Slide 1: 2021 Half Year Results
2021 Half Year Results 12 May 2021 1
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: Dominic Blakemore, Chief Executive
Dominic Blakemore Chief Executive 3
Slide 4: Today's agenda
Today’s agenda 1. Dominic Blakemore Overview 2. Karen Witts Half year results 3. Dominic Blakemore Regional reviews and strategy Conference call and Q&A session at 8:00 a.m. (U.K.). 4
Slide 5: Highlights
Highlights Restored more than half of our historic margin in Q2 at 4.2%; expect further progress in Q3 New business wins up c. 20% on 2019 and strong client retention Accelerated first time outsourcing now accounting for half of our growth Strong cash flow performance driven by efficient working cap
Slide 6: Our four strategic priorities
Our four strategic priorities SEIZING THE OPPORTUNITY REOPEN AND CONTROL THE INVEST IN OPTIMISE AND MOBILISE CONTROLLABLE GROWTH EVOLVE SAFELY 6
Slide 7: Karen Witts, Chief Financial Officer
Karen Witts Chief Financial Officer 7
Slide 8: Revenue continued to be affected by the pandemic
Revenue continued to be affected by the pandemic £m Organic revenue (32.8)% (32.8)% (9.4)% (30.4)% (461) (2,542) 12,615 12,154 (918) (143) 8,551 HY 2020 Currency HY 2020 at 2021 NA Europe ROW HY 2021 Revenue FX rates Revenue Revenue as % of 20191 70% 71% 82% 71% 1 On a constant currency basis. 8
Slide 9: Organic revenue trends varied by sector
Organic revenue trends varied by sector By Sector Q1 2021 Q2 2021 HY1 Business & Industry (43.4)% (41.5)% (42.5)% Education (37.0)% (25.6)% (32.0)% Healthcare & Seniors 0.8% 3.1% 1.9% Sports & Leisure (76.5)% (66.6)% (72.2)% DOR (1.2)% 2.5% 0.7% Group (33.7)% (26.8)% (30.4)% Revenue as % of 20191 71
Slide 10: Operating profit significantly impacted
Operating profit significantly impacted £m Operating margin 4.7% 1.4% 4.7% 3.4% (37) (378) 854 817 (131) (1) (17) 290 HY 2020 Currency HY 2020 at NA Europe ROW Other HY 2021 Operating 2021 FX rates Operating Profit Profit Notes: Based on underlying performance at reported exchange rates unless other
Slide 11: Continue to rebuild margin
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Continue to rebuild margin 7.5% 7.0% 105% 5.9% 104% 5.0% 4.2% 95% 98% 2.7% 3.0% 85% 0.6% 1.0% 71% 72% 75% -1.0% 66% -4.8% 65% -3.0% -5.0% 56% 55% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Group operating m
Slide 12: Our response to the crisis
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Our response to the crisis Operational initiatives Cost control Contract renegotiations Above unit cost control Secured the balance Labour flexibility In unit cost control sheet More agile operating model Food p
Slide 13: Our response to the crisis
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Our response to the crisis Operational initiatives Cost control Contract re-negotiations Above unit cost control Secured the balance Labour flexibility In unit cost control sheet More agile operating model Food
Slide 14: Costs and benefits from resizing
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Costs and benefits from resizing £m Cumulative annual benefits to date Total cost North Rest of Europe Total to date America World MAP 4 – In unit costs Cost avoidance 138 140 275 45 460 MAP 5 – Above unit Cost
Slide 15: Looking ahead to the rest of the year
Control the controllable Invest in growth Reopen safely and mobilise Optimise and evolve Looking ahead to the rest of the year Mobilise Further Re-training and Health and Rebuilding Expand menu existing and contract onboarding hygiene scale range new business renegotiations Non-linear margin progres
Slide 16: Income statement
Income statement £m HY 2021 HY 2020 Operating profit 290 854 Net finance cost (56) (65) • Finance costs reflect lower debt and interest rates Profit before tax 234 789 Tax (63) (189) • HY21 ETR of 27% • FY21 guidance 25% to 27% Profit after tax 171 600 Non-controlling interests - (3) Attributable pr
Slide 17: Strong underlying free cash flow
Strong underlying free cash flow £m HY 2021 HY 2020 • Gross capex £288m, 3.4% of sales Operating profit 290 854 • FY guidance c.£700m Depreciation and amortisation 380 373 dependent on pace of EBITDA mobilisations and re-openings 670 1,227 Net capital expenditure (272) (402) Trade working capital 11
Slide 18: Leverage ratio expected to reduce going forward
Leverage ratio expected to reduce going forward 6,000 3.0 3 5,000 2.1 2 1.6 1.5 1.3 4,000 1 3,446 3,383 3,272 3,006 3,000 2,627 Target 0 2,459 ratio 2,188 2,241 2,000 1-1.5x -1 1,418 over time 861 1,000 -2 0 -3 2017 2018 2019 2020 HY 2021 FY 2021 Net debt Trailing 12m EBITDA Leverage ratio IAS17 bas
Slide 19: Disciplined investment in capex and M&A
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Disciplined investment in capex and M&A HY capital expenditure Bolt on M&A opportunities Digital, infrastructure & compliance New business wins Enhance our Portfolio existing business diversification New busines
Slide 20: Investment supporting long term growth
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Investment supporting long term growth Strong track record of Robust post investment Maintain discipline for returns review process future investment • Historic ROCE of c.20% • Conduct ongoing post • Investing i
Slide 21: Capital allocation priorities remain unchanged
Capital allocation priorities remain unchanged Invest in the business M&A Capex for organic growth Resilient Required returns > cost of capital by the end of year 2 balance sheet Strong investment grade credit rating Target net debt/ Dividends EBITDA 1-1.5x over Returns to Shareholders To be resumed
Slide 22: Financial summary
Financial summary • Restored more than half of our 2019 margin in Q2 • Expect continued margin progression in Q3 of 4.5% to 5.0% • Robust balance sheet and strong liquidity • Prioritising investment according to our capital allocation framework • Investing capex to support record new business wins w
Slide 23: Group and regional performance
Dominic Blakemore Group and regional performance 23
Slide 24: Organic revenue: continued strong wins and retention
Organic revenue: continued strong wins and retention As a % of 2019 revenues 5.4% (4.4)% 105% 108% 69% 71% (30.4)% 60% (31.4)% 26% New Lost Organic business business LFL change B&I Ed H&SL S&L DOR Group Note: Mobilised new business. Based on underlying performance at reported exchange rates unless i
Slide 25: Regional performance: North America
Regional performance: North America Revenue by sector Organic revenue (33%) • New business of 5.2% (HY) and 5.6% (Q2) with double digit contribution from Healthcare & Sr Living Healthcare & Senior Living Education • Excellent client retention of 96.6% Sports & Leisure • All Healthcare sub-sectors gr
Slide 26: Regional performance: Europe
Regional performance: Europe Revenue by sector Organic revenue (33%) Healthcare & • New business of 5.1% (HY), 5.9% (Q2) with good Senior Living Education contributions from the UK and Turkey Sports & Leisure • Improved retention of 93.5% Defence, Offshore • Volumes unchanged due to sector exposure
Slide 27: Regional performance: Rest of World
Regional performance: Rest of World Revenue by sector Organic revenue (9%) Healthcare & • New business of 7% (HY) and 7.8% (Q2) with Senior Living double digit contribution from DOR in Australia Business & Industry Education and Chile Sports & Leisure • Improved retention of 94.5% • Most resilient r
Slide 28: Strategy
Strategy 28
Slide 29: Building back stronger for all our stakeholders
Building back stronger for all our stakeholders PEOPLE PERFORMANCE PURPOSE Responsible Long term value creation Support the community and employer protect the environment 29
Slide 30: Seizing the opportunity
Seizing the opportunity REOPEN AND CONTROL THE INVEST IN OPTIMISE AND MOBILISE CONTROLLABLE GROWTH EVOLVE SAFELY 30
Slide 31: Structural market opportunities for organic and inorganic growth
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Structural market opportunities for organic and inorganic growth Global food services market Food services market by region Food services market by sector c. £220bn 80 70 70 Self- Self- Self- Self- Self- operate
Slide 32: Accelerated first time outsourcing leading to strong new business wins
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Accelerated first time outsourcing leading to strong new business wins Sources of growth (%) New business wins (ARO value) 100 ARO Large Large Large Large players players players players up c. 20% 80 FTO Regiona
Slide 33: New business wins helping diversify our portfolio
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve New business wins helping diversify our portfolio New business wins by region New business wins by sector Sports & Leisure Rest of World 11% 15% Business & Industry 17% 9% 18% Europe 29% 22% 2019 2021 2019 50% 2
Slide 34: Successful support services business
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Successful support services business Group revenues • Extensive portfolio of sector brands • High value add proposition and proven processes Support services • Considerable cross-selling opportunities • Strong c
Slide 35: Seizing the opportunity
Seizing the opportunity INVEST IN REOPEN AND CONTROL THE OPTIMISE AND GROWTH MOBILISE CONTROLLABLE EVOLVE SAFELY 35
Slide 36: Reopening and mobilising safely and efficiently
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Reopening and mobilising safely and efficiently • Health and Safety is our number one priority • Robust hygiene and disinfection protocols • Proactive about recruitment – using digital tools to interview, onboar
Slide 37: Welcoming back sports fans
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Welcoming back sports fans • Stringent protocols, health screening and infection control training • Contactless processes reducing pressure points • Frictionless retail creating an effortless experience • Optimi
Slide 38: Seizing the opportunity
Seizing the opportunity INVEST IN REOPEN AND CONTROL THE OPTIMISE AND GROWTH MOBILISE CONTROLLABLE EVOLVE SAFELY 38
Slide 39: Building and scaling a digital offer
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Building and scaling a digital offer • Lean and more agile operating model • In-house, customisable digital capabilities • Central production units with digital solutions: • Copper Pan Kitchen • Feedr • Time2Eat
Slide 40: The future of B&I
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve The future of B&I • Hubs for collaboration and innovation • Hybrid working with extended opening hours • Multipurpose concepts enabled by digital • Food services flexing with population levels • Food as medicine
Slide 41: Building back stronger for all our stakeholders
Building back stronger for all our stakeholders PEOPLE PERFORMANCE PURPOSE Responsible Commercial offer grounded in Support the community and employer changing client expectations protect the environment 41
Slide 42: People: Inspiring and growing through great leadership
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve People: Inspiring and growing through great leadership • Thanks to all our colleagues for their hard work and extraordinary commitment • Our People differentiate us from our competition and are the reason client
Slide 43: People: Building a more diverse and inclusive business
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve People: Building a more diverse and inclusive business • Diversity & Inclusion fosters innovation and increases employee retention • Our clients want our workforce to reflect their culture and values • We are pr
Slide 44: Purpose: Doing our part to limit global warming
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Purpose: Doing our part to limit global warming • Compass UK & Ireland committed to Net Zero WASTE NOT 2.0 emissions by 2030 • Supporting our clients with their sustainability goals • Introducing carbon labellin
Slide 45: Purpose: Supporting local suppliers and social enterprise
Control the controllable Invest in growth Reopen and mobilise safely Optimise and evolve Purpose: Supporting local suppliers and social enterprise • Small and mid-sized family farms • Women and minority owned businesses • Black, Indigenous, People of Colour (BIPOC) • Working with over 20 different s
Slide 46: The Compass model of value creation remains intact
The Compass model of value creation remains intact Organic revenue growth Accelerated first time outsourcing and increased share gains Value created through Operating margin Continued margin improvement operations Capex Continuing to support organic revenue growth Value created Bolt-on M&A Opportuni
Slide 47: Summary
Summary Restored more than half of our historic margin in Q2, with further progress expected in Q3 Strong first time outsourcing momentum underpins confidence in future growth Continued investment in the business to seize exciting growth opportunities Our competitive advantages in People, scale and
Slide 48: Supplementary Information
Supplementary Information 48
Slide 49: Revenue
Revenue RoW 13% North America Food service Other 60% 80% Sports & Brazil RoW Japan Support Leisure Australia Business & Healthcare 5% 2%2%5% DOR Industry 4% 17% & Seniors Other Support 32% Europe 12% 3% DOR 34% 7% Germany 2% Geography Food Service Sector 5% 57% France 8% 73% USA 10% 3% UK 19% Food C
Slide 50: Geographic revenue by sector
Geographic revenue by sector North America Europe Rest of World 5% 5% 2% 25% 17% 14% 20% 9% 5% 32% 15% 32% 15% 46% 6% 42% 5% 44% 29% 2020 2% 2020 52% 2020 1% 14% 16% 33% 24% 10% 24% 13% 43% 2021 2021 2021 Business & Industry Defence, Offshore & Remote Education Healthcare & Seniors Sports & Leisure
Slide 51: Geographic financials
Geographic financials £m North America Europe Rest of World Other1 Total 2021 Revenue 5,160 2,260 1,131 8,551 Organic growth (32.8)% (32.8)% (9.4)% (30.4)% Operating profit 245 32 53 (40) 290 Margin 4.7% 1.4% 4.7% 3.4% Cash flow 392 94 30 (157) 359 Cash flow conversion 160% 290% 57% 124% 2020 restat
Slide 52: Costs and benefits from resizing
Costs and benefits from resizing £m Costs of resizing Estimated annual benefits Above Above Above Above In unit unit FY20 In unit unit HY21 In unit unit FY20 In unit unit HY21 (MAP 4) (MAP 5) Total (MAP 4) (MAP 5) Total (MAP 4) (MAP 5) Total (MAP 4) (MAP 5) Total North 22 26 48 - - - 140 55 195 - -
Slide 53: Balance sheet
Balance sheet Overview (£m) 2021 HY 2020 HY1 2020 FY Goodwill 4,487 4,751 4,669 Other non-current assets 4,494 5,132 4,900 Working capital (1,293) (1,128) (1,218) Net Assets held for sale 21 54 6 Provisions (573) (439) (637) Post employment benefit obligations 119 387 190 Current tax payable (99) (1
Slide 54: Net Debt
Net Debt £m 2021 HY 2020 FY Opening net debt 3,006 3,272 Free cash flow (359) (213) Net acquisitions and disposals 36 450 Resizing 126 108 Equity raise - (2,000) Dividends - 427 Impact of IFRS 16 - 995 FX and other non cash items (182) (33) Closing net debt 2,627 3,006 Net debt to EBITDA 3.0x 2.1x 5
Slide 55: Components of net debt
Components of net debt £m Bonds 2,291 Private placements 1,051 Commercial Paper - Bank loans - 3,342 Leases 845 Other loans and fair value accounting adjustments 108 Derivatives (131) Gross debt 4,164 Cash net of overdrafts (1,537) Closing net debt at 31 March 2021 2,627 Notes: Based on nominal valu
Slide 56: Financing
Financing Maturing in Drawn Principal borrowings Coupon Financial Year £m Bonds €500m 1.875% 2023 426 €750m 0.625% 2024 639 €500m 1.500% 2028 426 £250m 2.000% 2025 250 £250m 3.850% 2026 250 £300m 2.000% 2029 300 Total 2,291 US private placements $750m (2011 Notes) 3.98% - 4.12% 2022 - 2024 544 $300m
Slide 57: Maturity profile
Maturity profile £m 1,000 800 600 400 200 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 £ bond € bond US$ private placement Notes: Based on borrowings and facilities in place as at 31 March 2021, maturing in the financial year ending 30 September. 57 The average life of the Group's principal borrow
Slide 58: Financing: debt ratios and credit ratings
Financing Debt ratios and credit ratings Ratings Short term Long term Outlook Latest Update Standard & Poors A-1 A Negative 21 Dec 20 Moody’s P-2 A3 Stable 17 Dec 20 Ratios for USPP covenant purposes4 2021 HY 2020 HY5 Net debt1 / EBITDA2 5.6x 1.9x EBITDA2 / net interest3 12.5x 20.5x Notes: 1.Net deb
Slide 59: Liquidity position
Liquidity position £m HY 2021 FY 2020 Revolving Credit Facility maturing 2025* 2,000 2,000 Revolving Credit Facility maturing 2021** 800 800 Total Committed Revolving Credit Facilities (RCF) 2,800 2,800 Bank of England COVID Corporate Finance Facility (CCFF) 0 600 Amount drawn down from RCF & CCFF 0
Slide 60: Currency impact on operating profit
Currency impact on operating profit £m IMPACT ON HY 2020 PROFIT IMPACT ON FY 2020 PROFIT USD (31) (34) EUR 2 - CAD - - AUD 2 4 BRL (2) 1 JPY - (1) TRY (4) (4) Other (4) (5) Total currency impact (37) (39) Notes: Based on underlying performance at reported exchange rates unless indicated otherwise, s
Slide 61: Exchange rates
Exchange rates Rates used in consolidation Income Statement 1 Balance Sheet 2 2021 per £ 2020 per £ 2021 per £ 2020 per £ Australian Dollar 1.81 1.93 1.81 2.03 Brazilian Real 7.44 5.56 7.79 6.43 Canadian Dollar 1.74 1.71 1.73 1.76 Chilean Peso 1,003.19 1,008.04 991.17 1,056.84 Euro 1.13 1.16 1.17 1.
Slide 62: Exchange rates
Exchange rates Effect on 2020 revenue and profit US DOLLAR CANADIAN 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 Exch
Slide 63: Exchange rates
Exchange rates Effect on 2020 revenue and profit AUSTRALIAN DOLLAR TURKISH LIRA JAPANESE YEN £m cumulative change for an £m cumulative change for an £m cumulative change for an incremental 5 cent movement incremental 20 kurus movement incremental 10 yen movement Exchange Revenue Profit Exchange Reve
Slide 64: Definitions
Definitions Capital employed Total equity shareholders' funds adjusted for net debt, post employment benefit obligations net of associated deferred tax, amortised intangibles arising on acquisition, impaired goodwill and excluding the Group's non-controlling partners' share of net assets and net ass
Slide 65: Definitions
Definitions ROCE Return on capital employed (ROCE) divides NOPAT by the 12 month average capital employed. • acquisition related costs • one-off pension charge Specific adjusting items • cost action programme and COVID-19 resizing costs • tax on share of profit of joint ventures • gain/(loss) on sal