Posting of 2014 Annual Report and Notice of AGM

22 January 2015

 

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

 

Posting of 2014 Report and Accounts and Notice of Annual General Meeting

 

Following the release on 27 November 2014 of its preliminary results for the year ended 30 September 2014, the Company announces that it has today posted to shareholders copies of its Annual Report and Accounts for the period ending 30 September 2014 together with the Notice of Annual General Meeting ("Notice of AGM") and Form of Proxy.

 

Copies of the 2014 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 2014 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 3 March 2015 at the offices of Freshfields Bruckhaus Deringer LLP at 65 Fleet Street, London, EC4Y 1HS.

 

For further information contact:

 

SSP Group plc

 

Helen Byrne

Company Secretary & General Counsel

0207 543 3300

 

Compliance with Disclosure and Transparency Rule 6.3.5 ("DTR 6.3.5") - Extracts from the 2014 Annual Report and Accounts

The information set out below, which is extracted from the 2014 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 below should be read in conjunction with the Company's preliminary results for the year ended 30 September 2014 released on 27 November 2014 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.

This material should also be read in conjunction with, and is not a substitute for reading, the full 2014 Annual Report and Accounts.

Note and page references in the text of this announcement below refer to note numbers and page numbers in the 2014 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 Disclosure and Transparency Rule 6.3.5.  This statement relates to, and is extracted from, page 50 of the 2014 Annual Report and Accounts. Responsibility is for the full 2014 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. 

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

·      select suitable accounting policies and then apply them consistently; 

·      make judgments and estimates that are reasonable and prudent; 

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

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

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

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

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

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

Directors' responsibility statement

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 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."

2.         Principal Risks

The description below of the principal risks and uncertainties that the Company faces is extracted from pages 10 to 12 of the 2014 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	Mitigating Factors
Strategic
Business environment	The Group operates in the travel environment where factors such as the general economic climate, levels of disposable income, weather, changing demographics and travel patterns could all impact both passenger numbers and consumer spending.	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 on-going basis. The Group also conducts extensive customer research to understand current levels of customer satisfaction and gathers feedback on changing consumer requirements.
Strategic development	The Group's strategy involves expanding its business in developing markets, including regions of Asia Pacific 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 reputational, legal and compliance risks of doing business in such economies.	The Group has clearly defined appraisal processes and authorisation procedures for all investment expenditure 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 prioritises its investment in new contracts as part of the on-going review of its global pipeline, and the prioritisation of its capital investment and resourcing. 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.
Brand portfolio	The Group's success is dependent in large part upon its ability to maintain its portfolio of proprietary brands as well as the brands of its franchisors, and the appeal of those brands for clients and customers. The loss of any significant partner brands, the inability to obtain rights to new brands over time or the diminution in the appeal of partner brands or the Group's proprietary brands could impair the Group's ability to compete effectively in tender processes and ultimately have a material adverse effect on the Group's business.	The Group carries out extensive customer research into passengers' needs and continually analyses market trends in order to enhance its brand and concept portfolio on an on-going basis. The Group has a dedicated brands team to work with its partner brands on a day-to-day basis, including Starbucks, Burger King and M&S Simply Food, as well as other international, national and local brands.
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 either from its existing or new clients. The Group's clients may turn to alternative operators, cease operations, terminate contracts with the Group or increase pricing pressure on the Group. Changing client requirements, such as splitting tenders across two or more providers, favouring local brand operators or partnering directly with brand owners, may also adversely affect the Group's business.	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. As a consequence, the Group has a strong record of contract renewal and longstanding client partnerships, with the average relationship length being 27 years across its 10 largest clients. The Group 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.
Operational
Business interruption	The travel environment is vulnerable to acts of terrorism or war, an outbreak of pandemic disease, or a major and extreme weather event or natural disaster which could reduce the number of passengers in travel locations.	SSP has business continuity plans in place including liaison with authorities and landlords in key locations to ensure that contingency plans are in place. The Group also has comprehensive insurance at both global and local levels with leading insurers to cover, among other things, property damage, business interruption, public and product liability, employer's liability, workers' compensation, Directors' and Officers' liability, motor and other cover as required by local laws and regulations. This cover is reviewed on an annual basis.
Supply chain	SSP has agreements in place with key suppliers across the world. The interruption or loss of supply of core category products from these suppliers to our units may affect our ability to trade, whilst quality of supply issues may also impact the Group's reputation and its ability to trade.	The Group conducts risk assessments of all of its key suppliers to identify alternatives and develop contingency plans in the event that any of these key suppliers fail. The Group has contractual and other relationships with numerous third parties in support of its business activities. None of these arrangements are individually considered to be essential to the business continuity of the Group.
Food commodity price inflation	A substantial element of the Group's cost base comprises food and drink products and raw materials. As such, the profitability of the Group's contracts will depend on its management of its cost of goods, which also determines its ability to offer competitive pricing to its customers while maintaining sufficient margins.	The Group seeks to manage cost inflation through: pricing reviews; menu management to substitute ingredients in response to any forecast shortages and cost increases; and continuing to drive greater purchasing efficiencies through supplier negotiations, rationalisation and compliance.
Key personnel	The performance of SSP 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 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.
Technology and infrastructure systems	The failure of key operational IT systems could cause interruption to the trading of the business. Advances in technologies or alternative methods of delivery, including advances in vending technology, mobile payments, digital marketing and customer loyalty programmes, could have a negative effect on the Group's business if the Group is not able to respond adequately to these technological challenges.	The Group's IT systems receive on-going investment to ensure that they are able to respond to the needs of the business. Back-up facilities and contingency plans are in place and are tested regularly to ensure that business interruptions are minimised and that data is protected from corruption or unauthorised use. All IT programmes of any significance are authorised and overseen by the Chief Information Officer and project managed using well-recognised development methodologies and protocols.
Data protection	The Group is required to comply with applicable data protection laws and regulations in many of the jurisdictions in which it operates, including by notifying, updating and/ or continually working with many regulators in the event of a breach of applicable data protection laws and regulations. In certain jurisdictions where the Group accepts debit and/or credit cards at its outlets, it is becoming increasingly important to demonstrate that the Group is managing data security risks effectively and is in compliance with Payment Card Industry Data Security Standards ('PCIDSS'). Weakness in the Group's data security controls could result in an unlawful use of card data, and the Group could face significant penalties and remediation costs, as well as material damage to its reputation.	The Group has a well-developed PCIDSS compliance programme which covers relevant geographies, using a risk-based approach. It is advised on this by specialist third-party consultants. Its core systems infrastructure, which operates in almost all major territories, is designed to meet PCIDSS requirements.
Financial
Interest rate risk	The Group is exposed to fluctuations in interest rates on its loan balances.	The Group maintains a balance of fixed and floating rate debt so that the risks associated with increases in interest rates are mitigated through the use of interest rate swaps.
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 principal currencies of operation are Sterling, the Euro, the US Dollar, the Swedish Krona and the Norwegian Krone. The Group is subject to currency exchange risk including translation risk and economic risk.	The Group's policy in managing this financial currency risk is to use foreign currency denominated borrowings to ensure interest costs arise in currencies which reflect the operating cash flows, thereby minimising net cash flows in foreign currencies.
Liquidity and debt covenants	The Group needs continuous access to funding in order to meet its trading obligations and to support investments. There is a risk that the Group may be unable to obtain the necessary funds when required or that such funds will only be available on unfavourable terms. The Group's borrowing facilities include a requirement to comply with certain specified covenants in relation to the level of net debt and interest cover. A breach of these covenants could result in the Group's borrowings becoming repayable immediately.	The Group has put in place long-term borrowings in various currencies to meet its demand for funds. In addition, the Group has access to a revolving credit facility should such demands arise on short notice. The Group's treasury department maintains an appropriate level of funds and facilities to meet each year's planned funding requirement. Compliance with the Group's biannual debt covenant is monitored on a monthly basis based on the management accounts.  Sensitivity analysis using various scenarios is applied to forecasts to assess their impact on covenants.
Legal and Regulatory
Compliance	The laws and regulations governing the Group's industry have become increasingly complex across a number of jurisdictions and a wide variety of areas, including, among others, food safety, labour, employment, immigration, security and safety, health and safety, competition and antitrust, consumer protection (including data protection), environment, licensing requirements and related compliance. The Group is also required to comply with applicable data protection laws and regulations in many of the jurisdictions in which it operates. As a UK company, the Group is required to comply with the provisions of the UK Bribery Act as well as the local anti-bribery and anti-corruption laws in the territories in which it operates.	The Group has processes in place to ensure compliance with local laws and regulations. Depending on the nature of complexity in a country, the Group may obtain external advice to supplement the in-house legal and compliance team. The Group has a Code of Conduct and Anti-Bribery and Anti-Corruption Policy in place and anti-bribery training has been rolled out internationally. The Group's procedures under the Policy include regular reporting by the businesses into the Risk Committee. Compliance is monitored by Internal Audit and the Risk Committee on an on-going basis and all alleged breaches of the Code and Policy are investigated.
Food safety	The preparation of food and the maintenance of the Group's supply chain require a base level of hygiene, temperature maintenance and traceability, and expose the Group to possible food safety liability claims and issues, such as the risk of food poisoning.	The Group has food safety controls and procedures in place that are embedded in the Group's operations. These are monitored by country management teams on a regular basis and appropriate action is taken if any issues are identified.  Training sessions are also held in country to ensure compliance with these procedures.
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 health care subsidisation in some of the jurisdictions in which it operates, notably the United States, the United Kingdom and China.	The Group works proactively as union contracts and collective bargaining agreements expire or are re-negotiated from time to time to put in place measures to minimise the risk of less favourable terms to the Group.

"

3.         Related Parties

The following is extracted from note 26 to the Group's consolidated financial statements.

"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 Group Chief Executive Officer, the Chief Financial Officer and the Non-Executive Directors

	2014	2013
	£m	£m
Short-term employee benefits	(5.6)	(1.3)
Post-employment benefits	(0.3)	(0.1)
Termination benefits	-	(2.2)
Share-based payments	(4.0)	-
	(9.9)	(3.6)

"

 

 

This announcement contains certain forward looking statements with respect to the operations, strategy, performance and the financial condition of the Group. By their nature, these statements involve uncertainty since future events and circumstances can cause results to differ from those anticipated. Nothing in this announcement should be construed as a profit forecast. 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.