chair – page 93
F
G Independence and division of responsibilities – pages 92-93, 95
H Conflicts and time commitment – page 95
How the Board operates – pages 94-95
I
Governance arrangements are in place to ensure that the Board
and Directors can meet their obligations under the Code.
Composition, succession and evaluation
The Board, with the support of the Nomination Committee, conducts
regular reviews of its composition (and that of its Committees) and
leads the process for appointments to ensure plans are in place for
orderly succession to both the Board and the Executive Committee.
The Board undertakes an annual review of its effectiveness and that
of its Committees and individual Directors to ensure that the Board
and its members continue to contribute effectively.
For our Matters Reserved for the Board, Committee Terms
of Reference and Division of Responsibilities overview see
the Corporate Governance section of our website at
www.foodtravelexperts.com
J
K
L
Appointments and succession planning – pages 106-109
Composition of the Board – pages 106-107
Annual evaluation – pages 112-113
Audit, risk and internal control
The Board, supported by the Audit Committee, is responsible for
establishing appropriate risk management and internal control
procedures to ensure that the Group is appropriately managed and
that risks are appropriately identified and mitigated in the context
of the business as a whole.
M External auditor and internal audit – pages 118-119
N Fair, balanced and understandable assessment of Company’s
position and prospects – pages 8-79 and 117
O Internal financial controls and risk management – pages 58 -69,
115 and 118
Remuneration
The Board, supported by the Remuneration Committee, ensures
that the remuneration policies and practices are designed to 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 the
Company’s long-term strategy.
P
Alignment with strategy, purpose and values – pages 122-124,
126 and 129-130
Q Remuneration Policy – pages 140-150
R
Performance Outcomes, use of discretion – pages 123-124, 125
and 127-131
Page references are to sections of the Corporate Governance Report unless noted otherwise.
SSP Group plc Annual Report and Accounts 2022
87
OverviewCorporate governanceFinancial statementsStrategic report Board of Directors
Our Board of Directors brings a wide range of
experience, skills and background to the Group’s
decision-making. All Board members have
considerable leadership experience at global
businesses and institutions. Our Board members’
biographies demonstrate the contribution each
Director makes to the Board and our development
and delivery of our strategic priorities.
Mike Clasper CBE
Chair
Nationality: British
N
Patrick Coveney
Group CEO
Nationality: Irish
Date of Appointment:
31 March 2022
Key skills and contribution:
Patrick is a strong and strategic
leader with extensive industry
knowledge having spent 14 years
as CEO at Greencore Group plc, a
leading convenience food producer,
as well as holding non-executive
positions at various F&B companies.
Through his executive career,
Patrick has demonstrated a strong
track record of delivering growth
whilst embedding sustainability.
Patrick’s strong focus on colleagues,
customers and culture alongside his
proven ability to quickly develop
strong relationships make him well
placed to lead SSP to future success.
External appointments:
Patrick serves as a non-executive
director of OFI Group Limited, Chair
of Core Media and is President of the
Institute of Grocers & Distributors.
Previous experience:
Patrick spent 14 years as Group
CEO of Greencore Group plc, having
joined in 2005 as CFO. Patrick has
also held a non-executive director
position on Glanbia plc. Prior to
Greencore, he worked for nine years
at McKinsey & Company in Europe
and North America, latterly as
Managing Partner for Ireland.
Date of Appointment:
1 November 2019 as Non-Executive
Director and 26 February 2020
as Chair
Key skills and contribution:
Mike is a highly capable industry
leader with extensive sector
experience, particularly in the
airport and aviation services
industries. Mike believes high
corporate governance standards
underpin a well-run, successful
board and business, and that the
Board should lead by example in
driving culture. With a CBE for
services to the environment,
ensuring the continued
sustainability of the Company
is of upmost importance to Mike.
His leadership and business insights
have been and remain critical in
guiding the Board and supporting
the Business as the Group has
navigated through the Covid-19
recovery phase, implementation
of our sustainability targets and
transition of executive leadership.
External appointments:
Chair of Bioss International Ltd,
Trustee of Heart Cells Foundation,
Advisory Board member for Arora
International and member of The
Vice Chancellor’s Circle at the
University of Sunderland.
Previous experience:
Mike was formerly CEO at BAA plc,
Operational Managing Director at
Terra Firma Capital Partners Limited
and held various senior management
roles at Procter & Gamble. He is also
the former Chair of Coats Group plc,
HM Revenue & Customs and Which?
Limited and the former Senior
Independent Director of Serco
Group plc and ITV plc.
Jonathan Davies
Deputy Group CEO and CFO
Nationality: British
Date of appointment:
2004 as CFO and 1 September 2021
as Deputy Group CEO and CFO
Key skills and contribution:
Jonathan brings extensive financial,
strategic and commercial
experience to the Board with over
29 years working within retail and
FMCG companies. Jonathan’s tenure
within the Group gives him a deep
knowledge of the business, which
along with his capital markets
experience, enables him to provide
clear financial, operational and
strategic oversight to the Company
as it looks to implement its strategy.
This expertise has been vital as
Jonathan has managed us through
the pandemic and the transition to
new leadership. His external
non-executive role further
augments his strong board-level
experience.
External appointments:
Senior Independent Director and
Chair of the Audit Committee of
Assura plc.
Previous experience:
Jonathan began his career in Unilever
plc’s management development
programme before joining OC&C
as a start-up, where he was part
of its rapid growth and development
to become a leading international
consulting firm. Jonathan then spent
nine years at Safeway plc (with five
years on the Executive Board as
Finance Director).
Carolyn Bradley
Senior Independent
Non-Executive Director (SID)
Nationality: British
A R N
Date of Appointment:
11 October 2018 as a Non-Executive
Director and 21 February 2019 as SID
Key skills and contribution:
Carolyn’s extensive experience
in executive and non-executive
marketing and retail roles brings a
strong consumer focus to the Board.
Over the year, she has continued
to drive the focus on stakeholder
interests through her role as
Senior Independent Director and
Remuneration Committee Chair.
Last year as Senior Independent
Director, Carolyn provided strong
support to the Chair in the
recruitment process which led
to the appointment of our new
Group CEO and independent
Non-Executive Directors.
External appointments:
Non-Executive Director at Majid Al
Futtaim Retail LLC, The Mentoring
Foundation and B&M European
Value Retail S.A. and Chair of
TheWorks.co.uk plc and Advisory
Board member of Cambridge Judge
Business School.
Previous experience:
Carolyn spent over 25 years at Tesco,
in various operating, commercial
and marketing roles. She was also
formerly a Non-Executive Director
of Legal & General Group plc and
Senior Independent Director at
Marston’s plc. Carolyn was also
formerly a Trustee and the Deputy
Chair of Cancer Research UK
(stepping down in October 2022).
88
SSP Group plc Annual Report and Accounts 2022
Tim Lodge
Independent Non-Executive
Director
Nationality: British
A N
R N
Judy Vezmar
Independent Non-Executive
Director, Designated NED for
Workforce Engagement
Nationality: American
Date of appointment:
1 October 2020
Key skills and contribution:
Tim is an experienced former public
company CFO with a strong financial,
accounting and audit committee
background. He has significant
international commercial experience
in businesses with complex global
operations and supply chains in the
food and beverage sector. Tim’s
recent and relevant financial
knowledge and experience position
him well to promote the strategic
and financial resilience of the
Company whilst creating
shareholder value.
External appointments:
Non-Executive Director and Chair
of the Audit Committee of Serco
Group plc and Senior Independent
Director at Arco Limited. Director
of An African Canvas (UK) Limited,
Trustee of Gambia School Support,
and Chair of the Management
Committee of The Worshipful
Company of Cordwainers.
Previous experience:
Tim spent 26 years at Tate & Lyle plc
in various finance roles, including
six years as CFO. He subsequently
held CFO roles with the COFCO
International group. Tim has also
been a Non-Executive Director and
Audit Committee Chair at Aryzta AG.
Date of Appointment:
1 August 2020
Key skills and contribution:
Judy has extensive knowledge
of running complex international
businesses, bringing significant
expertise to the Board in the field
of data and analytics, which in turn
supports the Board in its continued
investment in technology and
automation. Judy’s strong people
focus is the foundation for her role
as Designated Non-Executive
Director for Workforce Engagement,
where she supports the Board in
both promoting the employee voice
in the boardroom and cascading the
Company’s culture from the Board
throughout the business.
External appointments:
Non-Executive Director and Chair
of the Remuneration Committee
of Ascential plc.
Previous experience:
Judy was previously CEO of
LexisNexis International. Prior
to that, she held several executive
leadership roles within the Xerox
Corporation in the United States
and Europe. Judy has also been
a Non-Executive Director of
Rightmove plc, serving on its
Nomination, Audit and
Remuneration Committees.
A Audit Committee
R Remuneration Committee
N Nomination Committee
Chair
Kelly Kuhn
Non-Executive Director
Nationality: American
A N
Apurvi Sheth
Non-Executive Director
Nationality: Singaporean
R N
Date of appointment:
1 January 2022
Date of Appointment:
1 January 2022
Key skills and contribution:
Apurvi has extensive executive
experience spanning more than 30
years across various international
food and beverage companies. She
has spent the majority of her career
in Asia and India and has strong
knowledge of the region and
emerging markets where she has
broad M&A experience, which adds
great insight to our growth
ambitions in this region. Apurvi’s
breadth of executive experience
and focus on innovation and value
creation complement the Board’s
existing skills and experience as it
looks to deliver on its strategy and
purpose. Apurvi is also passionate
about the DE&I agenda and is a
leader of Women’s forums and a
trainer in a local talent organisation.
External appointments:
Strategic Advisor to various
companies in Southeast Asia and
India, across a wide range of sectors
including food and beverage, retail
and technology.
Previous experience:
Apurvi spent 13 years in various roles
at Diageo plc including Managing
Director, Southeast Asia. She has
also served as Marketing Director,
APAC at PepsiCo International,
Marketing Director of India at
Coca-Cola and held various roles at
Nestle SA. Apurvi previously served
as a Non-Executive Director of
Heineken Malaysia BHD.
Key skills and contribution:
Kelly brings substantial business
experience from her previous
executive roles within the travel
sector. She combines sizeable
international P&L expertise with
commercial acumen and a strong
consumer focus. Kelly’s extensive
experience in customer engagement
across multiple markets is a valuable
addition to the Board as it continues
to deepen its relationships with
stakeholders. The Board welcomes
Kelly’s strong background in
executive sponsorship of
responsible business efforts –
including environmental as well
as diversity, equity, and inclusion
– as it continues to embed its new
Sustainability and People Strategies.
External appointments:
Non-Executive Director and member
of the Nomination and Remuneration
Committees of ISS A/S. Advisor to
CWT (formerly Carlson Wagonlit
Travel) and the McChrystal Group.
Member of various networks and
advisory boards promoting women
in the travel sector and diversity.
Previous experience:
Kelly spent 30+ years in various
roles at CWT, including as Executive
Vice President and Chief Customer
Officer, President of the EMEA
and Asia Pacific businesses, and
President for the company’s Military
& Government division. She also
served as President and Chief
Operating Officer at both Navigant
International and Arrington Travel
Center before they were acquired
by CWT and was previously a
Non-Executive Director at LaSalle
Hotel Properties.
SSP Group plc Annual Report and Accounts 2022
89
OverviewCorporate governanceFinancial statementsStrategic report Group Executive Committee
The Group Executive Committee is responsible
for the day-to-day management of the Group
and ensures all Board decisions are implemented
effectively, including the implementation of the
Group strategy. The Group Executive Committee
identifies and executes strategic opportunities
and regularly reviews the Group’s operational
performance and strategic direction.
Patrick Coveney
Group CEO
Jonathan Davies
Deputy Group CEO and CFO
Read more about Patrick and
Jonathan on page 88.
90
SSP Group plc Annual Report and Accounts 2022
Michael Svagdis
CEO SSP America
Jeremy Fennell
CEO Continental Europe
With 30 years of experience in the
food and beverage industry and
having joined SSP in 2014 as Chief
Executive Officer, North America
(covering the USA and Canada),
Michael Svagdis leads a talented
team driven by an unparalleled
passion for bringing cool, authentic
restaurants to airports that reflect
a taste of place. In October 2020,
Michael took on additional
responsibility for SSP’s business
in South America.
Prior to SSP, Michael held various
management and leadership roles
at Compass Group plc, Eurest and
Morrison Healthcare.
Michael has a degree in Business
Management from Massachusetts
Bay College, Massachusetts.
Jeremy is CEO of Continental
Europe, covering the Nordics, Frabel,
DACH and Spain. He joined SSP in
July 2019 as CEO of the Nordics
region, taking on responsibility for
Frabel, DACH and Spain in July 2021.
Previously Jeremy spent over 10
years at Dixons Carphone, including
four years as MD of Carphone
Warehouse and had responsibility
for the international airport chain
Dixons Travel. Prior to this, Jeremy
led the Dixons eCommerce business,
developing a multichannel offer at
Currys. Jeremy gained experience
working in the Nordics as Category
Director of market leader Elkjøp
(with 400+ stores across the Nordics
and Iceland).
Jeremy has a degree in Retail
Management from Bournemouth
University.
Miles Collins
Director of Group Finance
Sarah John
Corporate Affairs Director
Miles is responsible for the Group
Finance function, overseeing the
Group’s financial reporting, planning
and analysis and investment
appraisal. He joined SSP in 2006
and has gained extensive experience
of the business through his roles in
Group Finance and as CFO of the
UK division.
Miles began his career at Arthur
Andersen, before moving into food
retail with Safeway plc, where he
worked from 1992 to 2004 in a
variety of finance roles. He then
spent two years as Group Financial
Controller of Lastminute.com.
Miles is a chartered accountant
and holds a degree in law from
Manchester University.
Sarah is Corporate Affairs Director at
SSP Group, with overall responsibility
for Communications, Sustainability
and Investor Relations. Sarah joined
the business in 2015 as Director of
Investor Relations and joined the
Group Executive Team in 2021.
Prior to joining SSP, Sarah was
Director of Strategy and Corporate
Affairs for Compass Group PLC from
2003 until 2014. She has also held
positions at ABN AMRO, including as
Head of Equity Research, Dresdner
Kleinwort Wassterstein and Price
Waterhouse Coopers.
Sarah has a BA (Hons) Business
Studies and is also a trained
Executive Coach.
Richard Lewis
CEO SSP UK & Ireland
Jonathan Robinson
CEO SSP Asia Pacific
Mark Angela
Chief Business Development and
Strategy Officer, CEO India and EEME
Nathan Clements
Chief People Officer
Richard is CEO of UK & Ireland.
He joined SSP in September 2019
from Greene King plc where he was
Chief Operating Officer. Prior to this,
Richard held a number of different
leadership positions with over eight
years at Greene King, including
Group Integration Director and
Managing Director Retail.
Richard also has significant
international experience, including
through his role as COO of the
Warehouse, New Zealand’s largest
non-food retail group. Before that,
he held a variety of operational and
commercial roles at both Sainsbury’s
and Woolworths in the UK.
Richard has a degree in Geography
from the University of Salford.
Jonathan joined the Group Executive
Committee as CEO, Asia Pacific
with effect from 1 October 2022.
Jonathan joined SSP in April 2016
as Group Business Development
Director before moving to Hong
Kong in March 2019 as Chief
Development Officer, Asia Pacific
and latterly CEO, Asia Pacific from
February 2022.
Jonathan began his career in
commercial development in
Sainsburys before spending over
10 years in WHSmith in various roles
including Business Development
Director and General Manager Qatar.
Jonathan holds a Diploma in
Management from Birkbeck
University of London and a BA
in Communication Media from
Manchester Metropolitan University.
With effect from 1 October 2022,
Mark has been appointed as Chief
Business Development and Strategy
Officer, retaining leadership of India
and EEME. In this new central role,
Mark leads the evaluation of new
markets, corporate development
activities and drives strategy
development. Mark joined SSP in
February 2012 as CEO, UK & Ireland,
moving to Group CCO in 2014,
CEO Asia Pacific in 2019 and CEO,
Rest of the World in 2022.
Mark began his career at Schroders
before moving to ICI (now Astra-
Zeneca) and Colgate-Palmolive
in a variety of marketing and
management positions. Mark then
joined Greene King as Managing
Director before spending four years
as CEO of Pizza Express.
Mark holds a modern languages
degree from Cambridge University.
Nathan joined as Chief People
Officer in July 2021 with oversight
of people, transformation and safety
agendas. He co-chairs the Group
Inclusion Council and is executive
sponsor of our LGBT+ network.
Previously, Nathan has held senior
HR leadership positions at WBA
where he led a transformation to
improve customer and colleague
engagement and establish the DE&I
agenda. Prior to this, Nathan held
a number of senior HR roles at Daily
Mail, Morrisons Supermarkets,
B&Q and PepsiCo.
Nathan has a degree in Applied
Biology from Liverpool John Moores
University and a Postgraduate
Certificates in Business
Administration from the University
of Bradford, School of Management,
and Consulting and Change from the
Tavistock Institute.
Angela Moores
Chief Customer Officer
Mark Smith
Chief Digital and Technology Officer
Sukh Tiwana
Chief Procurement Officer
Angela is the Chief Customer Officer.
She joined SSP in 2013 as UK
Commercial Director, before moving
to Group Commercial Development
Director with responsibility for
rolling-out best practice initiatives
across the business. Angela re-joined
the UK team as UK and Group
Commercial and Marketing Director
before taking up her current role in
2021. Angela is the executive
sponsor of our Menopause Network.
Prior to SSP, Angela held
Commercial Directorships at
PizzaExpress and Greene King PLC.
Angela has a Business Studies degree
from Napier University, Edinburgh.
Mark is Chief Digital and Technology
Officer. He joined SSP Group in
February 2018 as Group CIO. He is
responsible for the Group’s digital
strategy and implementation of
digital and technology solutions.
Mark is the executive sponsor
of our Women in Tech initiative.
Sukh is Chief Procurement Officer
with over 30 years of experience.
He started his career with various
finance and purchasing roles at
Granada Group and, following its
merger with Compass Group, was
appointed Managing Director of
Compass Purchasing.
Mark spent 10 years at Accenture,
working with clients such as
Selfridges, Dixons, Argos and
Sainsburys. He then moved to M&S
as Head of HR Transformation before
working at Tesco as CIO – Asia, with
responsibility for technology across
2,500 stores across five countries.
In 2004, Sukh was appointed Group
Commercial Director of SSP Group,
responsible for purchasing, supply
chain and leading group wide
commercial negotiations. Sukh was
appointed Chief Procurement Officer
in 2022 and is also the co-chair of
our Group Inclusion Council.
Helen Byrne
General Counsel and Company
Secretary
Helen joined SSP Group as General
Counsel & Company Secretary in
March 2007, and leads the Group
legal and company secretarial team
which she established following her
arrival at SSP.
Helen is a UK qualified lawyer
and has extensive experience
in providing legal and corporate
governance advice at plc board and
group-wide level, having previously
been company secretary and general
counsel for international companies
Gullane Entertainment (formerly
The Britt Allcroft Company) and
HIT Entertainment.
Mark has a Computer Science degree
from the University of Warwick.
Sukh is a qualified CIMA Accountant
and holds an MBA from Oxford
Brookes University.
Helen holds an LLB degree from
Exeter University.
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Division of responsibilities
Governance framework
Board of Directors
– Determines the strategic development of
the Group and oversees the implementation
of the strategy
– Establishes and promotes the Group’s
purpose, values and strategy
– Ensures that the Company’s obligations
to its shareholders and stakeholders are
understood and met
– Monitors the Group’s culture and ensures
that workforce policies and practices are
consistent with the Company’s values
– Maintains the Group’s systems of risk
management and internal control
– Sets the sustainability strategy and
monitors performance against targets
At the date of this report, our Board comprised the Chair, five
Independent Non-Executive Directors and two Executive Directors.
The roles of Chair, Senior Independent Director and Group CEO are
separate and their responsibilities are well-defined, set out in writing
and regularly reviewed by the Board (see www.foodtravelexperts.com).
The Chair and the Non-Executive Directors have a programme of
meetings both amongst themselves and with various members of
the executive team, and this includes both formal Board meetings
and more informal gatherings where the Board can see our operations
first-hand and engage with our workforce. The Board is supported by
the General Counsel and Company Secretary, to whom all Directors
have access for advice and corporate governance services.
The Executive Directors meet monthly as part of the Group Executive
Committee to attend to the ongoing management of the Group. Any
significant operational and market matters are communicated to the
Non-Executive Directors on a timely basis outside of Board meetings.
The Risk Committee meets quarterly, the Sustainability Steering
Committee monthly, and the other operational committees
as necessary.
Read more about how the Board operates on page 94.
General Counsel and Company Secretary
The General Counsel and Company
Secretary supports the Chair and ensures
the Directors have access to the information
needed to perform their roles. She advises
the Board on legal and corporate
governance matters, including the UK
Corporate Governance Code, UK Listing
Rules and other statutory and regulatory
requirements.
Board Committees
Executive and
Operational
Committees
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SSP Group plc Annual Report and Accounts 2022
Governance framework
Chair
The Chair is responsible for leading the
Board and ensuring effectiveness in all
aspects of its role. The Chair sets the
Board’s agenda and ensures that adequate
time is given to key discussion points, in
particular the strategic aims of SSP Group.
Group CEO
The Group CEO is responsible for overseeing
the day-to-day operational management
of the Group and for implementation of the
strategic aims of the Group. The Group CEO
acts as a liaison between the Board and
operational management teams.
Deputy Group CEO and CFO
The Deputy Group CEO and CFO supports
the Group CEO by providing day-to-day
oversight of the Group’s operations, controls
and financial performance as well as
supporting the Group CEO in all other areas.
Non-Executive Directors
The Non-Executive Directors provide
independent oversight and constructive
challenge to the executive management
team, helping to develop proposals on
strategy, scrutinising performance against
agreed goals and objectives.
Designated Non-Executive Director
for workforce engagement (ENED)
Our ENED is tasked with bringing the
thoughts and concerns of our colleagues to
the attention of the Board so that they can
be taken into account in decision making.
Senior Independent Director (SID)
The SID’s role is to deputise for the Chair.
The SID serves as an intermediary between
the Chair and the rest of the Board and, as
necessary, the shareholders. The SID is also
responsible for holding an annual meeting
of the Non-Executive Directors and leads
the evaluation of the Chair on behalf of the
other Directors.
Nomination Committee
– Reviews the Board’s structure, size
and composition
Audit Committee
– Monitors the integrity of financial reporting
– Reviews and advises on internal controls
Remuneration Committee
– Sets the executive remuneration policy
– Ensures the policy aligns with strategy
– Leads the search and selection process
and risk management systems
and culture
for new directors and succession planning
– Oversees external and internal audit function
– Reviews workforce remuneration policies
– Monitors diversity and inclusion
See pages 104-113.
See pages 114-121.
See pages 122-146.
Group Executive Committee
– Day-to-day operational management
– Develops and implements the Group’s
strategy
Risk Committee
– Reviews and advises on the risk and control
Treasury Committee
– Agrees and implements the Group’s treasury
environment
– Ensures operation of a robust and effective
risk management and assurance framework
– Considers climate and other sustainability
related risks
Investment Committee
– Oversees SSP’s investment objectives
– Manages and implements SSP’s investment
policies
– Conducts post-investment reviews
policies
– Oversees the Group’s treasury activities
Disclosure Committee
– Oversees the disclosure of market sensitive
information and other public announcements
Sustainability Steering Committee
– Oversees the implementation of the Group’s
sustainability policy and objectives
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continued
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SSP Group plc Annual Report and Accounts 2022
How the Board operates
The Board and its Committees have a scheduled forward agenda
of meetings to ensure sufficient time is allocated to the topics to be
discussed and to ensure the appropriate balance is given to strategic,
operational, financial and governance matters. This year, and as
recommended by the 2021 Board evaluation, the Board dedicated
particular time to key issues affecting strategy such as sustainability
with in-depth sessions scheduled through the year.
At each Board meeting, the Board receives updates from the Group
CEO and Deputy Group CEO and CFO as well as presentations from
the regional CEOs and other functional leads as appropriate. Papers
are prepared by management and distributed in advance of meetings,
using a secure portal, to allow Directors sufficient time to consider
the matters independently in advance of the meeting. Directors
unable to attend a meeting are encouraged to read and comment
on the pre-circulated papers in advance of the meeting so that their
thoughts can be considered by the Board. The Chair and the Company
Secretary will follow up with the Director after the meeting to update
them on the key matters discussed and decisions made at the
meeting. From time to time, the Board will delegate authority
to a sub-committee to approve certain matters.
Board meetings are held at Group business locations, when possible,
to help all Board members gain a deeper understanding of the
business. This gives senior management across the Group the chance
to present to the Board, as well as to meet and interact with Directors
on more informal occasions. Although not all activities were able to
continue as planned due to the rise of the Covid-19 Omicron variant at
the beginning of the financial year, the Board were eager to revisit the
business as restrictions eased in the spring, visiting sites in London,
Paris and New York, with travel to more global locations planned this
year. These visits help inform and support the Board’s understanding
of the Group’s colleagues and culture.
More information on the Board’s monitoring of culture can be found
on pages 96 and 97.
Led by the Senior Independent Director, meetings between
the Non-Executive Directors, both with and without the presence
of the Chair and the Group CEO, are scheduled in the Board’s
annual programme.
Terms of Reference
The Board has a schedule of matters reserved for its decisions and
formal terms of reference for its Committees. These are reviewed
annually and are available to view on the Group’s website at
www.foodtravelexperts.com.
Matters not specifically reserved to the Board and its Committees
under their terms of reference, or for shareholders in General
Meeting, are delegated to the Group CEO and the Group Executive
Committee. The Group CEO then reports back to the Board on
activity carried out by the Group Executive Committee.
The significant matters reserved for the
Board’s decision include:
Strategy, culture and values
– Approval and regular review of the delivery of the Group’s
long-term business strategy and objectives
– Oversight of the Group’s operations and review of performance
on a regular basis
– Approval of the Group’s purpose, values and overall governance
framework and responsibility for setting the desired attitudes
and behaviours through Group policies, employee standards
and leading by example
– Assessing and monitoring the Group’s culture and its alignment
with the Group’s purpose and values and responsibility for
ensuring that any necessary corrective action is taken
Financial Reporting and controls
– Approval of operating and capital expenditure budgets
– Oversight of financial reporting and controls including approval
of the Annual Report, financial statements, dividend policy
and accounting policies and practices
– Ensuring maintenance of a sound system of internal control
and risk management
– Approval of decisions regarding material legal proceedings
Capital structure, contracts and expenditure
– Approval of capital structure changes
– Approval of material agreements, acquisitions and disposals
– Approval of non-recurring projects and treasury matters
Appointments and remuneration
– Board and committee composition, size and structure,
including any appointments to the Board (including appointment
of the ENED)
– Ensuring adequate succession planning for the Board,
committees, the Group Executive Committee and the Company
Secretary
– Recommendations regarding the external auditor
– Determining the remuneration policy and outcomes for
Executive Directors, Chair, and Group Executive Committee
– Approval of remuneration for Non-Executive Directors
– Approval of new share incentive plans or major changes
to existing plans
Sustainability
– Development and oversight of the Group’s sustainability
strategy, targets and attainment
Corporate governance and policies
– Convening general meetings, approving circulars and press
releases on significant matters
– Approval of delegations to the CEO, CFO and committees
– Conducting Board evaluation
– Reviewing stakeholder engagement mechanisms
– Approval of new policies, in line with purpose, values
and strategy
Time commitments and Conflicts of interests
Additional external appointments may only be taken by Directors
with the prior approval of the Board. In deciding whether to allow
Non-Executive Directors to take on additional appointments,
consideration is given to both the time commitment required as well
as any potential conflicts that may arise. The Company recognises
the benefit of our Executive Directors holding external directorships
and business interests, however, given the time commitment
necessary for their respective roles at SSP, our Executive Directors
are not ordinarily allowed to take on more than one non-executive
role.
Details of the Directors’ external directorships can be found in their
biographies on pages 88 and 87.
As set out on pages 112 and 113, the Board Evaluation process included
an assessment of the time commitments required from the Board
members to ensure that they have sufficient time to carry out their
roles. The Board remains confident that each Director has sufficient
time to dedicate to their role as has been demonstrated by the high
levels of responsiveness and availability for the additional Board and
Committee meetings over the financial year.
The Board has an effective procedure to identify potential conflicts
of interest and maintains a register of conflicts of interest which is
reviewed annually. Each Director is required to disclose to the Board
any situation in which they have, or may have, an interest which
conflicts with the interests of the Company.
Independence
The Chair was deemed independent on appointment, and the Chair
and all other Non-Executive Directors who shall put themselves
forward for reappointment at the 2023 AGM are considered by
the Board to be independent in accordance with the criteria under
provision 9 of the Code. In line with our medium-term Board
succession planning, no independent director will ordinarily serve
more than nine years on the Board to ensure continued independence.
The roles of Chair and Group CEO are held by separate individuals
and have clearly defined responsibilities as set out on the
Company’s website.
During the year, the Board reviewed and approved Mike Clasper’s
appointment for a second term of three years.
More information on our Non-Executive Director succession planning
can be found on page 107 and on the Chair’s reappointment can be found
on page 106.
Regulatory Disclosure
For information required to be in the Corporate Governance
Statement under Rule 7.2.6 of the Disclosure Guidance and
Transparency Rules see the Directors’ Report on pages 145-148.
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OverviewCorporate governanceFinancial statementsStrategic report How the Board monitors and assesses culture
The Board is responsible for assessing and monitoring the culture
of the Group and ensuring that workforce policies and practices are
consistent with the Group’s values. The Board does this through a
range of channels from its monthly updates on people, sustainability
and health and safety, which include updates on key issues, KPIs and
progress against goals as well as insights gained through meeting
colleagues during site visits. The ENED provides further insight into
SSP’s culture through her engagement with colleagues.
For more information on the ENED activity see page 52.
Similarly, the Executive Directors play an integral role, both in
monitoring culture but also in the promotion of a positive culture
through their behaviours. The Board’s committees also each play a
role in supporting the Board’s promotion of the desired culture. The
Nomination Committee for instance has a role to promote a diverse
and inclusive culture and the Remuneration Committee makes sure
our pay policies encourage positive behaviours that align with culture.
Whilst the Board reviews a wealth of data on various cultural
indicators, over the next year, and after taking into account
recommendations from the Board Evaluation process, the Board will
consider the development of separate cultural reporting to support
its responsibilities on culture. In addition to the existing channels,
such dedicated reporting will aim to identify and provide a baseline
for the metrics considered key to ensuring SSP has the right culture
to deliver long-term sustainable success.
Operation of the Group’s Risk Management Framework (see pages
58-61) and associated internal controls also play an important role
in driving a culture of transparency and compliance. This is overseen
by the Board, and the Audit and Risk Committees. As part of this
framework, the Board maintains a suite of policies in order to support
its work to promote and monitor culture throughout the organisation.
The Board sees information about compliance with certain key
policies including Diversity, Equity & Inclusion, Anti-Bribery and
Corruption, our Code of Conduct and policies for preventing the
facilitation of tax evasion. The Board also receives updates on health
and safety and routinely monitors issues raised through the Group’s
speak-up procedures. All colleagues receive relevant training as part
of their induction on joining the Group and continued refresher
training during their time with the Company to ensure they operate
in accordance with relevant Group policies.
Board leadership and Company purpose
continued
SSP’s culture
Our business is a people business, and our diverse teams are at the
heart of everything we do, serving our customers across six continents
and 35 countries and interacting with our other key stakeholders
throughout the year. Developing and maintaining a positive culture
where our colleagues are unified by our purpose to be the best part
of the journey for our customers, clients, brand partners and other
key stakeholders is critical to the delivery of our strategy. In order to
achieve our purpose, we want to create a culture of passion and pride
that is rooted in an environment of strong corporate governance and
a commitment to our sustainability responsibilities.
The Board places great importance on ensuring that a positive
purposeful and inclusive culture is established throughout the Group,
aligned across our regional businesses and demonstrated throughout
our teams starting with the Board and Group Executive Committee
and carried right through to our front of house teams in units around
the world.
Our values play a key role in delivering our purpose, vision and
strategy. They were developed in consultation with our teams across
the world. They guide our culture, behaviours and decisions, helping
ensure we act in the best interests of our stakeholders, the
environment and our business.
We are one team
Working together and sharing our best
ideas to fulfil our global potential
We are results focused
Delivering great food and service for our
customers and outstanding results for our
colleagues, clients, and shareholders
We all make a difference
Respecting each other, acting responsibly
and sustainably 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
achievement
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SSP Group plc Annual Report and Accounts 2022
Board
– Monthly updates on people, sustainability and
health and safety, including KPIs and progress
against goals
– Regular engagement with senior leadership
– Employee engagement insights through
survey and ENED feedback
– Direct engagement with colleagues and other
stakeholders through site visits
– Reviewing and approving key policies
including modern slavery and code of conduct
and diversity, equity and inclusion
– Regular updates on status and compliance
with key policies
Audit Committee
– Promotes culture of openness and integrity
through debate and challenge on matters
presented to it
– Reviews and challenges the operation of the
Group’s risk management system and fraud
detection mechanisms
– Oversees the internal controls framework
– Receives reports from the Group’s speak-up
facility
– Monitors compliance failures
– Ensures internal audit and external auditors
have sufficient independence to operate
effectively
Remuneration Committee
– Promotes positive behaviours and alignment
with culture through pay and remuneration
– Reviews and monitors gender pay
– Sets targets for bonus and incentive plans
that align with culture
How the Board
monitors, assesses
and promotes
culture
Nomination Committee
– Oversees how the Group promotes diversity,
equity and inclusion
– Responsible for Board succession and senior
management talent and succession and
ensuring the Board and Group Executive
Committee has the right diversity of skills
to promote desired culture
ENED
– Engages with broad spectrum of colleagues,
through site visits and attending virtual and
in-person listening groups
– Meets with executive management
– Attends workers’ councils
– Reports to the Board on insights and views
on culture and engagement
Executive Directors
– Lead by example to promote the desired
culture through the organisation
– Hold in-person and online town hall meetings
with the leadership teams across the business
facilitating two-way engagement
– Held the first in-person leadership
conference since 2019 for the senior global
leadership team in October
– Visit sites regularly across all markets,
meeting with colleagues at all levels of the
organisation to listen to their feedback
SSP Group plc Annual Report and Accounts 2022
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Board Leadership and Company Purpose
continued
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SSP Group plc Annual Report and Accounts 2022
Stakeholder engagement
The Board has a well-established programme of engaging with a wide
range of stakeholders who are key to the successful delivery of the
Group’s strategy. An overview of the Group’s key stakeholders and
our engagement with them can be found on pages 42-51.
Stakeholders
Customers
Page 44
Colleagues
Page 45
Clients
Page 46
Investors
Page 47
Brand partners
Page 48
Suppliers
Page 49
Communities, NGOs
and Society
Page 50
Government and
Regulators
Page 51
The Board and each of our Directors consider the impact their
decision-making will have on relevant stakeholders. Our case studies
on pages 102 and 103 provide examples of how the Board considered
the matters detailed in section 172 of the Companies Act 2006 during
the year.
AGM Outcomes and Shareholder engagement
We were pleased to return to an in-person general meeting during the
year, which, in addition to the ongoing engagement undertaken within
the year set out on page 47, provides a valuable forum for the Board
to engage with our shareholders.
While the majority of our resolutions at the AGM received high levels
of support, those receiving lower approvals were the Directors’
Remuneration Report (78.00%), authority for Directors to allot shares
(79.97%), and authority of the Company to call general meetings on
less than 14 days’ notice (78.95%). Whilst we are pleased that the
majority of shareholders voted in favour of these resolutions, it was
important for us to understand the reasons behind the votes against.
The Company engages throughout the year, and ahead of each AGM,
with shareholders and proxy voting agencies to understand their
views and follows up on any significant votes against resolutions
at the AGM. In accordance with provision 4 of the UK Corporate
Governance Code, the Board provided an update to shareholders on
the actions taken following the significant votes against the above
resolutions on 22 July 2022 and sets out below its final summary
on the issues.
Directors Remuneration Report
Prior to the publication of our 2021 Annual Report, we proactively
consulted with shareholders to discuss the Remuneration Committee’s
proposed approach to determining the bonus outcome for the 2021
financial year. The broad sentiment across those with whom we
engaged was that they were supportive of paying a bonus based on
the performance achieved in challenging conditions, notwithstanding
some negative feedback regarding our decision to pay a bonus for
2021 when Covid-19-related support had been received from the UK
Government. Overall, the Remuneration Committee believes that it
acted fairly and appropriately, and that the decisions taken in respect
of 2021 were in the best interests of shareholders.
The Board, led by the Remuneration Committee Chair, will continue to
actively engage with shareholders and advisory bodies on executive
remuneration, and will consider any input provided as it makes its
decisions going forward.
Key engagement with shareholders
October – November 2021
Remuneration Report engagement
December 2021
Full Year Results Roadshow
Further information on how the Remuneration Committee considered
the views of shareholders in remuneration outcomes can be found in the
Remuneration Report on pages 120-144.
January – February 2022
Trading Update and pre-AGM engagement
Authority to allot shares and call meetings at short notice
The resolution regarding share allotments sought approval in line
with the Investment Association’s Share Capital Management
Guidelines. Engagement undertaken around the 2022 AGM indicated
that a small number of overseas shareholders have adopted internal
voting policies which set a lower allotment threshold compared
to UK market practice. Similarly, the resolution regarding notice
of meetings also conflicted with a very small number of overseas
shareholders voting polices. Both resolutions continue to be
supported by the majority of our shareholders and are in line
with prevailing UK market practice. The Board considers these
appropriate resolutions to retain flexibility for the Company in both
its capital management, and in holding meetings in exceptional and
time critical circumstances. In future, the Board will continue to give
due consideration to allotment authorities and notice period lengths
and monitor developments in market practice in this area.
Shareholder engagement generally
The Board seeks to maintain continuous, meaningful engagement
with shareholders. It receives updates from the Corporate Affairs
team and members of the Group Executive Committee regarding the
key issues affecting shareholders, as well as reports on engagement
activity both undertaken and planned. The Chair seeks regular
engagement with major shareholders and, along with the Non-
Executive Directors, is available to meet with major shareholders
as required. The Remuneration Committee Chair communicates with
major shareholders on remuneration matters throughout the year
and on specific policy matters and the Audit Committee Chair is
available for discussions on relevant matters.
A key part of the work of the Corporate Affairs team is to ensure that
our shareholders, lenders and analysts have a strong understanding
of our strategy, performance, purpose and culture. Set out in the
timeline to the right is an overview of shareholder engagement
throughout the year. This is in addition to the regular correspondence
referred to above.
March – April 2022
Meet the new Group CEO
May 2022
Half Year Results Roadshow
July 2022
Trading Update
September 2022
Pre-close follow up calls
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OverviewCorporate governanceFinancial statementsStrategic report Key Board activities in the
2022 financial year
Overview of Board Matters
Key activities of the Board
The Board and its Committees have a scheduled forward agenda
of meetings to ensure sufficient time is allocated to the topics to be
discussed and to ensure the appropriate balance is given to strategic,
operational, financial and governance matters.
Committee updates
Committee meetings are held in advance of Board meetings
to facilitate effective discussions. The Committee Chairs provide
an update to the Board on those meetings including highlighting
decisions and key issues for the Board’s attention.
Strategy and operations
– Appointments: The Board approved the appointment of the Group
CEO, two new Non-Executive Directors and the successor to the
Audit Committee Chair.
– FY2023 Strategy: The Board considered the Group’s strategic
priorities and approved the strategy for the 2023 financial year.
– Monitoring of Strategy Execution: The Board received updates
on the Group’s progress against its strategy throughout FY2022.
– Market Updates: The Board received regular market updates
throughout the year and reviewed feedback from our institutional
investors.
– Significant Tenders: The Board approved relevant tenders in
accordance with its policy on Matters Reserved for the Board.
Performance updates
At each Board meeting, the Group CEO and Deputy CEO and CFO
provide updates on highlights, developments and challenges for the
period along with a financial update and proposed priorities for the
period ahead.
Strategy
Stakeholder updates
The Board receive regular updates from management on various
stakeholders including our colleagues, customers, clients and
shareholders.
Deep dives
As part of the forward agenda, the Board considers key areas of
strategy and other areas of importance through deep dive sessions.
During the 2022 financial year, deep dives included the Customer and
Brand Portfolio Plans, Procurement and Capital Management and
the Road to Net Zero.
Corporate Governance
The Board receives updates as necessary to ensure that all
governance and company secretarial matters are dealt with
efficiently and effectively.
For examples of the Board’s decision-making processes
see pages 102 and 103
Stakeholders
Finance
– Financial Reporting: On the recommendation of the Audit
Committee, the Board reviewed and approved the FY2021 annual
report and accounts and the FY2022 half-year report and
accounts.
– Monitoring of Financial Performance and FY2023 budget:
The Board monitored financial performance versus budget on
a regular basis throughout the year and reviewed and approved
the FY2023 budget.
– Debt Financing: The Board received an update on its bank facilities
and approved an amend and extend of the main bank facilities to
January 2025.
Strategy
Stakeholders
Strategic priorities
Leading customer
proposition
Skilled and engaged
colleagues
Long-term growth
and returns
Sustainability
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SSP Group plc Annual Report and Accounts 2022
Risk Management
– Review of Effectiveness of Risk Management and Internal
Controls: The Board reviewed the Group’s approach to risk
management and internal control systems and the effectiveness
of these systems.
People and culture
– People Strategy: The Board received updates on progress against
the Group’s People Plan for FY2022.
– Speaking Up: The Board monitored issues raised through the
Group’s Speak Up Policy.
– Annual Risk Assessment: The Board conducted an annual strategic
and operational risk assessment, including considering action plans
to mitigate risks.
– Employee Engagement: The Board discussed the Group’s approach
to employee engagement and received an update on the response
to the Global Colleague Engagement Survey.
– Digital and technology: The Board considered the Group’s digital
– People Data: The Board received an update on people data across
and technology strategy including progress of strategic
programmes. This included updates from the Audit Committee
on their review of the Group’s approach to cyber security.
the business.
– Share Plans: The Board approved the annual invitations for the
all employee incentive plans and the grant of various awards under
the long-term incentive plan and deferred bonus plan.
Strategy
Strategy
Stakeholders
Stakeholders
Governance, Legal and Regulatory
– Board Diversity and Succession Planning: On the recommendation
of the Nomination Committee, the Board oversaw the
arrangements for Board succession planning, reviewed Board
composition and approved an update to both our Board Diversity
Policy and Group Diversity, Equity & Inclusion Policy.
– The Board also approved the extension of term for the Chair and
considered a number of Group Executive changes.
– Governance and Compliance: The Board received governance and
compliance updates, including with respect to anti-bribery and
corruption and speaking up, and approved the Modern Slavery
Statement and Tax Strategy (which can be found on our website
at www.foodtravelexperts.com).
Sustainability
– Sustainability Strategy: The Board received updates on progress
made in delivering the Group’s Sustainability Strategy and targets
and considered the Group’s roadmap towards net zero.
– TCFD Disclosures: The Board received a briefing on our plan for
TCFD compliance and reviewed and approved our climate-related
scenario analysis prepared by an external consultancy.
– Sustainability Report: The Board approved our first standalone
Sustainability Report to support our business strategy.
Strategy
Strategy
Stakeholders
Stakeholders
Stakeholders
Customers
Colleagues
Clients
Investors
Brand partners
Suppliers
Communities, NGOs
and Society
Government and
Regulators
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OverviewCorporate governanceFinancial statementsStrategic report
Leadership in action
Key milestones
November 21
Appointment of Group CEO announced
December 21
Full year results
January 22
Appointment of new Non-Executive Directors
February 22
Q1 Trading update
February 22
AGM and Audit Committee Chair change
March 22
Appointment of Group CEO
April 22
Paris Board visit
May 22
Approval of Customer Plan
May 22
Half year Results
July 22
Strategy Day
July 22
Q3 Trading update
August 22
Bank Debt Amend & Extend
September 22
Approval of roadmap to net zero
October 22
New York Board visit
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SSP Group plc Annual Report and Accounts 2022
Key Board activities
The principles underpinning Section 172 of the Companies Act 2006
(the ‘Act’) are embedded in the Board’s decision-making. 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. See page 42 for our section 172(1)
statement.
Pages 42-51 provide 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 the 2022 financial year.
Key
Consequences of decisions in the long term
Interests of employees
Need to foster business relationships
Impact of operations on communities and the environment
Reputation for high standards of business conduct
Acting fairly between shareholders
Stakeholders
Customers
Brand partners
Colleagues
Suppliers
Clients
Investors
Strategic priorities
Leading customer
proposition
Skilled and engaged
colleagues
Communities, NGOs
and Society
Government and
Regulators
Long-term growth
and returns
Sustainability
Appointment of Group CEO
See pages 82-83, 86 and 95-97 of the FY21 Annual Report for
a discussion of the Board’s consideration of the CEO appointment
For further details of the Group CEO’s induction, see pages 8-10.
Approval of refreshed strategy
Approval of net zero plan
As we continue to recover from Covid and with our new Group CEO
in place, the Board considered how our Group purpose and strategy
promotes the long-term sustainable success and delivers long-term
value for both our shareholders and our wider stakeholders.
In considering the strategy and purpose, the Board considered
the interests and priorities of the Group’s employees and developing
a skilled and engaged workforce is now a core strategic priority for
the Board. Delivering a customer proposition aligned to our clients’
needs and goals is another core priority which reflects the Board’s
continued focus on fostering positive relationships with and creating
value for our customers and clients.
Another key consideration when approving the rearticulated
strategy was the impact of the Group’s operations on the community
and the environment. Operating within a sustainable framework is
therefore embedded in the strategy, to ensure we continue to reduce
negative impacts on the environment and bring value to the
communities in which we operate.
Lastly, the Board discussed the importance of clearly articulating
our strategy to our investors over the medium and long term,
to allow them to make a better assessment of our prospects over
those time horizons.
For further details of our strategy, see pages 18-31.
Link to stakeholders
Link to strategy
The Board are committed to creating a more sustainable business
and last year set an ambitious target: to become a net zero business
by 2040. The Board recognises that achieving this goal will be
challenging and during the year the Board undertook a deep dive
on the subject. Following this exercise, the Board approved our
new net zero plan and our strategy to achieve this ambitious goal.
Our net zero ambition is designed to ensure the Group’s operations
do not have a negative long-term impact. As part of our net zero plan,
the Board will regularly review the Group’s carbon dioxide equivalent
(CO2e) emissions, as well as other key sustainability metrics to ensure
this ambition continues to deliver positive change on our environment
and the communities in which we operate.
In considering our net zero plan the Board also considered the impact
on our customers. We know that sustainability is important for many
of our customers and as part of our net zero plan we intend to make
it easier for them to make sustainable choices, addressing their
growing concerns about the climate-impact of the food they are
eating and the brands they choose.
Our investors also value sustainability and part of our net zero plan is
to ensure our commitments stand up to scrutiny. As part of this aim,
the Board approved a standalone sustainability report to increase
our levels of disclosure and transparency and to maintain our
reputation for high standards of business conduct.
For further details of our roadmap to net zero see pages 30 and 31 and
in our Sustainability Report.
Link to stakeholders
Link to strategy
Approval of Customer Plan
Bank Debt Amend & Extend
In approving the first stage of our updated Customer Plan, the Board
considered the views of key stakeholders including those gained
through listening sessions. Delivering improvements to customer
experience is a key factor in all Board discussions and was central
in its approval of the Customer Plan which in turn seeks to further
develop the Group’s relationships with its customers.
In addition, the Board discussed the relationship between engaged
customers and our ability to drive long-term growth and returns.
Finally, by approving and delivering an improved customer proposition,
the Board sought to further strengthen SSP’s reputation among
stakeholders for high standards of business conduct.
In August 2022, SSP Financing Limited (the Group’s main financing
company) agreed an amend and extend to its bank Senior Facilities
Agreement, including extending the maturity date by 12 months to
15 January 2025, with the most recent amended covenant tests
remaining in place. The amendment was considered in light of the need
for the Board and management to keep flexibility over the best time
to carry out a refinancing of the Group’s debt. In considering whether
this was in the best interests of the Company, the Board looked to the
short- and long-term benefit that the Company would receive from
having the amended financing arrangements in place, including the
positive impact on Group employees, other stakeholders and SSP
Group plc itself, from having increased financial security provided
by such amendments in the current economic environment.
For further details of our Customer Plan, see pages 20 and 21.
Link to stakeholders
Link to strategy
For further details of our approach to our financing arrangements,
see pages 201-205.
Link to stakeholders
Link to strategy
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report
Dear Shareholder
I am pleased to present the report of the Nomination Committee
for the financial year ended 30 September 2022, which provides an
overview of the Committee’s activities during the year under review.
This year we welcomed our new Chief Executive Officer, Patrick
Coveney as well as two new independent Non-Executive Directors,
Kelly Kuhn and Apurvi Sheth. Kelly also joined the Audit and
Nomination Committees, and Apurvi joined the Remuneration and
Nomination Committees. Both these executive and non-executive
appointments were the result of two separate and robust
recruitment programmes undertaken by the Committee in 2021,
supported by Russell Reynolds.
In identifying candidates in the recruitment of both the Chief
Executive Officer and the Non-Executive Directors, we reviewed the
Board’s structure, size and composition, to ensure the appointments
supported the Board’s diversity ambitions as well as enhancing and
complementing the current skillset of the Board to support the
Group’s strategic priorities.
Ahead of their arrival, the Committee approved a structured and
tailored induction programme for our new Chief Executive Officer
and each of our new Non-Executive Directors. This covered one-to-
one meetings with the Group Executive Committee and other key
senior management and key advisers, in addition to briefings on the
current financial and operational plan and all other relevant policies,
procedures and governance materials and site visits.
More information on the Board induction process can be found on page 109.
We believe that the diverse skills and experiences brought by our new
Non-Executives alongside the strategic leadership of our new Group
CEO, ensures we have the right balance of skills, experience and
knowledge to lead the Group to success.
The Board believes diversity, in its broadest sense, provides the
breadth of perspectives needed to make the best decisions and
maximise opportunities for the success of the Company and the
benefit of all its stakeholders. SSP Group plc heads a diverse group,
operating in 35 countries across the world. The diversity of our
people is a key contributor to our success, and the Nomination
Committee is responsible for developing and implementing our
approach to diversity across the Group.
Nomination Committee Report
Mike Clasper
Chair, Nomination Committee
“The Board believes diversity, in its broadest
sense, provides the breadth of perspectives
needed to allow it to make the best decisions
and maximise opportunities for the success
of the Company, and the benefit of all
its stakeholders.”
Meeting attendance
Director
Mike Clasper
Carolyn Bradley
Ian Dyson2
Tim Lodge
Judy Vezmar
Apurvi Sheth3
Kelly Kuhn3
Date appointed as member
1 November 2019
1 October 2018
4 April 2014
1 October 2020
31 August 2021
1 January 2022
1 January 2022
Number of
meetings
attended1
4/4
Number of
additional
meetings held1
2/2
4/4
2/2
4/4
4/4
2/2
2/2
2/2
0/1
2/2
2/2
1/1
1/1
1 The number of meetings a member was eligible to attend.
2 Stepped down as Chair and as a member of the Committee at the conclusion of the 2022 AGM.
3 Appointed with effect from 1 January 2022.
The Nomination Committee terms of reference can be found at
www.foodtravelexperts.com
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SSP Group plc Annual Report and Accounts 2022
Whilst our Board membership was recently updated, we remain
proactive in maintaining a diverse range of skills, experiences,
and perspectives. During the year we undertook a thorough review
of the skills, tenure and diversity of the Board, to assess how the
composition of both the current and future Board will lead the Group
to long-term sustainable success. We also considered how we could
enhance these skill capabilities both through our future succession
plans and looked at how we can continue to develop the skills of our
current Directors.
Following this rigorous review, we believe our Board has the
appropriate breadth of skills and diversity we need to succeed.
We recognise the needs of the Board may change over time and this
annual review of skills and succession provides an opportunity for us
to regularly assess whether our Board as a whole continues to have
the right composition as it, and the environment in which it operates,
continues to evolve. This process also allows us to look ahead for
future challenges, incorporating them as we develop our future
succession plans.
Our robust succession plans were fundamental in supporting the
Committee’s activity last year, ensuring stability of leadership as
we led the recruitment process for a new Chief Executive Officer
alongside a recruitment for two new Non-Executive Directors.
A continued focus on succession planning will ensure we continue
to have the optimal Board to deliver success.
More information on our skills assessment and our Board succession plans
can be found on pages 106-107.
I am confident that the current Board has the correct balance of
skills to deliver our purpose: to be the best part of the journey which
supports our vision to be the best travel food and beverage provider
in the world, delivering for all our stakeholders.
Mike Clasper
Chair, Nomination Committee
5 December 2022
Last year, we adopted a formal Board Diversity Policy which acts as
an outline, and a statement of intent, of our approach and targets for
achieving a diverse Board. We are pleased to have achieved the targets
set by the FTSE Women Leaders Review (formerly the Hampton
Alexander Review) and the Parker Review, regarding gender and
ethnic diversity respectively and we remain committed to continuous
improvement. During the year the Nomination Committee updated
its Board Diversity policy to support this aim, increasing our gender
diversity target to maintain at least 40% female representation
as well as a at least one woman holding a senior Board position.
The Board recognises that a culture of inclusion is central to
promoting a diverse workforce at all levels of the business. Our
People Plan supported by our Group Diversity and Inclusion Policy,
seeks to promote diversity at all levels of the organisation. We are
delighted to have surpassed our target of 33% women in senior
leadership positions well ahead of our 2025 target and in the year
ahead will consider how we can stretch this target further (mindful
of the new Listing Rule target of 40%, coming into effect in our next
financial year). Whilst good progress has been made, the Board and
the Group continue to promote diversity and during the year a Group
Inclusion Council was launched, to help drive positive change, and
steer and advise SSP on its global diversity and inclusion goals. The
Group Inclusion Council is made up of 18 colleagues from each market
in which we operate, and supported by our Chief People Officer, Chief
Procurement Officer, Group Head of Talent & Inclusion, and Group
DE&I Manager, who provide expert support and guidance.
More information on our progress in delivery against our diversity policies
and targets as well as details of other initiatives in place to promote
diversity through the Group can be found on pages 110-111 and on pages
46-48 of our Sustainability Report.
Each year, the Board undertakes a formal, rigorous review of the
Board and its Committees, as well as of the Chair and the individual
Directors, to ensure that they continue to be effective and that each
of the Directors demonstrates commitment to their respective
roles as well as having sufficient time to meet their commitments
to the Company. The Board Evaluation process also allows the
Chair to consider the composition and diversity of the Board
and its Committees.
The review found that the Board has a good culture of trust and
openness, with confidence in executive management. Each Director
brings valuable insights and contributes to robust discussion and
debate. Whilst the Board and its Committees continue to operate
effectively, the evaluation allowed me to identify areas of focus
for the coming year.
More information on our Board evaluation including the process and the
outcomes can be found on pages 112-113.
Main responsibilities of the Committee
The main responsibilities of the Nomination Committee are to:
1) Review the structure, size and composition of the Board (including
its skills, knowledge, independence, experience and diversity);
2) Lead the process for appointments, making recommendations
to the Board as part of succession planning for both Non-Executive
and Executive Directors and senior management; and
3) Set measurable objectives for the diversity of the Board and
senior management.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Nomination Committee Report
continued
Composition, succession and evaluation
Board composition
The Board comprises the independent Chair, two Executive Directors
and five other independent Non-Executive Directors. The Nomination
Committee regularly evaluates the Board composition, including its
diversity, tenure and skills.
Details of the backgrounds and experiences, as well as external
appointments and tenure, can be found in the Board biographies
on pages 88-89.
Board appointment process
The Committee is responsible for ensuring that the Company has
a formal, rigorous and transparent procedure in place for Board
appointments 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 most
suitable individual for the role.
In identifying suitable candidates, the Nomination Committee:
The Company’s Articles of Association provide that at every Annual
General Meeting, each Director retires and seeks 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
Company appoints all Non-Executive Directors to the Board for
an initial three-year term, subject to their re-election by shareholders
at the first AGM following their appointment and their subsequent
re-election each year. To ensure independence, the expectation is
that Non-Executive Directors will serve for two three-year terms,
with an option for a third term. Letters of appointment are provided
to each Non-Executive Director and these are available for
shareholders to view at the Company’s registered office.
Kelly Kuhn and Apurvi Sheth were appointed to the Board on 1 January
2022 and Patrick Coveney was appointed on 31 March 2022. These
appointments were the result of rigorous and robust recruitment
processes undertaken last year and described in detail in the 2021
Annual Report. Russell Reynolds was engaged to assist with the
recruitment process. Other than in relation to prior and ongoing
Director recruitment processes, Russell Reynolds has no relationship
with the Company or any of its Directors.
Considers the balance of skills and experience of the Board
as a whole, to ensure the candidate has the requisite skills
to support the delivery of purpose;
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 geographical locations; 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.
Renewal of Mike Clasper‘s appointment as Chair
Mike Clasper was appointed as Non-Executive Director of the
Company in November 2019, before his appointment as Chair in
February 2020. Ahead of the expiration of the Chair’s first term,
the Committee, led by the SID in his absence, considered his
reappointment as Chair of the Company for a further three-year
term. In doing so, the Committee considered Mike’s skills and
contribution, along with feedback from the Board evaluation and
the SID’s review of the performance of the Chair. The Board was
satisfied that Mike’s strong leadership cultivated good dynamics
and an open and transparent Board culture and, following these
discussions, approved his reappointment as Chair of the Company
for a second term effective from 1 November 2022.
Skills review
During the year, following the appointments of two new Non-Executive
Directors, the Committee undertook a rigorous assessment of the
skills of the Directors, to ensure the Board has the right balance
of skills to support the Group’s long-term success and deliver value
for all stakeholders.
In addition to the skills, the Board also recognises the benefit of
having a range of backgrounds and experiences to support diversity
of thought and approach in decision-making.
More information on the skills and experiences of each Director can
be found in the biographies on pages 88-89.
In agreeing the skills matrix set out opposite, the Committee
considered which skills were necessary to deliver on strategy both
in the short and long term. Strict objective criteria were set against
each desired skill, with the Committee then assessing which of the
Directors was considered to have this expertise.
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SSP Group plc Annual Report and Accounts 2022
Board skills and experience
Executive & strategic leadership
Financial accounting, corporate finance
Consumer/retail
F&B
Travel/airports/rail
Strategy link
All Directors have access to the advice and service of our General
Counsel and Company Secretary.
Succession planning
The Nomination Committee is responsible for ensuring there are
robust and effective succession plans in place for orderly succession
to both Board and senior management positions.
During the year, the Committee reviewed its Board succession plan.
Whilst the Board is satisfied that it currently has the correct balance
of skills and experience, the review also considered the desired skills
necessary to support the Group’s strategy across the mid to long
term, cognisant of the tenure of each Director. Following this review,
the Nomination Committee approved its succession planning policy.
The succession plan is written down, will be reviewed regularly and
also has provisions for emergency planning in the case of an
unexpected Board vacancy.
International experience
Short term/contingency
Medium term
Long term
HR/People
Governance
Risk & compliance (including Health & Safety)
IT/Digital
Sustainability (including climate and diversity)
M&A
The assessment of skills demonstrates the breadth and depth of
experience across the Board, but also highlights areas where we may
focus future recruitment. This skills matrix will be regularly reviewed
and updated in line with evolving Group strategy and provides a
structured way of identifying the Board’s composition needs,
supporting effective succession planning.
Induction and continued development
The Chair leads the Board and is responsible for its overall
effectiveness in directing the Company. The Chair addresses the
developmental needs of the Board with a view to further developing
its effectiveness as a team, ensuring that each Director refreshes
and updates his or her individual skills, knowledge and expertise.
The Directors receive training and development throughout their
tenure. The Board and its Committees receive regular updates on
relevant legal, regulatory and financial developments, changes in
best practice and environmental, social and governance matters from
subject experts, including the Group Auditor, General Counsel and
Company Secretary and Deloitte, as advisors to the Remuneration
Committee. During the 2022 financial year, the Board received
specific training on the Market Abuse Regulation and TCFD, with
a session on Diversity, Equity and Inclusion held after the year end.
The Board have planned emergency cover
for senior Board positions for sudden and
unforeseen departures, including the Chair,
SID and Committee Chairs.
In considering the contingency succession
plan, the Board considered the requisite
skills and experience to provide short-term
cover and stability of leadership as well as
any other requirements under the respective
Committee’s Terms of Reference and the Code.
The Board’s medium-term succession plan
considers succession planning for the orderly
replacement of current Board members to
maintain independence.
As well as assessing the appropriate tenure,
the Board also assessed the time needed
to consider, recruit and onboard a new
Non-Executive Director in its medium-term
succession plan.
The long-term succession plan for the Board
considers how the size, skillset and diversity
of the Board continues to be effective in
delivery of long-term strategy as the needs
of the Group evolve.
The Nomination Committee also continued its focus on broader
succession planning throughout the management team, supported
by a talent review process and underlying development sessions with
colleagues. Our regular review of the executive succession plan is
supported by our talent review cycle, which assesses the readiness
of internal candidates for all key roles across the business, as well as
external candidates. During the year, the Committee was involved
in the appointment of a number of internal candidates to senior
management roles, ensuring that a fair and robust process was in
place to select the best candidate for the role. The Committee was
pleased to see that our talent review process supports the
development and progression of internal candidates.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Nomination Committee Report
continued
Directors induction
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. This is designed
through discussion with the Chair and the General Counsel and Company Secretary and considers existing expertise and any prospective
Board or Board Committee roles.
The general structure of induction involves the following:
Initial discussions
with Chair and
General Counsel
Receive and review
induction pack
Induction sessions
with NEDs and senior
executive team
Site visits
Continued training
and development
The extensive
induction has
developed my
understanding of the
business, our markets
and the exciting
opportunities ahead.
Kelly Kuhn
Non-Executive Director
Getting to know
so many of our
colleagues on
the ground has
provided me
with invaluable
insight into
SSP’s culture.
Apurvi Sheth,
Non-Executive Director
Kelly Kuhn and Apurvi Sheth induction programme
Kelly Kuhn and Apurvi Sheth, who joined the Board on 1 January 2022
as Non-Executive Directors, received comprehensive inductions as
set out below.
As well as receiving a suite of relevant documents including previous
Board and Committee minutes, the induction included formal
briefings with internal leadership and external advisors and site
visits. These visits aim to provide an understanding of the business
in action and an opportunity for the Directors to meet with a wider
cross section of colleagues.
Topics covered
Group’s purpose, values
and strategy
Financial position, risk
management and internal
controls and financing
arrangements
Stakeholders and
sustainability
Governance, legal
and regulatory
Sessions with
Chair
Deputy Group CEO and CFO
Divisional CEOs
Chief People Officer
Chief Digital and Technology Officer
Group Deputy CEO and CFO
Internal audit partner
External auditor
Corporate Affairs Director
Chief People Officer
Group Company Secretary
and General Counsel
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SSP Group plc Annual Report and Accounts 2022
Both Kelly and Apurvi have visited the business in London, Paris and
New York as part of the Board’s schedule where the whole Board had
the opportunity to meet with local colleagues, clients and joint
venture partners (New York). Kelly also visited other sites in London
as well as Sweden and Denmark, whilst Apurvi spent additional time
in India, Singapore and the UK businesses.
In Sweden, Kelly met with the Swedish senior management and
our CEO – Continental Europe where she learnt more on their new
upcoming concepts, and future constructions, as well as having a tour
of Arlanda Airport and Stockholm Central Station to see our current
units and meet colleagues. Kelly has also met with local colleagues
and leadership teams with visits to rail and air businesses in Denmark
and was shown further sites in London by the CEO – UK & Ireland.
Apurvi spent three days in Mumbai, where she visited the airport
and spent time with colleagues in our units and met with local
management. In Singapore, Apurvi has met with both the CEO – Asia
Pacific and CEO – India and EEME, to develop her understanding of
the key challenges and opportunities facing SSP in these regions.
Apurvi has also visited sites in Singapore and in London.
Throughout these visits, Kelly and Apurvi have taken the opportunity
to talk to unit-based staff about their experience of working at SSP
to further develop their understanding of SSP’s culture and values.
”Since joining, my priority has been to better
understand the business by talking directly to
colleagues, clients and our partners across our
global markets. The teams I’ve met have been
extremely professional and passionate.”
Patrick Coveney
Group CEO
CEO – Getting to know the business
Since joining the Board on 31 March 2022, Patrick has travelled
extensively visiting countries across three continents. This intensive
induction programme has allowed Patrick to quickly develop a
detailed understanding of the business and has provided invaluable
insights into the challenges and opportunities arising in the different
markets in which we operate. During these visits, Patrick has had the
opportunity to meet with a cross-section of both office based and
operational staff through site visits, local town halls and, more
informally, joining staff socials, allowing greater understanding of
the organisational culture. As part of these visits, Patrick met with
regional senior leadership teams as well as clients and joint venture
partners. Patrick has also taken the opportunity to visit some units as
part of general travel plans, as all our Directors are encouraged to do.
C
o
r
p
o
r
a
t
e
g
o
v
e
r
n
a
n
c
e
US
Since joining SSP, Patrick has had several trips to the US, visiting
LaGuardia, JFK and Chicago Midway Airports. Through these visits
Patrick has met with broad range of our colleagues and leadership
teams in the US, as well as brand partners and clients. Patrick has
also had the opportunity to sample our local offerings including
at a tasting event in New York and a showcase in Chicago Midway.
Asia Pacific
Over the summer, Patrick visited some of our units in Thailand,
Malaysia and Singapore, and while in Bangkok, Patrick had the
opportunity to help the team make noodles and serve the customers.
Whilst in the region, Patrick attended the APAC town hall attended
by 150 colleagues across the region and visited the newly opened
Malaysian head office, gaining great insight into the challenges and
opportunities in both well established businesses (Thailand) and new
ones (Malaysia).
Europe
Patrick has visited units across the UK & Ireland, the Nordics and
Continental Europe. This included a visit to Frankfurt Airport and
Frankfurt railway station units, talking to team members and
sampling the customer offering. Onsite, Patrick received a
demonstration of a pilot digital point of sale system, ahead of its
wider roll-out. Patrick also met with the local leadership team to
better understand the region’s opportunities and challenges and
joined the DACH team’s summer party, a great opportunity to hear
views of a range of colleagues.
EEME
Patrick has visited three of our EEME countries with trips to our
businesses in Cyprus, Greece and UAE. This gave him a chance to see
some of our joint venture businesses in operation and to meet local
clients as well as many more colleagues, both back and front of house.
Patrick even got to try his hand at making Levito Italian Pizza with
guidance from their chef and kitchen team.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report
Nomination Committee Report
continued
Diversity and Inclusion
The Nomination Committee is responsible for developing and
implementing our approach to diversity across the Group.
One of the Group’s core values is being a great place to work,
where everyone can fulfil their potential. Our people are central
to our success. Having a diverse, inclusive culture where everyone
is welcomed and a workforce that reflects both the communities
we operate in and the stakeholders we serve, is a fundamental part
of our strategy for delivering long-term sustainable success.
During the year, the Board and Nomination Committee continued
to drive this diversity agenda across the Group and are proud of
the progress made. In promoting a diverse and inclusive culture, the
Board is not only striving for gender parity but also driving initiatives
to support colleagues from ethnic minorities, colleagues who are
disabled or neurodiverse and colleagues from the Lesbian, Gay,
Bisexual, Transgender and Queer (LGBT+) community.
The Board also recognises the importance of a diverse pipeline in
maintaining progress against our goals. During the year, the Company
partnered with WiHTL (Welcoming Everyone in Hospitality, Travel
and Leisure), a collaborative, multi-stakeholder group devoted to
increasing diversity and inclusion across the sector. Through this
partnership, we gain access to cross-industry development
programmes for women and ethnic minorities, as well as an
opportunity to collaborate with other like-minded companies
in the sector.
The Board has also supported the launch of new initiatives within the
Group, such as the creation of the Group Inclusion Council, Women’s
network, Women in Tech network, Menopause network and LGBT+
network, each of which have an Executive Sponsor, to drive further
progress. In addition to these Group-wide initiatives, local initiatives
provide further opportunity to embed diversity and inclusion in the
workplace in a way that reflects the diversity of the markets we
operate in. In Australia, we have partnered with the Western Australia
Hospitality Disability Network and are proactively offering
placements to neurodiverse colleagues.
The Board are alert to the recommendations of the FTSE Women
Leaders Review to achieve a minimum of 40% women’s representation
in leadership teams by the end of 2025 (being the Group Executive
Committee and its direct reports, including the Group CEO and
Deputy Group CEO and CFO but excluding administrative and
support staff). We have exceeded our current target of 33% by 2025
and, in the year ahead, the Board are committed to undertaking a
review of our progress to date and to consider what further work
is needed to enable us to achieve this target of 40% women
representation in leadership by the end of 2025.
During the year the Group Executive Committee received training
from external experts to ensure they remain up to date on ongoing
developments in diversity. The Board received similar training
following the year end and also approved an updated global Diversity,
Equity & Inclusion Policy in November 2022, to further build upon the
progress made during the year.
For more information on actions taken during the year in delivery against
our Group Diversity, Equity and Inclusion Policy, see page 22-23 of the
Strategic Report and pages 46-48 of our Sustainability Report.
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SSP Group plc Annual Report and Accounts 2022
Diversity: Our progress
Women on the Board
(including the Chair)
50%
2021: 29% (2/7)
4/8
Women on the Group Executive Committee1
3/14
21%
2021: 23% (3/13)
Women on the GEC and Direct Reports2
30/84
36%
2021: 31% (22/70)
Women across all colleagues
52%
2021: 53% (12,064/22,981)
18,153/
34,794
Board members from an ethnic minority
1/8
12.5%
2021: 0% (0/7)
Leaders from an ethnic minority on the GEC1
1/14
7.1%
2021: 7.7% (1/13)
1
2
Group Executive Committee (including the Group CEO and the Deputy Group CEO and CFO).
The number of women and persons from an ethnic minority has remained the same since last
year, the change in percentage comes from an additional male appointment to the Group
Executive Committee.
Group Executive Committee (including the Group CEO and the CFO) and their direct reports
(but excluding administrative and support staff).
All data as at 31 October 2022 as per our reporting obligation under the FTSE Women Leaders
Review.
For gender diversity details as required by section 414C(8)(c) of the Companies Act see page 147.
Board Diversity Policy
The Group’s Board Diversity policy seeks to promote a culture of
diversity and inclusion and sets the measurable objectives by which
the Board monitors progress against its diversity goals. During the
year, the Board reviewed its policy and recommended a number of
updates to the Policy in line with the latest recommendations of the
FTSE Women Leaders Review (previously the Hampton-Alexander
Review), as outlined below.
In the year ahead, the Board intends to further develop its Board
Diversity Policy to ensure due consideration is given to diversity in
its broadest sense, including to sexuality, neurodiversity and social
backgrounds, as well as ensuring the application of the policy to each
Board Committee.
Performance against our policy objectives is set out below.
Policy Objective (during the year)
Progress
The Board will ensure that it is
made up of an appropriate mix of
skills, experience and knowledge
required to effectively oversee
and support the management
of the Group.
Maintaining no less than 33%
female representation on the
Board.
Maintaining no less than one
Director from a minority ethnic
background.
The Board will support and
monitor the Group’s plans and
activities to review the diversity
of its senior management and its
pipeline and to explore the ways in
which the overall diversity balance
in the Group Executive Committee
and senior leadership positions
can be developed.
Policy Objective update from 5 October 2022
Maintaining no less than
40% female representation
on the Board.
Maintaining no less than one
female in the role of either Chair,
Senior Independent Director,
Chief Executive or Chief Financial
Officer
As set out on pages 106-107,
the Board and the Nomination
Committee recently carried out
a detailed skills review to assess
experience on the Board against
our strategy. This review will be
refreshed next year as part of the
regular cycle of agenda items.
As at year end the Board included
50% female Directors.
As at year end, the Board included
one Director who identifies as
‘Asian/Asian British’.
The Nomination Committee
receives updates from the Chief
People Officer and Head of
Inclusion on the wider group
Diversity, Equity and Inclusion
Policy and the discussion on this
covers upcoming plans and
activities to review diversity
among senior management and
how it can be improved. For
example, during the year a
mentoring programme was run for
high potential female colleagues
and a Women in Tech network
was established.
Progress
As at year end the Board included
50% female Directors.
As at year end the Board included
a woman in the role of Senior
Independent Director
For more details on our Board Diversity Policy, see our Group website at
www.foodtravelexperts.com
New Listing Rules and Progress
Ahead of the proposed changes to the Listing Rules regarding inclusion
and diversity reporting (LR 9.8.6R and LR 14.3), we are pleased to
report that we have met the proposed new requirements of:
– at least 40% of the Board being female (50%)
– at least one senior Board position is held by a woman (SID)
– at least one member of the Board is from a non-white ethnic
minority background (One Director).
Board Gender Representation as at 31 October 2022
Number of
Board
members
4
4
% of the
Board
50%
50%
Number of
senior
positions1 on
the Board
Number in
Executive
Management2
Percentage in
executive
management
3
1
11
3
79%
21%
Men
Women
Board Ethnicity Representation as at 31 October 2022:
Number of
Board
members
% of the
Board
Number of
senior
positions on
the Board
Number in
Executive
Management*
Percentage in
Executive
Management
White
British or
other
White
(including
minority
white
groups)
Asian/
Asian
British
7
1
87.5%
12.5%
4
0
13
93%
1
7%
1
2
Senior positions refers to the roles of Chair, CEO, CFO and Senior Independent Director.
Executive Management refers to the Group Executive Committee, including the Group CEO
and Deputy Group CEO and CFO.
For the purposes of making the disclosures set out above, data was
collected through self-reported submissions from the Board and
Group Executive Committee.
Data is as at 31 October 2022 to align with the submission of data
to the FTSE Women Leaders Review.
There have been no changes to the Board gender and ethnicity
representation between the reference date and the date of
this Report.
“Our people are central to our success and having
a diverse, inclusive culture where everyone is
welcomed and a workforce that reflects both the
communities we operate in and the stakeholders
we serve, is a fundamental part of our strategy
for delivering long-term sustainable success.”
Mike Clasper
Chair
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Nomination Committee Report
continued
Board evaluation
The Chair is responsible, with assistance from the Nomination
Committee, for ensuring that the Company has an effective Board
with an appropriate combination of skills, experience and knowledge.
as having sufficient time to meet their commitments to the Company.
The Board Evaluation process also allows the Chair to consider the
composition and diversity of the Board and its Committees.
Each year, we undertake a formal, rigorous review of the Board and
its Committees, as well as of the Chair and the individual Directors,
to ensure that they continue to be effective and that each of the
Directors demonstrates commitment to their respective roles as well
The 2022 Board evaluation was internally facilitated, with the
2021 review having been externally facilitated, in accordance with
the Code. For additional rigour in the process, Independent Audit
supported us on designing questionnaires and analysing the results.
The general structure of the Board evaluation process involves the following:
FY21
Year 1 – External
FY22
Year 2 –Internal
FY23
Year 3 – Internal
2022 Board Evaluation Process
1. Questionnaires were developed
taking into consideration the Code
and associated guidance and other
best practice recommendations.
The questionnaires sought to identify
the strengths, weaknesses and
challenges facing both the Board and
its Committees, as well as building upon
the findings of the 2021 evaluation.
2. The questionnaires were issued to
Board members as well as other regular
attendees of the Board and Committee
meetings, including senior leaders and
external advisors.
3. Responses were collated and draft
reports of the findings and proposed
recommendations were circulated to
the Chair, Committee Chairs and Senior
Independent Director as relevant
for review.
4. The final reports on the Board,
Committee and Chair’s effectiveness
were considered and necessary
actions were agreed.
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SSP Group plc Annual Report and Accounts 2022
Individual Directors
The performance and contribution of individual Directors was
assessed by the Chair, with the support of the Senior Independent
Director, through individual meetings with each Director, supported
by an assessment of the Directors’ skills, their time commitment and
independence. The Chair was satisfied that the Directors and the
Board as a whole continues to contribute to the successful delivery
of strategy.
Review of Committee’s performance
The evaluation found that all Board committees are functioning well:
Audit Committee – The Audit Committee was found to be functioning
effectively with its focus, the high quality of discussion and debate,
and good challenge facilitated by the right mix of skills and
personalities being key strengths. The Committee agreed to continue
its focus on enhancing risk management reporting to the Board.
Review of Chair’s performance
The performance of the Chair was evaluated by Carolyn Bradley
as Senior Independent Director who chaired a meeting of the
Non-Executive Directors without the Chair present to gain feedback,
in addition to feedback from other regular attendees of the Board
including members of the executive committee and external
advisors. The review found there was a strong appreciation for
the high quality of chairing of Board meetings by Mike Clasper.
Remuneration Committee – The review of the Remuneration
Committee found quality of chairing, debate and the Committee’s
consideration of the executive remuneration strategy were all
regarded highly.
Nomination Committee – The review found that the Nomination
committee was functioning well with quality discussion and debate.
It was agreed that it had managed the CEO transition very well. In the
coming year, the Committee has agreed to focus is on enhancing their
oversight of how the Board’s diversity and inclusion goals are
embedded into the organisation through DE&I data.
Outcomes of 2022 Evaluation
The review found that Board has a good culture of trust and openness, with confidence in executive management. The Board received high
quality information, and the quality of Board papers had continued to improve over the past years.
Priorities
Focusing on the right areas
Recommended actions
– Allocate more time and resource to understanding the big trends, particularly changing client and customer needs,
market shifts and how technology is driving the strategy.
Oversight of Culture
– Continue to evolve ways of monitoring the culture and behaviours throughout the organisation.
– Continue to connect with the regional CEOs and the wider senior management team regularly.
Additional aspects of Board
effectiveness
Progress on 2021 Evaluation
Priorities
Focusing on the right areas
– Continue focus on succession planning despite the relatively short tenure of the Board to avoid the Board losing
independence at the same time.
Our progress
– The Board identified key strategic themes such as sustainability, and held deep dive sessions on these topics
throughout the year. In addition, regional CEOs and other senior leaders have been invited to attend the Board
when appropriate.
Managing the time
– Board and committee meetings in the year were scheduled over several days to allow further to time for
discussion, as well as resuming in-person meetings this year and Board dinners to allow informal discussions.
Getting to know the people, the
culture and the business
– Three of the meetings in the annual schedule were held at various site, allowing Non-Executive Directors to meet
clients and colleagues, to deepen their understanding of SSP’s culture, customers, brands, and business model.
Establishing grounded trust
– During the year, the Audit committee reviewed its internal audit arrangements. More information can be found
on pages 118-119.
– Private sessions of the Non-Executive Directors and auditors were routinely scheduled through the year.
Additional aspects of Board
effectiveness
– Committee memberships reviewed, with Tim Lodge succeeding as Chair of Audit Committee following the 2022
AGM, and Kelly Kuhn and Apurvi Sheth joining the Audit Committee and Remuneration Committee respectively
from 1 January 2022.
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SSP Group plc Annual Report and Accounts 2022
113
OverviewCorporate governanceFinancial statementsStrategic report
Audit Committee Report
Dear Shareholder
I am pleased to present the report of the Audit Committee
(the ‘Committee’) for the year ended 30 September 2022.
During the year, the Committee has continued to play a key role in
assisting the Board in discharging its oversight responsibility. 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 fraud and the facilitation of tax evasion.
During the last twelve months, our business has recovered strongly,
and this has meant the risk associated with Covid-19 has declined
compared with recent years. It has, however, been overtaken by
the significant risks posed by the well documented inflationary
environment and its concomitant impact on wages, product costs,
capital expenditure and disposable incomes. Further details of these
risks and their mitigating controls are set out on pages 58-67 of this
Annual Report.
As the effects of Covid-19 have subsided, the Committee has worked
with the Board and management to re-establish normal financial and
operational controls and governance processes. These controls have
been kept under regular review by our Risk Committee, our Internal
Audit function and by the Committee. Our finance, compliance and
business controls teams across the Group have had to continue to
adapt to the post Covid-19 working environment of hybrid working,
ensuring that the Group’s compliance and business controls
environment was maintained.
In addition, the Committee reviewed the BEIS consultation on
“Restoring trust in audit and corporate governance” and subsequent
proposals and the state of readiness across the SSP Group to
address these.
As the Group has generally been recovering from Covid-19 there
has been no specific groupwide impairment trigger in respect of
the financial year ending 30 September 2022. However, in certain
jurisdictions decisions have been made to exit underperforming units
which has resulted in impairments. Together with the recoverability
of goodwill, the Committee reviewed the exercise performed by
management to determine the recoverability of these assets for
all material cash-generating units (CGUs) and was satisfied that the
judgments taken were appropriate. 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.
I would like to thank Ian Dyson for his astute contributions to,
and leadership of, the Audit Committee during the last 8 years,
in particular his counsel during Covid-19. I would also like to add my
welcome to Kelly Kuhn, who joined the committee with effect from
1 January 2022. For details of Kelly’s background and experience,
please see page 89.
Tim Lodge
Chair, Audit Committee
“I would like to thank Ian Dyson for the way he
chaired the Audit Committee over the last few
years particularly during Covid-19. In my first year
as Chair of the committee we have continued to
provide oversight and challenge to both executive
management and the internal and external
auditors. We have paid particular attention to the
key judgements management have made in the
preparation of the financial statements and have
also reviewed and challenged the integrity of the
Group’s internal control and risk management
systems in the context of a business reopening
rapidly after its Covid-driven hibernation.”
Meeting attendance
Director
Ian Dyson2
Tim Lodge3
Carolyn Bradley
Kelly Kuhn
Date appointed as member
4 April 2014
1 October 2020
1 October 2018
1 January 2022
Number of
meetings
attended
1/1
Number of
additional
meetings held
–
4/4
4/4
3/3
–
–
–
1 The number of meetings a member was eligible to attend.
2 Stepped down as Chair and as a member of the Committee at the conclusion of the 2022 AGM.
3 Appointed as Chair of the Committee at the conclusion of the 2022 AGM.
The Audit Committee terms of reference can be found at
www.foodtravelexperts.com
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SSP Group plc Annual Report and Accounts 2022
– 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;
– selected the new external audit partner Lourens de Villiers
to succeed Nicholas Frost;
– 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 Alternative Performance Measures
(APMs) and the continued reference to pre-IFRS 16 numbers;
– 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;
– 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); and
– the Committee reviewed the BEIS consultation on “Restoring trust
in audit and corporate governance” and subsequent proposals and
the state of readiness across the SSP Group to address these.
In addition to the above, the Committee reviewed the following
matters during the year:
– assessments of impairment and reversals of impairment (where
relevant) of goodwill, intangible assets and assets held within
cash-generating units;
– updates on tax matters, including the Group’s tax strategy;
– appropriateness of statements on going concern, liquidity and
viability, reflecting the impact of the recovery of the business
from Covid-19;
– 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.
In my capacity as Audit Committee Chair, I visited the US business
and held meetings with key commercial and financial management.
As part of Kelly’s induction process to the Board and Audit Committee
she participated in a number of briefing sessions with Executive
management, the external auditors and internal auditors. In addition
she visited the Copenhagen, Stockholm and UK teams to enhance her
understanding of the business. A fuller description of the operation
of the Committee during the year is set out in this report. I will be
available at the 2023 Annual General Meeting and welcome the
opportunity to answer any questions from shareholders about
the work of the Committee.
Composition and meetings
The Committee held four meetings during the year and as at year
end comprises myself and two other independent Non-Executive
Directors, namely Carolyn Bradley and Kelly Kuhn. Attendance at
these meetings is shown on page 114. As Chair, I have recent and
relevant financial experience through my past roles as a Chief
Financial Officer of publicly quoted and large private companies.
The expertise and experience of the members of the Committee
is summarised on pages 88-89. The General Counsel and Company
Secretary, Helen Byrne, acts as Secretary to the Committee.
At the Committee’s invitation, the Chair of the Board, non-member
Non-Executive Directors, the Chief Executive Officer, the Deputy
CEO and CFO 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. Between
meetings I keep in touch with the Chair of the Board, the Group Chief
Executive Officer, the Deputy Group CEO and CFO and the General
Counsel and 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 Deputy CEO and
CFO. I attended the Risk Committee in September 2022 to become
more familiar with its workings.
The Audit Committee’s performance evaluation was undertaken as
part of the wider Board Evaluation process set out on pages 112-113.
The evaluation concluded that the Committee was effective in fulfilling
its responsibilities. It highlighted Members’ interest in reviewing
Internal Audit arrangements and undertaking periodic reviews to
make sure that there is appropriate assurance over all types of risks
across the business.
The terms of reference of the Committee can be found at
www.foodtravelexperts.com.
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 2022, the risks relating to availability of labour and wage
inflation, and supply chain disruption and product cost inflation
and the risk of a global recession caused by these inflationary risks
continued to increase and now all represent the highest risks to the
business. The Covid-19 risk has declined, as is now more limited to
the emergence of a new variant which could cause further local and
global lockdowns. Compliance with legislation (for example, GDPR,
food safety, the Criminal Finances Act, the Task Force for Climate
Change Disclosures, the Modern Slavery Act and the Bribery Act)
all continue to be medium level risks for the Group.
– 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;
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report 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
Goodwill and
intangible
assets
Cash-
generating
units
impairment
assessment
Taxation
Background
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.
No impairments of goodwill and intangible assets
were recognised in FY22.
Cash-generating units (CGUs) are required to be
tested for impairment annually if there is a trigger
for impairment. Covid-19 continued to be a specific
trigger for impairment in the year. 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.
A group wide impairment trigger has not been
recognised in FY22 as the Group has generally been
recovering from Covid-19. Specific impairment or
reversal of impairment triggers have been recognised in
certain jurisdictions, either where Covid-19 restrictions
remain in place or alternatively where the recovery from
Covid-19 has been more rapid than expected.
Total impairments recognised related to fixed assets
and ROU assets are £13.2m and £9.4m respectively,
which primarily relates to units which the group has
made the decision to exit. Total impairment reversals
relating to fixed assets and ROU assets of £1.4 million
and £2.9 million have been recognised.
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.
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SSP Group plc Annual Report and Accounts 2022
Committee’s activities and conclusions
The Committee reviewed the goodwill impairment assessment prepared
by management and challenged the key assumptions, including the
ongoing recovery of the business from Covid-19 on the forecasted sales
and EBITDA and the appropriateness of discount rates used.
The forecasts used by the management continue to be appropriately
conservative, reflecting the Group’s best estimate of the recovery in
passenger numbers in its key markets over the medium term. The
discount rates have increased compared to the prior year, which is
primarily a result of the underlying risk-free rates increasing.
The Committee particularly challenged management and auditors
regarding the forecasts for countries still most affected by Covid-19 but
concluded the Board approved forecasts supported the goodwill balances
in those countries.
The Committee challenged key judgements made by management.
The discount rates have increased compared to the prior year, which
is generally a result of the underlying risk free rates increasing.
We reviewed the methodology and checked to see if the rates were in a
similar range with a comparator group whilst adjusting for any Company
specific factors. The updated discount rates were deemed 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.
The Committee challenged both management and the auditors regarding
impairment reversals as the Covid-19 restrictions have been lifted and
performance has improved faster than expected in some locations.
The Committee was satisfied that there were no material impairment
reversals as the future recovery remains in line with management’s previous
forecasts and the relatively short term nature of the groups contracts
automatically limits the potential magnitude of impairment reversals.
Further details on impairments have been set out in note 11.
The Committee reviewed the Group’s tax strategy and received reports
and presentations from the Group 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.
Area
Going concern
and viability
statement
Background
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.
In making the going concern assessment, the
Directors have considered forecast cash flows and
the liquidity available over the going concern period.
In doing so they assessed a number of scenarios,
including a base case scenario and a severe but
plausible downside scenario.
With some uncertainty surrounding the economic
and geo-political environment over the next twelve
months, as well as the ongoing impact from Covid-19,
a downside scenario has also been modelled, applying
severe but plausible assumptions to the base case.
This downside scenario reflects a very pessimistic
view of the travel markets for the remainder of the
current financial year, assuming sales that are around
10% lower compared to 2019 levels than in the base
case scenario.
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 pages 76-79). These measures are
not defined nor specified under IFRS and therefore
are not intended to be a substitute for the same.
Furthermore, management have presented
‘pre-IFRS 16’ numbers and commentary together with
the statutory numbers in the Financial Review and
other sections. This is because the pre-IFRS 16 basis
is consistent with the financial information used to
inform business decisions and investment appraisals.
In management’s view presenting the information
on a pre-IFRS 16 basis provides useful and necessary
additional information to enhance the reader’s
understanding of the Group’s results.
Alternative
performance
measures
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.
Committee’s activities and conclusions
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
access to financing and the ability to meet its existing financial covenants.
We noted that in both the base case and the downside case the Group
would continue to have sufficient liquidity headroom based on the
forecast cash and committed available facilities. Furthermore, in both
its base case and its severe but plausible downside scenarios, the Group
would have headroom against all of the applicable covenant tests at all
testing dates during the period of assessment.
After careful review, the Committee was satisfied and recommended to
the Board that the Directors should continue to adopt the going concern
basis of preparation, and that based on the current funding facilities
available, the Directors could have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they
fall due for a period of at least 12 months from the date of approval of the
financial statements.
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 ‘Pre-IFRS 16’ disclosures added in the
current year and concluded that these were reasonable to include in the
Annual Report and Accounts for the year, noting that the Group continues
to receive feedback from users of the financial statements that this
information was useful and that similar companies continue to provide
equivalent disclosures.
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.
SSP Group plc Annual Report and Accounts 2022
117
OverviewCorporate governanceFinancial statementsStrategic report 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. A summary of the
Group’s risk management system is set out on pages 58-69.
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 58-69.
The Committee reviewed the effectiveness of the Group’s financial
and other internal control systems through the Core Financial
Controls assessment exercise, as well as though 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 page 112-113).
Internal audit
Deloitte LLP (‘Deloitte’) act as internal auditor to the Group, and
the partner responsible reports directly to the Audit Committee,
in addition to being a permanent attendee 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 Deputy Group CEO and CFO, 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 are prepared in accordance
with standards promoted by the Chartered Institute of Internal
Auditors. The Committee monitors the effectiveness of Internal
Audit plans in accordance with the Group’s ongoing requirements.
The Committee considered the output from the 2022 annual internal
audit programme of assurance work, reviewed management’s
responses to the matters raised and ensured that any action was
timely and commensurate with its level of risk, whether real or
perceived. The backlog of actions which grew during the Covid-19
hibernation is being cleared.
There were no significant weaknesses identified in the year that
would materially impact the Group as a whole, but a number of
recommendations were acted upon within the Group to strengthen
controls or develop action plans to mitigate risk. 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 2022, 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.
As set out in the last year’s report, the Board evaluation noted that
the outsourced internal audit arrangement with Deloitte was working,
but it was recommended that the Company consider a review of the
arrangements as well as a review of board reporting on operational
risk and controls. Following further consideration, it was felt that a
change of internal auditors while the business was still recovering
from Covid-19 might create unacceptable risk in itself; However the
internal audit arrangements will be reassessed during FY2023.
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. The Committee specifically asked KPMG to
examine the use of APMs and whether this remained appropriate.
118
SSP Group plc Annual Report and Accounts 2022
Auditor independence and non-audit services policy
The Committee reviews the formal policy governing the engagement
of the external auditors to provide non-audit services on an annual
basis. It sets out the circumstances in which the auditor maybe
engaged to undertake non-audit work for the Group. The Committee
also 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’s non-audit services policy remains in line with the latest
ethical guidance and there were no changes made in 2022.
Details of fees payable to the external auditor are set out in note 5
on page 177. In 2022, non-audit fees represented approximately 9%
of the audit fee. KPMG has provided services to certain Group
companies and the non-audit fees in 2022 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.
Tim Lodge
Chair, Audit Committee
5 December 2022
The Committee carried out an assessment of the external audit
process during the financial year, including KPMG’s role in that
process. The Committee also considered the robustness of the audit
process including, the level of challenge given to critical management
judgements. This took account of the Committee’s own discussions
with the external auditor on the work performed around areas of
higher audit risk. It also took account of discussions for the auditor’s
conclusions on those areas, and the depth of the auditor’s
understanding of the Group’s businesses. Specifically the Committee
challenged the auditors on whether they had done sufficient work on
the half year 2022 impairment tests and was satisfied with the work
done. 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.
KPMG was reappointed as external auditor following a tender
process for the Group’s external audit in 2015. The audit partner
for the year ended 30 September 2022 was Nicholas Frost, who has
been audit partner since year ended 30 September 2018 and 2022 is
therefore his last year before mandatory rotation. Lourens De Villiers
will replace Nicholas Frost, bringing significant listed company and
sector-specific auditing experience. Lourens is working closely with
Nicholas to enable a smooth handover of responsibilities.
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 complies with the provisions of the CMA
Order and that there are no contractual.
The proposed tender date is in the best interests of shareholders and
the Company as KPMG has a detailed knowledge of our business, an
understanding of our industry and continues to demonstrate that it
has the necessary expertise and capability to undertake the audit.
KPMG fees
The total fees paid to KPMG in the year ended 30 September 2022
were £2.4 million, of which:
Audit services
– £0.6 million – audit of these financial statements
– £1.6 million – audit of financial statements of subsidiaries
Non-audit services
– £0.1 million – audit related services
– £0.1 million – assurance work for turnover certificates within
the business
Further disclosure of the remuneration paid to KPMG can be found
in note 5 on page 177.
SSP Group plc Annual Report and Accounts 2022
119
OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
Carolyn Bradley
Chair, Remuneration Committee
“The Committee is proud of the achievements
of our leaders and colleagues as we accelerate
out of one of the most challenging periods in
our history. The business has had an exceptional
year and central to the recovery has been the
strength of our team.”
Meeting attendance
Director
Carolyn Bradley
Ian Dyson1
Apurvi Sheth2
Judy Vezmar
Date appointed as member
1 October 2018
4 April 2014
1 January 2022
1 August 2020
Ian Dyson resigned from the Board on 4 February 2022.
1
2 Apurvi Sheth joined the Board on 1 January 2022.
Number of
meetings
attended
6/6
Number of
additional
meetings held
1/1
3/3
3/3
6/6
0/1
0/0
1/1
The Remuneration Committee terms of reference can be found at
www.foodtravelexperts.com
120
SSP Group plc Annual Report and Accounts 2022
Statement by the Chair of the
Remuneration Committee
Introduction
On behalf of the Board and the Remuneration Committee, I am
pleased to present the Directors’ Remuneration Report for the year
ended 30 September 2022, which contains:
– the annual remuneration report, describing how the Directors’
Remuneration Policy has been applied this year and how the policy
will be implemented in the 2023 financial year.
– the Directors’ Remuneration Policy, which was approved by
shareholders at the 2022 AGM.
Exceptional performance and momentum in an important year
The business delivered a strong performance, during what was a very
challenging year, with the advent of the Omicron variant resulting in
a prolonged period of travel restrictions across certain parts of our
business, immediately followed by the outbreak of war in Ukraine,
as well as wide-ranging inflationary pressures.
The business responded rapidly to the recovery in passenger
demand, with disciplined management of unit re-openings, whilst at
the same time controlling the cost base tightly. On top of this, we have
actively mitigated high levels of cost inflation, carefully balancing
customer needs, resourcing pressures and profit protection. The
result has been a strong conversion of revenue to profit, well ahead
of the expectations at the start of the year. A close focus on cash
preservation has delivered free cash flow of approximately £52m,
despite investing c.£150m in capital expenditure during the year,
leaving the business in a very healthy position, with over £700m
of available liquidity and the Group returning to profitability.
The skill and judgement exercised by the leadership team, working
in partnership with our clients and brand partners, together with the
hard work and commitment of colleagues across the business, has
enabled the company to deliver an exceptional trading performance
during 2022.
As the Group recovered from the impact of Covid-19 on passenger
numbers, we delivered good results and exceeded the targets set
each quarter. Overall revenues in Q4 were 92% of 2019 levels, up
from 30% across the 2021 financial year and compared to a 2022
Budget of 80% of 2019 levels. Looking across our different markets,
by the fourth quarter, revenues were 95% of 2019 levels in both
Continental Europe and North America. In the UK, sales also
increased significantly, although industrial action in the rail network
impacted revenues, which reached 86% of 2019 levels. In the Rest of
the World, revenues returned to 86% of 2019 levels due in part to the
continued restrictions on travel in China and Hong Kong.
This recovery in revenues, supported by ongoing management
of inflationary cost pressures and pricing initiatives, meant that
the Group returned to profitability, reporting EBITDA of £138m
(on a pre-IFRS 16 basis at constant currency).
Beyond the immediate financial performance, we continued to make
excellent progress on business development, extending and renewing
contracts as well as winning new tenders to augment our existing
strong pipeline. As a result, the Group is now planning to accelerate
the mobilisation of our pipeline from 2023 onwards. In FY22 we have
made considerable progress against our strategy and our unique
competitive strengths position us well for sustainable growth and
returns in future years.
Central to this recovery has been the strength of the management
team. Patrick Coveney joined as Group CEO in March 2022 and
Jonathan Davies, our Deputy Group CEO and CFO, provided excellent
support through that transition and showed exceptional leadership
in the first half of FY22. Patrick and Jonathan, together with the wider
executive team, drove the strong recovery of the business through
FY22. We were pleased to welcome colleagues back from furlough
as well as many new colleagues to SSP this year. As a Committee,
we would like to take this opportunity to thank our teams across
all regions for their dedication and support in the re-opening of our
business. The results achieved this year and presented in this report
would not be possible without their commitment to the success of SSP.
Wider workforce context
Although the Group has continued to recover during FY22, we are
acutely aware that high inflation means that this is a challenging time
for many of our colleagues across the world who are experiencing a
significant increase in the cost of living.
Our ability to re-open our business so successfully has been
predicated on our knowledge of local pay market conditions as well
as our ability to attract and retain colleagues in a highly competitive
talent marketplace. We have taken numerous additional actions
to support colleagues during this time, with a mix of global, regional
and local initiatives to attract and retain key talent and skills in
our business. In many locations the immediate focus has been
on ensuring our colleagues are aware of the support, counselling
and hardship assistance available via our wellbeing and Employee
Assistance Providers.
As needed, we have made specific interventions, such as providing
colleagues with free meals during their shifts and increasing
employee discounts. For example, in the UK and Sweden we
increased the employee discount and changed the plan in the UK so
that these discounts are available to all UK colleagues from the first
day of employment.
We have reviewed pay rates across many of our markets and
increased these where needed in response to cost of living pressures
and in line with local market benchmarks. Unlike other years this
review was ongoing given the volatility of the market and the
pressure on both us and our competitors to open both safely and
swiftly. We also ran a month-long global mental health awareness
campaign in May, equipping our managers with the tools and
resources to have conversations with and support their teams.
As part of our digital transformation, we are also focusing on
ensuring our HR Information System is improved to better enable
access to very practical benefits, such as discounts on shopping and
utilities, which is to be followed by a review of providers that offer
the discounts most sought by our colleague base.
Board changes
Patrick Coveney joined SSP as Group CEO in March. The key terms of
Patrick Coveney’s remuneration arrangements on joining SSP were
disclosed last year. This report includes full details of the awards
granted during FY22 to replace awards from his former employer
that he forfeited on joining SSP. These awards were granted on the
basis that they should mirror the value of the remaining original
awards, with performance conditions commensurate to the original
awards. In addition, vesting periods are no shorter than the original
awards. Patrick made a significant investment in SSP shares
following his appointment and his shareholding is 227% of salary.
Relocation support has also been provided.
Simon Smith left SSP on 24 December 2021. His post-employment
shareholding requirement was enforced through trading restriction
on his share account and subject to reporting obligations to the
Company. During the year the Committee confirmed that Simon
was compliant with the post-cessation shareholding requirement.
Remuneration for FY22
Annual Bonus
We hope that this will be the final year of the Committee determining
remuneration outcomes against the backdrop of the pandemic. As we
disclosed last year, the intention was to continue to evolve the
framework we used for determining bonus outcomes in FY21 given the
highly uncertain environment in which the Group continued to operate.
Similar to FY21, the bonus framework for Executive Directors was
80% based on an EBITDA target derived from revenues and targeted
profit conversion, with 20% based on strategic objectives. Following
positive feedback from shareholders to the approach applied in the
2021 financial year, the approach to measuring EBITDA performance
was retained, as setting a fixed target range at the start of the year
would have possibly resulted in targets being overly easy or overly
stretching depending on the path of sales recovery. However, this
approach was evolved for FY22 with the inclusion of two boundary
conditions:
– A minimum level of absolute EBITDA performance that must
be achieved before any bonus is paid for financial performance
– An additional absolute EBITDA performance gateway that must
be achieved before any above-target bonus can be earned.
In line with good governance practice, this framework was then
subject to a discretionary overlay to make sure that any bonus earned
is appropriate.
Performance in FY22 against this framework has been exceptional.
This year revenue growth was higher than anticipated at the start
of the year which, using the framework mechanism based on pre-set
profit conversion targets, translated into significantly higher EBITDA
targets for the determination of any bonus outcome. Both profit
conversion and EBITDA were close to the maximum targets set,
with EBITDA of £138m, just below the maximum target of £142m.
Full details of the target range are provided on page 126. As discussed
above, this performance represents real recovery from the impact
of the pandemic on the Group’s financial position, including effective
management control of costs and pricing in a high inflation
environment. The Committee also reviewed the strategic objectives
for each Executive Director and the progress made during the year.
The resultant bonus outcomes were 94% and 96% of maximum for
Patrick Coveney and Jonathan Davies respectively. Full details of
our annual bonus outcomes are provided on pages 126 and 127.
SSP Group plc Annual Report and Accounts 2022
121
OverviewCorporate governanceFinancial statementsStrategic report Shareholder consultation
During FY22 the Committee also considered the result of the 2022
AGM, and the 78% vote for the Directors’ Remuneration Report.
Prior to the publication of our 2021 Annual Report, we proactively
consulted with shareholders to discuss the Remuneration
Committee’s proposed approach to determining the bonus outcome
for the 2021 financial year. We engaged with twenty of our largest
shareholders, representing approximately 73% of our shareholder
base. The broad sentiment across those with whom we engaged was
that they were supportive of our approach to reward and bonuses
for the year on the basis of the performance achieved by the
management team in challenging conditions. Overall, the Committee
believes that it acted fairly and appropriately in the context of SSP’s
performance, and that the decisions taken last year were in the best
interests of shareholders and balanced the needs of all stakeholders.
Looking forward
This year has been one of significant recovery following the
pandemic, and major progress of our strategy for future growth.
The commitment and hard work of our colleagues has enabled us
to deliver strong trading performance, to win new business across
the world, and to invest in our people, our digital capabilities and
sustainability. After zero incentive outcomes for FY20, and
applying downward discretion for FY21, we are satisfied that the
remuneration outcomes for FY22 are appropriate in the context
of an exceptional year for the business.
The Committee remains committed to an open and transparent
dialogue with shareholders on executive remuneration at SSP.
I hope you will support us at the forthcoming AGM.
This Directors’ Remuneration Report is approved by the Board
on behalf of:
Carolyn Bradley
Chair, Remuneration Committee
5 December 2022
Directors’ Remuneration Report
continued
The Committee reviewed this outcome in the wider context of the
experience of the Group and its shareholders and wider stakeholders,
including the support being provided to colleagues across our
regions, as discussed above. No UK Government support related
to furlough was received in relation to the year. Overall, the bonus
outcomes were reflective of the exceptional financial and strategic
progress made during the year.
This continues the strong alignment between bonus outcomes and
our shareholders’ and stakeholders’ experience through the period of
the Covid-19 pandemic – zero incentive outcomes for FY20 alongside
pay reductions; applying significant downwards discretion for FY21
(and consulting widely with shareholders on appropriateness of a
modest FY21 bonus payout); and for FY22, in our path to recovery
appropriately rewarding exceptional performance.
2019 PSP awards
The EPS and TSR performance conditions for the November 2019
PSP awards, which were set prior to the pandemic, were not met over
the three-year period to 30 September 2022, and these awards will
therefore lapse in full.
Salary increases
The Committee normally reviews Executive Director salaries at the
same time as all other colleagues, with any increases effective from
1 June. The wider workforce increases for salaried staff was set at a
minimum of 3%, with colleagues paid on an hourly basis receiving, on
average, increases well above this. In FY22 no increase was applied to
Patrick Coveney due to his recent appointment as CEO. For Jonathan
Davies, Deputy Group CEO and CFO, the Committee agreed to award
an increase of 3% aligned to the minimum salary increase received by
the wider UK population.
Remuneration for FY23
Annual bonus and RSP
For the coming year, given that the uncertainty around the impact
of the pandemic has reduced, the Committee intends to revert to
setting a normal fixed absolute target range at the start of the year,
which will be disclosed in the 2023 Annual Report. Financial
performance will be based on EBITDA performance as this is aligned
to the Group strategy and our focus on profitability, while also
incentivising investment in growth. The remaining 20% of the award
will continue to be based on strategic objectives. After a detailed
review during the year, this structure will also be used on a consistent
basis across the Group leadership team.
In line with our approved Policy, Executive Directors will continue
to receive Restricted Share Plan awards of up to 100% of salary,
which are subject to the achievement of performance underpins
as provided on page 130.
Pensions update
During the year a comprehensive review of pension arrangements for
UK employees was completed. As we disclosed last year, the forward-
looking approach to pension for Executive Directors was to align with
the findings of this review. As a result of this review, a number of
operational improvements were agreed, including the approach
to employee communication and governance, although no structural
changes were made to the pensions offering to colleagues at this
time. Therefore, from 31 December 2022 Jonathan Davies’ pension
allowance will reduce from 21% to 3% of salary in line with the rate
for the majority of UK employees. In line with our Policy, Patrick
Coveney’s pension has been set at 3% of salary since his appointment
in March 2022.
122
SSP Group plc Annual Report and Accounts 2022
Remuneration at a glance
Remuneration outcomes for the year ended 30 September 2022
The table below provides a high level overview of what our Executive Directors earned in 2022.
Fixed pay (salary, pension and benefits)
Annual bonus (total of cash and deferred shares)
PSP vesting (2019 award)
Patrick Coveney1
£498k
£643k
n/a
Jonathan Davies
£652k
£720k
£0
1 The above table shows Patrick Coveney’s earnings from the date of his joining SSP on 31 March 2022 to the end of the financial year on 30 September 2022.
Annual revenue
(£m)
Units opened
3,000
2,500
2,000
1,500
1,000
500
3,000
2,500
2,000
1,500
1,000
500
0
2017
2018
2019
2020
2021
2022
0
2017
2018
2019
2020
2021
2022
Operating profit/(loss)
Equity exposure of our Executive Directors
250
125
0
-125
10%
0%
-10%
-20%
Patrick
Coveney
250%
227%
238%
465%
Jonathan
Davies
200%
730%
224%
954%
2022 Minimum Shareholding Requirement
Actual shareholding Interests in unvested/unexercised share awards
-300
2017
2018
2019
2020
2021
2022
-30%
Operating profit/(loss) Underlying operating profit/(loss) margin
% of base salary as at 30 September 2022
Overview of implementation of Policy in 2023
A summary of the proposed packages for current Executive Directors in the 2023 financial year in comparison to packages for the 2022
financial year is set out below.
Element of remuneration
Base salary
Pension
2023 financial year
2022 financial year
Patrick Coveney
£775,0001
Jonathan Davies
£515,0001
Patrick Coveney
(from date of appointment)
£775,000
Jonathan Davies
£500,000
3% of base salary
3% of base salary2
3% of base salary
21% of base salary
Annual bonus maximum
175% of base salary
150% of base salary
175% of base salary
150% of base salary
Annual bonus targets
RSP annual award
Profit and strategic
Profit and strategic
Profit and strategic
Profit and strategic
100% of base salary
100% of base salary
100% of base salary
100% of base salary
Shareholding requirement
250% of base salary
200% of base salary
250% of base salary
200% of base salary
1
As set out on page 125, Patrick Coveney’s base salary was not reviewed as part of the June 2022 salary review as this was shortly after his joining on 31 March 2022. Jonathan Davies received
a 3% salary increase, in line with the lower end of the salary increases of the wider UK population. The next salary review will take place for all colleagues in June 2023.
2 As set out on page 125, Jonathan Davies pension will be aligned to the rate received by the wider workforce effective 31 December 2022.
SSP Group plc Annual Report and Accounts 2022
123
OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
Corporate governance code provision 40 disclosure
When considering the implementation of the Remuneration Policy for 2023, 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 continue to have regular dialogue with our shareholders.
– We sought to explain our Remuneration Policy in a way that highlights its alignment to our strategic priorities as well as
good governance practices under the UK Corporate Governance Code and investor guidance (for details of our strategic
priorities see pages 18-31 of this report).
– We continue to engage with the workforce, as appropriate, to explain the pay outcomes for the Executive Directors
and their alignment with the broader Company pay outcomes. See page 52 for details.
Simplicity
– Remuneration arrangements for our executives and our wider workforce are simple in nature and well understood by both
participants and shareholders.
– Our restricted share plan, as approved by shareholders in 2021, is a simple model that aligns our senior management team
to the experience of our shareholders through our recovery period.
Risk
– The Committee considers that the structure of incentive for Executive Directors and senior management arrangements
does not encourage inappropriate risk-taking.
– Our annual bonus is based on a balance of strategic and financial metrics. Targets are set to ensure that maximum can only
be earned for delivering truly exceptional performance while not encouraging risk-taking.
– Our RSP has more modest award levels relative to the prior 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 RSP, as approved by shareholders in 2021, 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 bonus and RSP incentivises management to take the right actions for sustainable value
creation in the current environment.
– The Committee considers business and individual 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 RSP model, as approved by shareholders in 2021, encourages our executives to focus on making the right decisions,
in line with our recovery strategy, 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.
– In 2022 we have aligned Executive Director pensions with the wider workforce rate.
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SSP Group plc Annual Report and Accounts 2022
Annual report on remuneration
Single total figure of remuneration – Executive Directors
The following table provides a summary single total figure of remuneration for the 2021 and 2022 financial years for the Executive Directors.
All figures shown in £000
Executive Directors
Patrick Coveney3
Jonathan Davies
Simon Smith4
Salary and Fees1
2021
2022
Benefits
Pension
2022
2021
2022
2021
Annual Bonus
2022
2021
Long-term
Incentives2
2022
2021
Other
2022 2021
Total fixed
remuneration
2022
2021
Total variable
remuneration
Total
2022
2021
2022
2021
390
505
151
n/a
464
645
96
41
7
1,046 1,109
144
n/a
18
22
40
12
106
32
150
n/a
98
130
643
n/a
720 187
0
0
228 1,363 187
0
0
0
0
n/a
0
0
0
0 n/a
0
0
0
0
498
652
190
n/a
580
797
643
720
0
n/a 1,141
187 1,372
190
0
n/a
767
797
0
0 1,340 1,377 1,363
187 2,703 1,564
1 Salary and fees – this represents the base salary and fees paid in respect of the relevant financial year.
2
Long-term incentives 2021 and 2022 – no shares vested under the 2018 and 2019 LTIP awards, therefore there is no value attributable to share price appreciation over the performance period.
The Committee did not exercise any discretion for the Executive Directors with regards to the vesting of the 2018 or 2019 LTIP awards.
3 Patrick Coveney – amounts of pay shown for Patrick Coveney shows remuneration earned from his appointment to SSP as Group CEO on 31 March 2022.
4 Simon Smith – amounts of pay shown for Simon Smith shows remuneration earned to the end of his employment on 24 December 2021.
Additional disclosures in respect of the single figure table
Base salary
Executive Director base salaries in the 2022 financial year
Patrick Coveney1
Jonathan Davies2
From 1 June 2022
£775,000 per annum
£515,000 per annum
From 1 October 2021
n/a
£500,000 per annum
Change
n/a
3%
1 Patrick Coveney joined SSP on 31 March 2022, therefore has no salary in October 2021 for comparison.
2
Jonathan Davies was appointed Deputy CEO alongside his role of CFO on 1 September 2021. His salary was increased from £467,600 to £500,000 effective 1 October 2021 to reflect his expanded
role, as detailed in the 2021 Directors Remuneration Report.
The amount of remuneration received by Non-Executive Directors is set out on page 131.
Benefits
During the year, Patrick Coveney and Jonathan Davies received benefits totalling £96k and £41k respectively. These benefits included
participation in the UK SIP, private medical insurance (for the executive and their family), life assurance, car allowance, company fuel card
and home to work travel (including associated tax paid). In addition, a one-off reimbursement of costs incurred as a result of company
commitments was provided to Jonathan Davies. Patrick Coveney’s benefits for the first twelve months of his appointment include travel
and accommodation costs associated with his relocation.
Details of shares held by Executive Directors under the UK SIP are set out below:
Jonathan Davies
Simon Smith2
Total SIP shares held at
1 October 2021
5,033
3,748
Shares acquired
during financial year
615
148
Matching shares awarded
during financial year
308
74
Matching shares forfeited
during financial year
0
-702
Shares sold during
financial year
0
-3,268
Total SIP shares held at
September 2022
5,956
0
1 Simon Smith left SSP on 24 December 2021. The above table shows shares acquired and matching shares awarded to Simon under the UK SIP between October and December 2021 only.
Patrick Coveney joined SSP after the annual invitation to join UK SIP (Share Incentive Plan) and therefore has not been able to participate
to date. The annual invitation for all eligible colleagues takes place each December.
Pensions
The table below sets out the pension arrangements for our Executive Directors that were in force during the year.
Director
Patrick Coveney1
Jonathan Davies2
Pension type
Cash in lieu of pension
Cash in lieu of pension
Pension level (% base salary)
3%
21%
1 The Company pension allowance for Patrick Coveney is in line with the rate applicable to the wider workforce.
2 The pension allowance for Jonathan Davies will be in line with the rate applicable to the wider workforce affective 31 December 2022.
SSP Group plc Annual Report and Accounts 2022
125
OverviewCorporate governanceFinancial statementsStrategic report
Directors’ Remuneration Report
continued
Annual bonus
The bonus structure for Executive Directors for the year ended 30 September 2022 assessed underlying operating profit as the financial
target. Of the total bonus opportunity, 80% was determined by the financial target, with the remaining 20% opportunity determined by
achievement of key strategic objectives.
As was the case in the 2021 financial year, confidence in accurate forecasts for the year ahead continued to be extremely limited and a wide
range of possible scenarios existed. Against that backdrop, setting a fixed absolute performance target range for EBITDA remained
challenging without the target potentially being either overly easy or overly stretching depending on the path of the sales recovery. Following
positive feedback from shareholders to the approach applied in the 2021 financial year, we chose to continue with this approach as we were
keen to retain a financially based mechanism and targets which aligned management to our financial objectives for the year. The bonus
mechanism calibrated Group EBITDA based on optimising revenues and targeted profit conversion. The target profit conversion ratio applied
was 20%, with maximum achieved for profit conversion above 30%. The Committee considered these to be stretching given the very
challenging operating circumstances, particularly at low levels of sales, where the impact of fixed costs become increasingly hard to mitigate.
In addition, two boundary conditions were added to the construct which were a minimum EBITDA performance threshold before any bonus
award is made, and an additional EBITDA performance ‘gateway’ before an above target bonus can be earned.
The outcomes from this mechanism were then subject to a discretionary framework to ensure that the outcomes were fair and reasonable
given the wider context for the Company and its stakeholders, including passenger numbers (PAX) and revenue achieved. The Committee also
retained its overall discretion over pay outcomes. Based on the framework described above, Patrick Coveney and Jonathan Davies earned
bonuses as set out in the table below. Further details of financial and strategic performance are set out below.
Annual bonus payout in the 2022 financial year
Maximum bonus opportunity
Bonus outcome (% of maximum)
Actual bonus – received as cash (£)
Actual bonus – deferred into shares (£) 1
Patrick Coveney
175%
94%
£321,338
£321,338
Jonathan Davies
150%
96%
£482,400
£237,600
1
Deferral policy: Executive Directors will be required to defer a minimum of 33% of any bonus received into the Group’s shares, where they meet their minimum shareholding requirement, and 50%
where they do not. Patrick Coveney will receive 50% of his total bonus as cash and the remaining 50% will be deferred into the Group’s shares. Jonathan Davies will receive 67% of his total bonus as
cash and the remaining 33% will be deferred into the Group’s shares.
Our overall performance and recovery during the financial year was at the upper end of market expectations for 2022 which resulted in the
bonus mechanic setting significantly higher targets for the determination of any bonus outcome. This also meant that the boundary conditions
put in place to restrict bonus in the instance of slow recovery were not required to be utilised. Based on the agreed mechanism, the Group
EBITDA performance achieved in the 2022 financial year was close to the maximum target, as a result of the EBITDA conversion being ahead
of the target set.
As outlined in the Remuneration Committee Chair’s Statement, performance in FY22 against this framework has been exceptional and
represents real recovery from the impact of the pandemic on the Group’s financial position, driven by effective management control of costs
and pricing in a high inflation environment. Overall, the Committee believes this outcome reflects this outstanding level of performance
achieved by the Group and the management team during the 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.
Financial performance
The table below sets out a summary of performance against the financial targets. All figures shown below are based on constant currency.
EBITDA2
Targets set for the 2022 financial year (£m)1
2022 performance (£m)
Threshold
(30% of maximum)
95
Target/budget
(50% of maximum)
100
Maximum
(100% of maximum)
142
138
1 Target based on profit conversion ratios set at the start of the year and applied to actual revenues achieved from available passenger numbers at SSP sites for the 2022 financial year.
2
EBITDA shown on an underlying (pre-exceptional) pre-IFRS 16 basis at constant currency. The additional EBITDA boundary conditions were £18m at threshold and a £48m performance ‘gateway’
for any above target bonus.
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SSP Group plc Annual Report and Accounts 2022
Strategic objectives
A summary of our Executive Directors’ performance against strategic objectives and how they link to our overall Group Strategy, is shown
below. For further details on the output of delivering the strategic objectives see the Strategic Report from page 18.
Patrick Coveney – Group CEO
Objective
(20% maximum)
Onboard
Link to
Strategic Priorities
1, 2, 3 & 4
Targets (six months)
– Successfully complete formal
Performance assessment
– Extensive onboarding programme completed, including significant
onboarding programme,
exiting this period with full
Group CEO accountabilities
in place
immersion in the regional businesses and agendas, visiting teams and
leaders across nearly 20 markets.
– Extensive engagement with analysts, shareholders and institutional
investors and has taken over as lead of our proactive investor
engagement approach.
– Significant time taken to also engage with clients, brands and joint
venture partners (multi-market).
Lead
2 & 3
– Lead the smooth transition
– Strong relationship established with Deputy Group CEO and CFO,
of group control from interim
structure, during the first
3 months of employment.
Ensure momentum and traction
against key strategic
objectives is maintained
who has significantly supported the knowledge-building journey of the
operating model, current activity and scheduled plan. This has ensured
successful delivery of:
– The re-opening programme, in line with reducing post Covid-19
restrictions;
– Unlocking and supporting significant growth in new business wins
across all markets in H2
– Ensured there is a clear plan around our current debt facilities,
minimising interest rate exposure.
– Established strong relationships with the Executive Team and built
a greater sense of working as a unified operating team.
Plan
1, 2, 3 & 4
– Define future strategy
– Engaged extensively with internal and external partners to develop the
strategy that will form the core framework for SSP’s financial and future
growth plans.
– This includes confirmation of:
– financial operating model
– customer strategy
– team and culture
– digital/technology plans
– sustainability agenda, goals and ambition
Taking into account performance against strategic objectives set for the first six months of his appointment, Patrick Coveney achieved 18% of bonus
for this element.
Jonathan Davies – Deputy Group CEO and CFO
Objective
(20% maximum)
Recovery
Strategy
Link to
Strategic Priorities
1 & 3
Targets
– Manage re-opening
programme and operating
cost base through the
recovery cycle
Performance assessment
– Reopening programme managed very tightly, with percentage of units
trading closely aligned with PAX and sales recovery. Ended the year with
sales at c.90% versus 2019 with unit trading at a similar level
– Targeted and achieved for all trading units to contribute to EBITDA profit.
1 & 3
– Mobilise new business and
– Mobilisation of new business (unit numbers and capex) was ahead
Financing
Leadership
3
3
2
manage overall capex
programme
of budget.
– Full year capex of £150m managed closely in line with Budget and market
expectations.
– Build pipeline of new business
– Pipeline of secured new business increased significantly during the year.
Contract retention above historical levels.
– Refine current debt facilities
– Evaluation of financing options completed to secure lower cost/more
flexible debt facilities.
– Amend and extend completed in July.
– CEO support
– Successfully supported the business for the period prior to the new
CEO joining.
– CEO induction and handover completed with all key stakeholders
(internal and external) and with a high degree of effectiveness ensuring
smooth and exceptionally effective transition process.
Taking into account performance against strategic objectives, Jonathan Davies achieved 20% of bonus for this element. The Committee considered
that his performance was exceptional in terms of both his role driving the business prior to Patrick joining, financing objectives as well as his leadership
effectiveness through the CEO transition.
Strategic Priorities: (1) Leading customer proposition, (2) Skilled and engaged colleagues, (3) Long-term growth and returns (4) Sustainability.
SSP Group plc Annual Report and Accounts 2022
127
OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
Strategic alignment of remuneration
Each year, the remuneration offer for our Executive Directors is reviewed to ensure the continued alignment to our strategic priorities and to
ensure that it incentivises the right behaviours to deliver our purpose and values. This includes a review of the financial measure and strategic
priorities that contribute to the payment of any bonus as well as confirmation that the RSP performance underpins remain aligned to our
long-term strategy. The external market situation, our business recovery, and the experience of our shareholders are also considered in any
pay-related decisions. As a FTSE listed company, we are always considerate of pay-for-performance practice and ensure this is applied across
the breadth of our pay policy. Part of this review included consideration of how the Executive Directors’ reward linked to our Sustainability
goals as set out on page 28. Delivery of progress on the Sustainability Strategy is incentivised under the RSP awards made to Executive
Directors and sustainability priorities are taken into account when setting annual bonus targets.
We also review and are mindful of the importance of the alignment of remuneration between our Executive Directors and other SSP
colleagues. We have determined that the best approach to ensuring this alignment is to utilise the same bonus and long-term incentive plan
structure for all eligible colleagues and therefore outcomes are applied on the same basis for the same performance outcome.
The bonus and long-term incentive outcomes received by our Executive Directors are communicated to our colleagues alongside the
outcomes of the Group and business performance for their specific region. In recent years, due to the pandemic, we have opted for a more
conservative stance for our Executive Directors than we have for our colleagues below this level who we needed to ensure remained rewarded
and incentivised through what was a difficult period for our sector. However, we will continue to develop our approach to ensure continuous
open dialogue. For example, Judy Vezmar, our designated Non-Executive director for Workforce Engagement (ENED), currently hosts
meetings with a range of employees from across the business, to encourage open and honest two way conversations across a wide range of
topics. These meetings are entirely flexible and can be used as a forum for employees to raise any topic they choose. For financial year 2023
we will ensure attendees of these sessions are clear that this includes any views or questions regarding Executive Remuneration and how it
aligns with the wider pay policy. Feedback from these sessions is then relayed to the Board for discussion.
Scheme interests awarded during the financial year (audited)
The following awards were made to the Executive Directors in the 2022 financial year.
Patrick Coveney
Jonathan Davies
Jonathan Davies
Jonathan Davies3
Plan
RSP
RSP
RSP
DSBP
Type of award
Conditional Share Awards
Nil Cost Options
Nil Cost Options
Conditional Share Awards
Date of award
11/04/20221
09/12/2021
25/02/20222
25/02/2022
Number of
awards granted
340,061
194,955
12,040
69,505
Face value (£)
at date of grant
775,000
467,600
32,400
187,040
Face value
% of salary
100%
93.5%
6.5%
n/a
End of performance
underpin period
30 September 2024
30 September 2024
30 September 2024
30 September 2024
1 The 11 April 2022 award was made to Patrick Coveney following his appointment as Group CEO.
2
The 25 February 2022 award was made to Jonathan Davies to reflect the salary increase that aligned to the expansion of his responsibilities and duties following his appointment as Deputy Group
CEO and CFO, for which the RSP award level is 100% of salary.
Jonathan Davies received a bonus of £187,040 in the 2021 financial year. As detailed above, the bonus was wholly deferred into shares under the Deferred Share Bonus Plan (DSBP) and is subject
to a three-year holding period from date of award.
3
The closing price on the day before grant was used to calculate the number of RSP shares over which each award was granted (£2.3985 for
the 9 December 2021 award, £2.6910 for the 25 February 2022 award and £2.2790 for the 11 April 2022 award). RSP awards will vest subject
to the confirmation of the performance underpins which will be assessed at the time the Group publishes its full year financial results for the
2024 financial year and completion of a three-year vesting period from date of grant. The performance underpins are the same as those
summarised on page 130 for the December 2022 awards and link to our strategic priorities relating to long term growth and returns and
sustainability. Following vesting, awards will be subject to an additional two-year holding period.
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SSP Group plc Annual Report and Accounts 2022
Buy-out awards for Patrick Coveney
In April 2022, to facilitate his recruitment as Chief Executive Officer, Patrick Coveney was granted share awards to replace deferred bonus
and performance-based share awards granted to him by his former employer, Greencore, which he forfeited on joining SSP. Prior to Patrick
joining it was agreed that his outstanding FY20 PSP awards would be very unlikely to vest and therefore no buy-out award would be granted
in respect of this award.
These buy-out awards were granted in accordance with our Directors’ Remuneration Policy. All awards were granted under the RSP, with the
performance conditions for awards replacing PSP awards mirroring those of the forfeited awards. The buy-out awards are subject to vesting
and holding periods so any shares that vest will be released no sooner than under the forfeited awards, with the vesting period for deferred
bonus award having been extended by five months to April 2023 and 2025. The number of shares for the awards were set based on the
average mid-market closing price of Greencore and SSP shares over the period of three dealing days immediately prior to the announcement
of his appointment on 25 November 2021. Details are provided below.
Patrick Coveney
Share award replaced
Deferred FY19 bonus
Deferred FY21 bonus
FY21 PSP award – tranche 2
FY21 PSP award – tranche 3
Date of award
11/04/2022
11/04/2022
11/04/2022
11/04/2022
Number of awards
granted
41,469
106,933
133,355
320,053
Face value (£) at
date of grant
£104,192
£268,671
£335,056
£804,134
Vesting Date
11/04/2023
11/04/2025
08/01/2023
08/01/2024
End of holding
period
n/a
n/a
08/01/2026
08/01/2026
The forfeited 8 January 2021 PSP award was subject to stretching absolute TSR growth targets, and a relative TSR underpin. The award was
made up of three tranches to be assessed annually after one, two and three years. The buy-out awards have been structured to ensure that the
performance conditions are equally stretching as those for the forfeited awards:
– The one-year performance period for the first tranche was completed prior to the grant of the buy-out awards and the absolute TSR growth
hurdle was not met, so no buy-out award was granted.
– For the two year and three-year tranches, the buy-out award was granted using the same stretching absolute TSR growth hurdles,
but applied to SSP from the original January 2021 grant date. Therefore, in accordance with the vesting schedule of the forfeited awards,
tranche 2 of the award will vest if SSP achieve absolute TSR performance of 91.2% from 8 January 2021 to 7 January 2023, and tranche 3
of the award will vest if SSP achieve absolute TSR performance of 154% from 8 January 2021 to 7 January 2024. TSR performance will
be measured on a one-month average basis.
– These awards were also subject to a relative TSR underpin, which has been replicated in the replacement SSP awards, whereby there
will be a 50% reduction in the award if SSP’s TSR performance is below median of SSP’s comparator group used for legacy PSP awards
(see page 134 for constituents).
The buy-out awards will lapse in the event that Patrick ceases to be employed by the Company due to his voluntary resignation or summary
dismissal. All buy-out awards are subject to SSP’s malus and clawback policies, and the Remuneration Committee’s discretion to adjust
vesting outcomes.
SSP Group plc Annual Report and Accounts 2022
129
OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
Implementation of Remuneration Policy in the year ending 30 September 2023
This section provides an overview of the Group’s Remuneration Policy to the year ending 30 September 2023, as approved at the 2022 AGM
on 4 February 2022. Patrick Coveney joined SSP and the Board on 31 March 2022.
Base salary
Benefits
Pensions
Annual bonus
Base salaries as at 1 October 2022:
Patrick Coveney: £775,000 (from date of joining)
Jonathan Davies: £515,000
Base salaries for Executive Directors will be reviewed in line with the Group’s usual timetable, usually with effect from 1 June.
Executive Director benefits will continue to include private healthcare (for the executive and their family), life assurance,
car allowance or a company car, travel to and from work (including associated tax paid) and participation in the UK SIP.
For the period to end March 2023, Patrick Coveney’s benefits include travel and accommodation costs associated with
his relocation.
Patrick Coveney: 3% of base salary
Jonathan Davies: 3% of base salary (from 31 December 2022)
New appointments: aligned with the wider workforce
Maximum opportunity:
Patrick Coveney: 175% of base salary
Jonathan Davies: 150% of base salary
Targets:
For the 2023 financial year, bonuses will continue to be based on 80% financial and 20% strategic objectives. The financial
measure will revert to being a fixed target based on EBITDA. Specific financial targets and details of strategic objectives
(linked to our Strategic Priorities) will be disclosed in the 2022/23 Annual Report when they are no longer considered
to be commercially sensitive.
Executive Directors will be required to defer a minimum of 33% of any bonus received into the Group’s shares, where they
meet their minimum shareholding requirement, and 50% where they do not.
Restricted Share Plan
The Committee intends to make the awards under the Restricted Share Plan in December 2022 as set out below:
Patrick Coveney: 100% of base salary
Jonathan Davies: 100% of base salary
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. The performance underpins are:
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 at SSP sites during the period
– efficient conversion of revenue into profit and cash
3. The Company has made progress on SSP’s Sustainability 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.
Minimum
Shareholding
Requirement
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
– Deputy Group CEO and 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.
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SSP Group plc Annual Report and Accounts 2022
Non-Executive Director Remuneration
Single total figure of remuneration – Non-Executive Directors (audited)
All figures shown in £000
Non-Executive
Directors
Mike Clasper
Carolyn Bradley
Ian Dyson1
Kelly Kuhn3
Tim Lodge
Apurvi Sheth3
Judy Vezmar
Salary and Fees
2021
2022
Benefits2
Pension
2022
2021
2022
2021
Annual Bonus
2022
2021
Long-term
Incentives
Other
2022
2021
2022
2021
Total fixed
remuneration
2022
2021
Total variable
remuneration
2022
2021
Total
2022
2021
275
72
21
38
58
38
51
553
273
71
61
–
51
–
51
507
–
–
–
–
–
3
2
5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
275
72
21
38
58
41
53
558
273
71
61
–
51
–
51
507
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
275
72
21
38
58
41
53
558
273
71
61
–
51
–
51
507
Ian Dyson did not stand for re-election at the 2022 AGM. Amounts shown reflect fees paid for the period of the year that he was a Director.
1
2 Benefits – this comprises the reimbursement of expenses for travel to and from Board meetings.
3 Kelly Kuhn and Apurvi Sheth were appointed to the board on 1 January 2022. Amounts shown reflect fees paid for the period of the year that they were Directors.
The Non-Executive Director fees for the year ended 30 September 2022 are set out below (unchanged to the fees set on 1 July 2019). It was
considered appropriate that the review of fees was postponed until financial year 2023. The Company will review 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.
Chair of the Board
Board member
Additional fee for Senior Independent Director
Additional fee for Chair of Audit/Remuneration Committee1
1
In addition to any additional fee for acting as the Senior Independent Director.
2022 fees
£275,000
£51,000
£10,000
£11,000
SSP Group plc Annual Report and Accounts 2022
131
OverviewCorporate governanceFinancial statementsStrategic report
Directors’ Remuneration Report
continued
Historical TSR performance
As the Company is a constituent of the FTSE 250, the FTSE 250 Index provides an appropriate indication of market movements against which
to benchmark the Company’s performance. The chart below summarises the Company’s TSR performance against the FTSE 250 Index over
the period from Admission on 15 July 2014 to 30 September 2022.
TSR performance since admission
350
300
250
200
150
100
50
0
Admission
15.07.2014
30.09.2014
30.09.2015
30.09.2016
30.09.2017
30.09.2018
30.09.2019
30.09.2020
30.09.2021
30.09.2022
SSP Group FTSE 250
Chief Executive Officer remuneration outcomes
The table below summarises the Chief Executive Officer single figure for total remuneration, and the annual bonus payable and long-term
incentive plan vesting levels as percentages of maximum opportunity for completed financial years following Admission.
Chief Executive Officer
CEO Name
Single figure of
remuneration
Annual bonus payable
(as a % of maximum
opportunity)
Long-term incentive
vesting out-turn
(as a % of maximum
opportunity)
2014
K. Swann
2015
K. Swann
2016
K. Swann
2017
K. Swann
2018
K. Swann
20191
K. Swann
20192
S. Smith
2020
S. Smith
20213
S. Smith
20224
20225
S. Smith P. Coveney
£4.5m
£2.5m
£2.6m
£7.4m
£6.0m
£5.3m
£0.8m
£0.7m
£0.8m
£0.2m
£1.1m
100%
100%
100%
100%
100%
100%
98.6%
0%
0%
0%
94%
n/a
n/a
n/a
100%
100%
100%
100%
0%
0%
n/a
n/a
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.
3 Due to Simon’s resignation, no bonus was paid for the 2021 financial year.
4 Reflects period spent in role as Group CEO from 1 October 2021 to 24 December 2021.
5 Reflects period spent in role as Group CEO from 31 March 2022 to 30 September 2022.
No long-term incentive plan awards vested in 2014, 2015 or 2016. The award due to vest in the 2022 financial year will lapse as the performance
conditions were not met.
Total remuneration for 2014 includes additional awards of cash and shares made on IPO by the Company and the previous majority shareholder.
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SSP Group plc Annual Report and Accounts 2022
Year-on-year change in pay for Directors compared to the average employee
Executive Directors
Non-Executive Directors
Year
2022
2021
Base salary/fees
Benefits5
Annual Bonus6
Base salary/fees
Benefits
Annual Bonus
Base salary/fees
2020
Benefits
Annual Bonus
SSP Group plc
employees
8%
(1%)
n/a
Patrick
Coveney1
–
–
–
2%
2%
n/a
0%
(8%)
(100%)
–
–
–
–
–
–
Jonathan
Davies
9%
128%
285%
15%
6%
n/a
(12%)
10%
(100%)
Mike
Clasper2
1%
–
–
90%
–
–
–
–
–
Carolyn
Bradley
1%
–
–
15%
–
–
13%
–
–
(1%)
(12%)
–
–
–
–
Ian Dyson3
(66%)
–
–
Kelly Kuhn1
–
–
–
Tim Lodge4 Apurvi Sheth1
–
–
–
14%
–
–
Judy Vezmar2
0%
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
629%
–
–
–
–
–
1 Director was appointed to the Board in the 2022 financial year and therefore has no prior year remuneration for comparison.
2 Director was appointed to the Board during the 2020 financial year and therefore the table is comparing a full years’ earnings in 2021 against pro-rata remuneration in 2020.
3 Director left during the 2022 financial year and therefore table is comparing pro-rata remuneration with a full year total for the previous year.
4 Director was appointed as Audit Chair following the 2022 AGM and therefore now also receives the associated fee for this role.
5 Benefits percentage increased for this Director due to the return to business as usual post covid and a one-off reimbursement, further details provided on page 125.
6 No year-on-year percentage could be calculated for 2022 due to a return to bonus payment for the 2021 financial year after a nil bonus payment in 2020, therefore ‘n/a’ is shown.
Relative importance of the spend on pay
The table below shows the total spend on employee pay in the 2021 and 2022 financial years and the total expenditure on dividends.
Total staff costs
Dividends
2022
£686.7m
£0m
2021 Percentage change
95%
0%
£352.2m
£0m
Increase in spend on employee pay is largely due to an increase in colleague numbers and a return to business as usual.
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 2022. This compares the Chief Executive Officer’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
2022
2021
2020
Method
Option B
Base Salary
Total Pay and Benefits
25th Percentile pay ratio
50:1
£26,435
£26,435
50th Percentile pay ratio
36:1
£34,874
£37,465
75th Percentile pay ratio
36:1
£36,010
£36,824
Option B
Option B
37:1
48:1
31:1
47:1
22:1
33:1
The pay ratios above are calculated using the actual earnings for UK employees. The CEO’s Single Total Figure of Remuneration is £1,141,000
as shown on page 125.
SSP have chosen Option B, using the most recently submitted 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 hourly paid operations colleagues 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. As mentioned
last year, furloughed colleagues were not able to be included in the Gender Pay Gap calculations resulting in a significant change in the
population that the percentiles have been drawn from, which in turn has impacted the pay ratio figures.
Total remuneration for UK full-time equivalent employees for financial year 2022 has been calculated in line with the single figure methodology
and reflects actual earnings received in the 2022 financial year. No elements of pay have been omitted. All payments have been calculated on
a full-time equivalent basis.
As with last year, the median pay ratio is notably lower than it would be in a normal year. This is due to a three-month gap between the outgoing
CEO leaving and the incoming CEO being appointed to role and the impact of furloughed colleagues not being included in Gender Pay Gap
calculations. It is likely that any year-on-year change in the pay ratio will be driven by the aforementioned factors 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.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
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 Deputy Group CEO and CFO. Executive Directors are encouraged to retain
vested shares earned under the Company’s incentive plans until the shareholding guidelines have been met. The Chair and each Independent
Non-Executive Director are expected to build and then maintain a shareholding in the Company equivalent in value to 100% of their annual
gross fee.
The period over which the minimum shareholding must be built up is a three-year period, either from the date of admission (15 July 2014),
or from the date of appointment if later. The table below shows details of the Directors’ shareholdings as at 30 September 2022.
Following his appointment Patrick Coveney purchased a significant number of shares taking his shareholding to 227% of salary, which
represents very significant progress towards meeting his shareholding guideline, taking into account that he has until March 2025 to formally
meet the guideline of 250% of salary.
Director
Patrick Coveney³
Jonathan Davies
Mike Clasper
Carolyn Bradley
Kelly Kuhn³
Tim Lodge³
Apurvi Sheth³
Judy Vezmar3
Shareholding guidelines
as a % of salary/fees
250%
200%
100%
100%
100%
100%
100%
100%
Shareholding as a
% of salary/fee achieved1
227%
730%
152%
100%
89%
94%
86%
89%
Shares owned outright at
30 September 20222
756,984
1,620,189
180,080
31,031
19,500
25,160
19,000
19,540
Interests in unvested PSP/RSP
awards at 30 September 2022
793,469
496,415
0
0
0
0
0
0
1
2
For the purposes of determining Director’s shareholding requirements, the individual’s salary/fee and the three-month average share price to 30 September 2022 (£2.320809) 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 (842 for Jonathan Davies as at 30 September 2022).
‘Shares owned outright at 30 September 2022’ 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.
3 The Director has until the third anniversary of their date of appointment to meet their Minimum Shareholding Requirement.
Simon Smith’s post-employment shareholding requirement was enforced through trading restriction on his share account and subject
to reporting obligations to the Company. During the year the Committee confirmed that Simon was compliant with the post-cessation
shareholding requirement.
Interests in Unvested PSP awards at 30 September 2022
Interests in unvested PSP awards refers to Performance Share Plan awards granted in 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)
Compound EPS
growth (75%)
12% p.a.
7% p.a.
1 October 2019 to 30 September 2022
Relative TSR vs comparator
group (25%)
Upper-quartile
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
Currys
Dignity
Domino’s Pizza Group
Dunelm Group
Elior
First Group
Frasers Group
Go-Ahead Group
Halfords Group
Inchcape
InterContinental Hotels Group
JD Sports Fashion
J D Wetherspoon
J Sainsbury
Kingfisher
Marks and Spencer Group
Marston’s
Mitchells & Butlers
N Brown Group
National Express
Next
Ocado Group
The Restaurant Group
Tesco
TUI AG
WHSmith
Whitbread
Following the year end, the Committee assessed the performance conditions for the PSP award with a performance period of 1 October 2019
to 30 September 2022. The threshold EPS and Relative TSR targets were not met. EPS growth over the period was negative and Relative TSR
was positioned below median. These awards will lapse in full on 7 December 2022.
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SSP Group plc Annual Report and Accounts 2022
Interests in Unvested RSP awards at 30 September 2022
Interests in unvested RSP awards refers to Restricted Share Plan awards granted in June 2021, September 2021, December 2021, February
2022 and April 2022. The performance underpins for each award are as follows.
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. The performance underpins are:
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 at SSP sites during the period
– efficient conversion of revenue into profit and cash
3. The Company has made progress on SSP’s Sustainability 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.
Movement in Directors’ shareholdings from 30 September 2022
At 5 December 2022, other than as set out below, there had been no movement in Directors’ shareholdings and share interests from
30 September 2022.
Director
Patrick Coveney
Jonathan Davies
Shares owned outright at
5 December 2022
756,984
1,619,527
Shares owned outright at
30 September 2022
756,984
1,619,347
Change
0
180
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 2022
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 2022, the Committee received independent advice on executive remuneration matters from Deloitte.
Deloitte received £91,950 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.
Statement of shareholder voting
Votes cast at the AGM in February 2022 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 for the
year ended 30 September 2021
Meeting
February
2022 AGM
Votes for
451,353,039
% for
Votes against
78% 127,272,261
% against
Total shares
voted
22% 578,625,300
% of issued share
capital voted
Votes withheld
72.68% 17,459,836
Prior to the publication of our 2021 Annual Report we pro-actively consulted with shareholders to discuss the Remuneration Committee’s
proposed approach to determining the bonus outcome for the 2021 financial year. We engaged with twenty of our largest shareholders,
representing approximately 73% of our shareholder base. Eighteen of the twenty shareholders, representing approximately 70% of the
shareholder base, corresponded with us either via calls or in writing.
The broad sentiment across those with whom we engaged was that they were supportive of our approach to reward and bonuses for the year
on the basis of the performance achieved in challenging conditions. However the Committee noted that the proxy advisory agencies were not
supportive of the approach taken. Following the vote, the Committee considered the voting outcome in context of the stakeholder views it was
seeking to balance.
The Committee takes on board feedback from shareholders and advisory bodies on executive remuneration and considers any input provided
as it makes decisions going forward.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report
Directors’ Remuneration Report
continued
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 was approved for this policy
at the Annual General Meeting of the Company in March 2021. The scenario charts have been updated to reflect the application of the policy
for the 2021 financial year and references to prior financial years have been updated to aid understanding. Previous versions of the policy
are in the 2014 and 2017 Annual Report and Accounts, which are available at www.foodtravelexperts.com in the Investors section.
Key principles of Remuneration Policy
The Remuneration Policy for the Directors of the Company is intended to help recruit and retain executives who can execute SSP’s strategy
by rewarding them with appropriate compensation and benefit packages. The policy seeks to align the interests of Executive Directors with
the performance of the Company and the interests of its shareholders.
Our incentive arrangements are designed to reward performance against key financial and strategic performance objectives. Our aim
is to reward management for delivering sustainable long-term performance and support the retention of critical talent.
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.
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
Normally reviewed annually. The Remuneration Committee may however
award an out-of-cycle increase if it considers it appropriate.
Performance metrics
None
Maximum potential value
Salary increases in percentage
terms will normally be in line with
increases awarded to other head
office employees in the relevant
geography but may be higher
in certain circumstances.
The circumstances may include
but are not limited to:
– Where a new Executive Director
has been appointed at a lower
salary, higher increases may
be awarded over an initial period
as the Executive Director gains
experience in the role;
– Where there has been an
increase in the scope or
responsibility of an Executive
Director’s role; and
– Where a salary has fallen
significantly below market
positioning.
There is no maximum increase
or opportunity.
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.
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SSP Group plc Annual Report and Accounts 2022
Pension
To provide an income following retirement and assist the Executive Director in building wealth for their future.
Operation
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.
Maximum potential value
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.
Performance metrics
None
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 contributions/cash
allowance as follows:
– Group CEO, Patrick Coveney:
3% of base salary per annum.
– Deputy Group CEO and CFO,
Jonathan Davies: 3% of base
salary per annum. Was 21% for
the period to 31 December 2022.
Benefits
To provide appropriate benefits as part of a remuneration package that assists in recruiting, rewarding and retaining Executive Directors.
Operation
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, life assurance, and
business travel.
Maximum potential value
Car allowance of up to £13,000
per annum.
Performance metrics
None
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.
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.
SSP Group plc Annual Report and Accounts 2022
137
OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
Annual bonus
To reward performance on an annual basis against key annual objectives.
Operation
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 clawback 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.
Maximum potential value
The maximum annual bonus
opportunity is 200% of base
salary per annum.
For the 2023 financial year
maximum annual opportunities are:
– Group CEO, Patrick Coveney:
175% of salary per annum.
– Deputy Group CEO and CFO,
Jonathan Davies: 150% of salary
per annum.
Performance metrics
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.
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
Awards may be made to Executive Directors in the form of conditional
share awards, nil cost options, forfeitable shares or equivalent rights.
Maximum potential value
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 metrics
Performance underpins may
be based around the Group’s
key financial and/or strategic
measures.
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 clawback 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.
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SSP Group plc Annual Report and Accounts 2022
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.
Minimum Shareholding Requirement
Aligns the interests of Executive Directors with shareholders and encourages commitment to the company.
Operation
Executive Directors are expected to build and maintain a holding in the
Company’s shares as follows:
– Group CEO: 250% of base salary
– Deputy Group CEO and CFO: 200% of base salary
Maximum potential value
N/A
Performance metrics
N/A
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.
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
The Chair’s fees are determined by the Committee.
Maximum potential value
N/A
Performance metrics
N/A
The Non-Executive Directors’ fees are determined by the Board.
The total fees for Non-Executive Directors, including the Chair, 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 chairship 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 136-139
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.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Directors’ Remuneration Report
continued
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
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.
(iii)
For these purposes, ‘payments’ include the Committee satisfying awards of variable remuneration and an award over shares is ‘agreed’ at the
time the award is granted.
Performance measures and targets
Annual bonus
Annual bonus metrics and targets are selected to incentivise Directors to meet objectives for the year and are chosen in line with the following
principles:
– The targets set for financial measures should be incentivising and appropriately stretching. Targets may be adjusted by the Committee
to take into account significant capital transactions during the year.
– There should be flexibility to change the measures and weightings year-on-year in line with the needs of the business.
– 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 2023 financial year, the underpins will continue to be linked to the creation of sustainable growth and strategic
objectives including progress made on the Company’s Sustainability Strategy.
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.
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SSP Group plc Annual Report and Accounts 2022
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).
Group CEO: Patrick Coveney
Deputy Group CEO and CFO: Jonathan Davies
£2,347k
33%
29%
38%
Target
£894k
100%
Minimum
£3,025k
26%
£3,413k
34%
45%
40%
29%
26%
Maximum
Maximum
+ 50% share price
appreciation
£1,473k
35%
26%
39%
Target
£572k
100%
Minimum
£1,859k
28%
£2,117k
36%
41%
37%
31%
27%
Maximum
Maximum
+ 50% share price
appreciation
Fixed pay Annual bonus Long-term incentives
Component
Fixed remuneration
Base salary
Pension
Benefits
‘Minimum’
‘Target’
‘Maximum’
Annual base salary for the 2022 financial year*
‘Maximum + 50% share price
appreciation’
Chief Executive Officer: 3% of salary; Deputy Group CEO and CFO: 3% of salary
Taxable value of annual benefits provided in the year ended 30 September 2022
Annual bonus
Maximum opportunity
Chief Executive Officer: 175% of salary; Deputy Group CEO and CFO: 150% 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; Deputy Group CEO and CFO: 100% of salary*
Vesting
0% vesting
100% vesting
100% vesting
100% vesting + 50%
share price appreciation
* Based on contractual base salary as at 1 October 2022.
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 136-139.
– 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 136-139. 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 Chair or Non-Executive Director, the remuneration package will be consistent with the policy set out above.
SSP Group plc Annual Report and Accounts 2022
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continued
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.
Patrick Coveney and Jonathan Davies’s payment in lieu of notice would be calculated by reference to the base salary in respect of any
unexpired portion of the notice period. This payment can be made in instalments over the notice period and can be reduced where alternative
employment is commenced during the notice period.
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:
Patrick Coveney
Jonathan Davies
Date of commencement of contract
31 March 2022
15 July 2014
Notice period for Director
9 months
9 months
Notice period for Company
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.
Chair
The terms of the Chair’s appointment broadly reflect the terms of the three-year appointments of the Non-Executive Directors. The Chair’s
appointment can be terminated at any time upon written notice, resignation or in accordance with the Articles of Association of the Company.
The Chair receives no benefits from the office other than fees and reimbursement of expenses incurred in performance of his duties, including
any tax due on the expenses. He is not eligible to participate in Group pension arrangements.
Non-Executive Directors
All Non-Executive Directors have been appointed on an initial term of three years, subject to renewal thereafter. All are subject to annual
re-election by shareholders.
The Non-Executive Directors have letters of appointment which can be terminated at any time upon written notice, resignation or in
accordance with the Articles of Association of the Company. Non-Executive Directors receive no benefits from their office other than fees and
reimbursement of expenses incurred in performance of their duties, including any tax due on the expenses. They are not eligible to participate
in Group pension arrangements.
Mike Clasper
Carolyn Bradley
Judy Vezmar
Tim Lodge
Apurvi Sheth
Kelly Kuhn
Effective date of appointment letter
1 November 2019
1 October 2018
1 August 2020
1 October 2020
1 January 2022
1 January 2022
Current term expires
31 October 2025
30 September 2024
31 July 2023
30 September 2023
31 December 2024
31 December 2024
Directors’ service contracts are kept for inspection by shareholders at the Company’s registered office.
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SSP Group plc Annual Report and Accounts 2022
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 2022
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continued
Takeovers and other corporate events
Under the RSP (or legacy awards made under the Company’s Performance Share Plan), 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 any 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. 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.
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SSP Group plc Annual Report and Accounts 2022
Directors’ Report
Statutory Disclosures
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.
The Company has chosen, in accordance with Section 414 C(11) of
the Companies Act 2006, to include certain matters in its Strategic
Report that would otherwise be required to be disclosed in this
Directors’ Report. Both the Strategic Report (pages 6-79) and
Corporate Governance Report (pages 80-149) are incorporated
into the Directors’ Report by reference.
Taken together, the Strategic and Corporate Governance Reports,
along with this Directors’ Report, form the management report
for the purposes of DTR 4.1.8R and are intended to provide a fair,
balanced and understandable assessment of the development and
performance of the Group’s business during the year and its position
at the end of the year, its business model, strategy, likely
developments, and any principal risks and uncertainties associated
with the Group’s business.
The following specific information required to be included in the
Directors’ Report is included in other sections of this Annual Report:
Disclosures required under UK Listing Rule 9.8.4
Area for disclosure
Detail of any long-term
incentive plans
Location of details in the
Annual Report and Accounts
Pages 125-144 Note 25,
page 199
There are no other disclosures to be made under Listing Rule 9.8.4.
Other statutory disclosures
Directors of the Group
Dividends
Pages 84, 88-89
Pages 74
Employee engagement and business
relationships
Pages 22-23, 42-51, 52, 96-99,
102-103 and 149
Environmental, social and governance
risks
TCFD Reporting
Future Developments
Going Concern Statement
Greenhouse Emissions
Post balance sheet events
Pages 54-67
Pages 54-57
Pages 20-31, 44-51
Pages 68-69, 167
Pages 30-31, 66
Page 207
Reporting under Section 172 of
Companies Act 2006 and engagement
with stakeholders
Treasury and Risk Management
Pages 42-51, 102-103
Note 28, Pages 201-205
Directors
The Directors holding office during the year can be found on page 84.
The interests in shares and awards over ordinary shares in the
Company held by Directors in office as at 30 September 2022 are
shown in the Directors’ Remuneration Report on page 134.
The appointment and replacement of Directors is governed by
the Company’s Articles of Association (‘Articles’), the UK Corporate
Governance Code, the Companies Act 2006 and related legislation.
Subject to the Articles, 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.
In line with market practice, the Company has made qualifying
indemnity provisions which the Directors had the benefit of during
the financial year ended 30 September 2022 and which remain in
force at the date of this report. In addition, the Directors and officers
of the Company and its subsidiaries are covered by Directors’ and
Officers’ liability insurance maintained by the Company.
Shares
Share Capital
At 30 September 2022 there were 796,376,695 ordinary shares of
1 17/200 pence each in issue (comprised of 796,113,196 ordinary shares
with one vote each and 263,499 ordinary shares 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 24 to the financial statements on pages 196-197.
Rights and obligations attaching to shares
There are no restrictions on the transfer of the Company’s ordinary
shares (or on the voting rights attaching to them) other than those
under the Articles (see below), restrictions imposed from time to time
by law (including insider trading law) or pursuant to the Company’s
securities dealing code. The Company is not aware of any agreements
between shareholders that may result in restrictions on the transfer
of securities and/or voting rights.
The rights attaching to the Company’s ordinary shares are set out in
the Articles, available on the Company’s website at https://investors.
foodtravelexperts.com/investors/corporate-governance.aspx. The
Articles of Association of the Company may be amended by a special
resolution of the shareholders.
Particular attention should be taken to the following:
– Transfers of ordinary shares – Articles 45-51 provide detail
of how transfers of shares may be undertaken. They also set
out the Directors’ rights of refusal to effect a transfer and
the action that Directors must take following such refusal.
– Votes of members – Articles 90-104 provide detail on the
procedures surrounding voting including on a show of hands
and on a poll.
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Directors’ Report
continued
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 £2,879,276; and
(b)
comprising equity securities up to a nominal amount of
£5,758,552 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 2023 AGM,
or close of business on 4 May 2023, whichever is sooner (the ‘Expiry
Date’). The Directors will be seeking a new authority at the 2023 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.
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 2023 AGM.
Shares issued pursuant to share schemes
During the 2022 financial year, a total of 376,500 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 partial
vesting of awards under the Company’s Performance Share Plan
(‘PSP’). The relevant PSP awards were those that vested in December
2021, based on the exercise of the Remuneration Committee’s
discretion to apply a minimum guaranteed vest. 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.
Details of the Group’s employee share schemes and awards made
during the financial year under the Restricted Share Plan (‘RSP’), PSP
and Deferred Bonus Scheme Plan and held by Executive Directors
as at 30 September 2022 are set out in the Annual Report on
Remuneration on pages 120-144.
Details of awards made during the year and held by employees as at
30 September 2022 under the RSP and PSP are disclosed in note 25
to the consolidated financial statements on page 199.
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 (‘Trustees’) 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. The general policy of
the Trustees is to abstain from exercising voting rights on unallocated
shares held in 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.
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 at the
2022 AGM. This authority was not used during the financial year.
This standard authority is renewable annually and the Directors
will seek to renew this authority at the 2023 AGM.
Profit Forecast
In its half-year results announcement on 24 May 2022 (HY Results),
the Group made the following statements in respect of the year
ending 2022, which are regarded as profit forecasts for the purposes
of the Financial Conduct Authority’s Listing Rule 9.2.18:
“Our current expectation is for sales in the second half of the year
to be around 80-85% of pre Covid-19 levels and for full year sales
to be in the region of £2.0bn to £2.1bn. Whilst the final profit outturn
will be dependent on a number of external factors, including the
trajectory of the recovery and inflationary cost pressures, we would
expect the full year EBITDA margin (on a pre-IFRS 16 basis) to be
between c.5% (at the lower end of the sales range) and c.6% (at the
higher end). This is consistent with the previously indicated range
of 25% to 30% profit conversion on the reduced sales compared
to 2019.” (HY Results, page 2).
“Our current expectation is for sales in the second half of the current
financial year to be around 80-85% of pre Covid-19 levels and for
full year sales to be in the region of £2.0bn to £2.1bn. Whilst the final
profit outturn will be dependent on a number of external factors,
including the trajectory of the recovery and inflationary cost pressures,
we would expect the full year EBITDA margin (on a pre-IFRS 16 basis)
to be between approximately 5% (at the lower end of sales range)
to approximately 6% (at the higher end) which is consistent with the
previously indicated range of 25% to 30% profit conversion on the
reduced sales compared to 2019.” (HY Results, page 7).
The Group provided updated revenue, EBITDA margin and EBITDA
guidance in its Third Quarter Update announcement on 14 July 2022
(Q3 Update) and its Pre-Close Trading Update on 27 September
2022 (Pre-Close Update), both of which are regarded as a profit
forecasts for the purposes of the Financial Conduct Authority’s
Listing Rule 9.2.18:
Q3 update: “For the current year, based on our performance to date
and the current strength of the travel recovery, we now expect to
deliver sales in the region of £2.1bn and EBITDA margin (on a pre
IFRS 16 basis) in the region of 6%, which is at the upper end of our
previous full year guidance range.”
Pre-Close Update: “For the current full year, we now expect to deliver
sales of approximately £2,170m and EBITDA of approximately
£140m (on a pre-IFRS 16 basis), slightly ahead of our previous full
year guidance.”
The actual figures for the 2023 Financial Year were: £2,185.4m
revenue, 6.5% EBITDA margin (on a pre-IFRS 16 basis) and £142m
EBITDA (on a pre-IFRS 16 basis), exceeding the guidance issued in
the Pre-Close Update by £15.4m (revenue), £2m EBITDA and 0.5%
(EBITDA margin) and exceeding the guidance issued in the Pre-Close
Update by 85.4 (revenue) and 0.5% (EBITDA margin).
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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 2022, the following notifications of
major shareholdings of 3% or more have been received by the
Company under DTR 5 (the percentages shown are the percentages
at the time of the disclosure and have not been re-calculated based
on the issued share capital at the year end).
No notifications have been received between 30 September 2022
and the date of this Report.
Name
Schroders plc
Date of
notification of
interest
07.11.14
% of issued
ordinary share
capital
4.99%
GIC Private Limited (Chase Nominees Limited)
02.11.17
Old Mutual Global Investors (UK) Limited
Artemis Investment Management LLP
JP Morgan Asset Management (UK) Limited
and JP Morgan Investment Management Inc
Marathon Asset MGMT Limited
Parvus Asset Management Europe Limited
HSBC Holdings PLC
APG Asset Management Limited
BlackRock, Inc.
02.07.18
10.12.19
17.03.21
23.08.21
09.12.21
08.02.22
01.09.22
06.09.22
3.16%
9.71%
5.06%
3.58%
8.24%
5.19%
9.21%
11.82%
5.29%
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 a result of share
consolidations that took place in 2018 and 2019 and the Rights Issue
that took place in April 2021.
As at 30 September 2022, the Company had no controlling
shareholders. No shareholder holds ordinary shares which carry
special rights relating to the control of the Company.
Employee engagement and business relationships
Understanding the views and values of all the Group’s stakeholders,
including employees, customers, investors 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 pages 22-23, 42-51, 52, and 102-103.
Details of how information is communicated to employees (including
as to participation in the Company’s employee share plans) 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.22-23, 42-51, 52, 96-97, 98-99
102-103 and 149.
Supplier payment policy
The country business teams within the Group are responsible
for establishing appropriate policies with regard to the payment
of their suppliers.
The Group’s head office has a set of standard terms and conditions
which is used throughout the Group, adapted for local law. It is Group
policy that supplier arrangements should take place on the Group’s
standard terms and conditions wherever possible. In the event that
they are not agreed, our operating companies will agree terms and
conditions under which supply arrangements are made. It is Group
policy that provided a supplier is complying with the relevant terms
and conditions, including the prompt and complete submission of all
specified documentation, payment will be made in accordance with
agreed terms. It is also Group policy to ensure that suppliers know the
terms on which payment will take place when business arrangements
are agreed.
For the payment practices reporting period ended 31 March 2022,
the average time to pay for our UK operating business was 47 days.
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
Other than a service contract between the Executive Directors and a
Group company, no Director had a material interest at any time during
the year in any significant contract with the Company or any of its
subsidiaries. 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.
Diversity Reporting under section 414C(8)(c) of the Companies Act
Details of the persons of each sex as at 30 September 2022 for the
categories referred to under section 414C(8)(c) are set out below.
Directors of SSP Group plc
Senior Managers
Male
4 (50%)
9 (75%)
Female
4 (50%)
3 (25%)
Employees of SSP Group
16,641 (48%) 18,153 (52%)
1
2
“Senior Managers” comprise the Group Executive Committee (excluding the Group CEO and
the Deputy Group CEO and CFO).
For the all employee number we have included the numbers for all employees across the Group,
not just SSP Group plc.
SSP Group plc Annual Report and Accounts 2022
147
OverviewCorporate governanceFinancial statementsStrategic report 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 2023 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.
AGM 2023
The AGM will be held in February 2023. Further details of the
arrangements for the 2023 AGM are set out in the Notice of AGM,
which, along with other relevant documentation, is enclosed with
this Annual Report or available on the Group’s website at
www.foodtravelexperts.com. The Directors consider that each
of the resolutions is in the best interests of the Company and the
shareholders as a whole and recommend that shareholders vote
in favour of all the resolutions.
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.
Electronic tagging
In accordance with European Single Electronic Format (‘ESEF’)
requirement that UK-listed companies provide their primary financial
statements in standardised machine-readable format, SSP’s 2022
Annual Report and Accounts is published as an XHTML tagged
document which can be found on www.foodtravelexperts.com.
Approved by the Board and signed on its behalf by:
Helen Byrne
General Counsel and Company Secretary
5 December 2022
Directors’ Report
continued
The Group’s main credit facilities, being the committed bank facilities
dated 16 June 2014 (as amended from time to time) entered into by
SSP Financing Limited (‘SSP Financing’), a wholly-owned subsidiary
of the Company, 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 (as amended from time to time) (‘2018 NPA’) in respect
of a US$175m issue of US Private Placement notes (the ‘2018 Notes’);
and (ii) a note purchase agreement on 11 April 2019 (as amended from
time to time) (‘2019 NPA’) in respect of a US$199.5m and €58.5m
issue of US Private Placement notes (‘2019 Notes’). 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.
Political Donations
The Company’s policy is to not make political donations. Neither
the Company nor its subsidiaries, during the financial year ended
30 September 2022, 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-UK political party. However, in view of the broad wording
adopted in the Companies Act, and the Board’s wish to avoid any
inadvertent infringement of it, the Company will propose to
shareholders at the 2023 AGM that a precautionary authority be
granted of up to £25,000 in aggregate. Further details are included
in the Notice of AGM.
Branches
The Company does not have any branches outside the UK.
Research and Development
The Group does not undertake material levels of research and
development activity.
Disabled Employees
The Company gives full and fair consideration to applications
for employment by disabled persons, bearing in mind the aptitudes
of the applicant concerned. In the event of employees becoming
disabled while in the course of their employment with the Company,
every effort is made to ensure that their employment with the Group
continues, and that appropriate training is arranged. It is the policy of
the Group that the training, career development and promotion of
disabled persons should, so far as possible, be identical to that of
other employees.
Our markets have progressed further initiatives and activities
to embrace diversity and help drive an inclusive business for our
colleagues and customers. See page 48 of our Sustainability Report.
148
SSP Group plc Annual Report and Accounts 2022
Statement of Directors’ Responsibilities
in respect of the Annual Report and Accounts
and the financial statements
In accordance with Disclosure Guidance and Transparency Rule
4.1.14R, the financial statements will form part of the annual financial
report prepared using the single electronic reporting format under
the TD ESEF Regulation. The auditor’s report on these financial
statements provides no assurance over the ESEF format.
Responsibility statement of the Directors in respect
of the Annual Report
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation taken
as a whole; and
– the Strategic Report and the Directors’ Report includes a fair
review of the development and performance of the business and
the position of the 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,
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
Jonathan Davies
Deputy Group CEO and CFO
5 December 2022
The Directors are responsible for preparing the Annual Report and
Accounts and the Group and parent Company financial statements
in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent
Company financial statements for each financial year. Under that
law they are required to prepare the Group financial statements
in accordance with UK-adopted international accounting standards
and applicable law and have elected to prepare the parent Company
financial statements in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and parent Company and
of the Group’s profit or loss for that period. In preparing each of the
Group and parent Company financial statements, the Directors are
required to:
– select suitable accounting policies and then apply them
consistently;
– make judgements and estimates that are reasonable, relevant,
reliable and prudent;
– for the Group financial statements, state whether they have been
prepared in accordance with UK-adopted international accounting
standards;
– for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
Company financial statements;
– assess the Group and parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern; and
– use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease
operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
SSP Group plc Annual Report and Accounts 2022
149
OverviewCorporate governanceFinancial statementsStrategic report 150
SSP Group plc Annual Report and Accounts 2022
Financial statements
Contents
Financial statements
152
Independent auditor’s report to
the members of SSP Group plc
Consolidated Income
Statement
Consolidated Statement of
other Comprehensive Income
162
163
164 Consolidated Balance Sheet
165
Consolidated Statement
of Changes in Equity
166
167
Consolidated Cash Flow
Statement
Notes to Consolidated
Financial Statements
208 Company Balance Sheet
209 Company Statement
of Changes in Equity
Notes to Company
Financial Statements
210
219 Glossary
220 Company Information
SSP Group plc Annual Report and Accounts 2022
151
OverviewCorporate governanceFinancial statementsStrategic report Independent auditor’s report to the
members of SSP Group plc
1 Our opinion is unmodified
We have audited the financial statements of SSP Group plc (“the
Company”) for the year ended 30 September 2022 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, the company balance sheet and the company
statement of changes in equity, and the related notes, including the
accounting policies in notes 1 and 33.
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
2022 and of the Group’s loss for the year then ended;
– the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
– the parent Company financial statements have been properly
prepared in accordance with UK accounting standards, including
FRS 101 Reduced Disclosure Framework; and
– the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
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
17 financial years ended 30 September 2022. 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.
Overview
Materiality:
Group financial
statements
as a whole
£11.5m (2021:£9.5m)
0.7% (2021: 0.6%) of total Group revenue
Coverage
78% (2021: 83%) of total Group revenue
Key audit matters
Recurring risks
vs 2021
Recoverability of goodwill and
indefinite life intangible assets
Recoverability of site assets
Going Concern
Recoverability of parent’s
investment in subsidiary
undertaking
2 Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgement, 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. We summarise below the key audit
matters, in decreasing order of audit significance, 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.
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SSP Group plc Annual Report and Accounts 2022
Recoverability of goodwill and
indefinite life intangible assets
Goodwill and indefinite
life assets £656.0m
(2021: £640.5m)
Refer to page 116 Audit
Committee Report, Note 1.16
Accounting policies and Note 12.
The risk
Forecast based assessment
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 a number
of 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 (including
climate change considerations and
the ongoing impact of COVID-19),
economic and political uncertainty,
tendering and competition.
The effect of these matters is that, as
part of our risk assessment for audit
planning purposes, 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.
In conducting our final audit work, we
concluded that reasonably possible
changes to the value in use calculation
would not be expected to result in
material impairment. The financial
statements (note 12) disclose the
sensitivity estimated by the Group.
Our response
Our procedures included:
Our sector experience – We compared our understanding of business
performance and broader market trends with the Group’s forecasts and
considered whether these had been appropriately captured in the
impairment models.
Our valuation expertise – We used our understanding of similar
companies and our experience to assist us in assessing appropriateness
of the impairment review methodology and assumptions. In addition,
we engaged our corporate finance specialists to support the assessment
of 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 passenger footfall trends and associated
projected market growth, revenue growth rates, and inflation.
Sensitivity analysis – We used KPMG’s proprietary data analytics
software tool to prepare multiple scenarios sensitising key 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 budget 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 the value in use calculations.
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 goodwill and indefinite life intangible assets.
Assessing consistency – We ensured consistency of forecast financial
information with other forecasting exercises across the Group including
goodwill and intangible asset impairment assessment and going concern
cash flow forecasts.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our results
We found the Group’s conclusion that there is no impairment of goodwill
and indefinite life intangible assets to be acceptable (2021: acceptable).
SSP Group plc Annual Report and Accounts 2022
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OverviewCorporate governanceFinancial statementsStrategic report Independent auditor’s report to the members of SSP Group plc
continued
Recoverability of site assets
Property, plant and equipment
(‘PPE’) – specific CGUs within
the overall balance of £472.3m
(2021: £388.7m)
ROU assets – specific CGUs
within the overall balance of
£746.8m (2021: £1,002.9m)
Refer to page 116 Audit
Committee Report, Note 1.16
Accounting policies and Note 11.
Our response
Our procedures included:
Our sector experience – We used third-party industry reports and
government sources, as well as our experience and understanding of
the 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 understanding of similar
companies and our experience to assist us in assessing appropriateness
of the impairment review methodology and assumptions. In addition,
we engaged our corporate finance specialists to support the assessment
of the discount rate assumptions used by the Group.
Sensitivity analysis – We prepared multiple alternate scenarios
sensitising key assumptions individually and in concert 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.
Testing application – We tested the completeness of site assets included
in the Group’s CGU impairment exercise, including the impact of newly
created ROU assets, assets acquired and/or disposed during the period.
We performed the tests above rather than seeking to rely on any of
the Group’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our results
We found the site assets balance, and the related impairment charge,
to be acceptable (2021: acceptable).
The risk
Forecast based assessment
Revenue is primarily linked to
passenger footfall through transit
hubs, which have not yet recovered to
pre-COVID-19 levels. The continuing
effects of the COVID-19 pandemic
during the period, including the
Omicron variant outbreak, have
impacted 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.
Site level performance and forecasts
are localised and therefore the risk
over recoverability of site assets
varies across countries.
Our risk assessment this year,
conducted at a country level,
identified that risk was associated
with PPE and ROU assets in the UK
and Spain.
The effect of these matters is that,
as part of our risk assessment for
audit planning purposes, we
determined that the carrying value
of site assets had a high degree
of estimation uncertainty, with
a potential range of reasonable
outcomes greater than our
materiality as a whole. In conducting
our final audit work, we reassessed
the degree of estimation uncertainty
to be less than materiality.
154
SSP Group plc Annual Report and Accounts 2022
Going concern
Refer to page 117 of the Audit
Committee report and note 1.2
to the Group financial
statements.
Our response
Our response:
Considering whether these risks could plausibly impact the liquidity or
covenant compliance within the going concern period by assessing the
directors’ sensitivities over the level of available financial resources and
covenant thresholds indicated by the Group’s financial forecasts taking
account of severe, but plausible, adverse effects that could arise from
these risks individually and collectively.
Our procedures also included:
Historical comparison: We considered the historical accuracy of the
Group’s cash flow forecasts by assessing the accuracy of previous
forecasts against actual performance.
Funding assessment: We obtained and inspected evidence of available
funding to ascertain the level of liquidity at the year end and for the going
concern period, the duration of availability of financing and associated
covenant testing requirements. We have assessed management’s
projections, including management’s severe but plausible downside
scenario, to support whether the covenants will be met over the
forecast period.
Sensitivity analysis: We considered sensitivities over the level of available
financial resources indicated by the Group’s financial forecasts, taking
account of plausible but realistic adverse scenarios which could arise
from these risks individually and collectively.
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.
Assessing transparency: We considered whether the going concern
disclosure in note 1.2 to the financial statements gives a full and accurate
description of the Directors’ assessment of going concern.
Our results:
We found the going concern disclosure in note 1.2, which did not include
a material uncertainty, to be acceptable (2021: which did not include a
material uncertainty, to be acceptable).
The risk
Disclosure quality
The financial statements explain how
the Board has formed a judgement
that it is appropriate to adopt the
going concern basis of preparation
for the Group and parent Company.
That judgement is based on an
evaluation of the inherent risks to
the Group’s and Company’s business
model and how those risks might
affect the Group’s and Company’s
financial resources or ability to
continue operations over a period
of at least a year from the date of
approval of the financial statements.
The risk most likely to adversely
affect the Group’s and Company’s
available financial resources over
this period is the recovery of global
passenger footfall.
There are also less predictable but
realistic second order impacts, such
as supply chain disruption, changes
in consumer travel patterns, or the
impact of climate change, which could
result in a rapid reduction of available
resources.
The risk for our audit was whether
or not those risks were such that they
amounted to a material uncertainty
that may have cast significant doubt
about the ability to continue as a
going concern. Had they been such,
then that fact would have been
required to have been disclosed.
The risk of a material uncertainty
arising has diminished in the year,
following the rights issue in 2021
and improvements in the underlying
business. Nonetheless, there remains
heightened risk surrounding
compliance with covenants and
economic uncertainty.
SSP Group plc Annual Report and Accounts 2022
155
OverviewCorporate governanceFinancial statementsStrategic report Independent auditor’s report to the members of SSP Group plc
continued
Recoverability of parent’s
investment in subsidiary
undertaking
Investment in subsidiary –
£1,201.9m (2021: £1,198.3m)
Refer to Note 33 Accounting
policies and Note 34.
The risk
Low risk, high value
The carrying amount of the parent
company’s investment in subsidiary
represents 81% (2021: 78%) 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.
3 Our application of materiality and an overview of the scope
of our audit
Materiality for the group financial statements as a whole was set
at £11.5m (2021: £9.5m), determined with reference to a benchmark
of total group revenue, normalised by averaging over the last
four years due to fluctuations in the business cycle, of £1,735.0m
(2021: three-year group revenue of £1,687.3m), of which it represents
0.7% (2021: 0.6% of three-year averaged group revenue).
We consider an average of four years’ group revenue to be the most
appropriate benchmark for the year ended 30 September 2022.
In the year ended 30 September 2021, materiality was based on an
average of group revenue for the three years to 30 September 2021.
This has been amended in this year’s audit due to the continuing
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 £4.6m (2021: £2.9m), determined with reference to a
benchmark of company total assets, of which it represents 0.3%
(2021: 0.2%).
Normalised Group revenue
£1,735m (2021: £1,687m)
Our response
Our procedures included:
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).
We performed the tests above rather than seeking to rely on any of the
Company’s controls because the nature of the balance is such that we
would expect to obtain audit evidence primarily through the detailed
procedures described.
Our results
We found the Company’s conclusion that there is no impairment
in its investment in subsidiary to be acceptable (2021: acceptable).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 65% (2021: 65%) of materiality
for the financial statements as a whole, which equates to £7.5m
(PY: £6.1m) and £3m (PY: £1.9m) for the parent company. We applied
this percentage in our determination of performance materiality
based on the level of identified misstatements during prior periods.
We agreed to report to the Audit Committee any corrected
or uncorrected identified misstatements exceeding £0.58m
(2021: £0.48m), in addition to other identified misstatements
that warranted reporting or qualitative grounds.
Group materiality
£11.5m (2021: £9.5m)
£11.5m
Whole financial statements materiality
(2021: £9.5m)
£4.8m
Range of materiality at 15 components (£1.7m to £6.9m)
(2021: £1.0m to £4.8m)
Total benchmark
Group materiality
£0.58m
Misstatements reported to the audit committee
(2021: £0.48m)
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SSP Group plc Annual Report and Accounts 2022
Scope
Of the Group’s 93 (2021: 93) reporting components, we subjected 15
(2021: 17) to full scope audits for Group purposes. The components
within the scope of our work accounted for the percentages
illustrated below.
Total Group revenue
Full scope for Group
audit purpose 2022
Full scope for Group
audit purposes 2021
Residual components
78%
(2021: 83%)
Total Group loss before tax
Full scope for Group
audit purpose 2022
Full scope for Group
audit purposes 2021
Residual components
The remaining 22% (2021: 17%) of total Group revenue, 23%
(2021: 16%) of total Group loss before tax and 18% (2021: 15%) of total
Group assets is represented by 75 (2021: 75) reporting components,
none of which individually represented more than 4% (2021: 3%) of
any of the total group revenue, group loss 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 with these.
The Group audit team instructed component auditors as to the
significant areas to be covered, including the relevant risks detailed
above and the information to be reported back. The Group audit team
approved the component materialities, which ranged from £1.7m to
£6.9m (2021: £1.0m to £4.8m), having regard to the mix of size and
risk profile of the group across the components.
The work on 12 of 15 (2021: 14 of 17) components was performed by
component auditors and the rest, including the audit of the parent
company was performed by the group audit team. The scope of the
audit work performed was predominately substantive, as we placed
limited reliance upon the Group’s internal control over financial
reporting.
The Group team undertook visits to overseas components in the US,
Spain, and India, and held virtual conference meetings with all other
non-UK component auditors (2021: virtual meetings held with all
non-UK component auditors). At these visits and meetings, the
findings reported to the Group audit team were discussed in more
detail, and any further work required by the Group audit team was
then performed by the component auditor.
4 The impact of climate change on our audit
Due to the nature of the Group’s operating sites and revenue streams,
there is a possibility that climate change risks, opportunities, and the
Group’s own commitments and changing regulations could have a
significant impact on the Group’s business and operations. There is
a possibility that climate change risks, both physical and transitional,
could affect financial statement balances, through estimates such
as the valuation of goodwill.
As part of our audit, we performed a risk assessment of the impact
of climate change risk on the financial statements and our audit
approach. As a part of this, we held discussions with our own climate
change professionals to challenge our risk assessment. In doing this
we performed the following:
Full scope for Group
audit purpose 2022
Full scope for Group
audit purposes 2021
Residual components
Understanding management’s processes: We made enquiries to
understand management’s assessment of the potential impact of
climate change risk on the Group’s Annual Report and Accounts and
the Group’s preparedness for this. As a part of this we made enquiries
to understand management’s risk assessment process as it relates to
possible effects of climate change on the Annual Report and Accounts.
Valuations: We considered how the Group considers the impact
of climate change risk, both in terms of impacts on input costs and
changes in passenger footfall through transport hubs.
We did not identify the impact of climate risk as a separate Key Audit
matter, given the nature of the Group’s operations and knowledge
gained of its impact on critical accounting estimates during our risk
assessment procedures and testing, including the relatively short
term nature of many of the Group’s assets.
SSP Group plc Annual Report and Accounts 2022
157
77%
(2021: 84%)
Total Group assets
82%
(2021: 85%)
OverviewCorporate governanceFinancial statementsStrategic report Independent auditor’s report to the members of SSP Group plc
continued
Audit procedures in relation to Key Audit Matters
In our key audit matter relating to the valuation of goodwill, as set
out in section 3 of this report, we determined that climate change
could affect projections of footfall and input costs. We have assessed
the impacts of these risks within our assessment of forecast cash
flows overall.
Other audit procedures
During the course of our audit, we considered the Group’s processes
around climate change related disclosures in the Annual Report and
read the disclosures in the Strategic Report and Directors’ Report
and considered its consistency with the financial statements and
our audit knowledge.
We held discussions with our own climate change professionals
to challenge our risk assessment.
5 Going concern
The directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).
An explanation of how we have evaluated management’s assessment
of going concern is set out in the related key audit matter in section 2
of this report.
Our conclusions based on this work:
– we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
– we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant
doubt on the Group’s or Company’s ability to continue as a going
concern for the going concern period;
– we have nothing material to add or draw attention to in relation to
the directors’ statement in note 1.2 to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
Company’s use of that basis for the going concern period; and
– the related statement under the Listing Rules set out on page 68
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the Group or the
Company will continue in operation.
6 Fraud and breaches of laws and regulations – ability to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”),
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
– Enquiring of the Directors, management, legal counsel, and
members of the Internal Audit function as to whether they are
aware of any instances of fraud, and as to the Group’s high-level
policies and procedures to prevent and detect fraud;
– Reading Board and committee minutes;
– Using analytical procedures to identify any unusual or unexpected
relationships;
– Inspection of internal audit reports issued during the year and
whistle-blower logs; and
– Considering the Group’s results against performance targets and
the Group’s remuneration policies, key drivers for remuneration,
and bonus levels.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
This included communication to our global component teams of all
relevant fraud risks identified at the Group level, and requests to
our component audit teams to report to the Group audit team any
instances of fraud which could give rise to a material misstatement
at the Group level.
As required by auditing standards, and having considered the impact
of the Group’s results against performance targets, we perform
procedures designed to address the risk of management override
of controls, in particular the risk that Group and component
management may be in a position to make inappropriate accounting
entries and the risk of bias in accounting estimates and judgements
such as the recoverability of goodwill and indefinite life intangible
assets and site assets. Further detail in respect of these matters
is set out in the key audit matter disclosures within section 2
of this report.
158
SSP Group plc Annual Report and Accounts 2022
Secondly, the Group is also 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 or the loss
of the Group’s permission to operate in geographic locations where
non-adherence to laws could prevent trading in these locations.
We identified the following areas as being most likely to have
such an effect:
– Consumer product laws such as product safety, quality standards
and communication of allergens, reflecting the nature of the
Group’s operations;
– Employee health and safety, reflecting the nature of the group’s
operating locations; and
– Data privacy laws, reflecting the customer data held by the group.
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. Therefore, if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
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 an instance of non-compliance with
laws and regulations is from the events and transactions reflected
in the Financial Statements, the less likely it is that the inherently
limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-
detection of fraud, as these may involve collusion, forgery, intentional
omission, misrepresentation, or override of internal controls. Our audit
procedures are designed to detect material misstatement. We are
not responsible for preventing non-compliance of fraud and cannot
be expected to detect non-compliance with all laws and regulations.
On this audit, we do not believe that there is a fraud risk related
to revenue recognition based on the following assessment:
– The accounting for the majority of the Group’s sales is non-
complex, with a strong correlation to cash receipts and limited
opportunities for manual intervention in the sales process to
fraudulently manipulate revenue.
– There is limited judgement in the accounting for sales which
further limits management’s opportunity to fraudulently
manipulate revenue.
We did not identify any additional fraud risks.
We also performed procedures including:
– Identifying and testing journal entries and other adjustments for
all full scope components based on specific risk-based criteria and
comparing identified entries to supporting documentation. These
included entries posted by unusual or unauthorised users, those
posted to unexpected account combinations and those with
unusual posting descriptions.
– Assessing significant accounting estimates for bias.
Identifying and responding to risks and material misstatement
due to non-compliance with laws and regulations
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, through discussions
with the Directors and other management (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 risks throughout
our team and remained alert to any indication of non-compliance
throughout the audit. This included communication from the Group to
all component audit teams of relevant laws and regulations identified
at the Group level, and a request for component auditors to report to
the Group audit team any instances of non-compliance with laws and
regulations that could give rise to a material misstatement at the
Group level.
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 company
legislation, distributable profits legislation, and taxation legislation
(direct and indirect). We assessed the extent of compliance with
these laws and regulations as part of our procedures on the related
financial statement items.
SSP Group plc Annual Report and Accounts 2022
159
OverviewCorporate governanceFinancial statementsStrategic report We are also required to review the Viability statement, set out on
page 69 under the Listing Rules. Based on the above procedures, we
have concluded that the above disclosures are materially consistent
with the financial statements and our audit knowledge.
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 judgements
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 perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
– 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;
– the section of the annual report describing the work of the
Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements,
and how these issues were addressed; and
– the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.
We are required to review the part of the Corporate Governance
report relating to the Group’s compliance with the provisions of the
UK Corporate Governance Code specified by the Listing Rules for
our review. We have nothing to report in this respect.
Independent auditor’s report to the members of SSP Group plc
continued
7 We have nothing to report on the other information in the
Annual Report and Accounts
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 emerging and principal risks
and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect
of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw
attention to in relation to:
– the directors’ confirmation within the viability statement on page
68 that they have carried out a robust assessment of the emerging
and principal risks facing the Group, including those that would
threaten its business model, future performance, solvency and
liquidity;
– the Risk Management and Principal Risk disclosures describing
these risks and how emerging risks are identified, 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.
160
SSP Group plc Annual Report and Accounts 2022
10 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
6 December 2022
8 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.
9 Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 149,
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.
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 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 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.
The Company is required to include these financial statements in an
annual financial report prepared using the single electronic reporting
format specified in the TD ESEF Regulation. This auditor’s report
provides no assurance over whether the annual financial report has
been prepared in accordance with that format.
SSP Group plc Annual Report and Accounts 2022
161
OverviewCorporate governanceFinancial statementsStrategic report Consolidated Income Statement
for the year ended 30 September 2022
Revenue
Operating costs
Operating profit/(loss)
Share of 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 per share (pence):
– Basic
– Diluted
2022
Underlying1
£m
2,185.4
(2,153.7)
2022
Adjustments
£m
–
59.8
2022
Total
£m
2,185.4
(2,093.9)
2021
Underlying1
£m
834.2
(1,157.5)
2021
Adjustments
£m
–
14.1
2021
Total
£m
834.2
(1,143.4)
Notes
3
5
14
8
8
9
24
4
4
31.7
6.6
4.9
(86.4)
(43.2)
0.9
(42.3)
(60.9)
18.6
(42.3)
(7.7)
(7.7)
59.8
–
–
8.6
68.4
(16.2)
52.2
50.7
1.5
52.2
–
–
91.5
6.6
4.9
(77.8)
25.2
(15.3)
9.9
(10.2)
20.1
9.9
(1.3)
(1.3)
(323.3)
2.3
2.6
(74.7)
(393.1)
50.6
(342.5)
(323.9)
(18.6)
(342.5)
(46.5)
(46.5)
14.1
–
–
(32.2)
(18.1)
(1.7)
(19.8)
(33.4)
13.6
(19.8)
(309.2)
2.3
2.6
(106.9)
(411.2)
48.9
(362.3)
(357.3)
(5.0)
(362.3)
(51.3)
(51.3)
1 Presented on an underlying basis, which excludes non-underlying items as further explained in note 6.
162
SSP Group plc Annual Report and Accounts 2022
Consolidated Statement of other Comprehensive Income
for the year ended 30 September 2022
Other comprehensive income/(expense)
Items that will never be reclassified to the income statement:
Remeasurements on defined benefit pension schemes
Tax charge 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
Foreign exchange reclassified to income statement on disposal of subsidiary
Effective portion of changes in fair value of cash flow hedges
Cash flow hedges – reclassified to income statement
Tax credit/(charge) relating to items that are or may be reclassified
Other comprehensive income for the year
Profit/(loss) for the year
Total comprehensive income/(expense) for the year
Total comprehensive (expense)/income attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income/(expense) for the year
Notes
22
24
2022
£m
8.5
(1.2)
(56.3)
45.6
–
(0.1)
1.4
3.6
1.5
9.9
11.4
(19.6)
31.0
11.4
2021
£m
3.5
(1.1)
22.3
(22.0)
(0.5)
0.5
2.6
(2.1)
3.2
(362.3)
(359.1)
(350.3)
(8.8)
(359.1)
SSP Group plc Annual Report and Accounts 2022
163
OverviewCorporate governanceFinancial statementsStrategic report
Consolidated Balance Sheet
as at 30 September 2022
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
Other reserves
Retained losses
Total equity shareholders‘ funds
Non-controlling interests
Total equity
Notes
11
12
13
14
15
17
16
17
18
19
20
21
23
19
22
21
20
23
28
15
24
24
24
24
24
2022
£m
469.3
701.7
736.3
17.0
89.0
85.5
2,098.8
37.0
1.5
142.0
543.6
724.1
2021
£m
388.7
684.1
1,002.9
12.0
93.2
69.7
2,250.6
23.7
15.3
118.4
773.6
931.0
2,822.9
3,181.6
(68.8)
(719.3)
(18.5)
(216.5)
(24.6)
(304.2)
(519.1)
(24.9)
(299.9)
(17.7)
(1,047.7)
(1,165.8)
(771.1)
(10.8)
(638.1)
(1.4)
(35.9)
–
(6.9)
(1,464.2)
(2,511.9)
311.0
8.6
472.7
1.2
(9.0)
(248.5)
225.0
86.0
311.0
(777.0)
(14.9)
(872.9)
(7.2)
(21.5)
(2.1)
(9.5)
(1,705.1)
(2,870.9)
310.7
8.6
472.7
1.2
7.7
(249.9)
240.3
70.4
310.7
These financial statements were approved by the Board of Directors on 5 December 2022 and were signed on its behalf by:
Jonathan Davies
Deputy Group CEO and CFO
164
SSP Group plc Annual Report and Accounts 2022
Consolidated Statement of Changes in Equity
for the year ended 30 September 2022
Share
capital
£m
5.8
Share
premium
£m
472.7
Capital
redemption
reserve
£m
1.2
Merger
relief
reserve
£m
206.9
Balance at 30 September 2020
Covid waiver extension
amendment
Loss for the year
Other comprehensive income/
(expense) for the year
Capital contributions from
non-controlling interests (note 24)
Dividends paid to non-controlling
interests (note 24)
Acquisition of shares in partly
owned subsidiary from non-
controlling interest (note 24)
Transaction with non-controlling
interest
Subsidiary disposal
Rights Issue (note 24)
Reclassification to retained losses
(note 24)
Share-based payments
Tax on share-based payments
Other movements
–
–
–
–
–
–
–
–
2.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 September 2021
8.6
472.7
1.2
(Loss)/profit for the year
Other comprehensive income/
(expense) for the year
Capital contributions from
non-controlling interests (note 24)
Dividends paid to non-controlling
interests (note 24)
Share-based payments
Tax on share-based payments
Other movements
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 September 2022
8.6
472.7
1.2
–
–
–
–
–
–
–
–
454.1
(661.0)
–
–
–
–
–
–
–
–
–
–
–
–
Other
reserves
£m
3.1
–
–
Retained
earnings/
(losses)
£m
(559.6)
0.2
(357.3)
Total
parent
equity
£m
130.1
0.2
(357.3)
4.6
2.4
7.0
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.4)
–
–
661.0
1.8
(0.2)
2.2
–
–
–
(0.4)
–
456.9
–
1.8
(0.2)
2.2
Non-
controlling
interests
£m
71.9
–
(5.0)
(3.8)
10.3
Total
equity
£m
202.0
0.2
(362.3)
3.2
10.3
(4.6)
(4.6)
(0.4)
(0.4)
0.4
3.8
–
–
–
–
(2.2)
–
3.8
456.9
–
1.8
(0.2)
–
7.7
(249.9)
240.3
70.4
310.7
–
(10.2)
(10.2)
(16.7)
–
–
–
–
–
7.3
–
–
4.0
0.1
0.2
(9.4)
–
–
4.0
0.1
0.2
(9.0)
(248.5)
225.0
20.1
10.9
3.4
(18.8)
–
–
–
86.0
9.9
1.5
3.4
(18.8)
4.0
0.1
0.2
311.0
SSP Group plc Annual Report and Accounts 2022
165
OverviewCorporate governanceFinancial statementsStrategic report Consolidated Cash Flow Statement
for the year ended 30 September 2022
Cash flows from operating activities
Cash flow from operations
Tax (paid)/refund
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
Disposal of subsidiary
Net cash flows from investing activities
Cash flows from financing activities
Equity funding from shareholders
Equity raising expenses1
Fees paid as part of the Group’s debt modifications
Receipt of bank loans
Repayment of borrowings
Loans taken from non-controlling interests
(Repayment)/Drawdown on Covid Corporate Financing Facility
Payment of lease liabilities – principal
Payment of lease liabilities – interest
Acquisition of shares in partly owned subsidiary from non-controlling interest
Interest paid excluding interest on lease liabilities
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
1 The Group incurred £18.0m of costs in relation to its April 2021 Rights Issue, of which £1.5m was unpaid at 30 September 2021.
Notes
26
14
11
12
24
24
27
27
27
27
21
21
24
24
2022
£m
434.5
(2.3)
432.2
4.3
2.2
(146.0)
(13.6)
(1.4)
–
(154.5)
–
–
(1.3)
1.0
(4.9)
8.6
(300.0)
(137.0)
(37.9)
–
(42.7)
(18.8)
10.7
(522.3)
(244.6)
773.6
14.6
543.6
2021
£m
129.4
1.1
130.5
2.0
2.0
(65.7)
(8.9)
–
(0.1)
(70.7)
474.9
(16.5)
(1.3)
28.0
(1.6)
–
175.0
(61.4)
(28.4)
(0.4)
(34.9)
(4.6)
5.2
534.0
593.8
185.0
(5.2)
773.6
166
SSP Group plc Annual Report and Accounts 2022
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 UK-adopted International Accounting
Standards(‘IAS’) and with the requirements of the Companies Act
2006 (the ‘Act’).
The financial statements are presented in Sterling, which is the
Company‘s functional currency. All information is given to the
nearest £0.1 million.
The financial statements are prepared on the historical cost basis,
except in respect of financial instruments (including derivative
instruments) and defined benefit pension schemes for which assets
are measured at fair value, 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 financial forecasts as part of the
preparation of its financial statements, including cash flow forecasts
prepared for a period of twelve months from the date of approval
of these financial statements (“the going concern period”) and taking
into consideration a number of different scenarios. 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.
As at 30 September 2022, the Group had available liquidity of
£708.2 million, including cash of £543.6 million and a committed
undrawn revolving credit facility of £150.0 million, as well as smaller
undrawn local facilities totalling £14.6 million.
In making the going concern assessment, the Directors have
considered forecast cash flows and the liquidity available over
the going concern period. In doing so they assessed a number of
scenarios, including a base case scenario and a severe but plausible
downside scenario.
With some uncertainty surrounding the economic and geo-political
environment over the next twelve months, as well as the ongoing
impact from Covid-19, a downside scenario has also been modelled,
applying severe but plausible assumptions to the base case. This
downside scenario reflects a very pessimistic view of the travel
markets for the remainder of the current financial year, assuming
sales that are around 10% lower compared to 2019 levels than in
the base case scenario.
Following its Rights Issue in 2021, the Group must comply with
monthly covenants specifying a minimum level of liquidity of £150
million and a maximum level of consolidated net debt on a pre-IFRS 16
basis of £800 million. The Group will next be tested on its leverage
and interest cover covenants at March 2023, with a maximum
leverage multiple of nine times EBITDA and a minimum interest cover
multiple of one times EBITDA (both on a pre-IFRS 16 basis) at that
date. The leverage covenant is then tested again at June 2023 (with
a maximum multiple of five times EBITDA) and at September 2023,
where the test moves to a 3.5 times maximum multiple. The interest
cover covenant will also be tested again at September 2023, with a
minimum four times threshold applicable. In both its base case and its
severe but plausible downside case scenarios, the Group would have
headroom against all of these covenant tests at all testing dates
during the next twelve months.
Based on the scenarios modelled, the Directors are confident that
the Group will have sufficient funds to continue to meet its liabilities
as they fall due for a period of at least 12 months from the date of
approval of the financial statements. The Directors have therefore
deemed it appropriate to prepare the financial statements for the
year ended 30 September 2022 on a going concern basis.
SSP Group plc Annual Report and Accounts 2022
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Notes to Consolidated Financial Statements
continued
1. Accounting policies continued
1.3 Changes in accounting policies and disclosures
During the year ended 30 September 2022, the Group adopted the
Interest Rate Benchmark Reform – Phase 2 amendments to IFRS 7,
IFRS 4 and IFRS 16 (‘IBOR’ reform). In accordance with the transition
provisions, the amendments have been applied retrospectively, to
hedging relationships and instruments. Comparative amounts have
not been restated and there was no impact on opening reserves on
adoption at 1 October 2021.
1.4 New accounting standards not yet adopted by the Group
The following amended standards and interpretations are not
expected to have a significant impact on the Group’s consolidated
financial statements:
Reference to the Conceptual Framework (Amendments to IFRS 3)
Property, Plant and Equipment – Proceeds before Intended Use
(Amendments to IAS 16)
Onerous Contracts – Cost of fulfilling a Contract (Amendments
to IAS 37)
Annual Improvements to IFRS Standards 2018-2020
IFRS 17 ‘Insurance Contracts’
Classification of liabilities as current or non-current (Amendments
to IAS 1)
Disclosure of Accounting Policy (Amendments to IAS 1 and IFRS
Practical Statement 2)
Definition of Accounting Estimate (Amendments to IAS 8)
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities
arising from a Single transaction
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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.
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:
(a) they include no contractual obligations upon the Group to deliver
cash or other financial assets or to exchange financial assets or
financial liabilities with another party under conditions that are
potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company‘s
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company‘s own
equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
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,
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.
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. Trade and other receivables are fully written
off when each business unit determines there to be no reasonable
expectation of recovery.
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.
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Notes to Consolidated Financial Statements
continued
1. Accounting policies continued
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.
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.
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
50 years
the life of the lease
3 to 13 years
3 to 13 years
1.11 IFRS 16 Leases
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
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.
1.12 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.
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.
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1.13 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.
1.16 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.
1.14 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 as there is no
foreseeable limit to the period over which they are expected to
generate net cash inflows. In particular, they are considered to
have an indefinite life, given the strength and durability of the brands
and the level of marketing support provided. The nature of the food
and beverage industry is such that obsolescence is not a common
issue, with the Group’s major brands being originally created over
20 years ago.
These assets 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 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.
1.15 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.
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.
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Notes to Consolidated Financial Statements
continued
1. Accounting policies continued
1.17 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.
1.18 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.
1.19 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.
1.20 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 goods 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.
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1.21 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.
1.22 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 items
The Group makes reference to non-underlying items in presenting
the Group’s statutory profitability measures. Non-underlying items
are non-recurring items of expense or income which are not incurred
in the ordinary course of business (for example arising as a result of
the impact of Covid-19). Examples of non-underlying items include
restructuring expenses and impairment of goodwill, property, plant
and equipment and right-of-use assets.
1.23 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
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.
1.24 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.
1.25 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.
1.26 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 1.3, the accounting policies
adopted are consistent with those of the previous year.
SSP Group plc Annual Report and Accounts 2022
173
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
2. 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.
Critical accounting judgements
Current and deferred tax
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 historic evidence of taxable profits, current levels
of profitability and forecasts prepared for budgets and the Group‘s
Medium Term Plan (as referred to on page 68 in the viability
statement in the risk management section of the Strategic Report).
Key sources of estimation uncertainty
Impairment of goodwill and indefinite life 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. There were no specific impairment
triggers in the year.
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 12
to these financial statements.
Other sources of estimation uncertainty
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.
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SSP Group plc Annual Report and Accounts 2022
3. Segmental reporting
SSP operates in the food and beverage travel sector, mainly at airports and railway stations.
Management monitors the performance and strategic priorities of the business from a geographic perspective, and in this regard has
identified the following four key ‘reportable segments‘: North America, Continental Europe, UK and the Rest of the World (RoW). North America
includes operations in the United States, Canada and Bermuda; Continental Europe includes operations in the Nordic countries Western Europe
and Southern Europe; the UK includes operations in the United Kingdom and the Republic of Ireland; 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.
2022
Revenue
Underlying operating profit/(loss)
Non-underlying items (note 6)
Operating profit/(loss)
2021
Revenue
Underlying operating loss
Non-underlying items (note 6)
Operating loss
North
America
£m
455.4
18.4
(1.1)
17.3
194.2
(48.7)
(2.3)
(51.0)
Continental
Europe
£m
867.9
22.6
59.4
82.0
360.5
(134.3)
15.3
(119.0)
UK
£m
614.9
23.5
4.2
27.7
190.0
(52.2)
(5.2)
(57.4)
RoW
£m
247.2
13.5
1.1
14.6
89.5
(51.1)
17.4
(33.7)
Non-
attributable
£m
–
(46.3)
(3.8)
(50.1)
Total
£m
2,185.4
31.7
59.8
91.5
–
(37.0)
(11.1)
(48.1)
834.2
(323.3)
14.1
(309.2)
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.
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
Other1
2022
£m
1,433.7
615.2
136.5
2,185.4
2021
£m
456.7
281.1
96.4
834.2
1 The majority of Other turnover relates to revenue from motorway units.
The following amounts are included in underlying operating profit or loss:
2022
Depreciation and amortisation1
2021
Depreciation and amortisation1
North
America
£m
Continental
Europe
£m
UK
£m
RoW
£m
Non-
attributable
£m
Total
£m
(62.6)
(123.7)
(42.0)
(40.3)
(13.1)
(281.7)
(58.6)
(171.4)
(55.8)
(50.9)
(9.7)
(346.4)
1 Excludes amortisation of acquisition-related intangible assets and accelerated depreciation as detailed in note 6.
SSP Group plc Annual Report and Accounts 2022
175
OverviewCorporate governanceFinancial statementsStrategic report
Notes to Consolidated Financial Statements
continued
3. Segmental reporting continued
A reconciliation of underlying operating profit/(loss) to loss before and after tax is provided as follows:
Underlying operating profit/(loss)
Non-underlying operating profit (note 6)
Share of profit from associates
Finance income
Finance expense
Non-underlying finance income/(expense) (note 6)
Profit/(loss) before tax
Taxation
Profit/(loss) after tax
2022
£m
31.7
59.8
6.6
4.9
(86.4)
8.6
25.2
(15.3)
9.9
2021
£m
(323.3)
14.1
2.3
2.6
(74.7)
(32.2)
(411.2)
48.9
(362.3)
The Group‘s customer base primarily represents individuals or groups of individuals travelling through airports and railway stations. It does not
rely on a single major customer; therefore, additional segmental information by customer is not provided.
4. Earnings 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.
Loss attributable to ordinary shareholders
Adjustments:
Non-underlying operating profit (note 6)
Non-underlying finance (income)/expenses (note 6)
Tax effect of adjustments
Less non-underlying profit attributable to non-controlling interest
Underlying loss 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
2022
£m
(10.2)
(59.8)
(8.6)
16.2
1.5
(60.9)
2021
£m
(357.3)
(14.1)
32.2
1.7
13.6
(323.9)
796,050,446
–
696,983,219
–
796,050,446
696,983,219
(1.3)
(1.3)
(7.7)
(7.7)
(51.3)
(51.3)
(46.5)
(46.5)
The number of ordinary shares in issue as at 30 September 2022 was 796,113,196 (2021: 795,736,696) which excludes treasury shares.
The Company also holds 263,499 treasury shares (2021: 263,499).
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.
176
SSP Group plc Annual Report and Accounts 2022
5. Operating costs
Cost of food and materials:
Cost of inventories consumed in the period
Labour cost:
Employee remuneration
Overheads:
Depreciation of property, plant and equipment1
Depreciation of right-of-use assets
Amortisation of intangible assets
Non-underlying operating profit
Derecognition of leases under IFRS 16
Rentals payable under leases
Other overheads
1 Capped to the life of the related unit lease where relevant.
2022
£m
2021
£m
(610.2)
(234.8)
(686.7)
(352.2)
(97.9)
(170.0)
(13.8)
59.8
16.6
(299.3)
(292.4)
(90.9)
(245.7)
(9.8)
14.1
11.9
(96.4)
(139.6)
(2,093.9)
(1,143.4)
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. £284.4m (2021: £83.4m) of the expense relates to variable elements, and the remaining £14.9m (2021: £13.0m) is
rent from short-term leases. These payments are not capitalised under IFRS 16.
Employee remuneration is shown net of government grants received in the year of £8.7m (2021: £71.0m). These grants relate to support
packages made available by several national governments in response to the Covid-19 pandemic primarily in Canada, Ireland and Germany.
Other forms of government support for operating expenditure totalled £13.7m (2021: £46.0m) This is primarily attributable to state aid
schemes to support uncovered fixed costs in Germany and Switzerland (£3.3m) and France (£6.2m), business rates relief in the UK (£1.7m),
and rent relief in Norway (£1.2m).
Non-underlying items within operating costs are detailed in note 6.
Auditor‘s remuneration:
Audit of these financial statements
Audit of financial statements of subsidiaries pursuant to legislation
Audit related services
Other assurance services
2022
£m
0.6
1.6
0.1
0.1
2.4
2021
£m
0.6
1.5
0.2
0.8
3.1
Amounts paid to the Company‘s auditor and its associates in respect of services to the Company, other than the audit of the Company‘s
financial statements, have not been disclosed as the information is required to be disclosed on a consolidated basis.
SSP Group plc Annual Report and Accounts 2022
177
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
6. 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 and site exits
Debt amendment expenditure
Other legal costs
Derecognition of lease under IFRS 16
Amortisation of intangible assets arising on acquisition
Finance expenses
Effective interest rate and net gains/(losses) on debt modifications
Retrospective interest charge on US Private Placement notes as part
of the December modification
Taxation
Tax charge on non-underlying items
Total non-underlying items
Total non-
underlying
items
2022
£m
–
(12.1)
(6.1)
–
23.0
(2.9)
(1.3)
(2.3)
61.5
–
59.8
8.6
–
8.6
(16.2)
52.2
2021
£m
(26.4)
(11.9)
(12.5)
–
92.0
(21.3)
(5.4)
(0.8)
2.3
(1.9)
14.1
(31.0)
(1.2)
(32.2)
(1.7)
(19.8)
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. In the prior year, goodwill impairments of £26.4m were identified, comprising write downs in Rail Gourmet,
Switzerland and Germany. Further information is provided in note 12.
Impairment of property, plant and equipment and right-of-use assets
The continuing impact of Covid-19 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 £12.1m (2021: £11.9m) for property, plant and equipment and net £6.1m (2021: £12.5m) for right-of-use assets. Further detail is provided
in note 11.
IFRS 16 rent credit
During the year, the Group successfully negotiated several rent waivers with clients, totalling £23.0m (2021: £92.0m), 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 (which was extended up
until 30 June 2022) to record these in the income statement in the period they are received, rather than as lease modifications.
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SSP Group plc Annual Report and Accounts 2022
Restructuring and site exits
The Group has recognised a charge of £2.9m (2021: £21.3m) relating to its restructuring programmes during the year.
Debt amendment expenditure
As part of the Group’s debt refinancing, £1.3m of lender and professional fees were incurred during the year (2021: £5.4m).
Derecognition of lease under IFRS 16
The Group has recognised a gain of £61.5m (2021: £2.3m) relating to previously impaired right-of-use asset values on the derecognition
of the leases.
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
As part of the Group’s debt refinancing, non-substantial modifications to the bank facility debt and US Private Placement notes occurred.
As a result of the modifications, one-off charges of £3.1m were recognised in the income statement (2021: £43.9m loss). The overall credit
of £8.6m comprises the £3.1m debt modification charge offset by the unwind of similar adjustments from prior years (£13.7m) and
non-underlying foreign exchange losses of £2.0m.
As part of the December 2021 modification to the US Private Placement notes, a one-off additional retrospective interest charge of £1.2m
was incurred.
Further details are provided in note 19.
7. 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
2022
Number of
employees
26,704
124
2,220
29,048
2021
Number of
employees
19,459
121
1,511
21,091
The increase in the average number of employees year-on-year reflects the impact of redundancies in the prior year arising out of the Group’s
restructuring programme to reduce its cost base in response to reduced trading levels resulting from Covid-19 restrictions, and the rebuilding
of the workforce in the current year as units have been re-opened.
The aggregate payroll costs of the Group were as follows:
Wages and salaries
Social security costs
Other pension costs
Share-based payments (note 25)
2022
£m
(591.4)
(78.2)
(12.6)
(4.5)
(686.7)
2021
£m
(296.3)
(45.6)
(8.5)
(1.8)
(352.2)
SSP Group plc Annual Report and Accounts 2022
179
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
8. Finance income and expense
Finance income:
Interest income
Other net foreign exchange gains
Other
Total finance income
Finance expense:
Total interest expense on financial liabilities measured at amortised cost1
Lease interest expense
Debt modification loss
Effective interest rate adjustments
Changes to estimated future cash flows on US Private Placement notes
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
Other net foreign exchange losses
Other
Total finance expense
2022
£m
3.9
–
1.0
4.9
(45.4)
(37.9)
(3.1)
13.7
–
(1.4)
(0.3)
(0.1)
(3.3)
–
(77.8)
2021
£m
2.3
0.3
–
2.6
(39.3)
(28.4)
(43.9)
14.8
(1.9)
(2.6)
(0.8)
(0.2)
–
(4.6)
(106.9)
1
Total interest expense on financial liabilities measured at amortised cost includes a one-off retrospective interest charge on the US Private Placement notes of £1.2m, which has been included
in non-underlying items.
Non-underlying items within finance income and expense are detailed in note 6.
9. Taxation
Current tax (expense)/credit:
Current year
Adjustments for prior years
Deferred tax (expense)/credit:
Origination and reversal of temporary differences
Recognition of deferred tax assets not previously recognised
Changes in tax rates
Adjustments for prior years
Total tax (expense)/credit
Effective tax rate
2022
£m
(13.1)
1.5
(11.6)
(5.8)
2.7
–
(0.6)
(3.7)
(15.3)
60.7%
2021
£m
(3.4)
5.0
1.6
37.9
–
13.0
(3.6)
47.3
48.9
11.9%
180
SSP Group plc Annual Report and Accounts 2022
Reconciliation of effective tax rate
The tax expense (2021: credit) for the year is different to the standard rate of corporation tax in the UK of 19.0% (2021: 19.0%) applied to the
profit (2021: loss) before tax for the year. The differences are explained below:
Profit/(loss) before tax
Tax (expense)/credit using the UK corporation tax rate of 19.0% (2021: 19.0%)
Losses on which no deferred tax was recognised
Non-deductible expenses
Secondary irrecoverable taxes
Effect of change in UK tax rate
Non-deductible goodwill impairment
Effect of rates in foreign jurisdictions
Temporary differences on which no deferred tax was recognised
Adjustments for prior years
Recognition of deferred tax assets not previously recognised
Tax impact of share of profits of non-wholly owned subsidiaries1
Total tax (expense)/credit
2022
£m
25.2
(4.8)
(15.6)
(2.1)
(1.7)
–
–
0.2
0.3
0.9
2.7
4.8
(15.3)
2021
£m
(411.2)
78.1
(38.8)
(7.4)
(0.4)
13.0
(5.0)
14.7
(7.8)
1.4
–
1.1
48.9
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 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 effective tax rates for the current and prior years compared to historic rates of around 22% is due to the continued 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 rates in the current year and prior year have 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 in 2021, for which no tax deduction is available.
In the UK, legislation was passed in 2021 to increase the main rate of corporation tax from 19% to 25% with effect from 1 April 2023. While this
will result in an increase to the Group’s effective tax rate in future years, the Group’s effective tax rate benefited in the prior year from a credit
of £13.0m on remeasurement of UK deferred tax assets.
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.
10. Dividends
No dividend for the 2022 financial year is proposed (2021: no dividend proposed) and no interim dividend was paid (2021: no dividend paid).
SSP Group plc Annual Report and Accounts 2022
181
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
11. Property, plant and equipment
Cost
At 1 October 2020
Additions
Disposals
Reclassifications1
Effects of movements in foreign exchange
Other movements2
At 30 September 2021
Additions
Disposals
Reclassifications1
Effects of movements in foreign exchange
Other movements2
At 30 September 2022
Depreciation
At 1 October 2020
Charge for the year
Impairments
Disposals
Effects of movement in foreign exchange
At 30 September 2021
Charge for the year
Impairments
Disposals
Effects of movement in foreign exchange
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
Land, buildings
and leasehold
improvements
£m
Equipment,
fixtures and
fittings
£m
301.3
15.7
(19.8)
11.3
(11.0)
–
297.5
18.0
(4.4)
18.3
49.8
–
379.2
(183.8)
(26.6)
(4.8)
19.8
6.8
(188.6)
(31.7)
(1.3)
4.2
(30.2)
(247.6)
131.6
108.9
914.0
50.0
(37.2)
(11.5)
(27.0)
3.1
891.4
128.0
(48.9)
(18.3)
45.1
4.0
1,001.3
(594.3)
(64.3)
(7.1)
37.2
16.9
(611.6)
(66.2)
(10.8)
47.1
(22.1)
(663.6)
337.7
279.8
Total
£m
1,215.3
65.7
(57.0)
(0.2)
(38.0)
3.1
1,188.9
146.0
(53.3)
–
94.9
4.0
1,380.5
(778.1)
(90.9)
(11.9)
57.0
23.7
(800.2)
(97.9)
(12.1)
51.3
(52.3)
(911.2)
469.3
388.7
1
Reclassifications arise from costs capitalised as work in progress assets that are initially allocated to equipment, fixtures and fittings and subsequently on completion of the assets are reallocated
to the correct classification.
2 Included in other movements is £4.0m (2021: £3.1m) in respect of increases to the restoration costs provision (see note 23).
Impairment of property, plant and equipment and right-of-use assets
The Group tests assets for impairment when an impairment trigger is identified. The assessments triggered by the impact of Covid-19 were
undertaken at year end resulting in cumulative impairment charges of £12.1m (2021: £11.9m) to property, plant and equipment and net £6.1m
(2021: £12.5m) to right-of-use assets. The impairment primarily relates to units which the group has made the decision to exit.
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 inflows and
outflows) in one unit could impact other units.
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.
182
SSP Group plc Annual Report and Accounts 2022
12. Goodwill and intangible assets
Cost
At 30 September 2020
Additions
Disposals
Reclassifications
Effects of movement in foreign exchange
At 30 September 2021
Additions
Business acquisitions
Disposals
Reclassifications
Effect of movements in foreign exchange
At 30 September 2022
Amortisation
At 30 September 2020
Charge for the year
Impairments
Disposals
Effect of movements in foreign exchange
At 30 September 2021
Charge for the year
Disposals
Effect of movements in foreign exchange
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
Indefinite life
intangible
assets
£m
Definite life
intangible
assets
£m
Goodwill
£m
Software
£m
Total
£m
658.8
–
–
–
(18.7)
640.1
–
0.8
–
–
17.5
658.4
(33.0)
–
(26.4)
–
1.8
(57.6)
–
–
(2.8)
(60.4)
58.0
–
–
–
–
58.0
–
–
–
–
–
58.0
–
–
–
–
–
–
–
–
–
–
598.0
582.5
58.0
58.0
69.1
–
–
–
(0.9)
68.2
–
–
–
–
0.6
68.8
(61.2)
(2.5)
–
–
0.4
(63.3)
(1.0)
–
(0.3)
(64.6)
4.2
4.9
101.0
8.9
(0.4)
0.2
(1.9)
107.8
13.6
–
(0.7)
(0.5)
6.3
126.5
(61.5)
(9.2)
–
0.4
1.2
(69.1)
(12.8)
0.4
(3.5)
(85.0)
41.5
38.7
886.9
8.9
(0.4)
0.2
(21.5)
874.1
13.6
0.8
(0.7)
(0.5)
24.4
911.7
(155.7)
(11.7)
(26.4)
0.4
3.4
(190.0)
(13.8)
0.4
(6.6)
(210.0)
701.7
684.1
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.
SSP Group plc Annual Report and Accounts 2022
183
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
12. Goodwill and intangible assets continued
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:
Goodwill
Indefinite life
intangible assets
UK & Ireland
Rail Gourmet
North America
France
Belgium
Spain
Germany
Switzerland
Finland
Norway
Sweden
Denmark
Greece
Egypt
Hungary
Australia
Hong Kong
China
Thailand
India
2022
£m
104.1
25.6
17.3
62.7
8.8
46.7
32.6
27.3
21.5
74.9
47.8
24.6
4.8
13.8
0.9
10.6
31.5
0.7
11.6
30.2
598.0
2021
£m
104.1
25.6
14.4
61.4
7.9
45.7
31.9
23.9
21.0
77.3
50.2
24.1
4.7
14.3
1.1
9.8
26.3
0.6
10.8
27.4
582.5
2022
£m
55.5
–
–
2.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58.0
2021
£m
55.5
–
–
2.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
58.0
The Group tests annually for impairment, or more frequently if there are indicators that goodwill might be impaired. No impairments to
goodwill or indefinite life useful assets were recognised in 2022. In 2021 impairment charges of £26.4m were booked in relation to Rail
Gourmet, Germany and Switzerland.
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:
2022
2021
North America
Continental Europe
UK & Ireland
Rest of the World
Terminal
growth rate
2.0%
Discount
rate
12.5%
2.0%-3.0% 9.8%-16.1%
12.6%
2.0%-6.0% 9.1%-20.1%
2.0%
Terminal
growth rate
2.0%
2.0-3.0%
2.0%
2.0-6.0%
Discount
rate
11.3%
8.6-11.9%
10.4%
9.4-21.1%
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.
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 3% would result in additional impairments of £11.0m, a reduction in the growth
rate by 2% would result in additional impairments of £3.0m, and a reduction in EBITDA on a pre-IFRS 16 basis of 10% in each forecast year
would result in additional impairments of £1.8 m.
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SSP Group plc Annual Report and Accounts 2022
13. Right-of-use assets
At 1 October 2020
Additions
Depreciation charge in the period
Remeasurement adjustments
Impairments
Currency translation
Covid-19 waiver extension amendment
At 30 September 2021
Additions
Depreciation charge in the period
Remeasurement adjustments
Impairments
Currency translation
At 30 September 2022
Concessions
contracts
£m
1,239.2
112.9
(239.6)
(79.8)
(12.3)
(48.2)
4.1
976.3
110.4
(163.3)
(254.2)
(6.1)
46.3
709.4
Land,
buildings and
leasehold
improvements
£m
30.8
0.2
(5.5)
1.7
(0.2)
(1.0)
–
26.0
7.1
(6.3)
(2.3)
–
2.2
26.7
Equipment,
fixtures
and fittings
£m
1.2
–
(0.6)
–
–
–
–
0.6
–
(0.4)
–
–
–
0.2
Total
£m
1,271.2
113.1
(245.7)
(78.1)
(12.5)
(49.2)
4.1
1,002.9
117.5
(170.0)
(256.5)
(6.1)
48.5
736.3
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 11.
14. Investments in associates
The Group uses the equity accounting method to account for its associates, the carrying value of which was £17.0m as at 30 September 2022
(2021: £12.0m). The following table summarises the movement in investments in associates during the year:
At 1 October
Share of profits for the year
Dividends received
Currency adjustment
Other1
At 30 September
2022
£m
12.0
6.6
(4.3)
2.2
0.5
17.0
2021
£m
12.2
2.3
(2.0)
(0.5)
–
12.0
1
The carrying amount of Cyprus Airports (F&B) Limited (49.98%) as at 30 September 2022 is £0 (2021: £0) due to unrecognised share of accumulated losses of the associate. In 2022, Cyprus
Airports (F&B) Limited generated profits exceeding the accumulated losses brought forward and the Group recognised its share in the amount of £1.2m. Cyprus Airports (F&B) Limited also paid out
dividends in the amount of £1.7m, and as a result the associate’s value as 30 September 2022 remains negative.
The financial information of the Group‘s associates included in their own financial statements required by IFRS 12 ‘Disclosure of Interest 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 43.
SSP Group plc Annual Report and Accounts 2022
185
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
15. 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
ROU assets and lease liabilities
Other
Deferred tax assets/(liabilities)
Set-off
Deferred tax assets/(liabilities)
Assets
Liabilities
2022
£m
0.7
11.3
2.7
65.3
0.2
8.6
3.4
92.2
(3.2)
89.0
2021
£m
1.7
12.7
1.9
56.5
1.0
18.1
4.5
96.4
(3.2)
93.2
2022
£m
(9.4)
–
–
–
–
–
(0.7)
(10.1)
3.2
(6.9)
2021
£m
(9.0)
(0.9)
–
–
–
–
(2.8)
(12.7)
3.2
(9.5)
Deferred tax assets are reviewed at each reporting date, taking into account the future expected profit profile and business model of
each relevant company or country, evidence of historic taxable profits and any potential legislative restrictions on use. In considering their
recoverability, the Group assesses the likelihood of their being recovered within a reasonably foreseeable timeframe, being typically a
minimum of five years, and using the Group’s Medium-Term Plan, consistent with the basis used for the viability assessment and for
impairment testing.
Movement in net deferred tax during the year:
Intangible assets
Property, plant and equipment
Provisions
Tax losses carried forward
Pensions
ROU assets and lease liabilities
Other
30 September
2021
£m
(7.3)
11.8
1.9
56.5
1.0
18.1
1.7
Recognised
in income
statement
£m
(1.4)
(0.3)
(0.1)
5.8
0.5
(9.5)
1.3
83.7
(3.7)
Recognised
in reserves
£m
–
–
0.9
2.8
(1.2)
–
–
2.5
Currency
adjustment
£m
–
(0.2)
–
0.2
(0.1)
–
(0.3)
30 September
2022
£m
(8.7)
11.3
2.7
65.3
0.2
8.6
2.7
(0.4)
82.1
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
Assets
Liabilities
2022
£m
7.5
726.8
98.0
832.3
2021
£m
4.6
624.7
85.2
714.5
2022
£m
1.5
177.5
29.2
208.2
2021
£m
0.9
145.3
25.5
171.7
2022
£m
–
–
–
–
2021
£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,
£12.1m of this (2021: £9.0m) will expire at various dates between 2023 and 2027.
186
SSP Group plc Annual Report and Accounts 2022
The largest proportion of the unrecognised deferred tax assets relate to carried forward losses in overseas territories, principally the US,
France and Germany, where there is a history of losses for tax purposes and where the use of those losses is not considered probable in the
near future.
There are unremitted earnings in overseas subsidiaries of £37.0m (2021: £25.0m) which would be subject to additional tax of £6.6m (2021:
£4.6m) 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 differences and it is probable that such differences will not reverse in the
foreseeable future.
16. Inventories
Food and beverages
Other
17. Trade and other receivables
Trade receivables
Other receivables1
Prepayments
Accrued income
Of which:
Non-current (other receivables)
Current
2022
£m
30.5
6.5
37.0
2022
£m
32.2
154.5
11.9
28.9
227.5
85.5
142.0
2021
£m
20.1
3.6
23.7
2021
£m
27.2
128.2
30.4
2.3
188.1
69.7
118.4
1
Other receivables include long-term security deposits of £45.9m (2021: £35.9m) relating to some of the Group’s concession agreements, sales tax receivable of £11.9m (2021: £13.4m), purchasing
income of £18.9m (2021: £7.8m) and £28.5m (2021: £29.9m) due from non-controlling interest equity shareholders in certain of the Group’s US subsidiaries which relate to capital contributions
owed in return for their equity stakes. These contributions are used towards unit fixed asset buildouts and are received in accordance with the cash requirements of the subsidiary. Capital
contributions owed by the Group company which is the immediate parent of these subsidiaries are eliminated on consolidation.
The value of contract assets was not material at the reporting date.
18. Cash and cash equivalents
Cash at bank and in hand
Cash equivalents
2022
£m
401.9
141.7
543.6
2021
£m
735.4
38.2
773.6
SSP Group plc Annual Report and Accounts 2022
187
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
19. Short-term and long-term borrowings
Current liabilities
Bank loans
US Private Placement notes
Covid Corporate Financing Facility (CCFF)
Non-current liabilities
Bank loans
US Private Placement notes
2022
£m
(46.2)
(22.6)
–
(68.8)
(409.0)
(362.1)
(771.1)
2021
£m
(6.5)
–
(297.7)
(304.2)
(434.6)
(342.4)
(777.0)
Bank loans held through the Group’s UK subsidiary SSP Financing Limited
As at 30 September 2022, the Group had Facility A borrowings of £111.5m and Facility B borrowings of £268.7m. Both Facility A and Facility B
debt mature on 15 January 2025 and accrue cash-pay interest at the relevant benchmark rate plus a margin, which was 3.5% per annum as at
30 September 2022.
As at 30 September 2022, the Group’s revolving credit facility remained undrawn. This £150m committed facility expires on 15 January 2025.
When drawn, this facility accrues cash-pay interest at the relevant benchmark rate plus a margin which was 3.0% per annum as at
30 September 2022. A commitment and utilisation fee also applies to this facility.
The Group did not hold any interest rate swaps as at 30 September 2022 (see note 28 for details of the Group’s interest rate profile).
Under its financing agreements, the Group must comply with two key financial covenants on an ongoing basis: Net Debt Cover, being the ratio
of Net Debt to EBITDA; and Interest Cover, being the ratio of EBITDA on a pre-IFRS 16 basis to Interest Expense. These covenants are normally
tested biannually, however were waived again for the year ended 30 September 2022 and replaced with monthly Minimum Liquidity and
Consolidated Maximum Net Debt covenants.
Bank loans are shown net of unamortised arrangement fees totalling £2.5m as at 30 September 2022 (2021: £2.5m).
2022 debt modifications
On 5 August 2022, a non-substantial modification to the Senior Facilities occurred whereby the debt maturity was extended by a further
12 months to 15 January 2025. There was no change to the margins, which remained at 3.5% per annum for the Term Loans and 3.0% per annum
for the Revolving Credit Facility, but the previously agreed conditional amortisation payments were modified with the amount repayable
increased from 5.85% to 11.7% of Facility A should certain criteria be met by 31 December 2022. In addition, a new unconditional repayment
of 11.7% was required to be made 30 June 2023, but only if the conditional 31 December 2022 payment had not been made. Finally, the further
conditional payment due by 31 December 2023 was increased from 5.85% to 11.7% and made unconditional. Together these amended
amortisation payments match the value of two annual amortisation payments originally due in July 2020 and July 2021 which had previously
been waived.
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.
As a result of the August 2022 modification, a one-off charge of £3.1m was recognised in the income statement.
188
SSP Group plc Annual Report and Accounts 2022
Bank loans – held through subsidiaries in France, Spain and India
A number of the Group’s subsidiaries, in France, Spain and India have local facilities. These are summarised as follows:
France
As at 30 September 2022, a number of subsidiaries in France had total borrowings of EUR 51.9m (£45.6m) (2021: EUR 55.0m or £47.3m).
This debt is subject to monthly amortisation payments with £19.2m due for final repayment in March 2026 and accruing cash-pay interest
at 2.14% per annum; and £26.3m due for final repayment in December 2027 and accruing cash-pay interest at 0.01% per annum.
In 2021 the majority of the borrowings were guaranteed by the French government, which allowed the subsidiary concerned to obtain a
below-market interest rate, and was accounted for as a government grant under IAS 20 – Accounting for Government Grants and Disclosures.
The loan was 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. In FY2022, amendments were signed on all the borrowings, which were
no longer carrying a below-market rate, and as such the government grant accounting was reversed. The net impact to the income statement
was £nil during the year ended 30 September 2022 (2021: £nil). The carrying amount of the borrowings was £45.6 m (2021: £44.2m).
Spain
Select Service Partner S.A.U. had borrowings of £6.3m (EUR 7.1m) as at 30 September 2022 (2021: EUR 9.0m). This debt is subject to monthly
amortisation payments with final maturity in May 2024 and accrues cash-pay interest at the relevant benchmark rate plus a margin of 1.6%
per annum. Select Service Partner S.A.U. also had access to a EUR 10.0m revolving credit facility, which was undrawn at 30 September 2022
and expired shortly after in October 2022.
Other borrowings
As at 30 September 2022, the Group subsidiaries concerned had borrowings of £4.0m in India, but loans previously held by Switzerland and
Greece had been repaid full or cancelled.
US Private Placement (USPP) notes
As at 30 September 2022, the Group had US Private Placement (“USPP”) notes totalling £379.4m. USPP notes are shown net of unamortised
arrangement fees, totalling £2.4m as at 30 September 2022 (2021: £2.4m).
On 15 December 2020 and 12 March 2021, as part of the debt refinancing, testing waivers were granted on the USPP notes which remained
in force as at 30 September 2022. In addition to the coupon detailed below, an additional variable fee and credit rating fee continue to be
applicable. The variable fee was 1% as at 30 September 2022 (1% as at 30 September 2021) which was non-cash pay until 31 March 2022 and
cash pay thereafter; and the credit rating fee was 1.5% as at 30 September 2022 (2.0% as at 30 September 2021) of which 1.0% was non-cash
pay until 31 March 2022, with the balance cash pay, and it became cash pay in its entirety from 1 April 2022.
The following notes were drawn as at 30 September 2022:
Drawn
Oct 2018
Oct 2018
Jul 2019
Oct 2018
Oct 2018
Oct 2018
Jul 2019
Dec 2019
Dec 2019
Currency
USD
GBP
USD
USD
GBP
USD
EUR
USD
USD
Amount in
currency
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
Coupon
4.35%
2.85%
4.06%
4.50%
3.06%
4.60%
2.11%
4.25%
4.35%
Maturity
Oct 2025
Oct 2025
Jul 2026
Oct 2028
Oct 2028
Oct 2030
Jul 2031
Dec 2027
Dec 2029
Covid Corporate Financing Facility (CCFF)
As at 30 September 2022, the Group had no Commercial Paper issuances through the CCFF, having repaid £175.0m on 1 February 2022 and
£125.0m on 2 February 2022 as a result of the closure of the scheme.
SSP Group plc Annual Report and Accounts 2022
189
OverviewCorporate governanceFinancial statementsStrategic report
Notes to Consolidated Financial Statements
continued
20. Trade and other payables
Trade payables
Other payables*
Other taxation and social security
Accruals
Deferred income
2022
£m
(93.0)
(185.6)
(30.8)
(407.8)
(3.5)
(720.7)
2021
£m
(84.8)
(155.2)
(31.2)
(249.8)
(5.3)
(526.3)
* Including non-current payables amounting to £1.3m (2021: £7.2m).
Other payables include capital creditors of £12.8m (2021: £34.9m), accrued holiday pay of £24.5m (2021: £16.4m), employee related costs
of £89.4m (2021: £60.0m) and sales tax of £21.8m (2021: £11.9m).
The value of contract liabilities was not material at the reporting date.
21. Lease liabilities
Beginning of the period
Additions
Interest charge in the period
Payment of lease liabilities
Remeasurement adjustments
Currency translation
Change in accounting policy
At 30 September
Of which are:
Current lease liabilities
Non-current lease liabilities
At 30 September
2022
£m
(1,172.8)
(117.5)
(37.4)
174.9
353.4
(55.2)
–
(854.6)
(216.5)
(638.1)
(854.6)
2021
£m
(1,349.3)
(113.2)
(28.4)
89.8
180.4
51.8
(3.9)
(1,172.8)
(299.9)
(872.9)
(1,172.8)
190
SSP Group plc Annual Report and Accounts 2022
Covid-19 practical expedient
The Group has applied “Covid-19 Related Rent Concessions beyond 30 June 2021 – Amendment to IFRS 16 “ issued on 31 March 2021 which was
extended up until 30 June 2022. This practical expedient allows the impact on lease liabilities of temporary rent reductions/waivers affecting
rent payments due on or before June 2022, 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 £23.0m for the year ended 30 September 2022
(2021: £92.0m). This is also reflected in the remeasurement adjustment line in the movement of the lease liability above.
There have been no deferred fixed rent payments in the current year (2021: £2.3m).
Other information relating to leases
Note 28 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 £463.9m (2021: £195.0m), with £174.9m (2021: £89.8m) being the payment of lease liabilities.
The remaining rent payments are not capitalised under IFRS 16, with £14.9m (2021: £13.0m) relating to short-term leases and £284.4m
(2021: £92.2m) to variable leases. There was an immaterial cash outflow for low-value leases.
The Group received an immaterial amount of income from subleasing right-of-use assets during the year.
As at 30 September 2022, the Group had £nil (2021: £4.6m) 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 2022.
The following table summarises the impact that a reasonable possible change in incremental borrowing rate (“IBR”) would have had on the
lease liability additions and modifications recognised during the year:
Increase in IBR of 1%
Decrease in IBR of 1%
Increase/(decrease) in
lease liability recognised
£m
(1.4)
1.2
SSP Group plc Annual Report and Accounts 2022
191
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
22. 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 £11.9m (2021: £7.5m) 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)
2022
£m
(1.0)
(9.8)
(10.8)
2021
£m
(3.7)
(11.2)
(14.9)
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment)
risk. The plans are administered by pension funds that are legally separate from the Group and are required to act in the best interests of the
plan participants. The Group expects to pay £1.1m in contributions to its defined benefit plans in 2023. As at 30 September 2021, the weighted
average duration of the defined benefit obligation was 15.3 years (2021: 15.1 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 2019. These results have been used
by a qualified independent actuary in the valuation of the scheme as at 30 September 2021 for the purposes of IAS 19 ‘Employee Benefits’.
From 1 July 2021, as agreed with the Trustees as part of the 2019 Valuation, the employing company contributions decreased to 20.40%
(with members paying 13.60%). In 2021, it was agreed with the Trustees of the RPS that, from 1 December 2021 until 1 May 2022, the employing
company contributions would be 23.8% of pensionable pay (with members paying 10.80%). From 1 May 2022, the employing company
contributions were set at 22.10% of pensionable pay (with members paying 12.2%).
The most recent funding triennial valuation of the RG scheme, as at 31 December 2019, showed a funding level of 108.9%. Accordingly,
the contributions that are being paid by the employing company are in respect of future service of current members. The annual update
as at 31 December 2021 showed a funding level of 114%.
The next full valuations of all sections of the Railways Pension Scheme will take place as at 31 December 2022. In preparation for this,
the Scheme Actuary is consulting with Employers on the methodology and assumptions that will be used for the valuations as required
under the Rules and statutory scheme funding legislation.
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 assumption1
2022
5.0%
3.6%
2.2%
3.3%
2021
1.8%
3.1%
1.8%
2.7%
1
The RG scheme uses Retail Price Index (RPI) as a basis for inflation. In 2020, the UK Government announced that RPI will be aligned with the Consumer Price Index with Housing costs (CPIH) by 2030.
The impact on defined benefit obligation liabilities of using CPIH is immaterial as at 30 September 2022.
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
192
SSP Group plc Annual Report and Accounts 2022
2022
20.9
23.0
23.5
26.8
2021
21.0
23.3
23.5
26.8
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 2022
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
3.4
(1.1)
(0.6)
(1.1)
(0.7)
Decrease
£m
(4.1)
1.0
0.6
1.5
0.7
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
Surplus
Withholding tax payable 1
Net pension asset/(liability)
2022
43.8%
14.2%
26.0%
29.1%
1.1%
85.8%
14.2%
2022
£m
38.1
(31.4)
6.7
(2.7)
4.0
2021
33.5%
37.7%
19.8%
42.9%
3.8%
86.9%
13.1%
2021
£m
41.9
(45.6)
(3.7)
–
(3.7)
1
The Group has recognised a pension surplus for the RG scheme on an accounting basis. This surplus is presented net of a withholding tax adjustment of £2.7m (2021: £nil) which represents the tax
that would be withheld on the surplus amount.
The following amounts have been recognised in balance sheet for each scheme:
– RG scheme
Pension assets
Pension liabilities
Net defined benefit assets recognised in balance sheet1
– Norway
Pension assets
Pension liabilities
Net defined benefit liabilities recognised in balance sheet
Total net defined benefit assets/(liabilities) recognised in balance sheet
1 The balance is included within Other receivables as at 30 September 2022 (2021: £nil).
Current service cost (reported in employee remuneration)
Net interest on pension scheme liabilities (reported in finance income and expense)
Total amount charged
2022
£m
30.0
(25.0)
5.0
14.2%
5.3
(6.3)
(1.0)
4.0
2022
£m
(0.3)
(0.1)
(0.4)
2021
£m
36.4
(38.7)
(2.3)
13.1%
5.4
(6.8)
(1.4)
(3.7)
2021
£m
(0.4)
(0.1)
(0.5)
SSP Group plc Annual Report and Accounts 2022
193
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
22. Post-employment benefit obligations continued
Changes in the present value of the scheme liabilities are as follows:
Scheme liabilities at the beginning of the period
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 the end of the period
Changes in the fair value of the scheme assets are as follows:
Scheme assets at the beginning of the period
Interest income
Employer contributions
Employee contributions
Remeasurement:
– arising from changes in financial assumptions
– arising from changes in experience adjustments
Benefits paid
Curtailment
Currency adjustment
Scheme assets at the end of the period
The following amounts have been recognised directly in other comprehensive income:
Remeasurements
2022
£m
(45.6)
(0.3)
–
(0.0)
(0.8)
–
14.1
(0.5)
1.5
0.2
(31.4)
2022
£m
41.9
0.7
0.5
0.0
(3.1)
(0.1)
(1.5)
(0.1)
(0.2)
38.1
2022
£m
7.7
2021
£m
(46.6)
(0.4)
–
(0.1)
(0.6)
–
0.2
0.2
1.9
(0.2)
(45.6)
2021
£m
39.8
0.5
0.4
0.1
3.3
(0.2)
(1.9)
(0.1)
–
41.9
2021
£m
3.5
(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 2022 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
2022
2.3%
1.2%
3.8%
2.1%
2021
2.2%
0.9%
0.9%
1.6%
194
SSP Group plc Annual Report and Accounts 2022
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
2022
22.9
24.5
2021
22.7
24.3
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 2022
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
0.7
(0.4)
(0.4)
(0.7)
(0.2)
Decrease
£m
(0.8)
0.3
0.3
0.6
0.2
Although the analysis does not take account of the full distribution of cash flows expected under the plans, it does provide an approximation
of the sensitivity.
The present value of the scheme 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 the beginning of the period
Current service cost
Contributions
Interest on pension scheme liabilities
Remeasurements:
– arising from changes in financial assumptions
– arising from changes in demographic assumptions
– arising from changes in experience adjustments
Currency adjustment
Deficit in the schemes at the end of the period
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
2022
£m
(9.8)
2022
£m
(11.2)
(1.0)
0.6
(0.1)
0.8
1.3
(0.4)
0.2
(9.8)
2022
£m
(0.1)
(0.1)
(0.2)
2022
£m
0.8
2021
£m
(11.2)
2021
£m
(11.8)
(0.6)
0.5
(0.1)
0.1
–
(0.1)
0.8
(11.2)
2021
£m
(0.6)
(0.1)
(0.7)
2021
£m
–
SSP Group plc Annual Report and Accounts 2022
195
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
23. Provisions
At 1 October 2021
Created in the year
Exchange differences
Reclassification
Unwind of discount
Utilised in the year
At 30 September 2022
Represented by:
Current
Non-current
Restoration
costs
£m
(17.2)
(9.0)
–
Restructuring and
site exit costs
£m
(3.5)
(2.9)
(0.4)
(0.4)
3.9
(22.7)
(3.4)
(19.3)
(22.7)
–
2.2
(4.6)
–
(4.6)
(4.6)
Other
£m
(18.5)
(13.0)
(1.7)
(0.3)
0.3
(33.2)
(21.2)
(12.0)
(33.2)
Total
£m
(39.2)
(24.9)
(2.1)
(0.7)
6.4
(60.5)
(24.6)
(35.9)
(60.5)
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 6.
Other provisions include the estimated cost of an ongoing free travel provision provided to employees of Travellers Fare Limited, a 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. Litigation provisions amounted to £13.3m in aggregate at 30 September 2022 (2021: £6.0m).
24. Capital and reserves
Share capital and share premium
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
At 30 September 2021
Ordinary shares issued in relation to the Group’s share incentive plans
At 30 September 2022
Number of
shares
Share
capital
£m
Share
premium
£m
795,736,696
376,500
796,113,196
8.6
–
8.6
472.7
–
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.
196
SSP Group plc Annual Report and Accounts 2022
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 138 as part of
the Annual Report on Remuneration.
As at 30 September 2022, the Trustees of the UK Trust and the Share Plan Trust respectively held 36,114 (2021: 19,207) and 515,806
(2021: 454,382) ordinary shares of the Company with a combined value of £1.0m (2021: £1.3m).
Reserves
Details of reserves (other than retained earnings) are set out below:
At 30 September 2020
Excess proceeds over share capital of the April 2021 Rights Issue,
net of fees incurred
Reclassification to retained earnings
Net gain on hedge of net investments in foreign operations
Other foreign exchange translation differences
Foreign exchange reclassified to income statement on disposal
of subsidiary
Deferred 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 charge on cash flow hedges
At 30 September 2021
Net gain on hedge of net investments in foreign operations
Other foreign exchange translation differences
Deferred tax credit 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 2022
Capital
redemption
reserve
£m
1.2
Translation
reserve
£m
7.3
Cash flow
hedging
reserve
£m
(4.2)
–
–
–
–
–
–
–
–
–
1.2
–
–
–
–
–
–
1.2
–
–
22.3
(18.2)
(0.5)
(1.3)
–
–
–
9.6
(56.3)
34.7
2.8
0.2
–
–
(9.0)
–
–
–
–
–
–
0.5
2.6
(0.8)
(1.9)
–
–
–
(0.3)
1.4
0.8
–
Merger relief
reserve
£m
206.9
454.1
(661.0)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£m
211.2
454.1
(661.0)
22.3
(18.2)
(0.5)
(1.3)
0.5
2.6
(0.8)
8.9
(56.3)
34.7
2.8
(0.1)
1.4
0.8
(7.8)
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 currencies, 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.
SSP Group plc Annual Report and Accounts 2022
197
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
24. Capital and reserves continued
Merger relief reserve
Rights Issue 2021 and subsequent reclassification to retained losses (prior financial year)
On 22 April 2021 the Company completed a Rights Issue 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 £472.1m, and the issue costs and other related fees
incurred from the placing of £18.0m, are both netted and recorded in the merger relief reserve, in accordance with Section 612 of the
Companies Act 2006.
Subsequent to this recognition, the Company reclassified the full amount of the merger relief reserve to retained earnings, as it relates
to realised profits as a result of receiving qualifying consideration on the issue of shares.
Non-controlling interests
At 1 October
Share of profit/(loss) for the year
Dividends paid to non-controlling interests
Capital contribution from non-controlling interests
Purchase of non-controlling interest in subsidiary
Transaction with non-controlling interest
Disposal of subsidiary
Other
Currency adjustment
At 30 September
2022
£m
70.4
20.1
(18.8)
3.4
–
–
–
–
10.9
86.0
2021
£m
71.9
(5.0)
(4.6)
10.3
(0.4)
0.4
3.8
(2.2)
(3.8)
70.4
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 43 on page 215 for further details
of registered office and ownership percentages of each of these companies.
Summarised financial information, before inter-company eliminations, is as follows:
MALS
2022
£m
19.5
3.5
3.9
6.0
24.8
28.9
(13.0)
(17.7)
17.5
4.4
MALS
2021
£m
6.6
0.6
0.5
0.7
25.6
27.8
(18.0)
(18.5)
13.2
(2.0)
Chennai
2022
£m
Chennai
2021
£m
16.8
2.7
2.0
5.2
19.7
32.7
(17.8)
(14.7)
10.2
2.6
4.9
0.2
0.1
(0.1)
18.2
23.4
(11.9)
(14.3)
7.9
(5.8)
Income statement
Revenue
Profit after tax
NCI share of profit
Total comprehensive income/(loss)
Balance sheet
Non-current assets
Current assets
Current liabilities
Non-current liabilities
NCI share of equity
Cash flow
Net increase/(decrease) in cash and cash equivalents
198
SSP Group plc Annual Report and Accounts 2022
25. Share-based payments
The Group has granted equity-settled share awards to its employees under the Performance Share Plan (PSP), the Restricted Share Plan
(RSP), 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 page 138 and
page 134 respectively, as part of the Annual Report on Remuneration.
Restricted Share Plan
The RSP awards are subject to performance underpins. For Executive Directors these are outlined on page 138. Should any of the underpins
not be met, the Remuneration Committee would consider whether a discretionary reduction in the number of shares vesting was required.
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 £4.5m in 2022 (2021: £1.6m) in respect of the PSP and RSP.
Outstanding at 1 October
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at 30 September
Exercisable at 30 September
Weighted average remaining contracted life (years)
Weighted average fair value of awards granted (£)
2022
Number of
shares
5,247,974
3,360,575
(273,177)
(1,220,918)
2021
Number of
shares
5,931,814
2,979,246
(227,815)
(3,435,271)
7,114,454
5,247,974
359,753
6.9
2.36
371,526
6.4
3.06
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 and RSP awards is £nil.
Details of awards granted in the year
The RSPs granted during the year have been valued with reference to the share price at the date of the award. Equity-settled awards are
measured at fair value at grant date. The fair value of awards granted 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.
No PSPs were granted during the year, or during the prior year.
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 2021, 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 2022 (2021: £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 2022, 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 incurred a charge of £0.1m in respect of the matching element of the
ISIP in 2022 (2021: £0.1m).
SSP Group plc Annual Report and Accounts 2022
199
OverviewCorporate governanceFinancial statementsStrategic report
Notes to Consolidated Financial Statements
continued
26. Cash flow from operations
Profit/(loss) for the year
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation
Derecognition of leases under IFRS 16
Non-cash change in lease liabilities
Impairments
Share-based payments
Finance income
Finance expense
Pension costs
Disposal of subsidiary
Share of profit of associates
Taxation
(Increase)/decrease in trade and other receivables
Increase in inventories
Increase in trade and other payables (including provisions)
Cash flow from operations
27. Reconciliation of net cash flow to movement in net debt
Note
11
13
12
6
25
8
8
14
9
At 1 October 2020
Net increase in cash and cash equivalents
Cash inflow from other changes in debt
Cash inflow from drawing of CCFF
Cash outflow from other changes in debt
Cash outflow from payment of lease liabilities
Lease amendments
Currency translation (losses)/gains
Other non-cash movements1
At 30 September 2021
Net decrease in cash and cash equivalents
Cash inflow from other changes in debt
Cash outflow from repayment of CCFF
Cash outflow from other changes in debt
Cash outflow from payment of lease liabilities
Lease amendments
Currency translation (losses)/gains
Other non-cash movements1
At 30 September 2022
Gross debt
Cash and cash
equivalents
£m
185.0
593.8
–
–
–
–
–
(5.2)
–
Bank and
other borrowings
£m
(535.2)
–
(28.0)
(175.0)
1.6
–
–
12.1
(14.3)
US Private
Placement notes
£m
(341.1)
–
–
–
–
–
–
13.0
(14.3)
Leases
£m
(1,349.3)
–
–
–
–
89.8
34.9
51.8
–
773.6
(244.6)
–
–
–
–
–
14.6
–
543.6
(738.8)
(342.4)
(1,172.8)
(2,254.0)
(1,480.4)
–
(9.6)
300.0
4.9
–
–
(9.5)
(2.2)
–
–
–
–
–
–
(49.7)
7.4
–
–
–
–
174.9
198.5
(55.2)
–
–
(9.6)
300.0
4.9
174.9
198.5
(59.2)
5.2
(244.6)
(9.6)
300.0
4.9
174.9
198.5
(44.6)
5.2
(455.2)
(384.7)
(854.6)
(1,694.5)
(1,150.9)
1
Other non-cash movements relate to debt modification losses, revised estimated future cash flows and effective interest rate of £5.2m (2021: £31.0m) (see note 19), offset against government
grant accounting on below-market interest rate loans received of £nil (2021: £1.1m) and capitalised fees of £nil (2021: £1.3m) recognised against debt in the period.
200
SSP Group plc Annual Report and Accounts 2022
2022
£m
9.9
97.9
170.0
13.8
(78.1)
(23.0)
18.2
4.5
(4.9)
77.8
0.6
–
(6.6)
15.3
295.4
(45.9)
(13.3)
198.3
434.5
Total gross
debt
£m
(2,225.6)
–
(28.0)
(175.0)
1.6
89.8
34.9
76.9
(28.6)
2021
£m
(362.3)
90.9
245.7
11.7
(14.2)
(92.0)
50.8
1.8
(2.6)
106.9
–
3.7
(2.3)
(48.9)
(10.8)
7.6
(0.2)
132.8
129.4
Net debt
£m
(2,040.6)
593.8
(28.0)
(175.0)
1.6
89.8
34.9
71.7
(28.6)
28. 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
Trade and other payables
Carrying
amount
2022
£m
543.6
186.7
730.3
(455.2)
–
(384.7)
(854.6)
(689.9)
Fair
value
2022
£m
543.6
186.7
730.3
(446.1)
–
(379.4)
(854.6)
(689.9)
Total financial liabilities measured at amortised cost
(2,384.4)
(2,370.0)
Derivative financial liabilities
Interest rate swaps
Total derivative financial liabilities
–
–
–
–
Carrying
amount
2021
£m
773.6
155.4
929.0
(441.1)
(297.7)
(342.4)
(1,172.8)
(495.1)
(2,749.1)
(2.1)
(2.1)
Fair
value
2021
£m
773.6
155.4
929.0
(432.1)
(300.0)
(329.6)
(1,172.8)
(495.1)
(2,729.6)
(2.1)
(2.1)
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 or, where this is not known,
the incremental borrowing rate.
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.
SSP Group plc Annual Report and Accounts 2022
201
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
28. Financial instruments continued
(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 two
external debtors representing more than 10% of the total balance. The Group has no other significant concentration of debtors with no other
debtor representing more than 10%. 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
Charged in the year
Reversed in the year
Utilised in the year
Currency adjustment
At 30 September
2022
£m
44.3
(12.1)
32.2
22.5
10.7
11.1
(12.1)
32.2
2022
£m
(10.1)
(4.0)
2.2
0.6
(0.8)
(12.1)
2021
£m
37.3
(10.1)
27.2
16.5
9.4
11.4
(10.1)
27.2
2021
£m
(9.5)
(4.4)
3.2
0.5
0.1
(10.1)
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. The Group has assessed customer balances in relation to their
operating sector (such as air or rail), receivable ageing and other indicators of risk to recoverability.
(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
2022
£m
220.7
211.5
35.4
12.9
51.2
531.7
11.9
543.6
2021
£m
296.7
372.1
41.7
11.9
38.4
760.8
12.8
773.6
202
SSP Group plc Annual Report and Accounts 2022
(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 August 2022, the Group secured the extension to January 2025 of its bank facilities that were previously due to mature in January 2024.
Further detail on this is provided within note 19.
Furthermore, the Group has not paid or announced any dividends in the year.
The following are the remaining contractual maturities of financial liabilities at the reporting date.
Non-derivative financial liabilities
Bank loans
US Private Placement notes
Lease liabilities
Trade and other payables
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
Carrying
amount
£m
Contractual
cash flows
£m
2022
1 year
or less
£m
(455.2)
(384.7)
(854.6)
(689.9)
(2,348.4)
(516.6)
(486.2)
(1,014.7)
(689.9)
(2,707.4)
(111.1)
(53.5)
(226.9)
(688.6)
(1,080.1)
Carrying
amount
£m
Contractual
cash flows
£m
(441.1)
(297.7)
(342.4)
(1,172.8)
(495.1)
(471.2)
(300.0)
(443.5)
(1,288.8)
(495.1)
2021
1 year
or less
£m
(21.7)
(300.0)
(21.7)
(299.9)
(487.9)
1 to
<2 years
£m
(39.3)
(16.5)
(184.3)
(0.5)
(240.6)
1 to
<2 years
£m
(85.9)
–
(23.0)
(229.4)
(0.1)
2 to
<5 years
£m
(365.9)
(147.1)
(372.8)
–
(885.8)
2 to
<5 years
£m
(341.8)
–
(30.2)
(506.2)
(2.8)
>5 years
£m
(0.3)
(269.1)
(230.7)
(0.8)
(500.9)
>5 years
£m
(21.8)
–
(368.6)
(253.3)
(4.3)
(2.1)
(1.9)
(1.9)
–
–
–
(2,751.2)
(3,000.5)
(1,133.1)
(338.4)
(881.0)
(648.0)
SSP Group plc Annual Report and Accounts 2022 203
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
28. Financial instruments continued
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 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 2022, the fair value of bank loans and US Private Placement debt used as hedging instruments was £579.2m
(2021: £522.9m). Of this, £206.7m was in respect of Euro exposure, £317.7m in respect of the US Dollar exposure, £32.0m in respect
of Norwegian Krone exposure and £22.8m for Swedish Krona exposure.
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.
The currency profile of the cash balances of the Group at 30 September 2022 was as follows:
Cash at bank and in hand
Sterling
Other currencies
2022
£m
298.0
245.6
543.6
2021
£m
548.0
225.6
773.6
Interest rate risk
A number of historic interest rate swaps taken out to hedge interest rate exposure from variable rate term loan facilities matured during the
year and were not replaced. The interest rate and currency profile of the Group‘s bank loans at 30 September 2022 before adjustments for
unamortised bank fees of £4.9m (2021: £4.9m) and government grants of £nil (2021: £5.4m) 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
2022
£m
(138.4)
(161.6)
(31.7)
(22.8)
(32.0)
–
(4.0)
(390.5)
2021
£m
(51.8)
(64.8)
(9.8)
(9.0)
(12.3)
–
(2.8)
(150.5)
2022
£m
(42.0)
(96.9)
(286.0)
–
–
–
–
(424.9)
2021
£m
(428.6)
(192.7)
(253.8)
(15.0)
(20.7)
(0.4)
–
(911.2)
Total
2022
£m
(180.4)
(258.5)
(317.7)
(22.8)
(32.0)
–
(4.0)
(815.4)
2021
£m
(480.4)
(257.5)
(263.6)
(24.0)
(33.0)
(0.4)
(2.8)
(1,061.7)
204
SSP Group plc Annual Report and Accounts 2022
Interest rate swaps
All interest rate swap contracts exchanging floating-rate interest amounts for fixed interest amounts were 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 £2.1m as at 30 September 2021.
In 2022, a charge of £0.1 m (2021: credit of £0.5m) 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 2022, a credit of £1.4m (2021: credit of £2.6m) 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 8).
IBOR reform
During the year the transition from GBP LIBOR was completed and from January 2022 onwards our GBP denominated Term Loans have
referenced Sterling Overnight Index Average (SONIA) based indices. We are expecting to transition from using the USD LIBOR rate to the
Secured Overnight Financing Rate (SOFR) in respect of our USD denominated Term Loans for interest periods commencing after October
2022 onwards. The Group continues to monitor the market and the output from various industry groups managing the transition to new
benchmark interest rates and will look to implement changes if appropriate in the future.
Sensitivity analysis (prior financial year)
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 2021, 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
2022
£m
–
–
2021
£m
0.9
(0.9)
(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 24), 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 March 2021 the Group secured a further amendment from its lending group of banks and US Private Placement noteholders to waive
existing financial covenants covering Net Debt Cover and Interest Cover an replace them with two new interim covenant tests, 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 debt.
As mentioned in the liquidity section, during the year the Group completed a further 12-month extension to January 2025 of its bank facilities
that were previously due to mature in January 2024.
SSP Group plc Annual Report and Accounts 2022 205
OverviewCorporate governanceFinancial statementsStrategic report Notes to Consolidated Financial Statements
continued
29. 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
2022
£m
124.9
2021
£m
67.5
Capital commitments relate to where the Group has contractually committed to acquire and/or build tangible assets that are not yet incurred
as at 30 September 2022.
30. Related parties
Related party relationships exist with the Group‘s subsidiaries, associates (note 14), key management personnel, pension schemes (note 22)
and employee benefit trust (note 24).
Subsidiaries
Transactions between the Company and its subsidiaries, and transactions between subsidiaries, have been eliminated on consolidation and
are not disclosed in this note. Where the Group does not own 100% of its subsidiary, significant transactions with the other investors in the
non-wholly owned subsidiary (‘investor’), other than those listed in note 24, are disclosed within this note (in the table below). Sales and
purchases with related parties are made at normal market prices.
Associates
Significant transactions with associated undertakings during the year, other than those included in note 14, are included in the table below.
Related party transactions
Sales to related parties
Purchases from related parties
Management fee income
Other income
Other expenses1
Amounts owed by related parties at the end of the year
Amounts owed to related parties at the end of the year
2022
£m
(0.2)
(2.5)
1.9
1.9
(8.4)
6.4
(14.7)
2021
£m
–
(0.5)
1.4
0.3
(7.5)
4.1
(6.6)
1 The majority of other expenses relates to £6.50m rent from Midway Partnership LLC (2021: £7.0m).
2 The majority of amounts relates to £10.1m loans received from non-controlling interest shareholders in Brazil, Thailand and Bahrain (2021: £6.4m).
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 2022 the value of the guarantees given by the various Group
companies in respect of both wholly owned and other subsidiaries was £135.9m (2021: £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, Deputy Group CEO and CFO,
Non-Executive Directors and the Group Executive Committee.
Short-term employee benefits
Post-employment benefits
Share-based payments
206
SSP Group plc Annual Report and Accounts 2022
2022
£m
(9.1)
(0.5)
(2.5)
(12.1)
2021
£m
(7.4)
(0.6)
(0.4)
(8.4)
31. Business combinations
Business combinations
The Group made no significant business combinations during the year ended 30 September 2022 or the prior year.
32. Post balance sheet events
There were no significant subsequent events after the reporting date.
SSP Group plc Annual Report and Accounts 2022 207
OverviewCorporate governanceFinancial statementsStrategic report Company Balance Sheet
As at 30 September 2022
Fixed assets
Investments
Current assets
Debtors due within one year
Liabilities falling due within one year
Creditors
Net current 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
2022
£m
2021
£m
34
35
36
37
37
37
37
37
37
1,202.0
1,202.0
1,199.3
1,199.3
288.4
300.9
(14.6)
273.8
(19.8)
281.1
1,475.8
1,480.4
8.6
472.7
–
1.2
–
993.3
8.6
472.7
(1.7)
1.2
–
999.6
1,475.8
1,480.4
These financial statements were approved by the Board of Directors on 5 December 2022 and were signed on its behalf by
Jonathan Davies
Deputy Group CEO and CFO
Registered number: 5735966
208
SSP Group plc Annual Report and Accounts 2022
Company Statement of Changes in Equity
As at 30 September 2022
At 1 October 2020
Loss for the year
Rights Issue
Reclassification to retained
earnings
Share-based payments
At 30 September 2021
Loss for the year
Reclassification to retained
earnings
Share-based payments
At 30 September 2022
Share
capital
£m
5.8
–
2.8
–
–
8.6
–
–
–
8.6
Share
premium
£m
472.7
–
–
–
–
472.7
–
–
–
472.7
Capital
redemption
reserve
£m
1.2
–
–
–
–
1.2
–
–
–
1.2
Merger
relief
reserve
£m
206.9
–
454.1
(661.0)
–
–
–
–
–
–
Treasury
shares
£m
(1.7)
–
–
–
–
(1.7)
–
1.7
–
–
Profit and
loss account
£m
351.3
(14.5)
–
661.0
1.8
999.6
(8.7)
(1.7)
4.1
Total
equity
£m
1,036.2
(14.5)
456.9
–
1.8
1,480.4
(8.7)
–
4.1
993.3
1,475.8
SSP Group plc Annual Report and Accounts 2022 209
OverviewCorporate governanceFinancial statementsStrategic report Notes to Company Financial Statements
33. 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.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted
international accounting standards and has set out below where advantage of the FRS 101 disclosure exemptions has been taken:
– the cash flow statement and related notes;
– disclosures in respect of transactions with wholly owned subsidiaries;
– disclosures in respect of capital management;
– disclosures required in respect of financial instruments;
– disclosures in respect of share based payments; and
– the effects of new but not yet adopted standards.
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 (2021: loss) is disclosed in note 37 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. As part of the Group’s adoption of the going concern basis, the Board has
reviewed the Group’s trading forecasts, incorporating different scenarios to reflect the uncertainty surrounding the economic and geo-political
environment over the next twelve months, as well as the ongoing impact from Covid-19. 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 on page 167 relating to the 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 previously recognised 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.
210
SSP Group plc Annual Report and Accounts 2022
34. Investments in subsidiary undertakings
Cost
At 1 October 2021
Additions
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
Shares in Group
undertaking
£m
1,199.3
2.7
1,202.0
1,202.0
1,199.3
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 2022 (2021: £nil).
35. Debtors
Due within one year
Amount receivable from Group undertakings
Other debtors
36. Creditors
Due within one year
Amounts payable to Group undertakings
Accruals and deferred income
Trade and other payables
Other taxation and social security
37. Capital and reserves
Share capital and share premium
2022
£m
287.8
0.6
288.4
2022
£m
–
(6.6)
(4.8)
(3.2)
(14.6)
2021
£m
300.7
0.2
300.9
2021
£m
(2.3)
(12.0)
(2.4)
(3.1)
(19.8)
Issued, called up and fully paid:
Ordinary shares of £0.01085 each
At 30 September 2021
Ordinary shares issued in relation to the Group’s share incentive plans
At 30 September 2022
Number of
shares
Share
capital
£m
Share
premium
£m
795,736,696
376,500
796,113,196
8.6
–
8.6
472.7
–
472.7
SSP Group plc Annual Report and Accounts 2022
211
OverviewCorporate governanceFinancial statementsStrategic report Notes to Company Financial Statements
continued
37. Capital and reserves continued
Reserves
At 1 October 2020
Loss for the year
Excess of proceeds over share capital of the April 2021 Rights Issue,
net of fees incurred
Reclassification to retained earnings
Share-based payments
At 30 September 2021
Loss for the year
Reclassification to retained earnings
Share-based payments
At 30 September 2022
Treasury
shares
£m
(1.7)
–
–
–
–
(1.7)
–
1.7
–
–
Capital
redemption
reserve
£m
1.2
–
–
–
–
1.2
–
–
–
1.2
Merger
relief
reserve
£m
206.9
–
454.1
(661.0)
–
–
–
–
–
–
Profit and
loss
account
£m
351.3
(14.5)
–
661.0
1.8
999.6
(8.7)
(1.7)
4.1
993.3
Total
£m
557.7
(14.5)
454.1
–
1.8
999.1
(8.7)
–
4.1
994.5
Capital redemption reserve
The capital redemption reserve relates to the cancellation of the deferred ordinary shares in 2015.
Merger relief reserve
Rights Issue 2021 (prior financial year)
On 22 April 2021 the Company completed a Rights Issue 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 £472.1m, and the issue costs and other related fees
incurred from the placing of £18.0m, were both netted and recorded in the merger relief reserve, in accordance with Section 612 of the
Companies Act 2006.
Subsequent to this recognition, the Company reclassified the full amount of the merger relief reserve to retained earnings, as it relates
to realised profits as a result of receiving qualifying consideration on the issue of shares.
Profit and loss account
The Company‘s loss for the financial year was £8.7m (2021: loss of £14.5m).
Dividends
No dividend for the 2022 financial year is proposed (2021: £nil) and no interim dividend was paid (2021: £nil).
212
SSP Group plc Annual Report and Accounts 2022
38. Directors‘ remuneration
The remuneration of the Directors of the Company is disclosed in note 30 to the Group accounts and in the Annual Report on Remuneration
on page 125. Details of RSP and DSPB awards made to Executive Directors are given on page 128.
39. 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 30 to the Group accounts.
The Company has no transactions with or amounts owed to or from partly owned subsidiary undertakings. All holdings in partly owned
undertakings are held through indirectly held wholly owned subsidiaries of the Company.
40. Contingent liabilities
The Company is a member of a VAT group and consequently is jointly liable for the VAT group‘s liability. The Company‘s contingent liability
at 30 September 2022 was approximately £7.2m (2021: £2.0m).
In addition, the Company is a guarantor for the Group’s main bank facilities and US Private Placement borrowings. The borrowings under
the facilities at 30 September 2022 were £759.6m (2021: £1,003.3m).
The Company has also provided guarantees in relation to certain operating liabilities of operating subsidiaries. All such liabilities are expected
to be paid by the relevant subsidiary in the normal course of business.
41. Other information
The fee for the audit of the Company‘s annual financial statements was £0.6m (2021: £0.6m).
The average number of persons employed by the Company (including Directors) during the year was 69 (2021: 57).
Total staff costs (excluding charges for share-based payments) were £12.1m (2021: £10.4m).
SSP Group plc Annual Report and Accounts 2022
213
OverviewCorporate governanceFinancial statementsStrategic report Notes to Company Financial Statements
continued
43. 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.
Part A – Subsidiaries
Name
Subsidiaries (all of which are included in the Group
consolidation):
Australia
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
SSP Australia Airport Concessions Pty Ltd
605/83 York Street, Sydney, Australia, NSW 2000
Holding
company
SSP Australia Airport F&B Pty Ltd
605/83 York Street, Sydney, Australia, NSW 2000
SSP Australia Catering Pty Limited3
605/83 York Street, Sydney, Australia, NSW 2000
WA Airport Hospitality Pty Limited
605/83 York Street, Sydney, Australia, NSW 2000
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
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
Brazil
SSP DFA Restaurantes Brasil Ltda
Rua Goethe, 54 – Botafogo Rio de Janeiro - RJ,
22281-020
Cambodia
51%
51%
50%1
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
China
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
16
214
SSP Group plc Annual Report and Accounts 2022
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Holding and
Management
Services
company
Holding
company
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
60%
Name
Cyprus
SSP Catering Cyprus Limited
67 Limassol Avenue, Lamda Vision, 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, Lamda Vision, Vision Tower
1st Floor, 2121 Aglantzia, Nicosia, Cyprus,
P.O.Box 14144, CY-2154 Aglantzia, Nicosia, Cyprus
Denmark
SSP Denmark ApS
Lufthavnsboulevarden 14, 1. sal, 2770, Kastrup,
Denmark
Egypt
SSP Egypt for Restaurants JSC
Cairo International Airport, Airmall Building, 1st Floor,
Cairo, Egypt
Estonia
Select Service Partner Eesti A/S
Endla 45, 10142 Tallinn, Estonia
Finland
Select Service Partner Finland Oy
Helsinki Airport, Vantaa, FI-01530, Finland
France
Bars et Restaurants Aéroport Lyon Saint Exupéry
SAS
Immeuble l‘Arc, BP 197, Lyon Saint Exupéry Aéroport,
69125, Colombier-Saugnieu, 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
Holding and
Management
Services
company
SSP Aéroports Parisiens SASU
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
SSP Caraibes SASU
5, rue Charles de Gaulle, Immeuble Equalia 94140,
Alfortville, France
SSP France Financing SAS
Immeuble le Virage, 5, Allée Marcel Leclerc, CS60017
13417 Marseille Cedex 08, France
Holding
company
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
Name
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 Centre,
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 Centre,
345 Nathan Road, Yau Ma Tei, Kowloon,
Hong Kong
SSP China Development Limited6
Unit 1702-05, Wing On Kowloon Centre,
345 Nathan Road, Yau Ma Tei, Kowloon,
Hong Kong
Hungary
SSP Hungary Catering Kft
Budapest Ferenc Liszt 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
Semolina Kitchens Private Limited
504, Regus, Level-5, Caddie Commercial Tower,
Hospitality District Aerocity Delhi New Delhi 110037
India
TFS (R&R Works) 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
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
Malaysia
Select Service Partner Malaysia SDN
C-2-3A, TTDI Plaza, Jalan Wan Kadir 3, Taman Tun Dr
Ismail, 60000 Kuala Lumpur
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Name
Mauritius
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
Holding and
Management
Services
company
Holding
company
3
49%1,10
21.756%1,15
Travel Food Services Global Private Ltd
Intercontinental Trust Limited, Level 3,
Alexander House, 35 Cybercity, Ebene, Mauritius
Inactive
company
49%1,10
Netherlands
Rail Gourmet Netherlands BV
Herikerbergweg 238, Luna ArenA,
1101 CM Amsterdam, the Netherlands
SSP Nederland BV
Leidseveer 2, 3511 SB, Utrecht, Netherlands
Norway
Select Service Partner AS
Henrik Ibsens veg 7, 2060 Gardermoen, Norway
Holding
company
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
Inactive
company
49%1,10
Select Service Partner Russia LLC6
Russian Federation, Moscow region, Khimki, Melnikov
Ave., 13, floor 1, premises 011, Room. 4
Inactive
company
49%1,10
49%1,10
49%1,10
29.4%1,11
49%1,10
49%1
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
Holding
company
SSP Airport Restaurants SLU
Camino de la Zarzuela, 19-21, 2ª plta., 28023, Madrid,
Spain
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
Inactive
company
Holding
company
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
74.551%23
Taiwan
SSP Taiwan Limited
1F, No.13, Ln. 84, He 1st Rd, Keelung City,
Jhongjheng District, 202, Taiwan, Republic of China
Inactive
company
SSP Group plc Annual Report and Accounts 2022
215
OverviewCorporate governanceFinancial statementsStrategic report Notes to Company Financial Statements
continued
43. Group companies continued
Name
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
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
Procurement 2U 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
Whistlestop Airports Limited
SSP Group Head Office
Whistlestop Foods Limited
SSP Group Head Office
Whistlestop Operators 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
Agency
company
Inactive
company
Agency
company
Procurement
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
Inactive
company
Inactive
company
Inactive
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)
Name
United States of America
ATL Dine and Fly, LLC
1210 Peachtree Street, NE, Atlanta, GA 30361, United
States
Inactive
company
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
Good Coffee PDX, LLC
Chefstable LLC, 819 Se Grant St, Portland OR 97214,
United States
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
Inactive
company
LBC PDX, LLC
780 Commercial Street, SE, Suite 100, Salem, Oregon,
97301, United States
Mack II SSP ATL, LLC
289 S.Culver Street, Lawrenceville, GA 30046, United
States
Inactive
company
Select Service Partner LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Inactive
company
SSP America AZA, LLC
CT Corporation System, 3800 N Central Avenue, Suite
460, Phoenix AZ 85012, United States
Inactive
company
SSP America BNA, LLC
300 Montvue Road, Knoxville, Tennessee 37919,
United States
Inactive
company
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
SSP America CVG, LLC
306 W Main Street, Suite 512, Frankfort KY 40601
United States
SSP America DAL, LLC
701 Brazos Street, Ste 720, Austin TX 78701, United
States
SSP America DEN, LLC
The Corporation Company, 1675 Broadway –
Suite 1200, Denver CO 80202, United States
SSP America DFW, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Inactive
company
Inactive
company
Inactive
company
SSP America DFWI, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Inactive
company
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
Inactive
company
49%1
49%1
62.8%17
70%
51%
70%
60%
90%
51%
90%
60%
216
SSP Group plc Annual Report and Accounts 2022
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 HOU, LLC
1999 Bryan Street, Suite 900, Dallas County, Dallas TX
75201-3136, United States
SSP America Houston, LLC
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Inactive
company
SSP America Hudson BNA Concessions, LLC
300 Montvue Road, Knoxville, Tennessee 37919,
United States
SSP America IAH20
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Inactive
company
SSP America IAH ITRP, LLC
1999 Bryan St, Suite 900, Dallas, Texas 75201, United
States
Inactive
company
SSP America, Inc.
330 N Brand Blvd., Glendale, California, United States
SSP America IND, LLC
150 West Market Street, Suite 800, Indianapolis,
IN 46204, United States
SSP America IND HC, LLC
334 North Senate Avenue, 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 KCI, LLC
120 South Central Avenue, Clayton, MO 63105, United
States
Inactive
company
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 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
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
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
Inactive
company
Inactive
company
Name
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
SSP America RDU, LLC
CT Corporation System, 160 Mine Lake Court,
Suite 200, Raleigh NC 27615-6417, United States
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Inactive
company
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
80%
62.8%
70%
70.7%
SSP America SAN, LLC
330 N Brand Blvd., Glendale, California, United States
70%
82%
55%
70%
65%
51%
61.5%
90%
80%
65%
80%
77.65%
57.65%
SSP America SAT, LLC
1999 Bryan Street, Suite 900, Dallas County, Dallas TX
75201, United States
Inactive
company
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 SFB, LLC
1200 South Pine Island Road, Plantation FL 33324,
United States
SSP America Sky Gamerz ATL, LLC
289 S.Culver Street, Lawrenceville, GA 30046, United
States
Inactive
company
Inactive
company
SSP America Sky Gamerz SEA, LLC
711 Capitol Way S, Suite 204, Olympia WA 98501,
United States
SSP America SFO, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
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
SSP America SMF, LLC
330 N Brand Blvd., Glendale, California, United States
SSP America SNA, LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
SSP America STS LLC
1209 Orange Street, Wilmington, DE 19801
Inactive
company
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
SSP America Texas, Inc.
CT Corporation System, 1999 Bryan Street, Suite 900,
Dallas County, Dallas TX 75201-3136, United States
Holding
company
SSP America (USA), LLC
Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle DE 19801, United States
Holding
company
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
51%
55%
51%
80%
65%
55%
60%
60%
52%
3
60%
69.885%19
SSP Group plc Annual Report and Accounts 2022
217
OverviewCorporate governanceFinancial statementsStrategic report Notes to Company Financial Statements
continued
43. Group companies continued
Part B – Associates
Name
Belgium
Railrest SA6
Rue De France 95, Be-1070 Brussels, Belgium
Cyprus
Cyprus Airports (F&B) Limited
Larnaca International Airport, P.O.Box 43024 6650,
Larnaca, Cyprus
SSP Catering Cyprus Ltd
67 Limassol Avenue, Lamda Vision Tower 1st Floor,
2121 Aglantzia, Nicosia, Cyprus, P.O.Box 14144,
CY-2154 Aglantzia, Nicosia, Cyprus
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
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
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
Management
Services
company
50%2
21.609%14
21.609%14
21.609%14
21.609%14
GMR Hospitality Limited
BCCL, Times Internet Building, Second Floor, Plot No.
391, Udyog Vihar Phase - III Gurugram Gurgaon 122016
India
Inactive
company
14.7%24
Design and
architectural
services
25%
49%2
Muffin Design Solutions Private Limited
No F-7 NVT Arcot Vaksanna Sarjapur,
Attibelle Road, Sariapur, Bangalore,
KA 562125, India
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
PLTR-SSP @ KCI, LLC
CSC-Lawyers Incorporating Service Company, 221
Bolivar Street, Jefferson City, MO 65101, 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
218
SSP Group plc Annual Report and Accounts 2022
Part C – Other Investments
Name
KCorp Charitable Foundation22
Shop 1, Floor G, Rashid Mansion,
Dr Annie Besant Road, Lotus Junction, Worli, MUMBAI
Maharashtra 400018 India
Principal
activity
(catering
and/or retail
concessions
unless
otherwise
stated)
Class and
percentage
of shares
held (100%
ordinary
shares* unless
otherwise
stated)
N/A2
Notes
*
1
100% of the shares are held by Select Service Partner Co. Limited (Thailand).
Ordinary shares includes references to equivalent in other jurisdictions.
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’.
SSP does not have control as defined by IFRS 10 ‘Consolidated Financial Statements‘.
Includes 100% of preference shares.
2
3
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
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 50.1% of the ordinary shares and 100% of the preference shares are held by SSP Asia Pacific
Holdings Limited and 49.9% of the ordinary shares are held by Travel Food Services Private
Ltd.
24 30% of the ordinary shares are held by Travel Food Services Private Ltd
Subsidiary undertakings exempt from audit
The following subsidiaries, all of which are incorporated in England
and Wales, are exempt from the requirements of the Companies Act
2006 relating to the audit of individual accounts by virtue of section
479A of that Act.
44.1%2,13
Company
Company Registration Number
Rail Gourmet Group Limited
SSP Asia Pacific Holdings Limited
SSP Bermuda Holdings Limited
SSP Euro Holdings Limited
SSP Financing No. 2 Limited
SSP Group Holdings Limited
SSP South America Holdings Limited
06180162
06180177
11815274
08654008
09113371
05736092
11508434
49%
50%2,18
50%2,18
51%2
50%2
Glossary
ABC
AGM
APAC
APM
AI
Articles
BEIS
BK
c.
CCFF
CO2e
CGU
CSA
DACH
DE&I
DSPB
DTR
EBITDA
EEME
ENED
ESEF
ESG
F2F
F&B
FAWC
FDA
FLSA
FRC
FTE
FY21
FY22
GAP
GDPR
GHG
GRI
Anti-bribery and corruption
Annual General Meeting
Asia Pacific
Alternative performance measure
Artificial Intelligence
the Company’s Articles of Association
The Government Department for Business,
Energy and Industrial Strategy
Burger King
circa
Covid Corporate Financing Facility
Carbon dioxide equivalent
Cash generating unit
Control Self-Assessment
Germany, Austria and Switzerland
Diversity, Equity & Inclusion
Deferred Share Bonus Plan
Disclosure Guidance and Transparency Rules
H&S
HY
IEA
IFRS
Health and Safety
Half Year
International Energy Agency
International Financial Reporting Standards
ISA (UK)
International Standards on Auditing (UK)
KPIs
LFL
LGBT+
M&A
M&S
MSAs
MTP
NED
NGO
NGFS
NPA
OAT
Key performance indicators
Like-for-like
Lesbian, Gay, Bisexual, Transgender plus
Mergers and acquisitions
Marks and Spencer
Motorway Service Areas
Medium term plan
Non-executive director
Non-government organisation
Network of Central Banks and Supervisors
for Greening the Financial System
Note Purchase Agreement
Order at Table
Earnings before interest, tax, depreciation
and amortisation
Pre-IFRS 16
underlying EBITDA
EBITDA adjusted for the impact of IFRS 16 and any
non-underlying items
Eastern Europe and Middle East
Non-Executive Director for Workforce
Engagement
European Single Electronic Format
Environmental, Social, and Governance
Farm to Fork
Food and Beverage
Farm Animal Welfare Council
Food and Drug Administration
Fair Labour Standards Act
Financial Reporting Council
Full time equivalents
Financial year 2021
Financial year 2022
Group Authorisation Policies
General Data Protection Regulation
Greenhouse Gas
Global Reporting Initiative
PSP
PY
RSP
SASB
SBTi
SDGs
SEDEX
TCFD
TFS
UAE
UK&I
UNHCR
USPP
WiHTL
Performance Share Plan
Prior year
Restricted Share Plan
Sustainability Accounting Standards Board
Science Based Targets Initiative
UN’s Sustainable Development Goal
Supplier Ethical Data Exchange
Task Force on Climate-related Financial
Disclosures
Travel Food Services Private Limited
United Arab Emirates
United Kingdom and Ireland
UN Refugee Agency
US Private Placement
Welcoming Everyone in Hospitality, Travel
and Leisure
SSP Group plc Annual Report and Accounts 2022
219
OverviewCorporate governanceFinancial statementsStrategic report Company Information
Forward-looking statements
Certain information included in this Annual Report and Accounts
is forward looking and involves risks, assumptions and uncertainties
that could cause actual results to differ materially from those
expressed or implied by forward-looking statements.
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.foodtravelexperts.com/international/careers/
Forward-looking statements cover all matters which are not
historical facts and include, without limitation, projections relating
to results of operations and financial conditions and the Company’s
plans and objectives for future operations, including, without
limitation, discussions of expected future revenues, financing plans,
expected expenditures and divestments, risks associated with
changes in economic conditions, the strength of the food and support
services markets in the jurisdictions in which the Group operates,
fluctuations in food and other product costs and prices and changes
in exchange and interest rates. Forward-looking statements can be
identified by the use of forward-looking terminology, including terms
such as ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘forecasts’,
‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’, ‘will’, ‘would’,
‘could’ or ‘should’ or, in each case, their negative or other variations or
comparable terminology. Forward-looking statements in this Annual
Report and Accounts are not guarantees of future performance.
All forward-looking statements in this Annual Report and Accounts
are based upon information known to the Company on the date of this
Annual Report and Accounts. Accordingly, no assurance can be given
that any particular expectation will be met and readers are cautioned
not to place undue reliance on forward-looking statements, which
speak only at their respective dates.
Additionally, forward-looking statements regarding past trends or
activities should not be taken as a representation that such trends or
activities will continue in the future. Other than in accordance with its
legal or regulatory obligations (including under the UK Listing Rules
and the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority), the Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise.
Nothing in this Annual Report and Accounts shall exclude any liability
under applicable laws that cannot be excluded in accordance with
such laws.
220
SSP Group plc Annual Report and Accounts 2022
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SSP Group plc
Jamestown Wharf
32 Jamestown Road
London
NW1 7HW
+44 20 7543 3300
www.foodtravelexperts.com
Company number: 5735966