REG - SSP Group PLC - Annual Report and Accounts and Notice of AGM

SSPAnnouncement

28/01/2020 17:25

RNS Number : 2141B
SSP Group PLC
28 January 2020
 


28 January 2020
LEI: 213800QGNIWTXFMENJ24
 
SSP Group plc
(the "Company")
 
Posting of 2019 Annual Report and Accounts and Notice of Annual General Meeting
 
On 20 November 2019, the Company published its preliminary results for the year ended 30 September 2019 and announced its intention to return up to c.£100 million to shareholders by way of a share buyback programme. The Company announces that it has today posted to shareholders copies of its Annual Report and Accounts for the period ending 30 September 2019, the Notice of Annual General Meeting (the "Notice of AGM") and Form of Proxy.
Copies of the 2019 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: www.Morningstar.co.uk/uk/nsm. Copies of the 2019 Annual Report and Accounts and the Notice of AGM are also available on the Company's website at www.foodtravelexperts.com.
Annual General Meeting
The Company's Annual General Meeting will be held at 11.00am on 26 February 2020 at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A 2AL.
Regulated Information
The information set out in the Appendix, which is extracted from the 2019 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 2019 released on 20 November 2019 which can be viewed at www.foodtravelexperts.com. 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
 
Investor and analyst enquiries
Sarah John
Director of Investor Relations
+44 (0) 203 714 5251
E-mail: sarah.john@ssp-intl.com
 
 
Appendix
This material should also be read in conjunction with, and is not a substitute for reading, the full 2019 Annual Report and Accounts.
 
Note and page references in the text of this Appendix refer to note numbers and page numbers in the 2019 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 73 of the 2019 Annual Report and Accounts. Responsibility is for the full 2019 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 International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU) and applicable law. The Directors have elected to prepare the parent company financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
 
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company, and of their profit or loss for that period. In preparing each of the Group and parent company financial statements, the Directors are required to:
 
·      select suitable accounting policies and then apply them consistently;
·      make judgements and estimates that are reasonable, relevant and reliable;
·      state whether they have been prepared in accordance with IFRSs as adopted by the EU or applicable UK accounting standards in the case of the parent company;
·      assess the Group and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
·      use the going concern basis of accounting unless they either intend to liquidate the Group or the parent company, or to cease operations, or have no realistic alternative but to do so.
 
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company, and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities.
 
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
 
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.  Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
  
Responsibility statement of the Directors in respect of the Annual Financial Report
 
We confirm that to the best of our knowledge:
 
·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
 
·      the Strategic Report/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, to be fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
 
 
 
Simon Smith
Chief Executive Officer
19 November 2019
 
 
 
Jonathan Davies
Chief Financial Officer
19 November 2019
 
  
2.         Principal Risks
The description below of the principal risks and uncertainties that the Company faces is extracted from pages 19 to 24 of the 2019 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 and are listed in order of priority. 
 
Strategic Priorities: 1: Optimising our offer to benefit from the positive trends in our markets and driving profitable LFL sales; 2: Growing profitable new space; 3: Optimising gross margins and leveraging scale benefits; 4: Running an efficient and effective business; and 5: Optimising investment using best practice and shared resource.
The principal risks discussed in the table below are listed in order of priority. A new risk has been added to the principal risks since last year regarding food safety.
 
↑ Risk increasing                                                 ↓Risk decreasing                                               ↔No risk movement
 




Risk/Risk Priority
 


Risk Description
 


Mitigating Factors
 




1


Business environment and geopolitical uncertainty

↔
 
 
 
 
 
 
 
 
 
 
Strategic priorities
1, 2


The Group operates in the travel environment where external factors such as the general economic and geopolitical climate, levels of disposable income, weather, changing demographics and travel patterns could all impact both passenger numbers and consumer spending. There is a risk that the Group is unable, or poorly placed, to respond to these external events.
The travel environment is vulnerable to acts of terrorism or war, an outbreak of pandemic disease, or a major and extreme weather event or natural disaster which could reduce the number of passengers in travel locations.
Increased protectionist trade policy and tariffs in the US could result in US cost inflation. Increasing risk to airline stability and public concern over climate change may impact air travel, either directly or through government policies.


The Group monitors the performance of individual business units and markets regularly. The Executive Directors review detailed weekly and monthly information covering a range of KPIs, and monitor progress on key strategic projects with local senior management. Specific short- and medium-term actions are taken to address any trading performance issues which are monitored on an ongoing basis.
The Group also conducts extensive research to understand current levels of customer satisfaction and gathers feedback on changing requirements.
The Group has business continuity plans in place including IT disaster recovery as well as liaison with authorities and clients in key locations to ensure that contingency plans are comprehensive and complete.




2


Retention of existing client 

relationships

↔
 
 
 
 
 
 
 
 
 
Strategic priorities
1, 2 


The Group's operations are dependent on the terms of airport and railway station concession agreements. Growth is dependent on the Group's ability to retain existing concession contracts and win new contracts from either new or existing clients.
The Group's clients may turn to alternative operators, cease operations, terminate contracts with the Group or increase cost 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 to monitor performance in close partnership with its clients' management teams.
The Group has an established contact strategy with key clients to establish and/or maintain ongoing relationships. These are discussed between Group and local management on a regular basis.
The Group conducts regular online and interview-based client surveys to ensure any concerns are being addressed.
Furthermore, the Group proactively seeks to invest in, extend and enhance its offers in key locations, working in conjunction with clients.




3


Brexit

↔
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 3 


Brexit may have an adverse impact on the wider economic environment in the UK and across the EU, resulting in weaker consumer spending in the travel food and beverage markets. It would also impact the travel sector directly if any restrictions in the freedom of industrial air travel between the UK and EU countries come into force.
The potential depreciation of the pound could lead to cost inflation pressures, particularly in the food commodity markets.
Potential restrictions on mobility of EU nationals post-Brexit may limit the availability of labour resource in the UK.
These risks may be compounded in the case of a 'no deal' Brexit which could further reduce the attractiveness of the UK for investment.


The Group carefully monitors the ongoing negotiations of the UK's exit from the EU, which are discussed between Group and local management on a regular basis.
The Group maintains a global portfolio and regularly monitors the impact of foreign exchange fluctuations on its cash flows, mitigating the impact from foreign exchange risk.
The Group's pricing and range initiatives are driven by continuous monitoring of consumer spending benchmarks.
Various gross margin initiatives, including recipe re-engineering and procurement rationalisation continue to be pursued, in order to mitigate the impact of cost inflation.
The Group continues to develop its UK recruitment strategy to ensure SSP is positioned as an attractive employer in the UK. There is also an ongoing focus on labour flexibility and productivity to improve retention rates post Brexit.




4


Benefits realisation from efficiency programmes 

↑
 
 
 
Strategic priorities

3, 4, 5


The Group is continuously seeking new programmes to improve efficiency. There is a risk that these programmes may be difficult to implement due to complexity, and furthermore that they could fail to deliver the desired benefits, e.g. labour efficiency and minimising waste and loss.
 


The Group has completed a detailed evaluation, planning and partial implementation of its major change programmes, and adapts and responds to feedback on an ongoing basis.
To aid these programmes, the Group continues to utilise specialist expertise in the business where required, both at a Group and at a country level.
Group IT also provides support for project management and implementation, using agreed standard business processes and controls.




5


Information security and stability

↑
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

4, 5


The Group becomes exposed to information security and cyber threats, e.g. threats detailed in the Payment Card Industry Data Security Standards (PCIDSS).
The risk of ransomware attacks has increased due to a general increase in the prevalence of ransomware attacks and their increasing sophistication.
The Group has commenced a major programme to implement SAP Inventory and Finance systems which can risk significant operational disruption.


The Group has developed extensive IT disaster recovery and information security policies and practices, to ensure that these meet the changing landscape. These are regularly discussed and reviewed by the Risk and Audit committees as well as the Board.
The Group has also rolled out cyber security training across the business to reinforce data protection responsibilities and cyber risks.
The Group's segmental business model and IT systems structure help to ensure that potential cyber attacks are likely to remain isolated locally rather than impact the entire Group.
A clear governance and management structure has been set up for the SAP project implementation including the engagement of a SAP preferred partner for the roll-out which has significant experience of implementing SAP at large companies.




6


Labour laws

and unionisation

↔
 
 
 
 
 
 
 
 
 
Strategic priorities

4 


Approximately half of the Group's employees are subject to collective bargaining agreements. These are principally in France, Germany, Spain, Denmark, Finland, Norway, Sweden and the United States.
The Group is also subject to minimum wage requirements and mandatory healthcare subsidisation in some of the jurisdictions in which it operates, notably North America, the United Kingdom and China. Furthermore, in the US, costs have continued to increase due to the Fair Labor Standards Act ('FLSA') as well as the immigration policy which has had an adverse impact on the supply of labour.


The Group works proactively with all of its unions to ensure that the various collective bargaining agreements are appropriate for the Group and therefore minimise commercial risks.
The Group is continually reviewing the impact of changes in remuneration structures in developing mitigating strategies across the Group. The reviews include the ongoing impact of the National Living Wage and the Apprenticeship Levy in the United Kingdom, and the impact of healthcare legislation and FLSA in the United States.
Various labour productivity and technology initiatives continue to be pursued by the Group, in order to mitigate the impact of labour cost inflation.




7


Regulatory compliance

↑
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 2


The laws and regulations governing the Group's industry have become increasingly complex across a number of jurisdictions and a wide variety of areas, including, among others labour, employment, immigration, security and safety, modern slavery, competition and antitrust, consumer protection, data protection, licensing requirements and related compliance.
With a UK parent company, the Group is required to comply with the provisions of the UK Bribery Act and the legislation aimed at preventing the facilitation of tax evasion, as well as the local equivalent laws in the territories in which the Group operates. There is a risk that the Group fails to comply with such laws and regulations.
The Group is required to comply with data protection laws in the jurisdictions in which it operates. The Company is subject to the EU General Data Protection Regulation (GDPR) which requires the ability to evidence compliance against a large number of mandatory obligations relating to personal data processing activities including being able to respond to an increased range of data subject rights and mandatory personal data breach response reporting.
The UK Corporate Governance Code published by the Financial Reporting Council in July 2018 impacts various areas including workforce and audit, risk and internal control, stakeholders, culture, succession and diversity and remuneration. Furthermore, the new IFRS 16 accounting standard fundamentally changes the accounting for operating leases and will result in material changes to the financial statements. Both the 2018 Corporate Governance code and IFRS 16 are applicable to SSP's financial year commencing 1 October 2019. These new requirements create a disclosure and reporting risk in the financial statements.


The Group has procedures and processes in place to ensure compliance with local laws and regulations. The Group may obtain external advice to supplement the in-house legal and compliance team.
The Group has a Code of Conduct, and Anti-Bribery and Anti-Corruption Policy, and training has been rolled out internationally. This is continually being reviewed and updated to improve controls and monitoring.
The Group's procedures under the policy include regular reporting by the businesses to the Risk Committee. Compliance is monitored by Internal Audit and the Risk Committee on an ongoing basis, and all alleged breaches of the Code of Conduct and policy are investigated.
GDPR compliance, is determined and managed locally but is overseen by the Steering Committee, comprising leadership from Group HR, Commercial and Legal. A Global Privacy Office staffed with expert resource has been established to help identify and address global data protection challenges. Local champions are in place to ensure compliance with local and Group rules.
Furthermore, terms and conditions have been included in our supplier and business partner contracts (to the extent possible) to ensure that they are GDPR compliant and sign up to our policy.
We have engaged external specialist firms to review compliance with the requirements of the 2018 Corporate Governance Code. This is additional to the thorough compliance checks and reviews conducted by the in-house legal department.
Related to IFRS 16, a new software solution is being implemented to ensure correct computation of the impact on the financial statements.




8


Food safety and product compliance
New risk
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 2


The preparation of food and maintenance of the Group's supply chain require a base level of hygiene, temperature maintenance and traceability. Non-compliance with food safety laws can expose the Group to significant reputational damage as well as possible food safety liability claims, financial penalties and other issues. Compliance with food allergen laws came into the spotlight following the death of a teenager, Natasha Ednan-Laperouse, who died after a severe allergic reaction to a Pret A Manger baguette in 2016. From October 2021, foods that are pre-packaged for direct sale in the United Kingdom will need to have a label with a full ingredients list with allergenic ingredients emphasised within it (commonly referred to as 'Natasha's Law').
An increase in NGO activism and UK public awareness has seen increased pressure to reduce the use of plastics in the Food and Beverage (F&B) industry. Network Rail has stated that F&B units must be plastic-free at their sites by 2020. Switching to non-plastic alternative materials could have significant cost impact on the business. There is also the risk of additional levies being imposed by the government on the use of plastic.


The Group has implemented a global safety management programme, setting minimum standards of health and safety, fire safety and food safety across all its operations and requiring periodic reporting of performance and incident statistics. Within this management programme are food safety standards which include processes to monitor the supply chain and to manage allergens. All SSP country operations are required to report on all food safety incidents (including allergens) on a quarterly basis to the Risk Committee, which reports on global safety performance to the Audit Committee every six months. SSP UK & Ireland currently controls allergen management within the supply chain, supported by staff training and unit audits. All operational staff undertake allergen training as part of mandatory training upon commencement of employment in unit. All units are subject to an unannounced 'Safe and Legal' audit by the Health and Safety team on a 12 monthly cycle. Full technical guidance and clarity of scope of Natasha's Law is expected to be provided by the Food Standards Agency by the end of 2019. This is likely to require significant investment and therefore a working group has been set up to discuss all options with relevant stakeholders, including Health and Safety, Purchasing, IT, New Product Development and Data teams.
Ongoing reviews of operations are being carried out in the UK to determine plastic-free feasibility and opportunities.
 




9


Changing client behaviours

↔
 
 
 
 
 
 
 
Strategic priorities

1, 2  


Changing client requirements, such as splitting tenders across two or more providers, seeking new income streams through pouring rights agreements, partnering with operators in joint ventures, developing third party purchasing models and favouring franchise and local brand operators or partnering directly with brand owners, may adversely affect the Group's business. Furthermore, new tender processes can be more complex and demand increased rents.


The Group has in place a clear 'SSP Value Proposition' that it presents to the client to address this risk.
The Group Chief Commercial and Strategy Officer works closely with country management teams to enhance and clarify the Group's proposition to its clients. There is greater focus on developing internal concepts to reduce complexity and costs.
The Group's contact strategy with key stakeholders and clients helps to mitigate this risk. This is informed by its annual client survey, which is carried out by an independent party.




10


Execution and mobilisation of new contracts

↔
 
 
 
 
 
 
Strategic priorities

3, 4, 5


There is a risk that the Group may not be successful in mobilising new contracts and operating them successfully.
 


The Group, as well as regional and country senior management teams, reviews mobilisation plans to ensure that new openings are delivered on time and in line with the specific agreement or contract.
The Group has strengthened the management teams, including the business development and property teams in the high-growth regions of Asia Pacific, India and North America.
The Group also teams up with its joint venture partners in new territories to provide local infrastructure and mobilisation support.




11


Expansion into new markets

↔
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 2 


The Group's strategy involves expanding its business in developing markets, including Asia Pacific, India, Eastern Europe, Middle East and more recently, Latin America.
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 strengthened the management teams in Asia Pacific and India, especially in finance, business development and operations, where this risk is high and the Group is growing.
In addition, the Group adopts a joint venture model in certain new territories to provide access to existing local infrastructure and expertise, as well as to help mitigate the risk inherent on entering new territories.
The Group has clearly defined authorisation procedures for all contract investments, to ensure that they are consistent with the objectives set by the Board and that they fully consider and evaluate the risks inherent in expansion into new locations and territories.
The Group works with in-house and external advisors to ensure the risks of doing business in developing markets are identified and where possible, mitigated before entering those markets. This includes appropriate due diligence of potential joint venture and other local partners.
The Group legal team works closely with country legal and operational teams to support business development activities and to ensure compliance with local requirements.
The risk of working in developing markets is also monitored by the Risk Committee, Group Investment Committee and the Audit Committee.
 




12


Senior management capability and retention 

↔
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 2, 4


The performance of the Group depends on its ability to attract, motivate and retain key employees. The skills developed in our business are highly attractive to other companies, which regularly target our staff for recruitment.
There is a risk that the Group may not have sufficient management capability at a senior level, such as country leadership in both existing and new territories, to execute the planned operational efficiency programmes and to support the growth and development of the business.
There is also a risk that the Group may not have sufficient resources in various functions including in legal, finance and IT, to meet the changing and complex needs of an international and growing business.
 


The Group continues to review key roles and succession plans at a country and at a Group level. Senior resources have been strengthened in a number of strategically important and growing businesses and there is a programme in places to further strengthen these going forwards.
The 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 required to run the Group effectively.
The Group carries out an annual talent mapping exercise to identify candidates for future roles and continues to invest in additional resources to support change initiatives and business development programmes.




13


Competitive intensity 

↔
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

1, 2 


Competition intensifies as the Group's competitors become more sophisticated, diversified, direct more resources to the preparation of tenders, and take a more aggressive position on commercial terms when tendering for contracts. This could put pressure on the Group's profitability and reduce the availability and attractiveness of contracts. Over the past year competition has notably intensified in India and China.


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 a quantitative and a qualitative perspective.
The Group's business development team utilises the feedback from regular client satisfaction surveys when developing new tenders, to ensure they remain competitive to clients.
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 continues to extend and update its brand portfolio to provide breadth and depth as part of a tender process.




14


Business development capability and investment 

↔
 
 
 
 
 
 
Strategic priorities

1, 2


The Group may not have the capabilities in key markets to maximise business development opportunities, in order to win profitable business in new markets.


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 Investment Committee process ensures all significant investments are assessed by the CEO and CFO.
The Group has also strengthened the management team in Asia Pacific and India, especially in finance, business development and operations.
Furthermore, the Group works with local joint venture partners in new markets to access support and advice on business development activities.




15


Outsourcing programmes

↔
 
 
 
 
 
 
 
 
 
 
 
Strategic priorities

5 


The Group fails to execute outsourcing projects effectively, resulting in business as usual being disrupted and the introduction of new third party risks.
Furthermore, any benefits expected from the outsourcing programme may not be realised.


The Group continues to utilise specialist resources in the business to manage implementation and transition projects, and it continues to use external advisors to provide input into the management of risks in such projects.
Furthermore, the Group has included the outsourcing centres in its Internal Audit review scope. The outsourcing partners are highly reputable and were selected after a rigorous tender process and extensive due diligence.
There are also monthly and quarterly reviews with outsourcing partners focusing on efficiency and costs to ensure shared services are being appropriately managed. Performance feedback is reported to the Executive Committee and the Risk Committee on a regular basis.




16


Maintenance/ development of brand portfolio

↔
 
 
 
 
 
 
Strategic priorities

1, 2 


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


The Group continues to strengthen its dedicated brands and marketing teams, to work closely with its partner brands and to enable greater capacity to attract and manage a broader portfolio of external brands.
The Group also 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.
Finally, the Group continuously looks to strengthen the depth and breadth of its brand partners.




17


Tax strategy
↑
 
 
 
 
 
 
Strategic priorities

2, 4


The Group may suffer reputational damage if customers, clients and/or suppliers believe that the Group is engaged in aggressive or abusive tax avoidance.
There is a risk that the Group may not be tax compliant due to complicated local tax laws across different geographical territories.
There is an increased focus on tax governance from the tax authorities, including the integration of systems with tax authorities. There continues to be more investment from OECD into Base Erosion and Profit Shifting (BEPS) related initiatives. There is a risk that there could be wholesale changes to how taxation systems work based on the data gathered in the future. This is also driving digitisation resulting in a cost and complexity impact.


The Group has a tax management policy which is based on the Board's guidance to adopt a low risk tax strategy.
The Group also regularly reviews its tax priorities and has strengthened the tax team at the centre. There is also increased oversight and monitoring of key tax issues at divisions by the Group tax team.
Increased disclosure of tax policy and tax payments in Group financial documents.




 
 
3.         Related Parties
The following is extracted from note 27 to the Group's consolidated financial statements (on page 117). 
 
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 non-wholly owned subsidiary ('investor'), other than those listed in note 21, 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 12, are included in the table below.
 
Related party transactions




 


2019
£m


2018
£m




Purchases from related parties1


(3.0)


(5.9)




Management fee income


2.6


2.1




Other income


1.6


1.7




Other expenses2


(14.2)


(11.5)




Amounts owed by related parties at the end of the year


10.1


2.2




Amounts owed to related parties at the end of the year


-


(0.5)




Operating lease commitments


(18.5)


(20.3)




1  The majority of purchases from related parties relates to purchases from The Minor Food Group PCL (£0.9m; 2018: £5.2m) which owns 51% of Select Service Partner Co. Limited.
2  The majority of other costs relate to £8.9m concession fees (2018: £8.9m).
  
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 associates, 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.
 
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 and Non- Executive Directors.
 




 


2019
£m


2018
£m




Short-term employee benefits


(6.5)


(5.1)




Post-employment benefits


(0.4)


(0.4)




Share-based payments


(1.5)


(2.4)




 


(8.4)


(7.9)




 




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