SSP GROUP PLC
Results for six months period ended 31 March 2020
SSP Group, a leading operator of food and beverage outlets in travel locations worldwide, announces its financial results for the first half of its 2020 financial year, covering the six months ended 31 March 2020.
First half overview
Covid-19 had a significant impact on SSP’s results for the first half of the current financial year. Prior to the onset of Covid-19, the Group had performed well and in line with expectations, delivering solid like-for-like sales growth and significant net contract gains, particularly in North America and Continental Europe. New contracts won during the first half, including those at Dublin, Cincinnati, Providence and Edmonton Airports, further strengthened our new business pipeline.
As indicated in our February and March updates, we began to see a material impact on trading in our Asia Pacific region from the escalation of the virus in late January and throughout February, following which trading then deteriorated rapidly across the entire Group during March as the impact of the pandemic spread across the world.
- Revenue of £1,214.6m: down 2.7% at constant currency2; 3.7% at actual exchange rates.
- Like-for-like sales3 down 8.4%: heavily impacted by Covid-19 and the closure of most of the global travel markets during March.
- Net gains4 of 5.7% driven by North America and Continental Europe.
- Operating loss of £6.7m on a reported basis under IFRS 16. On a pro forma IAS 17 basis, underlying operatingprofit1 was £1.3m (2019: £62.5m).
- Loss before tax of £34.3m on a reported basis under IFRS 16. On a pro forma IAS 17 basis, the underlying lossbefore tax was £10.7m (2019: profit of £54.2m).
- Basic loss per share of 8.0 pence on a reported basis under IFRS 16. On a pro forma IAS 17 basis, underlying basic loss per share5 of 4.0 pence (2019: underlying basic earnings per share of 6.7 pence).
- Net debt of £457.7m on a pro forma IAS 17 basis, down from £483.4m at 30 September 2019, after taking account of the cash impact of the £209.2m equity issue (net of fees paid) in late March.
- Liquidity strengthened: cash and undrawn available facilities of £413.3m at end of March, with access to around £343m of additional facilities secured during April and May.
Covid-19 impact and response
We have taken rapid and decisive management action to protect our colleagues and customers and to preserve cash and liquidity for the duration of the many government restrictions worldwide. These actions include the following:
• New health and safety protocols created and cascaded to colleagues
• Offices closed and colleagues supported to work from home
• More flexible rent terms negotiated with clients
• Temporary closure of the majority of units; colleagues furloughed
• Salary reductions across senior management, Executive Committee and Board
• Discretionary spend and capital investment reduced to a minimum
• Share buyback programme suspended
• In line with our desire to retain cash in the business and following consultation with shareholders, SSP is facilitating a dividend reinvestment equity offering of up to £26.8m alongside today’s results, giving shareholders the opportunity to reinvest the proceeds of their 2019 final dividend payment into new SSP shares
• No interim 2020 dividend declared
• March equity placing completed and access to the Bank of England’s CCFF confirmed, considerably strengthening our balance sheet and liquidity and leaving us well positioned to operate throughout even our most pessimistic trading scenario
• Waivers of existing covenant tests until September 2021
Commenting on the results, Simon Smith, CEO of SSP Group said:
“Covid-19 has had an unprecedented impact on the travel sector. Our response has been to take quick and decisive action to protect our people and our business, whilst around the world our colleagues have helped and supported their local communities. Although challenging, it was a great illustration of SSP at its best and demonstrated the resilience of our teams. I’m immensely proud of what’s been achieved.
Looking forward, and with sufficient liquidity to manage a pessimistic trading scenario, I believe the actions we have been taking during this crisis will make us a fitter and stronger business, well placed to deliver for all our stakeholders as the travel market recovers.”
1 Stated on an underlying basis, which excludes the amortisation of intangible assets arising on the acquisition of the SSP business in 2006. This is consistent with the prior year.
2 Constant currency is based on average 2019 exchange rates weighted over the financial year by 2019 results.
3 Like-for-like sales represent revenues generated in an equivalent period in each financial period in outlets which have been open for a minimum of 12 months. Like-for-like sales are presented on a constant currency basis.
4 Net contract gains/(losses) represent the net year-on-year revenue impact from new outlets opened and existing units permanently closed in the past 12 months. Net contract gains/(losses) are presented on a constant currency basis.
5 Stated on an underlying basis, which in 2020 excludes the amortisation of intangible assets arising on the acquisition of the SSP business in 2006 and the additional non-cash interest as a result of debt modifications arising on the adoption of IFRS 9. In 2019, it also excludes the amortisation of intangible assets arising on the acquisition of the SSP business in 2006 and the revaluation of the obligation to acquire an additional 16% shareholding in the TFS business in India.
6 The Group has adopted IFRS 16 ‘Leases’ with effect from 1 October 2019, using the modified retrospective approach to transition. Accordingly prior periods have not been restated and therefore the results for the six months ended 31 March 2020 are not directly comparable with those reported in the equivalent period for the prior year under the previous applicable accounting standard, IAS 17 ‘Leases’. To provide meaningful comparatives, the results for the six months ended 31 March 2020 have therefore also been presented under IAS 17 with the growth rates shown on an IAS 17 basis. See Notes 2 and 3 for a reconciliation of the IAS 17 alternative performance measures to the equivalent IFRS measures.
7 Net debt reported under IFRS 16 includes leases liabilities whereas under the pro forma IAS 17 basis lease liabilities are excluded. Refer to ‘Net debt’ section of the ‘Financial review’ for reconciliation of net debt.