HALF YEAR RESULTS ANNOUNCEMENT 2022

Half year results announcement for the six months ended 31 March 2022

Strong growth drives revenue above pre-COVID level²

Commencing a share buyback programme with up to £500m

 

Half year performance summary

•    Q2 underlying revenue at 99% of 2019 revenues with run rate now above our pre-COVID       level²

•    Organic growth of 37.9% driven by strong performance in North America and Europe

•    Excellent net new business growth, total in HY 2022 exceeds entire FY 2021 net new       business

•    Operating margin of 5.8%, an increase of 240bps on HY 2021

•    Leverage further reduced to 1.3x net debt/EBITDA, back within our target range

•    Commencing a share buyback programme with up to £500m this calendar year

Operational highlights

•    Strong growth across all sectors, with notable volume recovery in Business & Industry and       Education

•    Record new business wins of £2.5bn⁴ over the last 12 months, with broad based growth       across all regions

•  Client retention rate at highest ever level of 95.8%

•    Net M&A expenditure of £109m, further increasing our presence in delivered-in solutions

Strategy – positioning for the future

•    Capitalising on the significant market growth opportunities in first time outsourcing

•    Continuing to strengthen our competitive advantage in vending, digital solutions and ESG

•    Resilient business model helps mitigate heightened inflation – also a tailwind to       outsourcing

Outlook

•    Increasing FY 2022 organic revenue guidance from 20 – 25% to around 30%

•    Margin guidance remains unchanged; expect FY 2022 underlying operating margin to be       over 6%, exiting the year at around 7%

Statutory results

•    Statutory revenue increased by 36.3% and operating profit was up by 279.8% 

^{1. Reconciliation of statutory to underlying results can be found in notes 2 (segmental analysis) and 12 (non-GAAP measures)     of the financial statements.}

^{2. Measured on a constant currency basis.}

^{3. Organic revenue change.}

^{4.Annual revenue of new business wins in the last 12 months}

Business Review

Dominic Blakemore, Group Chief Executive, said:

“We continue to recover strongly from the pandemic and have achieved the important milestone of revenue exceeding our pre-COVID level on a run rate basis. We have seen a notable improvement in Business & Industry and Education as employees return to the office and students to in-person learning. Net new business growth has been excellent, particularly in North America and Europe, where we have mobilised a significant number of recent wins and benefited from our highest ever client retention rate.

We are mindful of global inflationary pressures, which have been exacerbated by the tragic events in Ukraine. Although we expect inflation to increase and continue at a heightened level in the medium term, we have a resilient business model to help mitigate this challenge. Inflation also provides a further impetus to outsourcing as organisations seek savings and we are capturing this growth opportunity as demonstrated by our record new business wins.

Given our strong first half performance and positive outlook, we are increasing our full year organic revenue growth guidance from 20 – 25% to around 30%. Whilst we are cautious about the inflationary environment, our margin guidance remains unchanged, with full year underlying operating margin expected to be over 6%, exiting the year at around 7%.

While investing in future growth, our increasing profit and cash flow continue to reduce leverage, which is now back within our target range. Our strong balance sheet and excellent growth prospects give us the confidence to commence a share buyback programme with up to £500m during this calendar year.

Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.”

Results presentation today

A recording of the results presentation for investors and analysts will be available on the Company’s website today, Wednesday 11 May 2022, at 7.00am. There will be a Q&A session at 9.00am, accessible via the Company’s website, www.compass-group.com, and you will be able to participate by dialing:

UK Toll Number:	+44 (0) 33 0551 0200
UK Toll-Free Number:	0808 109 0700
US Toll Number:	+1 212 999 6659
US Toll-Free Number:	+1 866 966 5335
Participant PIN Code:	Compass

Please connect to the call at least 10-15 minutes prior to the start time.

Financial calendar

Ex-dividend date for 2022 interim dividend	9 June 2022
Record date for 2022 interim dividend	10 June 2022
Last day for DRIP elections	7 July 2022
Q3 Trading Update	26 July 2022
2022 interim dividend date for payment	28 July 2022
Full year results	22 November 2022

Enquiries

Investors	Agatha Donnelly & Simon Bielecki	+44 1932 573 000
Press	Giles Robinson, Compass Group PLC	+44 1932 963 486
	Tim Danaher, Brunswick	+44 207 404 5959
Website	www.compass-group.com