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“An IPO is the appropriate next step for a business of SSP’s calibre, size and international scale“ |
Kate Swann Chief Executive Officer SSP |
INTERNATIONAL. In big breaking news this morning UK time, SSP Group, the world’s second-biggest international operator of travel-related branded food & beverage outlets, announced its intention to proceed with an Initial Public Offering (IPO).
The company intends to apply for admission of its shares to the premium listing segment of the Official List of the FCA and to trade on the main market for listed securities of the London Stock Exchange. SSP expects to raise gross primary proceeds of approximately £500 million through the offer of new shares. The net proceeds from the Global Offer will be used to reduce existing borrowings and to settle other financial obligations
As at 31 March 2014, SSP operated 1,981 branded food & beverage outlets in travel locations across 29 countries in the UK, Europe, North America, Asia Pacific and the Middle East.
Headquartered in London, SSP operates its outlets under concession agreements with clients, which are typically the owners and operators of airports and railway stations. The group serves on average one million customers daily and on average employs 30,000 staff.
SSP Chief Executive Officer Kate Swann said: “SSP is a leader in the fast-growing international travel food & beverage market and is focused on the more rapidly growing sectors of air and rail. The business is geographically diversified with good representation in the UK, Europe, North America, the Middle East and Asia Pacific.
“The group has built strong relationships with its clients and brand partners, and has established a reputation as an expert in its field.
“An IPO is the appropriate next step for a business of SSP’s calibre, size and international scale and we believe that we are well-placed for life as a listed company.”
For the financial year ended 30 September 2013, SSP reported revenues of £1,827.2 million and underlying EBITDA of £152.7 million. SSP recently announced its results for the six months ended 31 March 2014, including a +4.6% year-on-year increase in revenues on constant currency terms (+2.2% at actual exchange rates) and a +12.6% increase in underlying EBITDA on constant currency terms (+8.0% at actual exchange rates).
SSP Non-Executive Chairman Vagn Sørensen said: “SSP has proved itself to be a robust and resilient business that is capable of consistently delivering profitable growth. It benefits from a number of favourable trends, including rising air and rail passenger numbers, increasing consumer spend, and ongoing investment in travel infrastructure around the world.
“The company has a strong management team that we believe is capable of realising the significant potential that we see for this business, and a listing on the London Stock Exchange is a logical next step in helping us to achieve our plans for future growth.
“I would also like to take this opportunity to reiterate my welcome to John Barton, Ian Dyson and Denis Hennequin who joined the Board of SSP earlier this year. Their substantial combined experience in the food & beverage, travel and retail industries will be invaluable to SSP in the years ahead as it enters what promises to be an exciting next phase for the company and its stakeholders.”
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Café & Tapas at Málaga Airport, a location which saw SSP win the 2014 FAB Award for Best Airport Food Court |
OVERVIEW OF THE OFFER
● SSP will list on the Premium Segment of the Official List of the FCA and trade on the main market for listed securities of the London Stock Exchange.
● It expects to raise gross primary proceeds of approximately £500 million through the offer of new shares. The net proceeds from the Global Offer will be used to reduce existing borrowings and to settle other financial obligations.
● Concurrent with the IPO, the Group will refinance its existing financial debt by arranging new multi-currency term loan facilities in an aggregate amount of £510 million and a revolving credit facility of £75 million. At admission, SSP expects to have net debt of approximately £450 million, which represents 2.87x underlying EBITDA for the 12 months to 31 March 2014.
● Full details of the Global Offer will be included in the Prospectus expected to be published in the coming weeks.
In relation to the Global Offer and Admission, Goldman Sachs International and Morgan Stanley & Co International plc are acting as Joint Sponsors; Goldman Sachs International and Morgan Stanley Securities are acting as Joint Global Coordinators and Joint Bookrunners; BofA Merrill Lynch and Jefferies International are acting as Joint Bookrunners; and Nomura International plc and Shore Capital Stockbrokers Limited are acting as Co-lead Managers. Lazard & Co is acting as financial adviser to SSP.
BACKGROUND TO THE FLOAT: WHAT SSP WILL BE TELLING INVESTORS
AIRPORTS AND RAILWAY CHANNELS DOMINATE: The company generates the majority of its revenues from the airport and railway station sectors. Airports accounted for approximately 51% of revenues in the year ended 30 September 2013, while railway stations sector generated around 42%. On a geographic basis, approximately 92% of the group’s revenues in the year ended 30 September 2013 were derived from outlets in the UK, Northern Europe, North America, Asia Pacific, Eastern Europe and the Middle East.
STRONG CONTRACT RENEWAL RECORD; LONG-TERM CONCESSION BASE: SSP believes it has an ability to win, build and maintain strong, profitable and long-term client relationships. It has strong contract retention rates (approximately 80% for the three years to 30 September 2013). Critically it also has long-term contract maturities, with typical contract lengths of five to nine years for airports and over ten years for railway stations
It also boasts a successful track record of winning and entering into concession agreements with new clients, with contract gains over the past year including Abu Dhabi International Airport, Beijing Capital International Airport, Bordeaux Airport and Bordeaux Saint-Jean Railway Station
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Railway stations account for an impressive 42% of group revenues. Pictured here is SSP’s Montreux Jazz Café at Paris Gare de Lyon, winner of a Highly Commended accolade in the Best Individual Outlet at a Railway Station category at this month’s FAB Awards in Copenhagen |
SOLID FINANCIAL TRACK RECORD: SSP has delivered combined annual growth rate (CAGR) in revenues of +6.7% between the years ended 30 September 2007 and 30 September 2013.
Margins have improved as the global economy has recovered, with an increase in underlying EBITDA margins from 7.6% in the year ended 30 September 2011 to 8.4% in the year ended 30 September 2013.
The company enjoys a broad geographic revenue base, with approximately 39% of revenues in the year ended 30 September 2013 from the UK, 46% from Continental Europe, 8% from North America and 7% from the rest of the world.
SSP has shown continued strong momentum in the six-month period ended 31 March 2014.
SOUND UNDERLINING MARKET DYNAMICS: SSP believes that it has leadership positions (based on revenues) in many of the markets in which it operates, and further that these sectors and regions are some of the most attractive segments of the travel food & beverage industry.
The Directors believe that these sectors and regions benefit from a number of long-term structural growth drivers, such as increasing passenger volumes and increasing spend per passenger in travel hubs, together with airport and railway station operators increasingly seeking to commercialise their sites.
SSP believes it has a business model that allows the group to use local management and infrastructure to maintain strong relationships with clients in each market, to leverage local insight to customise brands, product offerings and strategies for each market, and to source business opportunities locally. Equally, it claims that its international scale allows the sharing of best practices across operations in different regions, countries and sites.
CUSTOMER AND BRAND EXPERTISE: The group claims a deep understanding of the broad spectrum of customers and evolving trends, through its extensive operating experience, customer feedback tools, and proprietary and third party data. Its Directors believe that SSP is therefore well-positioned to offer clients insights into drivers of footfall and sales, as well as the design of brand, and food & beverage, packages
SSP has a portfolio of over 300 international and local proprietary brands, partner brands and bespoke concepts which have been selected to fulfil customer and client requirements, and which are often customised for the travel environment. SSP also has a track record of creating, developing and operating innovative bespoke brand concepts, often in partnership with leading chefs around the world.
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Caviar House & Prunier at Center Bar at Zürich Airport, a prime example of how SSP works with strongly established travel-related brands |
EXPERT IN TRAVEL MARKET COMPLEXITIES: SSP believes it has proven expertise in operating outlets in the travel environment, an operationally demanding channel due to high customer volumes, extreme customer peaks and troughs, limited space and security restrictions.
EXPERIENCED, SPECIALISED MANAGEMENT TEAM: The senior management team has extensive experience within the travel food & beverage market and the broader retail industry. It is led by Chief Executive Officer, Kate Swann, who formerly spent ten years with WHSmith PLC. Chief Finacial Officer Jonathan Davies has been in this role for approximately ten years. Headquarters expertise is backed up by strong local management teams.
The Board of Directors includes five non-executive directors with deep experience across the retail and FMCG sectors, international markets and quoted companies:
– Chairman Vagn Sørensen joined the SSP board in 2006. He was formerly the CEO of Austrian Airlines Group and Deputy CEO of SAS Scandinavian Airlines System.
– Senior Independent Non-Executive Director John Barton is also Chairman of easyJet plc, Next PLC and Catlin Group Limited.
– Independent Non-Executive Director Ian Dyson is also the Senior Independent Director of Betfair Group plc and ASOS plc, and a Non-Executive Director of Intercontinental Hotels Group plc and Punch Taverns plc. He was formerly CEO of Punch Taverns plc, and Group Finance & Operations Director at Marks & Spencer plc.
– Independent Non-Executive Director Denis Hennequin was formerly the President of McDonald’s Europe. He currently also serves as a Non-Executive Director of Eurostar International Limited and the John Lewis Partnership.
– Non-Executive Director Per Franzén is EQT’s Head of Equity in Stockholm.
More details to follow.
