REG - SSP Group PLC - Final Results <Origin Href="QuoteRef">SSPG.L</Origin> - Part 2
29/11/2016 07:10
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(97.6) (78.1)
Purchase of other intangible assets (6.7) (3.7)
Acquisition of business - (5.1)
Net cash flows from investing activities (106.3) (85.3)
Cash flows from financing activities
Repayment of borrowings (30.8) (27.9)
Repayment of finance leases and other loans (0.2) (1.2)
Refinancing fee paid in the year - (1.0)
Interest paid (13.7) (16.8)
Dividends paid to equity shareholders (22.3) (10.0)
Dividends paid to non-controlling interests (11.1) (6.4)
Acquisition of increased share of subsidiary (0.8) -
Capital contribution from non-controlling interests 8.4 1.1
Exceptional IPO related transaction costs - (9.2)
Net cash flows from financing activities (70.5) (71.4)
Net decrease in cash and cash equivalents 11.7 2.6
Cash and cash equivalents at beginning of the year 134.7 133.3
Effect of exchange rate fluctuations on cash and cash equivalents 9.4 (1.2)
Cash and cash equivalents at end of the year 155.8 134.7
Reconciliation of net cash flow to movement in net debt
Net increase in cash in the year 11.7 2.6
Cash outflow from decrease in debt and finance leases 31.0 29.1
Change in net debt resulting from cash flows 42.7 31.7
Translation differences (39.1) 20.3
Other non-cash changes (1.2) (0.7)
Decrease in net debt in the year 2.4 51.3
Net debt at beginning of the year (319.8) (371.1)
Net debt at end of the year (317.4) (319.8)
Notes
1 Preparation
Basis of preparation and statement of compliance
The consolidated financial statements of SSP Group plc have been prepared on a
going concern basis and in accordance with International Financial Reporting
Standards as adopted by the EU ("IFRS") and the Companies Act 2006 applicable
to companies reporting under IFRS. These financial statements are presented in
Sterling and unless stated otherwise, rounded to the nearest £0.1 million. The
financial statements are prepared on the historical cost basis except for the
derivative financial instruments which are stated at their fair value.
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous
year.
There are no EU-endorsed IFRS or IFRIC interpretations that are not yet
effective that are expected to have a material impact on the Group.
IFRS 16, Leases, issued in January 2016 with an effective date of 1 January
2019 is not yet EU endorsed. Management is in the process of reviewing the
impact that this will have on the Group.
2 Segmental reporting
SSP operates in the food and beverage travel sector, mainly at airports and
railway stations.
Management monitors the performance and strategic priorities of the business
from a geographic perspective, and in this regard has identified the following
four key "reportable segments": the UK, Continental Europe, North America and
Rest of the World ("RoW"). The UK includes operations in the United Kingdom
and the Republic of Ireland; Continental Europe includes operations in the
Nordic countries and in Western and Southern Europe; North America includes
operations in the United States and Canada; and RoW includes operations in
Eastern Europe, the Middle East and Asia Pacific. These segments comprise
countries which are at similar stages of development and demonstrate similar
economic characteristics.
The Group's management assesses the performance of the operating segments
based on revenue and underlying operating profit. Interest income and
expenditure are not allocated to segments, as they are managed by a central
treasury function, which oversees the debt and liquidity position of the
Group. The non-attributable segment comprises costs associated with the
Group's head office function and depreciation of central assets.
2016 UK Continental Europe North America RoW Non-attributable Total
£m £m £m £m £m £m
Revenue 749.4 796.8 262.7 181.4 - 1,990.3
Underlying operating profit/(loss) 66.4 60.1 12.5 8.6 (26.2) 121.4
2015 UK Continental Europe North America RoW Non-attributable Total
£m £m £m £m £m £m
Revenue 727.2 749.7 201.6 154.4 - 1,832.9
Underlying operating profit/(loss) 52.7 53.5 3.5 14.6 (26.9) 97.4
The following amounts are included in underlying operating profit:
UK Continental Europe North America RoW Non-attributable Total
£m £m £m £m £m £m
2016
Depreciation and amortisation* (14.2) (34.9) (18.0) (9.9) (1.8) (78.8)
2015
Depreciation and amortisation* (16.5) (31.0) (15.7) (4.8) (4.9) (72.9)
* Excludes amortisation of acquisition-related intangible assets.
A reconciliation of underlying operating profit to profit before and after tax
is provided as follows:
Underlying operating profit 121.4 97.4
Adjustments to operating costs (1.9) (5.2)
Share of loss from associates 1.3 1.6
Finance income 0.5 0.7
Finance expense (15.7) (17.7)
Profit before tax 105.6 76.8
Taxation (23.8) (16.5)
Profit after tax 81.8 60.3
Profit after tax
81.8
60.3
3 Earnings per share
Basic earnings per share is calculated by dividing the result for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year.
Diluted earnings per share is calculated by dividing the result for the year
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the year adjusted by potentially dilutive
outstanding share options.
Underlying earnings per share is calculated the same way except that the
result for the year attributable to ordinary shareholders is adjusted for
specific items as detailed below:
2016 2015
£m £m
Profit attributable to ordinary shareholders 72.0 53.4
Adjustments:
Amortisation of acquisition-related intangibles 1.9 5.2
Tax effect of adjustments (0.4) (0.4)
Underlying profit attributable to ordinary shareholders 73.5 58.2
Basic weighted average number of shares 475,169,510 475,040,543
Dilutive potential ordinary shares 3,579,804 1,137,801
Diluted weighted average number of shares 478,749,314 476,178,344
The number of ordinary shares in issue as at 30 September 2016 was 475,199,063 (30 September 2015: 475,113,354).
2016 2015
Earnings per share (p):
- Basic 15.2 11.2
- Diluted 15.0 11.2
Underlying earnings per share (p):
- Basic 15.5 12.3
- Diluted 15.4 12.2
4 Operating costs
2016 2015
£m £m
Cost of food and materials:
Cost of inventories consumed in the year (636.5) (604.3)
Labour cost:
Employee remuneration (581.6) (541.7)
Overheads:
Depreciation of property, plant and equipment (74.2) (68.0)
Amortisation of intangible assets - software (4.6) (4.9)
Amortisation of acquisition-related intangible assets (1.9) (5.2)
Rentals payable under operating leases (349.6) (311.6)
Other overheads (222.4) (205.0)
(1,870.8) (1,740.7)
Adjustments to operating costs
Amortisation of intangible assets arising on acquisition (1.9) (5.2)
(1.9) (5.2)
For the years presented above, underlying operating profit excludes non-cash
accounting adjustments relating to amortisation of intangible assets arising
on acquisition of the SSP business in 2006.
5 Finance income and expense
2016 2015
£m £m
Finance income
Interest income 0.4 0.7
Net foreign exchange gains 0.1 -
Total finance income 0.5 0.7
Finance expense
Total interest expense on financial liabilities measured at amortised cost (10.5) (13.9)
Net change in fair value of cash flow hedges utilised in the year (2.7) (0.9)
Unwind of discount on provisions (0.6) (1.3)
Net interest expense on defined benefit pension obligations (0.4) (0.5)
Other (1.5) (1.1)
Total finance expense (15.7) (17.7)
6 Cash flow from operations
2016 2015
£m £m
Profit for the year 81.8 60.3
Adjustments for:
Depreciation 74.2 68.0
Amortisation 6.5 10.1
Share-based payments 4.5 3.8
Finance income (0.5) (0.7)
Finance expense 15.7 17.7
Share of Profit of associates (1.3) (1.6)
Taxation 23.8 16.5
204.7 174.1
(Increase) / decrease in trade and other receivables (18.7) 1.2
Increase in inventories (0.1) (1.4)
Decrease in trade and other payables, and in provisions 22.6 5.5
Cash flow from operations 208.5 179.4
7 Dividends
2016 2015
£m £m
Interim dividend paid in the year of 2.5p per share (2015: 2.1p) (11.8) (10.0)
Prior year final dividend of 2.2p per share paid in the year (10.5) -
(22.3) (10.0)
The proposed dividend of 2.9 pence per share, amounting to a final dividend of
£13.8m, is not included as a liability in these financial statements, and
subject to shareholder approval, will be paid on 31 March 2017 to shareholders
on the register on 3 March 2017.
8 Fair value measurement
Certain of the Group's financial instruments are held at fair value.
The fair values of financial instruments held at fair value have been
determined based on available market information at the balance sheet date,
and the valuation methodologies detailed below:
- the fair values of the Group's borrowings are calculated based on the
present value of future principal and interest cash flows, discounted at the
market rate of interest at the balance sheet date; and
- the derivative financial liabilities relate to interest rate swaps. The
fair values of interest rate swaps have been determined using relevant yield
curves and exchange rates as at the balance sheet date.
Carrying amounts and fair values of certain financial instruments
The following table shows the carrying amounts of financial assets and
financial liabilities. It does not include information for financial assets
and financial liabilities not measured at fair value if the carrying amount is
a reasonable approximation of fair value.
Carrying amounts
2016 2015
£m £m
Financial instruments measured at fair value:
Non-current
Derivative financial liabilities (14.2) (9.8)
Financial instruments not measured at fair value:
Non-current
Long term borrowings (442.5) (426.8)
Current
Cash and cash equivalents 155.8 134.7
Short term borrowings (30.7) (27.7)
Financial assets and liabilities in the Group's consolidated balance sheet are
either held at fair value, or their carrying value approximates to fair value,
with the exception of loans, which are held at amortised cost. The fair value
of total borrowings estimated using market prices at 30 September 2016 is
£476.7m (30 September 2015: £459.0m).
All of the financial assets and liabilities measured at fair value are
classified as level 2 using the fair value hierarchy, whereby inputs which are
used in the valuation of these financial assets and liabilities and have a
significant effect on the fair value are observable, either directly or
indirectly. There were no transfers during the year.
9 Post balance sheet event
On 20 October 2016, the Group announced the creation of a joint venture with K
Hospitality Group, whereby SSP will own a 49% share in Travel Food Services
Private Limited, a leading operator of food and beverage concessions in travel
locations in India. This partnership provides an entry point into the Indian
market and the Group expects to benefit from TFS' established strong local
presence.
SSP is acquiring 49% of TFS for an expected net consideration of £57.9m. The
acquisition will take place in two stages. The first stage is to acquire a 33%
stake for an estimated net consideration of £39.0m. This stage is expected to
be fully completed by the end of February 2017. The second stage, to acquire a
further 16%, is expected to take place by the end of 2018, for a net
consideration of approximately £18.9m, contingent upon the performance of the
business.
The Group will have control over TFS' relevant activities which affect its
returns and as such will fully consolidate TFS and its group companies.
10 Annual General Meeting
The Group's Annual General Meeting will be held on 13 March 2017. Details of
the resolutions to be proposed at that meeting will be included in the notice
of Annual General Meeting that will be sent to shareholders in late January
2017.
11 Other information
The financial information for the year ended 30 September 2016 contained in
this preliminary announcement was approved by the Board on 28 November 2016.
This announcement does not constitute statutory accounts of the Company within
the meaning of section 435 of the Companies Act 2006, but is derived from
those accounts.
Statutory accounts for the year ended 30 September 2015 have been delivered to
the Registrar of Companies. Statutory accounts for the year ended 30 September
2016 will be delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The auditors have reported on those accounts. Their reports were not
qualified, did not include a reference to any matters to which the auditors
drew attention by way of emphasis without qualifying their report, and did not
contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The Company's Annual Report and Accounts for the year ended 30 September 2016
will be posted and made available to shareholders on the Company's website in
late January 2017.
12 Forward looking statement
This document contains forward-looking statements. These forward-looking
statements include all matters that are not historical facts. Statements
containing the words "believe", "expect", "intend", "may", "estimate" or, in
each case, their negative and words of similar meaning are forward-looking. By
their nature, forward-looking statements involve risks and uncertainties
because they relate to events that may or may not occur in the future. We
caution you that forward-looking statements are not guarantees of future
performance and that the Group's actual financial condition, results of
operations and cash flows, and the development of the industry in which we
operate, may differ materially from those made in or suggested by the
forward-looking statements contained in this document or other made by us or
on the Group's behalf. In addition, even if the Group's financial condition,
results of operations and cash flows, and the development of the industry in
which we operate are consistent with the forward-looking statements in this
document, those results or developments may not be indicative of results or
developments in subsequent periods. Except where required to do so under
applicable law or regulatory obligations, we undertake no obligation to update
any forward looking statements whether as a result of new information, future
events or otherwise.
This information is provided by RNS
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