TIDMSSPG
RNS Number : 7954Z
SSP Group PLC
23 September 2020
LEI:213800QGNIWTXFMENJ24
23 September 2020
SSP GROUP PLC
Pre Close Trading Update
SSP Group plc ("SSP" or "the Group"), a leading operator of food
and beverage outlets in travel locations worldwide, issues a Pre
Close Trading Update for the second half of the financial year
ending 30 September 2020, covering the period from 1 April to 30
September 2020.
Extensive action to reduce the cost base and preserve cash is
expected to result in a materially lower cash usage than
anticipated at the Interim results and an underlying EBITDA and
operating loss broadly in the middle of the range indicated. This
performance is despite the continued impact of Covid-19 on sales
which are expected to be at the lower end of the range,
approximately 86% down year-on-year.
Simon Smith, CEO of SSP Group plc, said:
"Covid-19 continues to have an unprecedented impact on the
travel industry and on SSP's businesses in all geographies. Our
first priority throughout this crisis has been the health, safety
and welfare of our people and our customers. We have taken rapid
and decisive action to reduce cost, preserve cash and to
substantially strengthen the Group's financial position. It is with
regret that the prolonged nature of this crisis has resulted in us
having to restructure and make considerable job losses in order to
protect the business. These are always extremely difficult
decisions, and we are supporting our colleagues throughout this
process.
"We have seen some improvement in passenger demand since the
start of the crisis and we have reopened units swiftly and
profitably in response to this, with over one third of our units
now trading. Our model is flexible and we will continue to align
unit openings with demand, meeting the needs of our customers
whilst managing operating costs and cash flow tightly.
"In the medium-term we expect to see the gradual return of
passenger travel to more normalised levels. The actions we are
taking to rebuild the business will enable us to emerge fitter and
stronger, positioning us to capitalise on future opportunities and
delivering long term sustainable growth for the benefit of all our
stakeholders."
Current trading
Current weekly sales are running at approximately 76% below last
year, representing an improvement from the third quarter when sales
were approximately 95% lower in April and May and 90% lower in
June.
The sales improvement has been driven by a stronger recovery in
Continental Europe, where weekly sales are approximately 66% lower
year-on-year, compared with the UK, North America and the Rest of
the World, where weekly sales remain around 80-85% lower
year-on-year.
Sales in Continental Europe have benefitted from the stronger
performance of the rail business, notably in Germany and France,
and some recovery in regional air travel over the summer.
In the UK, there has also been a recovery in the air sector over
the summer predominantly from leisure customers, albeit
considerably lower capacity and renewed quarantine restrictions
reduced activity. The rail sector remained very weak during the
third quarter, but more recently we have seen a slow recovery,
driven by a gradual return in commuter travel as people return to
the office.
In North America, domestic air travel is starting to recover,
but international travel remains largely closed. In the Rest of the
World division, whilst domestic air passenger levels have recovered
strongly in China and are improving in Thailand and India,
international traffic remains low.
Across the Group, we have now re-opened just over a third,
approximately 1,100, of our units, which is ahead of the
expectations we set at the Interim results in June. Our approach to
unit openings continues to be systematic, with units and sites only
being opened selectively and where they will achieve break-even
levels of sales, even at low levels of passenger activity.
Expected outturn for H2 2020
Overall sales in the second half of the year are expected to be
approximately 86% lower year-on-year, resulting in a reduction in
revenue of around GBP1.3bn compared to H2 2019. Encouragingly, the
extensive management action to reduce the cost base, notably rent,
overhead and labour, means that despite the weaker sales the
underlying EBITDA and operating loss (on an IAS 17 basis) are
expected to fall broadly in the middle of the ranges set out in the
Interim results in June (-GBP120m to GBP190m EBITDA and -GBP180m to
GBP250m operating loss) for the second half of the year. Whilst the
decision to implement redundancies across the Group is extremely
regrettable, it has been a necessary step to protect the business
and preserve cash in the near term.
Overall net cash usage in H2 is expected to be in the region of
GBP250m to GBP270m, a considerably better outcome than that
anticipated at the Interim results in June of GBP340m to GBP440m.
This performance reflects tight management of working capital,
including agreed rent waivers and deferrals with many of our
clients, reduced capital expenditure, as well as the benefit of
government support schemes and the recovery of previously paid
corporation taxes in a number of countries. We were also able to
retain some of the cash related to the declared final dividend for
2019, through the placing of new shares.
On a pro forma basis, adjusting the Group's reported liquidity
position at the end of March to include new facilities secured in
early April (including the Bank of England CCFF), Group cash and
undrawn available facilities totalled approximately GBP750m. We
anticipate cash usage in H2 to be approximately GBP250m to GBP270m
which would leave the Group's liquidity headroom at the end of the
current financial year to 30(th) September 2020 at GBP480m to
GBP500m. The current operating cash burn is in the region of GBP25m
per month.
Conclusion and Outlook
Throughout this crisis, our focus has been and continues to be
the health and safety of our people and our customers. SSP has
taken decisive and significant action to protect the business and
reduce costs. Proactive liquidity management has enabled us to keep
our cash usage to a minimum during this period.
More recently, we have seen some limited improvement in traffic
in a number of regions, with sales currently at around 24% of
pre-Covid levels. As we head into the winter months, demand may
well remain subdued. However, we have an important role, providing
food and beverage services to the travelling public, and we will
continue to re-open units dynamically where we see demand,
maximising the profitability of the reopening programme and
rigorously controlling costs and cash.
Looking further out, we firmly believe that demand for travel
will return and the actions we have taken since February, together
with the evolving market backdrop, will ensure SSP emerges as a
fitter, stronger leader in the sector.
ENDS
CONTACTS
Investor and analyst enquiries
Sarah John, Corporate Affairs Director, SSP Group plc
+44 (0) 203 714 5251; E-mail: sarah.john@ssp-intl.com
Media enquiries
Peter Ogden / Lisa Kavanagh, Powerscourt
+44 (0) 207 250 1446; E-mail: ssp@powerscourt-group.com
NOTES TO EDITORS
About SSP
SSP is a leading operator of food and beverage concessions in
travel locations, operating restaurants, bars, cafés, food courts,
lounges and convenience stores in airports, train stations,
motorway service stations and other leisure locations. Prior to the
onset of Covid-19, during 2019 SSP Group employed c 40,000
colleagues (on average) around the world, serving around one and a
half million customers every day at approximately 180 airports and
300 rail stations in 36 countries around the world and operated
more than 550 international, national and local brands across our
c. 2,800 units.
Impact of COVID-19
Covid-19 has had an unprecedented impact on the travel sector.
Our response has been to take 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 have included the following:
-- New health and safety protocols created and cascaded to colleagues
-- Offices closed and colleagues supported to work from home
-- Temporary closure of units; colleagues furloughed where schemes available
-- March equity placing completed and access to the Bank of
England's CCFF confirmed, considerably strengthening our balance
sheet. Approximately GBP750m liquidity in place leaving us well
positioned to operate throughout even our most pessimistic trading
scenario
-- Waivers of existing covenant tests until September 2021
-- Salary reductions across senior management, Executive Committee and Board
-- Discretionary spend and capital investment reduced to a minimum
-- Share buyback programme suspended
-- No Interim dividend declared
-- A placing allowing shareholders to reinvest their 2019
dividend payment into new SSP shares and retain cash in the
business
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END
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