Compass Group Plc · LSE:CPG
Compass — FY2015 Earnings Presentation
56 slides from Compass's earnings presentation, Nov 24, 2015
Slide 1: 2015 Full Year Results
2015 FULL YEAR RESULTS Tuesday 24 November 2015
Slide 2: 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 all matters
Slide 3: Today's agenda
Today’s agenda 1. Richard Cousins Welcome & highlights 2. Dominic Blakemore Full year results 3. Richard Cousins Growth strategy & outlook 4. Q&A 3
Slide 4: Highlights
Highlights Organic revenue 5.8% Operating profit 6.7% Operating profit margin 7.3% 10bps EPS 53.7p 11.0% Full year dividend 29.4p 10.9% Ongoing share buyback £328m in the year Notes Based on underlying results at constant currency, with operating profit and margin before restructuring costs. 4
Slide 5: 2015 Full Year Results
2015 Full Year Results Dominic Blakemore Group Finance Director
Slide 6: Revenue
Revenue Change Reported Constant Organic 2015 2014 Rates Currency Growth £m £m % % % North America 9,361 8,199 14.2% 7.8% 7.9% Europe & Japan 5,469 5,716 (4.3)% 2.0% 1.9% Fast Growing & Emerging 3,013 3,143 (4.1)% 6.1% 6.9% Revenue 17,843 17,058 4.6% 5.6% 5.8% Notes Based on underlying revenues, def
Slide 7: Operating profit
Operating profit Change Analysed By Acquisition 2015 2014 Change Currency / Disposal Organic £m £m £m £m £m £m % North America 760 666 94 40 3 51 7.2% Europe & Japan 397 409 (12) (26) - 14 3.7% Fast Growing & Emerging 218 226 (8) (21) (1) 14 6.8% Unallocated central overheads (66) (65) (1) - - (1) A
Slide 8: Impact of currency on operating profit
Impact of currency on operating profit 2014 2015 Impact on 20 Nov Impact on Average Rate Average Rate 2014 Profit Spot Rate 2015 Profit USD 1.66 1.55 £44m 1.53 £9m CAD 1.79 1.90 £(3)m 2.03 £(3)m EUR 1.23 1.35 £(18)m 1.42 £(10)m YEN 169.92 184.31 £(3)m 187.83 £(1)m AUD 1.81 1.98 £(9)m 2.12 £(7)m BRL
Slide 9: Operating profit margin
Operating profit margin 2015 2014 North America 8.1% 8.1% Europe & Japan 7.3% 7.2% Fast Growing & Emerging 7.2% 7.2% Group before restructuring 7.3% 7.2% Group after restructuring 7.2% 7.2% Notes Based on underlying operating profit, definitions on page 56. 9
Slide 10: Income statement
Income statement 2015 2014 £m Reported Non-underlying Underlying Underlying Revenue 17,590 (253) 17,843 17,058 Operating profit before restructuring 1,287 (35) 1,322 1,245 Restructuring (26) - (26) - Operating profit after restructuring 1,261 (35) 1,296 1,245 Other gains (1) (1) - - Net finance cost
Slide 11: Underlying income statement at constant currency
Underlying income statement at constant currency £m 2015 2014 Growth Revenue 17,843 16,891 Operating profit before restructuring 1,322 1,239 +6.7% Restructuring (26) - Operating profit after restructuring 1,296 1,239 Net finance costs (104) (86) Profit before tax 1,192 1,153 Tax (292) (292) Tax rate
Slide 12: Operating cash flow
Operating cash flow £m 2015 2014 2013 2012 2011 Operating profit 1,296 1,245 1,265 1,178 1,091 Depreciation and amortisation 340 317 299 282 254 Net capital expenditure (476) (445) (434) (366) (340) Net cash flow 1,160 1,117 1,130 1,094 1,005 Net cash flow conversion 90% 90% 89% 93% 92% Trade workin
Slide 13: Free cash flow
Free cash flow £m 2015 2014 2013 2012 2011 Operating cash flow 1,123 1,114 1,197 1,108 992 Post employment benefits (59) (46) (54) (54) (42) Net interest (93) (71) (65) (73) (55) Net tax (242) (259) (256) (225) (209) Net other items (7) (1) 12 4 7 Free cash flow 722 737 834 760 693 Free cash flow co
Slide 14: Net debt
Net debt £m Opening net debt at 1 October 2014 2,371 Underlying free cash flow from continuing operations (722) European exceptional cash flow 36 Acquisitions 89 Disposals (3) Equity dividends 457 Purchase of own shares net of proceeds from issues 328 Impact of foreign exchange rates 46 Other 1 Clos
Slide 15: Financial summary
Financial summary Organic revenue growth 5.8% Margin progression 10bps Constant currency EPS growth 11.0% Free cash flow generation £722m Ongoing share buyback £328m Increase in dividend to 29.4 pence per share 10.9% Strong financial performance Notes Based on underlying performance, definitions on
Slide 16: Growth strategy & outlook
Growth strategy & outlook Richard Cousins Group Chief Executive
Slide 17: 2015 overview
2015 overview Strong top line growth Revenue by region Continued strength in North America Accelerating growth in Europe, FG&E reflecting our investment Restructuring to offset challenging North market conditions in FG&E Europe & America Japan 17
Slide 18: 2015 organic revenue growth
2015 organic revenue growth 8.8% 5.5% 2.5% 5.8% New business Lost business Like for like Organic revenue growth 18
Slide 19: 2015 margin progression
2015 margin progression 7.3% 7.2% 7.2% 2014 Cost Reinvestment Cost Overhead & Price 2015 margin Restructuring 2015 inflation reduction & operating increases pre - efficiencies leverage restructuring 19
Slide 20: North America: Core growth engine
North America Core growth engine Revenue up 7.9% Food service market (c $72bn) • Strong growth across all sectors 80 • Excellent retention 96.5% Self operated 60 Outsourced • Improvement in like for like volumes 65% Small regional Margins steady 40 Large players • Increased mobilisation costs due to
Slide 21: How we use sub-sectorisation to drive growth
North America How we use sub-sectorisation to drive growth Can we use our network to Office coffee leverages the existing network Vending increase our range of Avenue C a mini-market solution for small units services? Can we use our expertise in Levy Conference Centres Sport & sports events to grow
Slide 22: Europe & Japan: Return to growth
Europe & Japan Return to growth Growing at 1.9% & 3% in H2 Food service market (c £100bn) • New business wins driving top line 100 • Retention rates improving Self operated 80 • Positive volumes in H2, flat for FY Outsourced 60 88% Small regional Margins up 10bps Large players 40 • Continued operati
Slide 23: Increased investment drives turnaround in region
Europe & Japan Increased investment drives turnaround in region Organic revenue growth 4% Investment 3% for growth 2% 1% Growth returns 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -1% -2% Global financial -3% crisis -4% Restructuring & Euro crisis contract exits 23
Slide 24: Strong growth in emerging markets
Fast Growing & Emerging Strong growth in emerging markets Revenue up 6.9% Geographic split of revenue • Emerging markets up 11% • Australia - challenging as expected • Weak like for like volumes CAMEAT PACIFIC Margin steady (excluding restructuring) • Continued productivity and efficiency gains ASIA
Slide 25: Clear strategy
Clear strategy Focus on food - our core competence Food service market (c £200bn) Incremental approach to support 200 Self operated services Outsourced 150 Bolt on M&A 83% Small regional 100 Large players Concentrate on quality and performance 50 Compass Be the most efficient, lowest cost provider 0
Slide 26: Our portfolio delivers consistent growth over time
Our portfolio delivers consistent growth over time 10% Organic revenue growth 9% 10 yr CAGR 4.8% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 26
Slide 27: How we create shareholder value
How we create shareholder value 27
Slide 28: Innovation
Innovation Internally developed Food offering and concepts Ethnic foods Health & wellness Organic & & pop ups locally sourced Processes Labour scheduling Digital menus, layout, Data analytics & menu planning flow & food displays & feedback 28
Slide 29: Innovation
Innovation Internally developed Externally developed Food offering and concepts Ethnic foods Health & wellness Organic & Alternative ingredient Technologies to & pop ups locally sourced suppliers streamline processes Processes Labour scheduling Digital menus, layout, Data analytics Supply chain & Ca
Slide 30: Business model
Business model GROWTH Organic MARGIN Operating efficiency Opex INVESTMENT Capex Infill M&A EPS growth RETURNS TO Progressive dividend SHAREHOLDERS Capital returns A proven and sustainable model 30
Slide 31: New reporting regions
New reporting regions 31
Slide 32: New reporting regions
New reporting regions Gary Green 32
Slide 33: New reporting regions
New reporting regions Dominic Gary Blakemore Green 33
Slide 34: New reporting regions
New reporting regions Dominic Gary Blakemore Green Philippe Op Andy de Beeck Furlong Alfredo Ruiz Plaza 34
Slide 35: New reporting regions
New reporting regions Dominic Gary Blakemore Green Philippe Op Andy de Beeck Furlong Alfredo Ruiz Plaza Johnny Thomson, Group Finance Director 35
Slide 36: Summary and outlook
Summary and outlook Continued strength in North America Growth in Europe accelerating FG&E restructuring on track Ongoing returns to shareholders Focused on strong growth with discipline Remain positive about the structural growth opportunities 36
Slide 37: Supplementary Information
2015 Full Year Results Supplementary Information
Slide 38: Group revenue by geography, sector & service line
Group revenue By geography, sector & service line Fast Growing & Sports & Emerging 17% Leisure 12% Other FGE 6%0 Turkey 2% North America Brazil 4% 52% Business & Australia 5% Industry 38% USA 47% Healthcare & Other CE 5% Seniors 22% Norway 1% Food service 83% Neth 1% Food service Italy 1% Spain 1% 7
Slide 39: Revenue by sector: external geographies
Revenue by sector External geographies North America Fast Growing & Emerging Sports & Healthcare & Sports & Leisure 15% Seniors 9% Leisure 2% Business & Industry 28% Education 5% Business & Europe & Japan Industry 40% Sports & Healthcare & Defence, Leisure 11% Seniors 29% Offshore & Remote 3% Health
Slide 40: Geographic financials
Group Geographic financials Fast Growing & North America Europe & Japan Emerging Other1 Total £m £m £m £m £m 2015 Revenue 9,361 5,469 3,013 17,843 Organic growth 7.9% 1.9% 6.9% 5.8% Operating profit 760 397 218 (79) 1,296 Margin 8.1% 7.3% 7.2% 7.2% Cash flow 683 335 135 (432) 722 Cash flow conversio
Slide 41: Group and North American trends
Group and North American trends Geographic financials Group Revenue (£bn) & Organic Growth (%) Group Operating Profit (£m) & Margin (%) 17.8 16.9 1239 1296 16.2 1167 15.5 1083 14.5 917 949 837 13.3 742 12.5 12.7 5.9 0.0 3.2 5.4 5.4 4.3 4.1 5.8 5.8 6.5 6.9 6.9 6.9 7.1 7.2 7.2 2008 2009 2010 2011 2012
Slide 42: Europe & Japan and Fast Growing & Emerging trends
Europe & Japan and Fast Growing & Emerging trends Geographic financials E&J Revenue (£bn) & Organic Growth (%) E&J Operating Profit (£m) & Margin (%) 397 5.6 378 383 5.4 5.5 5.5 5.4 5.5 5.2 5.2 351 350 354 337 321 3.0 (3.1) (1.6) (0.4) (0.7) (3.0) (1.5) 1.9 6.0 6.5 6.8 6.5 6.4 7.0 7.2 7.3 2008 2009
Slide 43: Earnings and dividends per share
EPS/dividends Earnings and dividends per share 2015 2014 Earnings per share Continuing & Discontinued operations 52.3p 49.0p Discontinued operations - (0.2)p Continuing operations 52.3p 48.8p Other Adjustments 1.4p (0.1)p Underlying earnings per share 53.7p 48.7p Dividends per share Interim dividend
Slide 44: Dividend cover
EPS/dividends Dividend cover 2015 2014 2013 2012 2011 Per share (pence) Dividend (interim plus final) 29.4p 26.5p 24.0p 21.3p 19.3p Underlying earnings 53.7p 48.7p 47.7p 42.6p 39.0p Dividend earnings cover 1.8x 1.8x 2.0x 2.0x 2.0x Cash (£m) Cash cost of dividend (in the year) 457 444 404 378 360 Und
Slide 45: Reconciliation of reported to underlying
Free cash flow Reconciliation of reported to underlying £m 2015 2014 Reported Adjs1 Other2 Underlying Reported Adjs1 Other2 Underlying Operating profit 1,222 - (74) 1,296 1,184 - (61) 1,245 Depreciation and amortisation 366 - 26 340 342 - 25 317 EBITDA 1,588 - (48) 1,636 1,526 - (36) 1,562 Net capit
Slide 46: ROCE
Balance sheet ROCE 2015 2014 2013 2012 2011 2010 £m £m £m £m £m £m NOPAT 973 926 930 867 790 728 Average capital employed 5,093 4,799 4,878 4,774 4,307 3,999 ROCE 19.1% 19.3% 19.1% 18.2% 18.3% 18.2% Notes Based on underlying performance, definitions on page 56. 46
Slide 47: Balance sheet overview
Balance sheet Overview 2015 2014 £m £m Goodwill 3,538 3,528 Other non-current assets 2,135 1,959 Working capital (773) (751) Provisions (387) (438) Post employment benefit obligations (9) (170) Current tax payable (105) (116) Deferred tax 154 207 Net debt (2,603) (2,371) Net assets 1,950 1,848 Share
Slide 48: Capital expenditure % of revenue
Balance sheet Capital expenditure % of revenue 2.7% 2.7% 2.8% 2.5% 2.3% 2.3% 2.3% 2.1% 1.9% 1.9% 1.7% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Notes Based on underlying performance, definitions on page 56. 48 Gross capital expenditure includes tangible and intangible assets, including
Slide 49: Components of net debt
Financing Components of net debt £m Bonds 1,060 Private placements 1,396 Bank loans 300 2,756 Finance leases 13 Other loans and fair value accounting adjustments 103 Derivatives (45) Gross debt 2,827 Cash net of overdrafts (224) Closing net debt at 30 September 2015 2,603 Notes Based on nominal valu
Slide 50: Principal borrowings
Financing Principal borrowings Coupon Maturing in Financial Year £m Bonds €600m 3.125% 2019 442 €500m 1.875% 2023 368 £250m 3.850% 2026 250 Total 1,060 US private placements $162m (2008 Notes) 6.72% 2016 107 £35m (2008 Notes) 7.55% 2017 35 $1,000m (2011 Notes) 3.31% - 4.12% 2019 – 2024 660 $500m (20
Slide 51: Maturity profile of principal borrowings
Financing Maturity profile of principal borrowings £m 700 600 500 400 300 200 100 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 £ bond € bond US$ private placement £ private placement bank Notes Based on borrowings and facilities in place as at 30 September 2015, maturing in the fina
Slide 52: Debt ratios and credit ratings
Financing Debt ratios and credit ratings Ratings Outlook Confirmed Standard & Poors A Stable 27 Feb 15 Moody’s Baa1 Positive 18 Jun 15 Fitch (unsolicited) A- Stable 6 Feb 15 Ratios 2015 2014 Net debt1 / EBITDA2 1.6x 1.6x EBITDA2 / net interest3 15.9x 18.2x Notes 1.Net debt is adjusted where necessar
Slide 53: Rates used in consolidation
Exchange rates Rates used in consolidation Income Statement 1 Balance Sheet 2 2015 per £ 2014 per £ 2015 per £ 2014 per £ Australian Dollar 1.98 1.81 2.16 1.85 Brazilian Real 4.66 3.80 6.03 3.97 Canadian Dollar 1.90 1.79 2.03 1.81 Euro 1.35 1.23 1.36 1.28 Japanese Yen 184.31 169.92 181.42 177.83 Nor
Slide 54: Effect on 2015 revenue and profit
Exchange rates Effect on 2015 revenue and profit US Dollar Canada Dollar Euro £m cumulative change for an £m cumulative change for an £m cumulative change for an incremental 5 cent movement incremental 5 cent movement incremental 5 cent movement Exchange Revenue Profit Exchange Revenue Profit Exchan
Slide 55: Effect on 2015 revenue and profit
Exchange rates Effect on 2015 revenue and profit Australian Dollar Brazilian Real Turkish Lira £m cumulative change for an £m cumulative change for an £m cumulative change for an incremental 5 cent movement incremental 20 centavo movement incremental 20 kurus movement Exchange Revenue Profit Exchang
Slide 56: Definitions
Definitions 1. Constant currency basis restates the prior period results to 2015’s average 7. Underlying basic earnings per share excludes specific adjusting items and the tax attributable to those items. exchange rates. 2. Underlying revenue represents the combined sales of Group and share of equit