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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ssp Group Plc | LSE:SSPG | London | Ordinary Share | GB00BGBN7C04 | ORD 1 17/200P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.20 | 1.13% | 196.70 | 197.60 | 197.90 | 197.80 | 194.60 | 197.00 | 3,392,870 | 16:35:08 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Food Preparations, Nec | 3.02B | 8.1M | 0.0102 | 193.92 | 1.58B |
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. ------------------- ----------------------------------------- -------------------------------------------- 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 ------------------- ----------------------------------------- -------------------------------------------- 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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