Welcome to Compass Group's first quarter trading update. Hosting today's call will be Dominic Blakemore, Chief Executive Officer. Please note that this conference is being recorded, and for the rest of the call, your lines will be on listen only. However, you will get the opportunity to ask questions. If you require us at any point, please press star zero, and you will be connected to an operator. I'll now hand over to Dominic Blakemore to begin. Thank you. Thank you, Josh, and good morning. Thank you all for dialing in. As usual, I'm joined by Palmer Brown, our CFO. I'm sure you've all seen today's trading statement. Before opening the call to questions, I'd like to say a few brief words on our first quarter performance and our outlook. We're really pleased and encouraged by our start to the year. Growth was driven by an improved performance across all sectors with a limited impact from the Omicron variant in the first quarter. Almost two years after the start of the pandemic, the group is nearly back to pre-COVID revenues, reaching 97% in the quarter. Of course, the mix is now different, and while our accelerated new business growth and our sector strength has compensated for the loss in our base, particularly in B&I, we still have more than 15% of like-for-like revenues to return as economies reopen. This, along with record new business signings and maintaining excellent levels of retention, will sustain our strong growth momentum from prior quarters. While we're mindful of the impact from Omicron in the second quarter, nothing we see today changes our views on full-year guidance, and we remain as excited and as well-positioned as we've ever been to capitalize on the structural growth opportunity that lies ahead of us in both first-time outsourcing and M&A. Now let's open the call to questions. Thank you very much. If you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad now, please. Please ensure your line is unmuted locally, and then you'll be introduced to the call. That's star one on your telephone keypad now, please. We do have some questions coming through already. The first question comes from the line of Bilal Aziz from UBS. Please go ahead. Good morning, everyone. Thank you for taking my questions. Three from my side, please. First, just a quick query on the revenue guidance, which you've kept unchanged for now, and I appreciate there's still uncertainty out there, but can you give us any steer for Q2 to the extent that you think things may slow down? You flagged education in particular, so interested to see what you are hearing there. Number two, just within the quarter, can you perhaps break out new win versus price impact, please? I know, Dominic, you just mentioned 15% is the revenue decline in volume terms at least. Then lastly, just on midterm, the composition of your revenues, you know, could be quite materially different from 2019, given new business and inflation. Is there any change to how the new business ramps up to divisional average margins? Just trying to get a sense of how you expect the dilutive impact to last. Thank you. Yeah, thank you. Thank you, Bilal. I'll take the first two questions then pass the third to Palmer. With regard to revenue guidance for the full year and the outlook for Q2, I mean, as we've said today, we're maintaining our full year guidance. We expect to see a little bit of softness in quarter two from Omicron across those markets which have been lagging the U.K. Of course, we will be lapping strong comparatives in the second half of the year. If you recall, we were growing around 30% in the second half of 2021, and we will be lapping that. For now, we remain very comfortable with the guidance that we've provided on revenue. Specifically with regard to quarter two, we would expect the strong trends in new business and retention to continue, perhaps a touch of acceleration in pricing. I think the delta between quarter one and quarter two will really all be about the Omicron impact, which, you know, could be a few points. As we've seen in the U.K., we hope that it's short and sharp and that we can then accelerate beyond that into the second half. With regard to your question around the breakdown of components of growth in the quarter, our new business was around 10%, our retention around 95.5%. The net new at the 5.5% level, pricing around sort of 2.5%-3%, and the balance would be the volume recovery that we've enjoyed in the quarter. Now obviously, that net new 5.5 really benefits from the comparison against the sort of affected base. I think we feel that it would be more like a 4% net new on a 2019 basis and therefore a run rate basis, but clearly a strong improvement on our historic rates of 3%. Palmer, over to you for the last one. Sure. Just with respect to the sector margins and new business margins, actually, when you look at it on an EBIT basis, our sector margins are fairly similar. EBITDA would reflect a bit of the capital intensity differences in the businesses with sports and leisure, higher ed, a bit of vending, being a bit higher. But when you net it down to an EBIT basis, they're fairly similar. And that would be reflective in the sort of the startup and the trajectory. A bit more mobilization costs on some of the big ones as you would expect, within sports and leisure and higher education. It's fairly- Very clear. Thank you very much. Our next question comes from the line of Jamie Rollo from Morgan Stanley. Please go ahead. Thanks. Good morning, everyone. Just picking up from the last points, please. So you're running at sort of 84%-85% of 2019 on volume, and I think the last time you reported it was around 80%. Assuming a full volume recovery, you're sort of running really in the mid-teens, so 115%-ish versus 2019 without any sort of further gains from here. Just mathematically, is that what we should be thinking about as the sort of medium term opportunity without any more gains? Secondly, given the weight of contract gains in the period, is there any impact there on margins given sort of mobilization costs and so on? I know you've not given a margins figure at this time, but should we expect perhaps slightly weaker performance in the first half than the previous guidance? Finally, is there any change to the CapEx guidance here 'cause you're winning sort of more than expected? Are you still looking at 3.5% of sales still for this year? Thank you. Yeah. Thanks, Jamie. Good morning. Just with regards to the volume recovery, yeah, you know, your math is right. I think just kind of one caveat is obviously we're yet to see what impact sort of B&I hybrid working or working from home trends will have on that base volume. So that is the gross number, and we do expect, as we've always said, some dilution of that from those trends. I think the positive for us is as we've said, you know, we are seeing food programs being used to entice colleagues back into the office, which is very attractive for us. We're seeing higher participation than we would previously have seen, and also up-weighted spend. There will be obviously some counterbalance to that risk, which is exciting. As you know, as you also pointed out, you know, right now we're expecting sort of higher net new as we go forward to also adding to that equation. Yeah, I think it's an exciting growth and revenue recovery outlook. Over to Palmer on the other two, I think. Sure. With the, you know, the new business wins being as strong as they are, we've certainly seen the mobilization costs, the drag on margins, you know, in addition to just the normal increasing margin trajectory within the contract life cycle. This is something we talked about at the full year. We fully expected to see that this year, and it's one of the big reasons why we said that margin recovery would be strongly second half weighted. That is certainly the case. We've reiterated our guidance, including in that is the margin we fully expect to be north of 6% for the year, exiting around 7%. I think we, you know, we flagged at the end of the full year that we wouldn't expect to see much margin progression at all in the first half. We've said it. You know, we still see that and expect that to be the case for the first half. It's playing out in line with what we expected. With respect to CapEx, we're still anticipating the same level of CapEx around 3.5%, although what you hear from us in general is that we are very opportunistic. When we see opportunities, we're not gonna shy away from them. While we see that as being the case and expect that to be the case, we certainly reserve the right to take a re-look. I think just to add to that one further point here is I think the shape of CapEx is possibly changing a touch, so sort of less upfront on signing or investment in client facilities and more around digitalization, more around delivered-in operating model solutions, which is really exciting because it is an incremental CapEx. It's the same CapEx being used differently, potentially with better outcomes. Thank you. Just on the margin point, why has the high level of contract wins not had an additional mobilization cost or drag? I mean, you've maintained the margin guidance. Is there other savings in there or, what's going on to offset that? I think it's a combination of the ongoing growth within the net new since 2019. We get a bit of volume leverage that comes through, and we're managing it well. I mean, I think that's the key thing, and that's one of the things we look at with our full year guidance. You know, the revenue's gonna be a bit difficult. That's why we're keeping a pause on things given the Omicron variant that we're facing right now. We you know we expect to see that margin shape really come through the way we outlined it. Thank you very much. Thank you. The next question comes from the line of Vicki Stern from Barclays. Please go ahead. Good morning. Firstly on use of cash. I think back in November you said you'd like to be spending similar levels on M&A to those that you were spending before COVID, but there weren't that many deals attractive enough to get over the line. Obviously, you signed a few in the first quarter, but just more broadly, where do we stand now in terms of M&A expectations? Obviously related to that, when you look at the balance sheet, sort of when's the right time to start thinking about share buybacks again? Second question, you also mentioned in the press release that Compass could have revenue and profit growth above historic levels in the future. Could you just sort of flesh out what your thinking is there? Before COVID, I think the guidance was 4%-6% organic growth. Just yeah, sort of how you're thinking about that might shape up in the future with some of the points you've made around net new, et cetera. Then just on net new, is this level of signings, that value of signings that you gave us back at that full year still running around the 15% ahead of 2019 levels? Is it still sort of skewed towards first-time outsourcing? Related to that, just the pipeline, is that still also looking as attractive as you signaled back then? Thanks. Thank you, Vicki, and good morning. With regards to the use of cash, we think there is an exciting opportunity for M&A ahead. It will likely be more of what we've done before, which will be infill and so small, medium-sized deals. You've seen a few things closing in this quarter. The pipeline is attractive. As we've always said, it's lumpy, but we're absolutely seeing a little bit of a moment in time where I think everything that we've experienced over the past couple of years is bringing those opportunities into the pipeline. You know, we'll maintain our discipline and, you know, and hopefully we'll have the opportunity to convert some of those. You know, again, as we've always said, our capital allocation framework remains the same. To the extent we don't close those deals, you know, we will look at shareholder returns. I think the right time to update you on that would be, you know, around the half year as we've got a little bit more experience around the M&A pipeline under our belts. Just in terms of the revenue and profit growth above historical levels, yeah, I think you're absolutely right. The components of it that, you know, we're influencing is obviously net new, and we're talking about a percentage point of acceleration in our net new, and that's what we would hope and expect to be the component parts of revenue that can accelerate over time. When we talk about profit growth, we're talking about that being driven by accelerated revenue growth and therefore the two of them operating in tandem. Palmer, any more color on those, and that answers the third question, I think. No, I think the third's just in line with what you just said on the revenue growth, the new business wins being the biggest driver. Albeit we're seeing some improved retention as well. On the new business wins side, certainly in line with what we had last year. I think we had a good start to the year. Just as M&A, we've said new business wins can be lumpy. I think I gave you some examples of that before with some big wins. What we're seeing on a, you know, quarterly basis, trailing twelve-month basis is very much in line with what you heard from us at the end of last year. I think it's reflective of the, you know, structural opportunities we see in the marketplace and how we position ourselves. You know, within that, we're still seeing the uptick in the first-time outsourcing component, which we like very much, and we anticipate that will continue, at least for the foreseeable future. I think a final point to add would just be in terms of future growth, that, you know, it may well be that higher levels of inflation that we'll need to recover through pricing could also flatter the top line. I think we can all form a view as to, you know, how temporary or semi-permanent that might be, and we'll have to work very hard, as we've always done, to recover that inflation and protect margins. I think, you know, the real delta of improvement, which talks to the quality of the business, will be our performance in net new, and that's what we're very focused on. Great. Thanks very much. Thank you. Just as a reminder, it is star one if you would like to ask a question. Next question comes from the line of Richard Clarke from Bernstein. Please go ahead. Good morning. Thanks for taking my questions. Just the first one following on from Jamie's question about, you know, what's still to come. The 85% you talked about was on your 2019 volumes. Then you talked about a lot of the progress you've had is on contracts you've signed since 2019. Those contracts you've won since 2019, what percentage are those running at now? Is there still a substantial volume improvement still to come on the sort of 2020, 2021 win cohort? Second question, age-old topic of inflation. You said your pricing was running about 2%-3%. That's obviously presumably below what you're seeing in terms of input cost inflation. Maybe you can sort of confirm what you're seeing there and maybe just some color around how you're able to absorb that if not passing it on through price. Then the third question, just on the Rest of World, your commentary around Rest of World qualitatively is quite good, on DOR, but the number relative to 29 just stepped back 1%. Just what's driving that very modest step back, in the Rest of World, quarter-on-quarter? Yeah. Let me take the first and the third and then Palmer will talk to pricing and inflation. In terms of still to come, I mean, yes, there will be because some of the new business we're mobilizing depending on sector is mobilizing in the context of containment measures, lockdowns, and so forth. Therefore, we would expect some modest volume growth in those contract wins in the last couple of years too. I think the real prize is a recovery in the base volumes of the existing business pre-COVID. With regard to Rest of World, probably just something to call out is there is an M&A effect in the regions which doesn't affect the total group numbers. It's a wash between acquisitions and disposals. Sort of M&A adjusted like-for-like volumes are around 97% for the group. Because we made a number of disposals in the Rest of World region, South African business and some parts of our Japanese business, we're actually running above 100% in Rest of World, like North America compared to 2019 levels. The quarter-on-quarter change is really about seasonality. Of course, the delta there is Europe, which is probably, you know, three or four points like-for-like weaker than we've reported because we acquired the Fazer business in the Nordics, which has given us some volumes. Of course, the European business is most highly exposed to B&I and where we would expect the volume recovery to come back over time. With respect to the pricing inflation question that Richard, you asked, we're certainly seeing the heightened levels of inflation. In fact, we're probably seeing it tick higher than we even discussed at the end of the fiscal year. That's been holding true. We are seeing, although a bit of signs of improvement within the supply chain and on the labor side. I think when you look at job applicant flow, the duration of job postings, we're seeing some improvements there that give us, you know, some signs that will continue. It is certainly still tougher than it was historically. The same thing on the supply chain side of things. We're seeing less disruption on the distributor side of things. While we anticipate challenges for the rest of the year, we do anticipate that they will improve. Certainly we mitigate the best we can, and then we price. Our business model allows for that within our contract structures, our relationships with clients. Keep in mind the inherent delay in pricing that's there. We're typically able to price on the consumer-facing side of things fairly nimbly. Within the client-facing side of things, it's a bit more structured, and it's a bit more tied to lagging indicators such as you know, inflation indices, CPI, ECI, food away from home, that kind of thing. Those have to be a bit more planned and structured. January is a big pricing month for us overall, as you could appreciate. Certainly our teams across the globe have been quite busy in that respect. That's one of the big reasons why we expect to see the margin shape that we outlined being very much second half weighted, is this delayed effective pricing. Just to follow up then, just to be clear. The 2%-3%, that should probably go up as we go through the year. You'll get a bigger pricing component as we progress through the year. If we're doing it right, absolutely, we should. Okay, wonderful. Thanks very much. Thank you very much. Our next question comes from the line of Vicki Stern from Credit Suisse. Please go ahead. Good morning, and thank you. Firstly, around the M&A in the quarter, can you give some color on the sectors and splits between acquisition of small operators versus of new technologies or concepts? Then just for our models, would it be right to expect a kind of one-to-one flow through into our acquired growth expectations for this year? Then partly separately, at least, now that the recovery is taking shape and you have experience of operating in the new normal, can you give an update on to what extent clients are still looking for off-site preparation, and importantly, what the returns are like for you on operating these new restaurant concepts and dark kitchens? Yeah. Maybe I'll talk to the third question first, and then I'll let Palmer take the first two. When we speak to the recovery in new normal, I'm not sure we're there yet. I think we are going to take a while before we've established what we consider to be new trends. You know, the reality is that I think confidence in the return to the office was shaken by Omicron. I think our clients are yet to determine what their operating model is going to be. We understand there's lots of complexity around that. You know, we've still got to see confidence levels of individual employees returning to the office through transit systems. We've always talked about, you know, is it a three-day week in the office, and if so, which days? You know, how do colleagues get brought together for the most effective type of work? You know, we also know that our different clients in different sectors and different industries have got different perspectives on what they want from the office. I think we're some way away from the new normal, and I think it's gonna be a bit of suck it and see over time. That said, we think the ability to operate delivering solutions is critical to the future. What it gives us is an ability to vary our offer away from the traditional restaurant style dining into much more grab and go with attractive hot meal solutions. Typically, we would see this as being able to operate commissary kitchens or central kitchens, which we could then deliver into finishing kitchens, freeing up space on site, and allow our consumers to have hot and cold food offers at any time of the day. It's an attractive sort of new tool in the kit bag, really, for how we provide great quality and an attractive offer to our clients and their employees. I think there is a way to go. You know, Palmer will talk to some of the new operating models that we're acquiring as well as building. We're seeing strong growth in them, and it also opens up a different part of the market to us in those potential clients that have smaller colleague bases. It is attractive. The economics remain attractive because obviously we can produce at scale with batches that then get delivered into multiple clients. If we're doing this right, we should be at least protecting our sort of pre-COVID margins and with the opportunity to potentially do better as well. The acquisitions that we completed in Q1 are right in line with that evolving operating model. All of them in Q1 were in North America. The biggest piece is really related to the continuing build-out of our commissary network across the country. It's certainly tapping into the evolving operating model. We're using technology that both we've created ourselves as well as acquired previously to combine with the, you know, the ghost kitchens, the offsite central production kitchens and the like, to fulfill this evolving operating model that Dom just described. That's the biggest chunk that you see there with the micro markets certainly being a component within that. That is a core part of our strategy, and you'll see that continue to be a line of focus for us. In terms of the model, the revenue expectations, it's a little bit better than the 100%. It's, you know, it's closer to about 150 or so, in terms of a ratio to what we paid. Now that just happens to be on this batch. Everything's gonna be really case by case. I will say on the M&A front, it wasn't completed in Q1, it was just completed earlier this week, but the acquisition of the Sodexo Australian business that had been discussed previously, we completed two days ago. It's not material in terms of quantity, but it's significant in terms of strategy, so we're very pleased to have that completed. Thank you very much. Just as a reminder, it is star one on your telephone keypads if you would like to ask a question or make a contribution on today's call. Our next question comes from the line of Jaafar Mestari from BNP Paribas. Please go ahead. Hi. Morning, everyone. We've got Philippe Quanz at [uncertain]. Firstly, just on contract structures, just so we have the right thinking into the next leg of the volume recovery. Could you give us an update on how much of your portfolio is currently cost plus compared to the higher mix of cost plus reached at the peak of the crisis and 33% before COVID, presumably somewhere in between now as it's normalizing a little bit? And then two questions on delivered in. Firstly, how many central kitchens does GBP 87 million buy you? I think you started with around 70 at the group level, and then peers, sometimes much smaller that are a lot more advanced there, have close to 200. So where does Compass Group need to end in terms of that infrastructure? Separately, is there another option if you're gonna go for more delivered in to actually go for outsourcing? There's lots of players out there that offer sauces and soups and meals to be finished, and there's very big high street chains that do rely on that. Is that something you can do, or is that something that wouldn't quite work with clients? I'll take the second one first, then pass to Palmer. Just in terms of central kitchens, yeah, you're absolutely right, sort of in the seventies. Palmer will give you the detail on what we acquired. Just one comment, though. You know, we have to remember, we're probably the biggest sort of ghost kitchen operator in the world with all of the existing facilities we have that can be used to produce for other sites. We're very selective and judicious where we feel it is right and proper to invest in commissaries or central kitchens because, you know, we don't have the opportunities elsewhere in the portfolio. We can aggregate the scale, and it's right for the location and the number of client opportunities we see around that. That is and remains, you know, an exciting strategic option going forward, and we'll look at it both in terms of our existing footprint, our existing central kitchen, and where we can acquire, as well as build. Yeah, we do have some of the things you described delivered-in today. We obviously do many of them ourselves. We'll always look at the individual economics and the quality of the offer to determine what is right for us. I'm sure Palmer's got more to add to that, and then the first question too. I mean, I think I would say on the central production kitchens is they're not all created equally. I mean, they're different sizes, they're different scales. You know, what we're really talking about here are dedicated units that we can put high volumes through. They're shared within across sectors to a large degree. They're more pronounced in the urban areas, as you would appreciate. But in addition to that, we certainly have what we would refer to as the central kitchens rather than the units, which are the kitchens that we already have within our client network that we're sharing across different units. All of this is very much of a scale game and it's certainly one that we're, you know, again focused on. You know, with respect to the deals in the first quarter, we got about half a dozen within that, you know, that batch of acquisitions. Keep in mind, these aren't just empty central production units. They are fully operating. They have income. They are profitable as it is now. That's great because what it enables us to do is to migrate the capacity to our network while still in a profitable position on the units themselves. It's something that we very much focus on. It's part of our due diligence when we look at those kind of deals. I think your first question was with respect to contract structures. You're right. Historically, you know, we're looking at about a thirds across the primary types of structures, the P&L, the cost plus, the fixed price. That very much was indexed more towards the cost plus, the cost reimbursable models during COVID. That still remains the case right now. That is just as I described at the full year, an ongoing dialogue with clients. What you would have seen and we would have seen during the first quarter as volumes increased, particularly on the education side of things compared to where they were, the conversations and, you know, and structures started to migrate back towards the P&L where they were before. It's very much on a case-by-case basis. The vast majority of B&I remains cost plus in some sectors. In some countries, it would be a hundred percent cost plus. That's an ongoing dialogue. I don't really view that as a bright line at any point in time. It's just something that will evolve. Superb. Thank you very much. Thank you very much. Our next question comes from the line of Tim Barrett from Numis. Please go ahead. Hi. Morning, both of you. I just have one question left on the segments. If you look at the segments and the most COVID-centric ones, sports and leisure back at 107% jumps out. Can you talk around what the drivers are there? Is it simply sporting calendar or is more going on underlying that? Thanks very much. Yeah. It's a combination of the two, but the biggest piece is frankly the new business wins. We've had a number of new business wins since the onset of COVID, frankly, which were delayed in terms of mobilization, in terms of wrap up. We had a few new NFL teams and American football that had great seasons this year. That certainly had an impact. Some minor league soccer in some places within North America. We're certainly seeing the benefit of the new business wins come through. We did see some, you know, some one-offs, some non-recurring events within the quarter. When you look at some NFL playoff games, both in terms of the new business, but really in terms of the business that we already had, that's not something that you necessarily expect to recur. Similarly, we had a big Formula One event in Mexico that actually turned out a lot bigger than we anticipated initially. We benefited from that. That's not necessarily recurring. One thing to note within that within Q2, you know, we're experiencing some postponements of sporting events. While there are some cancellations, we fully expect most of these to be postponements and therefore just a timing issue. Although I will say that, you know, we are aware of some cancellations. Unfortunately, you know, we're seeing some, you know, events that were in our venues just from a timing issue having to move to venues which we don't operate. It's that kind of thing we're keeping an eye on. Overall, in the sports and leisure, it's just the same trend that we've been highlighting, which is just the strong net new business. Okay. That's a sector where you're slightly below the average of base revenue recovery. Is that fair to say? Yeah. It's still to some degree. Keep in mind there too that we're seeing very high per capita spending. When the events are occurring, even though attendance might be down where it's regulated, where it's not restricted, we're seeing very full attendance and very high spending. We're seeing the benefit of that throughout the portfolio. How long that lasts, I think remains to be seen, but certainly that's still continuing now. It's really helpful. Thanks very much. Thank you very much. I will now hand back over to Dominic. Thank you. Well, thank you very much for your questions today, and I wish you all a good day and I look forward to speaking to you at the half year. Thank you very much for joining today's call. 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