Compass Group Plc Ord New

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.

We will now take our first question from Jamie Rolo of Morgan Stanley. Your line is open, please go ahead.

Thanks, good morning everyone. Three questions please. First of all, on the net new very strong Q4 looks like it was a bit over 5%. I'm just wondering whether it could be high end of that four to 5% this year given retention still improving and maybe you can just quantify the ARO as to how that compares versus the three and a half billion. at the first half. Secondly, similar on volumes, it looks like those were about up 2% in Q4, and your guidance looks like it's maybe half a point of growth at the midpoint of the net new and price ranges. I'm just really wondering, for scope for further volume recovery, how much of that growth in Q4 was cyclical back to work, sports and leisure elements, How much is the structural share gain from a high six and improving technology? And then finally, why no buyback? I get it, leverage high end as a target at March, but that's partly seasonal working capital. It's a very strong balance sheet. Is this about more M&A in the pipeline? Thank you.

Thank you, Jamie. Thank you very much and good morning. I'll take the first two questions and then hand over to Petros on the buyback. Yeah, first of all, look, 4.2% net new full year 24 with 4.8% in the second half. And as you rightly say, a very strong fourth quarter. It is only a quarter. What's really pleasing is improving retention throughout the year as we guided to the second half retention above 96%. uh and and as you rightly say again a good aro on a four-year basis so three and a half billion dollars um aro full year versus what was 3.4 billion at the half year so we're entering 2025 with very positive net new momentum um as as we said before that lets us look out into the first half with confidence but you know the half two will really be about um what we can achieve in the first half of of our financial year 25. But at this point, look, we're looking forward into 25 with optimism on net new, and we'd hope to be in the higher end of the 45% range. In terms of volumes, volumes have performed strongly through the course of 24. We are guiding to a slight positive in 25. I think we still need to just see whether the return to office volumes have stabilized. I think what we're seeing though, and I think this is positive, is that You know, our value gap to the high street is significant now, and I think the consumer feels and sees that. I believe that's driving higher per capita and higher participation on site, which is very exciting. I think, as you rightly say, I think technology is playing its part as well in terms of how we communicate our offer. And then, you know, we're seeing very positive trends in the sports and leisure sector, which is a growing sector for us. So I think we are well exposed to the opportunity for sustained positive volume. But again, we'll update you as we go through the year. Maybe if I can just bring that together. You've heard us guide today to growth over 7.5% for 24. It feels like the impacts of the pandemic, the impacts of the cost of living crisis are behind us. What we're looking at is the opportunity to sustain net new in the 4-5% range with a bit more inflation than we saw historically. And I think what we're seeing in the UK and the US suggests we might see a little bit more inflation going forward. That gives us the right to price and we think that's helpful to our business model. And as we said, with positive volumes, I think we have the opportunity to be in this sort of mid to high single digit growth range going forward. And as a reminder, that's 50% faster growth than we enjoyed pre-pandemic on a business that's 60% larger. And with the portfolio changes made, increasingly focused on sustaining that. So, you know, I think the trends for 25 are good, but more importantly for me, our ability to sustain that over time, I think we're very well placed to do. Petros on the buyback.

Morning, Jamie. I think on the share buyback, the first thing to say, we're very comfortable with the capital allocation model we have. This gives us the ability to continue to invest in the business organically and organically and reward shareholders in the dividend and buybacks. I think what you see for the first half, you see within our framework a bit more M&A with what we have announced in Dupont in France and in Norway for full service. We're going to be towards the high end of our range in the first half. And consistent with our model, we're going to reassess this in the second half of the year. Again, when you look at the balance of our capital allocation model in investing in the business and rewarding shareholders, you know, it's going to be about striking this balance. In the first half, it's a bit more M&A. In the second half, we're going to reassess the scope And I'll just add to that.

I mean, I think you've seen us, as we've said today, do four significant deals in Europe as we would see them. I'm not sure we see a huge pipeline of those larger deals as we go forward. I think what you should expect from us now is more of the infill type deals you've seen in North America around GPOs. around micromarkets and around individual subsector brands. I think you'll see a bit more of that outside of North America, but inevitably those are going to be smaller deals with a smaller price tag. So I think the phase that we're now in is probably a bit more balanced between M&A and Biobat, but that's something for the second half rather than the first half, given that we'll be at the top end of the leverage range.

Great. Thank you both very much. Thanks, Jamie.

Thank you and we will now take our next question from Vicky Stern of Barclays. Your line is open, please go ahead.

Good morning, I just wanted to start following the election in the US, just how you're thinking about the potential implications of the result. There's obviously potentially broader macro implications to consider positives if we see more onshoring, but just on some of the specific points that have been called out, possible federal government cuts, how exposed you might be there, and RFK Jr., any implications that you might see in terms of school, meal, nutrition, scaling back of Obamacare, if you could just touch on some of those topics as they might land for you. Second one's just about margin growth. You've obviously made clear in the presentation that the growth algo from here is both top line and margin. But just if you could break out how you're thinking about the key levers of margin growth from here. I imagine, obviously, at the moment, that volume growth is pretty important in helping You're still positive on volume going forward. But there's also sort of investment elements on the other side. So how should we think about the puts and takes on that margin growth and what sort of level we should have in mind after this year? And then just finally, just a bit more detail if possible on the acquisitions in France and Norway, any financials you can offer us on those and just specifically how you see those businesses enhancing Compass?

Great. Thank you, Vicky, and good morning. If I take the election point, I'll then hand over to Petros on margin acquisitions. Yeah, look, on the US section, I think the first thing to say is our US business has flourished under both previous administrations. I think, secondly, it's important to say whatever measures are enacted, If they benefit the U.S. domestic economy, we will be strongly positioned as a winner. As you rightly say, anything that encourages onshoring will likely see the opportunity from new clients or from higher volume. We have little exposure to federal government business. Whenever any changes are made around nutritional requirements, I think we've always responded incredibly positively and very quickly. And often that complexity can be a further accelerant of outsourcing. um so look you know we're going to wait until we see policies enacted but we're not a business that's exposed to importing in the us and so we wouldn't anticipate tariffs having a major impact on our cost base other than through secondary supply chain factors and of course we've always demonstrated our ability to to manage that inflation because of our scale and not least because of the food by presence but also Importantly, anything that puts pressures on our clients' cost base gives us opportunity to unlock savings for them and really push on with the first-time outsourcing. You referenced the impact that might have on the broader global economy. I mean, look, one of my biggest learnings of this business now is it's true resiliency through most cycles and the fact that a lot of what we're about is self-help and unlocking the huge runway for growth that's everywhere. We've talked today about being focused on North America, US Canada, and then the next 10 countries. And that represents 90% of the global marketplace of opportunity. We just think there's a huge runway for growth there. And that will be, you know, through cycles. So, you know, we see positives, and then we're very confident in the ability of this business to manage through whatever's ahead.

Morning, Mickey. So when it comes to margin, I think what you should expect from us is consistent margin progression year over year. We have an opportunity across group. We expect to see faster margin progression outside North America and where we have significant opportunity in purchasing and core processes. We don't see a cap to it in this progression. And, you know, we continue to enjoy elevated growth that gives us operating leverage and synergies as we go in the business. When it goes to your question on the acquisitions, I think what you've seen there, you see what we discussed about CHM coin Hoffmans, which practically is our investment in further sectorizing, sub-sectorizing the business, following the North America blueprint, and we have continued investing in the European business, If you look both at Depone and Force Service in Norway, they offer presence in sub-sectors and regional coverage. We did not compete, we did not play in compass and provide a great opportunity for us to win in these sectors. It's great businesses, they enjoyed good growth, strong retention, and we feel there will be a great addition to our portfolio in further sub-sectorizing and offering bespoke offers to the clients. And they will give us an opportunity to drive attractive financial returns, you know, leverage economies of scale and integrating into our business. The other thing I want to say is with the acquisitions of CH&Co and Hoffmans, we have witnessed a great talent and great management teams coming to Compass, which further complements our management capability in the core markets.

Vicky, just come back on a couple of builds on Petro's response there. One thing I want to stress is you've seen our unit margin in these results recover to its pre-pandemic levels. So really what this is about now is the level of investment we're putting into the business and getting that balance right. we've been doing that particularly in sales and retention but also in technology i think we're going to be really rewarded for that over time i think it's kind of getting that balance right that gives us a sustainable model of growth and profitability and i think that's what you're you're hearing in the guidance um just specifically i just want to call out um the um the Norwegian deal in full service. It's the first time we've talked about it. That's around a $500 million acquisition for revenues, about $500 million with margins that are broadly in line with the group average. That for me is a really exciting deal. It's still core food, but it is multi-service to multi-tenanted building, typically contracting with the owner-manager of the buildings. And that's a trend we see across some of the northern European countries. I think it's a great example of us buying into a subsector and a capability that we can franchise across markets for growth. And I think that's really what we've done in the four deals that we struck. We've looked at those platforms that can give us real confidence in sustaining growth across over time as we go forward. And I think that, you know, that deal plays very, very nicely into it, as Petros has said on the other metrics as well.

That's very helpful. Thanks. We will now take our next question from Jaffa Mastari of BNP Paribas. Please go ahead.

Hi, good morning. I've got three questions. Just on the gross new business signings, you've given the number for this year, which is 3.5 billion, if I'm correct. Just wondering if you have any more color on the mix of segments and the mix of first-time outsourcing within that this year, please. And then I also wanted to come back on your implied like-for-like assumptions for next year, especially since you've now said net new business could be top end of 2020. Your competitors, Sodexo and Aramark, have a pretty consistent message on pricing and on volumes, and they're basically saying just between pricing of 2.5 to 3 and volumes, or they're both saying 1% to 2%. They can basically do 4% just like for like. Just curious if you've had a look and what part of their views on like for like you do not recognize or would expect to play out differently at Compass Group or just be looking at with a more cautious stance. And lastly, just on acquisition and disposals, we've got the 30 million EBIT impact. Could you please help us with the net revenue impact as well for 2025? I'm just trying to unpick what you're saying in terms of underlying margin trends. It looks like maybe 15 basis points, probably not 20 basis points. But curious what the revenue impact is, please.

Let me talk to the first two and then Petros on disposals. In terms of gross new business, again, we're in that 40% to 45% ratio of first-time outsourcing, which we've always said is a really good place to be for us. And we still see lots and lots of first-time outsourcing opportunity across all of our countries and all of our sectors. From a sectoral standpoint, I think what's really exciting is we've seen a lot of new business within BNI. It's the most mature sector, isn't it? It's the most mature sector in North America. You've seen the slides today in the presentation with BNI growing above the average in North America and across the group. And we see that continuing. We also continue to see within the pipeline lots of opportunity in healthcare and education as we really start to work on those two sectors ever more. So it was a nice mix of new business, lots of opportunities to look forward, strong pipelines. And I guess that leads into your next question around sort of guidance for next year. You know, I should clarify it was sort of the upper half of my 4% to 5% range, but clearly we're going into 2025 with very nice momentum there. In terms of like for like, yeah, look, I think the 2% to 3% pricing feels about right. You know, we're seeing sort of, let's call it 4% inflation, which is probably two in food and five in labor. You know, I think we have, you know, reasonable degree of confidence that that's the sort of level of inflation we're going to see certainly through the first half and into the second. I think the bigger sort of area of uncertainty for us is obviously volume. It's the most economically sensitive. There's been a lot going on in the last couple of years within volume. And I think the jury's still out for us in terms of how much is sort of market tailwinds and how much is volume. the business model initiatives that we've introduced. Look, I think we feel super positive about the things we're doing and excited about what more we can do as well. But I think, you know, we should always be a fraction conservative around volume, particularly when we think about, you know, what volume trends were pre-pandemic. So, look, I think that's how we see it.

And then Petros Disposal. Yeah, hi, Jafar. I think on the guidance of the 30 million reduction profit, I think, This marks the end of the country exits, and you have a bit of timing in there on the exits and the acquisitions. It's about 30 million impact on the project for the full year, with a broadly average margin for group around 420 million in revenue. And maybe you keep in mind, as of 26, finishing the country exits, any M&A will be profit-accretive on a going-forward basis. Super. Very clear. Thank you.

Thank you. And we will now move on to our next question from Estelle Wingard of JP Morgan. Your line is open. Please go ahead.

Hi, good morning. Just two questions from me. Is there any seasonality this year in terms of net new? Basically, how should we look at H1 versus H2 as last year was more H2 weighted? And also, would you expect any impact from the French budget? I mean, you should be caught by the tax surcharge for revenues above $1 billion. Is that in your tax guidance for next year? And I believe that the UK budget should be manageable from your side, i.e. somewhat absorbed and all passed on. Thank you.

Let me just make a comment on the UK budget and then I'll hand over to Petros on Net New and the French budget. I think the first thing is just a reminder for all of us that the cost and complexity for us we see them as accelerators of outsourcing and I think the NI rate increase and lowering of the level in which it kicks in increases cost for everyone. And what that means is we see an opportunity in first-time outsourcing. We can help clients manage their wider budgets where they're facing a non-cost, but also we know we can manage those services more efficiently. If we deal with the UK increases well, then we can deal with it better than anyone else in our industry, and that makes us more competitive. And if we deal with it well, then we'll be more competitive to the high street, and I think the value equation increases. So, you know, that's something which we are planning for. We'll execute against those plans. For those of you with longer memories, I find it analogous to Obamacare, something which we dealt with by managing our costs through efficiency, productivity, and some pricing. And as a result of that, we saw a greater propensity for outsourcing where self-op in particular weren't able to manage those costs. So the philosophy we've got with regard to the UK budget changes is one of opportunity rather than threat. And then Petros, on.

I think when it comes to half one, half two, you heard us talking about net new in the 4.8% driven by both better net new and retention. We're having good momentum in the first half to 25%. We expect growth to be, as we currently see, we expect growth to be first half weighted, as we see some moderation, you know, on pricing and inflation. And at this time, this is what we have factored in the guidance. We may, you know, we would like to see second half to be as strong as the first half, but we don't know what we don't know at this point in time. And this is how we have guided it.

Okay, thank you. And on the French budget, if I may?

I'm coming to this. Okay, sorry, thanks. On France, I think we're watching the space. Nothing has been enacted so far when it comes to legislation changes. You have seen our tax rate has come in line with our guidance, 25.5. If there is going to be any legislative changes upwards or downwards, we're going to see how governments will enact legislation.

Okay, thank you.

Thank you. And we will now move on to our next question from Neil Tyler of Redmond Atlantic. Your line is open. Please go ahead.

Good morning. Thank you. A couple, please, from me. Firstly, back to the like for like and the volume growth. Can I take it from your comments that, well, I suppose regionally you expect that to be more focused in Europe given the comments you made about the favorable market dynamics there and presumably end market wise or vertical wise continuing to benefit from the trends that you've been seeing in BNI and sports and leisure. So I wonder if you could talk a little bit more in terms of the life like in terms of regions and businesses. And then secondly, on the margin, Just coming back to, sorry if I missed it, but just coming back to your comments on reinvestment and the extent to which that's perhaps holding back normal operating leverage. Can you help me just go back over those dynamics? Is it sort of five basis points of margin from that or somewhere in that region? Thank you.

thanks neil good morning um yeah look on on the light flight and volume growth i actually i think what's really positive is we're seeing that across the piece So obviously, we've got sort of high levels of inflation than we witnessed previously. And that's allowing us to take sensible pricing and demonstrate value to our clients across all of our regions. And then separately, we continue to see volume growth across the business, North America and Europe included. We think that's still some return to office. We think it's still kind of events that are happening within the office environment. But as you rightly say, you know, there's elements there of strong performance within sports and leisure and increasing per capita spend. And, you know, we're building our sports and leisure presence ever more outside of North America as well with some very attractive wins over the last 12 months. So we feel well-placed and well-exposed to that opportunity. So, you know, again, this is a broad-based opportunity in like-for-like as well as in net new. And then just on the margin point, You know, look, it's an art, not a science. This is about putting the right level of investment in the business for the long-term health and growth of the business. Within that, we see enough opportunity in gross margin expansion year over year for us to be able to manage both the investment and to deliver ongoing margin accretion. I think what we're guiding to today is to say don't expect that to be sort of lumpy and bumpy. We're going to manage this to be a continued incremental progression alongside the right levels of appropriate investment in the business to create differentiated offers, ever more technological innovation in our business model, in our offer in front of house and back of house. And we're very excited about the opportunity to do that.

Okay, great. Thanks, Dominic. That's helpful. Thank you.

Thank you. And we'll now take our next question from Simon Latriper of Jefferies. Please go ahead.

Yes, good morning. Two questions, please. First of all, on the retention rate and the overall competitive environment, your retention is still strong, obviously, but still a bit below last year, and some of your peers reported a weaker retention. So I would be interested by any comments in this context on the recent evolution of the competitive landscape. And second question on Europe and profitability, so some nice progress in margins, but still below the previous peak. So how do you see the medium term outlook here? I mean, especially given the region looks to be much stronger. So would it be reasonable to expect that profitability in Europe should over time exceed the 2019 peak? Thank you.

Yeah. In terms of retention, it was a slight dip in the first half, a good improvement in the second half. I think we're on track as we look forward. The business that's out to bid next year feels a little less than we've experienced more recently. I think we feel very well placed. I think you have to look at the long-term trends in retention over multiple years. And I think that it's one of continuous improvement. We see our opportunity to do ever better. We talked to you about a strategic alliance group where we deploy the SAG processes. We've got above average retention. Where we don't, we're slightly lower. We're now developing lighter processes for non-SAG accounts. Where we've done that, we've seen a material improvement in retention. So look, we know that there's more we can do all of the time to continue to see marginal gains. And, you know, we're going to be relentless in that. We don't see anything really changing in the competitive landscape. And, you know, we're really backing ourselves to, you know, to hold these levels and continue to improve over time. As I said, there may be puts and takes within quarters and so forth. You know, it's the nature of it with these measures and individual accounts can weigh. But I think the long-term trend should be one of continuous improvements. And then just in terms of Europe, you're right, we're somewhere off where we were previously, and there's a delta between our European markets and North America. At the moment, I think that's for the right reasons. We're investing in establishing the growth model. And I think what we'll see is that over time we'll get more margin accretion out of our businesses outside of North America than in North America. I think, you know, both have the right to grow their margins, but the opportunity is greater in Europe. And it really comes back to the basics of using our purchasing scale in particular and seeking further productivity as we go, particularly as we grow faster and have the right for more operational leverage in Europe than we witnessed sort of in the pre-pandemic era when we simply weren't growing the top line. So I think the medium-term outlook is very exciting. And we'd expect to see good margin progress over time in those countries.

Thank you very much.

Thank you. And our last question comes from André Joulard of Deutsche Bank. Your line is open. Please go ahead.

Thank you very much. Good morning, gentlemen. Two questions, if I may. First one about your market share and the fact that you invest quite strongly in Europe at the moment. What is the target you have in mind in terms of market share? Is it comparable to the US or different? And in terms of development, you mentioned that you acquired a business with facility management. Do you have in mind to improve the weight of the facility management in your portfolio or do you remain focused on food? Second question about the leverage. I'm sure that some investors are telling you that one time to 1.5 times is maybe conservative and you said that you are comfortable with this leverage. Is it unrealistic to think about a slightly higher leverage which could help you to return some more cash to shareholders? Thank you.

Thank you, Andre. Good morning. In terms of the market share in EMEA, we're not setting a target. I think we have the right to grow our share consistently and continuously over time. We said today it's a 7% share across the region. That's a huge opportunity for us to the to grow from here and it's why we're so excited in you know in the processes that we're putting in place the results that we're getting and you know the response that we're getting in growth you know what does that look like you know we should be able to continue to grow our net new business in in europe in that four to five percent range for for many years to come right that that is the market opportunity that that that is ahead of us and that's the ambition that we hold as we've done in in north america over nearly 20 years um And then to your point, I'd be careful with the phrase facility management. What this business does is more like food services, reception, soft support services. It's a bundle of services like the ones that we currently already offer. And remember, 15% of our global business. So that's what nearly $6 billion is already within those types of services. we are good at them we have the capabilities um you know we're just responding to a trend where we see more bundling particularly where we are we are contracting with the building owner rather than the individual client themselves and there's more of an opportunity to provide synergies in that but this business remains you know majority food business and it just gives us kind of a new tool in toolbox as it were to respond to a different part of the market and you know what the M&A is about has been making sure that we've got the right offer for each part of our target addressable market in our major countries in Europe and we feel good about the deals we've done under a morning I think when the leverage you know you know you hear this talking were comfortable with the range

The business generates strong cash flow, enables us to invest in the business organically, inorganically, and rewards shareholders. It's appropriate. It's balanced. It's conservative. We like it.

Okay. Thank you very much.

Thank you. That was the last question. I will now hand it back to Dominic for closing remarks.

Thank you and thanks for your questions this morning. Before we finish I'd like to leave you with the following thoughts. We've had another strong year as the business continues to go from strength to strength. We've improved the quality of our portfolio and we've acquired or agreed to acquire four attractive platform businesses in Europe as we further develop our sub-sector business model and build scale in our core countries with the greatest market opportunity. The actions we've taken together with the favorable market dynamics give us confidence in being able to sustain a heightened level of organic growth for the medium term. With ongoing margin progression, we expect profit to grow above revenue growth and strong cash generation leading to long-term compounding shareholder returns. We're excited about the opportunities and we're really focused now on delivery. Wishing you a healthy and happy festive period and we'll speak to you again in February. Thank you very much.