Hello, and welcome to the Compass Group Half Year's Results Call. Hosting today's call will be Dominic Blakemore, Group Chief Executive Officer. This call is being recorded. Following the opening remarks, you will have the opportunity to ask questions. To ask a question, please press star one on your telephone keypad at any time. I would now like to turn the call over to Dominic Blakemore. Please go ahead. Thank you, and good morning. As usual, I'm joined by Palmer, our CFO. We're very pleased with our half year results. We've reached another milestone, and we're now above 100% of 2019 revenue on a run rate basis, with two of three regions and four of five sectors now above 100%. We're capturing the growth opportunity with another period of record new business wins and record client retention, with growth now well-balanced across our regions and sectors. Global inflationary pressures are impacting all of us, and we expect it to further accelerate in half two and continue into the medium- term. However, we believe we've the tools to manage these challenges and will benefit from the tailwind it provides to outsourcing. Our business model is resilient in times of volatility, and our balanced footprint will continue to limit risk. Given both our strong performance in the first half and our confidence in the future, we're increasing our organic revenue growth guidance and commencing a share buyback program. Lastly, a few words on Ukraine. We've all been shocked and saddened by the tragic events unfolding there. While we have no operations in Ukraine, we're providing extensive humanitarian support. We've permanently exited our small business in Russia and have terminated all known Russian supplier arrangements around the world. The impact of this is fully recognized in our results. Thank you. We'll now open up to questions. Thank you so much. As a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad. The first question is coming from the line of Jamie Rollo from Morgan Stanley. Your line is unmuted, and you may go ahead. Thanks. Morning, everyone. Three questions, please. Just first of all, starting with costs, what one of your competitors yesterday flagged a couple of items affecting its margins you've not mentioned today. Those were a slower conversion back from cost-plus to P&L and also some off-program procurement due to supply chain complexities. I guess you're not seeing those, but could you just talk a bit about we know, whether you are perhaps, you know, seeing any issues, what's offsetting that? Perhaps more specifically, if we're exiting at 7% this year, is it fair to say that next year's margins should be at least 7%? Secondly, on the business wins, the CapEx guidance of 3.5% implies more like sort of 4.5% in the second half. Is that the new run rate with this higher pace of business wins? If not, does that imply you're getting higher returns? 'Cause you're winning clearly a lot more business for a similar CapEx level. Then just a quick one on Brunel. The KPIs look excellent there. Clearly it shows what you can do in both digital and delivery. Can you replicate that outside UK higher ed into other verticals, other markets? Thank you very much. Thank you, Jamie. Just furiously scribbling down your questions. If I go to Palmer for the questions on cost and CapEx and then come back to me on Brunel. Sure. On the cost, the contract structures are gradually migrating back to our, you know, traditional proportions. We are seeing a gradual migration from the heightened cost- plus that we've had over the last couple years during the pandemic back to P&L as volumes continue to increase. Now, within that, you are seeing heightened subsidy levels relative to pre-COVID. It's not purely an apples- to- apples, but it's a gradual conversion. The implication, the read-through is obviously to the handling of inflation. When we look at it, we group the cost- plus and the P&L contracts to consumers together because they each give us the ability to handle inflation relatively nimbly. Cost- plus is obviously a direct pass-through. On the P&L basis, we have autonomy over pricing, so we can get pricing relatively nimbly. Those two represent about 70% of our overall contract structures, currently. The remaining 30% is in the fixed price category, where we do have the ability to price. However, it's on a lagging basis, and therefore, we're putting in a lot of time and investment to, you know, to mitigate the impacts there. Your question on CapEx, we're 2.6% in the half. 3.5% for the year, we still think is the right number. We don't see the model changing over time. It's just timing in this year. I wouldn't read more into it than that. I will say that, if we have the ability to win more growth, even more than we're doing now by spending more, we're not gonna shy away from it. Currently our model still holds. Thanks, Palmer. Just on Brunel, Jamie, I mean, I think the principles of what we're doing at Brunel are equally applicable to most of our sectors and most of our geographies. What are they? It's digital, it's prepay, it's cashless. It's scaling production in one location. It's producing to order, not to batch size as we would previously have done, which reduces waste and increases efficiency. I think all of those principles can be deployed across our sectors, whether it's B&I, it's defense, it's remote, and even in sports and leisure, as we see increasing use of digital, cashless, and unattended. We're very excited about the learnings that we've got there and in other parts of the business we're deploying this. Brown, you wanna follow? Jamie, forgive me. You raised a point about margin heading into 2023 as well. You know, reiterating our margin guidance for the year above 6%, for the year, you know, exiting around 7% in that neighborhood. As it reads into 2023, I think we just gotta be cognizant of the overall environment. We've got heightened growth, which has the drag of the mobilization costs, as well as the progression of margin over the life cycle of the contracts, as well as the high inflationary environment. As long as those two things are happening, our margin progression will be more paced. We still believe that we will get back to our pre-COVID margin level. Certainly, we don't necessarily view that as a cap. We do think we'll get back to there, but it's a matter of time. Right now, we're seeing the heightened growth opportunities in the marketplace. We're taking advantage of those. We will continue to do that. It will drive overall profit, and we think that's a better place for the company. Okay. Thanks, Palmer. Just to clarify on that. If you're exiting at 7%, you're saying the pace of growth will clearly slow, but there's no reason why next year should go back below 7%. That's not what you're saying? We would be disappointed if margin went backwards. We would be highly disappointed in that. Thank you very much. Thank you for your questions. The next question is coming from the line of Bilal Aziz from UBS. Your line is unmuted, and you may go ahead. Good morning. Thank you for taking my questions. Three hopefully quick ones from my side, please. Firstly, just on the good new business wins, clearly, another big step up sequentially. Some of your peers have given a bit of a quantification of where they think they could end up by the year end. Any sense from yourself on progression on that number in the second half? Secondly, tied to that, your net new relative to 2019 is running at 4.4%. Clearly, the indication is that the new business wins layering now will continue to take that number higher. Any updated thoughts on how that layers in going forward, please? Then lastly, just on the margin side, appreciate all the commentary on the inflation. You mentioned 30% of your contracts are fixed price. Do you have a sense of the price gap versus the cost side in the first half and how you expect that to trend going forward, please? Thank you. Come to Palmer on the third question. In terms of the new business wins and step up, yes. I think it's important to recognize that when we report record new wins and record retention, we're not yet seeing the full benefits of that within the P&L. With those forward-looking indicators, we would expect our net new win rate to improve further into the second half. How much further? You know, we'll talk to you in Q3. From that sort of 4.5% 2019 comparison, we would expect to make more progress. In terms of absolute new business wins, I think we won GBP 550 million in the first half. Yeah, that would be the start point for the run rate on a full year basis with a little bit of improvement. On inflation, Palmer? Yeah. In the first half, we got about five points of pricing within our growth. Clearly, inflation has been running higher than that, and we've been able to hold our margin consistent there. Between the mitigation impacts using our operational tools, menu flexibility, procurement opportunities and the like, coupled with the pricing, we've been able to digest the inflation as well as the mobilization costs that are there. That's one half. We're cognizant that we will see continued inflation in the second half of the year, possibly at an accelerating pace. We know that we certainly have to continue doing what we're doing and probably work even harder to continue the progression. We have the capabilities to do it and the confidence that we'll be able to handle things. Okay. Thank you very much. Thank you for your question. The next question is coming from the line of Vicki Stern from Barclays. Your line is unmuted, and you may go ahead. Good morning. Just firstly on the net new, the acceleration in signings. How much of that you think is temporary, helped by just the features of the moment, higher inflation, supply chain challenges and so on, and how much is sustainable or sort of driven by self-help, coming through from the company? Sort of similar question really on the higher retention. Is that a sustainable level of 95.8%? The link to that, you mentioned again in the press release that you think Compass should have faster revenue and profit growth in the future than in the past. If you just sort of flesh out again the thinking there, I think there used to be a sort of 4%-6% organic growth guide. Obviously, you're clearly seeing a step-up in growth right now, but, you know, as we look to the future, how should we think about the future growth rate? Just finally on B&I, you've obviously had a good recovery already in volumes there, but still are way off 2019 levels. You previously flagged, I think, a group revenue headwind of sort of 3%-4% perhaps from work from home effects. Just your latest thinking now around sort of that ultimate drag from work from home or indeed, you know, potentially mitigation of that through other things you flagged, like higher penetration and so on. Thanks. Maybe if I take the first question and pass two and three to Palmer. On the first, yeah, I think there's a few things going on there, Vicki. Absolutely, we're seeing the benefit of self-help, most particularly outside of North America, where for a while we've been working very hard on core processes, training, the right resourcing, the right focus on the market opportunities. I think that's where we're being most rewarded right now. I think the second point to make is that through COVID, we sought to retain all of our sellers in all of our markets, and so we didn't really miss a beat on continuing sales processes. I think that has rewarded us relatively and with our clients. I think what's exciting is the pipeline that we reported at the end of last year looks as good now and into 2023. Our win rates have improved. We do believe that, you know, the market factors that you described, whether it's supply chain disruption, labor availability, inflation, we talk about digital, we talk about sustainability. You'll have seen in our presentation this morning, we think there's a long list now of attributes and requirements for outsourcing that we can really meet. Yes, look, I mean, we very much hope that all of those factors are sustainable, but I think it gives us confidence that in a great marketplace with huge opportunity, we can sustainably perform better than we've done before. I think many of those apply to retention as well. I think if we can be demonstrating to our clients through the life of a contract that we can address all of these issues for them and with them, then I think that gives us a greater opportunity for retention. We hope that the way in which we've dealt with some of the challenges through COVID and some of the challenges that we're now seeing has created greater goodwill and trust, which will mean that as we face into some of these future challenges, then there's a degree of confidence in our ability to support our clients. When it comes to the model of revenue and profit growth, you know, we're living in uncertain times, aren't we? I think it's very difficult to put a range on things in the near- term. You know, we've seen 5% of pricing in the first half. Our historic level would have been 2%. You simply add 3% to the old growth rates. You know, we're 1.5 points ahead on net new business. You simply add that to the old growth rates. You know, we've still got a 15% volume recovery opportunity. You know, how and when does that come through? I think if you take all of those in turn, it tells me that we're gonna be at elevated levels of growth for a while, but I'm not sure we can put a range on that yet. We will do that when we feel confident. I think that what makes me, I guess, most excited is the opportunity for us to be at structurally higher levels of net new. Even if some of these, you know, I'm not gonna say transitional, but maybe medium- term factors subside, we should have a right to be at higher levels of growth, and we'll talk to you about that when we feel able. On the B&I question, we're becoming increasingly confident that we're gonna see a full recovery in B&I, looking at it on a revenue basis. Currently, it's still by far the slowest sector to recover. It's really the only sector that's you know meaningfully below 2019 levels. It's around 83% or so. Currently, we did see a nice pickup in the quarter, which we were very, very pleased to see. We're getting increasingly comfortable on the fact that it will recover. However, it will look different than it did historically. What we're seeing is a shift away from working more in the office on a prolonged basis. I think the data points we're seeing is that it's gone from somewhere around 4.2 days of work in the office, down to about 3.25 or so right now. That's still in a state of flux. We know many of our clients are wanting employees back in the office. The war for talent is making it somewhat difficult at the moment. We know a lot of clients have been big acquirers of real estate during the COVID downturn with plans to utilize that. What we're seeing is significant new business opportunities in B&I come from other avenues in terms of the new model. Significant opportunities and new business wins on micro markets in pantry and free food offers. Even in the traditional cafe space, we're seeing revenues come back more quickly than populations are. It gives effect to the higher participation levels that are happening there, the higher check averages, higher subsidy levels, and the free food levels. The net-net of it is we do expect to see a full recovery on a revenue basis. However, when you peel the onion back, it will look a bit different than it has historically. Very helpful. Thank you. Dominic, just a quick follow-up on the retention. I think you used to sort of set a ceiling for yourselves at 96% being the sort of optimal level. Just curious if that's still true because you're basically there already now. Yeah. I mean, look, our retention levels in North America have been and are exceptional. The opportunity has always been outside of North America, and that's really where we're seeing the step change. That point of improvement is really coming from the majority of it is coming from our performance outside of North America. I think there's still a way to go. I wouldn't put a ceiling on it. We will continue to eke out the marginal gains. Thanks very much. Thank you so much for your question, Vicki. As a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad. The next question is coming from the line of Richard Clarke from Bernstein. Your line is unmuted, and you may go ahead. Good morning. Thanks for taking my questions. Three, if I may, just the first one on the buyback. You know, maybe just some color on why you've gone for a buyback here rather than the normal special dividend and what maybe we can conclude on the M&A opportunities for announcing this now. Are those not quite as good as you'd hoped or are those still there? The second question, just on the comment that you believe there's 15% of volume to come back, is that a calculation back to 2019 volumes or is that incorporating any changes in volume you have? Where are you expecting that to be to hit that 7% margin number as you exit the year? Expecting quite a lot of recovery there. The third question on the prepared remarks. You talked about vending and delivery being on top of your classic GBP 220 billion addressable market. Just wondering, I don't think I've heard you use that language of it being incremental to it before. Maybe if you can just talk about what is that opportunity and you know, how big could that be beyond the GBP 220 billion you normally talk about. I think if I hand over on the first two to Palmer. Okay. The buyback. You know, we're looking at our, you know, performance over the COVID period, how we've recovered, our cash flows are, you know, getting back to the strong pre-COVID levels that we've enjoyed before. Our leverage at the half year was down to 1.3x. We had predicted that without any capital returns, we would be around 1-1.1x at the year-end. Keep in mind, that includes about 30 basis points of accounting change from the lease accounting. On an apples- to- apples basis, on a historical level, it's less than one, obviously fairly conservative. When we look at our overall capital allocation framework, we decided this was the right time to go forward. Our cash generation, we expect to increase as we go forward. With respect to the buyback versus the special dividend, I think at this level, at the GBP 500 million over the second half of the year, and then just the, you know, the flexibility and the just the increasing preference that we're hearing, we decided that was the appropriate path to take. You know what it means on a go-forward basis, obviously we'll continue to look at our overall framework as the sort as the indicator on where to land. We're increasingly, you know, looking at M&A. We've been disciplined in the past. I think we're even more disciplined now when you think about the macroeconomic environment that's there. We've got to be pretty convinced about the opportunity for us to take advantage of M&A at the moment with everything that's on our operators currently. I think that's the reality. That said, if we have a very attractive opportunity, then we're gonna take advantage of it. I think we've got the wherewithal to do that. Prior to COVID, the three years prior to COVID, we returned, I think it was GBP 2.7 billion of capital to shareholders. That's on top of a little over GBP 1 billion of M&A that was done in that same period. As we look forward over the next three years, we expect stronger cash generation than we had historically. Obviously that gives us a good bit of flexibility in decisions that we'll be facing going forward. In terms of the, you know, the base volume yet to recover, we think it's somewhere around 15% based on an historical basis. It sort of goes back to the question just a second ago with Vicki, to some degree. To what degree does that 15% come back? Or to what degree is some of that structurally impaired, but perhaps takes on another form in respect of new business? I think what we're trying to show here is that we've got still a significant portion of our business that we're currently not operating. While B&I is the largest piece of that, we're seeing it in all sectors. Healthcare, Retail is still significantly closed. We're seeing, you know, a backlog of the medical procedures. We're seeing sports and leisure events that have been postponed or tours or things of that nature. We still have base volumes yet to recover across all sectors. You know, we can talk about whether the full 15% comes back or not, but regardless, I think it gives you some indication of the opportunity that's there. What it means for, you know, the margin recovery is that we do expect to see overhead leverage as we go forward. We do think there's natural leverage in this business as we grow. As volumes naturally come back, we do expect to see a nice drop through that will help that margin recovery. Again, it's really difficult to predict the pace of that recovery, both on the top and bottom line. I'm not sure we're that good to accurately predict it. But it will come. We're confident in that. Then, just as we said before, we're gonna take advantage of the growth opportunities first and foremost. Thanks, Palmer. On the point, Richard, about vending and delivery, we haven't quantified it and, but we do see an interesting opportunity in both of those areas, as well as in support services where we've got great capability. In fact, I think we've now right-sized the portfolio. In support services, we've got good businesses with good leaders and a USP that have flourished through the pandemic and are accretive to growth. We feel confident that there's an opportunity there which is outside of that food core. Secondly, within vending and delivery, I think we've looked at it previously as an alternative way of addressing the needs of our clients on site. I think increasingly we're seeing that there are other opportunities opening up. Whether it's the examples we've given in the past of serving SMEs in Dublin from a central production kitchen through a digitally enabled, app-enabled delivery model, or whether it's the Brunel example, where 30% of our volumes are being served off-site through delivery, which would be incremental volume to us than we previously enjoyed. I think we see those increasing now as other drivers of opportunity which come from the innovations that we've been working on within our core food offer. Thanks. If I could just ask a quick follow-up to your comment on the overheads that Palmer mentioned. I noticed in your slides you had the reference to 480,000 employees. If I go back to your 2019 reports, you had 100,000 more employees than that. Is this a permanent change in the level of employment at Compass, or is there still some employment to come back as well, as the revenues and the volumes recover? Yeah. I think part of that is in the manner in which we do the calculation because it's on an FTE basis and therefore it's the period of time for which those employees have worked with us. The actual spot numbers would be higher, and then the average will become higher as we go forward. That said, clearly, you know, we are looking at greater levels of efficiency. It's one of the things we talked about through COVID and how we would introduce greater flexibility in recovery to be more flexible to volume volatility, which I think is really important. You know, we will see a good deal of those employees come back as these volumes come back sustainably over time. Okay. Thank you very much. Thank you so much for your questions, Richard. The next question in the queue is coming from the line of Neil Tyler from Redburn. Your line is unmuted and you may go ahead. Good morning. Thank you very much. A couple left, please. A quick one to start with. I wonder if you could help split the uplift in your organic growth expectations between the various components, I suppose, you know, faster recovery, additional price pass-through, and then the net new contribution. Following on from that, Palmer, you just sort of discussed the operating leverage that the business has demonstrated historically, and I wonder if there's anything in the nature of the new wins and the shape of the services that you're providing, and this comes back to the point on sort of, you know, on the cost structure, whether once things settle down into the new cadence of growth, there's any reason not to anticipate very similar operating leverage, and therefore 20-30 basis points of annual margin improvement or, you know, on the back of that new growth trajectory. Finally, alongside that, back to the topic of new wins, are there any individual either contracts or segments that you would be able to single out as contributing more meaningfully to the uplift in the gross wins figure, and particularly thinking in Europe? Thank you. Again, let me pick up on the first question, and then for Palmer for the second and third. Just on that first point, I mean, I don't think we would quantify the drivers of the uplift. What I would do is reassure you that this isn't about pricing. If we were taking, you know, five points of pricing in the first half, we would expect the same and maybe a point or two more, as we see higher inflation. We talked about, you know, inflation in the first half being sort of 6%-7%. We expect that to go to high single digits. We will see a bit more pricing, but it's a driver, but not the driver of the revenue uplift. I think more importantly, we're seeing a slightly stronger volume recovery. You know, we've talked about both B&I and education responding better than we'd anticipated, certainly post-Omicron and in the latter months of the second quarter. There's an element of that. Then I talked earlier about net new accelerating in the second half as well. I think it's again, you know, what's pleasing is that the guidance upgrade we've given today on growth is broad-based. In terms of the new business wins and the impact that it has, there's really nothing new on the new business wins in terms of the types of contracts we're winning. I think we flagged previously the increased amount of wins from first-time outsourcing. That is continuing within this GBP 2.5 billion over the last 12 months, about 45% of that is from first-time outsourcing. Just as Dominic mentioned earlier, it's a reflection of both the market dynamics that are in play as well as the self-help that we've been utilizing. What you've seen from us in the past, and it's not rocket science. I mean, there's a bit of a trade-off on the top line growth and the margin progression. You've seen us invest a good bit of drop through back into the top line to produce the growth rates that we've enjoyed historically. They accelerated from 3%-5% to 4%-6%. We're just north of 6% in 2019, fiscal 2020 when COVID's onset. We saw that gradual progression. When you looked at the margin profile then, it was modest margin profile, again, just focusing on the growth opportunity and the overall EBIT growth. We think that's the best shape and progression for the company. That's what you see us undertaking now. That's what we will continue to look for as we go forward. Within the, you know, the contract wins over the last 12 months and the first half. Again, the types of contracts, I don't think there's anything, you know, different there. They're broad-based across all sectors. We flagged a couple of big ones when we spoke at the end of the first quarter in sports and leisure and in D&E. You referenced the geographical dispersion. We are very excited about that. Within the, you know, the new business wins, the GBP 2.5 billion, it's 20% increase from where we were a year ago. I mean, we're very pleased that we saw 15% growth from our North America business, which was one that clearly was operating, you know, well historically, and that is accelerating. We're really excited about what's happening outside of North America. We see 30% increase outside of North America. The bulk of that within Europe, both within the UK and on the continent. We're seeing nice new business wins coming out of APAC as well. I think it's a reflection of all the, you know, the self-help, the expansion of the growth mentality, take advantage of the opportunity that presents itself in the market. We see that continuing. We're really pleased with what we're seeing, and we think that it can be sustainable. Thank you. That's very helpful. Thank you so much for your questions. Just a reminder, if you would like to ask a question on today's call, please press star one on your telephone keypad. The next question is coming from the line of Joe Thomas from HSBC. Your line is unmuted, and you may go ahead. Good morning, and congratulations on the performance so far this year. Just a couple of questions, if you wouldn't mind, please. Just thinking about the 30% organic growth guidance this year. Given the strength of the performance in Q1 and going into Q2, I'm just wondering almost why you're limiting it to 30%. Is there something else that you're seeing? Is it perhaps reticent about the economy or something that means that you're not pushing that higher? That'd be one question, please. Also, could you just talk about what's happening to the smaller scale competitors in the sector? Operators used to talk a lot about that as an opportunity post-pandemic. Now, not so much, and it's more about first time outsourcing. I'm just wondering if you can get some more market share gains coming through there. Then the final thing is, can you talk about the spread of margins within the business? I'm just thinking about those parts of the business that haven't come back, those contracts that where volumes remain low. How do you press the margins there, and what's the dispersion? What do you do about them? Very much. Thanks, Joe. I'll do the first couple and then pass on the third. Yeah, look, I think it's a significant upgrade today in our revenue guidance and on the back clearly of a very strong first half. You heard me say earlier, we expect a bit more strength in each of net new pricing and volume. You asked about. I think probably it's very important just to remind everyone, you know, we're lapping 35% growth in the second half of last year. We will be 25% growth in the second half of this year. You know, they're very significant comps and very significant growth on growth, even though, you know, the underlying base period was significantly affected by COVID. Look, I think we feel good with the guidance we've given today. We'd like to think there's more opportunity, but, you know, we'll continue to work very hard and remain cautious. In terms of the economy, I think it's a point worth making. You know, we may see a little bit of impact around the edges in the coming half. I think one point I think is very important and worth making is, you know, where we've seen previous recessions, this is a business that has been pretty resilient. We've been looking back at, you know, post the Global Financial Crisis. Actually, our organic revenues at the worst were flat and then grew after that year. You know, the reason for that was, again, there was a great opportunity for net new business wins, incredible pressure on self-op, pressure on other operators. While there was volume impact, there was a great net new business opportunity. We think that's another attribute of this business in times of economic difficulty. You know, when we reference sort of the smaller players in the industry, I mean, first of all, we are continuing to take share against all competitors in the industry. It's a smaller share of the pie than it was, but I believe in absolute terms it's still growing. I think we've just been much more pleased with the first time outsourcing opportunity because of course, that comes with the opportunity for us to deliver the greatest benefit for our clients, the greatest opportunity to reduce costs and improve quality of service. It is a great source of new business for us and tends to be stickier in the first couple of rebid moments if we've done a good job. You know, that said, I'd stress there are small players in the industry that continue to do a fabulous job, very attractive, great management team, super offers, lots of innovation. You know, we love to see that, and we love to think that, you know, that they could be partners or acquisition targets in the future, and we can help them grow. On the flip side of that coin, I'm sure given all of the challenges that we're facing, and Palmer referenced earlier, the huge operational effort that we face into, that our scale process allows us to get good outcomes on. I'm sure there are others that will struggle with that, and that becomes an opportunity for us to take share and remains one. Then on margins, Palmer? Yeah. On the spread of the margins, if we probably, you know, slice it a couple ways. First of all, if you look at the individual sectors that are there, interestingly enough, on a unit margin basis, our unit margins within each sector are fairly consistent with where they've been historically. Even within B&I, the unit margins are fairly consistent from what we've seen before. Now, what we're seeing is the progression from the cost-plus contracts back to the P&L. We see the heightened subsidy levels that are there, you know, compared to where we were before. We're working with clients to try to reduce those subsidies. Our clients have a desire to do that. We think good partners help them achieve their desires. We think we have the ability to do that. We're doing that sensibly, as the volumes recover there. I think you see that reflected in the unit margin. Where the drag occurs is just on the overhead. We still have overhead that's a bit more heavily indexed versus the base volumes. When you have the lower volume that's there, that's what's producing a bit of the drag. On a unit margin basis, the economics are quite good, which to us gives us a good feeling about what lies ahead. If we slice it a different way from a geographical perspective, you saw margin progression in North America, but a bit of margin regression within Europe and Rest of World. The biggest impact of that on our overall numbers is obviously within Europe. Really, there are a few reasons for that. One is it is the slowest to recover of all the regions that are there when you look at the base volumes. You have heightened net new business. So you have net new business within the half of 3.7%. That compares to historical levels of around 0.5%, so a significant increase there. Just as we've mentioned before, you know, we like what we see, and we think they're sustainable going forward. You've got government support that has waned over the, you know, the first half of the year and is pretty much all gone away at this point. That has had a bit of a drag as that's waned away. Clearly in inflation and the impact that it's had coupled with the higher proportion of fixed price contracts. You've got a bit of the pricing drag that comes along with it. We expect all regions to progress margin in the second half. Hopefully, that gives you a flavor of how the margin profile works across the business. Great. Thank you. Okay, thank you for your questions, Joe. The next question is coming from the line of Jaafar Mestari, sorry, from BNP Paribas. Jaafar, you're unmuted, and you may go ahead. Hi. Good morning. I've got a couple on free cash flow and compensation, please. Free cash flow GBP 360 million this H1, GBP 660 last year. That's over GBP 1 billion in just 18 months. Your three-year LTIP has a cumulative three-year cash flow target of GBP 1.2 billion-GBP 1.5 billion. I just wanted to make sure I get this right. Are there any material adjustments to take into account, or are you guaranteed to smash through that target? Or is there any scenario where you actually make such significant investments over the next 18 months that three-year free cash flow is indeed capped at GBP 1.5 billion? Jaafar, thank you. In terms of investments that we'll make in the business, as Palmer said today, we expect the run rate investment, particularly CapEx, which will impact free cash flow to continue as the levels we've seen. Nothing significant on that score. I mean, clearly, targets were set in a very, very uncertain environment. We're clearly performing very strongly. We're recovering very strongly. Growth is very positive. As you heard Palmer say, we expect to see, you know, significant uptick in cash going into the next year. Of course, these are matters for the RemCo who continue to exercise discretion on the quality of that outperformance. Super. I guess, you know, related to that, there's discretion, but it looks like on the LTIP side, at least the free cash flow component is pretty much there in 18 months. Separately, last year your annual bonus was 99% awarded. Obviously, as you said, this reflects a very strong performance. Looking into full year 2023, is there a rationale for the board here to now set even more stretching targets this time with a little bit more visibility? I think 50% of your annual bonus is traditionally based on margins and LFLs. Can you, I was gonna say get away, which is probably the wrong expression, but can you get away with only 7% and pace improvements, or is this the time to have very stretching targets in place? Yeah. Jaafar, I think this is a matter for our RemCo. I mean, clearly there are a number of different factors at play here, as we've sought to express today. I think, you know, what's most important for Compass is we see the strongest possible EBIT growth, whether it comes from growth or margin, and the remuneration targets will need to reflect that in a way that it's positive and incentivize our teams, but also is fair and realistic in terms of the market opportunity we have ahead of us. I'm absolutely certain that will be the mood and challenge of our board. Thank you, Blakemore. Thank you very much. Thank you for your question, Jaafar. The final question is coming from the line of Thomas Truckle from Jefferies. Your line is on. You go ahead. Yes. Thank you, gentlemen, and congratulations on the strong results. I just had one if I may, and that is just turning back to comments from the prelim results around expenditure per capita being elevated across education and sports and leisure. Just thinking about volume terms for H1, is this still the case that you've seen elevated per capita spend, or did that tail off through Q1 and Q2? Thank you. We have been seeing the higher per caps from consumers, the pent-up spending or revenge spend, as some folks internally refer to it. That has been most pronounced in sports and leisure, but in other sectors as well where we have the consumer spending. That has continued throughout the first half into the second quarter. We haven't seen any real impacts from that yet. Now that being said, the overall environment's changing from an inflationary perspective. To what degree that changes consumer behavior going forward remains to be seen. Thus far, you know, we are still seeing the heightened spend in the per cap check averages. Great. Thank you. Thank you so much for your question. I will now hand you back over to your host to conclude concluding remarks. Thank you very much. Thank you all for joining us today and your questions. We look forward to speaking to you at the Q3 results in July.