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SSP revenues recovering strongly as travel sector rebounds

SSP Group, the operator of global travel food and beverage outlets, has just announced its financial results for the first half of its 2022 financial year, covering the six months ended 31 March 2022.

SSP has had a good first half and revenues are recovering strongly as the travel sector rebounds. The actions taken during the pandemic to protect the business now leave it well positioned to capitalise on the many opportunities ahead.

Financial overview:
• Revenue of £803.2m (2021: £256.7m), up 212.9% vs 2021 (back to 64% of 2019 level, i.e. pre Covid-19)
• Underlying EBITDA of £14.7m compared to an underlying EBITDA loss of £110.3m in 2021 (both on a pre-IFRS 16 basis)
• Operating profit of £26m on a reported basis under IFRS 16, including credit for non-underlying items of £78.6m (2021: £219.9m loss on a reported basis under IFRS 16, including credit for non-underlying items of £6.7m). On a pre-IFRS 16 basis, the underlying operating loss was £36.4m (2021: £160.7m loss)
• Loss before tax of £2.3m on a reported basis under IFRS 16 (2021: £299.7m loss). On a pre-IFRS 16 basis, the underlying loss1 before tax was £55.3m (2021: £182.0m loss)

Business highlights:
• Strong recovery in revenue to 64% of 2019 levels in H1; further strengthening in the first six weeks of the second half to 83% of 2019 levels, as Covid-19 restrictions have been lifted, led by leisure travel in both the air and rail sectors and the return of commuters to the workplace
• Disciplined and flexible programme of unit openings and closures in response to the highly variable levels of passenger demand during H1; with c.2,200 units currently open, representing over 80% of the estate
• Continued focus on operating efficiency has enabled the business to deliver positive EBITDA in H1 and limit the profit conversion on the lower sales compared to 2019 to 22% of underlying Operating Profit
• High levels of contract retention, ahead of historical levels, underpinned by the strength of client relationships, brand portfolio and operational performance
• Mobilisation of new business pipeline continuing with c.50 new units opened in the first half
• Further new business won in H1 (c.80 units with estimated annual revenues of c.£75m), increasing the expected annual sales value of net gains since 2019 to c.£500m, once fully mobilised over the next 2 years
• Significant market growth opportunity globally, with the financial capacity to invest in organic and inorganic expansion of up to £425m-£475m
• Further investment in the customer proposition, with the launch of several new innovative brands and concepts, as well as the accelerated rollout of order and pay digital technology.

Recent trading & outlook
In the UK, sales are back to c.82% of pre Covid-19 levels, with the air sector boosted by strong leisure demand, and the rail business helped by the return of commuters in increasing numbers.

SSP's current expectation is for sales in the second half of the year to be around 80-85% of pre Covid-19 levels and for full year sales to be in the region of £2bn to £2.1bn.

Whilst the final profit outturn will be dependent on a number of external factors, including the trajectory of the recovery and inflationary cost pressures, SSP would expect the full year EBITDA margin to be between 5% and 6%.

In addition to this, at the end of March 2022, the group had a pipeline of c.230 secured new units, which it expects to open over the next 2 years, ultimately adding a further c.£300m of annualised sales.

Patrick Coveney, CEO of SSP Group, said, “The business is recovering well from a hugely challenging period. We have seen a significant rebound in trade since the impact of Omicron, with revenues currently running at over 80% of pre Covid-19 levels and with a similar proportion of our sites now open.

“I would like to thank all SSP colleagues for their dedication, resilience, and professionalism during the Covid-19 crisis, and for their contribution to delivering this robust first half performance. We are also grateful to our clients and brand partners for their support and commitment to SSP especially during the Covid-19 challenges.'

Patrick continued, “It has been immediately clear to me that I have joined a fantastic organisation that has done all of the right things during Covid-19 to protect the business, but, very importantly, is now taking the opportunity to strengthen the foundations of the business for the recovery.

“SSP has a number of fundamental strengths, including very strong local business platforms around the world, industry-leading operational execution, as well as outstanding financial discipline.

“These attributes, alongside the quality and breadth of our brands and concepts, our digital platforms, client relationships and brand partnerships, give us the opportunity to accelerate our growth and expansion across the international travel markets.'

Patrick concluded, “We anticipate a full recovery in leisure travel, which drives the majority of our business, and are confident that we are well positioned for the months and years ahead.”