19th May 2020 08:27
(Alliance News) - Compass Group PLC on Tuesday launched a GBP2.0 billion placing, subscription and retail offer after reporting a double-digit profit decline in the first half of its current financial year.
The stock was 2.9% lower in London in early trade at 1,120.00 pence a share, giving Compass a market capitalisation of GBP17.74 billion.
The FTSE 100-listed catering company reported revenue of GBP12.5 billion for the six months to the end of March, up 1.2% from GBP12.3 billion reported a year earlier. Organic revenue increased by 1.6% in the first half.
For the five months to the end of February, organic revenue growth was around 6%, the company noted, before a 20% fall in March and a 46% slump in April.
Underlying operating profit, meanwhile, was down 10% in the first half of Compass's current financial year, at GBP854 million compared to GBP949 million a year earlier.
The Chertsey, England-headquartered company said it recognises the importance of a dividend to its shareholders. However, it explained it needs to balance this with the impact that the Covid-19 pandemic has had on its business. As a result, Compass decided not to declare an interim or a final dividend for the year to the end of September.
For the first half of its financial 2019, Compass made a 13.1p a share payout.
Looking ahead, Compass said the duration of the pandemic, and the pace at which containment measures are relaxed in different countries is unknown, making it a challenge to reliably assess the impact across markets the company operates in.
Therefore, Compass said it is withdrawing its previous growth and margin outlook for 2020.
The company remains, however, excited about the significant structural market opportunity globally, it said, and the potential for further organic revenue growth, margin improvement and returns to shareholders over time.
"The Covid-19 pandemic has had a profound impact on Compass. We can only exist with the commitment of our colleagues around the world, many of whom have been on the front line of the battle against the pandemic," said Chief Executive Dominic Blakemore.
"Given the uncertainty in the short term outlook, today we have launched a GBP2 billion equity raise to reduce leverage and increase our liquidity. A strong balance sheet will allow us to weather the crisis whilst continuing to invest in the business to enhance our competitive advantages, support our long term growth prospects and further consolidate our position as the industry leader in food services," added Blakemore.
Compass said the placing will be conducted through an accelerated bookbuilding process, which will be launched immediately. Goldman Sachs International, Morgan Stanley & Co International PLC and Barclays Bank PLC are acting as joint global co-ordinators and joint bookrunners.
The price per share at which the placing shares are to be placed and the final number of placing shares will be decided at the close of the bookbuild, Compass noted.
The company also said members of the public may participate in the retail offer by applying exclusively through the PrimaryBid platform.
By Evelina Grecenko; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Compass Group