Ladies and gentlemen, thank you for standing by welcome to the FSP 2021 interim call.

My name is
Hailey and I will be the operator for your call this morning. If you would like to ask a question during the
question answer session, you can do so by pressing star followed by one on your telephone keypad.

And I will now hand you over to Simon Smith group CEO. Please go ahead.

Simon Smith: Thank you very much, so good morning everyone. And thank you for joining us again,
virtually for our interim results on the call today, we have Jonathan Davis, our group CFO and Sarah
John, our director of corporate says, so just to take you through the agenda, I will give you a short
overview of the first six months. Jonathan will then take you through the financials. I will then review
the business and our plans for recovery. And as always, we will finish with a Q and a there'll be plenty of
time for questions. So COVID-19 continues to have a significant impact on our business, but despite this
SSP has delivered a resilient performance in a challenging market, and I'm really proud of what the
teams have achieved both operationally and financially delivering a valuable service to the traveling
public, as well as supporting local communities. So I want to, again, personally, thank all of our
colleagues for that incredible effort. So turning to our performance, whilst the rollout of vaccines in
parts of the world has been successful and resulted in the start of domestic travel. As we all know, there
are still some countries that continue to be really challenged by the Panda. In the first half, our revenue
was 257 million down almost 80% compared to pre COVID levels. Now extensive action to reduce and
variable eyes the cost base as well as local government support, and they would ask to contain the drop
through on the last sales to 22% ahead of the previously indicated range of 25 to 30%. And minimising a
bit dire losses together with the tight control of cash kept our underlying cash usage to 130 million, or
an average of 22 million cash burn per month ahead again at the previously indicated range of 25 to 30
million. Following the action to strengthen the balance sheet, our pro forma liquidity was 854 million
and under the base case scenario shared as part of the rights issue. This will give us significant financial
capability to invest in the recovery. Now whilst the pace of the recovery varies around the world and
does remain volatile, we are now seeing encouraging signs, particularly in the UK and America led by
domestic travel. We are reopening units in these regions and driving profitable sales having reopened
around 250 units since March, we now have about 40% of the estate operating again, and we are ready
to accelerate reopenings in our other divisions, as demand recovers, and we expect the travel will
largely recover by 2024. And it is this recovery combined with our market position, strong operational
model and balance sheet capacity that will enable us to deliver long term sustainable growth and create
significant value for our shareholders. And with that, I will hand you over to Jonathan to take you
through the financials.

Jonathan: Thank you, Simon, and good morning. Clearly, first off results were heavily impacted by
COVID-19. But we're in line with the trading update and guidance that we gave in March with the
announcement of our rights issue. overall sales were 257 million in the first half down by 79%. year on
year. We saw an underlying EBIT da loss of 110 million on a pre IFRS 16 basis and an operating loss of
161 million. net debt increased to 840 million, reflecting the continued cash burn over the last six
months. But of course this was prior to the recent rights issue. under IFRS 16, we saw an underlying
operating loss of 227 million and net debt of just over 2 billion reflecting the additional lease liabilities
for the minimum guaranteed rent. Now over the next few slides, I'm going to run through the reported
numbers and explain the impact of IFRS 16. And then once I've dealt with the accounting Ophiucus on
the pre IFRS 16 results. Firstly, concession fees are much lower at 28 million compared with the 85
million pre IFRS 16. This is because under IFRS 16. The concession fees represent only the variable
element of the rent above the minimum guarantee. As we saw In the full year results, the reported
numbers reflect the temporary amendments to IFRS 16, such that any minimum guarantee waivers flew
directly through the p&l, rather than being accounted for as lease modifications where the impact
would be spread over the life of the lease. However, under the current ASB rules, these minimum
guarantee waivers must be reported as an exceptional item. And so the underlying IFRS 16 concession
fees don't include the benefit of any of the short term rent waivers we've secured amounting to around
53 million. The second major impact is on the depreciation charge, which has increased to 184 million,
compared with 50 million reflecting the depreciation of the capitalised the name of guarantees. In
summary, if we included the adjustment for the minimum guarantee waivers, the underlying operating
loss would be fairly similar under both proper under both accounting policies. Now looking further down
the p&l pre IFRS 16, we saw an underlying net loss of 161 million or 30 pence a share of this compared
with the reported net loss of 222 million. The reported financing costs were 35 million compared to 21
million pre IFRS 16. Due to the unwind of the discount applied to the capitalization of the minimum
guarantees. Pre IFRS 16, the tax credit was 70 million, and the non controlling interest share of the
losses were 4 million. A brief word about the exceptional items. The non recurring items added a further
39 million to the reported loss before tax, reflecting impairments, restructuring costs and debt
modifications was offset by the temporary minimum guarantee waivers of 53 million that I've just
referred to. We've made a number of further impairments to fixed assets and right of use assets
amounting to 27 million, as well as further goodwill impairments of 3 million, all of which reflected the
slower recovery in the travel sector that we're now assuming, compared to our expectations last year.
The restructuring costs of 10 million were mainly redundancy costs, and we've also expensed the bank
fees for the amended extend on our main facilities, which we know negotiated alongside the rights
issue. The exceptional financing costs principally reflect the treatment of the debt modifications under
IFRS nine as a result of the revised arrangements with our lenders, and the higher interest costs that we
will pay during the waiver period. Now leaving the accounting and turning to the underlying
performance of the business, firstly, a look at sales. During the second quarter sales remained at very
low levels down 78% year on year and around 81% down compared to pre COVID levels, as you'd expect
to give them the reinstatement of lockdowns at the turn of the year across many of our markets, and
the even tighter restrictions imposed in many European countries during the early parts of 2021. With
the gradual easing of lockdown restrictions in recent weeks, like for like sales are currently running at
around 70% down versus pre COVID levels. And we expect quarter three light for light to be down by
around 75%. Now looking at our regional performance. Sales in all regions have remained very
consistently at low levels during the second quarter, with the UK performance, the weaker weakest at
around 10% of pre COVID sales, reflecting the extreme lockdown measures, whereas in continental
Europe sales have remained slightly more robust despite the lockdown largely due to the rail sector as
passengers have continued to travel in countries such as France and Germany. Over the last three
months, that has been a real recovery in North America now as over 50% of 2019 sales driven by
strengthening domestic and leisure passengers and also in the UK, now at around 25% of 2019 sales
driven by the gradual recovery of the rail sector. However, you can see that in the rest of the world the
further restrictions in recent weeks in India and to a lesser degree in Thailand have reversed some of the
earlier improvements in the region. Now Simon will talk about the regional trends in more detail later.
So turning to profit despite the lower level of sales was down around 1 billion versus pre COVID levels.
The impact on profit continues to be mitigated by the extent of the actions that we've taken to reduce
operating costs. And the extension of furlough and other government support measures, as well as our
further success in negotiating rent reductions, principally minimum guarantee waivers. So as a result, we
managed to limit the profit conversion on the reduced sales to around 22%, which was better than the
25% that we had indicated in December. And in line with the update, we provided in the right tissue for
the four months to January, that's left the operating loss for the first half 161 million. And we would
expect profit conversions to remain in the region of 25% on the last sales versus pre COVID levels in the
second half. Now, looking at the p&l for the first half, you can see the operating cost reductions that
we've made in response to COVID, taking out over 480 million from labour, concession fees, and
overheads. We've achieved this by opening outlets very selectively, trying to match the number of units
as closely as possible to the passenger numbers in order to make the cost base as flexible as possible. Of
course, we can do this because the vast majority of our operations are in multi unit locations. So looking
down the p&l, you can see we've reduced overall labour costs by 62%. benefiting as I said from keeping
units close where passenger numbers remain low, and of course continued access to government
furlough schemes. We've managed to reduce rents by around 66%, mainly through continuing to agree
minimum guarantee waivers with our clients. And we've also been able to reduce the rest of the cost
base dramatically taking out well over 50% from our overhead costs, again, helped by reduced unit
numbers. Gross Profit Margin was up one and a half percent year on year to 72.2%. Reflecting mainly
changes in channel mix, but also all of the work that we've done to simplify and optimise our ranges
during the COVID period. Now turning to cash flow, we continue to manage cash very tightly, using
around 130 million of cash over the half. That is around 22 million a month. So below the cash burn
guidance we've given previously of 25 to 30 million. This was driven by the EBIT da losses being slightly
lower at around 80 million a month, and a good working capital performance. And in fact, you can see
from the chart that we saw a working capital inflow in the half of 22 million, despite the sales remaining
at very low levels, reflecting the further successes in things like rent deferrals and accessing government
support. As we've said, previously, we've been very disciplined with our capital investment programme,
limiting capex to around 25 million over the first half. So moving on to net debt. net debt at the end of
March was 840 million, as I've said, reflecting the underlying cash usage of older than 30 million and
exceptional costs of around 11 million. Importantly, including the net proceeds from the rights issue, pro
forma net debt would be around 389 million. So in terms of liquidity following the rights issue in April,
we have pro forma liquidity of over 850 million, with cash on the balance sheet of nearly 700 million and
further undrawn committed facilities of albumin 63 million. This includes the Bank of England, CCF of
300 million, which has now been fully drawn down. And we'll be repaid in February 22. However,
excluding this, we still have over 550 million of available liquidity. And even at the very low levels of
sales we've seen in the third quarter, so down around 70 to 80% versus pre COVID levels, we will
anticipate our cash burn to be in the region of 20 to 25 million a month. Now, as you saw the rights issue
recently, we've agreed further covenant waivers and extensions with all of our lenders through to early
2024. So in summary, as a result of the actions we've taken to raise additional liquidity and the action
we seek to manage our cash flow, we're really in a very strong place. issue to trade through a slow
recovery scenario. But having said that, we're primed to reopen rapidly over the coming months. And of
course, to accelerate our investment programme in due course. And finally, I just like to recap on our
medium term expectations. So as we indicated in march along with the rights issue, we expect the travel
sector to recover in the medium term, with our like for like sales returning to broadly pre COVID levels
by 2024. Under our base case scenario. On top of this, the current secured pipeline, along with the four
year impact of units that were pre COVID, should deliver a further 10 to 15% of net contract gains over
this period. And by then, we would expect our EBIT da margin to be back at the similar level.
Hailey: If you change your mind and wish her maybe your question, please press Start with a way to
when the parents ask your question, please ensure that your phone is unmuted locally to confirm that
starts by want to ask a question. And your first question today is from the loan of Jamie Rolo of mF,
please go ahead.

Jamie Rolo: Thank you. Morning, everyone. Three questions in the morning. The first one just want to
compare the percentage of units that are currently open. And you're sort of summer guidance against
the sales trajectory. It looks like 1200 to 1500 units possibly open over the summer, sort of 40 to 50% of
the units. And I'm just trying to work out what that might imply for where you think sales might go clear,
you're trying to focus sales in fewer units. But for example, in North America, your sales are running
above the proportion of units open. And it's the opposite to the other region. So I'm not really into that.
But it'd be quite helpful to talk a bit about the bit about that out directly. Secondly, on the flow through
margin, that's quite conservative a 25%. against what you've delivered what why might it not be as good
as it was in the first half other any other factors we should be thinking about? And then finally, just on
North America, where do you see the numbers look pretty good. In recent weeks, is it fair to say that the
US at least if not North America is now is now breakeven? Thank you. OKay, so I'll pick up the first and
third question. And Jonathan will pick up slow through margin The second question. So Jamie writes, our
plan as things are at the moment is to open somewhere between 12 115 100 units, so around 40 to 50%
of the estate, the reality is, it is difficult to give a forecast for q4. As you can know, the global situation
remains very fluid. What I can tell you is we have absolutely seen the start of recovery and domestic
travel. And as you've mentioned, USA is seeing the strongest recovery followed by UK, particularly due
to the success of the vaccination programme and the gradual easing of restrictions. There isn't much to
talk about between the different units and the sales performance. Most of that is really around timing
and the rollout of units, Jamie so you know, the fact that we've got a few more sales coming through
North America than we have in some of the other regions compared to their units is just more about the
timing of recovery. And when we're getting units open, we have a very systematic approach to what we
open when, and to make sure obviously, that it's breaking even and that we're generating profitable
sales. So I'd love to be able to give a stronger forecast to q4. But at this point in time, I think, you know,
given the fluidity of the situation, our job is just to really focus on every single location, make sure that
we can open those units really quickly, as demand recovers. And as I said earlier, you know, with over
10,000 people ready to be redeployed, we can respond really, really quickly in all of our regions.
Jonathan, do you want to pick up close requests

Jonathan: slowly, Jamie? So with regard to the profit conversion on the last sales, I wouldn't read too
much into what we see here. We're really maintaining the guidance that we've given both in March and
in December. With recent announcements. Clearly, there is still uncertainty and there are a number of
moving parts in there. So as we've said a number of times over the last 12 months or so. There is an
unknown around for example, our ability to get ongoing waivers of minimum guarantees with clients.
There is a certain unknown About the further extension of furlough across many of the countries we
operate in. So I think we just need to be a tiny bit cautious. conscious of that. Having said that, as you've
seen, we've continued to negotiate minimum guarantee waivers as to very similar level throughout the
COVID period thus far. And indeed, as sales have remained low furlough arrangements and other forms
of support for various governments have been extended. So, you know, we, we would really assume
that to be the case, but I think we're just taking a slightly cautionary position in the knowledge that
there are certain aspects of governments have bought, for example, here at home in the UK business
rate relief will fall away in the, you know, the latter part of this year, but I wouldn't read too much into
that, essentially, we're maintaining historical guidance.

Jamie Rolo: Thank you, Jonathan. So in the last question was around is America at breakeven. So as we
previously discussed, we would expect that when sales are north of about 50% of 2019 sales level and
an EBIT da level, we will breakeven, now, with the United States being better than that, I think you can
read across that as an EBIT da level, we are more than revenue.

Jonthan: Great, thank you very much.

Simon smith: It's actually

Haily: the next question is from Malone, or James rolling Clark of Barclays. Please go ahead.

James: Good morning, everyone. Thanks for taking my questions. I've got three, just on the new tender
opportunities, Please, could you elaborate a little bit about the competitive environment there, and the
kind of terms you're seeing on any bidding, bidding processes that you're currently involved in? How
that differs by region? And then secondly, on the rent, could you give an idea of what proportion of the
estate you've managed to link, minimum guarantee to passenger numbers, and the proportion of
contracts you'd expect to extend during the discussions. And then And then finally, on the sort of unit
model, going forward during the recovery, and on the recovered sales base, can you just talk a little bit
about the the sort of shape of the units in terms of pricing the shape of menus, staff per site, and the
level of automation, that's just in reference to I think your earlier comment about kiosks potentially
offering 5% upside to transaction value?

Simon Smith: Thank you. Sure. So I'll do one three, again, and Josie will take up to so terms of business
development worth remembering that the absolute primary focus of the business development teams is
make sure that they continue to renegotiate the rents, particularly minimum guarantees, make sure that
we continue to extend business because as we all know, renewals are profitable. And then on top of
that, agree a opening programme for a very large pipeline of units based on all the things you'd expect
Jamie so you know, sort of passenger numbers location and offer. Once they've done that, then we're
into kind of in parallel, whereas there's a new opportunities arise. I think, as we've said before, we
expected and indeed are seeing that in much of the sort of, sort of develop mature markets that we
have. So for example, across Europe, while there is a little bit of development activity, because of all the
financial support that the companies are getting. So by that I'm talking about things like furlough, we
didn't expect to see much change to the competitive competitive landscape this year. However, if you
go more further afield, to the rest of world where there is less support financially for companies, we are
seeing the shakeout of what we'd call the smaller competitors. So we've previously taught in countries
like India, where the sort of smaller private competitors have fallen by the wayside, it doesn't mean that
the larger portfolio players that we compete against have fallen away at all, you know, they're still like
us a very rational, but the sort of the tale of less rational competitors definitely haven't reopened their
units. And as a consequence, some does now where typically, excuse me, you might see eight or nine
people tend to now sort of three or four. A good example of that, actually, was one of the examples that
I touched on the presentation, which was the units that we've won a Gold Coast Airport in Australia. So
really interesting, the business came up for tender. We were successful in bidding, they're not actually
on the financials which were fine but actually on our offer, and also on our reputation, the client actually
referenced Perth airport, where we trade and and the Perth airport gave us a glowing sort of
commendation based on how we have behaved through the crisis. So keeping our units open,
supporting local communities. And that played quite an important part in winning the business and Gold
Coast. So I think for me, there's a combination of things going on. First and foremost, the business
development team have to focus on the priorities of outlined. But when new business comes up, that is
a bit less competitive. We're seeing, but also the way we have behaved over the last year, and as I've
just described, I think gives us a competitive advantage. And we obviously intend to optimise that.
Jonathan, do you want to pick up on rent?

Jonathan: Yeah, sure So with regard to the first point about the percentage of deals whereby we've
converted to a mag per passenger, first point I'd make is that we have continued to see, just over two
thirds of our contracts with the minimum guarantees waived. So we are only paying the concession fee.
And that's been a very consistent pattern throughout the pandemic. We haven't disclosed the degree to
which those are explicitly renegotiated to be a Magpul tax over the lifetime of the contract, partly
because we have quite a bunch of different models out there, to be honest. So, you know, we have got
some long term contracts where that has been the case. And that, therefore gives us protection over the
life of the contract. Equally, in many cases, we might have got that contract in place just for a year or
two, or in some cases, it will be an explicit agreement that until passengers get back to a certain
proportion of pre COVID levels, we will be concession fee, so difficult to precisely articulate the mix
there. But I think the key message is, we continue to get at least two thirds of the minimum guarantees
waived. And clearly, as we see sales recover, that will become less and less important, or it may be
slightly more challenging to negotiate new terms. Again, with regard to the proportion that we have got
extensions, difficult to call, because it's quite a complex picture. I mean, the reality here is, I think Simon
just alluded to this, it's early days, and we've got a mixture of longer term and shorter term extension,
some of them with preferential terms, clearly stating what's probably clear to you the, for the clients, in
many cases, going to a full blown tender isn't particularly in their interests at this point, in the cycle of
therefore they are prepared to give us shorter or shorter or medium term extensions, you know,
anticipating a tender in the future, often with preferential terms, quite frankly, because there's no real
competitive tension for them to exploit, but difficult to put precise dimensions around that at this stage.
Hopefully, that gives you a flavour of what's going on. So just fine in terms of unit model. So as you
know, we've got around 2800 units, and we've effectively was only got 40% of them open at the
moment, we've effectively rebuilt each individual unit and operating model. And by that I mean, smaller
menus more efficient, more efficient back office, as well as more efficient and customer friendly front of
house. So digital solutions being the obvious one, as we reopen that that obviously allows us to break
even on a lower level of sales. As we look forward, I think that's going to be really, really important
because obviously, where we are, we are suggesting that we'll get back to sort of pre COVID margin in
the medium term. And in order to say that what we are balancing is all of those initiatives across all of
those units, where typically our menu sizes at the moment are about half that that you'd normally see.
We're balancing that with a very aggressive opening programme and new business which as you know,
has a drag on the margin in the year who take the over the new store opening costs into the year, as
well as some cost inflation, which we always see and we expect and is built into our plan. So for me, and
for the team, all of that work on menu operations and customer solutions is the is the balances to make
sure we've got a lot of momentum to then as you always know, focus on long term compounding
growth by opening 10 Is 15% of new business over the next couple of years?

Jonthan: Good. That helps. Thanks, James.

James: Thank you.

Haily: The next question is Malone, Leo Carrington of crepes with, please go ahead.

Malone: Good morning.

Jonathan: Morning.

Malone: Just two questions from me, please. Firstly, in the Spanish press, there's been some recent
coverage of a dispute with aiyana. To the extent that this affects you, and the extent to which you you
can say, Here's, outline the details of this, what the likely resolution will be in, in your view, and just how
this particular scenario compares to that with other other landlords, clearly, you mentioned two thirds
of have given waivers. So potentially, there isn't that much, really, Crossfire, I'd love to hear your, your
view on that. And then secondly, in the, you know, references for pipeline and business development
activity of the 10 to 15%. net gains, you've, you've indicated, you expect, how much should these have
been achieved so far? I suppose through 2020. And, and, and this year, and how and how much is is is
sort of still to is still in the in the pipeline, if you like?

Smith: Yeah. Okay. So I'll do the first one drove them to the second, the first will be quite a quick
answer. So obviously, with, with, with the what you're what you're leading to is the various bits of press
around court cases recently, with our largest clients in Spain. We obviously can't comment on that for
legal and business confidential reasons. What I would say is that we have taken a prudent view in our
business in terms of the accounting. I can't give you any more comments at this stage in terms of the
actual discussions going on. Okay, that's it.