Compass Group Plc Ord New

Good morning, everyone, and thank you for joining us today. Welcome to our half-year results. We've delivered another very strong half, with operating profit up by 12%. This performance reflects a powerful combination of good organic growth, continued margin expansion, and disciplined M&A. As a result, we're raising our guidance for the full year and now expect operating profit growth above 11%. The outsourcing market remains highly attractive, and our new business wins were excellent, increasing by 14% year-on-year to $4.1 billion. Over half of our wins came from first-time outsourcing, reflecting the strong structural growth opportunity across our markets, driven by the increasing complexity of client demands. Combined with our strong client retention, we have high confidence in our outlook for net new business growth, which we expect to accelerate in the second half. We continue to execute against our proven growth algorithm as we generate strong, long-term recurring revenues. We're delivering mid to high single-digit organic revenue growth. When you layer on ongoing margin progression and M&A, that continues to translate into high single-digit operating profit growth. And this year, profit growth will be even stronger, reflecting the contribution from Vermont. I'll now hand over to Petros to walk you through the financials in more detail.

Thanks, Dominic. And good morning, everyone. We delivered strong progress across all our key financial metrics, with robust revenue growth and double-digit increases in both profit and earnings per share. Let me start with revenue. Revenue increased by 9%, with organic growth remaining strong at just over 7%. Net new business growth was just under 4% as the second quarter was modestly impacted by adverse weather in North America, which delayed mobilizations at several client sites. As Dominic mentioned, Based on our forward-looking indicators, we continue to expect net new growth to accelerate in the second half. Pricing and volume were in line with our expectations and acquisitions contributed an additional 1.5 points to growth. Given the timing impact of client mobilizations, it is better to assess net new performance on a 12-month basis. Over the last 12 months, net new growth was 4.2%. We expect net new to remain within our 45% target range in 2026, and this is for the fifth consecutive year. This compares with our historic average of 3%, when growth was largely driven by North America and international was broadly flat. Today, net new is more balanced with international performing on par with North America, which continues to fire on all cylinders. Operating profit increased 12% to more than $1.8 billion, driven by strong revenue growth and 20 basis points of margin expansion. Net interest expense was $166 million, reflecting higher debt following acquisitions. For the full year, we continued to expect interest expense of around $350 million. And as expected, our effective tax rate was 25.5% and we expected to remain stable. Earnings per share also increased 12% in constant currency. Turning to cash, capital expenditure was 3.4% of revenue and we continued to expect capex to be around 3.5% of revenue for the full year. As you know, working capital has a seasonal profile and we were pleased to reduce our usual first half outflow whilst growing revenue. Our strong working capital management helped to drive a 14% increase in operating cash flow ahead of profit growth. And we continue to expect working capital to be broadly neutral at the full year. Moving to regional performance, we delivered balanced growth with strong progress in both regions. In North America, revenue increased by 8%. Operating profit grew 9%, reflecting a 10 basis point improvement in margin. In international, revenue growth was higher, at 10%, as acquisitions added 3 percentage points to growth. Operating profit was up 15%. driven by 30 basis points improvement in margin. As we benefited from overhead leverage and synergies from M&A. Looking ahead, we are confident in our ability to continue driving margin improvement over the long term, supported by three clear levers. First, we're enhancing productivity through consistent execution of our MAP framework. delivering efficiencies from better purchasing and greater use of data and technology. Second, we're leveraging regional and group overheads. And third, we're delivering synergies from acquisitions, particularly in international. While opportunities exist in both regions, we expect faster margin progress in international, with more incremental gains in North America. Over time, This should narrow the margin gap between the two regions. Our capital allocation framework remains clear, disciplined and unchanged. Our first priority is to invest in the business through CAPEX to support growth where we generate returns north of 20%. We have also been using M&A to accelerate sectorization, particularly in Europe. Our focus is now shifting to bolt-on acquisitions such as vending and GPOs. Both forms of investment generate returns that are more than doubled our cost of capital and are value-accretive for our shareholders. Our dividend policy remains unchanged with a payout of around 50% of underlying earnings. We continue to target a strong investment-grade credit profile. with leverage of 1 to 1.5 times and any surplus capital returned to shareholders. Looking at the balance sheet now, as expected, leverage increased to 1.7 times at the half year, reflecting our investment in growth. During the period, we completed the acquisition of Vermont for $1.7 billion and more recently acquired Procare Management, a leading food and beverage GPO in Germany. for $270 million. Dominic will discuss this acquisition in more detail shortly. Looking ahead, we expect to leverage and return to our target range over time. Before turning to guidance, a quick word on the developments in the Middle East. While we have no direct exposure to the region, we are very well positioned to manage any inflationary impact. As always, our approach starts with mitigation followed by appropriate pricing. Around two-thirds of our contracts include dynamic pricing, and for the remaining fixed-price contracts, we have indexation clauses, covering both food and labor costs. Smaller competitors and street alternatives typically have far fewer levers available to them. So, in periods of elevated inflation, our value advantage versus street pricing usually grows. Finally, full year guidance. Based on our strong first half performance, we are raising our expectations for operating profit growth to above 11% on a constant currency basis. That reflects organic revenue growth of around 7%, around 2% profit growth from M&A and continued margin expansion. With that, I'll hand it back to Dominic.

Thanks, Petros. As you've seen today, we delivered another strong set of results and are well positioned for continued growth. It really is a privilege to work for a company that touches so many lives. The strength of our model lies in its diversity and adaptability. We feed people every day, in mainly captive environments, from school to retirement, wherever they learn, work, play or heal. Humans are social beings. Wherever people come together, they eat and drink, and we're there to serve them. We don't believe that fundamental need will change, regardless of how the world evolves, or how AI transforms the economy. Our addressable market is expanding at 5% per annum, and is worth around $360 billion. This growth reflects our expanding capabilities, entry into new sub-sectors, and deployment of more flexible operating models. At this growth rate, we estimate the market could reach around $600 billion by 2035. Following our exit from non-core markets, our portfolio is now more focused, with the top 10 countries representing 90% of the opportunity, while retaining broad sector diversification across all core markets. Business and industry alone represents a $130 billion market. It continues to be our best performing sector, delivering double-digit organic growth. Our sub-sector approach is a key strength, underpinning an extremely diverse client base that provides resilience and a significant runway for growth. Importantly, growth is not just dependent on securing new accounts. Our existing B&I tech clients are scaling with revenues from our top 10 tech clients up 36% over the past three years. We see significant opportunity across the AI ecosystem and it's broader than big tech. The AI build-out spans everything from semiconductors and servers to data centers and power to the next wave of enterprise applications. We already work with more than 60 clients across this ecosystem, and that footprint is growing. As the next wave of AI companies reach fundable scale, small teams quickly scale into campus-style operations needing integrated services. Healthcare also represents a highly compelling growth opportunity, with healthcare across all settings expected to be the fastest growing industry. Growth is being driven by structural and demographic changes, as populations age and chronic conditions become more prevalent. AI is also likely to increase productivity, which can increase the number of patients being treated. The addressable market size today is around $90 billion and growing, with more than half of that still self-operated. Sports and leisure is another exciting area. The global market is expected to grow to $80 billion by 2030. Through Levy, we are already a market leader in the US and the UK, with combined revenues of $5 billion. In the US, we now serve more than 350 venues, including around 40% of major professional sports venues. We're increasingly exporting this expertise internationally, with recent wins across Europe and Australia. And as venues host more non-game events, such as concerts, we've unlocked additional revenue streams. Non-game events now represent around 25% of Levy revenue, and we expect that share to continue growing. Education is a roughly $100 billion market, with around half still self-operated, creating a substantial outsourcing opportunity. Budgets are under pressure. Outsourcing delivers cost efficiency and expectations around food quality, technology and compliance continue to rise. At the same time, allergen and food safety regulations are becoming more complex, increasing the value of scale and expertise. We also see meaningful growth opportunities in defence, offshore and remote. These sectors carry high degrees of operational complexity, spanning compliance, security and logistics. which favours scaled operators with specialist expertise, such as Compass. Building on our global experience, we established a specialist team to address the US defence sector and recently secured and mobilised our first contract in this market. Turning to offshore and remote, energy security concerns are driving increased investments and activity in this space. The sector is characterised by long-term contracts in safety-critical environments, oil rigs, mining sites, maritime vessels, where the barriers to entry are high and client retention is strong. We're often asked what's behind our continued success and market outperformance. It really comes down to two things. First, we operate a truly unique sector-led model. Our business is decentralised, with many of our brands still led by their original founder, owner, entrepreneurs. That keeps us close to our clients, our consumers, and our markets. Second, we pair that local agility with the power of global scale, particularly in food procurement and technology. In short, we combine local relevance with global strength. The best of both worlds. And that's something that is genuinely unique in our industry. While we have strong competitive advantages across the market, it's worth noting that 85% of our wins come from first-time outsourcing and local operators. That means growth is largely structural, converting self-operated sites and winning against competitors who can't match our scale, technology or service quality. As Petros mentioned, in March, we acquired ProCare Management, or PCM, a leading food and beverage GPO in Germany. This is fully aligned with our strategy of building procurement scale and capability at the country level. TCM brings with it an advanced procurement technology platform with clear potential to be deployed across other markets. This high-quality acquisition means we now operate GPOs in five of our top ten markets, further strengthening our competitive advantages. We're also investing in AI and data to accelerate growth and improve productivity, particularly across sales, retention and operations, freeing up our unit managers to spend more time with their clients. Let me give you some examples. We're using data and AI to drive consistent execution of the sales funnel, which we expect to translate into higher conversion over time. Leveraging more than a decade of proprietary sales data, AI-powered tools support bid preparation, predict win probability, and guide next best actions. We know from the data that disciplined execution of best practice selling behaviors improves win rates. Similarly, in retention, we're applying AI across the full lifecycle, combining client, consumer, and operational insight. We track sentiment, monitor issues and resolution times, and use predictive models to flag accounts at risk, giving our teams the opportunity to intervene earlier, address issues proactively, and increase preemption rates over time. Finally, we deploy Eccentric OS, developed by Compass Digital Labs to support our unit managers. we've now rolled it out across around a quarter of our units in North America. It provides better data for demand forecasting, menu and inventory planning, reporting and labour optimisation, enabling unit managers to continuously improve the offer for clients. Just as importantly, it frees up time, allowing our operators to spend more time with clients and consumers where it matters most. In summary, We operate in a highly attractive market that keeps on growing. That's the foundation everything else builds on. What makes us different is how we combine local offers with global scale. Our teams on the ground know their clients inside out, and they're backed by the resources and capabilities of a global organization. That's a powerful combination and hard to replicate. We keep investing in technology, in our people, in innovation, because that's what keeps us ahead. You've seen today how AI and digital tools are already making a real difference across sales, retention and unit operations. Our results demonstrate the strength of our operating model and the scale of the opportunities ahead. This underpins our confidence in delivering against our growth algorithm of high single-digit operating profit growth. And for 2026, we expect to do even better, having raised our operating profit growth guidance to above 11%. With that, we'll open the call for questions. The operator will provide instructions. And please remember, you'll need to be connected by... This meeting is being recorded.

Operator, over to you.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. Please stand by while we compile the list. Thank you. Our first question will come from Leo Carrington of City. If your line is open, please go ahead.

Good morning. Thank you for taking my questions. Please can I first ask a couple of follow-ups on your comments, Dominic, on BNI strength and sports and leisure? In terms of sports and leisure, particularly in international, I noticed there was a long-term deal with the Jockey Club. There was this first time, I think, outsourcing at Old Trafford. Is this market much less mature than the US and are there more opportunities like this? And then on B&I, is industry similarly dynamic as the office sub-segment and generally outside of that strength in tech that you highlighted? I'm interested in your latest view on the outsourcing growth drivers, given that employment growth is flatter, although return to office is still a theme. I'd be interested in knowing what your ex-tech clients are saying.

Thank you. Thank you, Leo. Thanks for those questions. Yeah, look, I think you're absolutely right. I mean, you referenced the Jockey Club and Manchester United, both of which are significant first-time outsourcing opportunities for us. Those are in the UK, of course, and the UK has been a country of great success for us in the sports and leisure sector, obviously with the likes of Twickenham, Wimbledon, Tottenham Hotspur, the O2, the XL. So the UK is very much like the US for us in the sports and leisure sector. Actually, where we see the bigger opportunities across the international markets of Europe and Asia Pacific, where we've had success with the Australian Open in Melbourne and a number of football clubs across Europe. We're actually expanding our footprint. We're taking Levy internationally. so we can deliver the sports and leisure experience of the Levy brand which is proven in the US and the UK by deploying our local resources, our buying power and our logistics capability as well as our ability to source labor, but ensuring that we're using the Levy brand standards to deliver the quality of experience to our clients. What we see there is a lot of investment coming into Europe and internationally, in particular in the US, where there's a level of expectation of comparable standards in the hospitality and concessions to those which we've seen in the US and the UK. And we think it's a really exciting opportunity for us. I mean, you've seen our growth rates in the region are sort of around 14, 15%. We think we can do that and better still as we organize even more for the opportunity. So it's definitely a very exciting area for us. And I'd also call out the area of conference and events. It's been a very big part of our business in the US and increasingly in the UK, with the NEC being a latest win for us in the UK and operators alongside the Excel, but we see that opportunity across many of the European markets in the major European cities too. So it's a sector that we're organising for now. We think it's going to contribute accretive growth to international for some time to come. In terms of your question around BNI and sort of industry versus the offices you put in and what the drivers are, I mean, I think one that I would call out I mean, first of all, again, looking at the performance of BNI in the context of the group performance, it's been our fastest-growing sector for a number of years now. It's secretive growth in North America and in our international markets. There's a significant opportunity from first-time outsourcing, from the opening of new facilities, new buildings. Here in the UK, we're seeing that, aren't we, with the The new HSBC building with the JP Morgan Tower being announced in Canary Wharf, all of these are opportunities for outsourcing at scale in new facilities, which is keeping the sector buoyant. I think what's also exciting for us there is when we go through periods of higher inflation, as we are seeing today, today and likely will experience over the coming months and possibly years as the impacts of the events in the Middle East flow through food cost inflation. You know, we have a significant competitive advantage and that, you know, that plays out in our relative pricing against the streets where we're not tied to menus, we don't have the utility costs and we don't have the burden in particular of energy. And therefore, I believe that plays out both in terms of our competitiveness for the consumer who will choose to stay on site and gives us a benefit through like-for-like volumes, but also in an acceleration of outsourcing and of the benefit of the larger outsourcers who've got, you know, a better ability to manage costs than the smaller players. So I think those open up opportunities in terms of like-for-like and our ability to take share And we continue to see a sort of buoyancy within the overall B&I sector. As we talked about today in the presentation, you know, the AI ecosystem and phenomena isn't just about the tech players. It's about the entirety of the supply chain. That means that there is a level of manufacturing, too. which would fall within our business portfolio, where we expect to see growth and opportunity. I'd also point to the defence supply chain and the scaling up of defence manufacturing in many of the Western countries where we've doubled down on that footprint and we believe that that's going to create further opportunity in defence. So I think we're constantly seeing trends that benefit our business as long as we can continue to offer quality at the right cost. And we remain very, very excited about the potential for B&I and sports to measure going forward.

Thank you, Dominic.

Thank you. And our next question comes from Jamie Rollo of Morgan Smedley. Your line is open. Please go ahead.

Thanks. Good morning. Three questions, please. First of all, just back on the net news, slowdown to under 4% in Q2. I appreciate it's only a quarter and you've given us good figures for the pipeline and so on. But your attention was also down year on year. And there should be some general concern from investors about the competitive environment. Could you explain why the bad weather didn't hit like volumes earlier? And also talk about why that did hit client mobilization and also why that retention number was down a bit. And also talk about your confidence level on the net new re-accelerating in the back half of the year and sort of the cadence of that. Second question, a bit shorter, what's your pricing expectation for the second half now, given the sort of inflation picking up? And then finally, just on M&A, you're shifting to bolt-ons, you said, Petros. But, I mean, what's the likelihood, do you think, of a buyback announcement later this year? How is the pipeline looking for deals? Thank you.

Thank you, Jamie. Good morning. Let me have a go at your first question and then I'll let Petros add any color and then pick up on pricing and M&A. Look, yeah, we're highly confident in the outlook for the second half of the year. We've got high levels of assurance that we'll close the year in the 4% to 5% range. As you've seen today, our last 12 months metric is in the range of 4% to 5%. And this will be the fifth year where we're in our 4% to 5% net year range. As you rightly say, Jamie, there's always going to be puts and takes in net new between quarters. If we lose just a couple of days of opening, that does have an impact on net new, as we did to weather. We lost half a week in some instances, if not a week, because of delays as a result of the weather impact. And that has had an impact in the quarter. Retention is always bumpy, the timing of when contracts run on and off. Again, I'd ask you to look at the long-term trends. We've been in that 4% to 5% range now for what will be five years. We've been trending above 96% for many years now. There's a level of sustainability and consistency of the business, which, you know, we certainly didn't witness pre-COVID and which I'm very confident in. Why is that? It's underpinned by, you know, ever more data around the pipeline. You've seen our new business wins on an ARO basis are at $4.1 billion and growing very strongly. We talked today about the AI benefit to sales and retention. We think that that's going to yield further opportunity for us. I'm putting ever more pressure on us and the business to do better within the 4% to 5% range because we believe we can. And the last point I'd say on that is if you think back and you know us a long time now, Jamie, What's truly different here is that our international region is performing at a par with North America. You know, North America is doing what it's always done. We're in an environment where we see super scaling in North America and some really material contracts, whether those are in tech, defense, healthcare, education, we see some fantastic opportunity. But what's really exciting is what we're doing in international and the fact now that we're growing consistently at a par. That really is the delta in our performance. And we think that there's a level of consistency to that, which we're confident about going forward. And you will see as a result of acceleration in the second half, which will take us very positively into 26, 27 and beyond.

Only thing I'm going to ask Dominic on the organic, let's also remind ourselves we have been delivering positive volume for the last four years. We're operating in a fully normalized world. We're about 70 bps of a tailwind there, which plays back to our competitiveness within the street level and the good things our teams do with the clients. To your question on pricing, I think we're running around 2.7%. We have done, remember, we mitigate before we go to clients to discuss inappropriate pricing. We're factoring there about the semi-level pricing for the balance to go. Subject to what happens in the global landscape with the Iran conflict. If you look at the oil prices, they are running above $100. I think the gist here is we do have the resilience in the business and the experience to navigate this through if it emerges in the second half or in fiscal year 27. When it comes to the M&A, I just want to remind us, when you see our profit growth this year, there is a really good contribution from M&A, which is a matter of executing our integrations, executing our business cases, both when it comes to organic and margin expansion. So we're pleased with how the M&As are performing. As we move forward, we have come to the near completion of the medium-sized sectorization for Europe. We do expect to continue to invest in both zones in unattended and GPOs, which is a strategic priority for us. And as we go to the end of September, you know, to the full year, we're going to update in November what is going to be our capital allocation choice subject to M&A pipelines.

Okay, thank you very much.

Thank you. Once again, as a reminder, ladies and gentlemen, if you would like to ask a question, please press spell 1 on your telephone keypad. Thank you. And we'll now move on to our next question from Jaffa Mastari of BNP Paribas. Your line is open. Please go ahead.

Hi, good morning. I have three questions, please. The first one is on... acquisition synergies, which you mentioned is one of the reasons for the strong margins this half. I don't assume that's for Matt yet, because you've only had your hands on it for a few weeks in the half. So I'm really curious to understand what the process is for some of the acquisitions you've integrated sometimes two years ago now, and whether we should think that the big push you've done will result in couple of years now of continuing to take costs out and improving on those. And then thank you for the market commentary. It almost feels like a mini-investor day. I don't know if you've done more thinking or if you've shared more thinking than you would usually share at this stage of the year. One segment where you seem very excited is health care. That's global, I think, your comments. Health care global, you state, should be the fastest growing vertical. I'm going to use the dollar figures report for North American health care, so I'm sure this doesn't add up with organic growth, but I don't think there's disposals in North American health care. And on those dollar figures, North American healthcare in H126 is growing 4.1%, which is the lowest growth in your North America portfolio. So just curious how we reconcile those exciting opportunities in medium-term healthcare and the current trend. It wasn't dissimilar last year. Is it a bit more pain now and dense on growth? Is it mostly international? How do I make it make sense, please? And lastly, in terms of the AI ecosystem, I'm conscious you don't necessarily have the same public relations policy as some of your competitors, but some of them came out with big press releases that they're going to have data center revenues starting in 2026. So just curious where you are there. Is it something that's going to be very much ad hoc? Because as you said, you have relationships with a lot of these companies. participants already or is it just you're not going to have anything very big from the data center contract in 26?

Thank you, Jafar. Let me take those in reverse order and then I can give us a bit more color on the M&A synergy point. First of all, with regard to AI, I think if you recall our first quarter call, we talked extensively then about the opportunity and the fact that we were already operational within that new sub-sector. So, you know, we may not, as you rightly say, have taken a similar PR tag approach, but if we see it as being a good opportunity for us, let's remind ourselves that we're pretty much the exclusive partner of five of the six Mag7 that outsource today. So, we have a super relationship with them from which to build into that opportunity. It's something that's happening with a number of them both in North America and in the international region. We've developed a bespoke offer to provide services into that space. And as we talked about, there's some onsite restaurantation but it's also about the micro market offer, the cleaning and other soft services that we can provide into those facilities. And that's something we can bundle together. So we're very excited by that. It is, as you heard us say today in the presentation, it is one strand of the opportunity that exists within the AI ecosystem alongside manufacturing facilities, alongside some of the new startups that are emerging at scale and at pace. So we feel pretty exciting and believe that the AI in the round and data and technology will remain an exciting opportunity for us and a next growth contributor over time as we go forward. In terms of healthcare, yeah, look, you're right. In the short term, the growth is slightly below. where we believe it will be over time, and it's slightly below our average. That's true of North America. What we do believe, though, is that there remains a very significant opportunity. We know there are a number of accounts that are in discussion and are of scale. We see the cost pressures which are applying to the sector, and we also obviously all know the opportunities that exist around an aging population that's going to need more care and more clinical attention as we go forward. So, we do believe across all sub-sectors of healthcare, whether that's daycare, whether that is the senior living facilities, there's an exciting opportunity, and we continue to work very, very hard on our offer for that, and I think you'll see that starting to benefit our overall growth as we go forward. And then finally, I will hand this over to Petra, but just a little thought. You called out acquisition synergies. Maybe if I could just elevate that sort of to our overall margin performance. We're super excited today with the 20 basis points of margin progression that we've made, and there's really three levers within that. One is overhead leverage as we continue to grow and we maintain cost discipline. The second is the contribution of purchasing through our GPO footprint And the third is the M&A synergies. And I think what you see now is we've really dialed through the post-COVID era. We've dealt with the higher cost inflation of the sort of Ukraine crisis as it were. And I think what we believe now is there's no reason why we shouldn't be able to see consistent margin growth year over year from here, principally because of those three levers. We think we have it built into our business model. and we're confident that we'll see consistent margin accretion year over year, which is really exciting. And it actually feels like I talked earlier about, you know, a delta in our business model being the improvements in the international performance to be on a par with North America. I think if you have a level of confidence in ongoing margin expansion, then that too is another pivot for us in our performance as we go forward.

I'll just add one comment on healthcare. If you look at our international business, we're growing about 10% in healthcare, which is primarily driven by first-time outsourcing. If you take this in the contrast of North America, first-time outsourcing opportunity, which is about 60%, we're really focusing on unlocking these opportunities that we have ahead of us. On the margin expansion, I think Dominic Capra delivers maybe a couple of points to us here. We truly witness now an area where we have margin expansion across the three levers we can drive within our business. Half of our margin progress is called margin expansion, which is leveraging and purchasing, investing in data and tech. We have been investing for quite some time now, and it's an integral part of our business. I just want to remind everyone we're investing around $300 million today. on tech every year. We have about 1,500 of technologies within our North American organization that gives us the confidence to keep improving our processes and how we monetize these investments. And then when you go to the other two levers, a quarter of the other half is the DM&A expansion. And as you already said, very much is known that these numbers were annualizing acquisitions from last year and actually two years ago that they keep giving some really good performance. And the other quarter is overhead leverage, where we're truly convinced with the investments we have made, we can do more with Zain.

And this is where you see the overhead leverage. And also why that retention number was down a bit. And also talk about your confidence level on the net new re-accelerating in the back half of the year and sort of the cadence of that. Second question, a bit shorter, what's your pricing expectation for the second half now, given the sort of inflation pick-up? And then finally, just on M&A, you're shifting to bolt-ons, you said, Petros. But, I mean, what's the likelihood, do you think, of a buyback announcement later this year? How is the pipeline looking for deals? Thank you.

Thank you, Jamie. Good morning. Let me have a go at your first question, and then I'll let Petros add any color and then pick up on pricing and M&A. Look, we're highly confident in the outlook for the second half of the year. We've got high levels of assurance that we'll close the year in the 4% to 5% range. As you've seen today, our last 12 months metric is in the range of 4% to 5%, and this will be the fifth year where we're in our 4% to 5% net new range. As you rightly say, Jamie, there's always going to be puts and takes in net new between quarters. If we lose just a couple of days of opening, That does have an impact on net new, as we did to weather. We lost half a week in some instances, if not a week, because of delays as a result of the weather impact. And that has had an impact in the quarter. Retention is always bumpy, the timing of when contracts run on and off. Again, I'd ask you to look at the long-term trends. We've been in that 4% to 5% range now for what will be five years. We've been trending above 96% for many years now. There's a level of sustainability and consistency of the business, which we certainly didn't witness pre-COVID and which I'm very confident in. Why is that? It's underpinned by ever more data around the pipeline. You've seen our new business wins on an ARO basis are at $4.1 billion and growing very strongly. We talked today about the AI benefit to sales and retention. We think that that's going to yield further opportunity for us. I'm putting ever more pressure on us and the business to do better within the 4% to 5% range because we believe we can. And the last point I'd say on that is if you think back and you know us a long time now, Jamie, What's truly different here is that our international region is performing at a par with North America. You know, North America is doing what it's always done. We're in an environment where we're seeing super scaling in North America and some really material contracts. Whether those are in tech, defense, healthcare, education, we see some fantastic opportunity. But what's really exciting is what we're doing in international and the fact now that we're growing consistently at a par That really is the delta in our performance, and we think that there's a level of consistency to that, which we're confident about going forward, and you will see as a result an acceleration in the second half, which will take us very positively into 26, 27, and beyond.

Only thing I'm going to ask Dominic on the organic, let's also remind ourselves we have been delivering positive volume For the last four years, we're operating now in 2027 in a fully normalized world. We have about 70 bps of a tailwind there, which plays back to our competitiveness within the street level and the good job our teams do with the clients. To your question on pricing, I think we're running around 2.7%. We have that. Remember, we mitigate before we go to clients to discuss inappropriate pricing. We're factoring there about the semi-level pricing for the balance to go. Subject to what happens in the global landscape with the Iran conflict. If you look at the oil prices, they are running above $100. I think the gist here is we do have the resilience in the business and the experience to navigate this through if it emerges in the second half or in fiscal year 27. When it comes to the M&A, I just want to remind us, when you see our profit growth this year, there is a really good contribution from M&A, which is a matter of executing our integrations, executing our business cases, both when it comes to organic and margin expansion. So we're pleased with how the M&As are performing. As we move forward, we have come to the near completion of the medium-sized sectorization for Europe. We do expect to continue to invest in bolt-ons in unattended and GPOs, which is a strategic priority for us. And as we go to the end of September, you know, to the full year, we're going to update in November what is going to be our capital allocation choice subject to M&A pipeline. Okay.

Thank you very much.

Thank you. Once again, as a reminder, ladies and gentlemen, if you would like to ask a question, please press spell 1 on your telephone keypad. Thank you. And we'll now move on to our next question from Jaffa Mastari of BNP Paribas. Your line is open. Please go ahead.

Hi. Good morning. I have three questions, please. The first one is on acquisition synergies, which you mentioned is one of the reasons for the strong margins this half. I don't assume that's the format yet because you've only had your hands on it for a few weeks in the half. I'm really curious to understand what the process is for some of the acquisitions you've integrated sometimes two years ago now and whether we should think that the big push you've done will result in a couple of years now of continuing to take costs out and improving on those. And then thank you for the market commentary. It almost feels like a mini investor day. I don't know if you've done more thinking or if you've shared more thinking that you would usually share at this stage of the year. One segment where you seem very excited is health care. That's global, I think, your comments. Health care global, your states should be the fastest growing verticals. I'm going to use the dollar figures report for North American healthcare. So I'm sure this doesn't add up with organic growth, but I don't think there's disposals in North American healthcare. And on those dollar figures, North American healthcare in H126 is growing 4.1%, which is the lowest growth in your North America portfolio. So just curious how we reconcile those exciting opportunities in medium-term healthcare and the current trends. It wasn't dissimilar last year. Is it a bit more pain now and then some grows? Is it mostly international? How do I make it make sense, please? And lastly, in terms of the AI ecosystem, I'm conscious you don't necessarily have the same public relations policy as some of your competitors, but some of them came out with big press releases that they're going to have data center revenues starting in 2026. So just curious where you are there. Is it something that's going to be very much ad hoc? Because as you said, you have relationships with a lot of these participants already. Or is it just you're not going to have anything very big from the data center contract in 26?

Yeah, thank you, Jafar. Maybe let me take those in reverse order, and then I can hand to Petros to give us a bit more color on the M&A synergy points. Yeah, first of all, with regard to AI, I mean, I think if you recall our first quarter call, we talked extensively then about the opportunity and the fact that we were already operational within that new subsector. We may not, as you rightly say, have taken a similar PR type approach, but we see it as being a good opportunity for us. Let's remind ourselves that we're pretty much the exclusive partner of five of the six Mag7 that outsource today. So we have a super relationship with them from which to build. into that opportunity. It's something that's happening with a number of them, both in North America and in the international region. We've developed a bespoke offer to provide services into that space. And as we talked about, there's some onsite restaurantation, but it's also about the micro market offer. the cleaning and other soft services that we can provide into those facilities. And that's something we can bundle together. So we're very excited by that. It is, as you heard us say today in the presentation, it is one strand of the opportunity that exists within the AI ecosystem alongside manufacturing facilities, alongside some of the new startups that are emerging at scale and at pace. So we feel pretty exciting and believe that AI in the round and data and technology will remain an exciting opportunity for us and a next growth contributor over time as we go forward. In terms of healthcare, yeah, look, you're right. In the short term, the growth is slightly below where we believe it will be over time and it's slightly below our average. That's true of North America. What we do believe, though, is that there remains a very significant opportunity. We know there are a number of accounts that are in discussion and are of scale. We see the cost pressures which are applying to the sector, and we also obviously all know the opportunities that exist around an aging population that's going to need more care and more clinical attention as we go forward. So we do believe across all sub-sectors of healthcare, whether that's daycare, whether that is the senior living facilities, there's an exciting opportunity. And we continue to work very, very hard on our offer for that. And I think you'll see that starting to benefit our overall growth as we go forward. And then finally, I will hand this over to Petros, but just a little thought. You called out acquisition synergies. Maybe if I could just elevate that sort of to our overall margin performance. We're super excited today with the 20 basis points of margin progression that we've made. And there's really three levers within that. One is overhead leverage as we continue to grow and we maintain cost discipline. The second is the contribution of purchasing through our GPO footprint. And the third is the M&A synergies. And I think what you see now is we've really dialed through the post-COVID era. We've dealt with the higher cost inflation of the sort of Ukraine crisis as it were. And I think what we believe now is there's no reason why we shouldn't be able to see consistent margin growth year over year from here, principally because of those three levers. We think we have it built into our business model. And we're confident that we'll see consistent margin accretion year over year, which is really exciting. And actually feels like I talked earlier about, you know, a delta in our business model being the improvements in the international performance to be on a par with North America. I think if you have a level of confidence in ongoing margin expansion, then that too is another pivot for us in our performance as we go forward.

I'll just add one comment on healthcare. If you look at our international business, we're doing about 10% in healthcare, which is primarily driven by first-time outsourcing. If you take this in the contrast of North America, first-time outsourcing opportunity, which is about 60%, these were really focusing on unlocking these opportunities that we have ahead of us. On the margin expansion, I think Dominic Capra delivers maybe a couple of points to us here. We're truly witnessing now an area where we have margin expansion across the three levers we can drive within our business. Half of our margin progress is core margin expansion, which is leveraging our purchasing, investing in data and tech. We have been investing for quite some time now, and it's an integral part of our business. I just want to remind everyone we're investing around $300 million on tech every year. We have about 1,500 of technologies within our North American organization that gives us the confidence to keep improving our processes and how we monetize these investments. And then when you go to the other two levers, a quarter of the other half is the M&A expansion. And as you rightly said, very much is noted, these numbers were annualizing acquisitions from last year and actually two years ago that they keep giving some really good performance. And the other quarter is overhead leverage, where we're truly convinced with the investments we have made, we can do more with SANE. And this is where you see the overhead leverage playing to full extent.

Thank you very much.

Thank you. And our next question comes from Simon Littery-Bray of Jefferies. Your line is open. Please go ahead.

Thanks for taking my questions. A quick clarification on retention just for the second half and going forward, are you confident to have retention back above 96? Secondly, a bit of a short-term question on what sort of revenue boost do you expect from the World Cup in the second half in North America? And lastly, just clarifying that for the second half, you expect margin to improve in North America as well as in international region. Thank you.

Thank you, Simon, for those. Yeah, look, we are, you know, we're as confident as we can be of retention being above 96% as we go forward based on everything we see today. And we continue to put pressure on ourselves across the business to do even better. You know, we've seen with the deployment of AI within our retention processes that, You know, we can get to better outcomes on preempts. You know, we continue to deploy with rigor and discipline our SAC processes across the wider group. We continue to term out our contracts. I mean, we should be constantly putting pressure on ourselves to do even better on retention. In terms of the World Cup, just to remind, I mean, we operate four or five of the stadium today. We will see World Cup games in those facilities, but, of course, they will replace other sporting events that would have happened around at that time. We're also operating some of the fan zones. So, you know, I think there'll be a small benefit, but it will only be small in the context of the scale of our North American numbers. And then in terms of North American margin, Petros?

Simon, we continue to expect margin progress in the second half, both from North American international, making progress versus the first half and versus last year. It's going to be perhaps a little, you know, that's softer than the first half, given the large mobilizations we have in the second half. But definitely, we're seeing some really positive trends on the margin expansion. Thank you.

Thank you. And our next question comes from Estelle Wengrod of J.D. Morgan. Am I uncertain? Please go ahead.

Hi. Good morning. Thanks for taking my question. The first one, again, on retention, since Q2 was a touch softer, anything you would flag in terms of competitive intensity in the U.S. and outside the U.S.? Is the environment still relatively rational overall? And the second question, on the acceleration of net new in H2, How should we think of it on a quarterly basis, IEQ3 versus Q4? Thank you.

Thank you, Estelle. I mean, first of all, I would urge you and others not to overthink quarterly trends. You know, we're very focused on LTM. We're very focused on the full-year performance. In these numbers at this scale and the size of some of our contracts as they run on and off, you're always going to see distortions. But look, I'll let Petros pick up specifically on those two questions. The one other point which I think is really worth making when it comes to new business that we haven't made today is 85% of our new business is coming from first-time outsourcing and from winning from local players. I think a narrative around greater competitiveness is sort of not really borne out by the data. Only 15% of our growth is coming from, I guess, share wins from the larger global players. And also, if you look back over possibly the last 10 years, we've always been the net winner of share in that particular space in terms of against the largest international players. I know looking backwards doesn't necessarily predict how we go forward, but as you've heard us say today, we do truly believe that the model that we've built with the client localization at the front end and the benefits of total national scale and also the GPO model means that we should truly be best placed to continue to win at these levels. Petros?

Maybe a couple of points to understand. I think on retention, if you truly look in the last four years, we have been consistently at 96 and above. And there is nothing specifically to call out. I think Dominic touched on this. We do expect in the second half to accelerate towards the middle of our range of four to five. And if you look at our gross new signings, 4.1 billion in the line of sight we have on mobilizing the second half, we feel confident We're going to be the fifth year, the fifth consecutive year of delivering net new 4% to 5% and being in the middle of this range for the second half.

Okay, thank you.

Thank you. And our next question comes from Neil Tyler of Rockstar. The line is open. Please go ahead.

Good morning. Thank you. One further follow-up for me, Dominic. The 600 billion you mentioned as a sort of long-term market opportunity includes you adding further capabilities. So I wonder if you could and perhaps share what you anticipate you need to add to the portfolio to be able to address the entirety of that market and whether that would be more likely done organically or you need to look elsewhere for those. Thank you.

Yeah. Thank you, Neil. This is a really important question. If you look at the market that we competed in in 2015, it was valued at around $220 billion. Today, a decade later, that's $360 billion. So it's been growing at a CAGR of 5% ahead of GDP. Now, that is due to a number of factors. First of all, it's the growth of our client base within that. But separately, it's been the inclusion of other opportunities as we've seen them going forward. When you look at that $600 billion, it's a continuation of some of those trends. But also, as we've adapted our operating model, it does give us access to other channels which are growing faster still. So including in that, we've now got the opportunities we discussed today to address sports and leisure internationally, which wouldn't previously have been included. It would only have been within the markets in which we have previously operated. Secondly, it's where we see the expansion within the AI ecosystem. We've got the opportunity in micro markets internationally, which we haven't previously mobilized and organized around, and we do now have the capabilities for that. And it's the inclusion of the defense sector in North America where, as you've heard us say today, we've begun to take share and we're starting to win first-time outsourcing contracts as we scale our endeavors there. So, I think it's a combination of of positive tailwinds within those core sectors. Some of those we've talked about, like aging populations in the countries in which we operate, but then separately, it's our ability to open up new sub sectors, which, which expand the time for us ahead of ahead of those growth rates. And that's what feels really exciting. You've seen us do it with the M&A that we've prosecuted. Some of it will be by M&A, some of it will be by organic build, and some of it will be by transferring the capabilities we've already built within existing mature markets into new sector opportunities in other countries.

Okay. Thank you very much. Very clear.

Thank you, and our next question comes from Praveen Kundali of Barclays. Your line is open. Please go ahead.

Hello. Thanks for taking my questions. A couple of them on M&A and data center opportunity here. Firstly, could you please talk about a bit more about Procare M&A, what level of procurement synergies and margin accretion you expect when this is fully consolidated? And then secondly, on data center opportunity, One of your peers has launched a specialized offer recently. Could you please talk about your initiatives and the pipeline of new business in this new sub-sector? Thank you.

Why don't I hand those to Petros?

Hello, Praveen. So on VM&A, I guess you recall the fundamental of our business is GPO and purchasing. We have now five markets running GPO organizations, including Germany, with a recent acquisition. It's a great established third-party GPO business in Germany. This will bring our management nearly over a billion, including our business there. It's giving us sufficient scale to put in our model and drive the flywheel that we're seeing in other markets. I would say the GPO, the way we look at GPO, is more correlated to growth. We're getting more competitive on cost. We're investing back in the business. We're able to drive more gross new and retain and have better retention rates. We're very excited about the acquisition. As you know, we closed the acquisition last month. I would expect to see some improvements both on competitiveness when it comes to net new and margin expansion. On data centers, maybe the simple answer to this is we have been running data centers for some of our tech clients for quite some time now. And in our offer, if you look in our tech clients, we have been growing with them in excess of 30% for the last three, four years. We do have an offer today, which is in place. It has grown at scale, which combines food and specialty support services as they're scaling up their data centers. And you do see this in our growth rates in the tech. You do see this in our growth rates in the emerging economies within the AI ecosystem. So it's nothing new to us. We have been doing this, and we just plan to capitalize more as we go.

Let me, if I might just add on the GPO points, because I think it's just a really important area of our business. With the PCM acquisition in Germany, as Petros rightly said, we now have a billion dollars of spend in Germany. That's a very significant contributor to our competitiveness in Germany, where we see a great growth opportunity. As Petros also said, and just to reiterate the point, we've now got GPO capability in five of our top ten markets. We're making this a strategic priority. The way we'll build this out is by establishing GPO capability in each of those countries so that we can provide those services to third parties and treat Compass volume as a customer too. And we can do that either through market acquisition or through effectively exporting the offer that we've acquired here with PCM into new markets. We feel really good about some of the capability in terms of leadership that we're bringing into the group who are going to help us really accelerate this opportunity. And we feel that we've really got our arms around it now in a way that's going to be additive as we go forward with confidence.

Thank you. This is really helpful. Just a follow-up to the plus 36% tech revenue growth in the last three years that you sort of indicated earlier. Could you just chat about what it has been in the last 12 months? Thank you.

It has been in the double visit growth rates. If you're talking about our tech clients, Robin, sorry, I don't get the question. Yes. Okay. Yes.