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LEI:213800QGNIWTXFMENJ24
9th June 2021
SSP GROUP PLC
Results for six months period ended 31 March 2021
Resilient performance in a challenging market
SSP Group, a leading operator of food and beverage outlets in travel locations worldwide, announces its
financial results for the first half of its 2021 financial year, covering the six months ended 31 March 2021.
SSP has delivered a resilient performance in a very challenging market, materially strengthening its balance
sheet and continuing to demonstrate tight control over its operating costs and cash usage, and is in a strong
position to benefit from the expected recovery of the travel market over the medium term.
Financial overview:
● Revenue of £256.7m: down 78.8% at constant currency1; down 78.9% at actual exchange rates.
● Like-for-like sales2 down 79.0%: heavily impacted by Covid-19, with material reductions in passenger
numbers seen across all travel markets.
● Operating loss of £219.9m on a reported basis under IFRS 16, including credit for non-underlying
items of £6.7m (2020: £6.7m operating loss including charge for non-underlying items of £0.9m). On
a pre-IFRS 16 basis3, the underlying operating loss4 was £160.7m (2020: £1.3m profit).
● Loss before tax of £299.7m on a reported basis under IFRS 16 (2020: £34.3m loss). On a pre-IFRS 16
basis3, the underlying loss before tax4 was £182.0m (2020: £10.7m loss).
● Basic loss per share of 48.6 pence on a reported basis under IFRS 16 (2020: Basic loss per share of 8.0
pence). On a pre-IFRS 16 basis3, underlying basic loss per share4 of 30.0 pence (2020: underlying basic
loss per share of 4.0 pence).
● Net debt was £2,033.9m, which includes lease liabilities of £1,194.8m. On a pre-IFRS 16 basis3, net
debt was £839.6m, up from £692.0m at 30 September 2020. Including the net proceeds of the
recently completed Rights Issue, pro forma net debt would have been £388.8m, on a pre-IFRS 16
basis at the end of March 2021.
● Financial position now strengthened significantly following the Rights Issue in April 2021, alongside
the extension of our main bank facilities until January 2024 and the waiver and amendment of
covenants for both the main bank facilities and US private placement notes.
● Liquidity position strong, with cash and undrawn committed facilities of approximately £854m on a
pro-forma6 basis at the end of March 2021, following the completion of the Rights Issue in April.
● Medium term outlook unchanged, with like-for-like revenues expected to return to around pre-Covid
levels by 2024.
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Business highlights:
• Resilient first half performance, despite H1 sales down 79% versus 2019.
• Underlying pre-IFRS 16 operating profit conversion c. 22% on the reduced sales compared to
2019, better than previously indicated expectations of c. 25%.
• Free cash outflow of £140.9m, averaging around £23m per month, below the previously indicated
range of £25m - £30m.
• Gradual recovery of passenger numbers and demand, led by domestic and leisure travel, notably
in the UK and USA. In the first week of June, sales were down 70% versus 2019.
• A further 250 units re-opened since end of H1 taking total of trading outlets to c. 1,150 currently.
If current trends continue, we expect to have 1,200-1,500 units open over the summer, in line
with the recovery in demand.
• Significant amount of business development activity, in addition to our substantial pipeline of
contracts won but not yet opened.
Recent Trading and Outlook: As we announced in March, passenger numbers remained low during the first quarter of the financial year,
with revenues down approximately 79% year-on-year and 78% relative to the equivalent period in the 2019
financial year (i.e. prior to the impact of Covid-19). With increases in infection levels in key markets, new
variants of the Coronavirus and new government restrictions on travel implemented towards the end of
December, revenues during the second quarter continued at similarly low levels, approximately 81% below
the equivalent quarter in 2019.
Since the end of March when sales were down approximately 78% compared to 2019, we have seen some
improvement in trading. This has been driven by the gradual easing of lockdown restrictions in the UK in
recent weeks, coupled with improving passenger numbers, particularly in North America, driven by the
successful roll-out of the vaccination programmes. However, we have seen the impact of renewed travel
restrictions in our Rest of the World division, most notably in India and Thailand. Currently, sales are down
approximately 70% against 2019 and for the third quarter as a whole, we expect them to be down
approximately 75% against 2019.
Whilst the short-term outlook remains highly uncertain, we remain positive about a further upturn in both
domestic and leisure travel across the remainder of the current financial year. We anticipate that the profit
conversion on the lower sales, compared with pre-Covid levels, will continue to be in the region of 25%
during the second half of the financial year.
SSP has an important role to play in providing food and beverage services to the travelling public, and we
will continue to re-open units rapidly in response to demand, maximising the profitability of the re-opening
programme and rigorously controlling costs and cash. Looking further out, we firmly believe that demand
for travel will return and that the actions we have taken, the strength of our balance sheet, our long-
standing client relationships and deep understanding of the industry, together with the evolving market
backdrop, will enable us to continue to take advantage of new growth opportunities as the market recovers.
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Commenting on the results, Simon Smith, CEO of SSP Group, said:
“Despite the challenging trading conditions SSP has continued to deliver strong operational and cash
control. Our teams have continued to give their utmost during this period, and I would like to thank them
for their commitment and dedication.
The recovery in domestic and leisure travel has now begun in a number of our territories, and our teams are
busy re-opening units in line with passenger demand.
Over the past year we’ve strengthened our competitive advantages and created a more flexible operating
model. We have a strong balance sheet and can see many opportunities to accelerate growth as the market
recovers and to deliver sustainable growth for the benefit of all our stakeholders”.
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Financial highlights:
IFRS 16 H1 2021
£m
IFRS 16 H1 2020
£m
Revenue 256.7 1,214.6
Like-for-like sales fall2 (79.0)% (8.4)%
Underlying operating loss4 (226.6) (5.8)
Underlying loss before tax4 (260.9) (32.4)
Underlying loss per share (p)4 (41.3) (7.5)
Net debt5 (2,033.9) (1,934.2)
Pre-IFRS 163
H1 2021 £m
Pre-IFRS 163
H1 2020 £m
Underlying operating (loss) / profit4 (160.7) 1.3
Underlying loss before tax4 (182.0) (10.7)
Underlying loss per share (p)4 (30.0) (4.0)
Net debt5 (839.6) (457.7)
Statutory reported results: The table below summarises the Group’s statutory reported results (where the financial highlights above are adjusted).
As reported under IFRS 16
H1 2021 £m
As reported under IFRS 16
H1 2020 £m
Revenue 256.7 1,214.6
Operating loss (219.9) (6.7)
Loss before tax (299.7) (34.3)
Loss per share (p) (48.6) (8.0)
Net debt5 (2,033.9) (1,934.2)
1 Constant currency is based on average 2020 exchange rates weighted over the financial year by 2020 results. 2 Like-for-like sales represent revenues generated in an equivalent period in each financial period in outlets which have been open
for a minimum of 12 months. Units temporarily closed as a result of Covid-19 have not been excluded for the purposes of the like-for-like calculation. Like-for-like sales are presented on a constant currency basis.
3 The Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the modified retrospective approach to transition. Following the year of transition, we have decided to maintain the reporting of our profit and other key KPIs like net-debt on a pre-IFRS 16 basis (note that pre-IFRS 16 basis was referred to as ‘Pro forma IAS 17’ in the Annual Report and Accounts 2020). Pre-IFRS 16 profit numbers exclude the impact of IFRS 16 by removing the depreciation on Right-of-use (ROU) assets and interest arising on unwinding of discount on lease liabilities, offset by the impact of adding back in charges for fixed rent. This is further explained in the section on Alternative Performance Measures (APMs) on pages 19-22.
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4 Stated on an underlying basis, which excludes non-underlying items as further explained in the section on Alternative Performance Measures (APMs) on pages 19-22.
5 Net debt reported under IFRS 16 includes leases liabilities whereas on a Pre-IFRS 16 basis lease liabilities are excluded. Refer to ‘Net debt’ section of the ‘Financial review’ for reconciliation of net debt.
6 Pro forma liquidity at 31 March 2021 has been computed as £853.8m, comprising cash and cash equivalents of £240.1m, undrawn revolving credit facility of £150.0m, net proceeds of Rights Issue in April 2021 of £450.8m and other local government backed facilities of £12.9m.
A live webcast will be held at 8.30 a.m (UKT) today, and details of how to join can be accessed at https://webcasts.foodtravelexperts.com/event/default1.php?eventid=2219&media= CONTACTS: Investor and analyst enquiries
Sarah John, Corporate Affairs Director, SSP Group plc
On 9 June 2021: +44 (0) 7736 089218
Thereafter: +44 (0) 203 714 5251
E-mail: [email protected]
Media enquiries
Peter Ogden / Lisa Kavanagh
Powerscourt
+44 (0) 207 250 1446
E-mail: [email protected]
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, we served around one and a half million
customers every day at approximately 180 airports and 300 rail stations in 35 countries around the world
and operated more than 550 international, national and local brands.
www.foodtravelexperts.com
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Business Review
Financial results
Revenue decreased by 78.8% on a constant currency basis, comprising a like-for-like sales reduction of
79.0% offset by net contract gains of 0.2%. At actual exchange rates, total revenue fell by 78.9%, to
£256.7m.
Covid-19 continued to have a significant impact on the Group’s trading performance throughout the first
half of the financial year. During the first quarter, like-for-like sales fell by 79.6% compared to the prior
year, with new government restrictions on travel during the autumn of 2020 resulting in passenger numbers
remaining depressed in both the Air and Rail sectors. These trends continued into the second quarter, and
while the fall in like-for-like sales of 78.3% represented a slight improvement compared to the first quarter,
this was entirely due to the impact of easier comparatives as a result of the initial impact of Covid-19
occurring during March 2020.
The underlying operating loss for the first half was £226.6m. On a reported basis, the operating loss was
£219.9m, including a net credit for non-underlying items of £6.7m. Further details of those non-underlying
items have been set out in the section on Alternative Performance Measures on pages 19 to 22. On a pre-
IFRS 16 basis, the Group reported an underlying operating loss of £160.7m.
The Group’s free cash outflow during the first half of the financial year was £140.9m (2020: £176.9m)
reflecting the continued tight management of operating costs and cash flow, and representing an average
monthly cash burn of around £23m, which was below the c. £25m - £30m per month guidance previously
provided. Furthermore, this free cash outflow included £10.6m of exceptional costs, largely related to the
costs of further redundancy programmes completed during the period. Capital expenditure was £25.2m, a
significant reduction of £94.3m compared to the prior year. Further details of the Group’s free cash flow
are provided in the table on page 16.
Following the completion of the Rights Issue in late April 2021, the Group’s financial position has been
significantly strengthened. Linked to the completion of the Rights Issue, the Group’s existing main bank
facilities were extended by 18 months, to January 2024. Furthermore, covenant waivers were extended on
both the US private placement notes and the main bank facilities. Incorporating the net Rights Issue
proceeds of £450.8m, pro forma net debt on a pre-IFRS 16 basis at the end of March was £388.8m. The
Group now has significant available liquidity, with cash and undrawn available facilities of £843.3m at the
end of April. Our current monthly cash burn is around £20m - £25m, whilst sales remain down between
70% and 80% compared with pre-Covid levels.
Strategy Overview
Our vision is to be the leading provider of food and beverage in travel locations worldwide, delivering for
all our stakeholders (our customers, clients, brand partners, investors and, importantly, our colleagues) in
a way that ensures long term sustainable growth. We continue to believe that the markets in which we
operate are fundamentally attractive. The air and rail travel markets are expected to deliver long-term
growth, albeit from a lower base, as global GDP recovers and an increasing proportion of the world’s
population are willing and able to travel again.
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Before the outbreak of Covid-19, the markets in which we operate had benefitted from several structural
long-term growth drivers, the most significant being:
• growth in global GDP and disposable income, which had led to an increasing propensity to travel and had driven higher passenger volumes and expenditure on food and beverage products;
• a trend towards increased eating-out, including eating “on the move”; and
• investment in travel infrastructure and capacity expansion, supported by both government policy and infrastructure owners increasingly focusing on retail revenue streams.
Though Covid-19 has impacted these trends in the short term, we believe that these growth drivers will
return in the medium-term once the effects of the pandemic diminish. While some uncertainty remains
about the longer-term impact of working from home on business and commuter travel, we anticipate a full
recovery in leisure travel, which drives the majority of our business.
Structural advantages
SSP has a number of structural advantages that we believe put us in a strong position to capitalise on the
recovery of the travel sector over the medium-term:
1. Leading market positions: We have leading positions in some of the most attractive sectors of the
travel food and beverage market, underpinned by our extensive brand portfolio (comprising our
own brands and bespoke concepts as well as franchised local and global brands) and established
management and operational teams across the 35 countries in which we operate.
2. Food travel expertise: We provide a compelling proposition for both clients and customers based
on our food travel expertise. This includes a deep understanding of what our customers are looking
for, an extensive offering of concepts to meet these needs and a knowledge of how to operate in
complex travel environments which are logistically demanding. Our deep understanding of travel
F&B has enabled us to adapt our operating model so that we can operate our units at lower
passenger levels whilst still ensuring a great customer experience.
3. Long-term client relationships: Our principal clients are the owners and operators of airports and
railway stations, but we also have a small presence in motorway service areas, hospitals and
shopping centres. We have excellent, long-standing relationships with many of our clients and have
maintained high success rates in retaining our contracts.
4. Local insight and international scale: We have a deep knowledge of the individual markets in which
we operate, alongside significant international scale and expertise. A strong local presence enables
us to understand our customers’ tastes and needs, as well as allowing us to maintain close
relationships with clients and brand partners and to create a ‘sense of place’ in the locations which
we operate.
5. Experienced colleague base: We have highly experienced colleagues with a broad range of
experience across the food and beverage, travel and retail industries. In all our key markets, we
employ dedicated teams of senior managers focused on business development, sales, marketing
and operations, who work closely with our clients to ensure their requirements are met. They are
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supported by experienced, locally-based teams who have a track record of delivering operational
excellence and great customer service.
In the medium-term the Group expects to see the gradual return of passenger travel to more normalised
levels. The actions the Group is taking to rebuild the business will enable it to emerge better positioned to
flexibly re-open units in line with local market demands.
Delivering long term sustainable growth
Since the onset of the Covid-19 pandemic, SSP’s focus has been to protect our people and the business. We
acted quickly and decisively, keeping our teams safe, creating the liquidity needed, whilst at the same time,
removing significant cost and creating a more flexible operating model which enables us to break even at
lower levels of sales. With the recovery in domestic travel now commencing, our focus will now evolve
towards the recovery and driving sustainable growth.
Our immediate focus is to re-open our units safely and drive profitable sales. Our approach to re-opening
is data driven, the lead indicator being passenger numbers through our sites. We seek to open the right
combination of units at sites to enable us to capture the sales opportunity, whilst optimising efficiency and
controlling cash.
Our strategy for delivering long term sustainable growth for the benefit of all our stakeholders focuses on
five key priorities to drive growth. These comprise:
1. Optimising our existing estate and driving like-for-like revenue growth: as we re-open units we
are seeking to optimise our existing space through a range of opportunities from unit location to
customer proposition. The scale of the business gives us access to a wealth of consumer insight,
and we will seek to use this to deliver the right proposition, investing in product innovation and
digital technology, with the objective of giving us the best platform from which to drive
participation and spend.
2. Business development: Prior to Covid-19, we had a strong track record of winning new business
and had delivered an average of 4% net space growth per annum in the five years since IPO, with
strong growth in North America and the Rest of the World divisions. Once the market recovers, we
expect these opportunities to re-emerge at existing and new sites, as well as in new geographies
where the returns are attractive. Our immediate priority is to renew and extend contracts on
preferential terms, where possible, benefitting from the reduced rental expectations from clients
at current low levels of travel activity. We are also looking to reinforce our position in existing sites
where competitor units are not expected to re-open, and to review opportunities to secure
additional space. We believe that our track record and a robust balance sheet, as well as our client
and brand partner relationships, which have been strengthened during the crisis, will provide many
new opportunities, and we are already seeing the reactivation of business development in all our
markets.
3. Efficient conversion: Running efficient operations is a core competency for SSP and deeply
embedded into our culture. Building on the operational leverage inherent in the business, we
continue to remove unproductive costs and to simplify and automate processes to drive efficiencies
and mitigate input cost inflation. We have made significant progress in reducing our cost base and
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making it more variable during the crisis. Our aim is to retain the benefit of these learnings and as
we re-open units to continue to focus on keeping our cost base efficient.
4. Investment: Capital investment is an important part of our model as it drives contract renewals as
well as new contract growth. We typically achieve discounted cash flow paybacks of three to four
years on the capital we invest in our concession contracts. The challenges of Covid-19 may also
present selective acquisition opportunities, and we will be alert to these where they fit with our
strategy and deliver the required returns. We will also continue to invest in the business to drive
competitiveness, including in technology and our consumer proposition.
5. Returns to shareholders: Creating shareholder value is extremely important to SSP, and prior to
Covid-19, we had a long track record of delivering upper quartile total shareholder returns. Once
the travel market recovers, the business is expected to be, once again, highly cash generative
allowing us to de-lever the balance sheet over time and return to our medium-term leverage
targets, in line with our historical performance.
Underpinning these priorities are our People and Corporate Responsibility strategies which we have
redeveloped and reinforced this year. Our colleagues are at the heart of our business success, and we will
be further investing in our teams by focusing on retention, engagement and development, embedding the
Group’s values within the organisation and incentivising our critical talent. We’ve developed a new
Corporate Responsibility strategy in line with our stakeholders’ priorities and will be increasing our focus
on the wellbeing of our people and supporting our local communities, ensuring the products we serve are
healthy and ethically sourced and minimising our impact on the planet.
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Financial review Group performance
IFRS 16
H1 2021
£m
IFRS 16
H1 2020
£m
Year-on-year
change (%)
Revenue 256.7 1,214.6 (78.9)%
Underlying operating loss (226.6) (5.8) (3,806.9)%
Operating loss (219.9) (6.7) (3,182.1)%
Underlying operating loss was £160.7m (2020: £1.3m profit) on a pre-IFRS 16 basis.
Revenue decreased by 78.8% on a constant currency basis, comprising a like-for-like sales reduction of
79.0% offset by net contract gains of 0.2%. At actual exchange rates, total revenue fell by 78.9%, to
£256.7m.
Covid-19 continued to have a significant impact on the Group’s trading performance throughout the first
half of the financial year. During the first quarter, like-for-like sales fell by 79.6% compared to the prior year,
with increased infection levels in key markets and new government restrictions on travel resulting in
passenger numbers remaining depressed in both Air and Rail. These trends continued into the second
quarter, and while the fall in like-for-like sales of 78.3% represented a slight improvement compared to the
first quarter, this was entirely due to the impact of easier comparatives as a result of the initial impact of
Covid-19 in March 2020. Against the equivalent period in 2019, second quarter like-for-like sales fell by
81.3%, reflecting the stringent lockdowns imposed from late December 2020 across many markets, notably
in the UK and Continental Europe.
We have seen some improvements in trading during the third quarter as compared to the second quarter
run-rate. This is mainly due to the gradual easing of lockdown restrictions in the UK during April and May,
coupled with improving passenger numbers in North America, driven by the successful roll-out of the
vaccination programmes. However, we have seen the impact of renewed travel restrictions in our Rest of
the World division, most notably in India and Thailand. In the first week of June, sales decreased by
approximately 70% compared to 2019, and we expect sales for the third quarter as a whole to be down
approximately 75% against 2019. While the short-term outlook remains highly uncertain, we remain
optimistic that we will see a further upturn in both domestic and leisure travel across the remainder of the
current financial year.
Operating loss
On a reported basis, the operating loss was £219.9m, reflecting a net credit of £6.7m for the non-underlying
operating items.
The underlying operating loss for the first half was £226.6m, compared to an equivalent loss of £5.8m in
the prior year. On a pre-IFRS 16 basis, the Group reported an underlying operating loss of £160.7m.
The impact on the operating loss from the significantly lower sales following the pandemic continues to be
mitigated by the extent of our operating cost reductions, the extension of government furlough and other
support measures and our ongoing success in negotiating rent concessions, principally via waivers of
minimum guaranteed rents. Compared to the first half of the 2019 financial year, the Group has made
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savings of c. £480m in its labour, rent and overhead operating cost base. Reflecting this, the underlying pre-
IFRS 16 operating profit conversion was c. 22% on the reduced sales (compared to the first half of the 2019
financial year), which was slightly better than the 25% previously indicated. We anticipate that the profit
conversion on the lower sales, compared with pre-Covid levels, will continue to be in the region of 25%
during the second half of the financial year.
Non-underlying operating items
Items which are not considered reflective of the normal trading performance of the business, and are
exceptional because of their size, nature or incidence, are treated as non-underlying operating items and
disclosed separately.
The non-underlying operating items included in the net credit of £6.7m are summarised below:
- Impairment of goodwill: as a result of past acquisitions, and in particular the acquisition of the SSP
business by EQT in 2006, the Group holds a significant amount of goodwill on its consolidated
balance sheet. This is allocated to, and performance is monitored on, a country level. Goodwill
impairment testing is carried out annually, or more frequently if indicators of impairments have
been identified, by comparing the value relating to each country with the net present value of that
country’s expected future cash flows. As a result of Covid-19, goodwill impairments totalling £3.1m
were identified, comprising write downs in Switzerland and Germany.
- Impairment of property, plant and equipment and right of use assets: the impact of Covid-19 on the
Group's operations is expected to continue during the current year and beyond. As a result, the
Group has carried out further reviews for potential impairment across the entire site portfolio. This
impairment review compared the value-in-use of individual cash-generating units, based on
management’s current assumptions regarding future trading performance (taking into account the
effect of Covid-19) to the carrying values of the associated assets. Following this review, a charge
of £26.6m has been recognised, which includes an impairment of right of use assets of £16.8m.
- IFRS 16 rent credit: as part of its response to Covid-19, the Group has renegotiated rent agreements
with its clients, including a significant number of temporary waivers for the period up to the end of
June 2022 totalling £53.3m. In respect of these waivers, the Group has applied the practical
expedient issued by the International Accounting Standards Board as a part of the Amendment to
IFRS 16 to record this as a reduction in rent expense (rather than a modification of a right of use
asset) and as a non-underlying item within the consolidated income statement.
- Restructuring costs: as a result of the impact of Covid-19, the Group has recognised a charge of
£9.8m relating to its restructuring programmes carried out across the group during the first half of
the financial year. The charge primarily relates to redundancy costs.
- Fees related to extension of bank facilities and associated covenant waivers: with effect from
completion of the Rights Issue, the Group’s main bank facilities were extended from 15 July 2022
to 15 January 2024. In addition, the Group secured agreement to waivers or amendments on its
principal covenants under both its main bank facilities and US private placement notes until 2024.
In consideration for these extensions and amendments, the Group incurred fees totalling £5.4m,
and this cost has been recognised as a non-underlying expense in the period.
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- Other non-underlying expenses: these items totalling £1.7m included a recurring adjustment for the
amortisation of acquisition-related intangible assets of £0.9m (2020 £0.9m), as well as other non-
recurring costs amounting to £0.8m.
Regional performance
This section summarises the Group’s performance across its four operating segments. For full details of our
key reporting segments, please refer to note 2 on page 34.
UK (including Republic of Ireland)
IFRS 16
H1 2021
£m
IFRS 16 H1
2020
£m
Year-on-year
change
Revenue 45.6 372.6 (87.8)%
Underlying operating
(loss)/profit (37.8) 23.1 (263.6)%
Operating (loss) / profit (30.2) 22.4 (234.8)%
Underlying operating loss was £24.9m (2020: £23.8m profit) on a pre-IFRS 16 basis.
Our UK business has continued to be impacted by a significant decline in passenger numbers as a result of
travel restrictions throughout the first half of the financial year. Revenue decreased by 87.8% on a constant
currency basis, comprising a like-for-like reduction of 87.1% and net contract losses of 0.7%. At actual
exchange rates, revenue also declined by 87.8% to £45.6m.
With lockdown restrictions and quarantine measures in place for most of the first half of the financial year,
UK sales have remained at very depressed levels throughout this period. During the third quarter however,
as the UK government’s roadmap out of lockdown has developed, we have seen a steady improvement in
trading, principally in our rail business, where customers are gradually returning to trains both for leisure
purposes and also as they return to working in offices. Consequently, sales are currently (in the first week
of June) running at approximately 75% below 2019 levels. While we await further government guidance on
air travel, we remain optimistic that we will see further improvements in both the air and rail sectors across
the remainder of the current financial year.
The underlying operating loss for the first half of the financial year for the UK was £37.8m compared to an
equivalent profit of £23.1m in the prior year, and the reported operating loss was £30.2m. Non-underlying
operating items comprised an impairment charge of £2.2m, exceptional restructuring costs of £0.5m and
an adjustment for the amortisation of acquisition-related intangible assets of £0.7m. These were offset by
IFRS 16 rent credits of £11.0m. On a pre-IFRS 16 basis, the underlying operating loss was £24.9m, which
compared to an underlying operating profit of £23.8m last year.
13
Continental Europe
IFRS 16
H1 2021
£m
IFRS 16
H1 2020
£m
Year-on-year
change (%)
Revenue 118.0 424.3 (72.2)%
Underlying operating loss (99.9) (23.8) (319.7)%
Operating loss (100.0) (24.0) (316.7)%
Underlying operating loss was £71.1m (2020: £20.1m loss) on a pre-IFRS 16 basis.
Revenue in Continental Europe decreased by 73.1% on a constant currency basis, comprising a like-for-like
reduction of 73.3% and net contract gains of 0.2%. At actual exchange rates, revenue declined by 72.2% to
£118.0m.
During the first quarter, like-for-like sales in Continental Europe were slightly stronger than in the other
regions, with rail passenger numbers in Germany and France more resilient than in the UK, and trading in
the motorway sector in these countries less impacted by the pandemic than in other channels. From
January however, the impact of renewed government restrictions, in response to rising infection rates
meant that sales trends deteriorated compared to those prior to Christmas, and remained at low levels
throughout the second quarter.
Overall trading in this region remained very subdued during the early weeks of the third quarter, with
further travel restrictions imposed in a number of markets in April. However, during recent weeks, we have
seen a gradual easing of restrictions across most of our European markets, and in the first week of June
sales were running at approximately 71% below 2019 levels. As in the UK, we remain optimistic that we will
see further improvements in both domestic rail and short haul air travel across the remainder of the current
financial year.
The underlying operating loss for the period was £99.9m compared to an equivalent loss of £23.8m in the
prior year, and the reported operating loss was £100.0m. Non-underlying operating items comprised an
impairment charge of £15.1m, exceptional restructuring costs of £6.6m and an adjustment for the
amortisation of acquisition-related intangible assets of £0.2m. These were offset by IFRS 16 rent credits and
other one-off income totalling £21.8m. On a pre-IFRS 16 basis, the underlying operating loss was £71.1m,
which compared to an underlying operating loss of £20.1m last year.
North America
IFRS 16
H1 2021
£m
IFRS 16
H1 2020
£m
Year-on-year
change (%)
Revenue 55.1 246.5 (77.6)%
Underlying operating
(loss) / profit (37.5) 7.4 (606.8)%
Operating (loss) / profit (34.9) 7.4 (571.6)%
Underlying operating loss was £27.2m (2020: £7.8m profit) on a pre-IFRS 16 basis.
14
Revenue decreased by 76.5% on a constant currency basis, comprising a like-for-like decrease of 79.0%
offset by net contract gains of 2.5%. At actual exchange rates, revenue declined by 77.6% to £55.1m.
While like-for-like sales trends remained broadly stable, and in line with the Group average for the majority
of the half, we have seen a sustained improvement in domestic passenger numbers in the United States
from early March onwards. This trend, which has coincided with the successful roll out of the vaccination
programme across the United States, has continued throughout the third quarter, and we are now seeing
a faster recovery in this market compared to our other regions. However, passenger numbers remain very
subdued in Canada, where strict restrictions on travel remain in place. In the first week of June, sales were
running at approximately 47% below 2019 levels, and we anticipate further progress over the remainder of
the year.
The underlying operating loss for the period was £37.5m, compared to an equivalent profit of £7.4m in the
prior year, and the reported operating loss was £34.9m. Non-underlying operating items comprised of an
impairment charge of £6.0m and exceptional restructuring costs of £1.7m, offset by IFRS 16 rent credits of
£10.3m. On a pre-IFRS 16 basis, the underlying operating loss was £27.2m, which compared to an
underlying operating profit of £7.8m last year.
Rest of the World
IFRS 16
H1 2021
£m
IFRS 16
H1 2020
£m
Year-on-year
change (%)
Revenue 38.0 171.2 (77.8)%
Underlying operating
(loss) / profit (29.3) 6.3 (565.1)%
Operating (loss) / profit (21.5) 6.3 (441.3)%
Underlying operating loss was £15.5m (2020: £8.6m profit) on a pre-IFRS 16 basis.
Revenue decreased by 77.1% on a constant currency basis, comprising a like-for-like fall of 76.7% and net
contract losses of 0.4%. At actual exchange rates, revenue declined by 77.8% to £38.0m.
As was the case with North America, the overall sales trends for the Rest of the World region remained
broadly stable and in line with the Group average for the majority of the first half. However, we saw a
marked improvement towards the end of the second quarter, with like-for-like sales improving to 70.0%
below 2019 by the end of March, driven by improving domestic passenger numbers in India, Australia and
China. The third quarter has been impacted by the worsening situation in India and Thailand, with sales
running at approximately 83% below 2019 levels in the first week of June, and the short-term outlook for
the region remains uncertain.
The underlying operating loss for the period was £29.3m, compared to an equivalent profit of £6.3m in the
prior year, and the reported operating loss was £21.5m. Non-underlying operating items comprised an
impairment charge of £6.4m and exceptional restructuring costs of £1.0m, offset by IFRS 16 rent credits of
£15.2m. On a pre-IFRS 16 basis, the underlying operating loss was £15.5m, which compared to an
underlying operating profit of £8.6m last year.
15
Share of profit / (loss) from associates
The Group’s share of profits from associates was £0.5m (2020: £0.2m profit). On a pre-IFRS 16 basis, the
Group’s share of losses from associates was £0.1m (2020: £0.4m profit).
Net finance costs
The underlying net finance expense for the first half of the financial year was £34.8m, which includes
interest on lease liabilities of £13.5m. The reported net finance expense was £80.3m which includes an
adjustment of £45.5m primarily relating to non-cash charges arising from the adoption of the debt
modification rules under IFRS 9. This adjustment reflects the revised agreements with our lending group of
banks and US private placement noteholders, following the amendments signed in December 2020 and the
amendment and extension of our existing main bank facilities agreed in March 2021, which became
effective on 22 April 2021.
On a pre-IFRS 16 basis, underlying net finance costs increased year-on-year to £21.2m (2020: £12.4m),
primarily due to the higher borrowing costs under the Group’s US private placement notes following the
covenant amendments in December 2020.
Taxation
The Group’s underlying tax credit for the period was £24.5m (H1 2020: £2.3m), representing an effective
tax rate of 9.4% (2020: 7.1%) of underlying loss before tax. On a reported basis, the tax credit for the period
was £31.5m (2020: £1.6m) representing an effective tax rate of 10.5% (2020: 4.7%).
In the UK Spring Budget, the Chancellor announced a significant change to the main rate of UK Corporation
Tax, proposing an increase from 19% to 25% from April 2023. This change was substantially enacted on 24
May 2021 (thus after the balance sheet date), meaning that UK deferred tax assets in respect of losses and
other taxable temporary differences will need to be re-measured at the higher rate for the full year,
resulting in an increase to the tax credit for the year.
Looking forward, we therefore expect the underlying tax rate to be around 12% for the full year.
The Group’s tax rate is sensitive to the geographic mix of profits and losses and reflects a combination of
higher rates in certain jurisdictions, as well as the impact of losses in some countries for which no deferred
tax asset is recognised. The impact of Covid-19 has led to a significant change in the Group’s geographic
mix of profits and losses compared to prior years when the effective tax rate for the Group had remained
consistent around 22%.
Non-controlling interests
The loss attributable to non-controlling interests was £6.7m (2020: £3.4m attributable profit). On a pre-
IFRS 16 basis the loss attributable to non-controlling interests was £3.7m (2020: £7.9m attributable profit),
with the year-on-year change largely reflecting the impact of Covid-19 on our joint venture operations in
North America and in the Rest of the World.
Loss per share
The Group’s underlying loss per share was 41.3 pence per share, and its reported loss per share was 48.6
pence per share. On a pre-IFRS 16 basis the underlying loss per share was 30.0 pence per share (2020: 4.0
16
pence per share).
Dividends
Under the terms of the amended financing arrangements with the Group’s lending group of banks and US
private placement note holders, the Company is currently restricted from declaring or paying dividends
until the expiry of certain restrictions that apply during the covenant waiver and amendment period. As
such, the Directors will not be declaring an interim dividend (2020: £nil). No final dividend was
recommended for the year ended September 2020 (final dividend for year ended 30 September 2019:
£26.8m) and therefore no dividend was paid in the period.
When the existing restrictions are lifted and conditions improve, the Board will consider the best way to
restart the return of capital to shareholders, recognising the importance of dividends and capital returns to
shareholders.
Free Cash flow
The table below presents a summary of the Group’s free cash flow for the first half of 2021:
H1 2021
£m
H1 2020
£m
Underlying operating (loss) / profit1 (160.7) 1.3
Depreciation and amortisation 50.4 54.9
Exceptional restructuring and other costs3 (10.6) -
Working capital 22.1 (45.1)
Net tax (0.4) (20.1)
Other 1.0 2.9
Capital expenditure2 (25.2) (119.5)
Acquisition of subsidiaries, adjusted for net debt acquired - (26.9)
Net dividends to non-controlling interests and from associates (1.4) (15.3)
Net finance costs (16.1) (9.1)
Free cash flow (140.9) (176.9) 1 Presented on an underlying pre-IFRS 16 basis (refer to pages 19 - 22 for details) 2 Capital expenditure is net of cash capital contributions received from non-controlling interests of £0.6m (2020: £3.1m) 3 Refer to the APMs section on pages 19-22 for further details.
The Group’s free cash outflow during the first half year of £140.9m (2020: £176.9m) reflected its continued
tight management of operating costs and cash flow and represented an average monthly cash burn of
around £23m, which was below the c. £25m - £30m per month guidance previously provided. Furthermore,
this free cash outflow included £10.6m of exceptional costs, largely related to the costs of further
redundancy programmes completed during the period.
The working capital inflow during the period of £22.1m (2020: £45.1m outflow) was better than anticipated
at our preliminary results in December and reflected further success in agreeing rent reductions and
deferrals with our clients while sales remained at very low levels. We are also continuing to take advantage
of government-approved payment deferral schemes around the world, particularly in relation to payroll
taxes and VAT. We expect these payment deferrals to unwind in due course, broadly in line with the
recovery in sales.
17
Corporation tax payments were materially lower at £0.4m compared to £20.1m in 2020. The reduction
reflects considerably lower or no preliminary payments being due in most countries, owing to losses being
forecast for the year.
Capital expenditure was £25.2m, a significant reduction of £94.3m compared to the prior year. Following
the Covid-19 escalation during 2020, we placed our capital programme on hold, pending a recovery in the
travel sector. The creation of additional liquidity following the Rights Issue will, under our base case
scenario, provide significant investment capacity to drive business growth in the future, but in the near
term we will continue to exercise caution and continue to work with our clients to defer capital programmes
until passenger numbers and sales show material signs of recovery.
Net finance costs paid of £16.1m were £7.0m higher than the prior year, mainly reflecting increased interest
costs on the Group’s US private placement notes.
Net debt
Overall net debt increased by £147.6m to £839.6m on a pre-IFRS 16 basis, largely reflecting the free cash
outflow in the year of £140.9m as detailed above. On a pro forma basis incorporating the £450.8m net
proceeds of the Rights Issue following its successful completion in April, post the half year balance sheet
date, net debt would have been £388.8. On a reported basis under IFRS 16, net debt was £2,033.9m.
The table below highlights the movements in net debt in the period on a pre-IFRS 16 basis.
£m
Net debt excluding lease liabilities at 1 October 2020 (Pre-IFRS 16 basis) (692.0)
Free cash flow (140.9)
Impact of foreign exchange rates 26.8
Other non-cash changes1 (33.5)
Net debt excluding lease liabilities at 31 March 2021 (Pre-IFRS 16 basis) (839.6)
Lease liabilities (1,194.8)
Other 0.5
Net debt including lease liabilities at 31 March 2021 (IFRS 16 basis) (2,033.9)
1 Other non-cash changes represent £51.9m of losses recognised on debt modifications and revised estimated future cash flows, offset by an
effective interest rate gain of £7.8m, capitalised debt modification transaction costs of £1.4m and a mark-to-market interest rate adjustment of
£9.2m on government-backed below-market interest rate loans received.
Actions taken to strengthen liquidity and to secure covenant waivers
Since the start of the pandemic, the Group has taken rapid and decisive action to protect its people and the
business, generating significant liquidity, reducing costs and minimising cash usage. Nevertheless, against
a backdrop on ongoing uncertainty around the short and medium term trading outlook for the Group, and
having considered a number of different scenarios and financing alternatives, the Board took proactive
action, announcing in March 2021 that it was to strengthen the Group’s balance sheet by way of a Rights
18
Issue to raise gross proceeds of approximately £475m. Alongside and conditional upon the Rights Issue, the
Group secured the extension to January 2024 of its bank facilities that were previously due to mature in
July 2022, and secured waivers and modifications of the existing covenants under those bank facilities and
its US private placement notes.
Incorporating the £450.8m net proceeds of the Rights Issue following its successful completion in April, the
Group had pro forma liquidity at 31 March 2021 of £853.8m. This includes £300m in respect of the Bank of
England’s Covid Corporate Financing Facility (“CCFF”), which is due to be repaid in February 2022, but even
excluding this we now have over £550m of available liquidity. At the current low level of sales (down c.70%
- 80% compared to 2019) our current monthly cash burn is in the region of £20m - £25m.
Taking into account the current level of cash and available facilities and the monthly cash burn as described
above, we are confident that we are now in a very strong position to trade through even our most
pessimistic scenario.
Despite ongoing volatility in the near term, our expectation is for passenger numbers in the travel sector to
recover to near pre-pandemic levels in the medium term, with like-for-like sales recovering to 2019 levels
by 2024 in our base case scenario. In addition to this, our current pipeline, together with the full year
contribution from units opened during 2019 and the first half of 2020 prior to the onset of Covid-19, should
deliver an additional 10-15% of net gains over this period. We also expect EBITDA margins to return to 2019
levels in the medium term.
As we indicated in March, we believe that the Group is strategically well-positioned to benefit from the
recovery in the travel sector. In addition, our strategy for medium term leverage remains unchanged, i.e.
on a pre-IFRS 16 basis, for leverage to be between 1.5x and 2.0x Net Debt to EBITDA. Under our base case
scenario, this would give us the financial capacity for an additional £350m - 400m capex to drive further
business growth and capitalize on the recovery of the travel sector as it evolves.
Principal risks
The principal risks facing the Group for the remainder of the year are unchanged from those reported in
the Annual Report and Accounts 2020.
These risks, together with the Group’s risk management process, are detailed on pages 33 to 41 of the
Annual Report and Accounts 2020, and relate to the following areas: liquidity and funding, impact of Covid-
19, business environment and geopolitical uncertainty; retention of existing contracts; impact of Brexit;
senior management capability and retention; regulatory compliance; food safety and product compliance;
labour laws and unionisation; information security and stability; benefits realisation from efficiency
programmes; changing client behaviours; outsourcing programmes; tax strategy; maintenance
/development of brand portfolio; and expansion into new markets.
Post balance sheet events
On 17 March 2021 the Company announced a fully underwritten rights issue (the “Rights Issue”) to raise
gross proceeds of approximately £475 million. At the same time the Company announced certain
amendments to the terms of the Group’s main credit facilities agreement (the “Facilities Agreement”) and
its US private placement notes which, whilst signed on 12 March 2021, came into effect following
completion of the Rights Issue on 22 April 2021 (the “Debt Amendments”).
19
The Rights Issue has further strengthened the Group’s balance sheet by allowing the Group to materially
reduce its net indebtedness and allowing the Group to cover liquidity headroom under a reasonable worst
case scenario. The Rights Issue also facilitated the Debt Amendments which have resulted in an extension
to the maturity date of the Facilities Agreement to January 2024 and allowed the Group to secure further
covenant waivers and amendments from the Group’s lenders. Under these amendments, the 6-month
covenant tests introduced in the December 2020 amendments were removed, the original leverage and
interest cover covenant tests were further waived and amended up to and including the testing period
ending on 31 March 2023 (in respect of the interest cover test) and 30 September 2023 (in respect of the
leverage test) and the monthly liquidity and adjusted net debt covenant tests were amended and extended
until such time as the Group shows compliance with the original covenants at or prior to the March 2024
testing date.
As the completion of the Rights Issue occurred after 31 March 2021, the proceeds were recognised in equity
on 22 April 2021. Directly attributable transaction fees incurred were accounted for as prepayments as of
31 March 2021 and were subsequently offset against the Rights Issue proceeds in equity on 22 April 2021.
The impact of the Debt Amendments has, however, been accounted for in the current period in line with
the requirements of IFRS 9 as their occurrence was considered highly likely at the balance sheet date. Please
refer to notes 4 and 5 for further details. Disclosure of the impact of the Rights Issue and the Debt
Amendments on the financial statements for the 12 months ending 30 September 2021 will be included in
the Annual Report and Accounts 2021.
Alternative Performance Measures
The Directors use alternative performance measures for analysis as they believe these measures provide
additional useful information on the underlying trends, performance and position of the Group. The
alternative performance measures are not defined by IFRS and therefore may not be directly comparable
with other companies' performance measures and are not intended to be a substitute for IFRS measures.
Revenue measures
As the Group operates in over 30 countries, it is exposed to translation risk on fluctuations in foreign
exchange rates, and as such the Group's reported revenue and operating profit / loss will be impacted by
movements in actual exchange rates. The Group presents its financial results on a constant currency basis
in order to eliminate the effect of foreign exchange rates and to evaluate the underlying performance of
the Group's businesses. The table below reconciles reported revenue to constant currency sales, like-for-
like sales, net contract gains/(losses) and the impact of acquisitions where appropriate.
(£m) UK Continental Europe
North America
RoW Total
H1 2021 Revenue at actual rates by segment
45.6 118.0 55.1 38.0 256.7
Impact of foreign exchange - (2.7) 2.8 1.2 1.3
H1 2021 Revenue at constant currency1
45.6 115.3 57.9 39.2 258.0
H1 2020 Revenue at constant currency
372.6 428.6 246.5 171.3 1,219.0
Constant currency sales fall (87.8)% (73.1)% (76.5)% (77.1)% (78.8)%
20
Which is made up of:
Like-for-like sales fall2 (87.1)% (73.3)% (79.0)% (76.7)% (79.0)%
Net contract gains/(losses)3 (0.7)% 0.2% 2.5% (0.4)% 0.2%
(87.8)% (73.1)% (76.5)% (77.1)% (78.8)%
1 Constant currency is based on average 2020 exchange rates weighted over the financial year by 2020 results. 2 Like-for-like sales represent revenues generated in an equivalent period in each financial period in outlets which have been open for a minimum of 12 months. Units temporarily closed as a result of Covid-19 have not been excluded for the purposes of the like-for-like calculation. Like-for-like sales are presented on a constant currency basis. 3 Net contract gains / (losses) represent the net year-on-year revenue impact from new outlets opened and existing units permanently closed in the past 12 months. Net contract gains/(losses) are presented on a constant currency basis.
Underlying profit measures The Group presents underlying profit / (loss) measures, including operating profit / (loss), profit / (loss) before tax, and earnings / (loss) per share, which exclude a number of items which are not considered reflective of the normal trading performance of the business, and are considered exceptional because of their size, nature or incidence. The table below provides a breakdown of the non-underlying items in both the current year and the prior year.
Non-underlying items
IFRS 16
H1 2021
£m
IFRS 16
H1 2020
£m
Operating costs
Impairment of goodwill (3.1) -
Impairment of property, plant and equipment (9.8) -
Impairment of right-of-use assets (16.8) -
IFRS 16 rent credit 53.3 -
Restructuring expenses (9.8) -
Facilities Agreement and USPP amendment and extension fees associated with the April Rights Issue
(5.4) -
Amortisation of intangible assets arising on acquisition (0.9) (0.9)
Other non-underlying costs (0.8) -
6.7 (0.9)
Finance expenses
Debt modification loss and effective interest rate (44.1) (1.0)
Retrospective USPP interest charge (1.4) -
(45.5) (1.0)
Taxation
Tax credit / (charge) on non-underlying items 7.0 (0.7)
Total non-underlying items (31.8) (2.6)
Further details of the non-underlying operating items have been provided in the Financial Review section on page 11. Furthermore, a reconciliation from the underlying to the statutory reported basis is presented below:
21
H1 2021 (IFRS 16) H1 2020 (IFRS 16)
Underlying
Non-underlying
Items Total
Underlying
Non-underlying
Items Total
Operating (loss) / profit (£m) (226.6) 6.7 (219.9)
(5.8)
(0.9)
(6.7)
Operating margin (88.3)% - (85.7)%
(0.5)%
-
(0.6)%
Loss before tax (£m) (260.9) (38.8) (299.7)
(32.4)
(1.9)
(34.3)
Loss per share (p) (41.3) (7.3) (48.6)
(7.5)
(0.5)
(8.0)
Pre-IFRS 16 basis
The Group adopted IFRS 16 ‘Leases’ on 1 October 2019 using the modified retrospective approach to
transition. Following the year of transition, we have decided to maintain the reporting of our profit and
other key KPIs like net-debt on a pre-IFRS 16 basis (note that pre-IFRS 16 basis was referred to as ‘Pro forma
IAS 17’ in the Annual Report and Accounts 2020). This is because the pre-IFRS 16 profit is consistent with
the financial information used to inform business decisions and investment appraisals. It is our view that
presenting the information on a pre-IFRS 16 basis will provide a useful and necessary basis for
understanding the Group’s results. As such, commentary has also been included in the Business Review,
Financial Review and other sections with reference to underlying profit measures computed on a pre-IFRS
16 basis.
A reconciliation of key underlying profit measures to ‘Pre-IFRS 16’ numbers is presented below:
Six months ended Six months ended
31 March 2021 31 March 2020
Notes
Underlying IFRS 16
£m
Impact of IFRS 16
£m
Underlying Pre-IFRS 16
£m
Underlying IFRS 16
£m
Impact of IFRS 16
£m
Underlying Pre-IFRS 16
£m
Revenue 2 256.7 - 256.7 1,214.6 - 1,214.6
Operating costs 4 (483.3) 65.9 (417.4) (1,220.4) 7.1 (1,213.3)
Operating (loss) / profit
(226.6) 65.9
(160.7) (5.8)
7.1
1.3
Share of (loss) / profit of associates
0.5 (0.6) (0.1) 0.2
0.2 0.4
Finance income 5 1.1 - 1.1 1.1 - 1.1
Finance expense 5 (35.9) 13.6 (22.3) (27.9) 14.4 (13.5)
Loss before tax (260.9) 78.9 (182.0) (32.4) 21.7 (10.7)
Taxation 24.5 (7.4) 17.1 2.3 (1.5) 0.8
Loss for the period (236.4) 71.5 (164.9) (30.1) 20.2 (9.9)
22
IFRS 16 increases the underlying operating loss, whereby the depreciation of the right-of-use assets of
£133.9m is offset primarily by the reduced lease expense of £56.8m and a gain on lease disposals of £11.2m,
resulting in a net charge to underlying operating loss of £65.9m. The interest charge on the lease liabilities
of £13.5m and foreign exchange losses of £0.1m further increases the loss, though this is slightly offset by
the gain from associates of £0.6m, giving the underlying loss before tax impact of £78.9m. The impact of
IFRS 16 on net debt is primarily the recognition of the lease liability balance.
A reconciliation from pre-IFRS 16 underlying loss for the period to the statutory loss for the period is as
follows:
Six months ended 31 March 2021
£m
Six months ended 31 March 2020
£m Pre-IFRS 16 underlying operating (loss) / profit for the period (160.7) 1.3 Depreciation of Right-of-use assets (133.9) (148.4) Fixed rent on leases 56.8 141.3 Gain on lease disposal 11.2 - Non-underlying operating gain / (expense) (note 4) 6.7 (0.9) Share of profit from associates 0.5 0.2 Finance expense (34.8) (26.8) Non-underlying finance expense (note 5) (45.5) (1.0) Taxation 31.5 1.6
Loss after tax (268.2) (32.7)
Liquidity Liquidity remains a key KPI for the Group. Pro forma liquidity at 31 March 2021 has been computed as £853.8m, comprising cash and cash equivalents of £240.1m, undrawn revolving credit facility of £150.0m, net proceeds of Rights Issue in April 2021 of £450.8m and other local government backed facilities of £12.9m.
Loss attributable to:
Equity holders of the parent
(222.2) 61.0 (161.2) (33.5)
15.7 (17.8)
Non-controlling interests
(14.2) 10.5 (3.7) 3.4
4.5 7.9
Loss for the period
(236.4) 71.5 (164.9)
(30.1)
20.2
(9.9)
Loss per share (pence):
- Basic 3 (41.3) (30.0) (7.5)
(4.0)
- Diluted 3 (41.3) (30.0) (7.5)
(4.0)
23
Responsibility statement of the directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union;
- the interim management report includes a fair review of the information required by:
• DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
• DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
On behalf of the Board
Simon Smith Jonathan Davies
Chief Executive Officer Chief Financial Officer
09 June 2021 09 June 2021
24
INDEPENDENT REVIEW REPORT TO SSP GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set of financial statements in the half-
yearly financial report for the six months ended 31 March 2021 which comprises the condensed
consolidated balance sheet, income statement, statement of other comprehensive income, statement of
changes in equity and cash flow statement, and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set
of financial statements in the half-yearly financial report for the six months ended 31 March 2021 is not
prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting adopted pursuant
to Regulation (EC) No 1606/2002 as it applies in the European Union and the Disclosure Guidance and
Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”).
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and
Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity
issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. We read the other information contained in the half-yearly
financial report and consider whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards
on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK
FCA.
As disclosed in note 1, the latest annual financial statements of the group were prepared in accordance
with International Financial Reporting Standards as adopted by the EU and the next annual financial
statements will be prepared in accordance with International Financial Reporting Standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006. The
directors are responsible for preparing the condensed set of financial statements included in the half-yearly
financial report in accordance with IAS 34 adopted pursuant to Regulation (EC) No 1606/2002 as it applies
in the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements
in the half-yearly financial report based on our review.
25
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Nicholas Frost
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
9 June 2021
26
Condensed consolidated income statement
for the six months ended 31 March 2021
Six months ended 31 March 2021 Six months ended 31 March 2020
Notes Underlying1
Non-underlying
items Total Underlying1
Non-underlying
items Total £m £m £m £m £m £m
Revenue 256.7 - 256.7 1,214.6 - 1,214.6 Operating costs 4 (483.3) 6.7 (476.6) (1,220.4) (0.9) (1,221.3)
Operating loss (226.6) 6.7 (219.9) (5.8) (0.9) (6.7)
Share of profit of associates
0.5 - 0.5 0.2 - 0.2
Finance income 5 1.1 - 1.1 1.1 - 1.1 Finance expense 5 (35.9) (45.5) (81.4) (27.9) (1.0) (28.9)
Loss before tax (260.9) (38.8) (299.7) (32.4) (1.9) (34.3) Taxation 24.5 7.0 31.5 2.3 (0.7) 1.6
Loss for the period (236.4) (31.8) (268.2) (30.1) (2.6) (32.7)
Loss attributable to:
Equity holders of the parent
(222.2) (39.3) (261.5) (33.5) (2.6) (36.1)
Non-controlling interests
(14.2) 7.5 (6.7) 3.4 - 3.4
Loss for the period (236.4) (31.8) (268.2) (30.1) (2.6) (32.7)
Loss per share (p):
- Basic 3 (48.6) (8.0)
- Diluted 3 (48.6) (8.0)
1 Stated on an underlying basis, which excludes non-underlying items as further explained in the section on Alternative Performance Measures (APMs) on pages 19 – 22.
27
Condensed consolidated statement of other comprehensive income for the six months ended 31 March 2021
Six months ended
31 March 2021 Six months ended
31 March 2020 £m £m Other comprehensive income / (expense) Items that will never be reclassified to the income statement Remeasurements on defined benefit pension schemes 2.1 5.3 Tax charge relating to items that will not be reclassified (0.4) (1.0) Items that are or may be reclassified subsequently to the income statement Net gain on hedge of net investment in foreign operations 31.1 2.1 Other foreign exchange translation differences (29.9) (28.5) Effective portion of changes in fair value of cash flow hedges 0.4 (0.7) Cash flow hedges - reclassified to income statement 1.3 0.6 Tax credit relating to items that are or may be reclassified 5.7 2.4
Other comprehensive income / (expense) for the period 10.3 (19.8) Loss for the period (268.2) (32.7)
Total comprehensive expense for the period (257.9) (52.5)
Total comprehensive expense attributable to: Equity shareholders (247.1) (50.8) Non-controlling interests (10.8) (1.7)
Total comprehensive expense for the period (257.9) (52.5)
28
Condensed consolidated balance sheet as at 31 March 2021
Notes
31 March 2021
30 September 2020
£m £m
Non-current assets
Property, plant and equipment 387.0 437.2
Goodwill and intangible assets 701.8 731.2
Right-of-use assets 1,079.3 1,271.2
Investments in associates 11.8 12.2
Deferred tax assets 87.3 49.8
Other receivables 69.1 73.8
2,336.3 2,575.4
Current assets
Inventories 18.0 23.5
Tax receivable 0.8 10.1
Trade and other receivables 116.3 125.3
Cash and cash equivalents 8 240.1 185.0
375.2 343.9
Total assets 2,711.5 2,919.3
Current liabilities
Short-term borrowings 8 (297.8) (158.2)
Trade and other payables (411.9) (399.0)
Tax payable (11.5) (20.9)
Lease liabilities (263.6) (289.1)
Provisions (14.0) (12.3)
(998.8) (879.5)
Non-current liabilities
Long-term borrowings 8 (781.4) (718.1)
Post-employment benefit obligations (15.6) (18.6)
Lease liabilities (931.2) (1,060.2)
Other payables (6.7) (4.0)
Provisions (18.6) (21.4)
Derivative financial liabilities 8 (3.5) (5.1)
Deferred tax liabilities (11.0) (10.4)
(1,768.0) (1,837.8)
Total liabilities (2,766.8) (2,717.3)
Net (liabilities) / assets (55.3) 202.0
Equity
Share capital 5.8 5.8
Share premium 472.7 472.7
Capital redemption reserve 1.2 1.2
Merger relief reserve 206.9 206.9
Other reserves 15.8 3.1
Retained losses (818.4) (559.6)
Total equity shareholders’ funds (116.0) 130.1
Non-controlling interests 60.7 71.9
Total equity (55.3) 202.0
29
Condensed consolidated statement of changes in equity for the six months ended 31 March 2021
Share capital
Share premium
Capital redemption
reserve
Merger relief
reserve1
Other reserves2
Retained losses
Total parent equity
NCI Total equity
£m £m £m £m £m £m £m £m £m At 1 October 2019 4.8 461.2 1.2 - 12.9 (152.1) 328.0 87.6 415.6 Profit/(loss) for the period
- - - - - (36.1) (36.1) 3.4 (32.7)
Other comprehensive (expense) / income for the period
- - - - (19.0) 4.3 (14.7) (5.1) (19.8)
Equity issue1 1.0 0.8 - 206.9 - - 208.7 - 208.7 Share buyback - - - - - (1.7) (1.7) - (1.7)
Dividends payable to equity shareholders
- - - - - (26.8) (26.8) - (26.8)
Capital contributions from NCI
- - - - - - - 3.1 3.1
Dividends paid to NCI - - - - - - - (18.8) (18.8) Purchase of NCI shareholding
- - - - (4.2) - (4.2) (0.7) (4.9)
Other movements - - - - - (0.2) (0.2) - (0.2) Share-based payments
- - - - - 2.9 2.9 - 2.9
Tax on share-based payments
- - - - - (0.7) (0.7) - (0.7)
At 31 March 2020 5.8 462.0 1.2 206.9 (10.3) (210.4) 455.2 69.5 524.7
At 1 October 2020 5.8 472.7 1.2 206.9 3.1 (559.6) 130.1 71.9 202.0 Change in accounting policy
- - - - - 0.2 0.2 - 0.2
Loss for the period - - - - - (261.5) (261.5) (6.7) (268.2) Other comprehensive income / (expense) for the period
- - - - 12.7 1.7 14.4 (4.1) 10.3
Capital contributions from non-controlling interests
- - - - - - - 1.0 1.0
Purchase of NCI shareholding
- - - - - - - (0.4) (0.4)
Dividends paid to NCI - - - - - - - (1.0) (1.0) Share-based payments
- - - - - 1.0 1.0 - 1.0
Tax on share based payments
- - - - - (0.2) (0.2) - (0.2)
At 31 March 2021 5.8 472.7 1.2 206.9 15.8 (818.4) (116.0) 60.7 (55.3)
1 The merger relief reserve arose following an equity placement by the Company in March 2020. The excess of the gross proceeds raised over the
nominal value of the shares issued and fees incurred is recorded in the merger relief reserve, in accordance with Section 612 of the Companies
Act 2006.
2 At 31 March 2020 and 31 March 2021, the other reserves include the translation reserve and cash flow hedging reserve.
30
Condensed consolidated cash flow statement for the six months ended 31 March 2021
Notes Six months ended
31 March 2021 Six months ended
31 March 2020 £m £m Cash flows from operating activities Cash flow from operations 6 (50.6) 157.4 Tax paid (0.4) (20.1)
Net cash flows from operating activities (51.0) 137.3 Cash flows from investing activities Dividends received from associates - 3.5 Interest received 1.0 1.3 Purchase of property, plant and equipment (24.7) (107.3) Purchase of other intangible assets (1.1) (15.3) Acquisitions, net of cash and cash equivalents acquired (0.4) (26.9)
Net cash flows from investing activities (25.2) (144.7) Cash flows from financing activities Share buyback - (1.7) Equity issue net of fees paid - 209.2 Drawdown of Covid Corporate Financing Facility (CCFF) 175.0 - Net drawdown on revolving credit facility - 20.0 Net drawdown of other bank facilities 28.7 - Receipt of cash from USPP debt - 102.1 Payment of lease liabilities – principal (33.6) (129.0) Payment of lease liabilities – interest (13.8) (14.4) Interest paid excluding interest on lease liabilities (17.1) (10.4) Dividends paid to non-controlling interests (1.0) (18.8) Capital contribution from non-controlling interests 0.6 3.1
Net cash flows from financing activities 138.8 160.1
Net increase in cash and cash equivalents 62.6 152.7 Cash and cash equivalents at beginning of the period 185.0 233.3 Effect of exchange rate fluctuations on cash and cash equivalents
(7.5) (5.2)
Cash and cash equivalents at end of the period 240.1 380.8
Reconciliation of net cash flow to movement in net debt Net increase in cash in the period 62.6 152.7 Cash inflow from drawdown of USPP debt - (101.8) Cash inflow from CCFF (175.0) - Cash inflow from other changes in debt (28.7) (20.3)
Change in net debt resulting from cash flows, excluding lease liabilities
(141.1) 30.6
Translation differences 26.8 (3.1) Other non-cash changes (33.5) (1.8)
(Increase) / decrease in net debt excluding lease liabilities in the period
(147.8) 25.7
Net debt at beginning of the period (691.3) (483.4)
Net debt excluding lease liabilities at end of the period
(839.1) (457.7)
Lease liabilities at end of the period (1,194.8) (1,476.5)
Net debt including lease liabilities at end of the period (2,033.9) (1,934.2)
31
Notes
1 Basis of preparation and accounting policies
1.1 Basis of preparation
This condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial
Reporting adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The annual financial statements of the Group for the year ending 30 September 2021 will be prepared in
accordance with International Financial Reporting Standards (IFRSs) adopted pursuant to Regulation (EC)
No 1606/2002 as they apply in the European Union and in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006.
As required by the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority, the
condensed set of financial statements has been prepared applying the accounting policies and presentation
that were applied in the preparation of the Group’s published consolidated financial statements for the
year ended 30 September 2020, which were prepared in accordance with IFRSs as adopted by the EU. Those
accounts were reported upon by the Group’s auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified, however, it noted that there was a material uncertainty that may
cast significant doubt on the Group’s and the parent Company’s ability to continue as a going concern. The
report did not contain statements under Section 498 (2) or (3) of the Companies Act 2006. The comparative
figures for the six months ended 31 March 2020 are not the Group’s statutory accounts for that financial
year.
These financial statements are presented in Sterling and, unless stated otherwise, rounded to the nearest
£0.1 million. The financial statements are prepared on the historical cost basis except for the derivative
financial instruments which are stated at their fair value.
Except as described below, the accounting policies adopted in the preparation of these condensed
consolidated half-yearly financial statements to 31 March 2021 are consistent with the accounting policies
applied by the Group in its consolidated financial statements as at, and for the year ended, 30 September
2020 as required by the Disclosure and Transparency Rules of the UK’s Financial Conduct Authority.
1.2 Going concern
These financial statements are prepared on a going concern basis.
The Board has reviewed the Group’s trading forecasts, incorporating the impact on SSP of Covid-19, as part
of the Group’s adoption of the going concern basis, in which context the Directors have reviewed cash flow
forecasts prepared for a period of 16 months from the date of approval of these financial statements, with
a number of different scenarios considered. Having carefully reviewed these forecasts, the Directors have
concluded that it is appropriate to adopt the going concern basis of accounting in preparing these financial
statements for the reasons set out below.
32
Since the start of the pandemic, the Group has taken rapid and decisive action to protect its people and the
business, generating significant liquidity, reducing costs and minimising cash usage. Nevertheless, against
a backdrop on ongoing uncertainty around the short and medium term trading outlook for the Group, and
having considered a number of different scenarios and financing alternatives, the Board took proactive
action in March 2021 to strengthen the Group’s balance sheet, announcing a Rights Issue to raise gross
proceeds of approximately £475m. Alongside and conditional upon the Rights Issue, the Group secured the
extension to January 2024 of its main bank facilities that were previously due to mature in July 2022, and
secured waivers and modifications of the existing covenants under those bank facilities and its US private
placement notes.
As at 30 April 2021, following the successful completion of its Rights Issue, the Group had £1,065.1 million
outstanding under its borrowing arrangements, including: (i) US private placement notes of £324.1 million
with maturities between October 2025 and July 2031; (ii) a facilities agreement with a maturity of 15
January 2024 comprising (a) two term facilities totalling £376.0 million, both of which are fully drawn and
(b) an undrawn syndicated bank revolving credit facility of £150.0 million, and; (iii) various government
backed facilities comprising (a) a facility from the UK Covid Corporate Financing Facility (“CCFF”), a joint
Bank of England and HM Treasury lending facility, under which it has drawn £300.0 million, available until
February 2022, and (b) a number of smaller local government backed facilities amounting to £65.0 million.
At 30 April 2021, the Group had available liquidity of £843.3 million, including cash of £683.8 million and
the aforementioned committed undrawn revolving credit facility of £150.0 million, as well as smaller
undrawn local government-backed facilities totalling £9.5 million.
In making the going concern assessment, the Directors have considered forecast cash flows and the liquidity
available over the period to 30 September 2022. In doing so they assessed a number of scenarios, including
a base case scenario and a severe but plausible downside scenario. The base case scenario reflects an
expectation of extended travel restrictions and ongoing very challenging trading conditions during the third
quarter of the 2021 financial year, before a slow but steady recovery in passenger numbers in most of the
Group’s key markets during the final quarter. This gradual recovery is assumed to continue during the 2022
financial year, with Group sales during the second half of that financial year reaching approximately 90% of
2019 levels.
In light of the considerable uncertainty surrounding the ongoing impact of Covid-19, a downside scenario
has also been modelled, applying severe but plausible assumptions to the base case. This downside scenario
reflects a pessimistic view of the travel markets for the remainder of the current financial year, assuming
significant restrictions on non-essential travel throughout the third quarter, followed by a modest recovery
in domestic travel and no recovery in international travel during the final quarter, with overall Group sales
reaching 29% of 2019 levels by September 2021. The downside scenario then assumes a gradual recovery
during the 2022 financial year, but at a much slower pace than envisaged in the base case, with Group sales
reaching approximately half of 2019 levels by March 2022 and approximately 75% by September 2022.
Following the successful completion of the Rights Issue, the Group must comply with two financial
covenants during the next 16 months ending September 2022, each tested monthly, with the first of these
based on the Group demonstrating a minimum level of liquidity and the second based on the Group not
exceeding a maximum level of net debt. In both its base case and the downside scenario, the Group would
have headroom against each of these covenant tests at all testing dates during the next 16 months.
33
The ongoing impact of the Covid-19 pandemic cannot be accurately predicted, and it is not possible to
assess all possible future implications for the Group. Nevertheless, based on the scenarios modelled, as well
as the additional sensitivity analysis outlined above, the Directors are confident that the Group will have
sufficient funds to continue to meet its liabilities as they fall due for a period of at least 16 months from the
date of approval of the financial statements. The Directors have therefore deemed it appropriate to prepare
the financial statements for the six months ended 31 March 2021 on a going concern basis. The financial
statements do not contain any adjustments that would be necessary if that basis were inappropriate.
1.3 Changes in accounting policies and disclosures
The following amended standards and interpretations have been adopted by the Group in the current
period:
• Amendments to references to the conceptual framework in IFRS standards
• Definition of a Business (Amendments to IFRS 3)
• Definition of material (Amendments to IAS 1 and IAS 8)
There is no significant impact of adopting these new standards on the Group’s consolidated financial
statements.
The Group has adopted Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)
in the period. The Amendment extends the date a lessee is permitted to apply the practical expedient by a
year, from payments due on or before 30 June 2021 to payments due on or before 30 June 2022. The
amendment has been applied retrospectively, resulting in a £0.2m credit to retained earnings. The effect
of adopting the amendment in the period is an increase in reported profit of £2.5m, an increase in right-of-
use assets of £11.7m and an increase in lease liabilities of £9.2m.
1.4 New accounting standards not yet adopted by the Group
The following amended standards and interpretations are not expected to have a significant impact on the
Group’s consolidated financial statements:
• Onerous Contracts - Cost of fulfilling a Contract (Amendments to IAS 37)
• Property, Plant and Equipment – Proceeds before Intended Use (Amendments to IAS 16)
• Reference to the Conceptual Framework (Amendments to IFRS 3)
• Annual Improvements to IFRS Standards 2018-2020
• Classification of liabilities as current or non-current (Amendments to IAS 1)
• IFRS 17 ‘Insurance Contracts’
• Disclosure of Accounting Policy (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of Accounting Estimate (Amendments to IAS 8)
• Sale of Contribution of Assets between an investor and its Associate or Joint Venture (amendments
to IFRS 10 and IAS 28)
The Group has also considered the impact of IBOR reform on its hedge accounting. Please refer to note 8
for the details of the impact on the Group condensed consolidated financial statements.
34
2 Segmental reporting
SSP operates in the food and beverage travel sector, mainly at airports and railway stations.
Management monitors the performance and strategic priorities of the business from a geographic
perspective, and in this regard has identified the following four key “reportable segments”: the UK,
Continental Europe, North America and Rest of the World (RoW). The UK includes operations in the United
Kingdom and the Republic of Ireland; Continental Europe includes operations in the Nordic countries and
in Western and Southern Europe; North America includes operations in the United States and Canada; and
RoW includes operations in Eastern Europe, the Middle East, Asia Pacific, India and South America. These
segments comprise countries which are at similar stages of development and demonstrate similar
economic characteristics.
The Group’s management assesses the performance of the operating segments based on revenue and
underlying operating profit. Interest income and expenditure are not allocated to segments, as they are
managed by a central treasury function, which oversees the debt and liquidity position of the Group. The
non-attributable segment comprises costs associated with the Group’s head office function and
depreciation of central assets.
UK Continental
Europe
North
America
RoW Non-
attributable
Total
£m £m £m £m £m £m
Six months ended
31 March 2021
Revenue 45.6 118.0 55.1 38.0 - 256.7
Underlying operating loss (37.8) (99.9) (37.5) (29.3) (22.1) (226.6)
Non-underlying operating profit /
(costs)
7.6 (0.1) 2.6 7.8 (11.2) 6.7
Operating loss (30.2) (100.0) (34.9) (21.5) (33.3) (219.9)
Six months ended 31 March 2020
Revenue 372.6 424.3 246.5 171.2 - 1,214.6
Underlying operating profit / (loss) 23.1 (23.8) 7.4 6.3 (18.8) (5.8)
Non-underlying operating costs (0.7) (0.2) - - - (0.9)
Operating profit / (loss) 22.4 (24.0) 7.4 6.3 (18.8) (6.7)
The following amounts are included in underlying operating loss:
35
UK Continental
Europe
North
America
RoW Non-
attributable
Total
£m £m £m £m £m £m
Six months ended 31 March 2021
Depreciation and amortisation (30.7) (88.9) (30.9) (30.2) (3.6) (184.3)
Six months ended
31 March 2020
Depreciation and amortisation (40.1) (85.8) (37.1) (37.1) (3.2) (203.3)
A reconciliation of underlying operating loss to loss before and after tax is provided as follows:
Six months ended 31 March 2021
£m
Six months ended 31 March 2020
£m Underlying operating loss (226.6) (5.8) Non-underlying operating profit / (costs) (note 4) 6.7 (0.9) Share of profit from associates 0.5 0.2 Finance income 1.1 1.1 Finance expense (35.9) (27.9) Non-underlying finance expense (note 5) (45.5) (1.0)
Loss before tax (299.7) (34.3) Taxation 31.5 1.6
Loss after tax (268.2) (32.7)
3 Loss per share
Basic loss per share is calculated by dividing the result for the period attributable to ordinary shareholders
by the weighted average number of ordinary shares outstanding during the period. Diluted loss per share
is calculated by dividing the result for the period attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the period adjusted by potentially dilutive
outstanding share options.
Underlying loss per share is calculated the same way except that the result for the period attributable to
ordinary shareholders is adjusted for specific items as detailed below:
Six months ended 31 March 2021
Six months ended 31 March 2020
£m £m Loss attributable to ordinary shareholders (261.5) (36.1) Adjustments: Non-underlying operating costs (6.7) 0.9
36
Non-underlying costs attributable to non-controlling interests 7.5 - Non-underlying finance costs 45.5 1.0 Tax effect of adjustments (7.0) 0.7
Underlying loss attributable to ordinary shareholders (222.2) (33.5)
Basic weighted average number of shares 537,626,089 448,922,547 Dilutive potential ordinary shares - -
Diluted weighted average number of shares 537,626,089 448,922,547
Loss per share (p): - Basic (48.6) (8.0) - Diluted (48.6) (8.0) Underlying loss per share (p): - Basic (41.3) (7.5) - Diluted (41.3) (7.5)
The number of ordinary shares in issue as at 31 March 2021 was 537,659,932 which excludes treasury shares (31 March 2020: 533,856,044). The Company also holds 263,499 ordinary shares in treasury (31 March 2020: 263,499). Potential ordinary shares can only be treated as dilutive when their conversion to ordinary shares would decrease earnings per share or increase loss per share. As the Group has recognised a loss for the period none of the potential ordinary shares are considered to be dilutive.
4 Operating costs
Six months ended
31 March 2021 Six months ended
31 March 2020 £m £m Cost of food and materials: Cost of inventories consumed in the period (71.2) (358.4) Labour cost: Employee remuneration (146.6) (387.8)
Overheads:
Depreciation of property, plant and equipment (45.7) (51.8) Depreciation of right-of-use assets (133.9) (148.4) Amortisation of intangible assets (4.7) (3.1) Non-underlying operating costs 6.7 (0.9) Profit on lease disposal 11.2 - Rentals payable under leases (28.2) (112.9) Other overheads (64.2) (158.0)
(476.6) (1,221.3)
Non-underlying operating costs
The non-underlying operating costs in the six months ended 31 March 2021 are shown below.
Six months ended
31 March 2021 Six months ended
31 March 2020 £m £m Impairment of goodwill (3.1) - Impairment of property, plant and equipment (9.8) - Impairment of right-of-use assets (16.8) -
37
IFRS 16 rent credit 53.3 - Restructuring expenses (9.8) - Facilities Agreement and USPP amendment and extension fees associated with the April Rights Issue
(5.4) -
Amortisation of intangible assets arising on acquisition (0.9) (0.9) Other non-underlying costs (0.8) -
Total non-underlying operating costs 6.7 (0.9)
Impairment of goodwill
Goodwill is not amortised but is tested annually for impairment, by calculating the value in use of groups
of cash-generating units (‘CGUs’) to determine the recoverable amount. Due to the slower recovery in the
travel sector compared to our expectations in September 2020, and its impact on our forecasts for the value
in use for each CGU, goodwill impairments of £3.1m have been recognised during the period.
Impairment of property, plant and equipment and right-of-use assets
The impact of Covid-19, and various national restrictions imposed in response to the pandemic, continue
to be considered as an impairment trigger. As a result, the impact on the recoverable amounts of all CGUs
have been calculated and reviewed against the carrying value of assets held. This has resulted in
impairments of £9.8m for property, plant and equipment and £16.8m for right-of-use assets during the
period.
IFRS 16 rent credit
During the period, the Group successfully negotiated several rent waivers with clients, totalling £53.3m, as
part of its response to the Covid-19 pandemic. The Group applies the practical expedient issued as a part
of the Amendment to IFRS 16 to record this as a reduction in rent expense and an exceptional item within
the consolidated income statement.
Restructuring expenses
The Group has recognised a charge of £9.8m relating to its restructuring programmes carried out across
the group during the period. The charge primarily relates to redundancy costs arising as a result of the
impact of Covid-19.
Facilities Agreement and USPP amendment and extension fees associated with the April Rights Issue
On 12 March 2021, the Group agreed amendments to its main bank Term Loans and Revolving Credit
Facility (‘RCF’), and to its US private placement (‘USPP’) debt. The amendments took effect from 22 April
2021 and extended the Term Loans debt maturity date, the RCF maturity date and the covenant waiver
period (as well as making certain amendments to the covenant tests). £5.4m lender amendment and
extension fees were incurred.
Amortisation of intangible assets
Underlying operating loss excludes non-cash accounting adjustments relating to the amortisation of
intangible assets arising on acquisition of the SSP business in 2006.
38
5 Finance income and expense
Six months ended
31 March 2021 Six months ended
31 March 2020 £m £m Finance income
Interest income 1.1 1.1
Total finance income 1.1 1.1
Finance expense
Total interest expense on financial liabilities measured at amortised cost (18.2) (9.6) Lease interest expense (13.5) (14.4) Non-underlying finance costs (45.5) (1.0) Net change in fair value of cash flow hedges utilised in the period (1.3) (0.6) Unwind of discount on provisions (0.3) (0.3) Net interest expense on defined benefit pension obligations (0.1) (0.1) Net foreign exchange losses - (0.2) Other (2.5) (2.7)
Total finance expense (81.4) (28.9)
Non-underlying finance costs
The non-underlying finance costs in the six months ended 31 March 2021 include expenses arising as a
result of amendments and extensions of borrowings under IFRS 9.
Six months ended 31 March 2021
£m
Six months ended 31 March 2020
£m
Debt modification loss (43.9) -
Change in USPP estimated future cash flows (8.0) -
Effective interest rate gain / (charge) 7.8 (1.0)
Retrospective USPP interest charge (1.4) -
Total non-underlying finance costs (45.5) (1.0)
On 15 December 2020 and 12 March 2021, as part of the Group’s debt refinancing, non-substantial
modifications to the bank Term Loan facilities and USPP debt were agreed which resulted in a one-off loss
of £43.9m. In March 2021, a revision to estimated future interest costs under the USPP resulted in a further
one-off loss of £8.0m.
Furthermore, as part of the USPP December modification, margin rates were increased retrospectively from
7 August 2020 resulting in additional backdated interest charges of £1.4m.
An effective interest rate gain of £7.8m was recognised in the period.
39
6 Cash flow from operations
Six months ended
31 March 2021
Six months ended
31 March 2020
£m £m Loss for the period (268.2) (32.7)
Adjustments for: Depreciation of property, plant and equipment 45.7 51.8 Depreciation of right-of-use assets 133.9 148.4 Amortisation of intangible assets 5.6 4.0 Profit on disposal of lease (11.2) - IFRS 16 rent credit (53.3) - Impairments 29.7 - Share-based payments 1.0 2.9 Finance income (1.1) (1.1) Finance expense 81.4 28.9 Share of profit of associates (0.5) (0.2) Taxation (31.5) (1.6)
(68.5) 200.4 Decrease in trade and other receivables 14.4 20.3 Decrease in inventories 5.5 3.9 Decrease in trade and other payables including provisions (2.0) (67.2)
Cash flow from operations (50.6) 157.4
7 Dividends
Six months ended
31 March 2021 Six months ended
31 March 2020
£m £m
No final dividend for year ended 30 September 2020 has been approved or paid during the period (30 September 2019: 6.0p per share)
- (26.8)
- (26.8)
No interim dividend for H1 2021 is proposed (H1 2020: no interim dividend proposed).
8 Fair value measurement
Certain of the Group’s financial instruments are held at fair value.
The fair values of financial instruments held at fair value have been determined based on available market
information at the balance sheet date, and the valuation methodologies detailed below:
- the fair values of the Group’s borrowings are calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of interest at the balance sheet
date; and
- the derivative financial liabilities relate to interest rate swaps. The fair values of interest rate swaps
have been determined using relevant yield curves and exchange rates as at the balance sheet date.
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Carrying value and fair values of certain financial instruments
The following table shows the carrying value of financial assets and financial liabilities.
As at
31 March 2021
£m
As at
30 September 2020
£m
Financial assets measured at amortised cost
Cash and cash equivalents 240.1 185.0
Trade and other receivables 138.5 155.1
Total financial assets measured at amortised cost 378.6 340.1
Non-derivative financial liabilities measured at amortised cost
Bank loans (439.9) (411.3)
Covid Corporate Financing Facility (CCFF) (292.6) (123.9)
US private placement notes (346.7) (341.1)
Lease liabilities (1,194.8) (1,349.3)
Trade and other payables (397.9) (380.0)
Total financial liabilities measured at amortised cost (2,671.9) (2,605.6)
Derivative financial liabilities
Interest rate swaps (3.5) (5.1)
Total derivative financial liabilities (3.5) (5.1)
Financial assets and liabilities in the Group’s consolidated balance sheet are either held at fair value, or
their carrying value approximates to fair value, with the exception of loans, which are held at amortised
cost. The fair value of total borrowings excluding lease liabilities estimated using market prices at 31 March
2021 was £1,054.7m (30 September 2020: £885.4m).
Financial assets and liabilities are measured at fair value and are classified as level 2. This uses the fair value
hierarchy whereby inputs, which are used in the valuation of these financial assets, and liabilities have a
significant effect on the fair value, are observable either directly or indirectly. There were no transfers
during the period.
Interest rate benchmark reform (Amendments to IFRS 9, IAS 39 and IFRS 7) Group Treasury is managing the transition to alternative benchmark rates (‘IBOR’). The impact on the group
is anticipated to be immaterial. Wording within the main bank facility to accommodate IBOR transition was
agreed in March 2021 as part of the amendments to Facilities Agreement. For derivative contracts, the
Group expects to adopt the ISDA 2020 IBOR Fallbacks Protocol in the second half of this financial year. This
protocol amends the fallback provisions incorporated in the derivative contracts so that when a particular
IBOR rate ceases to exist or to represent the underlying market, it will be replaced by an applicable risk-
free rate plus a spread. The first quarterly period impacted by the change for both bank debt and derivatives
will be from January 2022, due to the timing of quarterly rates set. Hedge accounting relationships will be
maintained.
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9 Post balance sheet events
On 17 March 2021 the Company announced a fully underwritten rights issue (the “Rights Issue”) to raise
gross proceeds of approximately £475 million. At the same time the Company announced certain
amendments to the terms of the Group’s facilities agreement (the “Facilities Agreement”) and its US
private placement notes which came into effect following completion of the Rights Issue on 22 April 2021
(the “Debt Amendments”).
The Rights Issue has further strengthened the Group’s balance sheet by allowing the Group to materially
reduce its net indebtedness and allows the Group to cover liquidity headroom under a reasonable worst-
case scenario. The Rights Issue also facilitated the Debt Amendments which have resulted in an extension
to the maturity date of the Facilities Agreement to January 2024 and allowed the Group to secure further
covenant waivers and amendments from the Group’s lenders. Under these amendments, the 6-month
covenant tests introduced in the December 2020 amendments were removed, the original leverage and
interest cover covenant tests were further waived and amended up to and including the testing period
ending on 31 March 2023 (in respect of the interest cover test) and 30 September 2023 (in respect of the
leverage test) and the monthly liquidity and adjusted net debt covenant tests were amended and extended
until such time as the Group shows compliance with the original covenants as at or prior to March 2024
testing date.
As the completion of the Rights Issue occurred after 31 March 2021, the proceeds were recognised in equity
on 22 April 2021. Directly attributable transaction fees incurred were accounted for as prepayments as of
31 March 2021 and were subsequently offset against the Rights Issue proceeds in equity on 22 April 2021.
The impact of the Debt Amendments has, however, been accounted for in the current period in line with
the requirements of IFRS 9 as their occurrence was considered highly likely at the balance sheet date. Please
refer to notes 4 and 5 for further details. Disclosure of the impact of the Rights Issue and the Debt
Amendments on the financial statements for the 12 months ending 30 September 2021 will be included in
the Annual Report and Accounts 2021.
10 Related parties
Related party relationships exist with the Group’s subsidiaries, associates, key management personnel,
pension schemes and employee benefit trusts. A full explanation of the Group’s related party relationships
is provided on page 147 of the Annual Report and Accounts 2020.
There are no material transactions with related parties or changes in the related party transactions
described in the last annual report that have had, or are expected to have, a material effect on the financial
performance or position of the Group in the six month period ended 31 March 2021.
11 Forward looking statement
This announcement contains forward-looking statements. These forward-looking statements include all
matters that are not historical facts. Statements containing the words “believe”, “expect”, “intend”, “may”,
“estimate”, “anticipate”; “will”; “plans”, “aims”, “projects”; “may”; “would”; “could”; “should” or, in each
case, their negative and words of similar meaning are forward-looking. Forward-looking statements include
statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings,
42
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 Company’s
operations. By their nature, forward-looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key assumptions because they relate to events
that may or may not occur in the future. We caution you that forward-looking statements are not
guarantees of future performance and that the Group’s actual financial condition, performance, results of
operations and cash flows, and the development of the industry in which we operate, may differ materially
from those made in or suggested by the forward-looking statements contained in this document or other
disclosures made by us or on the Group’s behalf, including as a result of the macroeconomic and other
impacts of Covid-19, 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.
In addition, even if the Group's financial condition, results of operations and cash flows, and the
development of the industry in which the Group operates are consistent with the forward-looking
statements in this announcement, those results or developments may not be indicative of results or
developments in subsequent periods. The forward-looking statements contained in this announcement
speak only as of the date of this announcement. Except where required to do so under applicable law or
regulatory obligations, the Company and its Directors expressly disclaim any undertaking or obligation to
update or publicly revise any forward-looking statements whether as a result of new information, future
events or otherwise.
