Interim Results 2020 - The Food Travel Experts - www.foodtravelexperts.com - SSP - Food Travel Expert
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The Food Travel Experts Interim Results 2020 www.foodtravelexperts.com
Presentation structure 1. Group highlights Simon Smith 2. Financial review Jonathan Davies 3. Business review Simon Smith 4. Q&A All 2 SSP: The Food Travel Experts
Group highlights • Good first half performance prior to the impact of COVID-19 in Q2. • Strong net new space growth at 5.7%; in line like-for-like sales and further progress on our strategic initiatives • Material impact from COVID-19; pre-emptive management action taken to protect and hibernate the business • Sufficient additional liquidity created to deal with the “pessimistic scenario” • Restrictions on travel remain in place for now; SSP will contribute to building customer confidence to travel again • Poised to re-open units as demand starts to recover; systematic approach designed to drive participation & profitability • Simultaneously reducing cost and increasing flexibility • Leveraging market position and expertise in food travel retail; planning to emerge fitter, stronger business 3 SSP: The Food Travel Experts
Financial Review Interim Results 2020 Jonathan Davies, CFO SSP: The Food Travel Experts
Group Financial Overview
IAS 17 Change (%)
H1 2020 H1 2020 H1 2019 Constant Reported
£m
IFRS 16 IAS 17 IAS 17 Currency FX Rates
Revenue 1,214.6 1,214.6 1,261.6 (2.7)% (3.7)%
LFL Sales Growth (8.4)% (8.4)% 2.0% n/a n/a
Operating (Loss) / Profit* (5.8) 1.3 62.5 (97.6)% (97.9)%
(Loss) / Profit Before Tax* (32.4) (10.7) 54.2 n/a n/a
(Loss) / Earnings Per Share (p)* (7.5)p (4.0)p 6.7p n/a n/a
Net Debt (1,934.2) (457.7) (433.4) n/a (5.6)%
*Excludes, in both years, the amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006. In 2020 only, excludes the additional non-cash interest
from debt modifications under IFRS9. In 2019 only, excludes the revaluation of the final consideration to acquire an additional 16% of TFS.
5 SSP: The Food Travel Experts
Covid 19 impacting Operating Margin in H1
IAS 17 YOY bps
H1 2020 H1 2020 H1 2019 Change
IFRS 16 IAS 17 IAS 17
£m Reported FX Rates
Revenue 1,214.6 1,214.6 1,261.6
Gross Profit 856.2 856.2 892.2
% Sales 70.5% 70.5% 70.7% (20)
Labour Costs 387.8 387.8 385.1
% Sales 31.9% 31.9% 30.5% (150)
Concession Fees 112.9 254.2 248.6
% Sales 9.3% 20.9% 19.7% (10)
Overheads 158.0 158.0 143.2
% Sales 13.0% 13.0% 11.3% (170)
Depreciation & Amortisation* 203.3 54.9 52.8
% Sales 16.7% 4.5% 4.2% (30)
Operating (Loss)/Profit* (5.8) 1.3 62.5
Operating Margin (%) (0.5)% 0.1% 5.0% (490)
*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006.
6 SSP: The Food Travel Experts
Net loss of £-18m for H1 (IAS 17 basis)
H1 2020 H1 2020 H1 2019 IAS 17 Change
£m
IFRS 16 IAS 17 IAS 17 (%)
Operating (Loss) / Profit* (5.8) 1.3 62.5 (97.9)%
Net Financing Cost* (26.8) (12.4) (10.4)
Share of Associates 0.2 0.4 2.1
(Loss) / Profit Before Tax* (32.4) (10.7) 54.2 (119.7)%
Tax* 2.3 0.8 (12.0)
Non-Controlling Interests (3.4) (7.9) (11.0)
Net (Loss) / Profit * (33.5) (17.8) 31.2 (157.1)%
(Loss) / Earnings per share (p)* -7.5p -4.0p 6.7p (159.7)%
*Excludes, in both years, the amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006. In 2020 only, excludes the additional non-cash interest
from debt modifications under IFRS9. In 2019 only, excludes the revaluation of the final consideration to acquire an additional 16% of TFS.
7 SSP: The Food Travel Experts
LFL Sales down -18.5% in Q2
2.0% 1.2% 0.9% (1.8)% (47.4)% (18.5)% (8.4)%
0.0%
LFL Sales Increase/(Decrease (%YOY)
-10.0%
-20.0%
-30.0%
-40.0%
Sales down over
90% as at the very
-50.0% end of March
FY19 Q1 Jan Feb Mar Q2 H1
Q2
Note: Same store like-for-like sales growth at constant currency
8 SSP: The Food Travel Experts
Covid 19 impacting Operating Profit by c.£65m in Q2
Sales Operating Profit*
1400 70
£66m £-1m £-4m
£1,362m £-2m £-10m £-60m
£-135m 60
1350
50
1300
40
£m £m
1250
£1,215m 30
1200
20
1150
10
£1m
1100 0
H1 Forecast Jan Feb March H1 Actual H1 Forecast Jan Feb March H1 Actual
(Pre Covid) (Pre Covid)
*Underlying Operating profit on IAS 17 basis
9 SSP: The Food Travel Experts
H1 Revenue down -2.7%
Net Contract Total
Change at Constant Currency LFL Sales
Gains/(Losses) Revenue
UK (5.2)% 2.1% (3.1)%
Continental Europe (10.7)% 7.5% (3.2)%
North America (6.5)% 10.5% 4.0%
Rest of World (12.3)% 3.0% (9.3)%
Group (8.4)% 5.7% (2.7)%
10 SSP: The Food Travel ExpertsOperating Profit at broadly break-even in H1 (IAS 17 basis)
Operating Profit/(Loss)* IAS 17 Change (%)
H1 2020 H1 2020 H1 2019 Constant Reported
£m
IFRS 16 IAS 17 IAS 17 Currency FX Rates
UK** 23.1 23.8 39.1 (39.0)% (39.1)%
Continental Europe (23.8) (20.1) 17.7 (211.7)% (213.6)%
North America 7.4 7.8 9.5 (17.3)% (17.9)%
Rest of World 6.3 8.6 15.9 (48.5)% (45.9)%
Non-attributable (18.8) (18.8) (19.7) +3.6% +4.6%
Group (5.8) 1.3 62.5 (97.6)% (97.9)%
* Operating profit is underlying, at actual currency
** UK includes Republic of Ireland
11 SSP: The Food Travel ExpertsFree Cash outflow of £177m
H1 2020 H1 2019
£m
IAS 17 IAS 17
Operating Profit* 1.3 62.5
Depreciation & Amortisation 54.9 52.8
Working Capital (45.1) (36.3)
Capital Expenditure (119.5) (108.2)
Net Tax (20.1) (18.7)
Acquisitions (26.9) (3.4)
Other (12.4) (18.5)
Operating Cash Flow (167.8) (69.8)
Net Financing Costs (9.1) (6.1)
Free Cash Outflow (176.9) (75.9)
Note: Depreciation, Amortisation and Net Financing costs stated as IAS17 figures
*Excludes, in both years, the amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006.
12 SSP: The Food Travel ExpertsNet Debt of £458m (IAS 17 basis), after equity raise of £209m
H1 2020
Leverage
£m
(Net Debt/ EBITDA)
Net Debt at 1 Oct 2019 (IAS 17 basis) (483.4) 1.5x
Free Cash Flow (176.9)
Impact of foreign exchange rates (3.1)
Other (3.5)
Net Debt at 31 March 2020 (IAS 17 basis), pre New Equity (666.9) 2.5x
New Equity (net of fees) 209.2
Net Debt at 31 March 2020 (IAS 17 basis) (457.7) 1.7x
IFRS 16 Lease Liability (1,476.5)
Net Debt at 31 March (IFRS 16 basis)* (1,934.2) 3.5x
*IFRS 16 Leverage calculated based on estimated last 12 month IFRS 16 adjusted EBITDA
13 SSP: The Food Travel ExpertsMarch Pessimistic Scenario: Impact of Covid 19 on H2 sales and profit
Sales EBITDA
1800 300
£1,650m £-1,400m £-350m
£230m to £-420m
1600
H2 estimated
200
profit drop-
1400
through 25-30%
1200 100
H2 EBITDA loss
£m 1000
£m £-120m to £-190m
0
800
600 -100
H2 sales down
400 c.80 – 85% YoY
£250m -200
200
0 -300
H2 Forecast H2 Esimated Covid impact H2 Forecast H2 Forecast H2 Esimated Covid impact H2 Forecast
(Pre Covid) (Including Covid Impact) (Pre Covid) (Including Covid Impact)
Note: H2 estimate based on assumptions per March 25th trading update
14 SSP: The Food Travel ExpertsPessimistic Scenario: H2 cash usage
Estimated H2 Cash Outflows Actions taken to protect liquidity
£m
• Rapid reduction of operating costs
H2 EBITDA Loss (120 - 190) • Negotiations of rent concessions
Working Capital (180 - 200) • Access to government support
schemes
Other Net Outflows (40 - 50)
• Waiver of loan amortisation (£32m)
Total (340 – 440)
• Share buy back suspended
Estimated Monthly Cash Burn • No interim dividend
£m
• Capex reduction to £10-15m
Q4: Jul - Sep (25 - 30)
15 SSP: The Food Travel ExpertsBalance sheet and liquidity significantly strengthened
£m
Cash at end of March 2020 (pre Equity Raise) 172
Undrawn RCF 32
March Equity Raise 209
Available liquidity at end of March 2020 413
New Sources of Funding:
Bank of England CCFF 300
Other Local Facilities 37
Total Available Cash/Liquidity 750
Estimated H2 Cash Usage (340 – 440)
Implied Cash/Liquidity at end of Sept 2020 310 - 410
16 SSP: The Food Travel ExpertsBusiness Review Interim Results 2020 Simon Smith, CEO SSP: The Food Travel Experts
Four phases to our response to COVID - 19
Business Sustainable
Hibernation Recovery
Protection growth
• Health & Safety • Health & Safety • Health & Safety • Health & Safety
• Cost reduction • Unit closures • Re- open units • Accelerate growth
• Staff furloughed • Re-engineer unit costs • Leverage cost base
• Capex reduction
• Flexible or no rent • Reduce overhead • Embed sustainability
• New liquidity
A fitter, stronger SSP… delivering for all stakeholders
18Business Hibernation
Decisive management action; taken early protection
Key Priorities Action Taken
• New Protocols
Health and Safety • More communication
• Office based colleagues working remotely
• Agreed flexible, or no rental with landlords
Business Protection • Closed units; hibernation protocols
• Staff furloughed; Board/Senior management salary reduction
• Discretionary spend & capex reduced to minimum; projects deferred
Liquidity • Share buyback suspended and final dividend deferred
• £550m new liquidity created via placing and loans
• Accessed job protection schemes
People and Community • Increased internal communication and support
• Donations to local communities and health services
SSP: The Food Travel Experts
19Hibernation
Supporting communities during the crisis
Our Communities
• UK: Millie’s Cookies donated 100,000 freshly baked
cookies to NHS workers; M&S stores serving hospitals;
donations to local food banks
• Spain: Surplus food and disposable gloves donated to
the Red Cross and NGOs
• DACH: food donated to the Red Cross for vulnerable
people
• France: 2,000 facemasks donated to hospitals and
partnership with Restos du Coeur to make and distribute
meals to those in need
• Sweden: food and equipment donations to ambulance
crews; sweet treats donated to hospital staff
• North America: local food bank donations
• India: Over one million meals made and distributed to
those most in need
20 SSP: The Food Travel ExpertsRegional review
UK Continental Europe
• 66% Rail; 30% Air • 60% Air; 30% Rail
• Almost total shut down of operations; M&S in hospitals only • Countries at different stages of lockdown
• Rail travel gradual increase in passengers; air still shut • Germany most advanced, Spain slower easing of restrictions
• Opening programme focussed on rail and retail • Re-openings focussed on rail
• Aiming for c. 50 units open by the autumn • Aiming for c. 200 to 300 units open by the autumn
North America Rest of the World
• 100% Air; of which 80% domestic • 90% Air; 10% Rail
• Largely closed; Government restrictions easing • Countries at different stages of lockdown
• State by state approach • China/Asia most advanced, Middle East slower
• Preparing to open; driven by domestic air • Unit reopening commencing in China
• Aiming for c. 50 units open by end of summer • Aiming for c. 100 - 150 units open by the autumn
21 SSP: The Food Travel ExpertsCase study: China
Overview China flight trends: Jan-May
DOMESTIC
• Significant reduction in operated flights from January to
February – from c. 17,000 to c. 4,000 per day
• By end May: 10,000 daily flights operating, with recovery
led by domestic travel
• SSP operate 8 airports across China, 5 primarily domestic;
45% of SSP China revenues
• Lockdown easing for now; 14-day quarantine between
Beijing and majority of provinces has been relaxed INTERNATIONAL
• Discussions under-way to open some borders between
provinces/ Hong Kong
• Further unit openings planned over the summer
Source: Airsavvi, 29 May 2020
22 SSP: The Food Travel ExpertsRecovery
Immediate priorities in the recovery phase
Key Priorities Key Actions
• Additional protocols
Health and Safety • Social distancing in units and offices
• Increased communication to colleagues and customers
• Systematic approach; driven by consumer needs
Unit re-openings with new • New unit economics; MGRs, lower variable rents; profitable at lower sales levels
unit economics • Protect hibernated units in partnership with our landlords
• Re-align with demand
Overheads • Simplify structure and processes
• Reduce overhead
• Keep our teams informed, engaged and supported
People and Communities • Provide for and support our communities
SSP – The Food Travel Experts
23 SSP: The Food Travel ExpertsRecovery
Re-opening programme: Test – Learn - Adapt
Customer offer Health & Safety
• Customer research informing offer • PPE
• Range adapted around key items • Perspex screens installed
• High wastage, non-essentials • Till podia hand sanitizer
removed • Customer communications
• Use of technology
Heberer, Frankfurt Airport
Social distancing Unit economics
• Increased signage • Breakeven at lower level of sales
• Planogorams aligned to needs • Re-negotiated rent/franchise fees
• Queue spacing • Flexible labour/optimised hours
• Cashless payments • Overheads reduced
Fjola, Oslo station Burger King, Xian Airport
24 SSP: The Food Travel ExpertsSustainable
growth
Building competitive advantages for the longer term
Key Priorities Key Actions
• Aligned to changing customer preferences and needs
Strong customer offer • Accelerate technology to enhance customer experience and safety
• Prioritise pipeline and seek out value creating new opportunities
Value creating market growth • Restarting investment in high-growth markets
opportunities • Potential for selective M&A
• Ongoing simplification
Strong unit economics; lower • Ability to scale up and down
flexible cost base
• Accelerate roll out of IT, technology and automation as enablers
• Embed sustainability programme into each area of the business
Strong environmental and • KPIs, targets and measurements
sustainability credentials • Board oversight
Market position; international scale, local expertise; value creating business model; delivering for all stakeholders
25 SSP: The Food Travel ExpertsSignificant growth opportunities: Openings and new wins in H1
H1 Openings H1 Wins
Station Food acquisition Copenhagen Airport
Dublin Airport
Cincinnati Airport Mykonos Airport
Phoenix Airport Kuala Lumpur Airport Providence Airport
SSP: The Food Travel Experts
26Summary and outlook
• Strong first half pre-COVID
• COVID has had a significant impact; management action taken early to protect and hibernate the business
• Financial liquidity secured; plan allows us to manage the “pessimistic scenario”
• Poised to re-open units and support the rebuilding of customer confidence to travel as demand recovers
• Systematic opening program designed to maximize the opportunity and drive profitability
• Reducing cost; making the cost base more flexible; profit at lower level of sales
• Many future growth opportunities
• Delivering for all our stakeholders
SSP – The Food Travel Experts – Fitter, Stronger Business
27 SSP: The Food Travel ExpertsQ&A Interim Results 2020 SSP: The Food Travel Experts
Disclaimer Certain statements in the presentation may constitute “forward-looking statements”. These statements reflect the Company’s current beliefs and expectations and are based on numerous assumptions regarding the Company’s present and future business strategies and the environment the Company and members of its group will operate in and are subject to risks and uncertainties that may cause actual results, performance or achievements to differ materially. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the Company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behaviour of other market participants, the actions of regulators and other factors such as the Company’s ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Group operates or in economic or technological trends or conditions. As a result, you are cautioned not to place undue reliance on such forward-looking statements. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Forward-looking statements speak only as of their date and the Company, any other member of the Group, its parent undertakings, the subsidiary undertakings of such parent undertakings, and any of such person’s respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law or regulatory obligations. It is up to the recipient of this presentation to make its own assessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws. 29 SSP: The Food Travel Experts
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