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Wed 1st Jul 2020 - SSP to axe up to 5,000 jobs in the UK
SSP to axe up to 5,000 jobs in the UK: UK transport hub foodservice company SSP Group is to axe up to 5,000 jobs in the UK to reflect the current low level of passenger demand – traffic is still down 85% year-on-year – resulting from covid-19. SSP Group chief executive Simon Smith, said: “Covid-19 continues to have an unprecedented impact on the travel industry and on SSP’s businesses in all geographies. Reflecting this, over the last three months the company has taken rapid and decisive action to protect the business and to substantially strengthen the group’s financial position. We are beginning to see early signs of recovery in some parts of the world and are starting to open units as passenger demand picks up. However, in the UK the pace of the recovery continues to be slow. In response to this, we are now taking further action to protect the business and create the right base from which to rebuild our operations. Regrettably, we are starting a collective consultation which will affect our UK colleagues. These are extremely difficult decisions, and our main priority will be to conduct the process carefully and fairly. Importantly, we are retaining the flexibility to upscale operations and swiftly re-open additional units if we see improved sales over the summer. The medium-term prospects for the group remain positive. The objective of the action that we are proposing today is to ensure that we manage through this pandemic, rebuild our business as demand recovers and, in time, deliver long term sustainable growth for the benefit of all our stakeholders.” The company stated that covid-19 has had an unprecedented impact on the travel sector. It said: “Our response has been to take rapid and decisive management action to protect our colleagues and customers and to preserve cash and liquidity for the duration of the many government restrictions worldwide. These actions included the following: New health and safety protocols created and cascaded to colleagues; Offices closed and colleagues supported to work from home;Temporary closure of the majority of units; colleagues furloughed where schemes available; March equity placing completed and access to the Bank of England’s CCFF confirmed, considerably strengthening our balance sheet. Approximately £750m liquidity in place leaving us well positioned to operate throughout even our most pessimistic trading scenario; Waivers of existing covenant tests until September 2021; Salary reductions across senior management, executive committee and board; discretionary spend and capital investment reduced to a minimum; share buyback programme suspended.” It added: “The trading scenario we presented at our Interim Results on 3 June 2020 assumed an almost total shutdown of the travel market for the whole of the second half of our financial year. In this scenario, we envisaged group revenue being down approximately 80% to 85% in H2 2020 against the same period last year and an underlying Ebitda loss of between £120m and £190m and operating loss of between £180m and £250m for the second half year, the final out-turn depending on our ability to manage the profit conversion on the reduced sales. With the global lock-down continuing, and as we indicated in June, sales in April and May were approximately 95% below last year. During June sales have recovered slightly and are now running at approximately 90% below last year, with stronger performances in Continental Europe and North America reflecting the gradual easing of lockdowns in these regions offset by the UK and Rest of World, where sales remain below this level. Despite the low level of sales across the group, the impact on operating profit is being mitigated by the speed and the extent to which we have been able to reduce operating costs and hence our expectations for operating losses and Ebitda in H2 remain within the ranges indicated above, prior to restructuring costs, even if we see sales remain at the current run rate until the end of the financial year. The impact on passenger travel arising from covid-19 resulted in the closure of almost all of our units in the UK. Our intention was to re-open units and bring back our teams as rapidly as possible once passenger demand recovered, having accessed the UK Government’s furlough scheme. The reality is that passenger numbers still remain at very low levels, a reflection of the extent and duration of the current restrictions in place. In the Rail sector, which represents the majority of SSP’s UK operations, passenger numbers remain circa 85% lower year-on-year and the UK Air sector has to date been largely closed. The proposed introduction of air bridges and the start of the holiday season may lead to some limited return of short-haul air travel demand in July, although capacity is expected to be significantly reduced, and long-haul travel is anticipated to remain at extremely low levels. With the current social distancing measures remaining in place, the recovery in passenger numbers in the rail sector is expected to be prolonged. As a consequence, our expectation is that by the autumn only around 20% of units in the UK will have opened. We have therefore come to the very difficult conclusion that we will need to simplify and reshape our UK business, and we are now starting a collective consultation on a proposed reorganisation. If the pace of the recovery continues at the current level, this could lead to up to c. 5,000 roles becoming redundant from within the head office and UK operations. Clearly, these decisions are very difficult, and our priority is to conduct this process fairly and to support those affected. Our initial assessment is that the costs associated with this will be in the region of £8m-£10m. At this stage, we have not commenced restructuring of a material scale in any other geographies due to our expectations of a more rapid recovery, the longer durations of furlough support or our contractual lay-off arrangements.”

Sponsored Message – Heinz launches Click&Chips campaign to save the UK’s fish and chip shops: Heinz has launched the new Click&Chips campaign committed to helping the nation’s fish & chip shops reopen and trade successfully. Working in partnership with specialist click and collect app developers Stampapp, Click&Chips will create an individual app – and cover a two-month subscription fee – for 100 fish and chip shops nationwide, all at no cost to the shops themselves. The apps will employ a click and collect service to reduce queues in-store as well as provide the shops with an additional revenue stream. Claire Traynor, head of foodservice for Northern Europe at Kraft Heinz, said: “We wanted to empower chip shops with the tools and expert guidance to pivot their business and start trading successfully again. We’re incredibly excited about this campaign and cannot wait to see these small but mighty traders reopen for business.” Fish and chip shops have until midnight on Sunday 12 July 2020 to sign up by visiting clicknchips.co.uk. The spots will be awarded on a first come first served basis. The successful shops will be notified by Friday 17 July 2020 and supported every step of the way to bringing back the nation’s favourite comfort food. If you have information you would like to feature in a sponsored message, email paul.charity@propelinfo.com

Applegreen announces increased liquidity for Welcome Break subsidiary: Applegreen, the roadside convenience retailer, has announced its Welcome Break subsidiary has successfully completed a process to access additional facilities which significantly enhances its liquidity during the covid-19 crisis. The company stated: “Welcome Break has repurposed £25m of a dedicated capital expenditure facility in its existing banking facilities into a revolving credit facility which is available to draw down for any purpose. The lenders to Welcome Break have also agreed to relax or remove covenant conditions for tests up to and including June 2021. We thank these lenders for their ongoing support for Welcome Break and the confidence they have demonstrated in its business model. Welcome Break has traded in line with our covid-19 projections for both May and June and the business has now reopened a significant number of its food and beverage offers to meet demand as travel restrictions started to ease from early June. Traffic volumes on the UK motorway road network are continuing to recover and current traffic flows are now back to over 65% of 2019 volumes. We welcome the UK government’s recent announcement which will see further substantial lifting of restrictions from 4 July 2020 which we expect to drive further traffic increases on the road network. At 26 June 2020, Welcome Break had over £30m in available cash in addition to the new undrawn facilities of £25m. The Welcome Break business has substantial liquidity and is expected to be cashflow positive in June, leaving the business well positioned ahead of the important summer season. The remainder of the Applegreen business has continued to trade ahead of our covid-19 projections for both May and June. We are very pleased with the performance which has been aided by strong store sales in the local petrol filling station sites, good fuel margins and extensive cost saving measures. Traffic volumes have started to recover as authorities have accelerated the lifting of travel restrictions with working capital and cash also starting to rebuild with these increased volumes. Cash balances in this part of the business at 26 June 2020 were in excess of €60m with undrawn facilities of approximately €64m. Our absolute focus at present is navigating the various challenges associated with covid-19 and to ensure we are looking after our people whilst continuing to deliver the essential service we provide to our customers. The ultimate course of the pandemic remains unclear at this stage, but we are following the relevant guidance from the authorities and taking definitive steps to ensure the group remains well positioned as market conditions recover.”

British Land reports 36% of rents paid in retail: Property landlord British Land has reported that it collected 88% of rent for offices and 36% in retail (including its London campuses) relating to the June Quarter. It stated: “We continue to engage with customers on a case by case basis. For smaller, independent operators, primarily in food & beverage and retail, we have agreed rental waivers of £3m in relation to the June quarter in addition to £2m in relation to the March quarter, which we announced in our FY20 results. We are holding productive discussions with larger retail and leisure operators who have been disproportionately affected by lockdown. These include moves to monthly rents, deferrals and partial settlement of March and June rents, typically in return for the removal of lease breaks, lease extensions, reduced incentives or commitments for additional space. This is an ongoing process and so we expect the collection rates for June to improve over the coming weeks.”

Escape Hunt raises £4.3m: Escape Hunt, the operator of escape rooms, has announced it has received valid acceptances from qualifying shareholders in respect of 4,217,013 open offer shares, including applications for 2,181,429 open offer shares under the excess application facility. This represents approximately 62.64% of the maximum open offer shares available under the open offer. The company has therefore raised, in aggregate, approximately £4.316 million (before expenses) through the placing, open offer, subscription and issue of convertible loan notes.

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