Train station and airport food seller SSP (SSPG) is to share £100m among shareholders as a special dividend, potentially worth around 21p per share.
The company will also pay a greater percentage of net income as normal dividends in the future following a review of its medium-term capital requirements.
Investors like the news, sending its shares up 5.4% to 639.5p.
SSP, which owns such brands as Upper Crust as well as operating third party brands including Burger King under franchise or licence agreements, says it will raise the payout ratio for normal dividends from 35% to 40% of net income.
Shareholders will get 4.9p final dividend, bringing the full year dividend to 8.1p per share - equivalent to a 50% hike year-on-year.
Adding the 21p indicated special dividend amount to 8.1p normal dividends for the year equates to 29.1p for the 2017 financial year as a whole. That works out as a 4.6% yield.
Most investors will have bought SSP for capital gains rather than income. The business has done incredibly well since being on the stock market in July 2014 - rising by just over 200% in value.
We featured SSP as one of our Great Ideas just over a year ago at 323p, so investors following our idea will have almost doubled their money.
The latest full year results show 11.7% rise in revenue at constant currency rates to £2.38bn, or up 19.5% at actual forex rates. Underlying pre-tax profit grew by 38.3% to £148.7m.
The results came in roughly 3% to 4% above expectations driven by both revenue and margin outperformance.
‘The group delivered a good performance in the year, driven by like-for-like sales growth, new contract openings across the world and the ongoing implementation of our programme of operational improvements,’ says the company in its full year results commentary.
‘We are continuing to invest in the growth and development of the business and to bring new brands and concepts to our clients and customers.
‘We have made further good progress in the development of the business in North America and Asia Pacific and the first year's performance of TFS, our joint venture in India, has been encouraging. We have delivered another year of margin growth driven by good like-for-like growth and the ongoing roll out of our strategic initiatives.’
SSP says its cash flows have been strong, funding its highest level of investment to date.
