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SSP Group PLC

SSP Group Operating profit up 22.7% and a further special dividend of c. £150m

SSP Group (LON:SSPG), a leading operator of food and beverage outlets in travel locations worldwide, today announced its financial results for the year ended 30 September 2018.

Highlights:

· Underlying operating profit1 of £195.2m: up 22.7% at constant currency2, and 19.8% at actual exchange rates.

· Revenue of £2,564.9m: up 9.5% at constant currency, and 7.8% at actual exchange rates.

· Like-for-like sales3 up 2.8%: driven by growth in air passenger travel and retailing initiatives.

· Strong net gains4 of 5.1%: driven by North America and the Rest of the World.

· Underlying operating margin 1 up 70 basis points, at constant currency and excluding the acquisition impact of TFS in India, driven by further progress on our strategic initiatives. The acquisition impact added a further 10 basis points bringing the underlying operating margin to 7.6%.

· Underlying profit before tax of £184.4m: up 24.0%. Reported profit before tax of £182.9m, up 26.3%.

· Underlying basic earnings per share of 25.1 pence: up 23.6%. Reported basic earnings per share of 24.9 pence, up 27.7%.

· Final dividend of 5.4 pence per share, bringing the full year ordinary dividend to 10.2 pence per share: up 25.9%, reflecting a payout ratio of 40%.

· Underlying operating cash inflow5 of £90.2m, after another record year of investment of £144.2m in the business.

· Encouraging pipeline, with significant new contracts underpinning future growth, including at Montparnasse station in Paris, 29 Starbucks stores in the NS rail estate in the Netherlands, at Rio de Janeiro and Sao Paulo Guarulhos International Airports in Brazil, at Goa International Airport in India and in North America, at San Francisco and Seattle Airports.

· Proposed c. £150m special dividend and share consolidation, underpinning confidence in the business.

Commenting on the results, Kate Swann, CEO of SSP Group, said:

“SSP has delivered another strong performance in 2018. Operating profit was up 22.7% at constant currency, driven by good like-for-like sales growth, substantial new contract openings and further operational improvements. We have continued to expand our global footprint, materially extending our presence in North America, delivering excellent growth in India and entering the important Latin American region with two contracts in Brazil. The new business pipeline is encouraging and underpins our confidence in future growth. Our cash flow is robust and, in addition to investing £144m into the business this year, our highest to date, we are also returning c. £150m cash to shareholders.

The new financial year has started in line with our expectations and, whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets.”

Financial highlights:

Year-on-year change

2018

£m

2017

£m

Actual FX

Rates

Constant

currency2

Revenue

2,564.9

2,379.1

+7.8%

+9.5%

Like-for-like sales growth3

+2.8%

+3.1%

n/a

n/a

Underlying operating profit1

195.2

162.9

+19.8%

+22.7%

Underlying operating margin1

7.6%

6.8%

+80 bps

+80 bps

Underlying profit before tax1

184.4

148.7

+24.0%

n/a

Underlying basic earnings per share (p)1

25.1

20.3

+23.6%

n/a

Underlying diluted earnings per share (p) 1

24.8

20.0

+24.0%

n/a

Dividend per share (p)

10.2

8.1

+25.9%

n/a

Underlying operating cash inflow5

90.2

103.5

-12.9%

n/a

Net debt

(334.7)

(262.2)

-27.7%

n/a

 

Statutory reported results:

The table below summarises the Group’s statutory reported results (where the financial highlights above are adjusted).

2018

£m

2017

£m

Year-on-year change

Operating profit

193.3

161.0

+20.1%

Operating margin

7.5%

6.7%

+80 bps

Profit before tax

182.9

144.8

+26.3%

Basic – Earnings per share (p)

24.9

19.5

+27.7%

Diluted – Earning per share (p)

24.5

19.2

+27.6%

 

   

1 Stated on an underlying basis which excludes the amortisation of intangible assets arising on the acquisition of the SSP business in 2006 and the revaluation of the obligation to acquire an additional 16% ownership share of TFS.

2 Constant currency is based on average 2017 exchange rates weighted over the financial year by 2017 results.

3 Like-for-like sales represent revenues generated in an equivalent period in each financial year in outlets which have been open for a minimum of 12 months. Like-for-like sales are presented on a constant currency basis.

4 Net contract gains / (losses) represent the net year-on-year revenue impact from new outlets opened and existing units closed in the past 12 months. Net contract gains / (losses) are presented on a constant currency basis.

5 Stated on an underlying basis after capital expenditure, net cash flows to/from associates and non-controlling interests, acquisitions and tax.