TIDMSSPG
RNS Number : 5162H
SSP Group PLC
25 March 2020
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR
ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR
DISTRIBUTION WOULD BE UNLAWFUL.
FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND
IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
LEI:213800QGNIWTXFMENJ24
For immediate release
25 March 2020
SSP Group plc ("SSP")
COVID-19 Trading Update, Financing Arrangements and Dividend
Declaration
SSP's immediate priority continues to be the health and safety
of all of our colleagues and customers. Across the business, we
have implemented a range of additional health and safety policies
and protocols covering hygiene, travel and self-isolation periods,
and issued regular guidance in order to keep people fully informed
and as well protected as possible against infection.
Current Trading
In our recent update on 26 February 2020, we indicated that we
had seen sharp declines in passenger numbers across the Asia
Pacific regions (which account for approximately 8% of SSP's Group
revenue) in February. Since that update, SSP has seen an
unprecedented and rapidly escalating impact of the COVID-19 virus
on the travel operating environment, particularly in airports. The
widespread travel bans imposed by governments and airline capacity
reductions across our core markets have severely impacted passenger
numbers in the UK, Europe and North America, particularly in
international travel.
As a consequence, like-for-like revenues (based on the latest
week) across the UK and continental Europe are currently running
approximately 80% to 85% lower year-on-year ("YOY"), with the
impact in the air market being greater than in rail. In North
America, like-for-like revenues are approximately 80% lower YOY and
in the Rest of World, which includes Asia Pacific, Eastern Europe,
the Middle East, India and Brazil, like-for-like revenues are
approximately 60% lower YOY.
In terms of the financial impact of COVID-19, our expectation is
that for the month of March 2020, revenue across the Group will be
approximately 40% to 45% lower YOY. This is expected to reduce
Group revenue by approximately GBP125m - GBP135m, with a
corresponding reduction in operating profit of approximately GBP50m
- GBP60m.
Including the impact of COVID-19 on current trading, for the six
months ending 31 March 2020 ("H1 2020"), SSP expects to see a
decrease in total Group revenue of approximately -3% on a constant
currency basis, compared to the same period last year, comprising a
like-for-like sales decline of approximately -8% and net gains of
approximately +5%. Total Group revenue at actual exchange rates is
expected to decline by approximately -4% compared to the same
period last year. SSP expects to have approximately GBP180m -
GBP200m of cash and undrawn committed facilities (before any new
funding as described below) at the end of H1 2020, leaving leverage
at approximately 2.4x net debt / EBITDA (last twelve months).
Management Actions
We are taking all available actions to protect profit and cash,
whilst working closely with our clients to maintain appropriate
service levels for our customers.
Operational reductions
-- Temporary closure of units
-- Reduced operating hours
-- Opening programme ceased for H2 2020
Labour costs
-- Headcount reduction and temporary lay-offs commenced
-- Significant salary reductions across all senior management,
the Group Executive and Group Board
Rents
-- Majority of rent is being paid on a fully variable basis, as a percentage of revenue
-- Ongoing discussions with landlords for further rent relief
Overheads
-- Discretionary overhead expenditure being reduced to minimum levels to operate the business
Capex
-- Capital expenditure to be reduced to approximately GBP10m in H2 2020
Further to the management actions set out above, SSP has
suspended its previously announced share buyback of up to GBP100m,
having only purchased approximately GBP2m of shares to date.
SSP will also defer the payment date of the final dividend of
6.0 pence per ordinary share to 4 June 2020. The dividend was
approved at the Company's annual general meeting held on 26
February 2020 (with a record date and time of 6.00 p.m. on 6 March
2020) and would otherwise have been payable on 27 March 2020. SSP
will also enter into discussions with shareholders to request that
they waive their final dividend entitlement enabling that cash to
be retained in the business.
SSP's Board does not intend to pay an interim dividend for H1
2020.
In addition to management action, on 17 March 2020 and 20 March
2020 HM Treasury announced a package of temporary, timely and
targeted measures to support public services, people and businesses
through this period of disruption caused by COVID-19. These include
the Coronavirus Job Retention Scheme, deferred VAT payments and
changes to business rates. In addition to these UK schemes, SSP is
in active discussions with Governments around the world to secure
support under their local schemes.
Furthermore, the joint HM Treasury and Bank of England lending
facility, named the Covid Corporate Financing Facility ("CCFF") was
launched. This facility is designed to support liquidity among
larger firms, helping them to bridge coronavirus disruption to
their cash flows through the purchase of short-term debt in the
form of commercial paper. SSP expects to qualify for this scheme
and is already well advanced in preparations and discussions with
HM Treasury and the Bank of England to access the scheme.
Outlook
Clearly the duration of COVID-19's impact, including on global
travel is very uncertain at this stage as are its consequences for
our financial performance for the full year. Looking into the
second half of the financial year (April - September 2020, or "H2
2020"), SSP's central planning assumption is that recent trading
conditions seen through March 2020 will likely deteriorate
further.
SSP has considered a very pessimistic scenario assuming an
almost total shutdown of the travel market for the whole of the
second half of the financial year, with Group revenue being down
approximately 80% to 85% in H2 2020 against the same period last
year. This reflects a worsening revenue impact in the third quarter
of the financial year (down 85%) and only minimal improvement in
the fourth quarter (down 80%). In considering the impact of this on
operating profit, SSP has assumed that the benefit of the extensive
management action to reduce the cost base would result in a "drop
through" to operating profit from the reduced sales of 25% to 30%,
an improvement compared with that experienced in February and March
2020.
Financing Arrangements and Equity Placing
SSP is taking decisive and immediate action to preserve cash and
ensure sufficient liquidity even in the event of the most
pessimistic trading scenario.
Furthermore, SSP today announces the following financing
arrangements:
SSP announces that it has agreed a new up to GBP112.5m 18-month
committed bank facility with HSBC Bank plc, Lloyds Bank plc and
National Westminster Bank plc, which represents incremental
financing to its existing debt facilities. This is subject to
documentation on terms and conditions in line with such existing
facilities and is conditional on SSP raising new equity. The
Company is confident in its ability to meet its covenant thresholds
as at 31 March 2020.
SSP has separately announced today a proposed equity raising
-- Intention to conduct a non--pre--emptive placing of new
ordinary shares of 1 (17/200) pence each in the capital of the
Company representing up to 19.99% of the Company's existing issued
ordinary share capital (the "Equity Placing")
-- Directors and members of the senior management team including
CEO, CFO and Chairman to participate alongside the Equity Placing
and intend to contribute GBP760,000
-- The net proceeds of the Equity Placing will be used to
strengthen the Company's balance sheet, working capital and
liquidity position during this period of unprecedented disruption
in the global travel market as a result of the COVID-19
outbreak
Based on the scenario planning undertaken by SSP management, the
additional financing arrangements will provide sufficient liquidity
to deal with even the most pessimistic trading scenario and enable
SSP to operate through this unprecedented travel environment and
also be positioned to return to growth as markets normalise.
Summary
The global travel industry is facing unprecedented disruption on
a scale never before seen due to the impact of COVID-19 and the
government implemented travel bans. SSP's Board and management team
is, however, confident that the combination of our management
actions to reduce costs and preserve cash, reduction in planned
capex and the financing arrangements outlined above will position
SSP to withstand the current environment. We remain confident in
the long-term, proven strategy for growth and shareholder value
creation.
Commenting on this announcement, Simon Smith, CEO of SSP Group,
said:
"The COVID-19 outbreak is an unprecedented crisis and is having
a severely negative impact on the travel sector. These are hugely
challenging times and I would like to sincerely thank everyone at
SSP for their support and commitment. In common with the sector, we
have seen a very sharp drop off in passenger numbers and this has
heavily impacted SSP revenues. We've had to take significant action
to reduce our costs while doing everything we can to limit the
impact of this on our colleagues. However, we have had to close a
number of units given the extent to which passenger numbers have
decreased. These decisions have not been taken lightly and I
sincerely hope that we can re-open our units and welcome back our
teams as soon as possible.
We also welcome the actions announced by HM Treasury to support
individuals and businesses though the COVID-19 crisis. This
together with the management action we are taking, and the
additional funding arrangements announced today will put us in a
strong position to manage through this crisis and be in the best
shape possible to return to growth once the market begins to
recover."
CONTACTS
Investor and analyst enquiries
Sarah John, Director of Investor Relations, 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. With over 50
years of experience, today we have more than 39,000 employees,
serving approximately one and a half million customers every day.
We have business at approximately 180 airports and 300 rail
stations, and operate more than 2,800 units in 35 countries around
the world.
SSP operates an extensive portfolio of more than 550
international, national, and local brands. Among these are local
heroes such as Brioche Dorée in Paris, LEON in London, and Hung's
Delicacies in Hong Kong. Our range also includes proprietary brands
created for the travel sector including Upper Crust, Cabin Bar and
Ritazza, as well as international names such as M&S, Burger
King, Starbucks, Jamie's Deli and YO! Sushi. We also create
stunning bespoke concepts such as Five Borough Food Hall in JFK,
New York and Norgesglasset Bar in Oslo Airport.
www.foodtravelexperts.com
IMPORTANT NOTICES
The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this announcement for accuracy or completeness. The information
in this announcement is subject to change.
Neither this announcement nor the information contained herein
nor any copy of it is for publication, distribution or release, in
whole or in part, directly or indirectly, in or into or from the
United States (including its territories and possessions, any State
of the United States and the District of Columbia), Australia,
Canada, Japan, the Republic of South Africa or any other
jurisdiction where to do so would constitute a violation of the
relevant laws of such jurisdiction. The distribution of this
announcement may be restricted by law in certain jurisdictions and
persons into whose possession any document or other information
referred to herein comes should inform themselves about and observe
any such restriction. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such
jurisdiction.
This announcement is not intended to, and does not constitute,
or form part of, any offer to sell or an invitation to purchase or
subscribe for any securities in any jurisdiction.
Any securities referred to herein may not be offered or sold,
directly or indirectly, in the United States unless registered
under the United States Securities Act of 1933, as amended (the "US
Securities Act") or offered in a transaction exempt from, or not
subject to, the registration requirements of the US Securities Act.
Any potential offer and sale of securities referred to herein will
not be registered under the US Securities Act or under the
applicable securities laws of Australia, Canada, Japan or the
Republic of South Africa. There will be no public offer of the
Shares in the United States, Australia, Canada, Japan or the
Republic of South Africa.
Certain statements contained in this announcement constitute
"forward-looking statements" with respect to the financial
condition, performance, strategic initiatives, objectives, results
of operations and business of the Group. All statements other than
statements of historical fact included in this announcement are, or
may be deemed to be, forward-looking statements. Without
limitation, any statements preceded or followed by or that include
the words "targets", "plans", "believes", "expects", "aims",
"intends", "anticipates", "estimates", "projects", "will", "may",
"would", "could" or "should", or words or terms of similar
substance or the negative thereof, are forward-looking statements.
Forward-looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; and (ii)
business and management strategies and the expansion and growth of
the Group's operations. Such forward-looking statements involve
risks and uncertainties that could significantly affect expected
results and are based on certain key assumptions. Many factors
could cause actual results, performance or achievements to differ
materially from those projected or implied in any forward-looking
statements. The important factors that could cause the Group's
actual results, performance or achievements to differ materially
from those in the forward-looking statements include, among others,
economic and business cycles, the terms and conditions of the
Group's financing arrangements, foreign currency rate fluctuations,
competition in the Group's principal markets, acquisitions or
disposals of businesses or assets and trends in the Group's
principal industries. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward-looking
statements, which speak only as of the date hereof. In light of
these risks, uncertainties and assumptions, the events described in
the forward-looking statements in this announcement may not occur.
The forward-looking statements contained in this announcement speak
only as of the date hereof. The Company and its Directors each
expressly disclaim any obligation or undertaking to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise, unless required to
do so by applicable law or regulation.
The forecast financial information contained in this
announcement was prepared based upon certain assumptions (the
"Assumptions") about the development of the COVID--19 pandemic over
the remainder of the financial year 2020 which are based on
publicly available information published by organisations such as
The World Health Organization and the UK Government and the impact
of the COVID--19 pandemic, together with the impact of certain
actions under consideration that may be taken by the Company in
response, on the Group's condition (financial, operational,
management, legal, regulatory or otherwise), earnings, management,
results of operations, business affairs and business prospects (the
"COVID--19 Impact"). The Assumptions and the extent and nature of
the COVID--19 Impact are subject to a wide variety of significant
uncertainties and the Group's actual financial results for the six
months ending 31 March 2020, for the six months ending 30 September
2020 and for the year ending 30 September 2020 may differ
materially from the forecast financial information contained in
this announcement.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into or forms part of this announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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March 25, 2020 03:00 ET (07:00 GMT)
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