Interim Management Statement

RNS Number : 3176X

Compass Group PLC

07 February 2013

 



Compass Group PLC

AGM and Interim Management Statement

Compass Group PLC is today issuing its first Interim Management Statement for 2013 ahead of its Annual General Meeting to be held at 12:00 noon today at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE. At this meeting, shareholders will be provided with the following update on the Group's performance since 30 September 2012.

Group

Compass has had a good start to the new financial year with first quarter organic revenue growth of nearly 6%. Organic revenue growth in North America was particularly strong with the Ascension Health contract contributing over 1% to global sales in the period. The environment in Europe remains difficult, as expected, but our cost reduction plans are on track. In Fast Growing & Emerging, we have continued to see strong levels of demand.

Organic revenue growth has been driven by consistently strong new business levels and high rates of retention. Like for like revenue is positive overall but continues to show different trends across the world; positive in North America, negative in Europe & Japan and strong in Fast Growing & Emerging. The impact of acquisitions broadly mitigated the impact of the disposal of the US Corrections business.

We are continuing to generate considerable efficiencies through applying the MAP framework, which are being reinvested in exciting growth opportunities around the world as well as helping us to manage the challenging economic conditions in parts of Europe. These efficiencies also underpin our expectation of delivering further progress in the operating margin. Free cash flow conversion remains strong.

Regions

The 2013 financial year has started well in North America, with strong organic revenue growth and further cost savings. The Ascension Health and Texas A&M University contracts are now fully operational, and we have also won good levels of new business in Business & Industry (B&I). Economic conditions in Europe & Japan remain difficult and, as expected, we have seen a decline in organic revenue. The cost reduction plans announced in September 2012 are progressing well and remain on track. Fast Growing & Emerging continues to enjoy strong levels of organic revenue growth from both new business wins and like for like revenue, with particularly good performances in Australia, Turkey and Latin America. We have also made further progress on generating increased efficiencies, while investing in the many growth opportunities we see.

Financial Position

Since 30 September 2012, we have committed £77 million to infill acquisitions. These include Crown Camps, an experienced food service operator in the oil and gas sector in Colombia, and Nova Services Group, a Toronto-based company that provides food and support services to the B&I and Healthcare sectors. In the US, we have acquired two support services companies, CREST Services Inc. and Mayflower Healthcare Textile Services, LLC, to expand our range of services and geographic presence in the Healthcare sector.

In December, we concluded the £500 million share buyback announced in November 2011. In total, 74,581,481 million shares were purchased for cancellation at an average price of 670 pence per share. The Group announced a further £400 million share buyback at its final results in November 2012, which commenced on 7 January 2013. As at 6 February 2013, 5,175,000 shares have been purchased for cancellation for a total of £39 million.

Summary & Outlook

Compass has had a good first quarter and our expectations for the full year remain positive and unchanged. North America and Fast Growing & Emerging are continuing to perform well and we are making good operational progress in Europe & Japan. In the longer term, we remain positive about the significant structural growth opportunities in both food and support services globally and the potential for further revenue and margin growth.

Enquiries:
Sarah John / Clare Hunt	[phone]
Website	www.compass-group.com

Note to Editors

(a)    Compass Group PLC is a world leading food and support services company, which generated annual revenues of £16.9 billion in the year to 30 September 2012. It operates in around 50 countries, employs over 500,000 people and serves over 4 billion meals every year. The Company specialises in providing food and a range of support services across the core sectors of Business & Industry, Defence, Offshore & Remote Site, Healthcare, Education, Sports & Leisure and Vending with an established brand portfolio.

(b) MAP (Management and Performance) is a simple, but clearly defined Group operating framework. MAP focuses on five key value drivers, enabling the businesses to deliver disciplined, profitable growth with the focus more on organic growth and like for like growth.

The five key value drivers are:

MAP 1: Client sales and marketing

MAP 2: Consumer sales and marketing

MAP 3: Cost of food

MAP 4: Unit costs

MAP 5: Above unit overheads

(c)   Organic revenue growth, a term used throughout the announcement, is calculated by adjusting for acquisitions (excluding current period acquisitions and including a full period in respect of prior period acquisitions), disposals (excluded from both periods) and exchange rate movements (translating the prior period at current period exchange rates).

(d)    Forward looking statements

Certain information included in this announcement is forward-looking and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward-looking statements. Forward-looking statements cover all matters which are not historical facts and include, without limitation, projections relating to results of operations and financial conditions and the Company's plans and objectives for future operations, including, without limitation, discussions of expected future revenues, financing plans, expected expenditures and divestments, risks associated with changes in economic conditions, the strength of the foodservice and support services markets in the jurisdictions in which the Group operates, fluctuations in food and other product costs and prices and changes in exchange and interest rates. Forward-looking statements can be identified by the use of forward-looking terminology, including terms such as "believes", "estimates", "anticipates", "expects", "forecasts", "intends", "plans", "projects", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. Forward-looking statements are not guarantees of future performance. All forward-looking statements in this announcement are based upon information known to the Company on the date of this announcement. Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward-looking statements, which speak only at their respective dates. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority), the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Nothing in this announcement shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

A copy of this release, together with all other recent announcements and presentations can be found on Compass Group's website at www.compass-group.com.

 

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