The Food Travel Expertsinvestors.foodtravelexperts.com/~/media/Files/S/SSP-IR/reports-and...Covid 19...

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The Food Travel Experts

Interim Results 2020

Presentation structure

1. Group highlights Simon Smith

2. Financial review Jonathan Davies

3. Business review Simon Smith

4. Q&A All

SSP: The Food Travel Experts2

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


Financial Review

SSP: The Food Travel Experts

Jonathan Davies, CFO


Group Financial Overview


IAS 17 Change (%)

£m H1 2020IFRS 16

H1 2020IAS 17

H1 2019IAS 17

Constant Currency

Reported 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)%

5

*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.

Covid 19 impacting Operating Margin in H1


H1 2020IFRS 16

H1 2020IAS 17

H1 2019IAS 17

IAS 17 YOY bps Change

£m Reported FX Rates

Revenue 1,214.6 1,214.6 1,261.6

Gross Profit% Sales

856.270.5%

856.270.5%

892.270.7% (20)

Labour Costs% Sales

387.831.9%

387.831.9%

385.130.5% (150)

Concession Fees% Sales

112.99.3%

254.220.9%

248.619.7% (10)

Overheads% Sales

158.013.0%

158.013.0%

143.211.3% (170)

Depreciation & Amortisation*

% Sales

203.316.7%

54.94.5%

52.84.2% (30)

Operating (Loss)/Profit*

Operating Margin (%)

(5.8)(0.5)%

1.30.1%

62.55.0% (490)

6

*Excludes amortisation of intangible assets created at acquisition of the SSP business by EQT in 2006.

Net loss of £-18m for H1 (IAS 17 basis)


£mH1 2020IFRS 16

H1 2020IAS 17

H1 2019IAS 17

IAS 17 Change(%)

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)%

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.

LFL Sales down -18.5% in Q2


-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

FY19 Q1 Jan Feb Mar Q2 H1

Note: Same store like-for-like sales growth at constant currency

LFL

Sale

s In

cre

ase

/(D

ecr

ease

(%

YOY

)

Q2

8

2.0% 1.2% 0.9% (1.8)% (47.4)% (8.4)%(18.5)%

Sales down over 90% as at the very

end of March


Covid 19 impacting Operating Profit by c.£65m in Q2

Operating Profit*Sales

*Underlying Operating profit on IAS 17 basis

£1,215m

£-135m£1,362m £-2m £-10m

£m £m

£-1m

£1m

1100

1150

1200

1250

1300

1350

1400

H1 Forecast(Pre Covid)

Jan Feb March H1 Actual

0

10

20

30

40

50

60

70


Jan Feb March H1 Actual

£-60m

£66m £-4m

H1 Revenue down -2.7%


Change at Constant Currency LFL SalesNet Contract

Gains/(Losses)Total

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

Operating Profit at broadly break-even in H1 (IAS 17 basis)


Operating Profit/(Loss)* IAS 17 Change (%)

£mH1 2020IFRS 16

H1 2020IAS 17

H1 2019IAS 17

Constant Currency

Reported 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

Free Cash outflow of £177m


£mH1 2020IAS 17

H1 2019IAS 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)

12

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.

Net Debt of £458m (IAS 17 basis), after equity raise of £209m


H1 2020

£mLeverage

(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


March Pessimistic Scenario: Impact of Covid 19 on H2 sales and profit

Note: H2 estimate based on assumptions per March 25th trading update

EBITDASales

£m

0

200

400

600

800

1000

1200

1400

1600

1800


H2 Esimated Covid impact H2 Forecast(Including Covid Impact)

-300

-200

-100

0

100

200

300


H2 Esimated Covid impact H2 Forecast(Including Covid Impact)

£m

£250m

£1,650m £-1,400m

H2 sales down c.80 – 85% YoY

£230m

£-350mto £-420m

H2 EBITDA loss £-120m to £-190m

H2 estimated profit drop-

through 25-30%


Pessimistic Scenario: H2 cash usage

£m

H2 EBITDA Loss (120 - 190)

Working Capital (180 - 200)

Other Net Outflows (40 - 50)

Total (340 – 440)

Actions taken to protect liquidity

• Rapid reduction of operating costs

• Negotiations of rent concessions

• Access to government support schemes

• Waiver of loan amortisation (£32m)

• Share buy back suspended

• No interim dividend

• Capex reduction to £10-15m

Estimated H2 Cash Outflows

£m

Q4: Jul - Sep (25 - 30)

Estimated Monthly Cash Burn


Balance 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

Business Review


Simon Smith, CEO


Four phases to our response to COVID - 19

Business Protection

Recovery HibernationSustainable

growth

• Health & Safety

• Cost reduction

• Capex reduction

• New liquidity

• Health & Safety

• Unit closures

• Staff furloughed

• Flexible or no rent

• Health & Safety

• Re- open units

• Re-engineer unit costs

• Reduce overhead

• Health & Safety

• Accelerate growth

• Leverage cost base

• Embed sustainability

A fitter, stronger SSP… delivering for all stakeholders

18

Decisive management action; taken early


Key Priorities Action Taken

Health and Safety

Business Protection

Liquidity

People and Community

• New Protocols

• More communication

• Office based colleagues working remotely

• Agreed flexible, or no rental with landlords

• Closed units; hibernation protocols

• Staff furloughed; Board/Senior management salary reduction

• Discretionary spend & capex reduced to minimum; projects deferred

• Share buyback suspended and final dividend deferred

• £550m new liquidity created via placing and loans

• Accessed job protection schemes

• Increased internal communication and support

• Donations to local communities and health services

Business protection

Hibernation

19

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

Hibernation

Regional review


UK

Rest of the WorldNorth America

Continental Europe

• 66% Rail; 30% Air• Almost total shut down of operations; M&S in hospitals only• Rail travel gradual increase in passengers; air still shut• Opening programme focussed on rail and retail• Aiming for c. 50 units open by the autumn

• 100% Air; of which 80% domestic• Largely closed; Government restrictions easing• State by state approach • Preparing to open; driven by domestic air• Aiming for c. 50 units open by end of summer

• 60% Air; 30% Rail• Countries at different stages of lockdown• Germany most advanced, Spain slower easing of restrictions• Re-openings focussed on rail• Aiming for c. 200 to 300 units open by the autumn

• 90% Air; 10% Rail• Countries at different stages of lockdown• China/Asia most advanced, Middle East slower • Unit reopening commencing in China• Aiming for c. 100 - 150 units open by the autumn

Case study: China


• 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

• Discussions under-way to open some borders between provinces/ Hong Kong

• Further unit openings planned over the summer

China flight trends: Jan-MayOverview

Source: Airsavvi, 29 May 2020

DOMESTIC

INTERNATIONAL

Immediate priorities in the recovery phase


Key Priorities Key Actions

Health and Safety

Unit re-openings with new unit economics

Overheads

People and Communities

• Additional protocols

• Social distancing in units and offices

• Increased communication to colleagues and customers

• Systematic approach; driven by consumer needs

• New unit economics; MGRs, lower variable rents; profitable at lower sales levels

• Protect hibernated units in partnership with our landlords

• Keep our teams informed, engaged and supported

• Provide for and support our communities

• Re-align with demand

• Simplify structure and processes

• Reduce overhead

Recovery

23

SSP – The Food Travel Experts

Re-opening programme: Test – Learn - Adapt

• Customer research informing offer

• Range adapted around key items

• High wastage, non-essentials removed

• Use of technology

• PPE

• Perspex screens installed

• Till podia hand sanitizer

• Customer communications

• Increased signage

• Planogorams aligned to needs

• Queue spacing

• Cashless payments

• Breakeven at lower level of sales

• Re-negotiated rent/franchise fees

• Flexible labour/optimised hours

• Overheads reduced


Customer offer Health & Safety

Social distancing Unit economics

Recovery

Fjola, Oslo station Burger King, Xian Airport

Heberer, Frankfurt Airport

Building competitive advantages for the longer term


Key Priorities Key Actions

Strong customer offer

Value creating market growth opportunities

Strong unit economics; lower flexible cost base

Strong environmental and sustainability credentials

• Aligned to changing customer preferences and needs

• Accelerate technology to enhance customer experience and safety

• Prioritise pipeline and seek out value creating new opportunities

• Restarting investment in high-growth markets

• Potential for selective M&A

• Ongoing simplification

• Ability to scale up and down

• Accelerate roll out of IT, technology and automation as enablers

• Embed sustainability programme into each area of the business

• KPIs, targets and measurements

• Board oversight

Sustainable growth

25

Market position; international scale, local expertise; value creating business model; delivering for all stakeholders

Significant growth opportunities: Openings and new wins in H1


H1 Wins H1 Openings

Cincinnati Airport

Station Food acquisition Copenhagen Airport

Mykonos Airport

Dublin Airport

Phoenix Airport

26

Providence AirportKuala Lumpur Airport

Summary 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

Q&A



DisclaimerCertain 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 ownassessment as to the validity of such forward-looking statements and assumptions. Nothing in this presentation shall exclude anyliability under applicable laws that cannot be excluded in accordance with such laws.


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