Compass Group PLC

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.