The Food Travel Experts/media/Files/S/... · 2021. 6. 8. · 3 SSP: The Food Travel Experts....

www.foodtravelexperts.com

The Food Travel Experts

Interim Results 2021

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: First half 2021

• Resilient first half performance, despite H1 sales -80% v 2019

• Operating profit conversion c. 22% on the lost sales, ahead of previously indicated range of 25% - 30%

• Underlying cash usage of £130m, averaging £22m cash burn per month, ahead of previously indicated range of £25m - £30m

• Balance sheet materially strengthened, proforma liquidity of £854m

• Gradual recovery in demand, led by domestic and leisure travel; regional differences. Current sales -70% v 2019

• c. 250 units reopened since end of H1 bringing the total currently open to c. 1150, or around 40% of the estate

• Ability to rapidly re-open in line with demand

• Building on strong client relationships, accessing new business development opportunities

• Long term travel trends expect largely to return by 2024, well positioned to benefit from the recovery


Financial review

SSP: The Food Travel Experts

Jonathan Davies, CFO


Group financial overview


H1 2021 H1 2020

£m Reported(IFRS 16)

Pre IFRS 16 basis

Reported(IFRS 16)

Pre IFRS 16 basis

Revenue 256.7 256.7 1,214.6 1,214.6

LFL Sales Growth (79.0)% n/a (8.4)% n/a

EBITDA* (42.3) (110.3) 197.5 56.2

Operating (Loss)/Profit* (226.6) (160.7) (5.8) 1.3

Loss Before Tax* (260.9) (182.0) (32.4) (10.7)

Loss Per Share (p)* (41.3)p (30.0)p (7.5)p (4.0)p

Net Debt (2,033.9) (839.6) (1,934.2) (457.7)

5

*Stated on a pre-exceptional basis, before non-underlying items

Note: Pre IFRS 16 basis removes the impact of IFRS 16

Underlying H1 Operating Loss of £161m (pre IFRS 16 basis)


H1 2021

£m Reported (IFRS 16) Pre IFRS 16 basis

Revenue 256.7 256.7

Gross Profit% Sales

185.572.2%

185.572.2%

Labour Costs% Sales

(146.6)(57.1)%

(146.6)(57.1)%

Concession Fees% Sales

(28.2)(11.0)%

(85.0)(33.1)%

Overheads% Sales

(53.0)(20.7)%

(64.2)(25.0)%

EBITDA% Sales

(42.3)(16.5)%

(110.3)(43.0)%

Depreciation & Amortisation% Sales

(184.3)(71.8)%

(50.4)(19.6)%

Operating Loss*

Operating Margin (%)

(226.6)(88.3)%

(160.7)(62.6)%

6


Underlying H1 Net Loss of £161m (pre IFRS 16 basis)


H1 2021

£mReported (IFRS 16)

Pre IFRS 16 basis

Operating Loss* (226.6) (160.7)

Net Financing Cost* (34.8) (21.2)

Share of Associates 0.5 (0.1)

Loss Before Tax* (260.9) (182.0)

Tax* 24.5 17.1

Non-Controlling Interests* 14.2 3.7

Net Loss* (222.2) (161.2)

Loss per share (p)* (41.3)p (30.0)p

7


Non-Underlying items (IFRS 16)


£m P&L Charge Cash flow

Impairments and accelerated depreciation

Tangible Assets (26.6) -

Intangible Assets (3.1) -

IFRS 16 Covid rent waivers 53.3 53.3

Restructuring costs (9.8) (9.8)

Amendment and extension fees re bank loans* (5.4) (5.4)

Other (1.7) (0.8)

Operating Loss 6.7 37.3

Net Financing Cost (45.5) -

Loss Before Tax (38.8) 37.3

*Paid on completion of rights issue in April

-93.4%

-79.6%

-86.2%

-79.6%

-78.3%-79.0%

-81.3%

-79.6%

-95.0%

-90.0%

-85.0%

-80.0%

-75.0%

-70.0%

Q3 Q4 H2 Q1 Q2 H1

FY20 FY21

LFL

Sale

s D

ecr

eas

e %

YO

YLFL Sales down 79% in H1 (vs 2020)


Note: Same store like-for-like sales growth at constant currency vs 2020 (unless otherwise indicated)

9

LFL vs 2019

Revenue progression by region (vs 2019)


*Week ended 6 June 2021

UK25%

Continental Europe

29%

North America53%

Rest of World17%

0%

10%

20%

30%

40%

50%

60%

October November December January February March April May Latest Week*

% o

f 2

01

9 s

ale

s

£62m

£-161m£-223m-200

-150

-100

-50

0

50

100

150

200

H1 FY19 H1 Covid impact H1 FY21

£m

Operating Profit/ (Loss)*

11

Impact of Covid-19 on H1 sales and profit


*Underlying operating profit on a pre IFRS 16 basis

22% drop-through on sales impact

£1,262m £-1,005m

£257m

0

200

400

600

800

1,000

1,200

1,400

H1 FY19 H1 Covid impact H1 FY21

£m

Sales

Underlying H1 EBITDA loss of £110m (pre IFRS 16 basis)


£m H1 2021 H1 2019 YoY (vs 2019)H1 cost

savings %

Revenue 256.7 1,261.6 (1,004.9)

Gross Profit% Sales

185.572.2%

892.270.7%

(706.7)1.5%

Labour Costs% Sales

(146.6)(57.1)%

(385.1)(30.5)%

238.5(26.6)%

Concession Fees% Sales

(85.0)(33.1)%

(248.6)(19.7)%

163.6(16.3)%

Overheads% Sales

(64.2)(25.0)%

(143.2)(11.3)%

79.0(7.9)%

EBITDA% Sales

(110.3)(43.0)%

115.39.1%

(225.6)(52.1)%

Depreciation & Amortisation% Sales

(50.4)(19.6)%

(52.8)(4.2)%

2.4(15.1)%

Operating (Loss)/Profit*

Operating Margin (%)

(160.7)(62.6)%

62.55.0%

(223.2)(67.6)%

12


61.9%

65.8%

55.2%

Labour

Concession fees

Overheads

Underlying H1 Free Cash outflow £130m


£m H1 2021 H1 2020

EBITDA* (110.3) 56.2

Working Capital 22.1 (45.1)

Capital Expenditure (25.2) (119.5)

Net Tax (0.4) (20.1)

Acquisitions - (26.9)

Other (0.4) (12.4)

Underlying Operating Cash Outflow* (114.2) (167.8)

Net Financing Costs (16.1) (9.1)

Underlying Free Cash Outflow* (130.3) (176.9)

13

*Stated on a pre IFRS 16 basis. Amounts are before non-underlying items

Net Debt £840m (pre IFRS 16 basis)


£mH1

2021H1

2020

Net Debt at start of period (692.0) (483.4)

Underlying Free Cash Flow (130.3) (176.9)

Exceptional restructuring/ other costs (10.6) -

Net proceeds from March 2020 equity raise - 208.6

Other non-cash movements (6.7) (6.0)

Net Debt at end of period (839.6) (457.7)

Net proceeds from 2021 Rights Issue 450.8

Pro forma Net Debt including Rights Issue proceeds (388.8)


£854m Pro forma Liquidity post Rights Issue

£m

Cash at end of March 2021 240

Undrawn RCF 150

Undrawn Local Facilities 13

Rights Issue (Net proceeds) 451

Pro forma Liquidity post Rights Issue 854

CCFF repayment (February 2022) (300)

Pro forma Liquidity post CCFF repayment 554

Current monthly cash burn 20 - 25


Medium Term Outlook

• Despite ongoing volatility in the near term, our base case expectation is for travel market to recover to near pre-Covid levels in the medium term

• LFL revenue expected to fully recover to 2019 levels by FY2024 (recovery of passenger numbers as well as inflation)

• Current pipeline should deliver a further 10-15% of net gains over this period

• EBITDA margins expected to return to pre-Covid levels over the medium term

• Medium term leverage target remains unchanged (1.5-2.0x Net debt to EBITDA)

• In this scenario, additional financial capacity for investment to drive growth (up to £350-400m)

Business Review


Simon Smith, CEO


Delivering for all our stakeholdersOur Vision

To be the leading food and beverage provider in travel locations worldwide delivering for all our stakeholders in a way that ensures long term sustainable growth

Strategic pillars to deliver our ambition for all our key stakeholders

Deliver profitable growth in our core markets and exploit opportunities in new

geographies

Evolve our capability to drive commercial excellence and build

competitive advantage

Make a positive contribution to our environment, people and communities

through what we serve

Underpinned by our Values

COLLEAGUES CUSTOMERS CLIENTS BRAND PARTNERS

AND SUPPLIERSSHAREHOLDERS

Recognised as a great place to work with

real career opportunities

Deliver great food and beverage offers for our

customers

Preferred and valued partner delivering our shared goals

Sustainable long term profitable

growth and returns

Our Stakeholder goals

Food & beverage operator of choice in travel locations

worldwide

One team Results focussed Make a difference We are bold Celebrate success

People & Communities What we Serve Protecting Our Planet

Building on our Corporate Responsibility Strategy


More vegetarian/ vegan options: Nordics

Partnering with food waste apps: France

Donating food: Thailand

Global Engagement Survey

Mental Health Awareness training

Healthier choices: UK

Phased response to COVID and progress towards sustainable growth

20 SSP: The Food Travel Experts

Business Protection Hibernation Recovery Sustainable Growth

Key achievements

• New safety protocols

• Rents renegotiated

• Discretionary spend stopped

• Capital reduction

• New liquidity secured

• Increased communications

Key achievements

• Temporary unit closures

• Staff furloughed

• Rents renegotiated

• Right-sized & simplified organisation

• Retained skill to swiftly upscale

• Supported local communities

Key achievements

• Adapted operating model; lower cost, flexible, lower break even threshold

• Agile response to passenger demand

• Simplification; right sized organisation

• Commenced digital tech roll out

• Refreshed People & CR Strategy

• Refinanced the business: extended debt, new equity

Priorities

• Re-open profitably, drive profitable sales

• Extension and renewals, mobilise pipeline

• New business development

• Business and organisation efficiency

• Technology & competitiveness

• People & CSR

Covid Travel EnvironmentPost-Covid

environment

Underpinned by People and Sustainability Strategies

Proven strategy to deliver long-term sustainable growth

Covid learnings

Simplified ranges; consumer focussed

Value of digital order and pay

Operational flexibility

Organisational and process simplification

Strengthened client relationships

Stakeholder engagement

Same Store Sales Growth

• Reopen units; drive profitable sales

• Brands, range, digital & marketing

• New sales opportunities

Efficient Conversion

• Contract renewals & extensions

• Mobilise existing pipeline

• New space; selective M&A

Business Development

Balance SheetRe-investment

• Customer proposition

• Technology & automation

• People & sustainability

Shareholder Returns

• Focused & flexible range

• Rent, COGS, labour & overhead efficiency

• Production automation

• Resilience and efficiency

• Leverage 1.5 to 2.0x

• Capital allocation

Regional review: UK & Ireland and Continental Europe


UK & Ireland

• Sales currently c. 25% of pre COVID level

• Driven by rail, air just starting to re-open

• c. 230 units open currently, over a third of total

• 250-350 units expected to trade over summer, around half

• Responding to evolving mix and customer trends

Continental Europe

• Sales currently c. 30% of pre COVID level

• Predominantly domestic travel; potential for short haul international over the summer

• Stronger performance in rail but air starting to mobilise

• c. 500 units open currently, just under half

• 550-650 units expected to trade over summer

Regional review: North America and Rest of the World


Rest of the WorldNorth America

• Sales currently less than 20% of pre COVID level

• Driven by domestic leisure travel; but further outbreaks have led to new lockdowns

• c. 260 units open currently, around one third

• c 260-300 units expected over summer

• North America sales >50% of pre COVID level: USA, c60%

• Driven by domestic leisure travel; slower recovery in business

• c 160 units open currently, just under half

• c 175 - 200 units expected to trade over summer

• Customer preference for grab and go, “indulgence”, digital

North America: current context


Air passenger levels vs 2019 Key trends

Fast recovery in domestic travel

More people/ families travelling for leisure

Flight schedules concentrated

“Mix” changes impacting customer behaviour, e.g. indulgence

-81%

-44%

-100%

-80%

-60%

-40%

-20%

0%

20%

Source: IATA RPK; Domestic – USA; International – North America

Domestic

International

Competitive labour market

North America: systematic approach to re-opening


Analytical process

Zone analysis

Sales & profitability evaluation

Range & commercial initiatives

Daily sales profitability report

New sales opportunities

Recent re-openings

Seattle St Pete Clearwater

Chicago Midway Salt Lake City

JFK Indianapolis

North America: Covid learnings improving unit profitability


Actions taken Examples

Rent renegotiations

Cost of sales reconstruction

Brand swaps

Condensed simplified menus

Range opportunities & promotions

Order at Table and Virtual Kiosk roll out

Simplified menus

Digital roll-outPromotions

Brand swaps

Continental Europe: contract extensions and new contract wins


New contract wins

• New Dortmund Railway station

• Bringing Rewe to Go brand to travel sector

• Plans for more to follow

• 10 year contract for 8 units won at La Martinique Airport, French WI

• c. 2 million annual pax

Extensions and improved terms

• Retained business at Nantes Airport with new brands and concepts

• Revised terms and extension agreed

• Contract with Swedavia renewed; multiple unit extensions

• Revised terms & post-Covid opening plan

Continental Europe: competitive environment and adjacent business opportunities

SSP: The Food Travel Experts 28

Adjacent businesses

• Expansion of Togservice on-board rail catering from Norway into Sweden

• In-flight catering for Flyr - new Norwegian airline

• Leverage existing production facilities

Competitor outlets

• Agreement to operate two Starbucks units at Zurich Airport

• Agreement to operate Gorm’s pizza restaurant at Copenhagen Airport

Significant business development activity


9

Contract Renewals and Extensions

Mobilisation of Existing Pipeline

Recent New Wins

• Significant activity to extend and renew contracts

• Preferential terms secured• Including: Goa Airport, Suvarnabhumi

(Thailand), Tromso Airport, London Waterloo and Liverpool St stations

• Open existing won pipeline across all regions as demand recovers

• Including: Station Foods (Germany), Montparnasse, Dublin Airport, Greek regional airports, India MSA, Cincinnati, Edmonton, JFK

• Tender activity re-emerging• Recent new units secured include:• Gold Coast – 3 units, Delhi – 2 units,

Suvarnabhumi, Thailand – 3 units, Martinique – 8 units

Suvarnabhumi

Gold Coast

Goa Waterloo

Martinique

Dublin EdmontonCincinnati Mykonos

Delhi T3

Summary and Outlook

30

• Re-open units in line with demand

• Optimise offer; drive profitable sales

• Drive efficiencies and performance

• Renew and extend contracts, mobilize the pipeline

• Accelerate growth through new business development

• Significant (£350m - £400m) firepower to reinvest and drive

competitive advantage

• Further embed People & Corporate Responsibility strategies

Medium Term PrioritiesSummary & Outlook

• Resilient first half performance given challenging conditions

• EBITDA losses and cash burn minimised.

• Significant £854m proforma liquidity at the end of H1.

• Gradual recovery in demand, led by domestic and leisure travel;

sales -70% v 2019

• Poised to re-open more units as demand recovers.

• Competitive environment starting to present opportunities

• Sales recovery expected by 2024, margin in the medium term

Ready to re-open. Focussed on rebuilding a stronger business for all stakeholders

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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