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Compass reports a 1.6% rise in European revenue despite Brexit

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Compass reports a 1.6% rise in European revenue despite Brexit

Compass Group’s half-yearly results show a 1.6% increase in revenue year-on-year despite a slowdown in new business in the UK post the Brexit referendum to £3b.

This growth reflects good levels of new business which was partly offset by the negative impact of contract closures seen in the second half of 2016.

The first half of the year has benefitted by the timing of Easter partially offset by the negative impact of the 2016 leap year. The quarterly impact of Easter is estimated at around 2.5%.

New European contracts include the Institut Pasteur in France, Residencias Sanyres in Spain, Aston Villa Football Club in the UK, Jacobs Douwe Egberts in the Netherlands and Carrefour in Turkey. Contract extensions include Siemens Real Estate in Denmark, Prosafe in Norway, ENI headquarters in Italy and Hospital de Basurto in Spain.

The half-year report also showed a rise in underlying operating profit by 2.3% (£5m) on a constant currency basis, while the underlying operating margin rose to 7.5% due to a company-wide focus on driving operational efficiencies and sensible pricing to combat the impact of lower volumes in the oil and gas business, and manage the pressures of labour and food inflation, in the UK.

Richard Cousins, group chief executive, said: “Compass had a good six months, with the business performing as expected. Given our excellent cash generation and the strength of the business, we are announcing a £1b special dividend. This reflects our commitment to return surplus cash to shareholders whilst maintaining an efficient balance sheet.

“Our expectations for FY 2017 are positive and unchanged, with growth weighted to the second half. Our pipeline of new contracts is encouraging and our focus on organic growth, efficiencies and cash gives us confidence in achieving another year of delivery.

“In the longer term, we remain excited about the significant structural growth opportunities globally and the potential for further revenue growth, margin improvement, as well as continued returns to shareholders.”

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