25th Mar 2020 08:50
(Alliance News) - Food kiosk operator SSP Group PLC will be raising cash, it said on Wednesday, amid a crash in revenue as people stay away from travel hubs.
It also has suspended both its share buyback and its dividend payments.
Despite the dramatic news, shares were 18% higher on Wednesday morning in London at 277.50 pence each.
SSP owns brands such as Upper Crust and Ritazza, which are found in railway stations and airports. Widespread travel bans across the globe due to Covid-19 have "severely" impact passenger numbers, SSP said, in the UK, Europe and North America.
As a result, revenue in the UK and continental Europe on a like-for-like basis is running between 80% and 85% lower than the year before, with air doing worse than rail. In North America, the decline is 80% and in the Rest of World segment, like-for-like revenue is down 60%.
SSP believes revenue in March will fall around 40% to 45% year-on-year, translating into a GBP125 million to GBP135 million revenue shortfall. Operating profit would be hit by between GBP50 million and GBP60 million.
For the first half ended March 31, SSP sees revenue falling 3% at constant currency and down 4% at actual rates.
In a "very pessimistic" scenario, revenue in the second half ending September would be 80% to 85% lower than the same period a year prior.
Amid this slump in trading, SSP is to launch a share placing, though did not give any details save for saying the number of shares offered will not exceed 19.99% of the existing share capital.
"The net proceeds of the placing will be used to strengthen the company's balance sheet, working capital and liquidity position during this period of unprecedented disruption in the global travel market as a result of the Covid-19 outbreak," said SSP.
The placing will be run by Barclays PLC, JPMorgan Cazenove, Goldman Sachs Group Inc, and HSBC Holdings PLC.
SSP also has decided to halt its current GBP100 million share buyback, having only returned GBP2 million so far. Further, the 6.0 pence per share final dividend has been deferred. No dividend will be paid for the first half of its current year.
SSP is cutting all non-essential costs, and units are being closed and operating hours reduced.
The company has also agreed a new GBP112.5 million facility with a trio of UK banks lasting 18 months.
"The Covid-19 outbreak is an unprecedented crisis and is having a severely negative impact on the travel sector. These are hugely challenging times and I would like to sincerely thank everyone at SSP for their support and commitment," said Chief Executive Simon Smith.
"In common with the sector, we have seen a very sharp drop off in passenger numbers and this has heavily impacted SSP revenue. We've had to take significant action to reduce our costs while doing everything we can to limit the impact of this on our colleagues. However, we have had to close a number of units given the extent to which passenger numbers have decreased. These decisions have not been taken lightly and I sincerely hope that we can re-open our units and welcome back our teams as soon as possible."
"We also welcome the actions announced by HM Treasury to support individuals and businesses through the Covid-19 crisis. This together with the management action we are taking, and the additional funding arrangements announced today will put us in a strong position to manage through this crisis and be in the best shape possible to return to growth once the market begins to recover," Smith continued.
By George Collard; [email protected]
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