SSP Group plc

Okay, are we all right to get started? Yeah. Okay, good morning, everyone, and thank you for joining us here today, either in person or on our live webcast. I'm Patrick Coveney, the Group CEO of SSP, and I'm joined by Geert Borellen, our Group CFO today. In a minute, I will briefly summarize the progress that we've made in the first half. Geert will then cover the financials before I return to provide you with more detail on our delivery against Focus 26. and our outlook for the remainder of FY26. We said in December that we had to do more as a team to strengthen operational performance and to create value for shareholders. We shared our Focus 26 plan to drive sustainable improvements in profitability, cash generation and returns on capital, structured against the five pillars that you see on this slide. To be clear, there is more that we can and will do but we're seeing the benefits of that focus coming through in what we would characterise as a resilient first half performance with tangible progress against each element of the strategy. Sales for the first half have been where we planned them to be as we delivered like-for-like sales growth of 5% for the group in quarter one and critically sustained it in quarter two. Delivering a stronger, more profitable and more focused continental European business is paramount. With the actions that we've already delivered, And with more in flight there already, we're on track to deliver the planned increase in operating margin from 2.2% to over 3% for this year. And we're also setting out today the future direction for our European rail business, following our wide-ranging review in that region, with the implementation of that plan now getting underway. We recognise the critical role of productivity and cost efficiency in delivering Focus 26, and we've embedded the corporate overhead reduction plan that we shared last year to deliver annualized savings of £30 million. Importantly, and I stress this, we are also now delivering a targeted structural reduction in our minority interest charge across the group. Shareholders rightly expect strong conversion of sales and efficiencies into returns, and for the full year we're working on stepping up the return on capital employed metric beyond last year's 18.7% level, and we're on track to do so with a meaningful improvement of 70 basis points year-on-year in the 12 months to the end of March. Our programme of activities to drive stronger profit to cash conversion is progressing well, notwithstanding some planned one-off outflows that we had in the first half. We're running SSP more and more as a cash-first business, And based on current market conditions, we're well set to deliver on our pre-dividend, pre-buyback, pre-cash flow target of over 100 million for the year. Let me now hand you over to Hirt to talk through the numbers of the first half in more detail.

Thank you, Patrick, and good morning, everyone. I will start with the key highlights of this past year, and as in prior years, we present the metrics before any impact of IFRS 16. We grew revenues by 6% to $1.8 billion and increased underlying operating profit by 18%, with operating margin expanding by 30 basis points. This, in combination with higher income from associates and lower minorities, resulted in earnings per share of 1.1% whereas in prior year, we posted a loss. Better operating profit and lower capital expenditures were partially upset by the usual seasonal impacts and planned one-off outflows that Patrick referenced. This all resulted in free cash flow before dividends and share buyback a bit lower than last year. Leverage expressed as net debt over EBITDA was 2.2 times, the same as last year at this time. Consistent with our dividend policy, we propose an interim dividend of 1.6 P. Now, let's get into some of the details and let's start with sales. Sales growth was 6%, including 5% like-for-like growth, supported by strong performance in the UK and our Asia pack and EME markets. Notable is the strong recovery of like-for-like growth in the US towards the end of the half year, supported by increased dwell times due to airport security disruptions and the positive impact of spring break travel. Like-for-like sales momentum in Asia Pac and EME regions was again very strong, despite the impact of the Middle East towards the end of the half year. Later on in the presentation, Patrick will put this all in perspective of our group performance. Net contract gains added 2% to sales growth, again, as we prioritized investment in our Asia Pac and EME and North America regions. As in prior year, I would like to point to the negative 1% that you see in the column other on this slide. This represents the impact of the exit of our German motorway services business and the deconsolidation of our joint venture with Adani Airport Holdings in India. On the far right of the slide, you also see the like-for-like sales for the group as a whole have been solid at 3% in the first six weeks of the second half. This next slide shows how like-for-like sales evolved during the first six months of FY26 by region and into the start of this half. Sequential improvements are clearly visible in the UK and North American regions, as well as stable sales growth in continental Europe. The impact of the Middle East crisis is also visible with a drop to 8% like-for-like in quarter two in the Asia-Pac and EME regions. as I said, mostly as a result of the last weeks of the half year. In the first six weeks since April 1st, though, while we have seen stable sales trends across the majority of the group, passenger numbers in the key hubs across Asia Pacific and into Eastern Europe have contracted, leading to a 4% decline in like-for-like sales in the region. And Patrick will come back to set out the components of this and how we are thinking about this later on. In this half year, we generated positive EPS versus a loss last year. You've heard us say before that we are focused on creating value down every line of the income statement. And looking at how we build EBIT over time will only tell you part of the value creation story. This slide visualizes this clearly as it shows the different building blocks of EPS all through the income statement. It shows that improving EBIT is important, but the improving results coming from associates as well as a decrease in the profits that we share with minorities, i.e. keeping more for the SSP shareholders, are as important. We expect this minority share to continue to trend downward as a result of structural changes to our operations in North America, as well as due to the fact that growth in our Indian business is increasingly coming through the associate slide. Later in the presentation, Patrick will double-click on this when he reviews the North America region. Underlying operating profit grew by 18% to 50 million sterling with an increase in the underlying operating margin by 30 basis points at constant exchange rates. In continental Europe, we're particularly encouraged by the significant 32% reduction in operating losses to 9 million sterling. Operating margin in this region improved by 70 basis points. And the plan we put in place in this region and that we extensively commented on during the prelims is the driving force behind this improvement. Patrick and I are fully supportive of the great work that Satya and his team are doing there. The current momentum and focus that we have as a leadership team gives me confidence that we will end the year with an underlying operating profit margin in that region in excess of 3%. In the UK and Ireland region, the business continues its momentum and is making strong progress in its Focus 26 initiatives. We continue to benefit from the strong concepts we operate there, as well as the success of the M&S refreshes we did over the last years. In fact, in the half, the strong performance of the business is actually masked by the impact of positive one-off elements in the first half of 2025. Underlying operating profit decreased to $22 million as a result of these, in addition to a higher depreciation charge. In the APAC and EME region, we continue to benefit from profitable sales growth in Australia and Egypt, although this was partially offset by the effect of deconsolidating some of our units in India that I already referenced. As a reminder, upon this consolidation, SSP share in the results of these units is reported in the associates line in the income statement and continues to contribute to the earnings per share number. Towards the end of the second quarter, the Middle East conflict put pressure on the profit momentum of this part of the region. Our group earnings per share flipped from a loss last year of 0.4p to a profit of 1.1p in this year. As you can see on the slide, this is mainly due to the higher underlying operating profit, higher income from associates, and lower minorities and also lower financing costs, reflecting the results of our refinancing transactions last year. As you will have seen, our reported operating profit was 62.6 million sterling, reflecting approximately 11 million sterling of non-underlying items on a pre-IFRS 16 basis. Approximately 6 million of these were cash in the half year. As flagged at the prelims, these exceptionals are much lower than what we experienced in the prior year. These exceptional charges can be broadly bucketed as follows. The first bucket is related to the renegotiation of our contracts at one of the biggest railway stations in Paris. This is a major stepping stone for us on our way to structurally better margins in our French rail businesses. The charges considered exceptional here are the bulk of the impairments of 2.7 million, the one-off site exit costs of 11.3, and part of what is in the 2 million restructuring bucket in total relating to that railway station. I would also like to point to the 6.7 million exceptional credit that you see on this slide, and that is labeled IFRS 16, and that is the result of the derecognition of certain liabilities as part of this railway station agreement in France as well as some residual elements related to the exit from the Italian market that we announced last year. The remainder of the non-underlying items is related to the continued classification as software-as-a-service IT investment that can no longer be capitalized as an asset, and we continue to call them out as non-underlying expenses in our P&L. For the remainder of the year, we expect to continue to incur some non-underlying cost, albeit at a lower rate than in prior year. Components driving that will be the planned consolidation of the two corporate offices and resulting restructuring expense in France, and the continued investment in software as a service programs in IT. Our expected cash exceptionals related to all of this are already included within our full year guidance. The next slide shows the sources and uses of cash and how they impact our balance sheet. As anticipated, net debt increases at the half year, reflective of the seasonality of our business. Leverage at the half year stands at 2.2 times net debt over EBITDA, and that is the same level that we had last year. Free cash outflow before dividends and buyback amounted to 176 sterling compared to an outflow of 117 million in the prior year. Lower capex, lower tax payments were offset by higher financing costs and the timing of minority interest cash outflows. You also see the impact of the share buyback that we started in this half year. By the end of the half year, we had a cash outflow of approximately 43 million sterling incurred so far with regard to the buyback. The working capital outflow of 124 million in the first half of this year that you see on the slide is mainly due to the usual seasonality plus some one-off planned outflows. These include less usage of supply chain financing than at the year end, and the settlement of payments to M&S that were delayed at the year end as a result of M&S's cyber incident last year. Other factors include the temporary buildup of a receivable in our startup services aggregation platform in India. We expect to recover this by the end of the year. Our Indian business also had to invest in rent deposits as it won an important tender in Delhi's newest airport, Noida. Lastly, the gradual exit from our motor services business in Germany has a negative impact on working capital as well. As a reminder, we expect to complete this exit by the end of this calendar year. In short, the seasonal nature of our business combined with the above elements masks the great progress that we are making when it comes to cash generation and more specifically what we are doing to make the organization focus more on the importance of cash. On the next slide, I wanted to share with you some more insights on this. At the Prelims, you remember that we flagged significant cash generation opportunities, and more specifically in working capital. Since then, we've made progress in instilling in what should become an intuitive cash culture across the regions. We've introduced cash flow and working capital metrics to be looked at during monthly reviews. We have created a framework to create visibility on the drivers of free cash flow. And most importantly, we have introduced free cash flow as an incentive measure for management teams across the group this year. We have started to improve the capability or cash literacy in the organization. The UK team, for example, has rolled out a Cash is King training course to sensitize team members about cash and clarify how they can impact cash generation. In the group finance team, we now support the regional dashboards and ensure adequate target setting and performance management is kept in place. We've also clarified the opportunity we can go after. We have developed a dashboard tool that has helped teams to identify where the potential lies and where we should focus. And given the fact that our group is very diverse, those opportunities are not everywhere the same. The focus on top-line growth and return on invested capital is now complemented with a strong focus on cash generation. So what are some of these areas that we're now zooming in on? As we've shared with you before, a lot of the opportunity lies in core working capital management, like in the purchase-to-pay cycle, in challenging payment frequency, challenging the existence of repayments, and renegotiating payment terms. As you can imagine this is a project of many tens of small initiatives that when they all come together will have a meaningful impact on cash generation. With regard to receivables we found opportunities in how we build and collect supplier and marketing income when we're shortening the time between collection and income recognition is now key. Our team in France has stronger processes for purchasing income cash collection driving an improvement of 7 million for prior year. Our U.S. team is making a lot of progress in catching up on on-time collection of JV capital contributions. And in Thailand, for example, our team is working hard to convert cash deposits, a common practice in the country, into bank guarantees. And they plan to convert approximately two million of those deposits into guarantees and hence cash back to us by the end of the year. So while we're working hard to embed all of these cash opportunities, we continue to use supply chain financing initiatives where it makes sense. As a reminder, this form of financing comes at a cost lower than our revolving credit facility. At the half year, we had borrowed approximately 145 million sterling under this program, down from 154 at the year end. So the progress we are seeing gives me the confidence that we will generate a working capital inflow for the year as a whole. And assuming a stable operating environment through H2, be able to generate the $100 million of the free cash flow before dividends and share buyback we set out at the start of the year. CapEx for the half year was $93 million and consistent with our planning assumptions for the year. We plan to end the year with less than $200 million in CapEx. We're now returning to more normalized levels at approximately 5% of sales and still supporting a healthy combination of renewals, new contracts as well as technology investments. We continue to challenge our teams to be on the strategic requirement of certain capital investments, their ability to contribute to EBIT in the short term and ROIC return on invested capital in the long term. We continue to refine the way we look at capital allocation and especially one of the most relevant measures to help the regional teams prioritize investment between the ample opportunities we see in our markets across the world. Our capital allocation priorities are unchanged. First is our aim to maintain a sustainable balance sheet. This business operates best through cycles with leverage somewhere between one and a half and two turns. And of course, considering seasonal fluctuations in a business like ours, like you see here at the half. Second is to continue to fund profitable organic growth. We are firmly focused on generating improving returns out of the existing assets we have and locations and are not planning for M&A at this time. Organic growth, most particularly markets and airports where we already have a strong presence, creates the best platform from which we can improve our cash conversion. We continue to target a dividend payout ratio of between 30% and 40%. and we see returning cash to shareholders via a buyback as an important element of our financial model. Our share buyback program launched last October continues, and up to last week, or early this week, we had used about $57 million to purchase about 4% of our outstanding share capital, which is approximately 32 million shares. In summary, I'm happy with the results of the first half of the year. Sales growth is good and strongly supported by like-for-like sales. And while cash is top of mind, let us not forget that it is the optimization of all levers available to us that will increase our cash conversion. First of all, we need to be maniacally focused on the operational excellence because that is the biggest and best driving way for cash generation. Add to that working capital management, sensible capital investments, managing our relations with associates and minorities and all of our cash enablers. There's more work to do, but the momentum is there. And with that, I will turn it back to Patrick.

Okay. Thanks, Art, for setting out the first half numbers, but also for your strong leadership in what's now, it doesn't feel like this, I'm sure, but a year into your... your SSP journey. I wanted to turn now to how we're delivering the Focus 26 initiatives across the group's four regions in a little more detail. However, before doing that, let me just simply state this. We're controlling what we can control, which is a great many things, actually, and delivering the Focus 26 plan that we set out for you in December. So, let's start with North America. In North America, we've made strong progress against our plan on all fronts. Looking back for a second, in my first three years at SSP, our strategy there was centered on profitably but rapidly building out our share by growing the number of airports in which we trade. And we stepped up our airport presence from just over 30 airports at the start of 2022 to approximately 60 today. Our focus now is on more balanced growth by sustainably stepping up like-for-like sales in our expanded estate extending the number of restaurants across our current airport footprint, and more selectively, adding new airports to our network. We strengthened our life-for-life sales trajectory through the half with a particularly strong finish to quarter two, which we've sustained into quarter three. To do this, we're making improvements across our customer propositions, including refreshing our range of grab-and-go sandwich options and a stronger set of bakery propositions across the estate, and continued concept innovation everywhere. The North America team has also been at the forefront of our group-wide focus on raising operating standards with a dedicated operational excellence team who are setting operating standards across the network and the deployment of a program internally branded as Ready, Set, Go for shift leaders to better embed operational routines at the start of every shift. These airport and unit level efficiency efforts have been allied with a reset of overheads in America and we've reduced our non-customer facing roles in the region by 11% year on year. Bringing all of this together, we've delivered a strong uplift in both sales and EBIT. However, and I mentioned this right at the start, it's also worth highlighting that more of this benefit is accruing to SSP shareholders because we've also reduced our minority interest charge in America by 40% in the half. There are three reasons for this reduction. First, there is a changing federal, state and city regulation environment now, which allow for a lower level of minority interest business participation in new tenders. Second, With us now having a much broader and deeper set of airport coverage with stronger relationships than ever before, we can selectively grow out incremental units in existing airports with more targeted and typically lower levels of partner participation in doing that. And thirdly, we've sharpened up our cost allocation framework and ways of working with our equity partners everywhere. Importantly, we see each of these three trends as sustainable going forward, which will facilitate a stronger conversion of EBIT to net income for our shareholders. If I turn now to the UK and Ireland, we've traded well right through the half, particularly in the air channel, but also with M&S performing strongly across all channels. The ongoing refresh program that we have with our M&S units, combined with the brand's quality and familiarity, has driven double-digit light-for-leg sales across this format. In the air channel, our bar concept innovation is starting to drive performance. A good example would be The Reserve, our new premium bar in Dublin, which is already trading strongly. And we're also making improvements across our range of regional airport propositions more broadly. In Belfast and Leeds-Bradford airports, we're currently opening seven and nine units respectively on long-term contracts, where we're operating in each case the majority of the F&B offer in both airports, that's driving not only customer experience, but also enabling efficiencies and economies of scale for both us and our clients. These renewals are translating into higher sales and stronger customer propositions. Our reputation tool, that you've heard me describe before, drawing on 12,000 pieces of discrete customer feedback in the UK per month, now scores us at 4.6 out of 5, reflecting our improvements in availability, in speed of service, and overall food traveller experience. Alongside this work on proposition, our team is focused on the everyday disciplines of daily delivery including putting in place dedicated new format teams across our London estate who are raising operating standards by format, and the deployment of our workforce management system, which has been built in partnership with our technology team, which is driving efficiencies in opening hours and matching our labour schedule to unit-level demand in 15-minute increments. The momentum in our UK and Ireland business is strong, but as Hirt outlined earlier, it isn't fully reflected in the reported EBIT progression half year and half year, due to the prior one-off credits that he referenced in the first half. But overall, we expect a strong year for the UK. Our Asian and Middle Eastern businesses deliver the group's strongest sales performance, with like-for-like growth of 9%, underlying the long-term structural attractiveness of our businesses in these regions. This growth was achieved notwithstanding the recent conflict in the Gulf, which I'll come back to shortly. Across the region overall, returns from investments continue to build, mainly from the ARE acquisition in Australia and the TG acquisition in Indonesia, which are tracking ahead of business case and contributing progressively more to regional profitability. Lounges remain an expansion opportunity for us in the region, and last month we opened our first travel club lounge in Bangkok. And in India, our each aggregation system, which we've now rolled across our TFS lounges, but also other third-party lounges in India through the first half, is now capturing a greater share of the margin that's available to the industry from credit card and loyalty users. Underpinning all of this is an ongoing focus on cost efficiency, with initiatives ranging from a regional supplier consolidation program to an accelerated rollout of digital sales points. Now, Building profitability in continental Europe is essential. We're taking the actions required, resetting the cost base, exiting countries, channels, stations and units that we cannot fix, and changing leadership where needed. We've got under the bonnet and taken structural actions, not just short-term fixes, to permanently reset the economics of the region. Our continental European CEO, Satya Maynard, spoke to you in December about fixing the large contract at one of our major train stations in France. enabling us to halve the losses from this year on year, and setting us on course to reach at least break-even performance in that station in 28. But we've not stopped there. In the half, we've now addressed two further significant loss-making contracts in France. These had similar fixes, actually, to the December example, resetting baseline rents, closing units which were underperforming and couldn't be fixed, tackling historically high mags, and changing out unprofitable concepts or brands. Combined, the restructuring of these contracts will save in excess of 3 million in this fiscal year. Further progress against the cost elements of our plan include the consolidation of our two French corporate offices into one that Geert referenced earlier, the implementation of our workforce management labour optimisation tool that we developed in the UK but we're now deploying into France and Germany, and the continued exit from the final units in the German motorway service channel. As you know, of course, one of the most profitable ways to drive margin is through driving like-for-like sales. And central to that is the rollout of our point concept in Germany and the building of like-for-like performance as our recently renewed estate continues to mature in the Nordics. So there's a lot locked into our plan to deliver the second half. Momentum is building and our actions leave us on track to exceed 3% operating margin in the year. So, while we had a plan to further strengthen returns from our European air business, the median term prospects for our European rail business in its current form were unacceptably low. So in December, we started a rigorous assessment of all potential value-driving options that were open to us for this part of our business. Since then, we have tested every option against strict criteria covering feasibility, execution risk, and the cash costs and benefits of any prospective changes. On that basis, we ruled out the value-destructive options, including all options that would have been available to us for a complete or immediate full-channel exit. Simply put, the cash costs of such an exit would have been prohibitive. Instead, we concluded that at its core, the European rail business could deliver on our return hurdle, but it needed surgery and the current footprint needs a significant reset. So, in consultation with our employee bodies, we are now negotiating to exit approximately one-third of the units in our estate, the units where the economics are structurally challenged, while retaining the core where scale works, typically at larger, higher density stations. For the units not exited, we propose implementing site-level turnaround plans with defined milestones. If those aren't delivered, these units will be reclassified for exit. Taken together, the benefits will start to be delivered through FY27 as our actions gather momentum. So what will this business look like post-delivery? We've chosen to reset our footprint in European Rail and the outcome will be a smaller footprint more profitable, higher returning and less capital-consuming business. To be specific, the one-third of the estate that we plan to exit represents approximately 110 units and the average sales density for our remaining estate will rise by 25% as we narrow our focus to larger stations where we can achieve scale and to higher returning formats such as QSR, bakery and retail. Planning ahead, we would expect that the capital expenditure to be deployed into this channel would be approximately half the previous level, with lower levels of anticipated renewals and a restrictive approach to capital allocation generally. In combination, these proposed actions will drive returns from the inadequate levels we had since COVID to a level at which our business in this channel is operating at or above our cost of capital. The planned actions are now being embedded into a broader program of enhanced operational intensity for the region, and when implemented fully, will enable our continental European business to build medium-term margins beyond the previously indicated 5% level. So, turning now to Outlook. Before I move to a specific discussion on the elements of our outlook for the second half, let me take a minute just to delve a little deeper into the specific impacts on our business of the conflict in the Middle East. First of all, let's recognize there is a war going on, and we have 2,350 colleagues in the directly impacted region. I'd like to thank our leadership and our teams in Abu Dhabi, Saudi Arabia, Egypt and Cyprus for their immense efforts to keep our people, our clients and our units safe through this difficult time. But given the ongoing situation, what's happening to the region is clearly front and centre for all of you as well, so it's worth going into the details of what we've seen so far. At the end of February, as the conflict broke out, we saw a sharp drop in passenger numbers in the directly impacted Gulf markets. but also a meaningful portion of that demand was redirected through other hubs, particularly into the Eastern Mediterranean and the Asia-Pacific regions, where we saw strong like-for-like growth sustained, up 14% in both cases. As we moved into April and early May, the Gulf markets themselves, which represent approximately 2% of group sales, have traded and continue to trade, in fact, at approximately 60% of prior year levels. However, we have now also seen a drop in flights into the surrounding eastern Mediterranean and Asian regions, which cumulatively represent about 14% of group sales, impacting connecting volumes across the network, as well as a reduction in local traffic in many of these airports. So these parts of our business have gone from trading at a 14% like-for-like in half one to being essentially flat in half two to date. Clearly, this would be below what we expected it to be at the start of the year. Visibility about what happens in these regions as we go forward through the second half remains limited and uncertain, which is why we're focusing on what we can control through proper protection plans for the second half and the directly affected regions, as well as accelerating our Focus 26 actions more widely across the group. But, fortunately and critically, our diversified portfolio and flexible operating model are giving us at a group level a high level of resilience through this period. The key point here is the scale of the rest of the portfolio. Across just over 80% of the business, namely in North America, the UK and continental Europe, aggregate passenger numbers and spend levels are so far largely unaffected, and our Focus 26 delivery is strong. And as I hope we've made clear in the preceding slides, we've got confidence in the delivery in those markets because we've got multiple levers in play, commercially, operationally and on cost, to keep up momentum and profit conversion where demand remains robust. Turning now then to the outlook for the group as a whole. As we set out in our release this morning, based on the current operating environment, our expectations for FY26 earnings per share sit within the range of current market expectations. That's between 13.6 and 14.8p and would represent strong growth on the FY25 earnings per share level of 11.9p. On the same basis, we continue to expect to improve free cash flow, pre-dividend and pre-buyback to deliver the greater than 100 million free cash flow target that we have for FY26 as we strategically manage our capital allocation. And we also expect further progress on the group's return on capital employed, building on last year's level of 18.7%. Clearly, if the operating environment were to deteriorate for any reason, such as a resumption of large-scale military conflict in the Gulf, a substantial decline in the availability of aviation fuel, or a marked softening of consumer travel sentiment, that would represent a change versus the assumptions that underpin our outlook. and we'd need to revisit where we sit accordingly for those things to happen. A final point, just for completeness, on Tribal Food Services, TFS, our business in India. Following the successful IPO in India last July, we continue to consider options to realize value for SSP shareholders, working with our partner to plan to meet the required market requirements for a free float over time. The timing here will remain disciplined and market-led, with a clear focus on building a balanced forward looking partnership with K Hospitality, while also creating value for SSP shareholders. So, clearly right now, we're operating in an uncertain macro period, but the fundamentals of our business are strong. Notwithstanding the direct and indirect consequences of the recent Gulf War, which we tried to set out today, we are controlling what we can control, delivering focus 26 and moving SSP forward. Looking ahead, we operate in structurally growing food travel markets with leading share positions in attractive air and leisure segments and with very high levels of contract retention. Our focus on F&B and our operating capability differentiates us. It is built on deep expertise in complex food travel environments, long relationships for clients and a well-invested platform. Shareholder capital is being deployed strategically and with discipline. And finally, With cash generation now pivoting and growing through this year, after a period of high investment, we have the flexibility to balance our growth with consistent value delivery for shareholders. Each of the leaders that we're pulling at the moment strengthen the foundations of SSP and build an even stronger platform for future shareholder returns. So thank you for listening to us. I'm just going to sit down and then here tonight we'll take questions from the room and from the call. Sam, are you walking around with the microphones? Yeah, can we bring them down towards the front? Yeah, let's start with Tim and then Jamie. Okay.

Thank you. Good morning. It's Tim Ramsgill from Bank of America. I have three questions, please. The first is just around the kind of working capital dynamics. I guess, firstly, just to confirm, if you can, the scale of what you think the inflow will be for 2026. And then maybe also a sense of the scale of the more medium term opportunity. Again, just another confirmation around the UK where, as mentioned, there were some one-off costs, some one-off non-repeat items, I should say, from the prior year. Is that all in H1 or is there anything else in H2? And then I guess just thinking more broadly about the impact of the current disruption and the Middle East, etc. I guess some of the more retail-focused players would often reference the importance of the source destination or the destinations people are heading to as a driver. Does that have any relevance to you guys at all? Or does it matter if there's a switch, say, more to European travel from other destinations?

Yeah. You want to start with that?

There you go, yeah. Yep. Yeah, thank you for that question. On the working capital, I think if you think about the guidance, the guidance is 100 million free cash flow before dividends and share buyback, and obviously we have a whole bunch of buckets that will contribute to that. We haven't broken out how we see the... the source of funding coming from working capital, but it will be a change from last year, so I'll leave it at that. The reason why we do that is because we are really doing fundamental work in improving the cash flow generation and getting the teams up to speed on their understanding of how they need to do this. I'm very confident that we'll see a different profile by the end of the year from what we've seen last year. but we're not breaking that out at this time. It contributes, it's part of the 100 million, and we're sticking to the 100 million for the year.

Let me pick up the other item. So, I don't want to make a big deal about this, but if you looked at last year's results, Tim, it's on the UK, you'll see that in the regional overuse, we characterised in the results some... operational disruption and some non-recurring benefits and we basically demonstrated that they netted against each other such that the regional performance in each case was reflective of underlying trading but there were timing differences to that and so in the UK essentially let me put it this way almost all of those one-off benefits happened in the first half and almost all of the operational disruption the largest of which was the impact of on our business of the M&S cyber incident happened in the second half And so if you net those out, they broadly balance each other. And so what you'll see here is that we're a little bit behind the reported numbers in the first half. We'll be well ahead of the reported numbers in all likelihood in the second. And the net will be, as I indicated, pretty decent year-on-year performance on all fronts economic metrics for the UK as we anticipate for the full year. On your point on disruption. You can get into kind of greater or lesser details on that. Our general experience is that when people are going on holiday, it doesn't tend to make a huge difference where they're going on holiday to. So if someone is taking a holiday in the Balearics versus, say, Cyprus or the Greek islands, because it's a little bit nearer and they feel a little bit more confident going there, we don't see meaningful differences in the spend in airport before they go. That would be the kind of summary point here. I mean, the main, like I can't stress this enough actually, the main evidence that sits behind the outlook that we're giving today is our experience of trading the business right now. What has happened in the last six weeks? How has that played out differently by region? What's that meaning for the shape of our economic model? And how do we then reflect that and roll that forward? Recognizing that we're, you know, there would be big summer upticks in travel, but we are not seeing meaningful differences in aggregate level in consumer behavior in the UK, in North America, or in continental Europe as we roll forward. Is that, of course, subject possibly to change? Yeah, but we're not seeing it at the moment, and that's the basis of the guidance that we've given. Jamie, go next, please.

Thanks. Jamie Rollo from Morgan Stanley. Also three questions, please. Just continuing on, first of all, on current trading, obviously pretty good figures in those three regions in the last six weeks or so. To what extent has the M&S cyber incident last year boosted that 11%? If you could give us an underlying type number, that would be helpful. ditto dwell times going up in the US with the TSA delays. So what would that 3% number be if you were to maybe strip up those two factors? And are you saying we should expect that 3% to continue for the rest of the year when you talk about consensus expectations? Secondly, just on the European restructuring, if my maths is right, you're exiting about £17 million of rail, given that slide on the increase in the average unit turnover. So below 20% of our European rail revenue. Just an easy question really, what's the margin impact of that? It looks to be quite small, given it's not a big number. And if you can give us a feeling for what 2027 margins might be, because you talk about exceptional costs offsetting some of that exit. So is it a modest step up between 3% and 5%? And then finally, could you just explain why the North America non-controlling interests are down 40%? It just looks like you've allocated a load of group costs against your partners, because I can't believe it's the other factors you mentioned on the changing structures, and why your dividends or sort of pay to those partners up so much in the first half on the cash flow statement please.

Yeah. I tell you, this is like a proper intellectual exercise responding to each of those questions Jamie, but let me have a crack at it and here to jump in. Yeah, absolutely. Yeah, so let me take current trading first. And you had, I mean, two core questions, UK, US. Right, so third week of April, is when between the third and fourth week of April and FY25 is when the M&S cyber impact happened. So of the six weeks of current trading, about half was pre the comparative of cyber and about half was post. You also have the effect of the timing of Easter, which would be less favorable for us in 26 than it would have been in 25. What we've gone from is a 8% like-for-like in the first half to 11% in the UK in the first six weeks of the year. Adjusting for all of that, in terms of trying to do... By the way, we're going to be comping against this M&S effect for most of the rest of the year in some form. But I think it would be fair to say it wouldn't be... like-for-like comparison wouldn't quite be 11% but it will be up from the 8 if you adjust for each so judgmental a bit but somewhere between 9 and 10 Jenny is probably the big point is in across the air channel and across the M&S units, whether you do it kind of two year like for like or the year on year movement, we just have very, very good momentum on like for like performance in the UK, but we will have some kind of quite quirky comps as we roll through the rest of the year because of the disruptive effect in the M&S part of our business there. In North America, we did have four two or three weeks in March, we did get a net benefit from the huge low times in American airports because of the TSA understaffing and people turning up in airports earlier. Wasn't universal, but the net effect of it would have been positive. And our March light for light performance in the context of the six months that we had in the first half was much stronger than the other five. Hopefully, as we then transitioned into, quote-unquote, a more normal period in April, we've been able to sustain the like-for-like above the level we would have had in October through February, although not quite as peaky as we would have had in the month of March. Now, as we look into the rest of the year, it's appropriate for us to be very cautious, which hopefully we've been on the disruptive elements of the Gulf War, but three things are worth noting about America. One is we're about to kick off what is going to be the biggest sport event in history in terms of travel, which is the Football World Cup in America, 48 teams, seven weeks of competition. all across North America and we have a business that there or a travel environment that has very little international travel and very little exposure to the rest of the world beyond that which is domestically trading quite well. So we would be disappointed if we didn't have quite good like for like dynamics in America through the rest of the year because of the momentum we're carrying at the moment. and some of the anticipated planning for things like the impact of the Football World Cup and related stuff in America through the summer. But, you know, you want to be careful saying too much about what might or might not happen in America in the current environment, but they're the things that we know. Your top line maths on continental Europe, how does that all feed through to around the guidance for the year? In the end, we've gone with a pretty simple view, which is we expect the best planning assumptions and maintenance for the current light-for-light trajectory, which is the 3%. In very simple terms, if you're trying to bridge that to the 5, one point is the impact of the Gulf states itself being a little over half the historic level, right, so the kind of 60% that we gave. One point is related, disruption in the related regions that are most exposed to that. And then the three is the 80% of our business which is not directly impacted continuing to trade broadly as it is. That's how you feed into the top down way into the 3%. On the Continental European Rail Review, Over time, you're about right, actually, in terms of the sales impact. We won't do all of those unit closures in one year because we'll choose to optimize them around when renewals might naturally happen and manage for cash in terms of how we do that. But size-wise, that's about the right proportion that you've characterized. I think the bit that... as we look at it is the losses on those units who are planning to close are greater than you might have planned in the kind of top-down summary that you've done and you know we're clear as we plan for this is there will be some exit costs associated with doing that but if you take them over the two to three years in which we put this through where we've worked very hard to make this plan essentially self-funding so the business improvement we get with the reset that we're doing funds any of the costs associated with getting it done over a two to three year period as we look forward and we do end up with subjects to us aligning stakeholders as we anticipate we will with the material improvement and the underlying economics on all metrics apart from revenue of the of the rail business which would contribute to a raising of the medium term number of five percent because obviously on the other side of that we've got the performance improvement plan we've got for air so um it'll take us a couple of years to roll that through and by which i mean 27 28 but you know we think we've got clarity on where we're taking the business and we think this is a good answer for the contribution the continental European business in aggregate will play into the group. And the piece that I think has been really front of mind for Kirsten and I on this as we've worked this through with both our team and with the Albers and Marshall team who are helping us is we wanted to be really clear that we could also take down the capital requirements of this channel for our business such that the capital envelope that we're deploying to drive future growth and returns can go to more attractive structural places than European rail and so that's an important part when we said that the capital requirements this business will have relative to what we have historically put into it. So last piece on North America non-controlling interests. In the half itself, it would also be worth noting that there is a mix effect in terms of the airports that are up and down year on year. And let me see if I can explain that in the simplest possible way. So you've already mentioned that 60 airports in North America, 13 or 14 of those are in Canada. So we're dealing with about 45, 46 airports in the U.S., The size of the joint venture participation across those airports can be as low as 5% to as high as 50%. And depending on the underlying performance of those airports, that feeds through to different levels of sharing of profit with partners and therefore different levels of size of a minority interest charge. Some of the 40% half-year and half-year improvement on that is reflective of the mixed impact of airports that have done better or worse. The simplest way to describe that is the airports that are most weighted towards domestic have done best across America, and the ones that are most weighted towards international have done relatively less well, reflecting that international passengers as parts of overall passengers in America have moved from something like 13% of total passengers to about 10. And as you see that flow through, that impacts different airports differently. But we see a very clear path to take the percentage of our profits that are shared with partners from about 30% of North America, which is about 35% of the US, down by at least five and maybe more percentage points over a number of years. And the contribution of that, as you roll that through our numbers, is actually quite material. And all of that is not a saying that we won't work with partners where that makes sense we absolutely will this is a partnership driven business in all sorts of ways across the group including in America but for some of it for the three particular reasons that I mentioned the structure of that is going to evolve we are in control of how we do that in our business but what we're doing is not out of whack with what you're seeing some of the other large concessionaires do your last point on and how this feeds into cash. That's simply to do with timing of payments year on year, and I wouldn't read a lot into that. It's the net of all that is reflected in the cash guidance that he had summarized earlier. I'm going to make a serious attempt to be briefer in future questions.

Hi, Luca Ternosik from Barenburg. Thank you for taking my question. So just two for me. So on the first one, I wanted to ask about the continental European capex reduction. So you mentioned it is going to fall by 50%. And I was curious, does the continental European capex, is that proportional to revenue? So would continental European capex be proportional to, so one third of continental European total capex would be rail? And then just on the second bit, I was curious if there is a seasonality to your Gulf and Eastern Mediterranean sales profile. So you told us how much it is as a percentage of full year, but I was curious if that's different between H1 and H2. Thank you.

I mean, two very quick points when it comes to European CapEx. So while we're taking that, we're planning... to take out about a third of our units. They are much lower selling units than the remaining estates. So the sales adjustments, as per my question to Jamie and the response to Jamie, is about right as he's characterized it right. The critical thing is that the core of what we will be doing is centering our rail business about a retrenched, current estate rather than looking per se to grow the estate as quickly as we might have done in the past. And that has consequences in terms of the amount of capital that it will require in the next three to five years, which we think, as I say, is about half what we would previously have spent on that channel. I think more broadly though, We've done a ton of work together with our executive committee and teams across the world in being informed by bottom-up data and being more top-down in terms of how we allocate capital. And we think, first of all, the right, it's not the perfect metric, and I happily concede that, but the right proxy for the amount of capital to put into this business is about 5% of sales, right? However, that does not mean we're going to spend 5% of sales across every region. As we plan going forward, you know, we have some regions where we think we might spend 2.5%, 3%. We have others where we might spend nearly 10%. And that's reflective of how we think the business will evolve. But the CapEx envelope we're planning for is about 5% of group sales. it would be very, very odd if Europe wasn't towards the lower end of the range I've just described, taken in aggregate, given all the things that you've heard us say about the region. Last point on seasonality, it's not material. It doesn't quite have the same season profile as, say, Europe does, because it's so swelteringly hot in some of these markets through the summer, but it's not as seasonal a business as some other parts, so I would take the average numbers we've given and say they're about right for the second half. Yeah, Anna, if you can go next to it.

Thank you. It's Anna Barnfather from Pamela Libram. Two questions, please. Could you spit out UK performance between air and rail? And I wondered if there was any learnings from the European rail review that would be relevant to enhancing your UK rail business. And then the second question, just sort of longer term strategic, you mentioned now there's been a growth opportunity in some areas. I just wondered if you could just explain how the economics differ and how meaningful you think that could be longer term. Thank you.

So, without giving you actual numbers, our air channel is going faster than our rail channel in the UK. The effect is not as pronounced as you might think because of the very strong performance of the M&S stores, which represent comfortably more than half of our total rail sales today. And so, even with that very strong M&S performance, our air channel is growing faster than our rail channel in the UK. Now, in terms of learnings from Europe to the UK. There are some, but I wouldn't overdo it, right? There are, when you cut through it, there are two features of our UK rail business that are markedly different in every sense to any other rail environment in which we operate in. One is that we have 60% of our units on land or tenant protected leases, and the second is we have the M&S engine that is driving phenomenal light for light performance and customer capture and is a brilliant fit for the travel channel. And so those two features, bluntly, transform the economics of the channel relative to what we would see in other rail markets in Europe, which is why we're actually, we're in a very fortunate position in terms of those two features and protecting both of those things is very important to us. I mean, on long-term strategy, I'll try to do it in two sentences. One of the really attractive features of the markets in which we operate is, unusually actually, is that the highest growth markets tend also to be the highest margin ones. And so, by They do come with executional complexity and they can come with more geopolitical risk. But the opportunity actually to drive our business faster through TFS in India, to reset the business as the Gulf reopens, to continue to accelerate what we're doing in Indonesia and Malaysia, they are all very margin-enhancing opportunities but they require a skillful configuration of local partners, operating conditions and so forth to be able to get after it. But you can expect in a kind of top-down capital allocation that we will want to drive those channels higher.

Good morning, it's Mandari Dara, RBC. I also had two questions, if I may. My first question is, I just wondered if you could give some colour on how you see the actual demand outlook for summer travel, maybe in context of some airline capacity cuts that we've seen. And then my second was just a follow-up on European Rail. Maybe you mentioned it and I missed it, but I just wondered if we could get some colour on the timeline of the closures.

Yeah. I think you'll see us... We have a number of stakeholders that we need to align starting with a very active dialogue that we are currently having with appropriate at this stage in the process but necessary alignment with our works councils in terms of how we go forward to actually build that into a specific plan. Our current view is that the plan will be delivered over through 27 and 28 and that rushing to do it faster would actually potentially crystallize much greater restructuring costs and cash costs than doing it at natural transition points through that period. This isn't something we're kicking into the long grass. We are going to do it through those two years, but it probably is best to think about it as a two-year plan with the full effects of that then being in the third year, which would be FY29, in terms of improvement. But that is subject to engagement and alignment with our kind of almost internal stakeholders, which are our colleagues' work councils, but obviously it then involves working with clients as well. The reason we highlighted the three rent deals that have changed in France in the presentation is to say there are elements of this plan that we're getting on with already, including the client engagement base and the resetting of units and rents. I mean, the demand outlook question is, we see it playing out a little differently region on region. But if we were to take the, whatever it is, the 82% of our state, which fits in Europe, the UK and America, even if you add up all of the announced, currently announced flight schedule changes for the summer, it's de minimis in terms of what it actually means to the scale back, and you're talking 1-2% in that sort of order. Assuming that you don't get optics in EOS and the remaining flights and things like that. So we think, based on what we know today, that's manageable. And we've had to construct a giant outlook consistent with what we know today and what we can plan for today. But we do also recognise that we're giving that outlook in a more uncertain environment than before. But we kind of have to try and call it somewhere, but that's what we're doing at the moment. Yeah.

Harry.

Morning, it's Harry Gowers from JP Morgan. A couple of questions as well. The first one, sorry to labour the point, but just to follow up on the UK, it feels like UK air volumes have maybe generally been a bit softer post the Middle East conflict. So that kind of underlying acceleration that you talked about into the first six weeks, is that purely the investment in the estate and potentially just M&S performance more than anything else? And in Europe, there was a little deceleration in the first six weeks as well from a like-for-like perspective. So just anything to call out there versus the half one or Q2. And then Final one, just on TFS, I presume you're in very deep discussions with your partners at the moment, which you won't reveal the outcome, but just keen to hear if you have any updated views at all, just in terms of how you view that balance between crystallizing value, but also retaining a decent control and consolidating that business in the P&L.

Thanks a lot. Okay.

Just to try to go to your core question, we have good M&S performance overall, although it's much, much more weighted towards the rail channel than air because of the materiality of the individual units. So we're happy with our M&S performance in air. But I wouldn't want you to take away from that statement that the strength of our overall air business is actually being driven just by M&S, because it isn't. The thing to remember with our air estate is, both in terms of sales, but in particular in terms of the margin and profitability that we are in, it's very weighted towards regional airports rather than the very big airports. And they're direct, so if you're in Newcastle, Leith Bradford, John Lennon, Belfast, Bristol, I don't think there's a single route to the Gulf from the airport that I just mentioned there. If I got that wrong, it's only at the margin. So we haven't seen a material fall off. It's just a reality, we haven't. I can't pretend that we don't have a level of questioning around what will happen in the summer, but if we are going to see that impact flow through, we haven't seen it yet. And when you talk to many of the airport owners and commercial teams across Europe, they largely talk about the AI they're planning for and anticipating, and you think you might have seen some of this even in the Ryanair comments yesterday, a kind of late surge in bookings. But they're largely talking about substitution effects. In other words, there isn't currently a planning assumption in the aviation space that you see a large, a big uptick in staycations this summer. That's not what we, but you may definitely see a switch from you know, one airport to another. And hence my promise to Tim earlier, which is that doesn't meaningfully impact spend in airports as we see it. So your point on TFS, you know, we, there's sort of three considerations here, and I really have nothing new to say. I might only be saying what I said last year, which is one, no later than July 2028, TFS requires a free flow to 25%. It currently has 13.8. Number two, as we look at how the TFS business would be best set up to prosper, grow, and deliver value for all of its shareholders going forward, we think having a, this is the punchline, sorry, a genuinely and sustainably balanced partnership between SSP and K Hospitality is very important. and if you run with that thought that gives you a sense for where the equity would be likely to come from when it's placed and what that means for your third question which is what might that mean to the ability of SSP to consolidate or not a post meeting free flow requirements volume so that's what we said last December and our view on that hasn't changed and you know But we have to wait. We have to be different about it. We have to wait for market conditions to come right, but we have some time. Tim. Oh, sorry.

Leo from City. I just wanted to take a couple of follow-ups on Continental Europe, but focusing on the airports business. Is there any update you can give us in terms of how that part of the business is progressing, how some of the initiatives, like the digital investments and so on, are And then in terms of the comment you made about lowering capital requirements in continental Europe, is that comment really pointed at rail or is there more of a focus in the airport business as well going forwards?

Let me do the CapEx world first. I think in terms of our capital allocation, you need to think about two comments that we've made earlier in the conversation. Number one is we're going group-wide roughly ballpark for 5% of sales. That's a good benchmark for us in terms of the overall package that we have available in our cash allocation. That comes down to roughly for next year about $200 million. If you then look at the constituent parts, because of the plan that we're going through with Continental European Rail, we said Continental European Rail will be less. That does not mean that that part of Continental Europe that they would have had, we're just going to deduct from the $200 million. So we believe that all around the world, we have in all our regions ample opportunities for good, solid investment cases. that we're continually trading off. The fact that we're reprioritizing some capex away from continental European rail frees up that capex within the envelope of the 5% to be used elsewhere in the world. That could be in continental European air, that could be in the UK, that could be in the US, etc. Everything is back on the table and that's how Patrick and I, together with the executive committee, we allocate some of that capital and just prioritise it based on the merits of each market, of each sub-region and of each channel.

Yes, I mean, I think, Leo, the part is, we, if I was to try to imagine a continuum of where capital will go, not very much into rail in Europe, I think air in Europe would probably get less as a channel than air in other places, but still there are some parts of it that we really like. And then you begin to feed through to some of the regions where we have kind of higher return and long-term growth as we look forward. So that would be how I describe it.

Tim, you're... Morning, Tim Barr from Deutsche Niemeys. Just another one on Europe, sorry, but not to be blunt, you're talking about 110 units, 70 of turnover. Have you said what the, can you quantify the losses that that piece of the business is currently making? And then a totally different topic on India. We haven't really talked about the outlook there, but the other week there was quite a important moment when the Prime Minister talked about more work from home and less travel. Have you seen any kind of impact in the numbers?

Two things. I have to be careful about how far we go given the stakeholders we have to manage in Europe but I think it would be fair to say that the losses within the units that we plan to close and the stations in which they sit would be material and the removal of that has a material impact in the economics alongside some other things of the rail channel in Europe and taking an aggregate all of those things sort of a material positive impact when delivered on the overall performance of Europe. And so that's really all we can say in terms of specificity. On India, one of the consequences of having a publicly listed business in India is that the ability of our willingness of myself in here to jump into specific guidance around India, you know, 10 days out from them doing their full year results is quite limited. Although what I would say is if we were sitting on materially different information in terms of outlook, then that actually would require some of us to say something about it. So I'm going to let Verona Vikas go through the details of the outlook for India when they do the results in, you know, the very end of this month. What I would say is that our outlook assumes, at the group level, assumes a certain Indian performance and we haven't called it out as a big point of difference and so you can kind of conclude what you want from that, I'm afraid. But you are right to highlight the unusual comments of the Indian Prime Minister principally designed to reduce the level of spend on overseas currency and dollars in particular and there's a whole suite of things that he spoke about including travel. Okay, I think we're going to thank you for all the questions, thanks for being with us today and we look forward to speaking to all of you soon. Thank you.

This presentation has now ended.