19th May 2020 18:52
(Alliance News) - Compass Group PLC said late Tuesday it has successfully placed a total of 195.7 million shares at 1,025 pence each, raising GBP2.00 billion.
Shares in the FTSE 100-listed catering company closed down 3.4% in London on Tuesday at 1,114.00p each.
Compass launched the GBP2.00 billion placing, subscription and retail offer on Tuesday morning, after reporting a double-digit profit decline in the first half of its current financial year.
The placing represented 12.3% of the company's existing share capital. Following admission of the new shares, Compass will have 1.79 billion shares in issue.
"Compass consulted with a number of its major shareholders prior to the placing and has respected the principles of pre-emption through the allocation process. The company is pleased by the strong support it has received from new and existing shareholders, including a number of its existing retail shareholders via the retail offer," the company said.
Compass noted the placing price represented a 3.3% discount to the middle market price at the time at which the company and the joint global coâ€ordinators agreed the placing price.
Goldman Sachs International, Morgan Stanley & Co International PLC and Barclays Bank PLC acted as joint global co-ordinators and joint bookrunners.
"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.
Earlier Tuesday, Compass 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.
By Evelina Grecenko; [email protected] and Paul McGowan; [email protected]
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