Slide 1: 2013 Full Year Results
2013 Full Year Results Wednesday 27 November 2013
Slide 2: Disclaimer
Disclaimer Disclaimer Certain information included in the following presentation 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 a
Slide 3: Presentation structure
Presentation structure 1. Sir Roy Gardner Welcome & highlights 2. Dominic Blakemore Full year results 3. Richard Cousins Business review, strategy & outlook 4. Q&A 3
Slide 4: Business highlights
Business highlights • Good full year performance • Organic revenue growth of 4.3% • Underlying operating profit margin up 20bps to 7.1% • Full year dividend increased by 12.7% to 24 pence • Additional share buyback programme of £500m in 2014 4
Slide 5: 2013 Full Year Results
2013 Full Year Results Dominic Blakemore Group Finance Director
Slide 6: Revenue
Revenue Change 2 3 Reported Constant Organic 2013 2012 Rates Currency Growth £m £m % % % North America 8,150 7,517 8.4% 7.3% 8.0% Europe & Japan 6,039 6,243 (3.3)% (2.5)% (3.0)% Fast Growing & Emerging 3,368 3,145 7.1% 11.6% 10.2% Revenue 17,557 16,905 3.9% 4.5% 4.3% Notes: 1. Based on continuing op
Slide 7: Operating profit – Reported currency
Operating profit – Reported currency Change Analysed By Acquisition 2013 2012 Change Currency / Disposal Organic £m £m £m £m £m £m North America 657 598 59 6 (3) 56 Europe & Japan 420 397 23 (2) 3 22 Fast Growing & Emerging 242 235 7 (9) 3 13 Unallocated central overheads (64) (60) (4) - - (4) Assoc
Slide 8: Impact of currency on operating profit
Impact of currency on operating profit 2012 2013 Impact on 25-Nov Impact on Average Rate Average Rate 2012 Profit Spot Rate 2013 Profit USD 1.58 1.57 £6m 1.62 £(21)m CAD 1.59 1.59 - 1.71 £(4)m EUR 1.21 1.19 £3m 1.20 £(1)m YEN 124.35 143.83 £(7)m 164.73 £(6)m AUD 1.53 1.58 £(3)m 1.77 £(12)m BRL 2.99
Slide 9: Operating profit and margin – Constant currency
Operating profit and margin – Constant currency Margin 3 2013 2012 2 Change 2013 2012 £m £m £m % % % North America 657 604 53 8.8% 8.1% 8.0% Europe & Japan 420 395 25 6.3% 7.0% 6.4% Fast Growing & Emerging 242 226 16 7.1% 7.2% 7.5% Unallocated central overheads (64) (60) (4) Associates 10 8 2 Operat
Slide 10: Operating profit growth – Constant currency
Operating profit growth – Constant currency £m (estimated) 2013 2012 Net new business 40 35 Base estate 63 35 Above unit overheads (16) (6) Associates 2 - Organic operating profit growth 89 64 Acquisitions/disposals 3 31 Total operating profit growth 92 95 Notes: 1. Based on continuing operations, e
Slide 11: European exceptional
European exceptional Announced in September 2012 Delivered in 2013 • Material like for like volume declines • Like for like volume decline and profit impact expected, potential FY profit impact of £60m as expected • Labour cost reduction & flexibility plans • Action plans delivered on track to offse
Slide 12: Goodwill
Goodwill • Legacy issue • UK goodwill £1.8 billion to £1.4 billion • £377 million impairment, non-cash • Significant increase in discount rates • Solid performance in the UK, in challenging markets - Delivery in line with budget - No change to future expectations 12
Slide 13: Income statement
Income statement 2013 2012 £m Reported Exceptional Non-Underlying Underlying 3 Underlying 3 Revenue 17,557 - - 17,557 16,905 Operating profit 2 802 (436) (27) 1,265 1,178 European exceptional (59) Goodwill impairment (377) Other losses (1) - (1) - - Net finance costs (80) - (3) (77) (85) Profit befo
Slide 14: Underlying income statement at constant currency
Underlying income statement at constant currency £m 2013 2012 3 Growth Revenue 17,557 16,805 Operating profit 2 1,265 1,173 +7.8% Net finance costs (77) (85) Profit before tax 1,188 1,088 Tax (309) (283) Profit after tax 879 805 Non-controlling interest (8) (6) Attributable profit 871 799 +9.0% Aver
Slide 15: Free cash flow
Free cash flow £m 2013 2012 Operating profit 2 1,265 1,178 Depreciation and amortisation 299 282 EBITDA 1,564 1,460 Net capital expenditure 3 (434) (366) Trade working capital 102 31 Provisions (35) (17) Post employment benefits (54) (54) Net interest (65) (73) Net tax (256) (225) Net other items 12
Slide 16: Free cash flow progression
Free cash flow progression £1,000m £834m £800m £760m £693m £670m £593m £600m £520m £400m £357m £212m £200m 2006 2007 2008 2009 2010 2011 2012 2013 Notes: 1. Based on continuing operations and underlying free cash flow. 2. 2010 reported free cash flow was £744m. The £670m represents the free cash flo
Slide 17: Net debt
Net debt £m Opening net debt at 1 October 2012 973 Underlying free cash flow from continuing operations (834) European exceptional cash flow 1 72 Exceptional pension payment 72 Acquisitions 2 104 Disposals (7) Equity dividends 404 Purchase of own shares, net of proceeds from issues 437 Impact of for
Slide 18: Balance sheet efficiency
Balance sheet efficiency • Appropriate capital expenditure • Progressive dividends • Disciplined infill M&A • Capital efficiency - Target to maintain strong investment grade credit ratings - Provide the business with the flexibility it requires - Equates to medium term reported net debt / EBITDA of
Slide 19: Financial summary
Financial summary • Overall strong financial performance • Organic revenue growth 4.3% • Margin progression 20bps • Constant currency EPS growth 12.5% • Underlying free cash flow generation £834m • Increase in full year dividend to 24.0 pence per share 12.7% • Further share buyback £500m 19
Slide 20: Business review, strategy & outlook
Business review, strategy & outlook Richard Cousins Group Chief Executive
Slide 21: Agenda
Agenda 1. Business performance and MAP 2. Group strategy 3. Regional strategy 4. Summary and outlook 21
Slide 22: Organic revenue growth
Organic revenue growth % 2011 2012 2013 New business 8.8 9.0 8.8 Lost business (5.8) (5.7) (6.3) Net new business 3.0 3.3 2.5 LFL revenue 2.4 2.1 1.8 Organic growth 5.4 5.4 4.3 22
Slide 23: New business & retention
New business & retention • Strong levels of new business • Ongoing investment in sales and retention • Best practice sharing and training forums • Exciting pipeline 23
Slide 24: Consumer sales and marketing
Consumer sales and marketing • Innovative consumer propositions • Appropriate pricing policies • Incisive sales and marketing • New initiatives Partnering with • Measuring success 24
Slide 25: Driving efficiencies
Driving efficiencies • Menu standardisation • Increased flexibility • Product & supplier rationalisation • Productivity, scheduling & planning • Logistics & waste reduction 1% more efficient = >£150m improvement
Slide 26: Driving efficiencies: above unit overheads
Driving efficiencies Above unit overheads (AUO) MAP 5: above unit overheads £m 1000 7.0% • Simplification, less bureaucracy 900 6.5% 800 700 6.0% • Focus on back of house cost reduction % of Revenue 600 500 5.5% 400 • Redeployment of cost 300 5.0% 200 4.5% 100 • Limited absolute increase in overhead
Slide 27: Margin progression
Margin Margin progression Progression in H1 2013 7.1% 6.9% +20 bps Cost Volume Reinvestment Cost Overhead Modest 2012 inflation impact reduction / leverage price 2013 efficiencies increases 27
Slide 28: Consistent strategy
Consistent strategy Food and support services Organic growth Geographic spread Infill M&A Emerging markets Efficiencies Continued margin • Food (MAP 3) progression • Labour (MAP 4) • Above unit (MAP 5) Capex Progressive dividend Strong cash flow Infill M&A Shareholder value Returns to shareholders 2
Slide 29: Food: significant structural growth opportunity
Food: significant structural growth opportunity 250 Food Service Market (c.£200bn) 200 Self operated • Food service market c.£200bn, <50% 150 Outsourced 56% 56% outsourced 83% Small Regional 100 Large Players 7% 50 Compass • Available market: >80% self operated 0 or small regional players 44% 80 Foo
Slide 30: Support and multi services: our approach
Support and multi services: our approach Support and multi services by sector • Incremental and low risk approach B&I Healthcare • Country and sector specific strategy Education DOR • Growth opportunities in all sectors Group revenue split: FY 2013 17% • Soft support services; self performed 9% Supp
Slide 31: Geographic strategy: regional approach
Geographic strategy: regional approach 2003 2013 The future? Fast FG&E FG&E Growing & North North America Emerging North America Europe America Europe & & Japan Japan Europe & Japan • North America: core growth engine; a market leading position • Europe & Japan: fundamentals solid; good medium term
Slide 32: North America strategy
North America strategy Food Service Market ($72bn) • Leader in a growing market 80 • Vibrant outsourcing trend 60 42% 42% 65% 40 • Excellent sales and retention 20 58% • Further opportunities to leverage scale 0 Self operated Outsourced Small Regional • Excellent management Large Players Compass Not
Slide 33: Well balanced & diversified business
Well balanced & diversified business • Wide geographic presence: 48 states, 10 provinces & 2 territories • Access to all market segments North American market Compass Group North America 2013 revenue B&I Vending, Vending 10% 18% 15% DOR, 3% B&I, 25% Sports & DOR Leisure, 4% 12% Sports & Healthcare L
Slide 34: Driving organic growth
Driving organic growth • Top ten facility in New York – 1,170 • Global Internet services beds; 2,500 doctors providerxxxxx • 2002: Cleaning services only, one • 2003: Initial consultancy agreement sitexx for one site • Today: range of support services and • Today: full range of food services to food
Slide 35: Europe & Japan strategy
Europe & Japan strategy Food Service Market (c. £100bn) • Challenging economic backdrop 100 90 80 53% 53% 70 60 87% • But large, underpenetrated market 50 40 30 20 • Strong market positions 10 0 Compass Large Players Small Regional Outsourced Self operated • Good medium term opportunities Note: mark
Slide 36: Immediate focus
Immediate focus Continued focus on cost efficiencies Driving top line • Food cost reduced / traceability improved • Significant market opportunity • Lower labour costs, increased flexibility • Increased focus on sales and retention • Lean management techniques • Training & investment Organic • Reduc
Slide 37: Fast Growing & Emerging strategy
Fast Growing & Emerging strategy • Growing significance to the Group 60 Foodservice Market (£58bn) 50 40 • Streamlined focus 30 73% 73% 95% 20 • Huge opportunity but discipline 10 22% needed 27% 0 2% 3% Compass Large Players Small Regional • Investing for growth Outsourced Self operated Note: Compas
Slide 38: Fast Growing & Emerging 2013 revenue by sub-region
Fast Growing & Emerging 2013 revenue by sub-region CAMEAT Turkey Angola UAE Kazakhstan Qatar Azerbaijan Egypt Russia Central Asia, Middle South Africa Central Asia,& Africa, East Middle East & £0.8bn Latin America, Africa, £0.8bn £1.1bn Latin America Asia Pacific Brazil Latin Pacific & South Pacific
Slide 39: LatAm: exciting growth opportunities in Brazil
LatAm: exciting growth opportunities in Brazil Healthcare / Education Support Services • Trend to outsourcing • Organic consolidation • Investment • Professionalising service process • Professionalised segment • Cross-selling to foodservice management clients B&I • Organic consolidation DOR • Region
Slide 40: CAMEAT: working with multi national energy & resource companies
CAMEAT: working with multi national energy & resource companies Chevron: global partner • Global relationships • Across all commodities $475m 12 COUNTRIES • Leadership in health and safety $100m • Full multi service model 2004 2012 40
Slide 41: Asia Pacific: great growth opportunities in China
Asia Pacific: great growth opportunities in China Market Compass China & HK • Significant market potential • 4,300 employees, 225 sites, 47 cities • Increasing urbanisation • Strong organic growth & improved margin • Low outsourcing • B&I and Education, growing Healthcare • Highly fragmented: top 3
Slide 42: Summary and outlook
Summary and outlook • Another good year with solid organic revenue growth and margin progression • Ongoing strength in North America and Fast Growing and Emerging • European action plans are delivering • 12.7% dividend increase and further £500m buyback • Significant structural growth opportunities
Slide 43: Supplementary Information
Supplementary Information 2013 Full Year Results
Slide 44: Contents
Contents Group revenue 45 By geography & sector Free cash flow 51 Reconciliation of reported to underlying Revenue by sector 46 External geographies Balance sheet 52 Overview 53 ROCE 54 Capital expenditure % of revenue Sector financials 47 Group 48 European exceptional Financing 55 Components of net
Slide 45: Group revenue – By geography & sector
Group revenue – By geography & sector Fast Growing & Emerging 19% Sports & North America 47% Leisure Other FGE, 7% 10% Turkey, 2% Brazil, 4% Business Australia, 6% & Industry Healthcare 41% USA, 42% Other CE, 6% 20% Norway, 1% Netherlands, 1% Italy, 1% Spain, 2% Germany, 3% Japan, 4% Education Franc
Slide 46: Revenue by sector – External geographies
Revenue by sector – External geographies North America Fast Growing & Emerging Sports & Sports & Leisure Healthcare Leisure 13% 7% 3% Business Education & Industry 5% 30% Business & Industry 39% Healthcare Europe & Japan 29% Defence, Defence, Offshore, Sports & Offshore, Remote Leisure Remote 4% 10%
Slide 47: Sector financials - Group
Sector financials - Group North Europe & Fast Growing 2 America Japan & Emerging Other Total £m £m £m £m £m 2013 Revenue 8,150 6,039 3,368 17,557 Organic growth 8.0% (3.0)% 10.2% 4.3% Operating profit 1 657 420 242 (54) 1,265 Margin 3 8.1% 7.0% 7.2% 7.1% Cash flow 4 616 416 170 (368) 834 Cash flow c
Slide 48: Sector financials – European exceptional
Sector financials – European exceptional 2012 2013 2014 £m Actual Actual Expected Like for like volume (2.0)% (3.0)% Profit drop through (at 35%) (40) (60) Income statement savings: Accelerated cost efficiencies - 50 75 Other charges - 20 20 Total savings - 70 95 Income statement charge: Accelerated
Slide 49: EPS / dividends – Earnings & dividends per share
EPS / dividends – Earnings & dividends per share 2013 2012 Earnings per share Continuing and discontinued operations 23.5p 32.1p Discontinued operations (0.2)p - Continuing operations 23.3p 32.1p Other adjustments 1 24.4p 10.5p Underlying earnings per share 47.7p 42.6p Dividends per share Interim di
Slide 50: EPS / dividends – Dividend cover
EPS / dividends – Dividend cover 2013 2012 2011 2010 2009 Per share (pence) Dividend (interim plus final) 24.0p 21.3p 19.3p 17.5p 13.2p Underlying earnings 1 47.7p 42.6p 39.0p 35.7p 30.0p Dividend earnings cover 2.0x 2.0x 2.0x 2.0x 2.3x Cash (£m) Cash cost of dividend (in the year) 404 378 360 258 2
Slide 51: Free cash flow – Reconciliation of reported to underlying
Free cash flow – Reconciliation of reported to underlying £m 2013 2012 Reported Adjs 4 Other 5 Underlying Reported Adjs 4 Other 5 Underlying Operating profit 2 802 (436) (27) 1,265 856 (295) (27) 1,178 Depreciation and amortisation 701 377 25 299 337 37 18 282 EBITDA 1,503 (59) (2) 1,564 1,193 (258)
Slide 52: Balance sheet - Overview
Balance sheet - Overview 2013 2012 £m £m Non-current assets 1,725 1,584 Working capital (657) (520) Provisions (531) (603) Interest payable (62) (63) Post employment benefit obligations (208) (361) Current tax payable (130) (116) Deferred tax 227 256 Net assets before goodwill 364 177 Goodwill 3,620
Slide 53: Balance sheet - ROCE
Balance sheet - ROCE 2013 2012 2011 2010 2009 £m £m £m £m £m NOPAT 1 930 867 790 728 627 Average capital employed 2 4,878 4,774 4,307 3,999 3,752 ROCE 19.1% 18.2% 18.3% 18.2% 16.7% Notes: 1. Based on underlying operating profit, net of tax at the underlying tax rate of the year, less operating profi
Slide 54: Balance sheet – Capital expenditure % of revenue
Balance sheet – Capital expenditure % of revenue % of Revenue 5.0% 4.5% 3.9% 4.0% 3.6% 3.3% 2.9% 3.0% 2.7% 2.5% 2.3% 2.3% 2.3% 2.1% 1.9% 1.9% 2.0% 1.7% 1.0% 2001 2002 2003 2004 2005 2005 2006 2007 2008 2009 2010 2011 2012 2013 Group UK GAAP Continuing IFRS Notes: 1. For 2001 to 2005, total Group is
Slide 55: Financing – Components of net debt
Financing – Components of net debt £m Bonds 756 Private placements 1,135 Bank loans 300 2,191 Finance leases 21 Other loans and fair value accounting adjustments 33 Derivatives (66) Gross debt 2,179 Cash net of overdrafts (986) Closing net debt at 30 September 2013 1,193 Notes: 1. Based on nominal v
Slide 56: Financing – Principal borrowings
Financing – Principal borrowings Maturing in Coupon Calendar Year £m Bonds £250m 4 7.00% 2014 254 €600m 3.125% 2019 502 Total 756 US private placements $15m (2003 Notes) 5.67% 2013 9 $267m (2008 Notes) 6.45% - 6.72% 2013 - 2015 165 £35m (2008 Notes) 7.55% 2016 35 $1000m (2011 Notes) 3.31% - 4.12% 20
Slide 57: Financing – Maturity profile of principal borrowings
Financing – Maturity profile of principal borrowings £m 700 600 500 400 300 200 100 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 £ Bonds € Bonds US $ Private Placement £ Private Placement Bank Notes: 1. Based on borrowings and facilities in place as at 30 September 2013, maturing in
Slide 58: Financing - Debt ratios and credit ratings
Financing - Debt ratios and credit ratings Ratings Outlook Confirmed Standard & Poors A Stable 18-Feb-13 Moodys Baa1 Positive 04-Jul-13 Fitch (unsolicited) A- Stable 27-Sep-13 Ratios 2013 2012 Net debt 1 / EBITDA 2 0.8x 0.7x EBITDA 2 / net interest 3 20.3x 17.5x Net debt 1 / adjusted total capitalis
Slide 59: Exchange rates – Rates used in consolidation
Exchange rates – Rates used in consolidation Income Statement 2 Balance Sheet 3 2013 2012 2013 2012 per £ per £ per £ per £ Australian Dollar 1.58 1.53 1.73 1.55 Brazilian Real 3.30 2.99 3.60 3.28 Canadian Dollar 1.59 1.59 1.66 1.59 Euro 1.19 1.21 1.20 1.26 Japanese Yen 143.83 124.35 158.90 125.63 N
Slide 60: Exchange rates – Effect on 2013 revenue & profit
Exchange rates – Effect on 2013 revenue & profit US Dollar Euro Japanese Yen £m incremental change for an £m incremental change for an £m incremental change for an incremental 5 cent movement incremental 5 cent movement incremental 10 yen movement Exchange Revenue Profit Exchange Revenue Profit Exch
Slide 61: Exchange rates – Effect on 2013 revenue & profit
Exchange rates – Effect on 2013 revenue & profit Australian Dollar Brazilian Real Turkish Lira £m incremental change for an £m incremental change for an £m incremental change for an incremental 5 cent movement incremental 5 centavo movement incremental 5 kurus movement Exchange Revenue Profit Exchan
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