Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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For the Questor team at the Sunday Telegraph food-service group Compass has proved that it can weather turbulent times – and still looks good value at current levels. This may be due to the fact that the current crisis plays to the company´s strengths, as both the public and private sectors, globally, try to save costs by outsourcing non-core operations such as catering and cleaning. Furthermore, it is the largest company in the sector and it has a good geographical spread, which in turn increases the defensive nature of the firm. A fifth of its business is in rapidly-developing emerging markets, even if the bulk of it is in North America. Last week's trading update has not resulted in a cycle of consensus earnings forecast upgrades but it has certainly raised the possibility that these could come later in the year. The shares are trading on a September 2012 multiple of 14.5, falling to 13.2 – remaining at a discount to French peer Sodexo, which trades on an August 12 multiple of 17.3, falling to 15.4. Questor sees no reason for this valuation gap, which has been present for some time. The current prospective yield is 3.4% rising to 3.8%. Last tipped at 544p on November 24 last year, the shares are up 15% since then. Buy.
Morning,thanks for AVIA yesterday
Group Compass has had a good first quarter and our expectations for the full year remain positive and unchanged. We have seen good levels of new business wins and the improved level of retention we achieved in the second half of last year has continued into the new financial year. As expected, like for like volumes in North America and the Fast Growing & Emerging Markets continue to be robust, whilst in Europe they have been impacted by the continuing challenging macro economic environment. Excluding the one-off impact of the NBA strike in the US (which is now resolved and impacted organic revenue growth by approximately 1%), organic revenue growth in the first quarter was almost 5%; including the impact of acquisitions, overall revenue growth was over 8% on a constant currency basis. Using our performance management framework, MAP, we are continuing to drive efficiencies across the business. These efficiencies are being partially re-invested in the business to support the exciting growth opportunities around the world as well as underpinning our expectations that we can continue to deliver further improvement in the operating margin. Free cash flow conversion remains strong.
Financial Position On 20 December 2011, the Group pre-paid the $450 million US Private Placement notes that were due for repayment in May 2012. On 27 January 2012, the Group launched a 7 year €600 million Eurobond with a coupon of 3.125%. The proceeds from the bond issue will be received on 13 February 2012. Other than this, there has been no significant change in the strong financial position of the Group in the period since 30 September 2011.
http://www.investegate.co.uk/Article.aspx?id=201202020700176487W
Catering group Compass (CPG) retained its "buy" rating from Panmure Gordon, ahead of Thursday's interim management statement, with an increased target price of 675p from 658p. The broker is attracted by the company's high exposure to North America and believes that food cost inflation has reached its peak. Panmure forecasts full adjusted pre-tax profit of 1.07 billion pounds, and says that shareholders will benefit from cash returns in the form of dividends and buybacks. Shares in Compass edged down by 2.5p to 589.5p.
Seymour Pierce maintained its "buy" recommendation for catering company Compass (CPG) following the announcement of a 500 million pound share buyback scheme. The broker is impressed that the firm has net debt of only 779 million pounds despite spending 400 million pounds on acquisitions over the year. Seymour Pierce adds that the firm remains cash generative and forecasts net debt to equity to fall bellow 20% in 2012, compared to 22.8% at the end of September. Shares in Compass grew 7.5p to 612.5p.
Andy Furlong, Group Managing Director for the region, said: "We are delighted to have agreed to acquire such a highly respected company as Supercare. It has a reputation for the quality of its services and strong customer relationships with both South African and international clients. This acquisition is in line with Compass Group's ongoing strategy to invest and expand in fast growing markets and we continue to see many exciting opportunities."
Compass Group Agrees to Acquire Supercare in South Africa We are pleased to announce today that Compass Group, through its subsidiary Compass Group Southern Africa (Proprietary) Ltd ("CGSA"), has agreed to acquire Supercare Services Group (Proprietary) Limited ("Supercare") from, amongst others, management, Zungu Investments (Proprietary) Ltd, Corvest 6 (Proprietary) Ltd and Dickerson Investments (Proprietary) Ltd. For the year to 28 February 2011, Supercare generated revenue of ZAR 710.5m (c.£63.6m) and had gross assets of ZAR 155.3m (c.£12m). Supercare is one of South Africa's leading cleaning companies, providing a range of specialised services including contract cleaning and washroom hygiene services. It has a high quality client base across South Africa, with c.4,000 contracts in the Business & Industry, Healthcare and Education sectors, and it currently employs c.16,000 people. This acquisition, which is subject to various conditions including approval from the Competition Commission of South Africa, will expand CGSA's multi-service offer to clients and will give it a strong cross-selling platform.
http://www.investegate.co.uk/Article.aspx?id=201111250700317602S
Seymour Pierce has reiterated its buy rating and 650p target for contract caterer Compass following the group's full-year results. "The outlook is positive and we expect Compass to continue to improve organic growth and margin," Seymour Pierce said.
Richard Cousins, Chief Executive, said: "Compass has delivered another strong performance this year. Including the impact of acquisitions, revenue has increased by almost 10% and we have delivered organic revenue growth of over 5%. Our relentless focus on efficiency has continued and, excluding the impact of Japan and restructuring costs, we have increased the underlying margin by 20 basis points. Whilst we are not immune from economic reality, the fundamentals of the business remain strong and our flexible cost base will enable us to respond quickly to any changes in economic conditions. We continue to see many opportunities for further outsourcing in our core food market and support services is adding an exciting new dimension to our growth. We are also placing greater emphasis on the fast growing and emerging markets, where we see real opportunity for further expansion. Increasingly we see our business in three geographic segments, North America, Europe & Japan and Fast Growing & Emerging Markets. Our management structure will now evolve to reflect this and we are today announcing the appointment of Gary Green and Andy Martin as Group Chief Operating Officers. Gary will continue to have responsibility for North America and Andy will focus on Europe & Japan while I will allocate more of my time to the Fast Growing & Emerging Markets. We are also pleased to announce the appointment of Dominic Blakemore as Group Finance Director." Sir Roy Gardner, Chairman, said: "The Group continues to make excellent progress, despite the headwinds of food cost inflation, an uncertain economic backdrop in parts of the world and the impact of events in Japan. The strength of our cash flows enables us to increase investment in the business to drive organic growth, as well as investing in high-quality infill acquisitions. Looking forward, Compass is well placed to exploit the significant growth opportunities that we see in many of our markets. The future prospects of the Group have given us the confidence to increase the final dividend by 10% and to announce a £500 million share buy back over the next 12 months."
Continuing to invest in growth and reward shareholders · Revenue £15.8 billion + 9.4% (constant currency + 9.2%, organic + 5.4%) · Underlying operating profit £1,091 million + 9% (constant currency + 9%) · Underlying earnings per share 39.0 pence + 9% (constant currency + 9%) · Reported profit before tax £958 million + 5% · Free cash flow £693 million · Full year dividend 19.3 pence + 10% · Share buy back £500 million over 12 months
http://www.investegate.co.uk/Article.aspx?id=201111230700205955S
Contract caterer Compass brings out full-year figures on Wednesday, with the market expecting profits before tax to burst through the billion pounds barrier. Market consensus is for pre-tax profit of £1.01bn on turnover of £15.6bn. Earnings per share are set to rise to 38.7p from 35.7p last year, while the full-year dividend is tipped to be 19.37p, although broker Charles Stanley goes for a nice round number of 19p with its dividend forecast, which would still be a decent improvement on last year’s 17.5p pay-out.
Compass, the world’s largest contract caterer, will reveal plans this week to return £500m to shareholders by buying back shares. Analysts expect the company to announce the move alongside its annual results, when profits are forecast to exceed £1 bn. (…) Buybacks are becoming increasingly common among large groups with plenty of cash on their balance sheets, Glaxo Smith Kline and Virgin Media among them. (…) This week it will announce it has won new business, such as providing security services to Thomson Reuters, the media group, and catering for Vodafone in Turkey and Dell in India, The Sunday Times reports.
Whatever its intrinsic merits, the attempted purchase of ISS of Denmark by G4S for £5.2 billion has focused attention on the more cautious acquisition strategy being pursued by another big name in the outsourcing sector, Compass Group, says the Tempus column in the Times. Compass is buying Integrated Cleaning Management for an undislosed but probably small sum, in the context of the group as a whole, with the company having revenues of £61 million in the latest financial year. This takes Compass further into cleaning and support services and away from its core food operation. The shares have always commanded a high multiple because of that record of growth, but 13 times’ earnings for the year just started does not look unreasonable. A strong hold, says the Times.
Ian Sarson, Managing Director of Compass Group UK & Ireland, said: "We are delighted to have acquired such a highly respected company as ICM. This acquisition strengthens our multi-service capability and enables us to offer high quality cleaning services to more organisations across the UK. It provides us with a robust platform for growth, in line with our strategy to expand our presence in the fast-growing support services market."
Compass Group acquires Integrated Cleaning Management Limited We are pleased to announce today that Compass Group has acquired Integrated Cleaning Management Limited ("ICM") from Paul Rafferty and Coral Brodie. For the year ended 31 March 2011, ICM had revenues of £61.0m and gross assets of £16.3m. ICM is one of the UK's largest independent specialist providers of core cleaning and related services. Established in 1996, ICM's 8,000 employees work on more than 3,800 client sites, providing a full range of cleaning services for more than 32 million sq. ft. of floorspace every day. ICM operates across the UK, with a particular focus on the corporate office, hospitality, leisure, hotel and retail sectors. It has built a strong reputation and a high quality client base across all sectors.
http://www.investegate.co.uk/Article.aspx?id=201110240700236660Q
Among brokers, Credit Suisse has upgraded its price target to 657p, retaining its 'outperform' stance for the next 12 months. Goldman Sachs looks higher, for 715p on the basis of consistent revenue growth, cash generation and low leverage. Company REFS shows the consensus at 'buy' especially after July's share price fall. At the current market price of about 515p, this implies about 30% upside in terms of fair value - if requiring a P/E multiple in the late teens, to match it. I would not be so hopeful in current markets but Compass's risk/reward profile does now look to weigh on the upside. So this is a useful sound share to bear in mind when the market is having bad days amid the debt crisis. Compass may not excite aggressive investors trying to seize the turn in more volatile shares such as cyclicals and miners - yet events are showing how easy it is, to end up bloody. For portfolio balance it is worth being aware of quality defensive shares and catering is a more ethical business than tobacco.
http://www.iii.co.uk/articles/19209/stock-watch-compass-group
BOLL***S wrong board sorry
The share price is not going to do much today but with news expected on many fronts it should gain momentum over the next few weeks
"Good" performance from Compass, volumes under pressure Date: Thursday 29 Sep 2011 LONDON (ShareCast) - Compass said it put in “another good performance” in the fourth quarter of the financial year, with organic revenue growth expected to exceed 4%, though the catering giant has seen some pressure on volumes recently. Over the full year, Compass expects total revenue growth of 9%, or about 5% on an organic basis. When taking into account the Japanese earthquake, the profit margin for the full year is expected to be at the same level as last year, but excluding this, the underlying margin is expected to increase by about 20 basis points. Japan accounts for about 5% of Compass’s revenues. Compass said its organic growth has been driven by “strong levels of new business wins, an improvement in the underlying rate of retention to around 94% and modest inflationary price increases.” The company said that volumes over the full year are likely to broadly flat, with “marginally negative” volumes in the second half offsetting growth in the first half. “Whilst the current economic uncertainty is likely to put ongoing pressure on like for like volume in parts of the business, as we look forward, we remain very positive about the opportunities to grow the business,” the company said. “We are well placed to capitalise on the significant structural growth opportunities in both food and support services around the world and we are encouraged by the pipeline of new business.” ---