Compass to focus on emerging markets

24th Nov 2010 07:13

A bullish Compass has upped its dividend by a third as cash and new business flowed through the contract caterer's door over the past year.Revenues rose by 7.6% (4.7% in constant currency terms) to £14.5bn in the year to September, with underlying growth of 3.2%. That represents a sharp improvement on the first half of the year when yeqr on year organic revenue growth was poodling along at 0.4%. Pre-tax profits rose 18% to £913m, with margins up by 40 basis points. Underlying operating profits were a record £1bn.Compass adds it has seen a gradual improvement in the rate of new business wins over the year to 9.5%. Cash flow last year rose by a quarter to £744m, which will be used to make infill acquisitions, but is also behind the increase in the total dividend up to 17.5p.Net debt fell to £621m at the end of September from £943m a year earlier, even after about £205m was spent on bolt-on acquisitions, while capital expenditure grew to £310m from £295m the year before."Looking forward, whilst economic conditions remain challenging, we are excited by the growth opportunities we have around the world and the new business pipeline is strong," chief executive Richard Cousins said."Support services is becoming a new engine of growth," claimed group chairman Sir Roy Gardner. "Our relentless focus on operating efficiency should enable us to continue to reinvest in the business, whilst delivering steady margin expansion. In addition, the strength of our cash flow is enabling us to both reward shareholders and to accelerate growth through value creating infill acquisitions," Gardner added.With about 88% of the group's revenues emanating from outside the UK the company has relatively little exposure to the UK economy, but with 44% of revenues coming from North America it is looking to diversify away somewhat from developed economies.As well as focusing on emerging markets the company intends to target Australia, which got through the credit crunch relatively unscathed and avoided going into recession.