Compass Group PLC

Good morning and welcome to our 2024 full year results. It's been another great year of strong progress. Our operating profit increased by 16% with organic revenue growth of 11% and 30 basis points of margin progression to 7.1%. We operate in an industry that has a significant and attractive structural runway for growth. In recent years, we've improved the quality of our portfolio by exiting non-core markets, and we've continued to invest in capability, capex, and M&A to sustain higher net new business growth. Over the next few minutes, we'll tell you how our relentless focus on the core, strong competitive advantages, and ongoing investment are unlocking further growth opportunities. But first, let me hand you over to Petros.

Thanks, Dominic. Good morning, everyone. We've delivered another strong financial performance with double-digit growth across all key metrics, organic revenue, operating profit, EPS, and free cash flow. Net new was 4.2%, accelerating in the second half to 4.8%. This gives us good momentum into 2025 as the cornerstone of our growth. Pricing trended lower as the year progressed and was in line with our blended rate of inflation at around 4%. And volume growth moderated to around 2% as anticipated. We're sustaining high revenue and profit growth across all regions. With strong organic revenue growth and good margin progression, importantly, unit margin recovering to pre-pandemic level, every region delivered double-digit improvement in operating profit. Group operating profit increased by 16% to $3 billion. Interest increased to $249 million due to higher interest rates and debt. It is expected to be around $300 million in fiscal year 2025, reflecting our acquisition activity. Based on current interest rate expectations and assuming leverage at the midpoint of our 1 to 1.5 time range, our interest charge should reduce from fiscal year 26 onwards. As anticipated, our effective tax rate was 25.5%. Earnings per share were up by 15%, and in line with our policy, dividends grew by the same amount. Our continued strong cash position gives us flexibility to invest in growth and reward shareholders. CAPEX was 3.7% of revenue, reflecting some catch-up from the prior year. Going forward, we expect CAPEX to be around 3.5% of revenue. Working capital benefited from payroll and year-end timings, providing us with an inflow of around $200 million. We're continuing to rebuild margin while increasing investment to drive growth and mobilizing higher levels of new business. We expect to make further margin progress as we grow scale and benefit from overhead leverage, productivity, and digital initiatives. Looking at our portfolio. We've exited a further five non-core markets and agreed to dispose of our remaining presence in Latin America and Kazakhstan, all subject to regulatory approval. We're also continuing to invest in our core markets to further unlock growth. Net M&A expenditure was $1 billion, mainly related to CH&Co in the UK and Hoffmans in Germany. Post year end, we also acquired Dupont Restauration in France and agreed to acquire four services in Norway, which is yet to complete. The net impact of all announced acquisition disposals will reduce profit in fiscal year 2025 by around $30 million. Given our disposal program is complete, we expect any further acquisitions to be accretive to profit from fiscal year 2026 onwards. The business continues to be very cash generative, giving us flexibility to invest and return capital. In 2024, we invested $2.6 billion in CAPEX and M&A to drive growth. In addition, we rewarded our shareholders, returning $1.5 billion through dividends and buybacks. Leverage ended the year at 1.3 times net debt to EBITDA in the middle of our target range. Our capital allocation model remains unchanged. We're investing in CAPEX to drive net new business growth and are currently prioritizing strategic platform acquisitions such as Dupont and ForService. As a result, we expect leverage at the half year to be towards the top end of our 1 to 1.5 times range. Looking ahead, we will continue to distribute any surplus cash to shareholders and will revisit the scope of further returns later this year. Turning to guidance. In 2025, we expect high single-digit operating profit growth driven by organic growth above 7.5%, which is likely to be first-half weighted and continued margin improvement. We anticipate the components of growth to be net new in our 4% to 5% range, pricing of 2% to 3% depending on inflation, and while volume is more difficult to predict, it is likely to be a net positive. Now, back to Dominic.

Thanks, Petros. We continue to see strong outsourcing and favourable market trends, which give us confidence in sustaining higher growth. Food is more valued than ever by clients and consumers. Allergens, dietary requirements and sustainability initiatives continue to add to operational complexities. Major challenges such as heightened inflation put pressure on organisations, leading to further outsourcing. Our unique competitive advantages, sectorization, scale, and expertise enable us to address complexity, helping us to win more business, especially with first-time outsourcers. As a result, we're confident we can sustain higher organic growth. With a robust sales pipeline and strong retention, we expect net new business to continue in the 4% to 5% range. This is 1-2 percentage points higher than our historic rate, driven by better growth in Europe. Pricing will depend on inflation and is likely to be around 2-3%. And with continued attractive value versus the high street, volume could be a net positive. So organic growth is expected to be mid to high single digit, compared to around 5% pre-Covid. And with some margin progress, operating profit growth is expected to be ahead of revenue growth. We continue to improve the quality of our country portfolio, mainly in our rest of world region. With the programme now mostly complete, we're more resilient and even more focused on the opportunities in core markets. The addressable food services market for the countries in which we operate is worth around $320 billion. This has been updated for the countries we've exited and includes vending and micro markets in North America and Europe. With around three quarters of the market still self-operated or run by small players, there's a large structural growth opportunity. In fact, North America and the next 10 markets account for around 90% of this opportunity. Our business in North America remains as attractive as ever. There's a significant runway for growth across all of our sectors and the market dynamics are favourable. Our strong offer, flexible operating models and further sub-sectorisation are fuelling this sustained growth. Even though it's our most mature sector, B&I saw the highest rate of organic and net new business growth last year. Some of this is due to changing consumer and client trends, a greater appreciation of food and our attractive value versus the high street. And as ever, we continue to invest in innovation through CAPEX and in M&A to unlock further growth opportunities. Europe's sustained higher net new is a result of our growth focus and favourable market dynamics. Fragmented sales and retention processes have now been replaced by streamlined growth playbooks. Full market mapping, CRM tools and client feedback have doubled our new business ARO in Europe and doubled our sales pipeline compared to the historic rates. Building scale in country reinforces our market position and generates a positive cycle of growth. In a market where we have only 7% share, there's lots of potential in all countries and in all sectors. Self-help measures have also improved retention in Europe, one of our most important KPIs. Pre-COVID, it was significantly lower than North America, averaging around 92.5%. Having invested in a new CRM system, a stronger culinary offer and better Salesforce training, retention has increased to around 95.5%, a substantial step up. To unlock further growth, we're acquiring high-quality businesses to expand our portfolio of sectors and sub-sectors. We seek businesses that have unique capabilities or reach with a flexible operating model and an entrepreneurial management team. Historically, our acquisition strategy was focused more on North America. Whilst we're still investing there, we're seeing attractive opportunities in Europe as we replicate the successful North American growth blueprint. High-quality additions to our portfolio include Hoffmans in Germany, CH&Co in the UK, and more recently, Dupont Restauration in France, and we've agreed to buy full service in Norway. It's early stages, but the integration of these businesses is going well as we generate returns over time. CH&Co's new business wins are 40% higher than expected and we're saving more on costs too. M&A creates value by accelerating growth, removing costs and increasing scale. This takes time and returns build year on year. In the US, we're still generating value from businesses bought over 20 years ago, as their growth continues to compound year after year. To further enhance growth, we're investing in capabilities and resources across the group. Talent, systems, processes, and data are all growth enablers. And with a more systematic approach to leveraging best practice, we can quickly scale the best of Compass across the group. In summary, the combination of the strength of our business and favourable market dynamics give us confidence in achieving higher net new business growth than our historic rates. As a result, our medium-term growth algorithm is mid to high single-digit organic revenue growth with ongoing margin progression, back to our peak and beyond. This leads to profit growth ahead of revenue growth as we maintain our strong record of performance and deliver long-term compounding shareholder returns. This is now a phase of continued, sustained execution enabled by our world-class talent at all levels in the company and an agility to innovate with technology at pace and at scale. We're really excited for the future and we're wholly committed to delivery.