Slide 1: 2022 Full Year Results
2022 Full Year Results 21 November 2022 1
Slide 2: Disclaimer
Disclaimer Certain information included in this 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 which are
Slide 3: Dominic Blakemore, Group Chief Executive
Dominic Blakemore Group Chief Executive 3
Slide 4: Compass is a stronger and more resilient business
Compass is a stronger and more resilient business… ● Achieved milestone of revenues exceeding 2019 levels ● Record new business wins; up 20% on 2021 ● Client retention continues to improve ● Outsourcing market has never been stronger ● Capitalising with our culinary offer, ESG and digital capability
Slide 5: Another year of strong performance
Another year of strong performance… Organic revenue growth ARO new business Net new business growth of 37.5% £2.5bn 1 7.5% 2 Q4 2022: 116% of 2019 c. 45% from first time outsourcing Client retention up 100bps to 96.4% Underlying operating margin Underlying operating profit Further share buyback prog
Slide 6: Palmer Brown, Group Chief Financial Officer
Palmer Brown Group Chief Financial Officer 6
Slide 7: Excellent net new and strong LFL volume recovery
Excellent net new and strong LFL volume recovery c. 24% 7.5%1 c. 6% Organic 37.5% 1.1 0.1 1.4 25.8 0.6 4.5 18.1 18.7 FY 2021 revenue Currency FY 2021 at 2022 LFL volume Net new Pricing M&A FY 2022 revenue (£bn) FX rates (£bn) Notes: On a constant currency basis. Based on underlying performance at re
Slide 8: Group revenue at 116% of 2019 in Q4
Group revenue at 116% of 2019 in Q4… Sector revenue (% 2019)1 125 124 117 120 116 109 111 106 94 89 88 68 Business & Industry Sports & Leisure Education DOR Healthcare & Senior Group Living Q4 2021 Q4 2022 …with strong recovery in Business & Industry Notes: 1 On a constant currency basis. Based on u
Slide 9: A strong performance across the regions
A strong performance across the regions… Net new Organic % of 2019 Net new Operating rebased to revenue revenue growth margin 2019 North America 44.1% 109% 9.0% 6.8% 7.2% Europe 31.8% 98% 5.6% 4.1% 5.0% Rest of World 14.8% 100% 3.6% 3.1% 5.2% Group 37.5% 105% 7.5% 5.7% 6.2% …with net new growth acce
Slide 10: We've made good progress managing inflation
We’ve made good progress managing inflation… Food and wage inflation1 (12 months to Sept 2022) 8% ● Compass blended inflation rate c.9% UK ● Starting with mitigation 6% ● Operational changes ● Menu flexibility Wage 4% US ● Scale in food procurement EU ● Digital innovation 2% ● Pricing ● Increased ca
Slide 11: Group margin improved through the year
Group margin improved through the year… Underlying operating margin (%) 6.5 5.8 4.5 FY 2021 H1 2022 H2 2022 …despite higher mobilisation costs and inflationary pressures 11
Slide 12: With operating profit doubling
With operating profit doubling £m FY 2022 FY 2021 Revenue 25,771 18,136 ● FY23 Interest charge expected to be to c.£145m Operating profit 1,590 811 ● Reflects higher gross debt and increase Operating profit margin 6.2% 4.5% in interest rates Net finance costs (100) (113) Profit before tax 1,490 698
Slide 13: Strong cash conversion with leverage at 1.3x
Strong cash conversion with leverage at 1.3x £m FY 2022 FY 2021 1,590 811 ● FY22 capex 2.7% of revenue Operating profit 781 743 ● Expect capex to revert to c.3.5% of Depreciation and amortisation revenue in FY23 EBITDA 2,371 1,554 Net capital expenditure (704) (610) (159) 165 ● FY22 working capital
Slide 14: Our capital allocation priorities remain unchanged
Our capital allocation priorities remain unchanged Invest in business M&A Capex Resilient Required returns > cost of capital by c.3.5% of revenue the end of year two balance sheet Strong investment grade credit rating Target net debt/ Ordinary dividends EBITDA 1-1.5x Shareholder returns c.50% of und
Slide 15: Increasing shareholder returns
Increasing shareholder returns… Shareholder returns FY 2022 announcement Ordinary dividend Full year dividend 31.5p Initial £500m completed Share buyback programme Further £250m in H1 2023 …taking our total share buyback to £750m 15
Slide 16: FY23 guidance: Profit to grow faster than revenue
FY23 guidance: Profit to grow faster than revenue Operating profit growth above 20%1 Organic revenue growth Underlying operating margin around 15% above 6.5% Notes: 1 Underlying operating profit on a constant currency basis. 16
Slide 17: Dominic Blakemore: Strategy
Dominic Blakemore Strategy 17
Slide 18: We have a clear strategy to capture the growth
We have a clear strategy to capture the growth… Significant opportunity Operational complexities Relevant offer with strong across all markets and sectors driving outsourcing ESG and digital capabilities Strong new business wins Resilient portfolio: ~50% of Supporting our and client retention revenu
Slide 19: An industry with a significant market opportunity
An industry with a significant market opportunity… Addressable global food services market c. £220bn Large Large Large players players players Compass Compass Self- Europe North America Compass Self- Rest of World operated Self- c.£80bn c.£70bn operated c.£70bn operated Regional players Regional pla
Slide 20: Operational complexities are driving outsourcing
Operational complexities are driving outsourcing COST REDUCTION RISK AND REGULATION PEOPLE ● Health & Safety ● Health and wellbeing ● Business continuity ● Talent attraction and retention ● Allergen labelling ● Entice employees back to work ● Calorie labelling ● Improve productivity and morale ENVIR
Slide 21: We continue to capture the growth momentum
We continue to capture the growth momentum… New business wins (ARO £bn)1 £2.5bn £2.1bn £1.9bn 0.3 0.2 ■ ROW 0.2 0.6 0.5 ■ Europe 0.3 ■ North America 1.4 1.4 1.6 2019 2021 2022 …with new business wins up 20% on 2021 Notes: 1 ARO value is the annual revenue of new business wins. 21
Slide 22: And focusing on client relationships
And focusing on client relationships… Client retention rate (%) North America Europe Rest of World 97.1 96.4 96.4 95.3 94.3 94.5 93.7 93.3 88.7 2019 2021 2022 2019 2021 2022 2019 2021 2022 …with Group retention rate up 100bps on 2021 22
Slide 23: Net new business accelerated in the second half
Net new business accelerated in the second half… Net new business growth (%) (Rebased to 2019) 7.1 FY 2022 5.7 4.4 2.7 2019 H1 2022 H2 2022 …slowing margin recovery, but positive for profit growth 23
Slide 24: Strong net new growth in North America and Europe
Strong net new growth in North America and Europe North America (%) Europe (%) 6.81 4.11 6.8 5.6 5.1 4.7 4.4 4.3 1.8 1.2 0.8 0.8 0.4 2015 2016 2017 2018 2019 2022 2015 2016 2017 2018 2019 2022 …skewed to first time outsourcing Notes: 1 2022 rebased to 2019. 24
Slide 25: Resilient portfolio with c. 50% of revenue in non-cyclical sectors
Resilient portfolio with c. 50% of revenue… 2009 Today S&L S&L 56 countries 11% 40 countries 14% DOR DOR 9% 8% B&I 33% B&I Education 46% 15% Education 19% Healthcare & Healthcare & Senior Living Senior Living 19% 26% Non-cyclical Non-cyclical 43% 53% …in non-cyclical sectors 25
Slide 26: Digital is a growth enabler with tangible benefits
Digital is a growth enabler with tangible benefits… ● Decade long investment in in-house capability Where we utilise digital tools, the benefits include: ● Multiple digital tools and £1bn MAP 1: Key to winning new business in NA proprietary solutions ● Right to entry in all RFPs 20-40% MAP 2: Increa
Slide 27: We are committed to supporting our People
We are committed to supporting our People… ● “Same Day Pay” and “Advance Pay” ● Real Living Wage service provider with 30K colleagues on RLW ● Emergency financial support, enhanced pay and benefits ● Mental Health support and Chief Medical Officer as an adviser …through emerging challenges 27
Slide 28: And we are continuing our sustainability journey
And we are continuing our sustainability journey… ● Issued two sustainability bonds: ● €500m and £250m bonds ● Refinancing debt maturing in 2023 ● Proceeds will be used to support: ● Responsible sourcing (local, diverse and minority suppliers) ● Food waste reduction efforts ● Other decarbonisation p
Slide 29: We are well placed for further progress
We are well placed for further progress… ● Strong operational and financial results ● Positive outsourcing trends are continuing ● Market leading offer supports accelerated growth and retention PEOPLE ● Managing inflationary pressures & PURPOSE ● Resilient portfolio with higher exposure to non-cycli
Slide 30: Supplementary Information
Supplementary Information 30
Slide 31: FY 2023 guidance summary
FY 2023 guidance summary ● Underlying operating profit growth above 20% (constant currency) ● Organic revenue growth c.15%, weighted towards H1 ● Underlying operating margin above 6.5% ● Capex: c.3.5% of revenue ● Interest charge: c.£145m ● Effective tax rate: modest reduction on FY22 ● Working capi
Slide 32: Revenue
Revenue RoW 10% North America Support services 67% Other Sports & Japan RoW Leisure Australia Business & 2% 5% 16% 14% Industry Other 3% Europe 11% 33% France 4% Sector Geography Service 26% 8% UK 63% 4% USA Healthcare 8% & Senior DOR Canada 84% Living 19% Education Europe 23% Food service Notes: Ba
Slide 33: Geographic revenue by sector
Geographic revenue by sector North America Europe Rest of World 3% 17% 12% 15% 28% 35% 17% 6% 45% 1% 32% 15% 22% 41% 11% Business & Industry Defence, Offshore & Remote Education Healthcare & Senior Living Sports & Leisure Notes: Based on underlying performance at reported exchange rates unless indic
Slide 34: Underlying revenue as % of 2019
Underlying revenue as % of 20191 Q1 Q2 Q3 Q4 FY Business & Industry 76.6% 82.9% 96.8% 106.1% 90.9% Education 101.2% 107.3% 110.3% 117.5% 108.1% Healthcare & Senior Living 114.6% 116.3% 120.4% 123.9% 118.8% Sports & Leisure 107.3% 93.8% 118.8% 125.0% 112.1% Defence, Offshore & Remote 116.6% 115.3% 12
Slide 35: Geographic financials
Geographic financials £m North America Europe Rest of World Other1 Total FY 2022 Revenue 17,139 5,935 2,697 25,771 Organic growth 44.1% 31.8% 14.8% 37.5% Operating profit 1,236 299 141 (86) 1,590 Margin 7.2% 5.0% 5.2% 6.2% Cash flow 1,148 181 124 (563) 890 Cash flow conversion 93% 61% 88% 56% ROCE 2
Slide 36: Balance sheet
Balance sheet Overview (£m) FY 2022 FY 2021 Goodwill 5,119 4,550 Other non-current assets 5,895 4,556 Working capital (1,319) (1,255) Net assets held for sale 26 17 Provisions (579) (581) Net post employment benefit obligations (178) 129 Current tax payable (139) (87) Net deferred tax asset 70 128 N
Slide 37: Reduction in net debt and leverage
Reduction in net debt and leverage £m Net capex Leverage Leverage 2.7% of ratio 1.6x ratio 1.3x revenue 425 174 268 57 418 1,594 2,990 2,538 704 FY22 opening net FCF (pre capex) Net capex Acquisitions and Resizing Dividends SBB Other FY22 closing net debt disposals debt Notes: Based on underlying pe
Slide 38: Components of net debt
Components of net debt £m Bonds 3,025 Private placements 942 Financing 3,967 Other loans and fair value accounting adjustments (254) Borrowing 3,713 Leases 913 Derivatives 96 Gross debt 4,722 Cash (1,732) Closing net debt at 30 September 2022 2,990 Notes: Based on nominal value of borrowings as at 3
Slide 39: Financing
Financing Principal borrowings Coupon Maturing in Financial Year Drawn £m Bonds €500m 1.875% 2023 439 €750m 0.625% 2024 658 €500m 1.500% 2028 439 £250m 2.000% 2025 250 £250m 3.850% 2026 250 £300m 2.000% 2029 300 €500m 3.000% 2030 439 £250m 4.375% 2032 250 Total 3,025 US private placements $352m (201
Slide 40: Maturity profile
Maturity profile £m 1,000 800 600 400 200 0 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 £ Bond £ Sustainable Bond € Bond € Sustainable Bond US $ Private Placement Notes: 1. Based on borrowings and facilities in place as at 30 September 2022, maturing in the financial year ending 30 September.
Slide 41: Financing
Financing Debt ratios and credit ratings Ratings Short term Long term Outlook Latest Update Standard & Poor’s A-1 A Stable 25 May 22 Moody’s P-2 A3 Stable 12 May 22 Ratios for USPP covenant purposes FY 2022 FY 2021 Net debt1 / EBITDA2 1.0x 1.5x EBITDA2 / net interest3 33.4x 14.7x Reported ratios4 FY
Slide 42: Currency impact on operating profit and revenue
Currency impact on operating profit and revenue £m IMPACT ON FY 2022 IMPACT ON FY 2021 USD 105 38 CAD 2 2 AUD 1 1 BRL 1 1 TRY (3) (6) EUR 5 (2) JPY (1) (1) Other 3 3 Total currency impact on profit 113 37 Total currency impact on revenue 1,564 609 Notes: Based on underlying performance at reported e
Slide 43: Exchange rates
Exchange rates Rates used in consolidation Income Statement 1 Balance Sheet 2 2022 per £ 2021 per £ 2022 per £ 2021 per £ Australian Dollar 1.80 1.83 1.74 1.87 Brazilian Real 6.72 7.35 6.04 7.35 Canadian Dollar 1.64 1.73 1.53 1.71 Chilean Peso 1084.21 1019.64 1069.34 1095.13 Euro 1.18 1.15 1.14 1.16
Slide 44: Exchange rates
Exchange rates Effect on 2022 revenue and profit US DOLLAR CANADIAN DOLLAR AUSTRALIAN DOLLAR £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 Revenu
Slide 45: Exchange rates
Exchange rates Effect on 2022 revenue and profit EURO TURKISH LIRA BRAZILIAN REAL £m cumulative change for an £m cumulative change for an £m cumulative change for an incremental 5 cent movement incremental 20 kurus movement incremental 20 centavo movement Exchange Revenue Profit Exchange Revenue Pro
Slide 46: Definitions
Definitions INCOME STATEMENT Underlying revenue Revenue plus share of revenue of joint ventures. Underlying operating profit Operating profit excluding specific adjusting items*. Underlying operating margin Underlying operating profit divided by underlying revenue. Current year: Underlying revenue e
Slide 47: Definitions
Definitions BALANCE SHEET Net debt Bank overdrafts, bank and other borrowings, lease liabilities and derivative financial instruments, less cash and cash equivalents. Net debt to EBITDA Net debt divided by underlying EBITDA. Total equity shareholders' funds, excluding: net debt; post-employment bene