REG - SSP Group PLC - 2024 HALF YEAR RESULTS ANNOUNCEMENT
21/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240521:nRSU1883Pa&default-theme=true
RNS Number : 1883P SSP Group PLC 21 May 2024
21 May
2024
LEI: 213800QGNIWTXFMENJ24
2024 HALF YEAR RESULTS ANNOUNCEMENT
Good H1 performance; On track to deliver full-year expectations;
Well-positioned for medium-term compounding growth and returns.
SSP Group plc, a leading operator of food and beverage outlets in travel
locations worldwide, announces its financial results for the half year ended
31 March 2024.
(Unaudited) HY 2024 HY 2023 Change at Change at
actual FX rates constant FX rates(6)
Underlying Pre-IFRS 16(1,3)
Revenue £1,517m £1,318m 15% 19%
EBITDA(2) £106m £91m 17% 24%
Operating profit £38m £34m 10% 21%
Operating profit margin 2.5% 2.6% (10)bp 10bp
Loss per share (1.0)p (0.8)p (0.2)p
Dividend per share 1.2p - 1.2p
Free cash flow(4) £(240)m £(118)m £(122)m
Net debt(5) £(619)m £(297)m £(322)m
Statutory
Operating profit £58m £49m 19%
Profit before tax £13m £16m (19)%
Loss per share (1.3)p (1.3)p 0.0p
Net debt(5) £(1,633)m £(1,201)m £(432)m
Financial Highlights: (Underlying pre- IFRS16(1,3))
· First half revenue of £1.5bn, up 19% on a constant currency basis,
with double-digit growth across all regions
· H1 revenue growth comprises: like-for-like sales growth of 12%,
including a very strong performance in APAC and EEME reflecting strengthening
passenger numbers; net gains of 4% from the mobilisation of our new contract
pipeline; and a contribution of 3% from acquisitions in North America
· EBITDA of £106m, up from £91m last year, leaving us on track to
deliver Group "Planning Assumptions", as set out in December 2023
· Strong contributions to profitability delivered by the North America
and APAC & EEME regions, reflecting the faster growth in these markets and
strong profit conversion
· Good underlying EBITDA growth in the UK, benefitting from a further
recovery in passenger numbers and despite some ongoing impact from industrial
action in the rail sector
· Profitability in Continental Europe held back by a heightened level
of renewals, particularly in the Nordics countries, and greater levels of
industrial action that impacted the rail sector in France and Germany
· Underlying pre-IFRS 16 loss per share of 1.0p compared with 0.8p per
share in the prior year
· Reported loss per share of 1.3p per share, in line with the prior
year
· Re-instatement of the Interim dividend at 1.2p per share, reflecting
sustained confidence in future prospects
· Free cash usage of £240m after investment of £144m in capital
projects (compared with £94m in the prior year), acquisitions of £59m and a
working capital usage of £66m, reflecting the normal seasonal profile as well
as the unwind of the remaining payment deferrals from the Covid-19 period
· Net Debt of £619m, at the end of March 2024, and leverage (Net Debt:
EBITDA) of 2.1x. Under IFRS 16, Net Debt increased from £1,421m at 30
September 2023 to £1,633m at 31 March 2024
Strategic Highlights:
· Successfully pivoting to higher growth markets with 39% of our sales
over the last 12 months now from North America and APAC & EEME (compared
with 35% in the previous 12 months); we are now present in 51 North American
airports (37 airports in October 2022) and on track to create a business with
annualised sales of over $1 billion
· Significant new contracts won in H1 including 7 units at Cincinnati
airport, 3 at Milan railway station and 9 units at Noida (Delhi) airport; in
the last six months, we have won c.150 new units across all regions and
mobilised c.200 units from our secured pipeline
· This current momentum in new business wins, together with our secured
pipeline underpins our expectation of the delivery of organic net gains
(excluding acquisitions) of c.5% for FY24 and FY25 and c.3%-5% in the
medium-term
· In total, c.80 new units acquired since the start of the year. This
includes 62 new units from the acquisition of Airport Retail Enterprises Pty
Ltd ("ARE") in May 2024, which increases the size of our business in Australia
from 40 to 102.
· In North America, we have completed the acquisitions of ECG in Canada
and Mack II, gaining us entry to Atlanta, the busiest airport in North
America. In addition, we have completed on the transfer of Denver, the final
airport of the Midfield acquisition
· We have secured entry into two new high growth markets: New Zealand
and Indonesia, as announced today. In Indonesia we have agreed to create a new
joint venture with PT Taurus Gemilang, subject to obtaining the necessary
consents, which will initially operate 13 units, principally in Bali, and
will give us a presence in this very large and growing market; combined
consideration of c.£90m relating to ARE and Indonesia. We also commenced
operations in Saudi Arabia during the first half following tender wins at
Riyadh and Jeddah
· Enhanced business capabilities with new brands and concepts, digital,
sustainability and people driving an improved proposition; Global customer
rating(7) up from 4.2 to 4.4 out of a maximum score of 5.0
Recent Trading
Since the half year-end, we have traded in line with expectations, with total
revenue during the first six weeks of the second half (from 1 April to 12 May)
up 14% year-on-year on a constant currency basis, with revenue in North
America up 28%, Continental Europe up 5%, UK up 9% and APAC & EEME up 25%.
FY2024 expectations
While we face into macroeconomic and political uncertainty, we believe that
demand for travel will remain resilient and the industry is well set for both
short-term and long-term structural growth. Progress in the first half of the
year has been encouraging, with strong revenue growth and good profit
conversion in most of our markets.
As we approach the peak summer season, we are well-positioned to deliver the
planning assumptions for FY24, as outlined at our Preliminary Results on 5
December 2023. We continue to plan for like-for-like sales growth for the full
year of between 6% and 10% and for net contract gains in the region of 5%
(excluding acquisitions). Including the acquisition of ARE in Australia, which
completed in May 2024, we now expect a contribution of c.3% from acquisitions
in the year. We continue to plan for underlying EBITDA to be within the range
of £345-£375m and underlying operating profit within the range of
£210-£235m, all stated on a pre-IFRS 16 basis and at constant currency based
on average rates for FY23. The currency impact on these metrics, if current
spot rates were to continue through FY24, would be a negative currency impact
on revenue, underlying EBITDA (on a pre IFRS-16 basis) and operating profit of
approximately -2.0%, -3.5% and -4.6%.
We continue to plan for capital expenditure to be in the region of £280m in
the current year, comprising: capital to fund our renewals and maintenance
programme of c.£140m, representing approximately 4% of expected revenues for
2024 (in line with the historical average); expansionary capital for new
contracts of c.£80m, expected to deliver net contract gains in the region of
5%; and c.£60m reflecting the deferral of renewal and maintenance capital
expenditure from the Covid-19 period.
We are planning for capital expenditure in the region of £260m in FY25,
consistent with c.5% of net gains, which is well underpinned by our existing
pipeline of secured contracts. In FY26, we are planning for net gains of
between 3% and 5%, based on the pipeline and our recent track record of new
business wins, and are therefore planning for capital expenditure to be in the
range of £220-£250m.
Our investment appraisal process, models and benchmarks have been unchanged
over many years and we seek a minimum hurdle rate of a post-tax IRR greater
than 20%. We complete post investment reviews to validate expected returns.
These indicate a long track record of delivering returns ahead of our target
hurdle rate.
Medium-term outlook
Our compounding shareholder growth and returns model, aligned to our
medium-term financial framework, is set to deliver:
· Sales growth ahead of pre-Covid levels, including net gains of
between 3% and 5% p.a., resulting from our pivot to higher growth markets
(principally the North America and APAC & EEME regions) which offer higher
levels of structural demand and infrastructure growth, and where we have
strong businesses with relatively low market shares and significant momentum.
· Sustainable operating margin enhancement benefitting from operating
leverage (driven by revenue growth), greater use of technology and automation
and our wide-ranging efficiency programme, all of which will enable us to
mitigate the impact of rising rent levels and inflationary cost increases.
· Sustainable medium-term earnings growth driven by strong operating
profit growth, with non-controlling interests to increase broadly in line with
profit growth in countries with joint venture partnerships.
· Capital investment underpinned by high returns on capital projects,
generally a 3-4 year discounted cashflow payback and post-tax IRR greater than
20%, in line with historical performance. We expect contract renewal and
maintenance capex (needed to retain the base estate of the business) to be on
average c. 4% of Group sales and expansionary capex (i.e. investment in new
contracts) to vary with the level of contract wins and the timing of
mobilisation of new contracts.
· Balance sheet deleveraging, the pace of which will be determined by
the scale of new business investment and value creating infill M&A where
we target a post-tax IRR greater than 15%.
· Payment of the ordinary dividend with a target payout ratio of
c.30-40% and surplus cash returned to shareholders in line with our capital
allocation framework.
Commenting on the results, Patrick Coveney, CEO of SSP Group, said:
"The first half has been a period of continued momentum, and we've made good
strategic and financial progress. At constant currency, the Group delivered
double-digit sales growth in all our geographies around the world - with an
exceptionally strong like-for-like sales performance in APAC and EEME. Our
momentum is being supported by tailwinds from the high structural growth of
the markets in which we operate, our proven ability to win and retain
high-returning contracts and by our value creating acquisitions.
"Supporting our top-line growth is disciplined cost management, and we are
pleased to have delivered year-on-year EBITDA growth of 24% and to be
announcing an interim dividend.
"Trading momentum has continued into the second half, and we are confident in
delivering on our expectations for the full year. In particular, we are well
set to capitalise on what we anticipate will be a Summer of strong demand in
all our markets - including Continental Europe, where the Olympics and the
European Championships will help boost footfall in airports and stations. We
will also start to realise the benefit of our latest value-creating
acquisition in Australia and new market entries in New Zealand and Indonesia.
"As a business we are making good progress on our strategic priorities, thanks
to the hard work and commitment of all our colleagues and the support of our
clients and brand partners around the world. With our continued momentum and
foundations in place for further expansion, we remain confident in our ability
to deliver sustainable, compounding growth and returns for all our
stakeholders in the years to come."
(1) Stated on an underlying basis, which excludes non-underlying items as
further explained in the section on Alternative Performance Measures (APMs) on
pages 18-21.
(2) Underlying EBITDA (on a pre-IFRS 16 basis) is the underlying pre-IFRS 16
operating profit excluding depreciation and amortisation.
(3) We have decided to maintain the reporting of our profit and other key
financial measures like net debt and leverage on a pre-IFRS 16 basis. 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 18-21.
(4 ) A reconciliation of Underlying operating profit/(loss) to Free cashflow
is shown on page 16.
(5 ) Net debt reported under IFRS 16 includes lease liabilities whereas on a
pre-IFRS 16 basis lease liabilities are excluded. Refer to 'Net debt' section
of the 'Financial review' for a reconciliation of net debt.
(6) Constant currency for FY24 is based on average FY23 exchange rates
weighted over the financial year by 2023 results. Constant currency for FY24
is based on FY23 exchange rates.
(7) As measured through our customer listening tool, Reputation.
A presentation for investors and analysts will be held at 9.00am (UK time)
today, with access by invitation only. Attendees are also able to join via a
live webcast with details accessible at:
SSP - Food Travel Expert (foodtravelexperts.com)
(https://webcasts.foodtravelexperts.com/results/2024interimresults)
CONTACTS
Investor and analyst enquiries
Sarah John, Corporate Affairs Director, SSP Group plc
Sarah Roff, Group Head of Investor Relations, SSP Group plc
On 21 May 2024: +44 (0) 7736 089218 / +44 (0) 7980 636214
E-mail: sarah.john@ssp-intl.com (mailto:sarah.john@ssp-intl.com) /
sarah.roff@ssp-intl.com
Media enquiries
Rob Greening / Nick Hayns
Powerscourt
+44 (0) 207 250 1446
E-mail: ssp@powerscourt-group.com
NOTES TO EDITORS
About SSP
SSP is a leading operator of food and beverage outlets in travel locations
worldwide, with c.43,000 colleagues in over 600 locations across 37
countries. We operate sit-down and quick service restaurants, cafes, lounges
and food-led convenience stores, principally in airports and train stations,
with a portfolio of more than 550 international, national and local brands.
These include our own brands (such as Urban Crave, which brought the first
"street eats" concept to airports in the US and Nippon Ramen, a noodle and
dumpling concept in the APAC region) as well as franchise brands (such as
M&S Simply Foods, Starbucks and Burger King).
Our purpose is to be the best part of the journey, and this is underpinned by
our aim to bring leading brands and innovative concepts to our clients and
customers around the world, with an emphasis on great value, taste, quality
and service - using digital technology to boost efficiency.
www.foodtravelexperts.com (http://www.foodtravelexperts.com)
Business review
We are making significant progress against our strategic priorities, setting
us up to deliver long-term sustainable growth and returns.
Our strategic priorities are:
1. Pivoting to high growth markets
2. Enhancing business capabilities; driving competitive advantage
3. Delivering operational efficiencies; driving sustainable margin
enhancement
1. Pivoting to high growth markets
Our strategy is to increase our focus on the higher growth markets of North
America, APAC and EEME, while continuing to grow selectively in the UK and
Continental Europe. North America, APAC and EEME are large and fragmented
markets in which SSP already has well-established businesses and which offer
significant growth potential for the Group.
For the Group as a whole, in the current year we expect to deliver organic net
gains of c.5% (excluding acquisitions, which will add a further c.3% to
sales), from our secured new business pipeline. In the medium-term, we
anticipate net gains in the region of 3-5% annually, underpinned by our
secured pipeline and current momentum in new business success. In the last six
months, we have secured 150 new units, with approximately two thirds in North
America and APAC & EEME.
In addition to organic expansion, in our high growth markets, we are also
accelerating growth through disciplined M&A which can serve to provide
entry to new markets and new sites in addition to unlocking new client
relationships and brands. Consistent with the strategy of accelerating growth
in the Asia Pacific region, in May 2024 we acquired Airport Retail Enterprises
Pty Ltd ("ARE") in Australia. ARE delivers annual revenues in the region of
AUS$200m (c. £100m) from 62 outlets, principally bars, casual dining
restaurants and cafes, across seven Australian airports. ARE's portfolio is
highly complementary to SSP's existing operations and, as a result of the
acquisition, SSP has gained entry into four new airports (Canberra, Gold
Coast, Townsville and Mount Isa). SSP has grown its food and beverage
operations in Australia significantly with c. 100 units now operating across
11 of the largest 19 airports in Australia.
In North America, since the start of this financial year, we have completed
the acquisitions of the final airport (Denver) from the Midfield Concessions
deal, the ECG business in Canada, and eight units at Atlanta Airport, the
busiest airport in North America. We are now present in 51 airports in North
America, up from 37 airports at the beginning of the 2023 financial year, with
a presence in approximately half of the busiest 80 airports (airports with
more than 1.5 million annual passenger enplanements).
In total, we have secured entry into three new markets in the past six months.
These comprise New Zealand, where we secured a contract to run five outlets at
Christchurch International Airport; Saudi Arabia, where we signed a new
contract with Jeddah Airport to operate 26 outlets complementing our first
contract signed earlier in the period at Riyadh Airport; and Indonesia, where
we have agreed to create a new joint venture with PT Taurus Gemilang, subject
to obtaining the necessary consents, to operate 13 outlets, mostly in Bali,
which we expect to provide a platform for further growth in this significant,
high growth market.
2. Enhancing business capability; driving competitive advantage
We are strengthening our capabilities to drive competitive advantage by
investing across our business, principally by enhancing our customer
proposition including our concepts and brands. In addition, we are expanding
the use of digital, fully engaging our people and transforming our delivery of
sustainability. This approach supports us to deliver high levels of new
business and strong like-for-like sales growth.
Developing great customer propositions
Developing formats and concepts that offer customers quality food and beverage
and a great overall experience is critical to retaining existing business with
our clients and winning new business.
In the period, we have continued to innovate and develop our proposition to
deliver better customer experiences, for example with the launch of new
concepts such as Eastward Long Island Kitchen in the USA and Soul Bar &
Café in Australia. We also secured several new brand partnerships, including
with Eric Kayser and Pizza Express.
In the UK, building on the successful launch of our own Juniper brand in
Gatwick Airport, we have opened a further three premium bar and restaurants in
Newcastle, Manchester and Liverpool Airports. We also launched our inaugural
"drive through" Burger King at Stansted Airport. In UK convenience retail,
where we have significant capability through M&S, we are not only
investing in a renewal programme behind this brand, but also expanding our own
brands including Café Local, with 18 new rail units opened and another 24 to
open by the end of 2024.
We have also made significant progress in developing our convenience retail
offer in other parts of the Group. For example, we are rolling out our
SSP-owned retail concept Point across our markets, aiming to bring 'freshly
made food to go' to the convenience sector. From an initial presence in the
Nordics, we now operate 41 units and, in the period, we opened our first units
in the Asia Pacific region with seven new units in Thailand.
As a result of the enhancements to our proposition our 'Global Reputation
Score' improved to 4.4 out of 5 from 4.2 out of 5 six months ago.
Digitising our business
Embracing digital technology solutions is an important part of our strategy to
improve our customers' experience and drive like-for-like sales through
improved penetration levels and average spend per transaction. In the last six
months, we have continued to implement our digital transformation, rolling out
almost 100 new digital touchpoints such as Order at table (OAT), self-order
kiosks and self checkouts.
Digital solutions also act as an enabler for operational efficiencies, both in
the front and back of house. For example, helping to offset labour cost
pressures, 14% of transactions in North America are now coming through digital
solutions compared to 8% a year ago. In addition to supporting a faster speed
of service and larger basket sizes, surveys show that many customers prefer to
order via online kiosks and the majority are more willing to visit a casual
dining restaurant if digital self-order options are available.
Supporting our people and culture
The progress we are making across our strategic priorities is enabled by
enhancements across our people agenda. We are focused on ensuring SSP is a
great place to work where each of our 43,000 colleagues can fulfil their
potential. The increased number of colleague "listening" activities across the
Group, such as the ENED international programme of employee meetings and the
European Works Council, ensure we capture more frequent and in-depth colleague
feedback. In February and March we also completed our annual Group-wide
engagement survey and maintained our engagement score of 4 out of 5 whilst
achieving a record level of participation with an 80% completion rate, an
improvement of 4 ppts on last year. As a result of the survey, we are
identifying areas for improvement and developing action plans in collaboration
with our senior leadership teams.
As we build a diverse, inclusive culture where everyone is welcomed, in the
period we also launched our Global Diversity, Equity and Inclusion strategy
and mission statement "Belong at SSP". We are making ongoing progress in
gender diversity with 39% of our Group Executive Committee and their direct
reports now female, with a target to achieve 40% by 2025.
We are committed to protecting the safety and wellbeing of our colleagues,
customers, and clients and are focused both on embedding a culture of safety
throughout our business and ensuring our colleagues have the tools required to
stay safe. Initiatives to support this include the more rigorous reporting of
safety metrics which is generating more visibility to drive action plans in
priority areas.
Building a sustainable business
Sustainability is an important strategic priority for SSP and is crucial for
the long-term success of our business. Our Sustainability Strategy focuses on
the three key areas of Product, Planet and People, and is underpinned by high
standards of governance. Our 10 key commitments are focused on the most
important social and environmental issues for our business and stakeholders.
We continue to make strong progress against our targets, embedding
sustainability into the way we do business and working in collaboration with
our partners to drive positive change across the food travel sector.
Our 2023 Sustainability Report, published in December 2023, provides
comprehensive information on our Sustainability Strategy, progress against our
targets and details of strategic actions and initiatives. The full report is
supported by a Summary and Sustainability Data Book which provides all our
performance data, reporting criteria and indices against reporting frameworks
(GRI, SASB and TCFD) in one accessible place. The report, summary and data
book can all be found at: Sustainability | SSP (foodtravelexperts.com)
(https://www.foodtravelexperts.com/sustainability/) .
Overall, we are making strong progress against our 2025 targets, including
exceeding our target for 30% of own brand meal offerings to be plant-based or
vegetarian and for over 80% of our own brand packaging to be of free of
unnecessary single-use plastic and to be reusable, recyclable or compostable.
We've also made significant progress in key areas, such as cage-free egg
sourcing (+14% vs FY22), sustainably-certified coffee (+8% vs FY22) and
certified fish (+9% vs FY22).
The Science Based Targets initiative (SBTi) has validated our targets to reach
net-zero greenhouse gas (GHG) emissions across our value chain by FY40, from a
FY19 base year. By the end of FY23, we achieved a 42% reduction in absolute
Scope 1 and 2 emissions from our FY19 base year. Across all three scopes,
absolute emissions have remained relatively flat, while emissions intensity
(per £m revenue) reduced by 6% compared to FY2019. We believe this
demonstrates the progress we are making in putting the right measures in place
to ensure that, as our business grows, we are doing so efficiently and
controlling absolute emissions increases in line with growth projections set
out in our net zero roadmap.
To further drive Scope 3 reductions, we have partnered with Klimato,
specialists in helping restaurants calculate, communicate and track the
climate impact of our food. In December 2023, we implemented Klimato carbon
labelling on our menus at Abu Dhabi International Airport - the first time
Klimato carbon labelling has been employed in a travel location.
Our work on sustainability is also playing an important role in supporting
business growth. For example, in Norway and Hong Kong the strength of our
Sustainability Strategy and initiatives were an important contribution in
winning new airport contracts in both markets. In the UK, our focus on
sustainable, locally-sourced products was a key factor in our seven-year
contract extension with London City Airport. In recognition of this
sustainable menu work for London City Airport, our UK&I F&B Director
won the Sustainability Award at the 2024 Menu Innovation and Development
Awards (MIDAS).
3. Delivering operational efficiencies
Delivering operating efficiency is a core SSP competency and we have brought
in new processes and tools during the first half to support this program. We
aim to optimise gross margins and leverage the international scale of our
business, by paying rigorous attention to managing the key input costs of food
and drink, labour and overheads. Over the last six months, this focus on
operating efficiencies together, with the momentum we have in volume growth,
has enabled us to deliver an improvement in our key operating cost ratios
(cost of goods, labour and overheads) of c.1% year on year, which has helped
to more than offset increased concession fees.
Our multi-year value creation plan includes the continual re-engineering of
our customer offer to optimise gross margins, keeping unnecessary complexity
out of our product ranges, whilst providing the appropriate level of customer
choice. We also continue to drive labour efficiency, conscious of the
pressures on labour rates and availability in certain regions. This means a
continued focus on staff scheduling and kitchen productivity, as well as using
digital order and payment technology to drive service levels and efficiency.
During the first half we launched our next generation of labour scheduling
technology (Work Force Management) into our UK business, and will look to
deploy this more widely across the group in the future.
We have reduced unit overheads in a number of markets through detailed
analysis and improving the ways of working to allow for better control and
visibility. This includes reducing cost associated with central production
units, cash offices and storage facilities.
Our approach to reducing costs is matched by our drive to reduce consumption
and waste. We have implemented a range of energy savings initiatives including
cloud based building management systems and the roll out of smart meters
across a number of countries as well as the sale of surplus food at the end of
the day at discounted prices.
We continue to share great initiatives throughout teams to drive a process of
continuous improvement.
Financial review
Group performance
H1 2024 H1 2023 Change
£m
£m
Actual currency Constant currency LFL
Revenue 1,517.2 1,318.4 +15.1% +18.8% +11.6%
Underlying operating profit 58.0 52.4 +10.7%
Operating profit 57.7 48.6 +18.7%
- EBITDA was £105.5m (H1 2023: £90.5m) and Underlying operating
profit was £37.7m (H1 2023: £34.4m) on a pre-IFRS 16 basis.
The Group's trading performance has been encouraging across the first half
year, with revenue growing strongly across all of our regions. Total first
half Group Revenue of £1,517.2m increased by 15.1% compared with the first
half of last year at actual foreign exchange rates, and by 18.8% on a constant
currency basis. This constant currency revenue growth included like-for-like
growth of 11.6% (including a 0.6% contribution from the additional leap year
day) and net new space growth of 7.2%, with the latter comprising 4.4% from
organic net contract gains and 2.8% from acquisitions. Revenue in the first
half of the Group's financial year is typically lower than in the second half,
as a significant part of our business serves the leisure sector of the travel
industry, which is particularly active during the summer season in the
northern hemisphere.
During the first quarter, revenue was 21.2% ahead of the prior year on a
constant currency basis, reflecting robust trading led by leisure travel
demand across all regions. Like-for-like growth of 14.3% reflected the further
recovery in passenger numbers as well as the strength of our customer
proposition and operational execution. This was supplemented by a strong
contribution of 4.7% from net gains as we mobilised our extensive secured
pipeline, as well as a 2.2% contribution from acquisitions in North America.
The second quarter has seen further strong revenue growth of 16.4% on a
constant currency basis, including like-for-like growth of 8.9% (with 1.1%
contributed by the extra leap year day), net contract gains of 3.9% and
acquisitions of 3.6%. The slightly softer like-for-like growth compared to the
first quarter was as expected, reflecting much stronger prior year
comparatives, and was delivered in spite of the impact of further significant
industrial action, most notably in Continental Europe. Since the half
year-end, we have traded in line with expectations, with total revenue during
the first six weeks of the second half (from 1 April to 12 May) up 14%
year-on-year on a constant currency basis.
Looking forward, our planning assumptions for full year revenue growth on a
constant currency basis remain largely unchanged. We continue to plan for
like-for-like growth of between 6% and 10% and for net contract gains in the
region of 5% (excluding acquisitions) but have increased our planning
assumption for the contribution from acquisitions to 3% (from 2% previously)
to reflect the additional anticipated revenue from the ARE acquisition in
Australia, which completed earlier this month.
Trading results from outside the UK are converted into sterling at the average
exchange rates for the year. The overall impact of the movement of foreign
currencies (principally the Euro, US Dollar, Swedish Krona, Norwegian Krone,
Indian Rupee, Egyptian Pound and Swiss Franc) during the first half of 2024
compared to the 2023 average was -1.5% on revenue, -3.0% on EBITDA and -5.5%
on operating profit. If the current spot rates (16 May 2024) were to continue
through 2024, we would expect a negative currency impact on revenue,
underlying EBITDA (on a pre IFRS 16 basis) and operating profit of
approximately -2.0%, -3.5% and -4.6% compared to the average rates used for
2023, which is the basis of the constant currency guidance above.
Operating profit
The underlying operating profit under IFRS16 was £58.0m, compared to £52.4m
in the prior year. On a reported basis, the operating profit was £57.7m
(2023: £48.6m), reflecting a net charge of £0.3m (H1 2023: £3.8m charge)
for the non-underlying operating items.
On a pre-IFRS 16 basis, the underlying operating profit of £37.7m increased
compared to the prior year by 21.3% on a constant currency basis, and by 9.6%
at actual exchange rates. Underlying pre-IFRS16 EBITDA of £105.5m (H1 2023:
£90.5m) increased by 23.7% on a constant currency basis and 16.6% at actual
exchange rates, while the depreciation charge of £67.8m increased by 25.0% on
a constant currency basis and 20.9% at actual exchange rates.
For the full year, our planning assumptions (on a constant currency pre-IFRS16
basis) for underlying EBITDA and EBIT as outlined in December 2023 remain
unchanged. We therefore continue to plan for underlying EBITDA within the
range of £345-375m and underlying operating profit within the range of
£210-235m, all stated at constant currency based on average rates for 2023.
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 debit of £0.3m are
summarised below:
- Impairment of property, plant and equipment and right-of-use
assets: the Group has carried out impairment reviews where indications of
impairment have been identified. These impairment reviews compared the
value-in-use of individual sites, based on management's current assumptions
regarding future trading performance, to the carrying values of the associated
assets. Following this review, £11.0m impairment charges for Ireland and
Netherlands have been recognised, which include an impairment of right-of-use
assets of £1.8m. These impairments were driven by localised developments in
Ireland and Netherlands which were not pervasive to the rest of the countries.
- Gain on lease derecognition: the Group has recognised a credit
relating to the renegotiation of a concession contract in the APAC and EEME
region, such that the contract now falls outside the scope of IFRS 16. This
has resulted in the derecognition of both the right of use asset and the lease
liability, with the net impact on the income statement being a £8.9m
credit.
- Repayment of historical legal fees and release of legal provision:
as a result of the successful resolution of a legal matter we have recognised
£3.7m in repaid legal fees in the period as well as the release of a
provision of £2.0m relating to the case.
- Other non-underlying expenses: we have incurred £3.9m in other
non-underlying costs, principally relating to the various acquisitions
completed and announced in the period.
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 33.
North America
H1 2024 H1 2023 Change
£m
£m
Actual currency Constant currency LFL
Revenue 369.7 299.9 23.3% 29.4% 7.9%
Underlying operating profit 29.2 22.4 30.4%
Operating profit 27.9 21.2 31.6%
- EBITDA was £48.4m (H1 2023: £35.2m) and Underlying operating
profit was £25.7m (H1 2023: £17.4m) on a pre-IFRS 16 basis.
First half revenue of £369.7m increased by 29.4% on a constant currency
basis, including like-for-like growth of 7.9% and contributions from net
contract gains of 8.2% and acquisitions of 13.3%. At actual exchange rates
first half revenue increased by 23.3%.
Revenue during the first quarter increased by 30.5% on a constant currency
basis, including strong like-for-like growth of 10.2% and a contribution of
20.3% from net gains and acquisitions, including a c.10% benefit from the
Midfield Concessions business, with the final airport transferring in November
2023.
Overall sales growth in the second quarter remained at a similar level (up
28.4% year-on-year), but with slightly lower like-for-like growth of 5.6%,
reflecting supply-side airline capacity constraints in several airports, as
well as strengthening prior year comparatives over the Spring break holiday
period. Growth from net gains and acquisitions strengthened to 22.8%, helped
by a full quarter of sales from the ECG acquisition in Canada and the
commencement of trading in the recently acquired operations in Atlanta.
The underlying operating profit for the period was £29.2m, compared to
£22.4m in the prior year, and the reported operating profit was £27.9m
(2023: £21.2m). Non-underlying operating items comprised transaction costs
totalling £1.3m. On a pre-IFRS 16 basis, the underlying operating profit was
£25.7m, which compared to £17.4m last year, an increase of c.48%.
Continental Europe
H1 2024 H1 2023 Change
£m
£m
Actual currency Constant currency LFL
Revenue 532.8 494.9 7.7% 10.6% 8.7%
Underlying operating (loss)/profit (5.5) 4.1 -234.1%
Operating (loss)/profit (10.7) 4.1 -361.0%
- EBITDA was £6.3m (H1 2023: £17.2m) and Underlying operating
loss was £16.3m (H1 2023 loss: £3.0m) on a pre-IFRS 16 basis.
Revenue in Continental Europe of £532.8m in the first half increased by 10.6%
on a constant currency basis, including like-for-like growth of 8.7% and a
contribution of 1.9% from net gains. At actual exchange rates first half
revenue increased by 7.7%.
Revenue during the first quarter increased by 13.3% on a constant currency
basis, including strong like-for-like growth of 11.5% and a further 1.8% from
net gains. The like-for-like growth included a particularly strong performance
in Spain, driven by strong passenger numbers during the extended summer
holiday season which stretched into the autumn.
During the second quarter, revenue growth moderated to 7.8%, including
like-for-like growth of 5.8%. As well as reflecting strengthening prior year
comparatives, this weaker like-for-like growth included an impact from
increased levels of industrial action, particularly in the rail channel in
Germany and France.
The underlying operating loss for the period was £5.5m (2023: £4.1m profit),
with a reported operating loss of £10.7m (2023: £4.1m profit).
Non-underlying operating items comprised impairments of property, plant and
equipment (£4.7m) and right-of-use assets (£0.5m) relating to the
Netherlands. On a pre-IFRS 16 basis, the underlying operating loss was
£16.3m, which compared to an underlying operating loss of £3.0m last year.
Profitability (pre-IFRS 16 EBITDA of £6.3m compared to £17.2m in the prior
year) in this region was significantly impacted in the first half by high
levels of renewal activity and related disruption and pre-opening costs in the
air channel, particularly in the Nordic countries, together with the greater
levels of industrial action, principally impacting the rail channel. The
year-on-year impact of renewal activity is expected to ease in the second half
as we reach the anniversary of the ramp up of activity.
UK (including Republic of Ireland)
H1 2024 H1 2023 Change
£m
£m
Actual currency Constant currency LFL
Revenue 392.1 328.5 19.4% 19.6% 14.7%
Underlying operating profit 19.5 18.1 7.7%
Operating profit 13.9 18.0 -22.8%
- EBITDA was £26.5m (H1 2023: £23.2m) and Underlying operating
profit was £16.7m (H1 2023: £16.0m) on a pre-IFRS 16 basis.
First half revenue in the UK of £392.1m increased by 19.6% on a constant
currency basis, including like-for-like growth of 14.7% and a contribution of
4.9% from net gains. At actual exchange rates first half revenue increased by
19.4%.
Revenue during the first quarter increased by 22.8% on a constant currency
basis, including strong like-for-like growth of 17.1% and a further 5.7% from
net gains. The like-for-like growth reflected encouraging passenger numbers in
the air channel and a further improvement in rail passenger volumes as
commuters continued to return to work in offices, as well as a slightly lower
incidence of strike action compared to last year. Overall revenue growth in
the second quarter remained strong (up 16.1% year-on-year), and like-for-like
growth of 12.1% remained robust, despite ongoing industrial action throughout
the quarter.
The underlying operating profit for the first half of the financial year for
the UK was £19.5m (2023: £18.1m), with a reported operating profit of
£13.9m (2023: £18.0m). Operating margin was impacted by the pre-opening
costs and disruption arising from the renewal programme at a number of major
sites during the first half. Non-underlying operating items included
impairments of property, plant and equipment (£4.0m) and right-of-use assets
(£1.4m) relating to our operations in Ireland. On a pre-IFRS 16 basis, the
underlying operating profit was £16.7m, which compared to £16.0m last year.
APAC and EEME
H1 2024 H1 2023 Change
£m
£m
Actual currency Constant currency LFL
Revenue 222.6 195.1 14.1% 22.1% 20.2%
Underlying operating profit 35.1 31.3 12.1%
Operating profit 42.4 31.3 35.5%
- EBITDA was £39.5m (H1 2023: £34.1m) and Underlying operating
profit was £31.6m (H1 2023: £27.5m) on a pre-IFRS 16 basis.
Revenue in the APAC and EEME region of £222.6m increased by 22.1% on a
constant currency basis, including like-for-like growth of 20.2% and a
contribution of 1.9% from net gains. At actual exchange rates first half
revenue increased by 14.1%.
Revenue during the first quarter increased by 25.2% on a constant currency
basis, including like-for-like growth of 23.4% and a further 1.8% from net
gains. The like-for-like growth reflected further improvements in passenger
numbers across the Asia Pacific region, most notably in India.
Although the prior year comparatives continued to strengthen throughout the
second quarter, overall revenue growth of 19.2% remained encouraging, driven
by further like-for-like growth of 17.1%, helped by a further recovery in
passenger numbers across the region, and despite a slower than expected
recovery in Hong Kong, where Chinese inbound passengers remain below pre-Covid
19 levels. Net gains of 2.1% in the quarter and 1.9% for the half included the
impact of contract losses in China following our decision to exit our
remaining airports in mainland China.
The underlying operating profit for the period was £35.1m (2023: £31.3m),
and the reported operating profit was £42.4m (2023: £31.3m). Non-underlying
operating items comprised a gain on derecognition of a lease of £8.9m offset
by transaction costs of £1.6m. On a pre-IFRS 16 basis, the underlying
operating profit was £31.6m, which compared to £27.5m in the comparative
period last year.
Share of profit of associates
The Group's underlying share of profits of associates was £0.6m (2023: £2.4m
profit). On an underlying pre-IFRS 16 basis, the Group's share of profit from
associates was £1.1m (2023: £2.4m profit), with the year-on-year reduction
primarily reflecting start-up costs in Extime, our joint venture with
Aeroports de Paris.
Net finance costs
The underlying net finance expense for the first half of the financial year
was £46.5m (2023: £38.0m), which includes interest on lease liabilities of
£30.0m (2023: £24.0m). The reported net finance expense under IFRS 16 was
£45.5m (2023: £35.2m).
On a pre-IFRS 16 basis, underlying net finance costs were higher than the
prior year at £16.5m (2023: £14.0m), as expected given the higher average
net debt this year compared to last.
Including the additional interest cost arising from the ARE acquisition in
Australia, as well as reflecting the current market expectations for interest
rates in the second half, we expect underlying pre-IFRS 16 net finance costs
for the full year to be in the region of £40m.
Taxation
The Group's underlying tax charge for the period was £2.7m (2023: £3.8m),
representing an effective tax rate of 22.3% (2023: 22.6%) of underlying profit
before tax. On a reported basis, the tax charge for the period was £4.6m
(2023: £4.1m) representing an effective tax rate of 35.9% (2023: 25.9%).
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. Looking forward, we expect the underlying tax rate to be around
22-23%.
As reported last year, OECD Pillar Two legislation has been enacted in the UK,
introducing a global minimum effective tax rate of 15%. The Group's first
accounting period to which these rules will apply is the year ended 30
September 2025. The Group is actively working to fully understand the impact
of the new rules but currently does not expect them to have a material impact
on the Group's operations or results.
Non-controlling interests
The profit attributable to non-controlling interests was £18.7m (2023:
£21.7m). On a pre-IFRS 16 basis the profit attributable to non-controlling
interests was £25.0m (2023: £24.0m), with the year-on-year increase
primarily reflecting strong year-on-year profit growth in our TFS joint
venture in India. An analysis of the non-controlling interest charge in each
half year is set out below.
On a pre-IFRS 16 basis H1 2024 H1 2023
£m
£m
North America 9 10
APAC & EEME 16 14
- India 13 11
- Other 3 3
Group 25 24
In North America, the profit attributable to non-controlling interests reduced
marginally year-on-year, reflecting relatively stronger profit growth in
airports with lower JV shares and airline capacity constraints and challenging
prior year comparatives in several airports where we operate joint ventures
with high minority shares. In addition, we have seen strong growth in Canada,
where we own 100% of the business.
For the full year, our previous planning assumptions for non-controlling
interests remain unchanged, and we therefore expect the profit attributable to
non-controlling interests to increase year-on-year by between 15% and 25%, in
line with our expectations for profit growth in our businesses with joint
venture partners.
Loss per share
The Group's underlying loss per share was 1.2 pence per share (2023: 1.1 pence
per share), and its reported loss per share was 1.3 pence per share (2023: 1.3
pence per share).
On a pre-IFRS 16 basis the underlying loss per share was 1.0 pence per share
(2023: 0.8 pence per share).
Dividends
The Board has declared an interim dividend of 1.2 pence per share (H1 2023:
nil), with a view to maintaining the pay-out ratio for the full year at
between 30% and 40% of underlying pre-IFRS 16 earnings per share, and with the
interim dividend representing approximately one third of the expected full
year dividend, based on our Planning Assumptions. The dividend will be paid on
28 June 2024 to shareholders registered on 31 May 2024. The ex-dividend date
will be 30 May 2024.
Free Cash flow
The table below presents a summary of the Group's free cash outflow for the
first half of 2024:
H1 2024 H1 2023
£m £m
Underlying operating profit(1) 37.7 34.4
Depreciation and amortisation 67.8 56.1
Working capital (65.9) (50.7)
Net tax payments (15.5) (12.0)
Acquisitions, net of cash received (58.9) (2.8)
Other 4.5 3.0
Dividend (19.9) -
Capital expenditure(2) (143.9) (94.3)
Net dividends to non-controlling interests and from associates (24.3) (23.5)
Net finance costs (21.7) (28.3)
Free cash outflow (240.1) (118.1)
(1) Presented on an underlying pre-IFRS 16 basis (refer to pages 18 - 21 for
details)
(2) Capital expenditure is net of cash capital contributions received from
non-controlling interests of £7.9m (2023: £12.9m)
The Group's free cash outflow during the first half year was £240.1m, an
increase from the £118.1m outflow in the first half of the prior year,
reflecting the previously anticipated higher levels of capital expenditure in
2024, as well as the impact of the completed acquisitions. The first half cash
outflow also included the impact of the reinstatement of the Group's ordinary
dividend in 2023, with a full year dividend for the prior year paid to
shareholders in February 2024.
Capital expenditure was £143.9m, a significant increase compared to £94.3m
in the prior year as we expanded our capital expenditure programmes across the
Group in order to mobilise our significant pipeline of new business. As we
indicated in December, we are currently planning for capital expenditure of
around £280m in the current financial year. Acquisition costs of £58.9m in
the first half included the consideration paid for the remaining part of the
Midfield Concessions business, as well as the acquisitions of ECG in Canada
and of the Mack II business in Atlanta.
The seasonal working capital usage of £65.9m in the first half (2023: £50.7m
outflow) was slightly higher than in previous years, driven by the further
reduction of the Group's deferred liabilities from the Covid-19 period. For
the second half year we anticipate a normal cash inflow as a consequence of an
increase in the negative working capital in the business during the peak
summer trading period. For the year as a whole, as indicated in December, we
anticipate working capital to be broadly neutral in terms of cash flow, with
the benefit of the expected sales increase broadly offset by the unwind of
deferred liabilities in the first half.
Net corporation tax payments of £15.5m (2023: £12.0m) and net dividends paid
to non-controlling interests (net of receipts from associates) of £24.3m
(2023: £23.5m) remained at broadly similar levels year-on-year. Net finance
costs paid of £21.7m were significantly lower than in the first half of the
prior year (2023: £28.3m), as the comparative include the payment of deferred
interest liabilities in respect of the Group's US Private Placement notes.
Net debt
Overall net debt increased by £226.6m to £618.8m on a pre-IFRS 16 basis,
largely reflecting the free cash outflow in the year of £240.1m as detailed
above. On a reported basis under IFRS 16, net debt was £1,632.9m (30
September 2023: £1,420.9m), including lease liabilities of £1,014.1m (30
September 2023: £1,028.7m).
Based on the pre-IFRS 16 net debt of £618.8m at 31 March 2024, leverage (Net
debt/EBITDA) increased to approximately 2.1x from 1.4x at 30 September 2023.
Looking ahead to September 2024 and reflecting the recently completed
acquisition of the ARE business in Australia, we expect leverage to be towards
the upper end of target range of 1.5x to 2.0x.
The table below highlights the movements in net debt in the year on a pre-IFRS
16 basis.
£m
Net debt excluding lease liabilities at 1 October 2023 (Pre-IFRS 16 basis) (392.2)
Free cash flow (240.1)
Impact of foreign exchange rates 6.3
Other non-cash movements 7.2
Net debt excluding lease liabilities at 31 March 2024 (Pre-IFRS 16 basis) (618.8)
Lease liabilities (1,014.1)
Net debt including lease liabilities at 31 March 2024 (IFRS 16 basis) (1,632.9)
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.
1. Revenue measures
As the Group is present in 37 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.
(£m) North America Continental Europe UK APAC and EEME Total
H1 2024 Revenue at actual rates by region 369.7 532.8 392.1 222.6 1,517.2
Impact of foreign exchange 7.9 6.5 0.2 8.6 23.2
H1 2024 Revenue at constant currency(1) 377.6 539.3 392.3 231.2 1,540.4
H1 2023 Revenue at constant rates by region 291.7 487.4 328.1 189.3 1,296.5
Constant currency sales growth 29.4% 10.6% 19.6% 22.1% 18.8%
Which is made up of:
Like-for-like sales growth(2) 7.9% 8.7% 14.7% 20.2% 11.6%
Net contract gains(34) 21.5% 1.9% 4.9% 1.9% 7.2%
Total constant currency sales growth 29.4% 10.6% 19.6% 22.1% 18.8%
(
)
(1) Constant currency is based on average 2023 exchange rates weighted over
the financial year by 2023 results.
(2) Like-for-like sales represent revenues generated in an equivalent period
in each financial year in outlets which have been open for a minimum of 12
months. Like-for-like sales are presented on a constant currency basis.
(3) Revenue in outlets which have been open for less than 12 months and prior
period revenues in respect of closed outlets are excluded from like-for-like
sales and classified as contract gains. Net contract gains/(losses) are
presented on a constant currency basis.
(4) The impact of the acquisitions has been included in net contract gains.
2. Non-underlying items
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 and prior year.
Non-underlying items
IFRS 16 IFRS 16
H1 2024 H1 2023
£m £m
Operating costs
Impairment of property, plant and equipment (9.2) -
Impairment of right-of-use assets (1.8) -
Gain on derecognition of leases 8.9 -
Repayment of legal costs and release of legal provision 5.7 -
Other non-underlying operating costs (3.9) (3.8)
(0.3) (3.8)
Effective interest rate adjustments 1.4 2.8
Refinancing fees (0.4) -
Tax charge on non-underlying items (1.9) (0.3)
Total non-underlying items (1.2) (1.3)
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:
H1 2024 (IFRS 16) H1 2023 (IFRS 16)
Underlying Non-underlying Items Total Underlying Non-underlying Total
Items
Operating profit/(loss) (£m) 58.0 (0.3) 57.7 52.4 (3.8) 48.6
Operating margin 3.8% 0.0% 3.8% 4.0% (0.3)% 3.7%
Profit/(loss) before tax (£m) 12.1 0.7 12.8 16.8 (1.0) 15.8
Loss per share (p) (1.2) (0.1) (1.3) (1.1) (0.2) (1.3)
3. Pre-IFRS 16 basis
In addition to our reported results under IFRS 16 we have decided to also
maintain the reporting of our profit and other key KPIs like net-debt on a
pre-IFRS 16 basis. 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 2024 31 March 2023
Notes Underlying IFRS 16 Impact of IFRS 16 Underlying Underlying IFRS 16 Impact of IFRS 16 Underlying
£m £m Pre-IFRS 16 £m £m Pre-IFRS 16
£m £m
Revenue 2 1,517.2 - 1,517.2 1,318.4 - 1,318.4
Operating costs 4 (1,459.2) (20.3) (1,479.5) (1,266.0) (18.0) (1,284.0)
Operating profit/(loss) 58.0 (20.3) 37.7 52.4 (18.0) 34.4
Share of profit from associates 0.6 0.5 1.1 2.4 - 2.4
Finance income 5 8.9 - 8.9 11.2 - 11.2
Finance expense 5 (55.4) 30.0 (25.4) (49.2) 24.0 (25.2)
Profit before tax 12.1 10.2 22.3 16.8 6.0 22.8
Taxation (2.7) (2.4) (5.1) (3.8) (1.3) (5.1)
Profit for the period 9.4 7.8 17.2 13.0 4.7 17.7
(Loss)/Profit attributable to:
Equity holders of the parent (9.3) 1.5 (7.8) (8.7) 2.4 (6.3)
Non-controlling interests 18.7 6.3 25.0 21.7 2.3 24.0
Profit for the period 9.4 7.8 17.2 13.0 4.7 17.7
Loss per share (pence):
- Basic 3 (1.2) (1.0) (1.1) (0.8)
- Diluted 3 (1.2) (1.0) (1.1) (0.8)
Underlying operating profit is £20.3m lower on a pre-IFRS 16 basis, as adding
back the depreciation of the right-of-use assets of £111.8m does not fully
offset the recognition of fixed rents of £132.1m. Profit before tax is
£10.2m higher on a pre-IFRS 16 basis as a result of adding back £30.0m in
finance charges on lease liabilities and £0.5m relating to associates. The
impact of IFRS 16 on net debt is primarily the recognition of the lease
liability balance.
Pre-IFRS 16 basis underlying EBITDA is a key measure of profitability for the
Group. A reconciliation to pre-IFRS 16 basis underlying operating profit for
the period is presented below:
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Pre-IFRS 16 underlying EBITDA 105.5 90.5
Depreciation of property, plant and equipment (62.6) (51.3)
Amortisation of intangible assets (5.2) (4.8)
Pre-IFRS 16 underlying operating profit 37.7 34.4
Furthermore, a reconciliation from pre-IFRS 16 underlying operating profit for
the year to the statutory profit for the period is as follows:
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Pre-IFRS 16 underlying operating profit for the period 37.7 34.4
Depreciation of right-of-use assets (111.8) (90.5)
Fixed rent on leases 132.1 106.1
Gain on derecognition of leases - 2.4
Non-underlying operating profit/(costs) (note 4) (0.3) (3.8)
Underlying share of profit from associates 0.6 2.4
Net finance expense (46.5) (38.0)
Non-underlying finance credit (note 5) 1.0 2.8
Taxation (4.6) (4.1)
Profit for the year 8.2 11.7
A reconciliation of underlying operating profit to profit before and after tax
is provided as follows:
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Underlying operating profit 58.0 52.4
Non-underlying operating profit/(costs) (note 4) (0.3) (3.8)
Underlying share of profit from associates 0.6 2.4
Finance income 8.9 11.2
Finance expense (55.4) (49.2)
Non-underlying finance credit (note 5) 1.0 2.8
Profit before tax 12.8 15.8
Taxation (4.6) (4.1)
Profit after tax 8.2 11.7
4. Liquidity and cashflow
Liquidity remains a key KPI for the Group. Available liquidity at 31 March
2024 has been computed as £358.2m, comprising cash and cash equivalents of
£190.4m, and undrawn credit facilities of £167.8m. Since the half year, the
Group issued US Private Placement notes (the 'Notes') of EUR240m (equivalent
to approximately £205m) significantly increasing the available liquidity.
A reconciliation of free cashflow to underlying operating profit/(loss) is
shown on page 16.
Principal risks
The principal risks facing the Group for the remainder of the year are
unchanged from those reported in the 2023 Annual Report and Accounts.
These risks, together with the Group's risk management process, are detailed
on pages 70 to 77 of the Annual Report and Accounts 2023, and relate to the
following areas: Business environment, geo-political uncertainty and terrorism
threat, Availability of labour and wage inflation, Supply chain disruption and
product cost inflation, Health and food safety, Information security and
stability, Compliance, Mobilisation of pipeline, The competition landscape,
changing client behaviours and client retention, Insufficient senior
capability at Group and country level, Benefits realisation from efficiency
programmes, Sustainability, Innovation of brand portfolio & changing
customer demands, Merger and acquisition activity, and Expansion into new
markets.
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 as adopted for use in the
UK;
- 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
Patrick Coveney
Jonathan Davies
Chief Executive
Officer
Deputy Chief Executive Officer and Chief Financial Officer
20 May 2024
20 May 2024
INDEPENDENT REVIEW REPORT TO SSP GROUP plc
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 2024 which comprises the condensed consolidated income statement,
condensed consolidated statement of other comprehensive income, condensed
consolidated balance sheet, condensed consolidated statement of changes in
equity and condensed consolidated 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 2024 is not prepared, in
all material respects, in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK and the Disclosure Guidance and Transparency
Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued 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.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the group will continue in operation.
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 annual financial statements of the group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
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. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
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.
Lourens de Villiers
for and on behalf of KPMG LLP
Chartered Accountants 15 Canada Square London, E14 5GL
20 May 2024
Condensed consolidated income statement (Unaudited)
for the six months ended 31 March 2024
Six months ended 31 March 2024 Six months ended 31 March 2023
Notes Underlying(1) Non-underlying items Total Underlying(1) Non-underlying items Total
£m £m £m £m £m £m
Revenue 1,517.2 - 1,517.2 1,318.4 - 1,318.4
Operating costs 4 (1,459.2) (0.3) (1,459.5) (1,266.0) (3.8) (1,269.8)
Operating profit / (loss) 58.0 (0.3) 57.7 52.4 (3.8) 48.6
Share of profit of associates 0.6 - 0.6 2.4 - 2.4
Finance income 5 8.9 - 8.9 11.2 - 11.2
Finance expense 5 (55.4) 1.0 (54.4) (49.2) 2.8 (46.4)
Profit/(loss) before tax 12.1 0.7 12.8 16.8 (1.0) 15.8
Taxation (2.7) (1.9) (4.6) (3.8) (0.3) (4.1)
Profit/(loss) for the period 9.4 (1.2) 8.2 13.0 (1.3) 11.7
(Loss)/
profit attributable to:
Equity holders of the parent (9.3) (1.2) (10.5) (8.7) (1.3) (10.0)
Non-controlling interests 18.7 - 18.7 21.7 - 21.7
Profit/(loss) for the period 9.4 (1.2) 8.2 13.0 (1.3) 11.7
Loss per share (p):
- Basic 3 (1.2) (1.3) (1.1) (1.3)
- Diluted 3 (1.2) (1.3) (1.1) (1.3)
(1) Stated on an underlying basis, which excludes non-underlying items as
further explained in the section on Alternative Performance Measures (APMs) on
pages 18 - 21.
Condensed consolidated statement of other comprehensive income (Unaudited)
for the six months ended 31 March 2024
Six months ended Six months ended
31 March 2024
31 March 2023
£m £m
Other comprehensive income / (expense)
Items that will never be reclassified to the income statement
Remeasurements on defined benefit pension schemes 0.7 (1.8)
Tax (charge) / credit relating to items that will not be reclassified (0.1) 0.4
Items that are or may be reclassified subsequently to the income statement
Net gain on hedge of net investment in foreign operations 11.4 31.3
Other foreign exchange translation differences (25.0) (46.7)
Cash flow hedges - reclassified to income statement 1.1 -
Tax credit / (charge) relating to items that are or may be reclassified 1.0 (1.2)
Other comprehensive expense for the period (10.9) (18.0)
Profit for the period 8.2 11.7
Total comprehensive expense for the period (2.7) (6.3)
Total comprehensive (expense) / income attributable to:
Equity shareholders (18.5) (17.2)
Non-controlling interests 15.8 10.9
Total comprehensive expense for the period (2.7) (6.3)
Condensed consolidated balance sheet (Unaudited)
as at 31 March 2024
Notes
31 March 2024 30 September 2023
£m £m
Non-current assets
Property, plant and equipment 657.1 586.9
Goodwill and intangible assets 696.1 681.1
Right-of-use assets 950.4 931.5
Investments in associates 24.1 16.2
Deferred tax assets 88.1 91.0
Other receivables 105.0 81.2
2,520.8 2,387.9
Current assets
Inventories 45.1 42.4
Tax receivable 6.0 6.0
Trade and other receivables 141.7 158.6
Cash and cash equivalents 8 190.4 303.3
383.2 510.3
Total assets 2,904.0 2,898.2
Current liabilities
Short-term borrowings 8 (148.2) (12.6)
Trade and other payables (680.5) (741.1)
Tax payable (8.0) (23.3)
Lease liabilities (257.0) (252.3)
Provisions (15.2) (25.3)
(1,108.9) (1,054.6)
Non-current liabilities
Long-term borrowings 8 (661.0) (682.8)
Post-employment benefit obligations (10.7) (10.5)
Lease liabilities (757.1) (776.4)
Other payables (1.2) (1.3)
Provisions (32.4) (30.7)
Deferred tax liabilities (26.4) (19.8)
(1,488.8) (1,521.5)
Total liabilities (2,597.7) (2,576.1)
Net assets 306.3 322.1
Equity
Share capital 8.6 8.6
Share premium 472.7 472.7
Capital redemption reserve 1.2 1.2
Other reserves (26.8) (18.2)
Retained losses (265.4) (238.1)
Total equity shareholders' funds 190.3 226.2
Non-controlling interests 116.0 95.9
Total equity 306.3 322.1
Condensed consolidated statement of changes in equity (Unaudited)
for the six months ended 31 March 2024
Share capital Share premium Capital redemption reserve Other reserves(1) Retained losses Total parent equity NCI Total equity
£m £m £m £m £m £m £m £m
At 1 October 2022 8.6 472.7 1.2 (9.0) (248.5) 225.0 86.0 311.0
(Loss)/profit for the period - - - - (10.0) (10.0) 21.7 11.7
Other comprehensive income / (expense) for the period - - - (5.8) (1.4) (7.2) (10.8) (18.0)
Capital contributions from non-controlling interests - - - - - - 5.8 5.8
Dividends paid to NCI - - - - - - (24.3) (24.3)
Share-based payments - - - - 2.9 2.9 - 2.9
At 31 March 2023 8.6 472.7 1.2 (14.8) (257.0) 210.7 78.4 289.1
At 1 October 2023 8.6 472.7 1.2 (18.2) (238.1) 226.2 95.9 322.1
(Loss)/profit for the period - - - - (10.5) (10.5) 18.7 8.2
Other comprehensive income / (expense) for the period - - - (8.6) 0.6 (8.0) (2.9) (10.9)
Capital contributions from non-controlling interests - - - - - - 25.7 25.7
Dividends paid to NCI - - - - - - (27.8) (27.8)
Purchase of additional stake in subsidiary - - - - (6.4) (6.4) 6.4 -
Transaction with NCI - - - - 6.2 6.2 - 6.2
Dividends paid to shareholders - - - - (19.9) (19.9) - (19.9)
Share-based payments - - - - 2.7 2.7 - 2.7
At 31 March 2024 8.6 472.7 1.2 (26.8) (265.4) 190.3 116.0 306.3
(1) The other reserves include the translation reserve.
Condensed consolidated cash flow statement (Unaudited)
for the six months ended 31 March 2024
Notes Six months ended Six months ended
31 March 2024
31 March 2023
£m £m
Cash flows from operating activities
Cash flow from operations 6 179.0 168.4
Tax paid (15.5) (12.0)
Net cash flows from operating activities 163.5 156.4
Cash flows from investing activities
Dividends received from associates 3.5 0.7
Interest received 2.3 3.7
Purchase of property, plant and equipment (136.1) (104.8)
Purchase of other intangible assets (15.7) (2.3)
Acquisitions, net of cash and cash equivalents acquired (58.9) (2.8)
Net cash flows from investing activities (204.9) (105.5)
Cash flows from financing activities
Repayment of the Term Loan and USPP facility - (40.5)
Drawdown on revolving credit facility (RCF) 136.4 -
Net repayment of other bank facilities (6.4) (6.9)
Loans taken from/(repaid to) non-controlling interests 2.8 (0.9)
Payment of lease liabilities - principal (104.1) (101.6)
Payment of lease liabilities - interest (30.0) (24.0)
Interest paid excluding interest on lease liabilities (23.6) (32.0)
Dividends paid to non-controlling interests (27.8) (24.3)
Capital contribution from non-controlling interests 7.9 12.9
Capital contributions into associates (0.8) -
Fees paid as part of the Group's debt modifications (0.4) -
Dividends paid to equity shareholders (19.9) -
Net cash flows from financing activities (65.9) (217.3)
Net decrease in cash and cash equivalents (107.3) (166.4)
Cash and cash equivalents at beginning of the period 303.3 543.6
Effect of exchange rate fluctuations on cash and cash equivalents (5.6) (12.6)
Cash and cash equivalents at end of the period 190.4 364.6
Reconciliation of net cash flow to movement in net debt
Net decrease in cash in the period (107.3) (179.0)
Repayment of Term Loan and USPP facility - 40.5
Drawdown on revolving credit facility (RCF) (136.4) -
Cash outflow from other changes in debt 3.6 7.8
Change in net debt resulting from cash flows, excluding lease liabilities (240.1) (130.7)
Translation differences 6.3 32.2
Other non-cash changes 7.2 2.9
Increase in net debt excluding lease liabilities in the period (226.6) (95.6)
Net debt at beginning of the period (392.2) (296.5)
Net debt excluding lease liabilities at end of the period (618.8) (392.1)
Lease liabilities at end of the period (1,014.1) (808.7)
Net debt including lease liabilities at end of the period (1,632.9) (1,200.8)
Notes to the unaudited financial statements
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 as adopted for use in the UK.
The annual financial statements of the Group are prepared in accordance with
UK-adopted international accounting standards. 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 2023. Those accounts were reported upon by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and 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
2023 are not the Group's statutory accounts for that financial year.
The Group has applied the mandatory temporary exception to recognising and
disclosing information about deferred tax assets and liabilities arising from
Pillar 2 income taxes.
These condensed 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 as described below, the accounting policies adopted in the preparation
of these condensed consolidated half yearly financial statements to 31 March
2024 are consistent with the accounting policies applied by the Group in its
consolidated financial statements as at, and for the year ended, 30 September
2023 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 financial forecasts as part of the
preparation of its financial statements, including cash flow forecasts
prepared for a period of 16 months from the date of approval of these
financial statements and taking into consideration a number of different
scenarios. Whilst cash flow forecasts have been prepared for a period of 16
months to coincide with the Group's 2025 financial year end, the period of
assessment for going concern purposes is assessed as being 12 months from the
date of approval of these interim financial statements ("the going concern
period"). 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.
In making the going concern assessment, the Directors have considered forecast
cash flows and the liquidity available over the going concern period. In doing
so they assessed a number of scenarios, including a base case scenario and a
plausible downside scenario. The base case scenario reflects an expectation of
a continuing growth in passenger numbers in most of our key markets during the
forecast period, augmented by the ongoing roll-out of our new business
pipeline.
With some uncertainty surrounding the economic and geo-political environment
over the next twelve months, 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 sales that are around 5% lower than in
the base case scenario.
In both its base case and downside case scenarios, 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 12 months from the date of approval
of the financial statements, and that it will have headroom against all
applicable covenant tests throughout this period of assessment. The Directors
have therefore deemed it appropriate to prepare the financial statements for
the six months ended 31 March 2024 on a going concern basis.
1.3 Changes in accounting policies and disclosures
The following amended standards and interpretations have been adopted by the
Group in the current period:
· 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)
· Amendments to IAS 12 Deferred Tax related to Assets and Liabilities
arising from a Single transaction
There is no significant impact of adopting these new standards on the Group's
consolidated financial statements.
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:
· Classification of liabilities as current or non-current (Amendments
to IAS 1)
· IAS 1 'Presentation of Financial Statements' (amendments) -
classification of liabilities as current or non-current and non-current
liabilities with covenants
· IFRS 16 'Leases' (amendments) - lease liability in a sale and
leaseback
· IFRS 7 'Financial Instruments: Disclosures' & IAS 7 'Statement of
Cash Flows' (amendments) - supplier finance arrangements
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": North America, Continental Europe, the UK and
APAC and EEME. North America includes operations in the United States, Canada
and Bermuda; Continental Europe includes operations in the Nordic countries
and in Western and Southern Europe; The UK includes operations in the United
Kingdom and the Republic of Ireland; and APAC and EEME includes operations in
Asia Pacific, India, Eastern Europe and the Middle East, 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.
North America Continental Europe UK APAC and EEME Non-attributable Total
£m £m £m £m £m £m
Six months ended 31 March 2024
Revenue 369.7 532.8 392.1 222.6 - 1,517.2
Underlying operating profit / (loss) 29.2 (5.5) 19.5 35.1 (20.3) 58.0
Non-underlying operating costs (1.3) (5.2) (5.6) 7.3 4.5 (0.3)
Operating profit / (loss) 27.9 (10.7) 13.9 42.4 (15.8) 57.7
Six months ended 31 March 2023
Revenue 299.9 494.9 328.5 195.1 - 1,318.4
Underlying operating profit / (loss) 22.4 4.1 18.1 31.3 (23.5) 52.4
Non-underlying operating costs (1.2) - (0.1) - (2.5) (3.8)
Operating profit / (loss) 21.2 4.1 18.0 31.3 (26.0) 48.6
The following amounts are included in underlying operating profit / (loss):
North America Continental Europe UK APAC and EEME Non-attributable Total
£m £m £m £m £m £m
Six months ended 31 March 2024
Depreciation and amortisation (45.6) (82.3) (26.4) (20.5) (4.8) (179.6)
Six months ended 31 March 2023
Depreciation and amortisation (35.2) (62.7) (21.7) (22.5) (4.5) (146.6)
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 Six months ended
31 March 2024 31 March 2023
£m £m
Loss attributable to ordinary shareholders (10.5) (10.0)
Adjustments:
Non-underlying operating costs 0.3 3.8
Non-underlying costs attributable to non-controlling interests - -
Non-underlying finance credit (1.0) (2.8)
Tax effect of adjustments 1.9 0.3
Underlying loss attributable to ordinary shareholders (9.3) (8.7)
Basic weighted average number of shares 797,438,639 796,349,611
Dilutive potential ordinary shares - -
Diluted weighted average number of shares 797,438,639 796,349,611
Loss per share (p):
- Basic (1.3) (1.3)
- Diluted (1.3) (1.3)
Underlying loss per share (p):
- Basic (1.2) (1.1)
- Diluted (1.2) (1.1)
The number of ordinary shares in issue as at 31 March 2024 was 798,070,196
which excludes treasury shares (31 March 2023:796,529,196). The Company also
holds 263,499 ordinary shares in treasury (31 March 2023: 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 Six months ended
31 March 2024 31 March 2023
£m £m
Cost of food and materials:
Cost of inventories consumed in the period (422.2) (369.8)
Labour cost:
Employee remuneration (479.7) (425.4)
Overheads:
Depreciation of property, plant and equipment (62.6) (51.3)
Depreciation of right-of-use assets (111.8) (90.5)
Amortisation of intangible assets (5.2) (4.8)
Non-underlying operating loss (0.3) (3.8)
Gain on derecognition of leases - 2.4
Rentals payable under leases (190.2) (165.4)
Other overheads (187.5) (161.2)
(1,459.5) (1,269.8)
Non-underlying operating loss
The non-underlying operating gain / (costs) in the six months ended 31 March
2024 are shown below.
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Impairment of property, plant and equipment (9.2) -
Impairment of right-of-use assets (1.8) -
Gain on derecognition of leases 8.9 -
Repayment of historical legal fees and release of legal provision 5.7 -
Other non-underlying operating costs (3.9) (3.8)
Total non-underlying operating loss (0.3) (3.8)
Impairment of property, plant and equipment and right-of-use assets:
The Group has carried out impairment reviews where indications of impairment
have been identified. These impairment reviews compared the value-in-use of
individual sites, based on management's current assumptions regarding future
trading performance, to the carrying values of the associated assets.
Following this review, a charge of £11.0m has been recognised, which includes
an impairment of right-of-use assets of £1.8m.
Gain on lease derecognition:
The Group has recognised a credit relating to the renegotiation of a
concession contract in the APAC and EEME region, such that the contract now
falls outside the scope of IFRS 16. This has resulted in the derecognition of
both the right of use asset and the lease liability, with the net impact on
the income statement being a £8.9m credit.
Repayment of historical legal fees and release of legal provision:
As a result of success in a legal matter we have recognised £3.7m in repaid
legal fees in the period as well as the release of a provision of £2.0m
relating to the case.
Other non-underlying expenses:
We have incurred £3.9m in other non-underlying costs, principally relating to
the various acquisitions completed and announced in the period.
5 Finance income and expense
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Finance income
Foreign exchange gains 6.1 6.1
Interest Income 2.4 5.1
Net change in fair value of cash flow hedges utilised in the period 0.4 -
Total finance income 8.9 11.2
Finance expense
Total interest expense on financial liabilities measured at amortised cost (24.7) (24.9)
Lease interest expense (30.0) (24.0)
Non-underlying finance credit 1.0 2.8
Unwind of discount on provisions (0.7) (0.4)
Other - 0.1
Total finance expense (54.4) (46.4)
Non-underlying finance credit
The non-underlying finance credit in the six months ended 31 March 2024
includes income recognised under IFRS 9 as a result of prior year amendments
and extensions of borrowings.
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Effective interest rate gain 1.4 2.8
Refinancing costs (0.4) -
Total non-underlying finance credit 1.0 2.8
In the prior periods, non-substantial modifications to the Group's financing
arrangements resulted in charges which were recognised as non-underlying. The
amortisation of the liability resulting from this charge through the effective
interest rate calculation has therefore also been recognised as
non-underlying.
6 Cash flow from operations
Six months ended Six months ended
31 March 2024 31 March 2023
£m £m
Profit for the period 8.2 11.7
Adjustments for:
Depreciation of property, plant and equipment 62.6 51.3
Depreciation of right-of-use assets 111.8 90.5
Amortisation of intangible assets 5.2 4.8
Gain on derecognition of leases (8.9) (2.4)
Impairments 11.0 -
Share-based payments 2.7 2.9
Finance income (8.9) (11.2)
Finance expense 54.4 46.4
Movements in provisions and pensions 0.5 0.9
Share of profit of associates (0.6) (2.4)
Taxation 4.6 4.1
242.6 196.6
(Increase)/decrease in trade and other receivables (3.0) 13.1
Increase in inventories (2.7) (2.0)
Decrease in trade and other payables including provisions (57.9) (39.3)
Cash flow from operations 179.0 168.4
7 Dividends
The final dividend of 2.5p per share for the year ended 30 September 2023 was
approved and paid during the period (2023: no final dividend was approved or
paid for the year ended 30 September 2022).
The Board has declared an interim dividend of 1.2 pence per share (H1 2023:
nil), with a view to maintaining the pay-out ratio for the full year at
between 30% and 40% of underlying pre-IFRS 16 earnings per share, and with the
interim dividend representing approximately one third of the expected full
year dividend, based on our Planning Assumptions. The dividend will be paid on
28 June 2024 to shareholders registered on 31 May 2024. The ex-dividend date
will be 30 May 2024.
The ex-dividend date will be 30 May 2024.
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.
- 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.
Carrying value and fair values of certain financial instruments
The following table shows the carrying value of financial assets and financial
liabilities.
As at As at
31 March 2024 30 September 2023
£m £m
Financial assets measured at amortised cost
Cash and cash equivalents 190.4 303.3
Trade and other receivables 192.0 191.8
Total financial assets measured at amortised cost 382.4 495.1
Non-derivative financial liabilities measured at amortised cost
Bank loans (471.5) (347.0)
US private placement notes (337.7) (348.4)
Lease liabilities (1,014.1) (1,028.7)
Trade and other payables (651.6) (712.4)
Total financial liabilities measured at amortised cost (2,474.9) (2,436.5)
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 2024, was £808.3m (30 September 2023: £693.1m).
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.
In January 2024 the Group entered into two interest rate swap agreements to
fix the interest on a portion of its EUR and GBP Term Loans. Their
mark-to-market value at 31 March 2024 was £1.1m.
9 Business combinations and purchase of non-controlling
interest
A summary of the details of the acquisitions completed in the period is shown
in the table below:
Business / Company Sector Country SSP Ownership Acquisition date
Midfield Concession Enterprise Inc. (Denver airport) Air USA 60% 16 November 2023
ECG Ventures Ltd Air Canada 100% 11 December 2023
Mack II Air USA 100%(1) 1 February 2024
( )
(1) The ownership % of Mack II will be reduced after negotiating the required
joint venture partnership agreements, and the acquisition accounting will be
adjusted for that transaction.
The fair values of the identifiable assets and liabilities of those companies
as at the date of acquisition were:
Fair value recognised on acquisition
£m
Denver airport Mack II ECG Ventures TOTAL
Assets
Property, plant and equipment 9.7 1.2 4.0 14.9
Intangible assets - - 0.2 0.2
Right of use assets 11.3 10.4 21.8 43.5
Other receivables - - 0.4 0.4
Liabilities
Other liabilities - (0.4) (0.9) (1.3)
Lease liabilities (8.4) (5.3) - (13.7)
Deferred tax liabilities - - (6.5) (6.5)
Total provisional identifiable net assets at fair value 12.6 5.9 19.0 37.5
Less: non-controlling interest measured at fair value (5.1) - - (5.1)
Increase in Other receivables due from NCI 5.1 - - 5.1
Add: Goodwill arising on acquisition 2.5 5.1 13.2 20.8
TOTAL provisional net assets acquired 15.1 11.0 32.2 58.3
Satisfied by:
Purchase consideration transferred:
Purchase consideration £m £m £m £m
Cash paid 6.9 11.0 30.6 48.5
Offsets against NCI receivables in other joint ventures from the same joint 5.7 - - 5.7
venture partners
Deferred consideration 1.9 - 1.6 3.5
Capital expenditure settlements 0.6 - - 0.6
Total purchase consideration 15.1 11.0 32.2 58.3
The Group measured the acquired lease liabilities using the present value of
the remaining lease payments at the date of acquisition. The right-of-use
assets were measured at an amount equal to the lease liabilities and adjusted
to reflect the favourable terms of the lease relative to market. The
right-of-use assets include concession rights amounting to £29.8m in total
across the three acquisitions will be amortised over the life of the
contracts.
At the time when the financial statements were authorised for issue, the Group
had not yet completed the accounting for the acquisitions. In particular, the
fair values of the assets and liabilities disclosed above have only been
determined provisionally, because the independent valuations have not been
fully finalised.
These acquisitions contributed £12.7m to revenue and £1.5m to operating
profit from the dates of acquisition to 31 March 2024.
There has been also an acquisition of 51% of shares in SSP Arabia Limited for
the total consideration of £1.3m.
Purchase of non-controlling interest
Prior to 14 December 2023 the Group held a controlling 50% interest in SSP
Brazil with the residual value of accumulated non-controlling interest
(losses) of £6.4m. On 14 December 2023, the Group purchased the remaining 50%
interest in SSP Brazil, taking its ownership to 100%. The consideration paid
for the additional 50% interest in SSP Brazil was equivalent to £0.6m.
Purchase of an associate
On 25 October 2023, the Group acquired a non-controlling 50% interest in
Extime Food & Beverage Paris SAS for the consideration of £10.5m with a
controlling interest held by Aeroports de Paris.
10 Post balance sheet events
Airport Retail Enterprises Pty Ltd
On 13 February 2024, the Group signed an agreement to purchase Airport Retail
Enterprises Pty Ltd ("ARE"). This will expand the Group's presence across
Australia adding 62 outlets across seven airports to its portfolio: Sydney,
Melbourne, Brisbane, Gold Coast, Canberra, Townsville and Mount Isa. The cash
consideration for the acquisition was approximately £80m (AUS$150m) (subject
to completion adjustments). The transaction completed on 1 May 2024. Due to
the timing of completion, the provisional fair values of all acquired assets
and liabilities are yet to be determined.
US Private Placement
On 26 April 2024, the Group issued US Private Placement notes (the 'Notes') of
EUR240m. The notes represent SSP's third issue in the US Debt Private
Placement market, following its issues in 2018 and 2019 and carry a fixed rate
of interest of 4.89%. The notes have a maturity of five years.
Indonesia
We have agreed to create a new joint venture with PT Taurus Gemilang, subject
to obtaining the necessary consents - to operate 13 outlets, mostly in Bali,
which we expect to provide a platform for further growth in that market. The
consideration for the acquisition will be c. £10m subject to completion
adjustments.
11 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 190
of the Annual Report and Accounts 2023.
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 2024.
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,
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, 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PPUCUAUPCPGURecent news on SSP
See all newsREG - SSP Group PLC HSBC Holdings PLC - Holding(s) in Company
AnnouncementREG - SSP Group PLC - Director/PDMR Shareholding
AnnouncementREG - SSP Group PLC - Director/PDMR Shareholding
AnnouncementREG - SSP Group PLC - Director/PDMR Shareholding
AnnouncementREG - SSP Group PLC - Holding(s) in Company
Announcement