TIDMSSPG
RNS Number : 9541P
SSP Group PLC
22 February 2021
22 February 2021
LEI: 213800QGNIWTXFMENJ24
SSP Group plc
(the "Company")
Posting of 2020 Annual Report and Accounts and Notice of Annual
General Meeting
On 17 December 2020, the Company published its preliminary
results for the year ended 30 September 2020. The Company announces
that it has today posted to shareholders copies of its Annual
Report and Accounts for the period ending 30 September 2020, the
Notice of Annual General Meeting (the "Notice of AGM") and Form of
Proxy.
Copies of the 2020 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 . Copies of
the 2020 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 Annual General Meeting ("AGM") of the Company will be held
on 25 March 2021 at 1.30 p.m. In light of the Covid-19 pandemic and
the UK Government's Stay at Home Guidance, to ensure we protect the
health and safety of our shareholders, our people and Directors,
the AGM will be a closed meeting, held at the Company's registered
office.
Neither shareholders nor their proxies (other than the Chairman
of the Meeting) will be able to attend in person and anyone
attempting to do so will unfortunately have to be refused entry.
The Company will arrange for the requisite quorum to be in
attendance at the Company's registered offices to ensure that
formalities are complied with.
As shareholders cannot attend the AGM, we strongly encourage
Shareholders to appoint the Chair of the meeting as their proxy to
ensure their vote is counted. Proxy appointments must be received
by Computershare by no later than 1.30 p.m. (GMT) on 23 March
2021.
Despite this year's AGM format, the Company is committed to
ensuring our Shareholders are able to raise questions with the
Board. The Notice of AGM sets out details of how Shareholders can
submit questions ahead of the AGM. Responses to questions received
by 1.00 p.m. (GMT) on 22 March 2021 will be published on the
Company's website as soon as practicable after that date.
Regulated Information
The information set out in the Appendix, which is extracted from
the 2020 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 2020 released on 17
December 2020 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
Notes to Editor
About SSP
SSP is a leading operator of food and beverage concessions in
travel locations, operating restaurants, bars, cafés, food courts,
lounges and convenience stores in airports, train stations,
motorway service stations and other leisure locations. Prior to the
onset of Covid-19, we served around one and a half million
customers every day at approximately 180 airports and 300 rail
stations in 35 countries around the world and operated more than
550 international, national and local brands across our c. 2,700
units.
www.foodtravelexperts.com
Appendix
This material should also be read in conjunction with, and is
not a substitute for reading, the full 2020 Annual Report and
Accounts.
Note and page references in the text of this Appendix refer to
note numbers and page numbers in the 2020 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 92 of the 2020 Annual Report and Accounts.
Responsibility is for the full 2020 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 and the Directors' Report includes a
fair review of the development and performance of the business and
the position of the Company 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 Company's and the Group's
position and performance, business model and strategy.
Simon Smith
Chief Executive Officer
16 December 2020
Jonathan Davies
Chief Financial Officer
16 December 2020
2. Principal Risks
The description below of the principal risks and uncertainties
that the Company faces is extracted from pages 36 to 41 of the 2020
Annual Report and Accounts.
Risks are identified as 'principal' on the basis of their
likelihood of occurrence and their potential impact on the Group.
Furthermore, our strategic priorities based on our five lever
framework laid out below form the basis of Group-wide risk
identification, assessment and discussions:
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. New risks have been added to the principal risks
since last year regarding liquidity and funding and the impact of
Covid-19.
Risk increasing Risk decreasing No risk movement
Risk/Risk Risk Description Mitigating factors
Priority
1. Liquidity Covid-19 has significantly reduced SSP has implemented effective
and funding trading over an extended and processes to minimise liquidity
uncertain timeframe. An inability pressures; for example, a significant
New Risk to effectively respond and manage reduction in capital spend and
expenditure accordingly would the furlough of colleagues,
impact the Group's ability to as well as salary reductions
operate within committed credit have been implemented across
facilities. senior management.
The Group is reliant on the Further, the Group did not declare
Covid Corporate Financing Facility an interim dividend, postponed
(CCFF), and an inability to its share buyback programme
refinance the facility or draw and completed a new equity placing
down further funding tranches in March 2020 (as well as a
would further impact the Group's small placing in June 2020 to
ability to operate within committed retain some of the final 2019
credit facilities. The Group's dividend as cash in the business).
senior debt facilities, which
mature in July 2022, will also Covenant amendments have been
need refinancing or extending secured as further detailed
in due course. There is also in the viability statement on
a risk of breaching covenants pages 42-43, and in the going
on existing financing facilities concern note on pages 106-107.
unless covenant waivers are Management will remain in close
secured from lenders. If the dialogue with both lenders and
Group is unable to agree covenant USPP note holders and will seek
waivers there is a risk that further covenant amendments
Strategic the lenders could require repayment should the need arise. Liquidity
Priorities of their financing commitments. and covenants headroom is closely
4 monitored and stress tested.
SSP has also engaged in ongoing
discussions with key advisors
and lenders about access to
alternative sources of finance
in the future should this be
needed in the medium to longer
term.
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2. Impact of The pandemic has had a severe The Group has implemented short-term
Covid-19 effect on the travel sector, cost reductions and a significant
which has been effectively closed restructuring programme to reduce
in many of SSP's markets, and the cost base, while also improving
there is a risk that the recovery short-term liquidity by the
in the travel markets may be use of government support schemes,
prolonged due to ongoing restrictions such as the UK's Coronavirus
for health and safety reasons Job Retention Scheme, reduction
and behavioral changes which in capex spend and negotiating
might impact passenger numbers. rent reliefs with its clients.
In the Air sector most industry There has also been a reduction
analysts expect that there will in product range to further
not be a recovery to pre-Covid reduce supply chain complexity
levels of activity until 2023 and costs.
or 2024. The principal reasons
for this will be a potential
loss of business travel, as
companies look to restrict travelling
and promote video-conferencing,
which has proven effective during
the pandemic, and a reduction
in long haul travel, as a consequence
of airline capacity reductions
and safety concerns. In the
Rail sector, there may also
be some longer term impacts
on passenger numbers as a consequence
the accelerated trend towards
working from home, which has
proven effective for many firms
and their employees, and will
affect commuter travel which
is important for SSP's rail
operations.
2.
New Risk The risks to SSP are that passenger The Group CEO and CFO continue
volumes may not return to pre-Covid to carry out focused weekly
levels, and therefore impact trading reviews with country
sales potential, leaving some management teams. Management
outlets and contracts operating have also put in place rolling
at uneconomic levels of sales, forecasts in place of quarterly
given the fixed operational forecasts to enable the Group
cost base. There is also a risk to react to changes as they
that there is greater pressure occur.
from clients to pay fixed minimum
guaranteed rents, even at lower
passenger volumes, or open more
outlets at individual sites
than is commercially optimal
for SSP.
Furthermore there is a risk At the outset of the Covid-19
that some of the actions taken pandemic, the
by SSP to trade through the
pandemic, notably the organisational
restructuring undertaken in
many countries, may leave the
business under-resourced for
a recovery in demand and remove
key management capabilities.
Group established a Business
Continuity Committee to ensure
that the Group had all the proper
processes in place to mitigate
the risks of a variety of Covid-19
scenarios. This was led by the
Group HR Director with input
from our internal auditor's
risk/crisis team.
As a consequence of Covid-19
the Group has been required
to adopt new health and safety
protocols and operational standards
(e.g. to meet social distancing
regulations)
in order to protect its staff Group HR has led a comprehensive
and customers. All of these review of government guidelines
potentially lead to higher operational on health and safety and social
costs and carry compliance risks. distancing procedures to ensure
customer and employee safety
can be ensured as offices and
units start to reopen
Strategic
Priorities
4
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3. Business The Group operates in the travel The Group monitors the performance
environment environment where external factors of individual business units
and geopolitical such as the general economic and markets regularly. The Executive
uncertainty and geopolitical climate, levels Directors review detailed weekly
of disposable income, weather, and monthly information covering
changing demographics and travel a range of KPIs, and monitor
patterns could all impact both progress on key strategic projects
passenger numbers and consumer with local senior management.
spending. There is a risk that Specific short- and medium-term
the Group is unable, or poorly actions are taken to address
placed, to respond to these any trading performance issues
external events. which are monitored on an ongoing
basis.
The travel environment is vulnerable
to acts of terrorism or war, There has been greater focus
an outbreak of pandemic disease, on business continuity planning
or a major and extreme weather and recovery. The Business Continuity
event or natural disaster which plan has been tested during
could reduce the number of passengers this current crisis with staff
in travel locations. Tourism working from home and has proved
and business travel have been to be effective.
materially impacted by Covid-19 The Group has been conducting
resulting in a direct business research to understand changing
impact due to the downturn in requirements of customers in
the global economy while also light of the pandemic to better
increasing the risk of economic tailor our offer to their needs.
downturn in the global economy.
The crisis will be more acute
in countries with a high level
of debt and dependency on tourism,
e.g. Greece and Spain, and the
timeline to recovery in the
travel sector is uncertain.
Strategic
Priorities Further, Covid-19 has exacerbated
1, 2 risk to airline stability, which
had previously been increasing,
e.g. the failure of Jet Airways
and impact of Boeing Max 737
grounding.
Increased protectionist trade
policy and tariffs could result
in cost inflation, particularly
in the US. Public concern over
climate change may impact air
travel, either directly or through
government policies.
------------------- ----------------------------------------- --------------------------------------------
4. Retention The Group's operations are dependent The Group's local management
of existing on the terms of airport and structures in all its major
contracts railway station concession agreements. geographies allow it to maintain
Growth (and maintenance of market strong relationships with its
share) is dependent on the Group's clients and to monitor performance
ability to retain existing concession in close partnership with its
contracts and win new contracts clients' management teams.
from either new or existing
clients. Further, the Group has an established
contact strategy with key clients
Covid-19 has resulted in a reduction to establish and/or maintain
in tenders, thus reducing this ongoing relationships. These
risk in the short term. However, are discussed between Group
rent relief negotiations may and local management on a regular
result in friction, especially basis.
for reliefs sought beyond the
near term. Unsuccessful rent Management has actively engaged
relief negotiations may force with clients on a reopening
the Group to exit units that programme to ensure that units
are no longer viable. can be reopened profitably.
The Group conducts regular online
Moreover, as trading recovers and interview-based client surveys
from Covid-19 impact, there to ensure any concerns are being
may be tensions over the timing addressed.
Strategic of reinstatement of suspended
Priorities capital expenditure programmes
1, 2 given the ongoing pandemic and
unit closures.
Resource reductions made in
response to Covid-19 may result
in reduced operational standards,
impacting relationships with
clients and franchise partners
in the medium term.
------------------- ----------------------------------------- --------------------------------------------
5. Impact of Brexit may have an adverse impact The Group carefully monitors
Brexit on the wider economic environment the ongoing negotiations of
in the UK and across the EU, the UK's exit from the EU through
resulting in weaker consumer its Brexit risk mitigation committee.
spending in the travel food
and beverage markets. It would The Group maintains a global
also impact the travel sector portfolio and regularly monitors
directly if any restrictions the impact of foreign exchange
in the freedom of industrial fluctuations on its cash flows,
air travel between the UK and mitigating the impact from foreign
EU countries come into force. exchange risk.
The potential depreciation of The Group's pricing and range
the pound could lead to cost initiatives are driven by continuous
inflation pressures, particularly monitoring of consumer spending
in the food commodity markets. benchmarks.
Potential restrictions on mobility Various gross margin initiatives,
of EU nationals post-Brexit including recipe re-engineering
may limit the availability of and procurement rationalisation
labour resource in the UK in continue to be pursued, to mitigate
the long term. the impact of cost inflation.
These risks may be compounded The Group continues to develop
in the case of its UK recruitment strategy
a 'no deal' Brexit which could to ensure SSP is positioned
Strategic further reduce the attractiveness as an attractive employer in
Priorities of the UK for investment. the UK during the store reopening
1, 3 programme. There is also an
ongoing focus on labour flexibility
and productivity to improve
retention rates post Brexit.
An increased focus on technology
initiatives during the Covid-19
recovery stage will help reduce
demand for labour as units open.
------------------- ----------------------------------------- --------------------------------------------
6. Senior Management The performance of the Group The Remuneration Committee reviewed
capability depends on its ability to attract, the remuneration for senior
and retention motivate and retain key employees. management in light of Covid-19
The skills developed in our with the aim of ensuring that
business are highly attractive the reward offer is designed
to other companies, which regularly to attract, retain and motivate
target our staff for recruitment. the key personnel required to
run the Group effectively. In
Given the impact of Covid-19 light of Covid-19 and the resulting
and the increasing risk over increased recruitment and retention
staff retention, particularly risk, the Group has developed
for senior employees with transferable revised incentive schemes for
skills, insufficient senior senior management, e.g. a revised
capability risk has increased LTIP structure.
over the prior year. Additionally,
there continues to be a risk The Group also continues to
that the Group may not have review key roles and succession
sufficient resources in various plans at a country and at a
functions including in legal, Group level. The Group carries
Strategic finance and IT, to meet the out an annual talent mapping
priorities changing and complex needs of exercise to identify candidates
4 an international business as for future roles and continues
it adapts and recovers from to invest in additional resources
the impact of Covid-19. to support change initiatives
and career development programmes.
It may also be difficult to
attract senior employees as
the travel food sector will
be considered riskier in the
short to medium term.
------------------- ----------------------------------------- --------------------------------------------
7. Regulatory The laws and regulations governing The Group has procedures and
Compliance the Group's industry have become processes in place to ensure
increasingly complex across compliance with local laws and
a number of jurisdictions and regulations. The Group may obtain
a wide variety of areas, including, external advice to supplement
among others, labour, employment, the in-house legal and compliance
immigration, security and safety, team.
bribery and corruption, tax
evasion, modern slavery, competition The Group has a number of key
and antitrust, consumer protection, compliance policies (e.g. Anti-Bribery
data protection, licensing requirements and Anti-Corruption) for which
and related compliance. There training has been rolled out
is a risk that the Group fails internationally. This is continually
to comply with such laws and being reviewed and updated to
regulations. improve controls and monitoring.
The Group's procedures under
The UK Corporate Governance its compliance policies include
Code 2018, certain amendments regular reporting by the businesses
to the Companies Act and IFRS to the Risk Committee and regular
16 are applicable to SSP's current monitoring by internal audit.
financial year. These new requirements All alleged breaches of the
create a disclosure and reporting Group's policies are investigated.
risk in the financial statements
as well as reputational risk GDPR compliance is determined
if the new rules are not properly and managed locally but is overseen
implemented. by a steering committee, comprising
leadership from Group HR, Group
Covid-19 has resulted in an IT, Commercial and Legal. The
additional compliance burden Group's Global Privacy development
due to the increased health programme is temporarily on
and safety protocols to be observed hold in light of Covid-19, however,
for colleagues and customers, with advice from its external
use of government support programmes advisors, the Group has adopted
(e.g. furlough schemes) and a short-term simplified controls
an increased focus on good governance. programme for FY 2021.
Reduced staffing and employees Related to IFRS 16, a new software
being placed on furlough, and solution has been implemented
an increase in reliance on external to ensure correct computation
advisors, has also led to an of the impact on the financial
increased compliance risk, slightly statements. Increased frequency
offset by the extension of compliance of reviews from country CFOs
deadlines have ensured that risks related
to completeness and accuracy
Strategic of the numbers is mitigated.
Priorities
1, 2 Following the onset of the Covid-19
pandemic, the Group's internal,
legal and finance teams (supported
by the Business Continuity Committee)
have worked closely with the
local business teams to assess
the risk of non-compliance with
laws and contracts arising from
the crisis and to advise on
mitigating actions (including
operational protocols to safeguard
our various stakeholders).
------------------- ----------------------------------------- --------------------------------------------
8. Food safety Food safety and integrity are The Group has implemented a
and product vital for our business. The global safety management programme,
compliance preparation of food and maintenance setting minimum standards of
of the Group's supply chain health and safety, fire safety
require a base level of hygiene, and food safety across all its
temperature maintenance and operations and requiring periodic
traceability. Non-compliance reporting
with food safety laws or failure of performance and incident
to effectively respond to a statistics. Within this management
food safety incident, can expose programme are food safety standards
the Group to significant reputational which include processes to monitor
damage as well as possible food the supply chain and to manage
safety liability claims, financial allergens. All SSP country operations
penalties and other issues. are required to report on all
food safety incidents (including
Proper management of allergens allergens) on a periodic basis
remain in the industry spotlight. to the Risk Committee, which
From October 2021, foods that reports on global safety performance
are pre-packaged for direct to the Audit Committee every
sale in the United Kingdom will six months.
need to have a label with a
full ingredients list with allergenic SSP UK & Ireland currently controls
ingredients emphasised within allergen management within the
it (commonly referred to as supply chain, supported by staff
'Natasha's Law'). training and unit audits. All
operational staff undertake
An increase in NGO activism allergen training as part of
and UK public awareness has mandatory training upon commencement
seen increased pressure to reduce of employment in unit. All units
the use of plastics in the food are subject to an unannounced
and beverage (F&B) industry. 'Safe and Legal' audit by the
Network Rail has stated that Health and Safety team on a
F&B units must be plastic-free 12-monthly cycle. Full technical
Strategic at their sites by 2020. Switching guidance and clarity of scope
Priorities to non-plastic alternative materials of Natasha's Law is expected
1, 2 could have significant cost to be provided by the Food Standards
impact on the business. There Agency. The UK allergens working
is also the risk of additional group set up last year is currently
levies being imposed by the checking which products are
government on the use of plastic. in scope, and sourcing an IT
platform to support allergen
data and labelling.
Ongoing reviews of operations
are being carried out in the
UK to determine plastic-free
feasibility and opportunities.
------------------- ----------------------------------------- --------------------------------------------
9. Labour laws Approximately half of the Group's The Group works proactively
and unionisation employees are subject to collective with all of its unions to ensure
bargaining agreements. These that the various collective
are principally in France, Germany, bargaining agreements are appropriate
Spain, Denmark, Finland, Norway, for the Group and therefore
Sweden and the United States. minimise commercial risks.
The Group is also subject to The Group is continually reviewing
minimum wage requirements and the impact of changes in remuneration
mandatory healthcare subsidisation structures in developing mitigating
in some of the jurisdictions strategies across the Group.
in which it operates, notably The reviews include the ongoing
North America, the United Kingdom impact of the National Living
and China. Furthermore, in the Wage and the Apprenticeship
US, costs have continued to Levy in the United Kingdom,
increase due to the Fair Labor and the impact of healthcare
Standards Act ('FLSA') as well legislation and FLSA in the
as the immigration policy which United States.
has had an adverse impact on
the supply of labour. There The Group's strategic plan in
is a risk that the Group is response to Covid-19 includes
unable to offset the cost impact initiatives to improve labour
of the above on its overall efficiency and profitable reopening
labour costs. of units with continued focus
Strategic on roll-out of technology solutions
priorities There is also a risk that governments to such as self order Kiosks
4 will seek further employee protections and order at table to reduce
as a result of Covid-19, which costs.
could negatively impact the
Group's base costs. Owing to the job losses due
to Covid-19, there might be
increased labour supply in the
short to medium term which may
mitigate some of the risk of
the ongoing labour inflation.
------------------- ----------------------------------------- --------------------------------------------
10. Information There is a risk that the Group The Group has developed extensive
security becomes exposed to information IT disaster recovery and information
and stability security, cyber threats, e.g. security policies and practices,
threats detailed in the Payment to ensure that these meet the
Card Industry Data Security changing landscape. These are
Standards (PCIDSS) as well as regularly discussed and reviewed
ransomware attacks, particularly by the Risk and Audit Committees
in light of increased homeworking as well as the Board.
of its head office staff.
The Group's new Security operation
The Group has commenced a major centre became operational in
programme to implement SAP Inventory September 2020 (as part of the
and Finance systems which can Company's Cyber Security Programme).
risk significant operational This will help to reduce time
disruption. There is a risk to detect and respond to incidents
that the speed of implementation (spam, malware attacks, phishing
is negatively impacted by the emails, etc.). Additional layers
Covid-19 recovery process. of protection to prevent ransomware
impacting critical files on
As the Group adapts to the post servers have been added. The
Covid-19 way of doing business, Group has also rolled out cyber
there is likely to be an increased security training across the
focus on technology solutions business to reinforce data protection
and there is a risk that the responsibilities and cyber risks.
Group is unable to make the
right investment of time, capital The Group's segmental business
and resource into such programmes. model and IT systems structure
help to ensure that potential
Reduction in resource as part cyber attacks are likely to
of Covid-19 response may generally remain isolated locally rather
increase pressure on IT teams. 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
Strategic experience of implementing SAP
Priorities at large companies.
4, 5
In light of the increased working
from home by head office colleagues,
the Group has increased the
roll-out of the new modern workplace
technology to improve security
of our laptops across the business
(e.g. multi-factor authentication,
encryption of all data on hard
disks, etc.).
------------------- ----------------------------------------- --------------------------------------------
11. Benefits The Group is continuously seeking The Group's strategic plan in
realisation new programmes to improve efficiency. response to Covid-19 is being
from efficiency There is a risk that these programmes implemented with focus on guiding
programmes may be difficult to implement the business strategy through
due to complexity, and furthermore the Covid-19 period to ensure
that they could fail to deliver evaluation of the overall cost
the desired benefits, e.g. labour structure. This includes various
efficiency and minimising waste initiatives such as simplification
and loss. of product offering and profitable
reopening of units.
The impact of Covid-19 restructuring
has been significant and may The Group has completed a detailed
lead to loss of momentum on evaluation, planning and partial
technology enhancements and implementation of its major
capital investment that are change programmes, and adapts
required for sustainable growth. and responds to feedback on
This may be compounded by the an ongoing basis.
loss of resource in areas such
as commercial, waste and loss, To aid these programmes, the
procurement and labour management. Group continues to utilise specialist
Strategic expertise in the business where
Priorities required, both at a Group and
3, 4, 5 at a country level.
Group IT also provides support
for project management and implementation,
using agreed standard business
processes and controls.
------------------- ----------------------------------------- --------------------------------------------
12. Changing Changing client requirements, The Group has in place a clear
client behaviours such as splitting tenders across 'SSP Value Proposition' that
two or more providers, seeking it presents to the client to
new income streams through pouring address this risk.
rights agreements, partnering
with operators in joint ventures, Senior Group commercial management
developing third party purchasing works closely with country management
models and favouring franchise teams to enhance and clarify
and local brand operators or the Group's proposition to its
partnering directly with brand clients. There is greater focus
owners or increased health and on developing internal concepts
safety monitoring requirements, to reduce complexity and costs.
may adversely affect the Group's
business and /or profit margins. The Group's contact strategy
with key stakeholders and clients
Furthermore, new tender processes helps to mitigate this risk.
Strategic can be more complex and demand This is informed by its annual
Priorities increased rents. However, Covid-19 client survey, which is carried
1, 2 is expected to result in a reduction out by an independent party.
in new tenders and increased
flexibility as clients aim to
get through the downturn.
------------------- ----------------------------------------- --------------------------------------------
13. Outsourcing The Group may fail to execute The Group continues to utilise
programmes outsourcing projects effectively, specialist resources in the
resulting in business as usual business to manage implementation
being disrupted and the introduction and transition projects, and
of new third party risks. it continues to use external
advisors to provide input into
Furthermore, any benefits expected the management of risks in such
from the outsourcing programme projects.
may not be realised.
The Group has temporarily scaled
Staff turnover at outsourcing down some outsourced resources
partners may be impacted by to match reduction in business
Covid-19. operations in light of Covid-19.
This process has been well managed.
There are also monthly and quarterly
reviews with outsourcing partners
Strategic focusing on efficiency and costs
Priorities to ensure shared services are
5 being appropriately managed.
Performance feedback is reported
to the Executive Committee and
the Risk Committee on a regular
basis.
------------------- ----------------------------------------- --------------------------------------------
14. Tax strategy The Group may suffer reputational The Group has a tax management
damage if customers, clients policy which is based on the
and/or suppliers believe that Board's guidance to adopt a
the Group is engaged in aggressive low-risk tax strategy.
or abusive
tax avoidance. The Group also regularly reviews
its tax priorities and has done
There is a risk that the Group so in light of the Covid-19
may not be tax compliant due pandemic (for example, the Eat
to complicated local tax laws Out to Help Out scheme was successfully
across different geographical rolled out at short notice).
territories. Covid-19 support There is also increased oversight
schemes (e.g. furlough) have and monitoring of key tax issues
further increased the tax compliance within divisions by the Group
burden. tax team.
There is an increased focus Increased disclosure of tax
on tax governance from the tax policy and tax payments in Group
authorities, including the integration financial documents.
of systems with tax authorities.
There continues to be more investment
Strategic from OECD into Base Erosion
Priorities and Profit Shifting (BEPS) related
1, 2 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.
------------------- ----------------------------------------- --------------------------------------------
15. Maintenance/ The Group's success is largely In light of Covid-19, to provide
Development dependent upon its ability to greater support to the regions,
of brand maintain its portfolio of proprietary the top 10 franchise brand negotiations
portfolio brands and the brands of its are being handled by the Group
franchisors, as well as the centrally. There are also ongoing
appeal of those brands to clients negotiations with franchise
and customers. brand partners to obtain better
terms, which have been accelerated
The loss of any significant due to the need to respond to
partner brands, the inability Covid-19.
to obtain rights to new brands
over time or the diminution The Group continues to work
in appeal of partner brands closely with its partner brands,
or the Group's proprietary brands, particularly in light of Covid-19,
could impair the Group's ability to maximise the roll-out of
to compete effectively in tender operational efficiencies to
processes and ultimately have ensure units are opening profitably
a material adverse effect on despite lower passenger numbers.
the Group's business.
The Group will continue to carry
The risk has reduced over the out customer research into passengers'
prior year as, in light of Covid-19, needs as necessary to ensure
there have been no significant its brands and concepts have
new brand openings during the the right offer in the post-Covid-19
year. In the short term the world.
Strategic need for new brands has reduced
Priorities due to the economic disruption Finally, the Group continuously
1, 2 caused by Covid-19. There is looks to strengthen the depth
however, a risk that some of and breadth of its brand partners
our brand partners may fail as well as to reform and strengthen
during the ongoing pandemic its own proprietary brands.
resulting in adverse financial
and reputational consequences
for the Group.
------------------- ----------------------------------------- --------------------------------------------
16. Expansion Historically, the Group's strategy The Group has strong management
into new has involved expanding its business teams in developing markets
markets in developing markets. The political, where this risk exists. In addition,
economic and legal systems and the Group adopts a joint venture
conditions in these markets model in certain new territories
are less predictable than in to provide access to existing
countries with more developed local infrastructure and expertise,
institutional structures, subjecting as well as to help mitigate
the Group to additional commercial, the risk inherent on entering
reputational, legal and compliance new territories.
risks.
The Group has clearly defined
However, this risk has reduced authorisation procedures for
due to the ongoing impact of all contract investments, to
Covid-19 as entering new markets ensure that they are consistent
in the short to medium term with the objectives set by the
is unlikely. However, Covid-19 Board and that they fully consider
may extend the time period over and evaluate the risks inherent
which new businesses can reach in expansion into new locations
profitability after the initial and territories. The Group works
set-up. 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.
Strategic The Group legal team works closely
Priorities with country legal and operational
1, 2 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.
------------------- ----------------------------------------- --------------------------------------------
3. Related Parties
The following is extracted from note 31 to the Group's
consolidated financial statements (on page 147).
Related party relationships exist with the Group's subsidiaries,
associates (note 15), key management personnel, pension schemes
(note 23) and employee benefit trust (note 25).
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 25, 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 15, are included in the
table below.
Related party transactions
2020 2019
GBPm GBPm
------------------------------------------------------- ------ ------
Purchases from related parties(1) (1.7) (3.0)
------------------------------------------------------- ------ ------
Management fee income 2.2 2.6
------------------------------------------------------- ------ ------
Other income 1.1 1.6
------------------------------------------------------- ------ ------
Other expenses(2) (11.2) (14.2)
------------------------------------------------------- ------ ------
Amounts owed by related parties at the end of the year 3.6 10.1
------------------------------------------------------- ------ ------
Amounts owed to related parties at the end of the year (6.1) -
------------------------------------------------------- ------ ------
Operating lease commitments - (18.5)
------------------------------------------------------- ------ ------
1 The majority of purchases from related parties relates to
purchases from The Minor Food Group PCL (GBP0.9m; 2019: GBP0.9m)
which owns 51% of Select Service Partner Co. Limited.
2 The majority of other expenses relate to GBP11.2m rent from
Midway Partnership LLC (2019: GBP8.9m concession fees with various
parties).
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 2020 the value of these guarantees was GBP119.0m. 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.
2020 2019 GBPm
GBPm
----------------------------- ----- --------------
Short-term employee benefits (5.0) (6.5)
Post-employment benefits (0.6) (0.4)
Share-based payments (0.8) (1.5)
----------------------------- ----- --------------
(6.4) (8.4)
----------------------------- ----- --------------
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NOAZZGZZNZRGMZM
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