Compass Group Plc · LSE:CPG
Compass — Investor Presentation (May 2020)
23 slides from Compass's investor presentation, May 19, 2020
Slide 1: Company Presentation
Company Presentation 19 May 2020 1
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS NOT AN OFFER OR INVITATION TO BUY OR SELL SECURITIES. This Presentation has been prepared and issued by and is the sole responsibility of Compass Group plc (referred to herein as “Compass” or the “Company”). This Presentation is not a prospectus for the purposes of th
Slide 3: Transaction summary
Transaction summary New capital to reduce leverage and strengthen our long term growth prospects Equity • c£2 billion equity placing Placing Timeline • Transaction launch anticipated on 19 May 2020 • £4.9 billion* as at 31 March 2020 Net Debt • Proforma £2.9 billion* post raise • £3 billion cash and
Slide 4: Executive summary
Executive summary Coronavirus has temporarily impacted the business We have rapidly reduced cost, improved liquidity and focused on cash We continue to see very attractive structural growth opportunities Compass has a strong and proven model of creating long term shareholder value New capital will r
Slide 5: Compass is the global market leader
Compass is the global market leader We are in a market with structural Global food services market growth opportunities and we have several competitive advantages Self operated • Food focused, with some support services Large players • Decentralised / flexible structure Structural • Sectorisation an
Slide 6: We manage the business for all stakeholders
We manage the business for all stakeholders PEOPLE PERFORMANCE PURPOSE Large and responsible Long term value creation Support the community and employer protect the environment 6
Slide 7: HY 2020 – on track for a strong HY until Coronavirus hit
HY 2020 – on track for a strong HY until Coronavirus hit 5 months to February March HY 2020 Organic Operating Organic Organic Operating revenue margin revenue revenue Margin North America 8.1% - (18.9)% 3.6% (50bps) Europe 0.8% +20bps (29.8)% (4.3)% (170bps) Rest of World 5.2% - (7.4)% 3.1% (40bps)
Slide 8: Current trading
100% open Current trading HY 2020 Group revenue by region March April North America Europe Organic revenue growth (20.4)% (46.1)% 64% 24% Drop through 28.5% 23% Rest of World 12% Group revenue* Activity • Approximately 50% of the Sports & Leisure 11% c.100% closed business is closed Education 20% c.
Slide 9: Actions already taken to mitigate the impact of COVID-19
Actions already taken to mitigate the impact of COVID-19 • Monthly cost savings of £500m • H2 capex reduced to £200m • Acquisitions paused • Dividend suspended • Committed credit facilities increased from £2.0bn to £2.8bn • Obtained leverage covenant waivers for US Private Placement Strengthen liqui
Slide 10: Our COVID “stress” scenario assumptions
Our COVID “stress” scenario assumptions Our Slow Recovery Case H2 FY 20 H1 FY 21 H2 FY 21 FY22-23 Revenue loss versus pre COVID-19 level B&I ~65% 50% 30% World Education ~65% 30 - 50% 15 - 20% economy may still be Sport & Leisure 100% 50 -100% 50% recovering Group ~50% 30 - 40% ~20% • Re-opening wil
Slide 11: Our illustrative COVID-19 “stress” scenarios
Our illustrative COVID-19 “stress” scenarios Slow recovery Second wave overlay % of Pre COVID-19 Group Revenue % of Pre COVID-19 Group Revenue 100% 100% 90% 90% Sports & Sports & 80% Leisure 80% Leisure 70% Education 70% Education 60% 60% 50% Business & 50% Business & Industry Industry 40% 40% Defen
Slide 12: £2bn capital raise to reduce leverage
£2bn capital raise to reduce leverage • Increase optionality to continue to invest in the business to strengthen our competitive advantages • Enhance liquidity • Capex to support strong organic growth • Inorganic growth opportunities • Capacity to right size the business as required in a “new normal
Slide 13: Leverage under different scenarios (with £2bn raise)
Leverage under different scenarios (with £2bn raise) Slow recovery Second Wave Overlay FY2021 FY2022 FY2021 FY2022 Net Debt / EBITDA Net Debt / EBITDA Net debt/ EBITDA above 2.1 x Net debt/ EBITDA between 1.6x and 2.0x Net debt/ EBITDA between 1.0x and 1.5x These scenarios are f
Slide 14: Capital allocation priorities
Capital allocation priorities Invest in the business M&A Capex for organic growth Resilient Required returns > cost of capital by Right sizing as required balance sheet the end of year 2 Strong investment grade credit rating Target net debt/ Dividends EBITDA 1-1.5x* Returns to Shareholders To be res
Slide 15: Attractive opportunities in a post COVID world
Attractive opportunities in a post COVID world Acceleration of first time outsourcing (c50% of the addressable market) & share gains from smaller players (c20% of the addressable market) Increasing structural growth opportunity – Increased importance of Health & Safety protocols and a resilient supp
Slide 16: The Compass model of value creation remains strong
The Compass model of value creation remains strong Accelerated first time out sourcing, increased share Organic revenue growth gains from small/ regional players Value created from the Continued margin improvement: MAP framework, Operating margin operation focus on pricing, procurement and productiv
Slide 17: Summary
Summary Equity • c£2 billion equity placing Placing Timeline • Transaction launch anticipated on 19 May 2020 • £4.9 billion* as at 31 March 2020 Net Debt • Proforma £2.9 billion* post raise • £3 billion cash and undrawn committed facilities as at 30 April Liquidity • Proforma £5 billion post raise N
Slide 18: APPENDIX
* COMPASS APPENDIX
Slide 19: Liquidity position
Liquidity position £m HY 2020 April 2020 Revolving Credit Facility maturing 2024 2,000 2,000 Revolving Credit Facility maturing 2021* - 800 Total Committed Revolving Credit Facilities (RCF) 2,000 2,800 Amount drawn down from RCF (202) (350) Total Unutilised Committed Credit Facilities 1,798 2,450 Ca
Slide 20: Maturity profile
Maturity profile £m 1200 1000 800 600 400 200 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 £ bond € bond US$ private placement Bank Commercial Paper Notes: Based on borrowings and facilities in place as at 31 March 2020, maturing in the financial year ending 30 September 20 The average life o
Slide 21: Components of net debt
Components of net debt £m Bonds 2,348 US private placements 1,331 Commercial Paper 816 Bank loans 202 4,697 Leases 929 Other loans and fair value accounting 149 adjustments Derivatives (217) Gross debt 5,558 Cash net of overdrafts (682) Closing net debt at 31 March 2020 4,876 Notes: Based on nominal
Slide 22: Financing
Financing Maturing in Drawn Principal borrowings Coupon Financial Year £m Bonds €500m 1.875% 2023 442 €750m 0.625% 2024 664 €500m 1.500% 2028 442 £250m 2.000% 2025 250 £250m 3.850% 2026 250 £300m 2.000% 2029 300 Total 2,348 US private placements $750m (2011 Notes) 3.98% - 4.12% 2022 - 2024 605 $500m
Slide 23: Debt ratios and credit ratings
Debt ratios and credit ratings Long Term Ratings Outlook Confirmed Standard & Poors A Negative 24 Mar 20 Moody’s A3 Stable 26 Mar 19 Fitch (unsolicited) A- Stable 07 May 20 Ratios 2020 HY 2019 HY Net debt1 / EBITDA2 2.0x 1.5x EBITDA2 / net interest3 20.3x 20.4x Notes: 1. Net debt excludes leases, de