Annual Report and Accounts and Notice of AGM

RNS Number : 4565V
SSP Group PLC
30 January 2017
 

FOR IMMEDIATE RELEASE

   LEI: 213800QGNIWTXFMENJ24   

 

                                                               

 

30 January 2017

 

SSP Group plc (the "Company" or the "Group")

 

Posting of 2016 Annual Report and Accounts and Notice of Annual General Meeting

 

Following the release on 29 November 2016 of its preliminary results for the year ended 30 September 2016, SSP Group plc announces that it has today posted to shareholders copies of its Annual Report and Accounts for the period ending 30 September 2016 together with the Notice of Annual General Meeting ("Notice of AGM") and Form of Proxy.

 

Copies of the 2016 Annual Report and Accounts, Notice of AGM and Form of Proxy have been submitted to the National Storage Mechanism and will shortly be available for inspection at:www.Morningstar.co.uk/uk/nsm. Copies of the 2016 Annual Report and Accounts and Notice of AGM are also available on the Company's website at www.foodtravelexperts.com.

 

The Company's Annual General Meeting will be held at 11.00am on 13 March 2017 at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London, EC4Y 1HS.

 

The information set out in the Appendix, which is extracted from the 2016 Annual Report and Accounts, is included for the purposes of complying with DTR 6.3.5 and its requirements on how to make public annual financial reports.  The information in the Appendix should be read in conjunction with the Company's preliminary results for the year ended 30 September 2016 released on 29 November 2016 which can be viewed at www.foodtravelexperts. Together, these constitute the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service.

 

For further information contact:

 

SSP Group plc

 

Helen Byrne

Company Secretary & General Counsel

0207 543 3300

 

 

 

Appendix

This material should also be read in conjunction with, and is not a substitute for reading, the full 2016 Annual Report and Accounts.

Note and page references in the text of this Appendix refer to note numbers and page numbers in the 2016 Annual Report and Accounts that can be viewed on the Company's website.

 

1.             Directors' responsibility statement

The following responsibility statement is repeated here to comply with DTR 6.3.5.  This statement relates to, and is extracted from, page 56 of the 2016 Annual Report and Accounts. Responsibility is for the full 2016 Annual Report and Accounts, not the extracted information presented in this announcement and the full year results announcement.

"The Directors are responsible for preparing the Annual Report and the Group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and parent company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards including FRS 101 Reduced Disclosure Framework.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of the Group and parent company financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;

• for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the parent company financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the strategic report/directors' report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

By order of the Board:

Kate Swann


Jonathan Davies


Chief Executive Officer


Chief Financial Officer


28 November 2016


28 November 2016


 

2.             Principal Risks

The description below of the principal risks and uncertainties that the Company faces is extracted from pages 18 to 20 of the 2016 Annual Report and Accounts.

"The following table summarises the principal risks and uncertainties to which the Group is exposed, and the actions taken to mitigate those risks and uncertainties. Risks are identified as principal based on the likelihood of occurrence and the potential impact on the Group. Two risks (labour laws and unions, outsourcing) have been added as principal risks since the prior year.


Risks

Mitigating Factors

Strategic


Strategic development

The Group's strategy involves expanding its business in developing markets, including Asia Pacific and Eastern Europe and the Middle East.

The Group may not be successful in winning new contracts on commercially acceptable terms, or may win new contracts but fail to mobilise and operate them successfully in these territories.

The Group may not have the capability to enter new markets and capitalise on the business development opportunities these provide.

The Group prioritises its investment in new contracts as part of the ongoing review of its global pipeline, and the prioritisation of its capital investment and resources.

The Group has strengthened the management team in Asia Pacific, USA and Eastern Europe and the Middle East, especially in business development and operations.

The executive management team reviews mobilisation plans to ensure that new openings are delivered on time.

The Group adopts a joint venture model in certain new territories to provide access to existing local infrastructure and expertise.

Client relationships

The Group's operations are dependent on the terms of airport and railway station concession agreements and on its ability to retain existing concession contracts and win new contracts from either its existing or new clients. The Group's clients may turn to alternative operators, cease operations, terminate contracts with the Group or increase pricing pressure on the Group.

The Group's local management structures in all its major geographies allow it to maintain strong relationships with its clients and monitor performance in close partnership with its clients' management teams. The Group has now established a 'contact strategy' with key stakeholders at clients to establish and/or maintain ongoing relationships.

The Group also has an annual online and interview-based client survey to ensure any concerns are being addressed. Furthermore, the Group proactively seeks to invest in, extend and enhance its offers in its key locations, working in conjunction with its clients.

Senior management capability and retention

The performance of the Group depends on its ability to attract, motivate and retain key employees. The skills developed in our business are highly attractive to other companies, who regularly target them for recruitment.

The Group may not have sufficient management capability at a senior level (e.g. country leadership) to execute the planned operational efficiency programmes and support the growth and development of the business.

The Group may not have sufficient resources to meet the changing and complex needs of an international and growing business (e.g. Legal, Finance, IT).

The Group continues to review key roles and succession plans in country and at the centre. Senior resources have been strengthened in a number of strategically important and growing businesses.

The Group carries out an annual talent mapping exercise to identify candidates for future roles.

The Group Remuneration Committee monitors the levels of remuneration for senior management and seeks to ensure that they are designed to attract, retain and motivate the key personnel to run the Group effectively.

The Group has invested in additional resource to support change initiatives and business development programmes.

Business environment

The Group operates in the travel environment where external factors such as the general economic and geopolitical climate (including the impact of Brexit and sustained terrorist attacks impacting key markets), levels of disposable income, weather, changing demographics and travel patterns could all impact both passenger numbers and consumer spending. There is a risk that the Group is unable to or poorly placed to respond to these external events.

The Group monitors the performance of individual business units and markets regularly. The executive management team reviews detailed weekly and monthly information covering a range of KPIs, and monitors progress on key strategic projects. Specific short and medium-term actions are taken to address any trading performance issues which are monitored on an ongoing basis.

The Group also conducts extensive customer research to understand current levels of customer satisfaction and gathers feedback on changing consumer requirements.

Changing business model

Changing client requirements, such as splitting tenders across two or more providers, partnering with operators in joint ventures, developing third party purchasing models and favouring local brand operators or partnering directly with brand owners, may adversely affect the Group's business.

The Group has in place a clear 'SSP Value Proposition' that it presents to the client to address this risk.

The Group's Director of Strategic Partnerships and the Group Chief Commercial Officer work closely with the country management teams to enhance and clarify the Group's proposition to its clients.

The Group's 'contact strategy' with key stakeholders and its clients helps to mitigate this risk. This is informed by its annual client survey, which is carried out by an independent party.

Brand portfolio

The Group's success is largely dependent upon its ability to maintain its portfolio of proprietary brands as well as the brands of its franchisors, and the appeal of those brands for clients and customers. The loss of any significant partner brands, the inability to obtain rights to new brands over time or the diminution in the appeal of partner brands or the Group's proprietary brands could impair the Group's ability to compete effectively in tender processes and ultimately have a material adverse effect on the Group's business.

The Group carries out extensive customer research into passengers' needs and continually analyses market trends in order to enhance its brand and concept portfolio on an ongoing basis.

The Group has strengthened its dedicated brands team to work closely with its partner brands and to enable greater capacity to attract and manage a broader portfolio of external brands. The Group has extended its brand portfolio to provide additional breadth and depth of brand partners.

Intensified competition

Competition intensifies as the Group's competitors become more sophisticated and direct more resources to the preparation of bids and take a more aggressive position on commercial terms when bidding for contracts. This could put pressure on the Group's profitability and reduce the availability and attractiveness of contracts.

The Group has clear internal benchmarking and investment appraisal processes to evaluate tender proposals and to ensure that the Group is able to make a competitive offer, as well as meet its investment criteria.

The Group has developed high-quality 'business-to-business' marketing collateral to clearly lay out the benefits of working with SSP, which it shares with the clients to help them better understand the Group's proposition from both quantitative and qualitative aspects.

The Group's strengthened business development team utilise the feedback from regular client satisfaction surveys when developing new bids.

Expansion in

developing markets

The Group operates business directly in a number of developing markets, including Asia Pacific and Eastern Europe and the Middle East. Political, economic and legal systems and conditions in these countries are generally less predictable than in countries with more developed institutional structures, subjecting the Group to additional commercial, reputational, legal and compliance risks.

The Group has clearly defined authorisation procedures for all contract investment to ensure that it is consistent with the objectives set by the Board, and fully considers and evaluates the risks inherent in expansion into new locations and territories.

The Group works with in-house and external advisors to ensure risks of doing business in developing markets are identified and where possible mitigated before entering those markets.

The Group has strengthened its legal teams to support business development activities and ensure compliance with local requirements.

The risk of working in developing markets is also monitored by the Group Risk Committee and the Group Audit Committee.

Implementation of efficiency programmes

The change programmes fail to deliver benefits e.g. labour efficiency and improvements in wastage and loss.

The Group has completed detailed evaluation and planning for its major change programmes. Specialist expertise has been recruited into the business where required, both at a Group and a country level. The Group provides central support with regional CEOs and CFOs to facilitate appropriate country actions based on key performance indicators linked to margin management. Group IT also provides support for project management and implementation using agreed standard business processes and controls.

Labour laws and unions

Approximately 35% of the Group's employees are subject to collective bargaining agreements, principally in France, Germany, Spain, Denmark, Finland, Norway, Sweden and the United States.

The Group is also subject to minimum wage requirements and mandatory healthcare subsidisation in some of the jurisdictions in which it operates, notably North America, the United Kingdom and China.

The Group works proactively with all of its unions to ensure that the various collective bargaining agreements are appropriate for the Group and minimise commercial risks.

The Group is reviewing the impact of changes in remuneration structures, including the introduction of the national living wage and apprenticeship levy in the UK and the Healthcare bill in the US and developing mitigating strategies across the Group.

Outsourcing programmes

The Group fails to execute outsourcing projects effectively resulting in the business as usual being disrupted and the introduction of new third party risks.

The Group has recruited specialist resources into the business to manage implementation and transition projects and has used external advisors to provide input into the management of risks on such projects.

The outsourcing partners are highly reputable and have been selected after a rigorous tender process and extensive due diligence.

Cyber threats

The Group becomes exposed to information security and cyber threats e.g. Payment Card Industry Data Security Standards (PCIDSS).

The Group continually reviews its business continuity plans for its supply chain, IT disaster recovery and information security policies and practices to ensure that these meet the changing landscape.

Tax strategy

Risk that reputation is damaged if customers, clients
and / or suppliers believe that the Group is engaged in aggressive or abusive tax avoidance.

The Group has a tax management policy which is based on Board guidance to adopt a low risk tax strategy.

 

The risks listed on pages 18 to 21 do not comprise all those associated with SSP Group plc and the order of risks presented does not denote an order of priority. Additional risks and uncertainties not presently known to management, or currently deemed to be less material, may also have an adverse effect on the business. These less material risks are kept in view in case their likelihood or impact should show signs of increasing."

3.             Related Parties

The following is extracted from note 27 to the Group's consolidated financial statements (on pages 94 to 95).

"Related party relationships exist with the Group's subsidiaries, associates (note 12), key management personnel, pension schemes (note 19) and employee benefit trust (note 21).

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 jointly owned subsidiary ('JV partner'), other than those listed in note 21, are disclosed 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 12, are included in the table below.


2016

£m

2015

£m

Purchases from related parties1

(4.8)

(3.9)

Management fee income

1.6

0.7

Other income

1.1

0.5

Amounts owed by related parties at the end of the year

0.7

0.1

Amounts owed to related parties at the end of the year2

(4.9)

(0.2)

1 All purchases are from The Minor Food Group PCL ('MFG') which owns 51% of Select Service Partner Co. Limited.

2 Included in the amounts owed to related parties at the end of the year above is £1.1m (2015: £nil) owed to Epigo SAS ('Epigo') and £3.8m (2015: £0.2m) owed to MFG.

 

The Group has provided a number of guarantees to third parties in respect of obligations of its associates, relating to, for example, concession agreements, franchise agreements and financing facilities. In addition, certain subsidiaries benefit from guarantees provided by the Group's JV 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 100% owned subsidiaries.

 

Remuneration of key management personnel

The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. The Group considers key management personnel to be the Chief Executive Officer, the Chief Financial Officer and the Non-Executive Directors."

 


2016

£m

2015

£m

Short-term employee benefits

(4.0)

(4.0)

Post-employment benefits

(0.4)

(0.4)

Share-based payments

(1.3)

(0.8)


(5.7)

(5.2)

 

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

.

 


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