REG - SSP Group PLC - Annual Financial Report
06/01/2022 17:15
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RNS Number : 6995X SSP Group PLC 06 January 2022
6 January 2022
LEI: 213800QGNIWTXFMENJ24
SSP Group plc
(the "Company")
Posting of 2021 Annual Report and Accounts and Notice of Annual General
Meeting
On 8 December 2021, the Company published its preliminary results for the year
ended 30 September 2021. The Company announces that it has today posted to
shareholders copies of its Annual Report and Accounts for the period ending 30
September 2021, the Notice of Annual General Meeting (the "Notice of AGM") and
Form of Proxy.
Copies of the 2021 Annual Report and Accounts, the Notice of AGM and Form of
Proxy have been submitted to the National Storage Mechanism and will shortly
be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . Copies of the 2021
Annual Report and Accounts and the Notice of AGM are also available on the
Company's website at: https://investors.foodtravelexperts.com/investors.aspx
(https://investors.foodtravelexperts.com/investors.aspx) .
Annual General Meeting
The Company's Annual General Meeting ("AGM") will be held at 11am on 4
February 2022 at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A
2AL.
We would like to remind our shareholders that they should not attend the AGM
if they are suffering from Covid-19 symptoms or are otherwise isolating in
accordance with Government Guidance. Furthermore, due to the evolving nature
of the pandemic, it may be necessary to make changes at short notice to the
way in which we conduct the AGM, including in the event of a reintroduction of
government restrictions on social distancing or public gatherings.
Shareholders planning to attend the meeting in person should therefore check
the Company's website for any further announcements:
https://investors.foodtravelexperts.com/investors/shareholder-information/2022.aspx.
We strongly recommend that you appoint the Chair or another nominated person
as your proxy to ensure your vote can be counted, whether or not you intend to
attend the AGM in person. Please note that if restrictions on public
gatherings are reintroduced, if you appoint someone other than the Chair as
your proxy they may not be permitted to attend the AGM and therefore would not
be able to vote your shares. Subject to Government Guidance at the relevant
time, completing a Form of Proxy will not prevent you from attending and
voting at the AGM in person.
Proxy appointments must be received by Computershare by no later than 11.00
a.m. (GMT) on Wednesday 2 February 2022.
Regulated Information
The information set out in the Appendix, which is extracted from the 2021
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 2021 released on
8 December 2021 which can be viewed at
(https://investors.foodtravelexperts.com/investors/reports-and-presentations/2021.aspx)
https://investors.foodtravelexperts.com/investors/reports-and-presentations/2021.aspx
(https://investors.foodtravelexperts.com/investors/reports-and-presentations/2021.aspx)
. 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
General Counsel & Company Secretary
+44 (0)207 543 3300
Investor and analyst enquiries
Sarah John
Corporate Affairs Director
+44 (0)207 543 3300
E-mail: sarah.john@ssp-intl.com (mailto:sarah.john@ssp-intl.com)
Appendix
This material should also be read in conjunction with, and is not a substitute
for reading, the full 2021 Annual Report and Accounts.
Note and page references in the text of this Appendix refer to note numbers
and page numbers in the 2021 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 136 of the
2021 Annual Report and Accounts. Responsibility is for the full 2021 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 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 International
Financial Reporting Standards as adopted by the European Union (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 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 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;
· assess the Group and parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the Annual 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 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.
Jonathan Davies
Deputy Chief Executive Officer and Chief Financial Officer
7 December 2021
2. Principal Risks
The description below of the principal risks and uncertainties that the
Company faces is extracted from pages 57 to 67 of the 2021 Annual Report and
Accounts.
1. Impact of Covid-19
Executive responsibility for this risk: Group CEO, Deputy CEO and CFO,
Regional CEOs
Link to Strategy: 1, 3,4 Trend: ↔
Risk description Mitigating factors
The pandemic has continued to have a severe effect on the travel sector, with The Group has implemented short-term cost reductions and a significant
closures due to lockdowns in most of SSP's markets in the first half of the restructuring programme to reduce the cost base, while also improving
year and a slow recovery in the second half. There is a risk of further short-term liquidity by the use of government support schemes, a reduction in
lockdowns and restrictions due to mutations of the virus, further stalling the capital expenditure and negotiating rent reliefs with its clients. A reduction
recovery in our markets, as was seen with the Delta variant (including the in product range has also further reduced supply chain complexity and costs.
Omicron variant) in the current financial year. Following the Rights Issue in April 2021, SSP is now well placed to fund the
recovery phase. For more information on the Rights Issue see pages 68 to 69
Covid-19 may result in long-term structural changes to the industry and and 151.
consumer behaviour. In the Air sector most industry analysts expect that there
will not be a recovery to pre-Covid levels of activity until 2023 or 2024. The Long-standing client relationships have enabled our local teams to
principal reasons for this will be a potential loss of business travel, as successfully renegotiate rents and reopening programmes.
companies look to restrict travelling and promote video-conferencing, and a
reduction in long haul travel, as a consequence of airline capacity reductions In the medium term, SSP's product offer will reflect the changing passenger
and safety concerns. In the Rail sector, passenger numbers may be impacted mix, in particular the shift towards leisure from business travel.
longer term as a consequence of the accelerated trend towards working from
home, thereby reducing commuter travel which is important for SSP's rail The Group CEO and CFO continue to carry out focused weekly trading reviews
operations. These structural changes mean that passenger volumes may not with country management teams, who now use rolling forecasts in place of
return to pre-Covid levels, potentially impacting our sales potential and quarterly forecasts to enable the Group to react to changes as they occur.
profitability, given the fixed operational cost base.
Group HR has led a comprehensive review of government guidelines on health and
Similarly, pressure from clients to pay fixed minimum guaranteed rents (MAGs) safety and social distancing procedures to ensure customer and employee safety
and open more outlets, despite low passenger numbers, increases the risk that can be ensured as offices and units start to reopen.
units will not operate profitably.
There is also the risk that in the case of further outbreaks of the virus,
government support such as furlough schemes may not be available.
Outlet reopenings have been impacted by shortage of operational staff in
certain locations. There is a risk that due to the severe impact of the
pandemic on the food travel sector, staff may change industry and the
shortages become a long-term trend.
See pages 16 to 17 for our view on the likely recovery of the travel market.
2. Business environment and geopolitical uncertainty
Executive responsibility for this risk: Group CEO, Deputy CEO and CFO,
Regional CEOs
Link to strategy: 1, 2 Trend: ↔
Risk description Mitigating factors
The Group operates in the travel environment where external factors such as The Group monitors the performance of individual business units and markets
the general economic and geopolitical climate, levels of disposable income, regularly. The Executive Directors review detailed weekly and monthly
changing demographics and travel patterns could all impact both passenger performance, covering a range of KPIs, and monitor progress on key strategic
numbers and consumer spending. There is a risk that the Group is unable, or projects with local senior management. Specific short- and medium-term actions
poorly placed, to respond to these external events. are taken to address any trading performance issues which are monitored on an
ongoing basis.
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 There continues to be greater focus on business continuity planning and
disaster which could reduce the number of passengers in travel locations. recovery. The Business Continuity plan was tested during this current crisis,
Whilst terrorism continues to be a prominent risk, no significant attacks have with staff working from home, and has proved to be effective. The Group has
taken place in the current year, although the events in Afghanistan have been conducting research to understand changing requirements of customers in
increased risk in the region. light of the pandemic to better tailor our offer to their needs.
Tourism and business travel were materially impacted by Covid-19 resulting in On climate change, we are developing our response to the TCFD requirements.
a direct business impact due to the downturn in the global economy. However,
the recovery in the overall global economy has been robust in the fourth For further information see pages 54 to 57. In addition, see Our Strategy on
quarter in most of our major markets, approaching pre-pandemic levels. There pages 20 to 25 and Creating Sustainable Value on pages 42 to 47
is a risk that this may be impacted by future Covid-19 variants including
Omicron.
Furthermore, Covid-19 has exacerbated risk to airline stability, which had
previously been increasing, e.g. the failure of Jet Airways.
In the medium to longer term, public concern over climate change may impact
air travel, either directly or through government policies.
3. Availability of labour and wage inflation
Executive responsibility for this risk: Regional CEOs, Group Chief People
Officer
Link to strategy: 3,4 Trend: New risk
Risk description Mitigating factors
Covid-19 has had a near-term impact on the hospitality sector resulting in Group HR continues to support the development of mitigating strategies for
frontline staff and skilled labour shortages across the Group. This is a labour cost inflation across the Group. Various incentives are being offered
result of the shift in the workforce to other sectors (e.g. online or service to retain existing frontline staff.
centre operations). In addition, government support during the pandemic has
reduced participation in the workforce (e.g. in the US). This has resulted in Each business area is closely monitoring their markets by location to ensure
high wage inflation adversely impacting margins as well as causing delays to SSP remains competitive, in terms of pay and benefits, and continues to
the store reopening programme. There is also a risk that SSP will be unable to attract talent. Group HR is working with the business to ensure we take either
recruit sufficient resources to support planned growth in a timely manner. defensive or proactive steps to ensure business continuity.
Mass migration and population movements in both the UK (Brexit) and the US See pages 33 to 37 and 48 to 49 for details of our relaunched People Strategy
(immigration policy) continue to contribute to these supply shortages. There as well as details of engagement with our colleagues.
is also a trend towards greater demands by unions for additional employee
protections (e.g. payments during mandatory quarantine, increased healthcare
payments) adding to inflationary pressures.
4. Impact of Brexit
Executive responsibility for this risk: Regional CEOs, Group Chief People
Officer
Link to strategy:
1,3
Trend: ↔
Risk description Mitigating factors
Brexit has had an adverse impact on the wider economic environment in the UK Various gross margin initiatives, including recipe re-engineering and
and across the EU, resulting in weaker consumer spending in the travel food procurement ationalization, continue to be pursued, to mitigate the impact of
and beverage market. cost inflation.
Restrictions on mobility of EU nationals post-Brexit has impacted SSP's labour The Group's pricing and range initiatives are driven by continuous monitoring
force in the UK. The challenges in recruiting skilled kitchen labour and of consumer spending benchmarks.
catering staff have continued over the prior year and may do so over the
medium term. The Group continues to develop its UK recruitment strategy to ensure SSP is
positioned as an attractive employer in the UK during the store reopening
programme. There is also an ongoing focus on labour flexibility and
productivity to improve staff retention rates. An increased focus on
technology initiatives during the Covid-19 recovery stage will help reduce
demand for labour as units open.
The Group Treasury team maintains a global portfolio and regularly monitors
the impact of foreign exchange fluctuations on its cash flows, mitigating the
impact from foreign exchange risk.
For more information, see Our Strategy on pages 20 to 25 and our People
Strategy on pages 48 to 49.
5. Supply chain disruption and product cost inflation
Executive responsibility for this risk: Regional CEOs, Chief Procurement
Officer
Link to strategy: 3 Trend: New risk
Risk description Mitigating factors
There has been a shortage of lorry delivery drivers in the UK, Europe and US In response to the supply chain disruption and product cost inflation, there
causing supply disruption. Less frequent deliveries have had an adverse impact has been a reduction in product range to reduce supply chain complexity, and a
on efficiency and hence cost. Similarly, there is a risk that SSP can't meet programme to identify alternative suppliers where any issues are noted with
increased supplier minimum order quantities while customer numbers remain existing suppliers.
depressed as a result of Covid-19.
For further details on our engagement with suppliers see page 45.
Globally, demand has significantly exceeded supply capability for various
products. Lack of availability has led to a decline in volume-based discounts A Rights Issue was completed in April 2021 raising £475m of cash (£450.8m
and purchasing and marketing income. Similarly, a shortage of supply of IT net proceeds). This has ensured that sufficient cash is available to finance
equipment risks delaying implementation of various efficiency programmes such any required capital expenditure. In addition, capital rationing and proactive
as Order at Table and replacement of electronic tills at units. negotiations are ongoing with clients to ensure that capital expenditure is
staggered and can be deferred where possible.
There also continues to be a risk of further product cost increases due to
cost of social distancing in factories as well as a risk of supply chain
disruption if manufacturers halt operations due to local Covid-19 outbreaks or
insolvency.
Capital expenditure costs will increase as projects deferred during the height
of Covid-19 to preserve cash start to resume, in many cases at higher costs
give the current inflation in building costs. As a result, original returns on
investment may no longer be achievable.
6. Senior Management capability and retention
Executive responsibility for this risk: Group Chief People Officer
Link to strategy: 4 Trend: ↑
Risk description Mitigating factors
The performance of the Group depends on its ability to attract, motivate and The Remuneration Committee reviewed and revised remuneration packages
retain key employees. Given the impact of Covid-19 and the increasing risk (including through revised Bonus and LTIP schemes) for senior management with
over staff retention, particularly for senior employees with transferable the aim of ensuring that the reward offer is designed to attract, retain and
skills, insufficient senior capability risk continues to be high. motivate the key personnel required to run the Group effectively. Similarly,
Group HR continues to evaluate remuneration of senior staff (including
Additionally, there continues to be a risk that the Group may not have retention measures) to ensure they remain motivated and fairly compensated.
sufficient resources in various functions, including in legal, finance and IT, See pages 108 to 132 for more information.
to meet the changing and complex needs of an international business as it
adapts and recovers from the impact of Covid-19. The Group also continues to review key roles and succession plans at a country
and at a Group level. The Group carries out an annual talent mapping exercise
It may also be difficult to attract senior employees as the travel food sector to identify candidates for future roles and continues to invest in additional
will be considered riskier in the short to medium term. resources to support change initiatives and career development programmes
(including restarting its leadership training programmes).
For further details on the People Strategy see pages 48 to 49.
7. Retention of existing contracts
Executive responsibility for this risk: Regional CEOs
Link to strategy: 1,2 Trend: ↓
Risk description Mitigating factors
The Group's operations are dependent on the terms of airport and railway The Group's local management structures in all its major geographies allow it
station concession agreements. Growth (and maintenance of market share) is to maintain strong relationships with its clients and to monitor performance
dependent on the Group's ability to retain existing concession contracts and in close partnership with its clients' management teams.
win new contracts from either new or existing clients.
Furthermore, the Group has an established contact strategy with key clients to
As sales improve, it will become increasingly difficult to get rent relief establish and/or maintain ongoing relationships. These are discussed between
from clients and negotiations may result in friction, especially for relief Group and local management on a regular basis.
sought beyond the near term or where there are ongoing disputes. Unsuccessful
rent relief negotiations may force the Group to exit units that are no longer Management has actively engaged with clients on a reopening programme to
viable or to operate at less profitable levels. ensure that units can be reopened profitably.
Moreover, as trading recovers from Covid-19 impact, there may be tensions over Following the Rights Issue and improved liquidity at Group, there is a plan to
the timing of reinstatement of suspended capital expenditure programmes, given recommence reinvestment in sites and to address deferred capital expenditure.
the ongoing pandemic and unit closures.
For further details on our strategic priorities (including business
Resource reductions made in response to Covid-19 may result in reduced development) see pages 22 to 25 and for an update on our engagement with
operational standards, impacting relationships with clients and franchise clients see page 44.
partners in the medium term.
8. Regulatory compliance
Executive responsibility for this risk: Deputy CEO and CFO, General Counsel
and Company Secretary, Regional CEO
Link to strategy: 1,2 Trend: ↔
Risk description Mitigating factors
The Group's operations are subject to an increasingly wide range of evolving The Group has a number of policies and operating procedures in place to ensure
domestic and international legislation and standards, regulatory requirements, compliance with local laws and regulations and seeks specialist advice and
including as relates to ESG (including TCFD), fraud, anti-bribery and additional resource where needed.
corruption and privacy (such as the General Data Protection Regulation (GDPR))
matters. The Group operates mandatory compliance training programmes. These are
supported by the Internal Audit process and include review of compliance with
Failure to comply with, or failure to adapt to changes in, legislation, legislation and regulations and awareness of key policies and procedures.
regulations and standards (including the evolving and increased environmental
responsibilities) could expose the Group to increased compliance costs, There is regular reporting on compliance matters to the Risk Committee, with
liability to third parties, fines, penalties, reputational damage, or result any alleged breaches of the Group's policies investigated.
in trading restrictions or disruption. Any of the above could have an adverse
impact on the Group's performance, share price or continuation of business. Since the onset of Covid-19, the Group's legal and finance teams have
continued to work with the operational teams to assess the risk of
The Group anticipates an increased compliance and litigation risk as a result non-compliance with laws and contracts arising from the crisis and to advise
of Covid-19 and the resultant economic environment (including a reduction in on mitigating actions (including operational protocols to safeguard our
resource), resulting in material settlements, fines, penalties and various stakeholders).
reputational harm.
GDPR compliance is determined and managed locally with oversight from a cross
functional Group steering committee. The Group's Global Privacy programme
operated under minimum controls during the year but has been bolstered by
additional specialist resource who is tasked with developing our privacy
controls.
Emerging compliance risk is continually monitored throughout the business,
supported by the annual risk management assessment process. This process led
to the appointment of additional resource to prepare a plan for TCFD
compliance, managed by Risk Committee.
For further information on our activities regarding compliance see Embedding
Sustainability (pages 28 to 41) and Corporate Governance Report (pages 82 to
95).
9. Food safety and product compliance
Executive responsibility for this risk: Regional CEOs, General Counsel and
Company Secretary
Link to strategy: 1,2 Trend: ↔
Risk description Mitigating factors
Food safety and integrity are vital for our business. The preparation of food The Group has implemented a global safety management programme, setting
and maintenance of the Group's supply chain require a base level of hygiene, minimum standards of health and safety, fire safety and food safety across all
temperature maintenance and traceability. Non-compliance with food safety laws its operations and requiring periodic reporting of performance and incident
or failure to effectively respond to a food safety incident, can expose the statistics. The food safety standards include processes to monitor the supply
Group to significant reputational damage as well as possible food safety chain and to manage allergens. All SSP country operations are required to
liability claims, financial penalties and other issues. report on all food safety incidents (including allergens) on a periodic basis
to the Risk Committee (which reports to the Audit Committee as appropriate).
There is a risk that the UK business is not compliant with the new allergen
laws ('Natasha's Law') introduced in October 2021, where foods pre-packaged SSP UK & Ireland currently controls allergen management within the supply
for direct sale must be labelled with a full ingredients list with allergenic chain, supported by staff training and unit audits. All operational staff
ingredients emphasised within it or upcoming calorie labelling laws. This undertake mandatory onboarding allergen training and all existing unit
could lead to fines or damage to reputation. colleagues completed updated training for the new legislation. All units are
subject to an unannounced 'Safe and Legal' audit by the Health and Safety team
An increase in NGO activism and UK public awareness has seen increased on a 12-monthly cycle.
pressure to reduce the use of plastics in the food and beverage (F&B)
industry. Switching to non-plastic alternative materials could have The UK business has also partnered with a third-party software system,
significant cost impact on the business. There is also the risk of additional Nutritics to provide compliant labels with ingredients verification by the
levies being imposed by the government on the use of plastic. Health and Safety team. This system will also support compliance with the new
calorie labelling regulation being introduced in April 2022. A working group
has been set up to ensure timely compliance.
Ongoing reviews of operations are being carried out in the UK to determine
plastic-free feasibility and opportunities.
For further details on activities undertaken in this area see Embedding
Sustainability on pages 28 to 41.
10. Sustainability
Executive responsibility for this risk: Group CEO, Corporate Affairs Director,
Chief Procurement Officer
Link to strategy: Trend: New
4
Risk description Mitigating factors
Increasing expectations from stakeholders (including customers, clients, brand The Group recognises the importance of sustainability to our business and
partners, investors, NGOs, regulators, communities, competitors, colleagues stakeholders. As such, the Board is responsible for challenging our approach
and suppliers) on sustainability means that SSP needs to understand and act on and performance, including considering the impacts of sustainability and ESG
its key sustainability issues. Climate change is an increasing risk that could risk. The Group Executive Committee is responsible for setting, driving and
impact both our operations and supply chain physically and as a result of monitoring our sustainability direction. Issue Owners (Group HR, Procurement
transition to a low carbon economy (including in terms of reduced air travel) and Commercial) oversee sustainability activity and a senior sustainability
if we are not sufficiently prepared. role has been created to manage our sustainability programme.
Failure to integrate sustainability into our overall business strategy and Our sustainability framework helps us to focus on the key sustainability
decision-making, and to keep pace with our competitors in this area, including issues that are important for our stakeholders and for SSP. It has been
our rating in ESG Indices, may reduce our competitiveness and market position. updated this year, building on existing commitments, setting new timebound
targets, developing regional action plans including bi-annual divisional
Increased sustainability activism could result in disruption if SSP were found performance dashboards.
to be in breach of its sustainability responsibilities (including
environmental, human rights or animal welfare). Sustainability issues are Our sustainability framework takes into account stakeholder expectations. This
increasingly being legislated on (including Streamlined Energy and Carbon year we have further engaged with key internal and external stakeholders and
Reporting (SECR) regulations, Modern Slavery Act (MSA), Taskforce for have completed a benchmarking of competitors and ESG Index ratings which will
Climate-Related Financial Disclosures (TCFD)) and it requires vigilance to be updated periodically. For more information on stakeholder engagement see
stay abreast of, and respond to changing requirements, both ensuring mandatory pages 42 to 47.
disclosures are made and action is being taken.
Processes are in place to monitor compliance with sustainability related
Failure to have appropriate due diligence processes to identify and act on legislation and responsibilities and to manage specific sustainability risks
sustainability issues internally and within our supply chain could potentially across key topics, including policies, audits, training and briefings. Our
result in reputational damage; loss of client, brand partner and customer SECR report is on page 40 and our most recent modern slavery statement is
trust; and business continuity issues. available on our website www.foodtravelexperts.com/international
(http://www.foodtravelexperts.com/international) . For TCFD, we are aligning
our disclosure with the requirements and have appointed a consultancy to
undertake climate-related scenario analysis in order to prepare for FY22
reporting. For more information on progress on adopting the TCFD requirements
see pages 54 to 55.
Our due diligence programme monitors supplier compliance with our Ethical
Trade Code of Conduct and Human Rights Policy requirements. Our risk-based
approach targets compliance of key higher risk suppliers and we work
collaboratively with our suppliers to improve conditions and take corrective
action. For more information on progress on Embedding Sustainability see pages
28 to 41.
11. Information security and stability
Executive responsibility for this risk: Chief Digital and Technology Officer
Link to strategy: Trend: ↔
4,5
Risk description Mitigating factors
There is a risk that the Group becomes exposed to information security, cyber The Group has developed extensive IT disaster recovery and information
threats, e.g. threats detailed in the Payment Card Industry Data Security security policies and practices, to ensure that these meet the changing
Standards (PCIDSS) as well as ransomware attacks, particularly in light of landscape. These are regularly discussed and reviewed by the Risk and Audit
increased home working of its head office staff. Committees as well as the Board.
The Group is in the process of implementing SAP Inventory and Finance systems The Group's has a dedicated security operation centre which provides targeted
which can risk significant operational disruption. There is also a risk that threat intelligence to reduce time to detect and respond to incidents (spam,
the speed of implementation is negatively impacted by the Covid-19 recovery malware attacks, phishing emails, etc.). Additional layers of protection to
process. prevent ransomware impacting critical files on servers have been added.
There has been a reduction in resource as part of SSP's Covid-19 response. The Group's segmental business model and IT systems structure help to ensure
Whilst resources are being scaled up to required levels, there will be that potential cyber attacks are likely to remain isolated locally rather than
increased pressure on IT teams in the short term. impact the entire Group.
SSP has some operating systems which are approaching end of life in the next The Group has commenced rollout of new modern workplace technology to improve
18-36 months. There is a risk that support for these systems will cease, which security of our laptops across the business (e.g. multi factor authentication,
may cause disruption. encryption of all data on hard disks).
A clear governance and management structure has been set up for the SAP
project implementation including the engagement of a SAP preferred partner for
the roll-out which has significant experience of implementing SAP at large
companies.
For further information on our investment in technology see Our Strategy on
page 25.
12. Benefits realization from efficiency programmes
Executive responsibility for this risk: Deputy CEO and CFO, Regional CEOs
Link to strategy: Trend: ↔
3,4,5
Risk description Mitigating factors
The Group is continuously seeking new programmes to improve efficiency. There The Group's strategy throughout the Covid-19 period has focused on cash
is a risk that these programmes may be difficult to implement due to management. This has included initiatives such as simplification of product
complexity and challenges introduced by Covid-19, and furthermore that they offering and profitable reopening of units.
could fail to deliver the desired benefits, e.g. labour efficiency and
minimising waste and loss. The Group reviews its major change programmes as appropriate and adapts and
responds to feedback on an ongoing basis. These programmes are supported by
The impact of Covid-19 restructuring has been significant and may lead to loss specialist expertise in the business where required, both at a Group and at a
of momentum on technology enhancements and capital investment that are country level.
required for sustainable growth. This may be compounded by the loss of
resource in areas such as commercial, waste and loss, procurement and labour Group IT also provides support for project management and implementation,
management. using agreed standard business processes and controls.
For further information see Our Strategy on page 24.
13. Innovation and development of brand portfolio
Executive responsibility for this risk: Group CEO, Chief Customer Officer
Link to strategy: Trend: ↑
1,2
Risk description Mitigating factors
The Group's success is largely dependent upon its ability to add to and The Group has set as a priority the strengthening of its propriety brands, and
strengthen its portfolio of proprietary brands and the brands of its is in the process of increasing marketing resources. A new Chief Customer
franchisors, as well as to innovate and develop its own brands. Officer has been appointed with a key responsibility to reinvigorate these
brands.
During the pandemic, there was a reduction in investment in SSP's own brand as
a part of the drive to minimise costs. There is a risk that such a trend will In light of Covid-19, to provide greater support to the regions, the top 10
result in a decline in sales. Similarly, the loss of any significant partner franchise brand negotiations are being handled by the Group centrally. There
brands, the inability to obtain rights to new brands over time or the are also ongoing negotiations with franchise brand partners to obtain better
diminution in appeal of partner brands could impair the Group's ability to terms. SSP has been successful in negotiations with several franchisors in
compete effectively in tender processes and ultimately have a material adverse achieving higher levels of flexibility and is working closely with brands to
effect on the Group's business. maximise the roll-out of operational efficiencies to ensure units are opening
profitably despite lower passenger numbers.
There is now increased pressure from brand partners to revert to full menus,
following simplification adopted during the pandemic. Complexity of menus may The Group will continue to carry out customer research into passengers' needs,
result in higher costs and greater resource requirements which may be as necessary, to ensure its brands and concepts have the right offer in the
challenging in the current scenario. post-Covid-19 world.
Franchised brands make up a high proportion of SSP's business, a trend which Finally, the Group continuously looks to strengthen the depth and breadth of
is increasing. In some cases the commercial deal structure of our franchise its brand partners as well as to strengthen its own proprietary brands.
agreements may be unattractive. There is a risk that if SSP increases prices
to improve profitability then it may risk breaching terms of the franchise See Our Strategy for details of investment in this area on page 25 as well as
agreements. Creating Sustainable Value for details of our engagement with Brand Partners
with details on page 45.
14. Liquidity and funding
Executive responsibility for this risk: Group CEO, Deputy CEO and CFO
Link to strategy: 5 Trend: ↓
Risk description Mitigating factors
Covid-19 has significantly reduced trading over an extended and uncertain SSP completed a Rights issue in April 2021 raising £475m of cash (£450.8m
timeframe. An inability to effectively respond and manage expenditure net proceeds). The Group has also secured extension to its main bank
accordingly would impact the Group's ability to operate within committed facilities to January 2024 that were previously due to mature in July 2022,
credit facilities. Although sales remained at very low levels during the first and secured waivers and modifications of the existing covenants under those
half year (c. 20% and pre-Covid 19 levels) there has been a marked improvement bank facilities and its US Private Placement notes. This coupled with trend of
over the summer months with sales reaching 50% of pre-pandemic levels toward improved sales results in a very robust liquidity and funding position. SSP is
the end of the year. With the successful Rights Issue, the Group's cash flow now able to provide funding for capital expenditure and cash deposits to
position is very robust. This has resulted in a significant reduction in the divisions as needed.
risk score over the prior year.
There is continued close monitoring of cash burn by senior management to
There have been some funding issues noted at divisional level where banks have ensure that this remains within agreed targets. There is also a programme in
been reluctant to provide guarantees and there has been increased pressure place to ensure that units are reopened profitably.
from clients to provide cash deposits rather than bank guarantees.
For further information on the Rights Issue and our liquidity position, see
The risk of breaching covenants on its existing financing facilities has been pages 68 to 69 and 151 to 152.
materially reduced, even after the return of £300m of Covid Corporate
Financing Facility (CCFF) funds in February 2022.
15. Changing client behaviours
Executive responsibility for this risk: Regional CEOs
Link to strategy: 1,2 Trend: ↔
Risk description Mitigating factors
During the pandemic period, there was increased flexibility from clients and a The Group has in place a clear 'SSP Value Proposition' that it presents to the
reduction in new tenders. However, as sales start to recover, this can be client to address this risk.
expected to change with brands demanding more investment which was delayed
during the Covid-19 period. There may also be increased requirements for Senior Group commercial management works closely with country management teams
introducing 'local hero' brands, which like other franchised brands, will to enhance and clarify the Group's proposition to its clients. There is
offer relatively lower margins than SSP's propriety brands. greater focus on developing internal concepts to reduce complexity and costs.
There is increased competition in some of our major markets including the UK The Group's contact strategy with key stakeholders and clients helps to
and US. This means that there will be further pressure on sales as more mitigate this risk and we are looking to restart our regular client survey,
competition is chasing limited sales during this time of recovery. which is carried out by an independent party.
As the industry returns to pre-pandemic status, the impact of previously There continues to be greater focus on developing internal concepts to reduce
considered client requirements may become a renewed risk. For example, reliance on franchised brands and hence complexity and costs.
splitting tenders across two or more providers, seeking new income streams
through pouring rights agreements, partnering with operators in joint See Our Strategy section (page 23) and Creating Sustainable Value (page 44 -
ventures, developing third-party purchasing models and favouring franchise and Clients) for more information on investment in business development and
local brand operators or partnering directly with brand owners or increased engagement with clients.
health and safety monitoring requirements, may adversely affect the Group's
business and/or profit margins.
For more information on market drivers see Our Market on pages 16 to 17.
16. Outsourcing programmes
Executive responsibility for this risk: Deputy CEO and CFO, Regional CEOs
Link to strategy: 5 Trend: ↓
Risk description Mitigating factors
The Group may fail to execute outsourcing projects effectively, resulting in The Group continues to utilise specialist resources in the business to manage
business as usual being disrupted and the introduction of new third-party implementation and transition projects, and it continues to use external
risks. advisors to provide input into the management of risks in such projects.
Furthermore, any benefits expected from the outsourcing programme may not be The Group has temporarily scaled down some outsourced resources to match
realised. reduction in business operations in light of Covid-19. This process has been
well managed. Over the next year resources will be scaled up in line with the
Staff turnover at outsourcing partners may be impacted by Covid-19, leading to recovery of the business.
increased risk from lack of continuity. Whilst there has been limited
disruption to date, some divisions have noted short-term operational issues There are also monthly and quarterly reviews with outsourcing partners
with outsourcing service providers. focusing on efficiency and costs to ensure shared services are being
appropriately managed. Performance feedback is reported to the Executive
Committee and the Risk Committee on a regular basis.
17. Tax compliance and responsibility
Executive responsibility for this risk: Deputy CEO and CFO, Group Head of
Tax
Link to strategy: 1,2 Trend: ↔
Risk description Mitigating factors
The Group may suffer reputational damage if customers, clients or suppliers The Group has a tax management policy which is based on the Board's guidance
believe that the Group is engaged in aggressive or abusive tax avoidance. to adopt a low-risk tax strategy.
There is a risk that the Group may not be tax compliant due to complicated The Group also regularly reviews its tax priorities and has done so in light
local tax laws across different geographical territories. Covid-19 support of the Covid-19 pandemic. For example, to improve accuracy, advice was taken
schemes (e.g. furlough) have further increased the tax compliance burden. on the implementation of the various iterations of furlough schemes that were
rolled out at short notice, and cross-functional teams have worked together to
There is an increased focus on tax governance from the tax authorities, optimise the systems used to make these claims.
including the integration of systems with tax authorities. There continues to
be more investment from OECD into Base Erosion and Profit Shifting (BEPS) There is also increased oversight and monitoring of key tax issues within
related initiatives. There is a risk that there could be wholesale changes to divisions by the Group tax team and increased disclosure of tax policy and tax
how taxation systems work based on the data gathered in the future. This is payments in Group financial documents.
also driving digitisation resulting in a cost and complexity impact.
For details on our tax strategy see our website
www.foodtravelexperts.com/international.
(http://www.foodtravelexperts.com/international.)
18. Expansion into new markets
Executive responsibility for this risk: Regional CEOs, Legal Counsel and
Company Secretary
Link to strategy: Trend: ↔
1,2
Risk description Mitigating factors
Historically, the Group's strategy has involved expanding its business in The Group has strong management teams in developing markets where this risk
developing markets. The political, economic and legal systems and conditions exists. In addition, the Group adopts a joint venture model in certain new
in these markets are less predictable than in countries with more developed territories to provide access to existing local infrastructure and expertise,
institutional structures, subjecting the Group to additional commercial, as well as to help mitigate the risk inherent on entering new territories.
reputational, legal and compliance risks.
The Group has clearly defined authorisation procedures for all contract
However, this risk has reduced due to the ongoing impact of Covid-19 as investments, to ensure that they are consistent with the objectives set by the
entering new markets in the short to medium term is unlikely. However, the Board and that they fully consider and evaluate the risks inherent in
pandemic may extend the time period over which new businesses can reach expansion into new locations and territories. The Group works with in-house
profitability after the initial set-up and external advisors to ensure the risks of doing business in developing
markets are identified and where possible, mitigated before entering those
markets. This includes appropriate due diligence of potential joint venture
and other local partners.
The Group legal team works closely with country legal and operational teams to
support business development activities and to ensure compliance with local
requirements.
The risk of working in developing markets is also monitored by the Risk
Committee, Group Investment Committee and the Audit Committee.
For further information see Our Strategy on page 23.
3. Related Parties
The following is extracted from note 30 to the Group's consolidated financial
statements (on page 192).
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
2021 2020
£m £m
Purchases from related parties (0.5) (1.7)
Management fee income 1.4 2.2
Other income 0.3 1.1
Other expenses1 (7.5) (11.2)
Amounts owed by related parties at the end of the year 4.1 3.6
Amounts owed to related parties at the end of the year (6.6) (6.1)
1 The majority of other expenses relates to £7.0m rent from Midway
Partnership LLC (2020: £11.2m).
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 2021 the value of the guarantees
given by the various Group companies in respect of both wholly owned and other
subsidiaries was £114.3m (2020: £119.0m). The Group does not expect these
guarantees to be called on and as such no liability has been recognised in the
financial statements.
Remuneration of key management personnel
The remuneration of key management personnel of the Group is set out below in
aggregate for each of the categories specified in IAS 24 'Related Party
Disclosures'. The Group considers key management personnel to be the Chief
Executive Officer, Chief Financial Officer, Non-Executive Directors and the
Group Executive Committee.
2021 2020
£m £m
Short-term employee benefits (7.4) (5.0)
Post-employment benefits (0.6) (0.6)
Share-based payments (0.4) (0.8)
(8.4) (6.4)
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