Compass Group Stock

Welcome to Compass Group's Third Quarter Trading Update Conference Call, hosted by Dominic Blakemore, Group Chief Executive Officer. This call is being recorded. [Operator Instructions]

I will now turn the call over to Dominic Blakemore for his opening remarks. Please go ahead.

Thank you. Hello, and thank you for joining today's call, which is a little later than usual as Petros and I are in the U.S. meeting clients and supply chain partners. We delivered another strong quarter with organic revenue growth over 7%, continued excellent client retention of 96% and net new business growth accelerating back into our 4% to 5% target range.

We remain on track to deliver net new business growth at this level, which represents over $2.2 billion for the fifth consecutive year. As such, we're demonstrating our ability to grow consistently at scale over the long term. Our performance reflects the strength of our sector-focused model, disciplined execution and strong client demand. We continue to win market share across multiple sectors supported by a record pipeline.

Over the last 12 months, we secured $4.3 billion of new business wins, which is up 16% year-on-year with around half coming from first-time outsourcing. Business & Industry remains our strongest performing sector, delivering double-digit organic growth and more than $2 billion of new business wins. With a record sales season in U.S. Education, 6 of our top 20 biggest wins coming in health care. International Sports & Leisure growing double digits and great new account wins in U.S. Defense & Data Centers supporting our progress in DOR. We have broad-based growth across all of our sectors.

Given our strong execution and continued momentum, we are reiterating our 2026 guidance of above 11% underlying operating profit growth in constant currency. This is being driven by a combination of strong organic revenue growth, acquisitions and ongoing margin contribution.

With that, let's open the call up for questions. Over to the operator.

[Operator Instructions] We'll now take our first question from Jamie Rollo of Morgan Stanley.

Three questions, if I may. First, on net new, you sounded very confident on the first half call that we'd see the midpoint of 4% to 5% in the second half, and you've come in, in the low 4s in the first quarter. Should we expect that figure to improve again into the fourth quarter? And how should we think about 2027, is sort of 4% the new 4% to 5%, if you like? Is that really a 4% on ongoing run rate?

Secondly, on international, 6.4%, perhaps a little bit light, given that was your easiest comp last year, could you talk a bit more about this pricing slowdown and the events calendar? I think you said Sports & Leisure was up double digit in international, so again, is that a segment you're expecting to pick up in Q4 on OSG?

And then just finally, big picture, no real M&A in the quarter. What's your sort of view going forward there? And should we think maybe about a more balanced capital allocation at year-end and maybe a buyback?

Jamie, thank you for those questions. Let me just touch on each of them and maybe hand over to Petros to give you more detail on them all. I mean, first of all, just on net new, we're really pleased with the progress we've made quarter-on-quarter, and we do anticipate further acceleration in the fourth quarter. Our guidance of being between 4% and 5% is because we will oscillate as we've seen. That guidance is on a 12-month basis, and we will oscillate between that. We performed in the higher end of it, been at the lower end of it. It really depends on timing of some of the mobilizations. And as we said, we will expect to do better as we progress through this year.

Yes. I mean, international, really pleased with the Sports & Leisure performance, but yet impacted by the timing events in the prior year calendar.

Petros, do you want to pick up on a bit more data?

Just a couple of things, Jamie. On net new, let's recognize, we have been delivering 4% to 5% for fifth consecutive year. What is really interesting here is we have sustained a level of retention of 96% over 4 years with international being sustained at 95%, a significant improvement to the pre-COVID performance.

As Dominic referenced, the first-time outsourcing trends we're seeing has been the strongest over the last 4, 5 years, and we're making really good progress across all sectors. Just to realize one thing, we will be a $50 billion business this year. Ourselves growing within the 4% to 5% sustainably is giving us very material share gains in the market in a very fragmented $360 billion size. When it comes to international, the only thing I will add to Dominic's point is we do see lower inflation in international. We discussed this in Half 1 call, predominantly is behind food compared to North America.

On the M&A, you have seen our spend has been the same with Half 1. We have discussed before we have completed our sectorization of the medium-sized deals with international. We continue to focus on GPOs on attending and vending. And we do think, as we go to end of September, full year results, to be in a position to evaluate the balancing between the M&A and buybacks. Just to remind everyone, we will be a fraction higher than the 1.5 leverage on September, and we'll deleverage as we go forward in '27.

And our next question will come from Leo Carrington of Citi.

If I could ask 3, please, on a slightly separate topic. Firstly, on CapEx, beyond that point you made about the phasing of openings and the phasing of net new increasing the CapEx potential sales this year, are there any other factors to draw about impacting this potentially vending in micro markets, sort of lifting the CapEx intensity?

Secondly, on ARO, which is developing very well, but beyond that University of Kentucky contract, are there any particular large contracts to flag? Or is this the bulk of signings being more typically sized?

And then lastly, on the topic of construction phase data centers, I know, H1, Dominic said that these projects are just one strand of the growth from AI. Have there been any evolution in this market since then that you can update us on?

Leo, thank you. Let me speak to the ARO development, and I'll hand over to Petros for the CapEx and data center construction.

Again, just revisiting our LTM signings are now $4.3 billion on a 12-month basis, 50% from first-time outsourcing, we believe that's 2 to 3x the size of our international competitors combined. So we feel we're doing extremely well on the winning of new business against what we believe is a record pipeline. You're absolutely right, within that, we have a very significant contract with the University of Kentucky. Over the years, we've had major contract wins over time, so this isn't unusual for us. And in fact, we're actually lapping significant contract wins in the prior year and prior years, which effectively, we need to continue to deliver, and we believe we can and we see in our pipeline.

In terms of other significant contracts, yes, there are deals, which are in the high tens of millions, low hundred million. We see those in Sports & Leisure. We see those in the Defense sector. That wouldn't be unusual for us. At the same time, that's balanced by a very, very healthy pipeline of lower contract value wins, which really is the bread and butter of our business, whether that's in international or North America. We're very positive about those. We're very positive about the balance of our book of wins, the balance of our book of opportunity in the pipeline.

Thank you, Dom. Leo, on CapEx, just to be clear here, we don't see any change in the underlying intensity of CapEx in the business. This is truly to do with lumpiness. We have some couple of sizable contracts. Last year, we closed the year at 3.3%, this year at 3.7%. If you're going to take an average 4, 5 years, we're just around 3.5%, which we think is the underlying funding requirements for our business.

I just want to also call out, this year, we're going to spend $1.6 billion in CapEx, somewhere around 20% of this is not client-facing CapEx, which goes technology, data, AI, all of the things we have talked in the past, that gives us a really good investment in the business. We have been doing this for many years and our ability to keep making progress in the efficiency and investing in data tech for growth.

When it comes to data centers, first thing to say is that in the last 9 to 12 months, we have been awarded a couple of hundred million dollars in data centers through our 5 out of 6 Mag partnerships with us, for which we have the largest offering wallet. We keep expanding this capability. I want to remind you, we do have a very strong support services businesses in North America and international that support food and nonfood service for our clients. In addition to this, our teams are on opportunities on the construction phase, and we'll take them as they come.

And our next question comes from Neil Tyler of Rothschild & Co Redburn.

Three for me as well, please. Firstly, within the $4.3 billion, you mentioned $2 billion of that is within B&I. Just sort of trying to unpack that a little bit more, if you're able to share any details around the momentum of that $2 billion sort of relative to the 16% growth overall, please?

And then, thinking about the -- I suppose, the like-for-like growth or maybe it's the new wins alongside the M&A that you've undertaken over the last couple of years, could you please update us on your thoughts on the timing of revenue synergy delivery and maybe updates and comments on that delivery as it pertains to the acquisitions you've made?

And then finally, in the release, you mentioned with regards to Sports & Leisure and specifically in the International business, customers maximizing the commercial potential of their operations. Can you sort of expand on that a little bit? And maybe if you're able to give some examples of how that's translating into either like-for-like or new wins?

Okay. Thank you, Neil. Let me just tackle the revenue synergy point, and then, Petros will pick up on B&I and Sports & Leisure. I mean, I think it's important to say, if you look back at our track record of revenue synergy delivery, you will see that our rationale for doing many of these deals is that their contribution to organic growth year after year once the -- we've lapped that first year of acquisition has been growth accretive to our model. We've proven that with Bon Appétit, we've proven that with Levy, we've proven that with Restaurant Associates, we've proven it with Flik.

We do believe that the case is the same for the acquisitions that we've made with CH&CO with Vermaat for service and others. We've seen that in parts. That will accelerate, we believe, over time, as they become embedded into our model. But that becomes part of our ordinary course growth and very much the rationale for the acquisitions that we've made that we believe will increasingly give our international region the attributes of our North American business model.

Petros?

On your $4.3 billion, just to give a bit of color, just remember, our B&I is the most sectorized business, goes from financial services, banking institutions, all the way to attending vending. We have a very broad footprint there. And we do see this actually firing across all of the subsectors within B&I with also 1/3 of this being first time outsourcing with clients mobilizing new locations.

When it comes to education, I would say it's above fair share in this $4.3 billion. We had record wins within North America, some really positive developments in K-12. Sports & Leisure international, definitely above fair share. We're growing 10%, double digits on the year-to-date, and we do have a very strong pipeline. Health care, we have grown 6 out of our top 15 wins, which is really promising signs there, a fraction slower than -- fraction lower than the fair share, but with good opportunities as we go forward, and we remain positive on this.

If I go on the Sports & Leisure, actually, the backdrop here is the fun experience and our ability to trade up and trade across within our offer. The key thing is maybe 10 years ago, we used to have 2 offers, the VIP boxes, we used to call them the concessions. If you go to our accounts now, you will see a vertical offer up to 7 or 8 tiers, spanning a very, very high-end hospitality all the way down to an amazing concessions. In addition to this, we are running fun zones within the stadiums, and it's a partnership with our clients, long-term partnership with our clients to keep improving the offer and growing these accounts organically as we go.

The last thing I'm going to say, we have invested a lot in data and AI in this phase. You imagine very big events. We have to deliver exceptional service, exceptional revenue in a very short period of time, and technology is really helping us and demonstrating to our clients the value we can add to the operations.

If I may, I might just add a couple of comments to that, I think as we came out of the pandemic, we talked a lot about the strength of Sports & Leisure being around this thing, we call, revenue spend. I think increasingly, we're now seeing this being baked into exactly what Petros has described, the fan experience. It's very clear to us that the consumer is willing to pay for a great experience and a unique experience. It's extremely important to our client partners that they can generate competitive revenues from the food and beverage and hospitality experience to support their underlying operation.

And what we're seeing is exactly what Petros has described, a tiering of the hospitality experiences, which hits different price points and has very premium experiences at the top end of that. Having visited Wimbledon this year, we operated over 5 partner restaurants with [indiscernible] Michelin Star, providing different types of experience across the entirety of the estate as well as the broader fan-based concession experience.

I think this World Cup has been another demonstration of the willingness of the fans to spend on great experience. And we think there's a lot more to come in global sporting events, international sporting events and local sporting events in individual markets. So we think it's an area of great opportunity and one where we partner, we think, brilliantly with our clients because our interests are so mutually aligned.

We will now take our next question from Kate Xiao of Bank of America.

I have 2 questions. The first one on net new acceleration trajectory. Your ARO, obviously up $4.3 billion, is a 16% year-on-year growth. When I look at -- when I think about the trajectory of that ARO number, about a year ago, it was at mid-single-digit kind of growth, and that has accelerated to low teens and now 16%. So your ARO has accelerated for the past 3 or 4 quarters. Does that mean -- and obviously, your net new with retention being stable has just started to accelerate? Does that mean we should think of the next 3 to 4 quarters as net new acceleration as well, as a reflection of your ARO acceleration in the past couple of quarters? That was the first question.

And the second question, I just want to ask around the data center opportunities, particularly around construction side. Obviously, the space and opportunity is very big, and -- but there is asset-heavy and asset-light operators, right? So can you talk to us about the kind of opportunities with your capabilities that you are seeing? Are you -- do you intend to operate asset-heavy when it's required? Or are you only looking at asset-light opportunities? And if so, can you tell us a bit about the size of the opportunities and the relative share of those opportunities within the overall, I guess, TAM in the construction-phased data center?

Yes. Kate, thank you. Let me tackle the data center question. Maybe Petros might have some further color, and then, he can pick up on the ARO acceleration point. And I think the first thing I'd say to this is, look, it's happening very fast, right? And I think we are -- if we're all genuinely honest, we're all learning as we go. It's a super opportunity undoubtedly. It's been sized differently by different commentators. It's a very significant marketplace. It's multi tens of billions, hundreds of billions in both the construction phase and the ongoing operational phase.

And of course, there are different partners. So in some instances, we'll be partnering directly with the major tech players. In others, it's with the data center owners and operators, where they typically franchise their capacity to a number of different customers. And in others, it will be through EPCs and EPCMs, so constructing the data centers on behalf of those owners. So we're working through this to understand what a different client base looks like.

What we do believe is we have a compelling offer. We are already operating many data centers for, in particular, the Mag 7. I think Petros referenced it earlier, the 6 of the 7 that outsourced. We are the almost exclusive partner to 5 of those 6. So we have very significant volumes on their existing estate. It gives us the opportunity to speak to them about data center construction and data center provision of services. We're working more and more on building out our relationships with the individual data center owners and operators.

And in terms of your question regarding sort of asset heavy, asset light, I mean, a lot of this depends on the relative remoteness of the facility. Our preference would be for the asset-light model. We don't rule anything out if the opportunity is significant. I think we've demonstrated that in the remote sector in Australia, where we have co-invested in facilities in the short to medium term, where the economics are attractive. We'll feel our way through this. We will ensure we do what is absolutely right from a CapEx and return standpoint. And we're building those capabilities all at a time.

I would stress as well, as Petros referenced earlier, let's not forget our capability when it comes to the support services and some of the maintenance facilities. We have those capabilities through our businesses in Canada, in the ESS, effectively, the remote mining and construction sites in Canada, which have been franchising to the U.S. We have ESFM, which is US support services of facility management businesses. In the Nordic region, for example, we have 4 services. In a number of the European countries, we've got support service businesses as well. And in Australia, we've got Delta FM, which provides facility management alongside food.

So I guess the reason I make that point is that the solution here on the construction phase of data centers is beyond food, as it will be in the operational delivery thereafter. And we believe we have a compelling combination of both food and support services that we can bring together under acknowledged and recognized brands in the industry by our clients. So we feel we're very well placed. We started strongly. I think there's a lot to go after. I think we'll see this sort of play out over time. And a lot of it is about, I think, partnering with the right individual client partners, as we go to build those relationships.

Thanks, Dom. Kate, nothing to add in data centers. I think Dominic captured everything there. On net new, this number, you will appreciate we're going to grow north of 7% this year. This number expect us to continue to grow as we go. In order for us to have confidence, we deliver within the 4% to 5% range. Just to remind us again, a $50 billion business this year, $4.3 billion of new business, retention 96%. We do see an acceleration in Q3 on net new versus Q2. We talked about this. We do expect a modest improvement in Q4 as we go.

And above all, I think we're looking here at being consistent in delivering within our medium-term algorithm for years to come. And this is why the gross new evolution of the business, which is broad-based across sectors gives us good confidence. The sustained level of retention gives us good confidence, and as we go forward, we will see some quarters are going to be maybe towards the low end of our range. Some quarters are going to be towards the mid part of our range. But it's going to be within the 4% to 5%.

I just want to remind you, last year, Q4 had been an exceptional year for Compass. We finished the year at 9.2% organic. So we're lapping these comparators in quarter 4 this year. And the business growing at around 7% on top of 9-plus percent last year demonstrates the underlying resilience of the business and the growth opportunities that exist for us.

And our next question comes from Jaafar Mestari of BNP Paribas.

I have 3 question, please. The first one is just following up on this net new business trend. I'm reading my notes from H1 and trying to compare and contrast. And I know lots of people heard more formal indications that you would touch 4.5% in the second half. So I just wanted to circle back on this. Again, I know it's been labored, but just to understand if there's been specific delays or specific changes in how you intend to mobilize some of the wins?

And if there's any reason not to expect a mean reversion, you said just now, Petros Parras, some quarters it would be towards low end, some quarters will be towards top end. We've had a handful towards low end.

And then secondly, I just wanted to maybe wrap up the World Cup contribution, your estimate of the contribution for the quarter on just 1 month. And what will be different in the Q4 contribution where perhaps you have more of your normal events that are being displayed to perhaps less of a net contribution?

And lastly, on the U.S. education market, you mentioned a record selling season. You showed a chart at your quick strategy update in H1 that was showing that in North American Education, you didn't really see that uptick in first-time outsourcing. It was still very much competitive wins. So just curious if we exclude University of Kentucky, generally, is it broad-based but competitive wins? Or is this already changing? And have you seen any meaningful first-time outsourcing K-12 or higher education deals, please?

Jaafar, without being a broken record, we're delighted that our net new business is on an LTM basis within the 4% to 5%. We are delighted it's accelerating. We do anticipate further acceleration in the fourth quarter. It's very difficult to forecast exactly what we're going to see based on the timing of mobilization of new business in particular and the relative pickup of volumes in new business.

Look, as we've said, and as was picked up on previously by Kate, we've got a very positive uplift in the gross new business signings. There is an element of timing with all of that. We know that there is a number of those signings, which will open in out years, and we don't get the immediate benefit. And so there will always be that to it in our guidance as we manage that through. We're retaining very strong retention levels, the 96%. And of course, the absolute dollars have to grow significantly for us to continue to sustain within our 4% to 5% range.

And I'd stress $4.3 billion of new business and $2.3 billion of net new, we are something like 2 to 3x ahead of the competition in absolute terms. So we're very pleased with where we are. We believe we can sustain that. It continues to allow us to be within our P&L algorithm. And I think our focus is very much over the multiyear performance. Do we think we can do this in the fourth quarter? Yes. Do we think we can do it for the next year? Yes. Do we think we can do it for the next 3 years? Yes. That's what's really important to us. And that's what we see in this marketplace rather than concerns around 10 bps here and there by quarter.

In terms of the World Cup, before I hand over to Petros, we're absolutely delighted with the event. We're very proud of our teams who operated on the ground for such an incredibly important events and with such high volumes of spectators and such high profile. We were the biggest F&B partner to the event with over 1/4 share of the total matches. But let me let Petros give you some more color.

As Dominic referenced, north of north of 1 quarter of delivering exceptional service within the games played in World Cup. In total, about north of 100 games in the period of June and July. We said in Q3, the impact of group is around 30 basis points, and we're expecting Q4 to be around 10 basis points. There are still some games played in July. Phenomenal experience, but what I would like also to call out is outside of World Cup, we do see positive volume contribution across the business that you see in the organic for Q3.

If I go to the -- your education question, I think the answer is we do see broad-based growth, competitive wins within K-12, first-time outsourcing and competitive wins within higher education. So we're quite pleased that the education sector is giving us growth across all of the sources of growth, share gain and first-time outsourcing. And enrollments look good to the extent we know so far. So we remain positive on the sector.

And we'll now take next question from Sabrina Blanc of Bernstein.

I have 2 questions from my part. The first one is coming back to the performance in international and due to -- part is due to lower inflation. Do you expect a catch-up in the coming months because when we look at what happened in the Middle East and the inflation coming from that part, you said, is a bit contraindicate.

And the second question is regarding the CapEx acceleration at the end of the year. I understand it's a question of timing. But usually, when you have mobilization first, it used to happen more in OpEx than in CapEx. So could you explain the difference this time?

Thank you, Sabrina. Let me touch on the points around food cost inflation pricing in international, and Petros can reflect on CapEx. Look, I think the first thing to remind us all of is that we're in sort of very dynamic times. I remember being in this business in the first 5 years when we virtually saw no food cost inflation at all for over 5 years. What we've witnessed since the pandemic through Ukraine and now through Middle East is volatility. And that volatility is based on global geopolitical events as well as local weather patterns. And that means, we'll see different conditions in different markets at different times and unlike anything we witnessed before.

Right now, food cost inflation in some of the Western European markets is a point. It remains at 3.5% in North America for different reasons. What we've demonstrated in this business is our ability to price for inflation. And we've done that because we changed our contract structures through the pandemic. That means that we have more dynamic contract structures, which protect us better. We obviously talk about 3 different types of contracts that we've got, but I think in the least flexible, we've introduced the opportunity to price more with greater agility.

What that means is I'm not concerned with the headwind that the cost inflation can present and our ability to price for it. But what it also means is that when cost inflation comes up, pricing will come off, and you'll see that in our top line. Typically, we know that we -- because of the way that we protect our clients, we're not pricing with margin. And therefore, there is no real impact to the profitability of the business.

As a result, as I've said, you're seeing that slight slow down in pricing in this quarter. Were we to see an impact from the Middle East, and we haven't yet seen that, but there are many commentators that are suggesting that we'll see high single-digit food cost inflation, for example, in the fourth quarter here in the U.K., then you will see us take that in pricing over time, and it will flow through our top line.

So I think you may see an acceleration and deceleration over time, which will lag the movements in food cost inflation. I think that's really the index that you need to track, whereas labor inflation, which is the other driver of pricing is, I think, more predictable and more stable based on the trends that we're seeing across the piece at the moment.

Petros?

On your question on CapEx, I think the key thing here is timing. Just to remind ourselves, we're investing in client-facing solutions before mobilized contracts. Mobilized contracts take a couple of years, even 3 years to go to maturity in terms of performance. So you have always a lag between capital investment and returns over time. We're confident in the returns over time, and we know the organic CapEx investment is giving, as you know, north of 20% return on capital employed across the business. And for us, it's an area we'd like to continue to invest there. So it's pretty much down to lumpiness timing of execution of investments in Q4 and as we move to Q1 next year.

And the final question comes from Pravin Gondhale of Barclays.

Firstly, on like-for-like price. You called out lower inflation being a driver of moderate like-to-like growth in international. How should we be thinking about inflation and like-for-like price growth trajectory in Q4 and H1 next year? If you can provide some steer on that, that would be helpful. And just wanted to know related to that, whether are we in -- are we firmly in the territory of lower end of that 2% to 3% inflation range right now? And have you seen any signs of increased escalations from clients in international markets on price revisions in Q3, especially in Europe?

Petros, why don't you take that?

Yes. Pravin, I'll try to answer your question. The line was not very clear. I think I got most of it. So that I'm going to take extra, but -- so on like-for-like, we do -- so we are now -- if you exclude the return to office and a lot of tailwinds we had in a couple of -- in the last couple of years, we do see a positive volume contribution, anywhere between 20 to 100 basis points, and you have seen this across the quarters. The attribution of this, primarily, we believe, is behind our value offer being received positively compared to the street pricing in restaurants and when our associates dine in our premises.

The second thing is we discussed about the premiumization of the offer, the trading up.

And the third thing is the use of data and AI in driving more sell-out given certain locations, think about the kiosks, preorder, grab and collect, all of the solutions we have with our clients. So we do expect to continue to have positive volume as we move to Q4 and beyond, structurally based on the 3 elements I referenced.

For Q4, again, I'm going to say we have to recognize an exceptional strong volume last year across the piece, North America and international. We have to lap this as we go in Q4.

When it comes to food inflation, I would say we're running around 2.5% on a blended basis. Iran, as Dominic referenced, we haven't seen the Iran conflict embedded in the numbers. Typically, these things may take 6 to 9 months to show. And I want to remind you, this is a different thing compared to the Ukrainian-Russian conflict back in the day that had also an element of product availability shortage within our supply chain. This is more, we believe, to do with the oil price and distribution cost of the last mile of our supply chain partners. So we're monitoring the space. If it's going to manifest itself in next year, as Dominic said, the business has been resilient in navigating through this, and we remain confident to deliver within our medium-term algorithm.

Apologies for the bad line.

Thank you. I will now hand it back to Dominic for closing remarks.

Thank you, and thank you, everyone, for joining us today. I hope you all have a very enjoyable summer, and we'll speak to you again in November.

Goodbye. Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.

Good morning, everyone, and thank you for joining us today. Welcome to our half year results. We've delivered another very strong half with operating profit up by 12%. This performance reflects a powerful combination of good organic growth, continued margin expansion and disciplined M&A. As a result, we're raising our guidance for the full year and now expect operating profit growth above 11%.

The outsourcing market remains highly attractive, and our new business wins were excellent, increasing by 14% year-on-year to $4.1 billion. Over half of our wins came from first-time outsourcing, reflecting the strong structural growth opportunity across our markets, driven by the increasing complexity of client demands.

Combined with our strong client retention, we have high confidence in our outlook for net new business growth, which we expect to accelerate in the second half. We continue to execute against our proven growth algorithm as we generate strong long-term recurring revenues.

We're delivering mid- to high single-digit organic revenue growth. When you layer on ongoing margin progression and M&A, that continues to translate into high single-digit operating profit growth. And this year, profit growth will be even stronger, reflecting the contribution from Vermaat.

I'll now hand over to Petros to walk you through the financials in more detail.

Thanks, Dominic, and good morning, everyone. We delivered strong progress across all our key financial metrics with robust revenue growth and double-digit increases in both profit and earnings per share. Let me start with revenue. Revenue increased by 9%, with organic growth remaining strong at just over 7%. Net new business growth was just under 4% as the second quarter was modestly impacted by adverse weather in North America, which delayed mobilizations at several client sites.

As Dominic mentioned, based on our forward-looking indicators, we continue to expect net new growth to accelerate in the second half. Pricing and volume were in line with our expectations, and acquisitions contributed an additional 1.5 points to growth.

Given the timing impact of client mobilizations, it is better to assess net new performance on a 12-month basis. Over the last 12 months, net new growth was 4.2%. We expect net new to remain within our 4% to 5% target range in 2026, and this is for the fifth consecutive year.

This compares with our historic average of 3% when growth was largely driven by North America and international was broadly flat. Today, net new is more balanced, with international performing on par with North America, which continues to fire on all cylinders.

Operating profit increased 12% to more than $1.8 billion, driven by strong revenue growth and 20 basis points of margin expansion. Net interest expense was $166 million, reflecting higher debt following acquisitions. For the full year, we continue to expect interest expense of around $350 million. And as expected, our effective tax rate was 25.5%, and we expect it to remain stable. Earnings per share also increased 12% in constant currency.

Turning to cash. Capital expenditure was 3.4% of revenue, and we continue to expect CapEx to be around 3.5% of revenue for the full year. As you know, working capital has a seasonal profile, and we were pleased to reduce our usual first half outflow whilst growing revenue. Our strong working capital management helped to drive a 14% increase in operating cash flow ahead of profit growth. And we continue to expect working capital to be broadly neutral at the full year.

Moving to regional performance, we delivered balanced growth with strong progress in both regions. In North America, revenue increased by 8%. Operating profit grew 9%, reflecting a 10 basis points improvement in margin. In International, revenue growth was higher at 10% as acquisitions added 3 percentage points to growth. Operating profit was up 15%, driven by 30 basis points improvement in margin as we benefited from overhead leverage and synergies from M&A.

Looking ahead, we are confident in our ability to continue driving margin improvement over the long term, supported by three clear levers. First, we're enhancing productivity through consistent execution of our MAP framework, delivering efficiencies from better purchasing and greater use of data and technology.

Second, we're leveraging regional and group overheads. And third, we're delivering synergies from acquisitions, particularly in International. While opportunities exist in both regions, we expect faster margin progress in International with more incremental gains in North America. Over time, this should narrow the margin gap between the two regions.

Our capital allocation framework remains clear, disciplined and unchanged. Our first priority is to invest in the business through CapEx to support growth where we generate returns north of 20%. We have also been using M&A to accelerate sectorization, particularly in Europe. Our focus is now shifting to bolt-on acquisitions such as vending and GPOs. Both forms of investment generate returns that are more than double our cost of capital and are value accretive for our shareholders.

Our dividend policy remains unchanged with a payout of around 50% of underlying earnings. We continue to target a strong investment-grade credit profile with leverage of 1 to 1.5x and any surplus capital returned to shareholders.

Looking at the balance sheet now. As expected, leverage increased to 1.7x at the half year, reflecting our investments in growth. During the period, we completed the acquisition of Vermaat for $1.7 billion and more recently acquired Pro Care Management, a leading food and beverage GPO in Germany, for $270 million. Dominic will discuss this acquisition in more detail shortly. Looking ahead, we expect to deleverage and return to our target range over time.

Before turning to guidance, a quick word on the developments in the Middle East. While we have no direct exposure to the region, we are very well positioned to manage any inflationary impact. As always, our approach starts with mitigation, followed by appropriate pricing. Around 2/3 of our contracts include dynamic pricing. And for the remaining fixed-price contracts, we have indexation clauses, covering both food and labor costs.

Smaller competitors and street alternatives typically have far fewer levers available to them. So in periods of elevated inflation, our value advantage versus street pricing usually grows.

Finally, full year guidance. Based on our strong first half performance, we are raising our expectations for operating profit growth to above 11% on a constant currency basis. That reflects organic revenue growth of around 7%, around 2% profit growth from M&A and continued margin expansion.

With that, I'll hand it back to Dominic.

Thanks, Petros. As you've seen today, we delivered another strong set of results and are well positioned for continued growth. It really is a privilege to work for a company that touches so many lives. The strength of our model lies in its diversity and adaptability. We feed people every day in many captive environments from school to retirement, wherever they learn, work, play or heal.

Humans are social beings. Wherever people come together, they eat and drink, and we're there to serve them. We don't believe that fundamental need will change regardless of how the world evolves or how AI transforms the economy.

Our addressable market is expanding at 5% per annum and is worth around $360 billion. This growth reflects our expanding capabilities, entry into new subsectors and deployment of more flexible operating models. At this growth rate, we estimate the market could reach around $600 billion by 2035.

Following our exit from noncore markets, our portfolio is now more focused with the top 10 countries representing 90% of the opportunity, while retaining broad sector diversification across all core markets. Business and industry alone represents a $130 billion market. It continues to be our best-performing sector, delivering double-digit organic growth.

Our subsector approach is a key strength, underpinning an extremely diverse client base that provides resilience and a significant runway for growth. Importantly, growth is not just dependent on securing new accounts. Our existing B&I tech clients are scaling with revenues from our top 10 tech clients up 36% over the past 3 years. We see significant opportunity across the AI ecosystem, and it's broader than big tech.

The AI build-out spans everything from semiconductors and service to data centers and power to the next wave of enterprise applications. We already work with more than 60 clients across this ecosystem, and that footprint is growing. As the next wave of AI companies reach fundable scale, small teams quickly scale into campus-style operations needing integrated services.

Health care also represents a highly compelling growth opportunity with health care across all settings expected to be the fastest-growing industry. Growth is being driven by structural and demographic changes as populations age and chronic conditions become more prevalent.

AI is also likely to increase productivity, which can increase the number of patients being treated. The addressable market size today is around $90 billion and growing, with more than half of that still self-operated.

Sports & Leisure is another exciting area. The global market is expected to grow to $80 billion by 2030. Through Levy, we are already a market leader in the U.S. and the U.K. with combined revenues of $5 billion. In the U.S., we now serve more than 350 venues, including around 40% of major professional sports venues.

We're increasingly exporting this expertise internationally with recent wins across Europe and Australia. And as venues host more nongame events such as concerts, we've unlocked additional revenue streams. Nongame events now represents around 25% of Levy revenue, and we expect that share to continue growing.

Education is a roughly $100 billion market with around half still self-operated, creating a substantial outsourcing opportunity. Budgets are under pressure. Outsourcing delivers cost efficiency and expectations around food quality, technology and compliance continue to rise. At the same time, allergen and food safety regulations are becoming more complex, increasing the value of scale and expertise.

We also see meaningful growth opportunities in defense, offshore and remote. These sectors carry high degrees of operational complexity, spanning compliance, security and logistics, which favors scaled operators with specialist expertise such as Compass. Building on our global experience, we established a specialist team to address the U.S. defense sector and recently secured and mobilized our first contract in this market.

Turning to Offshore & Remote. Energy security concerns are driving increased investment and activity in this space. The sector is characterized by long-term contracts in safety critical environments, oil rigs, mining sites, maritime vessels, where the barriers to entry are high and client retention is strong.

We're often asked, what's behind our continued success and market outperformance? It really comes down to two things. First, we operate a truly unique sector-led model. Our business is decentralized, with many of our brands still led by their original founder, owner entrepreneurs. That keeps us close to our clients, our consumers and our markets.

Second, we pair that local agility with the power of global scale, particularly in food procurement and technology. In short, we combine local relevance with global strength, the best of both worlds. And that's something that is genuinely unique in our industry.

While we have strong competitive advantages across the market, it's worth noting that 85% of our wins come from first-time outsourcing and local operators. That means growth is largely structural, converting self-operated sites and winning against competitors who can't match our scale, technology or service quality.

As Petros mentioned, in March, we acquired Pro Care Management, or PCM, a leading food and beverage GPO in Germany. This is fully aligned with our strategy of building procurement scale and capability at the country level. PCM brings with it an advanced procurement technology platform with clear potential to be deployed across other markets. This high-quality acquisition means we now operate GPOs in 5 of our top 10 markets, further strengthening our competitive advantage.

We're also investing in AI and data to accelerate growth and improve productivity, particularly across sales, retention and operations, freeing up our unit managers to spend more time with their clients. Let me give you some examples.

We're using data and AI to drive consistent execution of the sales funnel, which we expect to translate into higher conversion over time. Leveraging more than a decade of proprietary sales data, AI-powered tools support bid preparation, predict win probability and guide next best actions. We know from the data that disciplined execution of best practice selling behaviors improves win rates.

Similarly, in retention, we're applying AI across the full life cycle, combining client, consumer and operational insights. We track sentiment, monitor issues and resolution times and use predictive models to flag accounts at risk, giving our teams the opportunity to intervene earlier, address issues proactively and increase preemption rates over time.

Finally, we're deploying Centric OS, developed by Compass Digital Labs, to support our unit managers. We've now rolled it out across around 1/4 of our units in North America. It provides better data for demand forecasting, menu and inventory planning, reporting and labor optimization, enabling unit managers to continuously improve the offer for clients. Just as importantly, it frees up time, allowing our operators to spend more time with clients and consumers where it matters most.

In summary, we operate in a highly attractive market that keeps on growing. That's the foundation everything else builds on. What makes us different is how we combine local offers with global scale. Our teams on the ground know their clients inside out, and they're backed by the resources and capabilities of a global organization. That's a powerful combination and hard to replicate.

We keep investing in technology, in our people, in innovation because that's what keeps us ahead. You've seen today how AI and digital tools are already making a real difference across sales, retention and unit operations.

Our results demonstrate the strength of our operating model and the scale of the opportunities ahead. This underpins our confidence in delivering against our growth algorithm of high single-digit operating profit growth. And for 2026, we expect to do even better, having raised our operating profit growth guidance to above 11%.

With that, we'll open the call for questions. The operator will provide instructions. And please remember, you'll need to be connected by phone to ask a question. Operator, over to you.

[Break]

[Operator Instructions] Our first question will come from Leo Carrington from Citi.

[indiscernible] first ask a couple of follow-ups on your comments, Dominic, on B&I strength and Sports & Leisure. In terms of Sports & Leisure, particularly in International, I noticed a long-term deal with the Jockey Club, there was this first time, I think, outsourcing Old Trafford. Is this market much less mature than the U.S. And are there more opportunities like this?

And then on B&I, is industry similarly dynamic as the office subsegment? And generally, outside of that strength in tech that you highlighted, I'm interested in your latest view on the outsourcing growth drivers, given that employment growth is flatter, although return to office is still a theme. I'd be interested in knowing what your ex-tech clients are saying.

Thank you, Leo. Thanks for those questions. Yes, look, I think you're absolutely right. I mean you referenced the Jockey Club and Manchester United, both of which are significant first-time outsourcing opportunities for us. Those are in the U.K. of course, and the U.K. has been a country of great success for us in the Sports & Leisure sector, obviously, with the likes of Twicken and Wimbledon, [ Tottenham Hotspur ], the O2, the [ XL ].

So the U.K. is very much like the U.S. for us in the Sports & Leisure sector. Actually, where we see the bigger opportunities across the international markets of Europe and Asia Pacific, where we've had success with the Australian Open in Melbourne and a number of football clubs across Europe.

We're actually expanding our footprint. We're taking Levy internationally, so we can deliver the Sports & Leisure experience of the Levy brand, which is proven in the U.S. and the U.K. by deploying our local resources, our buying power and our logistics capability as well as our ability to source labor, but ensuring that we're using the Levy brand standards to deliver the quality of experience to our clients.

What we see there is a lot of investment coming into Europe and internationally, in particular in the U.S., where there's a level of expectation of comparable standards in the hospitality and concessions to those which we've seen in the U.S. and the U.K. And we think it's a really exciting opportunity for us. I mean you've seen our growth rates in the region are sort of around 14%, 15%. We think we can do that and better still as we organize even more for the opportunity. So it's definitely a very exciting area for us.

And I'd also call out the area of conference and events. It's been a very big part of our business in the U.S. and increasing in the U.K. with the NEC being a latest win for us in the U.K. and operated alongside the [ XL ]. But we see that opportunity across many of the European markets in the major European cities, too. So it's a sector that we're organizing for now. We think it's going to contribute accretive growth to International for some time to come.

In terms of your question around B&I and sort of industry versus the offices you put in and what the drivers are. I mean, I think one that I would call out immediately. I mean, first of all, again, looking at the performance of B&I in the context of the group performance; it's been our fastest-growing sector for a number of years now. It's accretive growth in North America and in our international markets.

There's a significant opportunity from first-time outsourcing from the opening of new facilities, new buildings. Here in the U.K., we're seeing that [ aren't ] we with the new HSBC building with the JPMorgan tower being announced in Canary Wharf. All of these are opportunities for outsourcing at scale in new facilities, which are keeping the sector buoyant.

I think what's also exciting for us there is when we go through periods of higher inflation as we are seeing today and likely will experience over the coming months and possibly years as the impacts of the events in the Middle East flow through food cost inflation, we have a significant competitive advantage. And that plays out in our relative pricing against the street, where we're not tied to menus, we don't have the utility costs, and we don't have the burden in particular of energy.

And therefore, I believe that plays out both in terms of our competitiveness for the consumer, who will choose to stay on site and gives us a benefit through like-for-like volumes, but also in an acceleration of outsourcing and of the benefit of the larger outsourcers who've got a better ability to manage cost than the smaller players. So I think those open up opportunities in terms of like-for-like and our ability to take share. And we continue to see a sort of buoyancy within the overall B&I sector.

As we talked about today in the presentation, the AI ecosystem and phenomenon isn't just about the tech players, it's about the entirety of the supply chain. That means that there is a level of manufacturing, too, which would fall within our business portfolio where we expect to see growth and opportunity.

I'd also point to the defense supply chain and the scaling up of defense manufacturing in many of the Western countries where we've doubled down on that footprint, and we believe that, that's going to create further opportunity in defense. So I think we're constantly seeing trends that benefit our business as long as we can continue to offer quality at the right cost. And we remain very, very excited about the potential for B&I and Sports & Leisure going forward.

And our next question comes from Jamie Rollo of Morgan Stanley.

Three questions, please. First of all, just back on the net new slowdown to under 4% in Q2, I appreciate it's only a quarter and you've given us good figures for the pipeline and so on. But your retention was also down year-on-year. And there's been some general concern from investors about the competitive environment.

Could you explain why the bad weather didn't hit like-for-like volumes and also talk about why that did hit client mobilization and also why that retention number was down a bit? And also talk about your confidence level on the net new reaccelerating in the back half of the year and the sort of the cadence of that.

Second question, a bit shorter, what's your pricing expectation for the second half now, given the sort of inflation pickup?

And then finally, just on M&A, you're shifting to bolt-ons, you said, Petros. But I mean, what's the likelihood do you think of a buyback announcement later this year? How is the pipeline looking for deals?

Thank you, Jamie. Let me have a go at your first question, and then I'll let Petros add any color and then pick up on pricing and M&A.

Look, yes, we're highly confident in the outlook for the second half of the year. We've got high levels of assurance that we'll close the year in the 4% to 5% range. As you've seen today, our last 12 months metric is in the range of 4% to 5%. And this will be the fifth year where we're in our 4% to 5% net new range.

As you rightly say, Jamie, there's always going to be puts and takes in net new between quarters. If we lose just a couple of days of opening, that does have an impact on net new as we did to weather. We lost half a week in some instances, if not a week because of delays as a result of the weather impact, and that has had an impact in the quarter.

Retention is always bumpy, the timing of when contracts run on and off. Again, I'd ask you to look at the long-term trends. We've been in that 4% to 5% range now for what will be 5 years. We've been trending above 96% for many years now. There's a level of sustainability and consistency of the business, which we certainly didn't witness pre-COVID and which I'm very confident in.

Why is that? It's underpinned by ever more data around the pipeline. You've seen our new business wins on an ARR basis are at $4.1 billion and growing very strongly. We talked today about the AI benefit to sales and retention. We think that that's going to yield further opportunity for us and putting ever more pressure on us in the business to do better within the 4% to 5% range because we believe we can.

And the last point I'd say on that is if you think back and you know us a long time now, Jamie, what's truly different here is that our International region is performing at a par with North America. North America is doing what it's always done. We're in an environment where we're seeing super scaling in North America and some really material contracts, whether those are in tech, defense, health care, education; we see some fantastic opportunity.

But what's really exciting is what we're doing in international and the fact now that we're growing consistently at a par. That really is the delta in our performance, and we think that there's a level of consistency to that, which we're confident about going forward. And you will see as a result, an acceleration in the second half, which will take us very positively into '26, '27 and beyond.

Only thing I'm going to ask to, Dominic, on the organic. Let's also remind ourselves, we have been delivering positive volume for the last 4 years. We're operating now in '27 in a fully normalized world. We have about 70 bps of a tailwind there, which plays back to our competitiveness within the street level and the good job our teams do with the clients.

To your question on pricing, I think we're running around 2.7%. We have done -- remember, we mitigate before we go to clients to discuss in appropriate pricing. We're factoring thereabout the same level of pricing for the balance to go, subject to what happens in the global landscape with the Iran conflict. If you look at the oil prices, they are running above $100.

I think that gist here is we do have the resilience in the business and the experience to navigate this through if it emerges in the second half or in fiscal year '27.

When it comes to the M&A, I just want to remind us when you see our profit growth this year, there is a really good contribution from M&A, which is a matter of executing our integrations, executing our business cases, both when it comes to organic and margin expansion. So we're pleased with how the M&As are performing.

As we move forward, we have come to the near completion of the medium-sized sectorization for Europe. We do expect to continue to invest in bolt-ons in an [ attending ] and GPOs, which is a strategic priority for us. And as we go to end of September to the full year, we're going to update you in November what is going to be our capital allocation choice subject to M&A pipeline.

[Operator Instructions] And we'll now move on to our next question from Jaafar Mestari of BNP Paribas.

I have three questions, please. The first one is on acquisition synergies, which you mentioned is one of the reasons for the strong margins this half. I don't assume that Vermaat yet because you've only had your hands on it for a few weeks in the half.

So really curious to understand, what the process is for some of the acquisitions you've integrated sometimes 2 years ago now and whether we should think that the big push you've done will result in a couple of years now of continuing to take cost out and improving on those?

And then thank you for the market commentary. It almost feels like a mini Investor Day. I don't know if you've done more thinking or if you've shared more thinking that you would usually share at this stage of the year. One segment where you seem very excited is North -- well, health care, and that's global, I think your comments. Health care global, you state, should be the fastest-growing vertical.

I'm going to use the dollar figures you report for North America health care. So I'm sure this doesn't add up with organic growth, but I don't think there's disposals in North America health care. And on those dollar figures, North America health care in H1 '26 is growing 4.1%, which is the lowest growth in your North America portfolio.

So just curious how we reconcile those exciting opportunities in medium-term health care and the current trends. It wasn't dissimilar last year. So is it a bit more pain now and then some growth? Is it mostly international? How do I make it make sense, please?

And lastly, in terms of the AI ecosystem, I'm conscious you don't necessarily have the same public relations policy as some of your competitors, but some of them came out with big press releases that they're going to have data center revenues starting in 2026.

So just curious, where you are there? Is it something that's going to be very much ad hoc because as you said, you have relationships with a lot of these participants already? Or is it just you're not going to have anything very big from the data center contract in '26?

Yes. Thank you, Jaafar. Maybe let me take those in reverse order, and then I can hand to Petros to give us a bit more color on the M&A synergy point.

Yes, first of all, with regard to AI, I mean, I think if you recall our first quarter call, we talked extensively then about the opportunity and the fact that we were already operational within that new subsector. So we may not, as you rightly say, have taken a similar PR-type approach. But we see it as being a good opportunity for us.

Let's remind ourselves that we're pretty much the exclusive partner of 5 of the 6 [ Mag 7 ] that outsourced today. So we have a super relationship with them from which to build into that opportunity. It's something that's happening with a number of them, both in North America and in the international region.

We've developed a bespoke offer to provide services into that space. And as we talked about that some on-site [ restaurantation ], but it's also about the micro market offer, the cleaning and other soft services that we can provide into those facilities. And that's something we can bundle together. So we're very excited by that.

It is, as you've heard us say today in the presentation, it is one strand of the opportunity that exists within the AI ecosystem alongside manufacturing facilities, alongside some of the new startups that are emerging at scale and at pace. So we feel pretty exciting and believe that AI in the round and data and technology will remain an exciting opportunity for us and a net growth contributor over time as we go forward.

In terms of health care, yes, look, you're right. In the short term, the growth is slightly below where we believe it will be over time, and it's slightly below our average, that's true of North America. What we do believe, though, is that there remains a very significant opportunity. We know there are a number of accounts that are in discussion and are of scale.

We see the cost pressures, which are applying to the sector. And we also obviously all know the opportunities that exist around, an aging population that's going to need more care and more clinical attention as we go forward.

So we do believe across all subsectors of health care, whether that's day care, whether that is the senior living facilities; there's an exciting opportunity, and we continue to work very, very hard on our offer for that. I think you'll see that starting to benefit our overall growth as we go forward.

And then finally, I will hand it over to Petros, but just a little thought. You called out acquisition synergies. Maybe if I could just elevate that sort of to our overall margin performance. We're super excited today with the 20 basis points of margin progression that we've made.

And there's really three levers within that: One is overhead leverage as we continue to grow and we maintain cost discipline. But the second is the contribution of purchasing through our GPO footprint. And the third is the M&A synergies.

And I think what you see now is we've really dialed through the post-COVID era. We've dealt with the higher cost inflation of the sort of Ukraine crisis as it were. And I think what we believe now is there's no reason why we shouldn't be able to see consistent margin growth year-over-year from here, principally because of those three levers.

We think we have -- it built into our business model, and we're confident that we'll see consistent margin accretion year-over-year, which is really exciting. And actually feels like I talked earlier about a delta in our business model being the improvements in the International performance to be on a par with North America. I think if you have a level of confidence in ongoing margin expansion, and that, too, is another pivot for us in our performance as we go forward.

I'll just add one comment on health care. If you look in our International business, we are growing about 10% in health care, which is primarily driven by first-time outsourcing. If you take this in the contrast of North America, first-time outsourcing opportunity which is [ about 60% ]. This -- we're really focusing on unlocking these opportunities that we have ahead of us.

On the margin expansion, I think Dominic covered the levers, maybe a couple of points to add here. We're truly witnessing now an area where we have margin expansion across the three levers we can drive within our business. Half of our margin progress is core margin expansion, with sales, leveraging our purchasing, investing in data and tech. We have been investing for quite some time now, and it's an integral part of our business.

I just want to remind everyone, we're investing around $300 million on tech every year. We have about 1,500 of technologies within our North America organization that gives us the confidence to keep improving our processes and how we monetize these investments.

And then when you go to the other two levers, 1/4 of the other half is the M&A expansion. And as you rightly said, Vermaat is not in these numbers. We're annualizing acquisitions from last year and actually 2 years ago that they keep giving some really good performance. And the other 1/4 is overhead leverage where we are truly convinced with the investments we have made, we can do more with the same. And this is where you see the overhead leverage playing to full extent.

And our next question comes from Simon LeChipre of Jefferies.

A quick clarification on retention just for the second half and going forward, are you confident to have retention back above 96%? Secondly, a bit of a short-term question on what sort of revenue growth do you expect from the World Cup in the second half in North America? And lastly, just clarifying that for the second half, you expect margin to improve in North America as well as in International region?

Thank you, Simon, for those. Yes, look, we're confident as we can be of retention being above 96% as we go forward based on everything we see today and that we continue to put pressure on ourselves across the business to do even better. We've seen with the deployment of AI within our retention processes that we can get to better outcomes on preempt. We continue to deploy with rigor and discipline our processes across the wider group. We continue to term out our contracts. I mean we should be constantly putting pressure on ourselves to do even better on retention.

In terms of the World Cup, just to remind, I mean, we operate 4 or 5 of the stadium today. We will see World Cup games in those facilities. But of course, they will replace other sporting events that would have happened around at that time. We're also operating some of the fan zones. So I think there'll be a small benefit, but it will only be small in the context of the scale of our North American numbers.

And then in terms of North American margin, Petros?

Simon, we continue to expect margin progress in the second half, both from North America and International, making progress versus the first half and versus last year. It's going to be perhaps a tad softer than the first half, given the large mobilizations we have in the second half. But definitely, we're seeing some really positive trends on the margin expansion.

And our next question comes from Estelle Weingrod of JPMorgan.

The first one, again, on retention since Q2 was a touch softer. Anything you would flag in terms of competitive intensity in the U.S. and outside the U.S.? Is the environment still relatively rational overall? And the second question on the acceleration of net new in H2, how should we think of it on a quarterly basis, i.e., Q3 versus Q4?

Thank you, Estelle. I mean I would -- I mean, first of all, I would urge you and others not to overthink quarterly trends. We're very focused on LTM. We're very focused on the full year performance. In these numbers, at this scale and the size of some of our contracts as they run on and off, you're always going to see distortions. But look, I'll let Petros pick up specifically on those two questions.

The one other point, which I think is really worth making when it comes to new business that we haven't made today is 85% of our new business is coming from first-time outsourcing and from local -- from winning from local players. So I think a narrative around greater competitiveness is sort of not really borne out by the data.

Only 15% of our growth is coming from, I guess, share wins from the larger global players. And also if you look back over possibly the last 10 years, we've always been the net winner of share in that particular space in terms of against the largest international players.

So look, I know looking backwards doesn't necessarily predict how we go forward. But as you've heard us say today, we do truly believe that the model that we've built with the client localization at the front end, and the benefits of total national scale and also the GPO model means that we should truly be best placed to continue to win at these levels.

Petros?

Maybe a couple of points to add is that, I think in retention, if you truly look in the last 4 years, we have been consistently at 96% and above, and there is no specific thing to call out. I think Dominic touched on this. We do expect in the second half to -- net new to accelerate towards the [ middle ] of our range of 4% to 5%. And if you look at our gross new signings, $4.1 billion and the line of sight we have on mobilizing in the second half, we feel confident we're going to be the fifth year, the fifth consecutive year of delivering net new 4% to 5% and being in the middle of this range for the second half.

And our next question comes from Neil Tyler of Rothschild.

One further follow-up from me, Dominic. The $600 billion you mentioned as a sort of long-term market opportunity, includes you adding further capabilities. So I wonder if you could perhaps sort of share what those -- what you anticipate you need to add to the portfolio to be able to address the entirety of that market and whether that would be more likely done organically or you need to look elsewhere for those?

Yes. Thank you, Neil. This is a really important question. If you look at the market that we competed to in 2015, it was valued at around $220 billion. Today at [indiscernible] that's $360 billion. So it's been growing at a CAGR of 5% ahead of GDP.

Now that is due to a number of factors. First of all, it's the growth of our client base within that. But separately, it's been the inclusion of other opportunities as we've seen them going forward. When you look at that $600 billion, it's a continuation of some of those trends, but also as we've adapted our operating model, it does give us access to other channels, which are growing faster still.

So including in that, we've now got the opportunities we discussed today to address Sports & Leisure internationally, which wouldn't previously be included. It would only have been within the markets in which we have previously operated.

Secondly, it's where we see the expansion within the AI ecosystem. We've got the opportunity in micro markets internationally, which we haven't previously mobilized and organized around, and we do now have the capabilities for that. And it's the inclusion of the defense sector in North America, where as you've got to say today, we've begun to take share, and we're starting to win first-time outsourcing contracts as we scale our endeavors there.

So I think it's a combination of positive tailwinds within those core sectors. Some of those we've talked about, like aging populations in the countries in which we operate. But then separately, it's our ability to open up new subsectors, which expand the TAM for us ahead of those growth rates.

And that's what feels really exciting. You've seen us do it with the M&A that we've prosecuted. Some of it will be by M&A. Some of it will be by organic build. And some of it will be by transferring the capabilities we've already built within existing mature markets into new sector opportunities in other countries.

And our next question comes from Pravin Gondhale of Barclays.

A couple of them on M&A and data center opportunity here. Firstly, could you please talk about a bit more about Pro Care M&A? What level of procurement synergies and margin accretion you expect when this is fully consolidated?

And then secondly, on data center opportunity. One of your peers has launched a specialized offer recently. Could you please talk about your initiatives and the pipeline of new business in this new subsector?

Certainly. Why don't I hand those to Petros?

Pravin, so on the M&A, I guess you recall, the fundamental of our business is GPO and purchasing. We have now 5 markets running GPO organizations, including Germany with the recent acquisition. It's a great established third-party GPO business in Germany. This will bring our managed spend nearly over $1 billion, including our business there. It's giving us sufficient scale to put in our model and drive the flywheel that we're seeing in other markets.

I would say the GPO, the way we got GPO is more correlated to growth. We're getting more competitive on cost, we're investing back in the business. We're able to drive more gross new and retain and have better retention rates. We're very excited about the acquisition. As you know, we closed the acquisition last month. I wouldn't expect to see some improvements both on competitiveness when it comes to net new and margin expansion.

On data centers, maybe the simple answer to this is we have been running data centers for some of our tech clients for quite some time now. And in our offer, if you're looking at our tech clients, we have been growing with them in excess of 30% for the last 3, 4 years.

We do have an offer today which is in place. It has grown at scale, which combines food and especially the support services as the scaling of the data centers. And you do see this in our growth rates in the tech. You do see this in our growth rates in the emerging economies within the AI ecosystem. So it's nothing new to us. We have been doing this and we just plan to capitalize more as we go.

Let me -- if I might just add on the GPO point. So I think it's just a really important area of our business. With the PCM acquisition in Germany, as Petros rightly said, we now have $1 billion of spend in Germany. That's a very significant contributor to our competitiveness in Germany where we see a great growth opportunity.

As Petros also said, and just to reiterate the point, we've now got GPO capability in 5 of our top 10 markets. We're making this a strategic priority. The way we'll build this out is by establishing GPO capability in each of those countries so that we can provide those services to third parties and treat Compass volume as a customer, too. And we can do that either through mark an acquisition or through effectively exporting the offer that we've acquired here with PCM into new markets.

We feel really good about some of the capability in terms of leadership that we're bringing into the group, who are going to help us really accelerate this opportunity. And we feel like we've really got our arms around it now in a way that's going to be additive as we go forward with confidence.

This is really helpful. Just a follow-up to the [ plus 36% ] tech revenue growth in the last 3 years that you sort of indicated earlier. Could you just chat about what it has been in the last 12 months?

It has been in a double-digit growth rate. If you're talking about our tech clients, Pravin, sorry, I don't get the question. Okay. Actually, if you look at our B&I performance overall, we have been growing at about 12% in North America. Our tech line actually is ahead of this aggregated growth rates. That gives us confidence to keep growing within our existing clients.

And our next question comes from Kate Xiao of Bank of America.

I have three. First, can you comment on current trading in the first half of 3Q? Are you seeing in terms of organic growth? And especially net new, are you seeing early signs of that acceleration already?

And two, on volume, can you help us understand the second half trajectory of volume growth there? Obviously, you did a 0.7% in first half. Last year, it was 1%. I guess, in the second half of this year with the tailwind of World Cup, which I assume would be mostly in volume, should we think about volume in the second half more towards the 1% of that range? And can you help us understand the moving parts there?

And third question is a bit longer term. Obviously, that 5% market CAGR that you guys have are thinking now into the long term, how can we -- how do we think about your 6% to 8% top line growth algo? At the lower end of that range, we're looking at only 1 percentage point of outperformance over the market. Is that a bit too conservative? Because if I look at your North America, it has been 7% to 8% consistently for a number of years.

Is it a matter of conservatism because we're at very early stage of inflection of your international markets? And especially, you talked about all the tailwinds in a number of end markets. With all that tailwind, should we be thinking about maybe upside to the 7% to 8% range in the long term?

Kate, thank you. You've gone from 1 month out to 10 years out in those questions. So thank you. I'll start with the long term. I mean, look, what's really important for us is that we've got a framework for investors that gives them insight into our levels of confidence of the long-term performance of this business.

And I think today, we're the best business we've ever been. I've been here 15 years now, and I look at this business and think there's a level of consistency and sustainability of it that we -- that is greater and better than we've ever previously enjoyed. Why is that? Because I truly believe we're in that 4% to 5% range across both parts of our business and can consistently perform within that. And of course, we'll task ourselves with doing better still.

The other element that drives our long-term growth algorithm is, of course, like-for-like. We talked about having 0.5 point of volume opportunity to 1 point and then the balance being made up of pricing of maybe 1.5 to 2.5 points. There's always going to be fluctuations within that.

Perhaps in the near term, we're going to see more pricing if the inflation comes through as a result of the Middle East. Maybe that might come off over time. We certainly feel like we're in an era of higher levels of inflation and therefore, pricing than we have been for the previous decade prior to COVID.

So on the balance of that, I'd like to think that over time, we'll be at the higher end of each of those ranges for market factors as well as self-help. I won't make the comparison to -- you talked about sort of the rest of the industry as it were. I think what's different for us is that we're seeking consistency. We've delivered consistently now for 5 years. We haven't demonstrated volatility in our performance. That's what's really important for us is that we have that level of consistency.

What comes with that consistency on the top line is also the ability to consistently deliver the margin that we talked about. And that's where the 2 really come together. If we can be in that sort of mid- to high single-digit revenue growth range consistently and be contributing 10 to 20 bps of margin, then at that level, we're into high single-digit to low double-digit profit growth, right? And that's the beauty of what we're trying to build here and we believe we can put in place consistently.

And therefore, when it comes to your more near-term questions, I mean, look, we're only 1 month into current trading in the third quarter. So we're not going to comment on that, if you don't mind. But everything we are seeing would all of the comments that we've made on the call today. More importantly, this is a long-term contract business, right?

When it comes to retention, the little that would impact us in the balance of this year that will run through the [ ITY ] year-to-go numbers. And therefore, we have a level of confidence around everything we're seeing on retention. Likewise, we know pretty much when contracts are going to open and mobilize in the quarters that are ahead of us. So there's a level of certainty in the nearer term that we've conveyed today in the call with you.

And then, Petros, do you want to just pick up on the volume?

I think you covered it pretty much, Dom. Maybe the only point I'm going to make case is this, you take this long-term view of volumes being flat, call it for a decade before coverage, and where we are now in a normalized world, whether contributing anywhere between 50 to 100 basis points, which practically, if you see what has happened for the last 5 years, inflation has gone up. We do see more participation in our restaurants when it's compared to Street pricing. And we have -- and we see this across the sectors.

And the second thing we're seeing is more of a tiered offer, specifically in Sports & Leisure. 5 years ago, we used to have a concession in a VIP offer. Today, we have 8 tiered offers with the Sports & Leisure. And this speaks a lot about the quality of the experience and the willingness of our clients to keep innovating with us.

And the third thing I'm going to say, we have invested a lot in technology when it comes to how we serve our clients. So things like queue time reduction when we're using kiosks, pre-order, grab-and-go concepts, unattended and vending businesses; all of this supports more throughput and more spend within our restaurants. And this is what you see more structurally coming to our volumes.

We'll now take our next question from Karl Green of RBC.

Just two remaining questions from me. Just going back to a comment you made about first time outsourcing in business and industry, it referenced some clients opening, for example, new headquarters. One would assume that some of those new premises and new headquarters will be with existing clients or indeed, clients might have outsourced to other people before.

So I just wondered, if you could indicate what percentage of organic growth, it comes from first-time outsourcing with new clients who have never outsourced to you or others previously? It's a subtle definition, but it kind of build like the some first time outsourcing in there that is a facility rather than client-related.

And then the second question, just back to Jamie's question on top of the Q&A, I didn't quite get the answer as to the explanation for why the new business mobilization have been impacted by the weather compared to the like-for-like volumes. If you could just remind me the answer to that, please?

Yes. Let me start with your second question, and then I will go to your first question. So if you go mid-February to through March, there have been quite a lot of extreme weather events in 4 states in the United States and Southern states as well. We have no storms, you have different events, which practically delayed us mobilizing client accounts, new businesses. And this is what you see in the net new, the gross new. And you heard us talking earlier, we know this will accelerate in the second half of this year.

When it comes to your first question on the first-time outsourcing, actually, we see about 2/3 of being new investments, new buildings from our clients and then about 1/3 on share gains. But nonetheless, it has been a very consistent trend or, call it, maybe 4, 5 years now. And we're capitalizing on this trend. So there is a really good contribution from both sorts of growth in this sector.

Yes. And sorry, just to add to that point, Karl. Look, the volumes look broadly flat sort of Q1 and Q2, we suspect they could have been a touch stronger if they hadn't been impacted by the weather. And also actually, what we tend to find, particularly when it's sort of rain and snow, there's a pickup in support services for the cleanup operations afterwards, which has always been a sort of a net hedge for us in those circumstances.

We'll now take the last question from Ivar Billfalk-Kelly of UBS.

Sorry if I'm going over your -- I missed a portion of the call. I want to touch on the GPOs again, given you mentioned the contribution to margins and the importance of them. And since you only have the GPO and 5 of the top 10 countries, I mean what do you actually need to put in place in the remaining 5 countries such that you'll be able to expand the model to those remaining countries? Is it a question of scale? Is it capability? What do you actually need there? And when might we expect that?

Secondly, longer term, you only relatively recently rationalized your portfolio. But is there going to be a point in future where you think that you might actually need to enter new geographies to try and continue contributing to the growth?

And lastly, just on the vending. And again, you're talking about the importance there. But can you quantify the pace of organic growth in the vending space compared to the traditional offering that you have, please?

Yes. Thank you for those questions. Let me just take new geographies first. I think the simple answer is no. As you'd have seen from the presentation today, we see the opportunity in our existing market with the new subsectors that we can enter being $600 billion by 2035. So we've got phenomenal headroom into which to grow this business.

So we see no priority of entering other geographies. This is about really focusing on how we accelerate growth in our core, in our core sectors and subsectors, and particularly export the learnings that we've got our great performance in areas like Sports & Leisure into those international market opportunities.

In terms of the GPOs, we're in 5 countries, so U.S., Canada, U.K., Australia and now Germany. Fundamentally, what we've done in pretty much all of those is we've acquired third-party GPO food and beverage operators, which have the technology, the sellers, the buyers to be able to really offer the most credible buying programs to third parties.

By putting the Compass volumes into those programs, we get benefits with our suppliers. We get the halo of Compass growth, Compass M&A, the growth of our third parties and the new third parties that we bring into the operating model. All of that creates a level of growth with suppliers that they wouldn't otherwise enjoy with any one of those individual groups separately. That's how the model works for us.

As you rightly said, it is about capability. So it's about identifying those organizations and then scaling them, and we're working very actively on where we see opportunities to partner and opportunities to acquire to build those in those remaining markets.

Of course, with some of these acquisitions, we've acquired great technology. So there is an opportunity for us to bring that technology into other markets and to build it organically, but we really get ahead of it more quickly through an inorganic play.

And then maybe, Petros on the vending point?

Vending has been, in North America, the fastest-growing business within B&I. We have been enjoying double-digit CAGR growth across all of the state of the business, which is micro markets, place like food offer and micro markets [indiscernible] market spending and office coffee, has been consistent and has been a growing sector for us in North America. As Dominic reference, we have a true opportunity to capitalize in International, and we have know how, we have the capability to bring this forward in the international markets.

That was our last question. I will now hand it back to Dominic Blakemore for closing remarks.

Just thank you very much, everyone, for joining us this morning, and we look forward to speaking with you on the Q3 call later in the year.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.

Welcome to the Compass Group 2026 First Quarter Trading Update Conference Call, hosted by Dominic Blakemore, Group Chief Executive Officer. This call is being recorded [Operator Instructions] I will now turn the call over to Dominic Blakemore for his opening remarks. Please go ahead.

Thank you. Welcome to our Q1 trading update. As usual, Petros is alongside me.

We've had a strong start to the year, delivering organic revenue growth above 7%. Growth moderated as expected from the exceptional Q4 run rate, but the overall momentum remained very positive and strongly within our multiyear growth algorithm. Both regions and all sectors performed well with Sports & Leisure and Business & Industry, the fastest growing. For the fifth year running now, net new business remains in our 4% to 5% range, supported by sustained strong client retention of over 96%. Outsourcing trends remain robust with new business wins up 10% year-on-year to $4 billion, nearly half of which came from the B&I sector.

We completed the acquisition of Vermaat in December and are now progressing with the integration. Together with synergies from the other acquisitions and operating leverage across the business, we're confident in delivering good margin progress this year. We've also announced our intention to change the currency of our share price from sterling to U.S. dollars from the 1st of April.

Turning to guidance. Our expectations for 2026 are positive and unchanged. We anticipate underlying operating profit growth of around 10% on a constant currency basis, driven by organic revenue growth of around 7%, 2% profit growth from M&A and ongoing margin progression. Before I hand back over to the operator for Q&A, I'd like to address the trends we're seeing in AI across our business.

B&I continues to be one of our fastest-growing sectors, both globally and in North America, supported by strong net new and positive volumes. Contract signings are very healthy with over half of the new wins coming from first-time outsourcing, driven in part by the continued expansion in the tech sector, where we have a very strong presence and are growing above double-digit. After spending 3 weeks meeting with around 40 current and prospective clients, one message came through loud and clear. AI is driving significant improvements in efficiency, productivity and growth, but capturing the opportunity requires new skills and evolving roles across organizations.

It's also important to remember that 80% of our business is in sectors such as sports, defense, mining, manufacturing, education and health care, which are largely insulated from any AI risk and continue to offer us very strong pipelines and attractive first-time outsourcing opportunities. The remaining 20% of our portfolio is in white collar B&I, which spans tech, professional and financial services. And over 1/3 of this is related to tech, where we are benefiting from what's been described as the largest infrastructure build-out in human history. The other 2/3 includes professional and financial service clients where only a very small proportion is exposed to entry-level roles. The AI supply chain now spans energy generation, chip manufacturer, data centers, modeling and applications. And we already have a very strong exposure to all of these layers, where we see an acceleration in growth as this ecosystem continues to scale.

And we're an active AI adopter ourselves, embedding AI across our operations to drive growth and productivity, particularly in sales execution and procurement. In summary, we're well positioned to benefit from the AI economy, both supporting our hyperscaling technology clients and by participating in the broader AI supply chain. Experience has also shown us that our business has proven extremely resilient through major cycles from the global financial crisis to COVID. And we've consistently adapted, emerged stronger and accelerated net new growth.

With that, I'll now hand over to the operator so we can take your questions. Thank you.

[Operator Instructions] We will now take our first question from Jamie Rollo of Morgan Stanley.

Two questions, please. First of all, just on the 4% net new, you've obviously outlined very good ARR and retention numbers. Could you perhaps just give us your confidence level that, that net new figure sort of accelerates through the year and how you see the quarterly cadence? And also maybe just looking into the years ahead, should we really be thinking more about a sort of 4% net new business rather than that 4% to 5% number? And then the other question, sort of high level, just on GLP-1 adoption. Are you seeing any impact on sort of portion sizes, any impact from sort of protein mix on revenue or margins? Anything to change your sort of like-for-like volume assumptions?

Thank you, Jamie, let me take those 2. I mean, first of all, I think take a step back, we're now -- this is the fifth year at which we've been delivering within the 4% to 5% range. And again, that is a very significant acceleration on the level of net new in this business pre-pandemic. That's largely because we're delivering consistently across the entire portfolio with good net new in both international and North America. We see every opportunity to sustain that over the years to come. We're very, very excited about the pipelines that we see for 1 to 3 years. But more importantly, the evolution of our subsectors and the opportunities that they generate for us.

We're working very, very hard on opening up new subsectors for us where we don't currently compete, like defense in certain markets, like airline lounges outside of North America, like data centers across the globe. All of those expand our addressable market and give us more opportunity to both sustain that net new growth rate, but also accelerate. If I look into this year, we anticipate a similar level for the first half of this year, similar trends in Q2 to Q1. And yes, you're absolutely right with a record level of new business signings now at $4 billion. If we retain and sustain the levels of retention we've got, we would expect to see a modest acceleration into the second half in net new and for the full year. That gives us confidence going into next year.

I think as we've always said, we will be within that range as best we can see. Perhaps in some years, it may be lower in some years, it may be higher. That's exactly what you've seen us deliver. Our ambition is to push above that range, right? And we will do everything we possibly can to improve our sales execution and expand our addressable market to do even better. We've had years when North America have been above 5%. We've had years when material markets for us have been above 5%. So our ambition and expectation is to build the pipelines and processes that can achieve that more broadly across all of our business.

When it comes to GLP-1, to be honest, we're not seeing an impact at this point in time. Were we, too -- we think it's a positive for our business. Again, let's just remind ourselves that we can adapt our menus, our portion sizes, our offer. We can premiumize in a way that we can deliver to the consumer what that consumer wants. So we do believe that were there to be a different demand pattern, we could respond to that in a way that is positive for the business. Separately, we would say that we're seeing more protein enriched products within the Canteen vending business, and we think that's exciting because it gives us a broader range of SKUs to market to our consumers, more variety and potentially more opportunity.

And we'll now take our next question from Jaafar Mestari of BNP Paribas.

Two questions, please. Firstly, just so we're all on the same page, if you could give us a little bit more color on the very qualitative descriptions you've made of these KPIs for net new business. It sounds like it's 4% but we would love to hear the similar if there is one. Does that mean pricing is between 2.5% and 3%, and is net positive volumes? Does that mean 0 plus or between 0 and 1, please? That would be extremely helpful.

And then related to net new business, we've seen good signings have continued to tick up. We've seen retention that you stated is unchanged. And so that would suggest if you start towards the lower end of the range, it's just the timing of those wins really. So maybe some more color on that. Is it broad-based? Were there are a couple of bigger contracts that explain why there's a temporary mismatch?

And I'm sorry, that's 3 questions. But lastly, if I take your $4 billion of signings and 96% retention, that would suggest at some point, the net new deserves to be delivering is 4.7%. Is that something that is a good assumption for the end of '26, early '27? Or is there anything we should have in mind in terms of further timing discussions? I suppose there's also a slightly pedantic point about FX in your $4 billion, if part of that is international, et cetera. Can I do that math, the 4.7%?

Thank you, quite a lot to unpack there. Let me have a go in the round and then maybe hand over to Petros for some more detail. I mean what I first sort of urge you to do is not fixate on the quarterly trends. we can have one material contract opening, which can distort the trends from quarter-to-quarter. I think it's much more important to look at the trend over the year and over time. We delivered 4.5% last year. We've done that for 4 years consecutively, closer to 4% at the moment. The momentum between Q4 and Q1 is largely about a lower level of pricing resulting from a lower level of inflation, which I think we very much signaled in previous calls.

The $4 billion of new business is a really exciting number. We've got a very exciting pipeline ahead of us. And yes, there are some quite chunky deals in that pipeline, right? And there were some chunky deals in the $4 billion. But of course, we've always had large deals in there as well as the more -- the smaller deals, which we see consistently across our smaller markets. It has to be a mix for us to sustain these levels. Yes, if you do the math, you would anticipate an acceleration as would we. Again, as I said earlier, if we sustain the levels of retention we're enjoying today, then that should be the case. And that would give us confidence going into the first half of next year and as a platform to build from with very exciting pipelines.

So I think what's most important for us is we've set out the 4% to 5%. The 4% to 5% underpins the mid- to high single-digit organic growth. We've consistently been there. We see ourselves staying there and to build from here, and that underpins the model, which gets us to the double-digit earnings as it were. Petros, would you add?

I think Dominic referenced all the good points. The only thing I'm going to say, Jaafar, is on volume. We're seeing about 0.5 point positive contribution in Q1. We remain positive for the next quarters. Just to put this a bit in context, we are lapping a massive Q1 last year with a quite sign of return to office and a very dense calendar. We're driving -- we're seeing in the print about 0.5 point of contribution, which is higher than pre-COVID was nearly flat. And this gives us confidence that the volume will continue to contribute positively as we go.

And our next question comes from Leo Carrington of Citi.

Can I ask on 2 themes. Firstly, in terms of the growth in B&I, I appreciate that detail on AI. I wonder if it would be also helpful to elaborate on your exposure to prime or Grade A offices versus the out-of-town secondary offices. I'm just thinking about the relative durability of those as employment centers. And then secondly, on M&A, can you give some color on which regions and subsectors saw the M&A spend when excluding Vermaat, the $200 million? And then regarding the market itself, I appreciate we've got the sector deep dive on the mine. But can you outline what the post integration plans are for the business, please?

Sure. Leo, thank you for those questions. I don't have a specific breakdown in the split between our sort of prime city B&I clients and those which would be outside. And of course, the split we often see is that our B&I clients are largely city-based. And of course, our manufacturing data center and other such clients would be more suburban or remote for very obvious reasons. So I think we're talking about potentially different categories of clients. It's also why you would typically see brands like Restaurant Associates, Flik, Bon Appetit represented in major urban centers, but U.S. would be more in the manufacturing blue collar suburban locations. And we believe that there's a level of, again, resiliency in that model because of the different trends that we would see in the U.S and B&I central city locations.

So hopefully, that gives you some color. I know it doesn't give you the exact quantified detail. Petros, do you want to answer on M&A in Vermaat?

Yes, $1.9 billion spend in quarter 1, $1.7 billion in Vermaat, $200 million is just bolt-on in field for vending and attending in the United States. We have been doing this for a long time. It does help on growth. It does help on the margin expansion as we go. We have a pipeline for the second half of the year in M&A as we discussed in the December call. When it comes to Vermaat, we closed in December. We are in the process of integrating the business within our portfolio. We cannot comment on how this integration is going. It's too early. Rather than we're very excited to welcome an excellent business and the management team within the Compass family.

And we'll now move on to our next question from Ivar Billfalk-Kelly of UBS.

I want to follow up on the AI exposure or nonexposure as the case may be. But within the business and industry division, what sort of contract structures do you actually have in place? And how would the financials actually evolve if you do see your clients have lower office attendance? And linked to that, are you actually making any changes to the contract structure that you're writing here to protect from lower volumes in the future?

And secondly on -- a follow-up on Jamie's question about the GLP-1 drugs. What sort of proportion of your revenue mix actually come from add-ons like snacks, like chocolate bars and [ crisps ], which might actually be exposed if people are eating less food? And lastly, it's probably one-off in nature, but can you give us a sense of the potential opportunity from the Football World Cup that we're going to have this summer? Do you allow for anything within your guidance at the moment? And could there be upside?

Yes. Thank you, Ivar, for those 3. Yes, look, first of all, specifically with reference to AI and maybe giving a bit more color than I gave in the intro. Generally, we feel very positive about the opportunity that comes from AI within our portfolio. As I said, 20% of our business is white collar B&I, 7% of that 20% is with tech clients. In the last quarter, we grew 14% in that sector. There's a phenomenal opportunity to partner with the hyperscalers here. And if you do the math, that's contributing a point of group growth. And we've seen that growth both across net new and volume like-for-like.

Just to give you one example, we talked about it before. We understand there are plans in place to see something like 6,000 data centers in the U.S. by 2030. That's the U.S. alone. That is both new construction and it's the scaling up of existing construction. When those facilities become scaled, we see an opportunity of around $4 million to $5 million per data center. In reality, that's created a new subsector for us, which could be anywhere between $10 billion and $20 billion, of which we have perhaps a 1% share today. That's a super opportunity, and I think a very real example of what's out there for us in this phase of expansion. And that's is without speaking to the level of expansion we're also seeing within that client base in their programming software and coding divisions, which is also very, very significant, both in the U.S. and within their operations overseas. So I think that speaks to the opportunity.

When you talk to the risk, look, we would believe that what we described as entry-level roles, which I think those are the ones which have been categorized as being at most risk, at least in this space, would be no more than 10%, 15% of most of our 13% of white collar professional service, financial service, B&I. So again, the math would get you to 1%, 1.5% if half of that were at risk over a number of years. We feel it's largely insignificant and immaterial and manageable. I'd also point to the fact that everything I'm seeing right now is that we're seeing role replacement rather than displacement. Whenever I talk to the CEOs of our clients, we understand that new roles are being created around data integrity, data management, data compliance, the technology skills to be able to manage the LLMs and decide on the most appropriate models and the retraining of colleagues around how to use AI and deploy the outcomes.

So I think there is a net positive there. I'd also point to some of the research would suggest that we could be in a phase of very significant net job creation over the years to come. All of that said, were it to present a risk, I think we learned a lot through the pandemic and working from home. We reorganized, restructured many of our contracts to protect us from any significant volume declines. We still have the basket of contracts we've always described, which 1/3, 1/3, 1/3 broadly as we reverted to that post pandemic, which gives us good shelter and mitigation against the potential risk. So we do feel should risk materialize, we're well placed to address it. We actually believe that there is more opportunity than risk for us in that space.

Moving on to GLP-1 drugs. I don't have the exact breakdown of confectionery and soft drinks. Obviously, our core is providing food and beverage on the plate as it were, a culinary offer as opposed to a snacking and confectionery offer. We do have that in our Canteen vending business. And I would signal that it continues to be one of the fastest-growing sectors of our business, both from putting down additional sites, but also from the like-for-like volume growth within that. And I think part of that goes to the ability to put new products in to replace those products which may become off trend. People are still consuming. They're just consuming differently, and we have an ability to adjust and adapt to that.

And then lastly, Football World Cup, we -- how this works is there are a number of stadium that we are presently in that will be used as venues for the World Cup. We will obviously get revenues associated with that. But typically, those stadium would have been used for concerts and other events during that period of time. So in the round, we believe that it's broadly neutral-ish. We are doing a few other things like fan zones, which will give us a bit of volume tailwind in that fourth quarter. I wouldn't call it out as being material. I think it will be a positive contributor for us.

And we'll now move on to our next question from Estelle Weingrod of JPMorgan.

I've got 2 questions. The first one, you touched upon the phasing of organic growth for the year. Anything to flag on margins in terms of perhaps just margin expansion year-on-year in H1 versus H2? And the second one, I mean with one of your close competitor hiring a lot more new sales in the U.S., is there anything you're seeing out there in terms of the competitive landscape?

Let me take the second one first, and then I'll hand over on margin to Petros, and he may also add to the second question, too. Look, I think it's important for us to say that we always grow our sales force every single year. We've always said that this is a virtuous circle of growth to be able to grow proportionately on bigger volumes, we need more sellers. And we're constantly adding -- we're also adding sellers to new subsectors and new opportunities like first-time outsourcing, like defense in North America. So we ourselves are constantly investing. It's not a new thing for us. It's just part of our model. I think that's very important to say.

Secondly, no, we aren't seeing anything different competitively to be briefly honest. And in reality, and I think Petros may add some color to this. We don't earn most of our growth from the largest competitors. As we've said repeatedly, half of our growth is coming from first-time outsourcing. Of that balance of 50%, probably 2/3 of that comes from small local regional players. So actually, this industry isn't about a head-to-head or a 3-way fist fight as it were. It's a much more balanced growth story than perhaps the narrative allows.

Petros?

Let me just take the margin question. Overall, we feel confident on margin progress for 2026 and beyond, and we discussed this back in December in previous calls. If you think about the 3 levers we have, core business margin expansion, we're making really good progress there within our MAP framework for performance when it comes to purchasing and productivity. Second thing is operating leverage. You have seen last year and the last couple of years, we're driving some good efficiencies there as we grow and continue to enjoy around 7% growth. And the third thing is the M&A acquisitions and the line of sight we have on synergies we delivered last year, which help on our profit performance as well as the opportunities we have for this year as we move forward. If you take the 3 components of margin expansion, we feel good about it. And overall, we view the implied margin expansion in our guidance as a floor for 2026.

[Operator Instructions] And our next question comes from Andre Juillard of Deutsche Bank.

Three questions, if I may. First one about health care and education. You didn't talk about this segment. Could you give us some more color about the evolution? Second question about pricing moderation. What do you mean exactly? Could you also give us some more granularity? And third question about leverage. So you confirm your target of leverage and the acquisition already done in the pipe. But could you consider to use your balance sheet to return some cash and try to serve on the opportunity of your stock level?

Andre. Let me hand those 3 over to Petros.

So when it goes down to health care and education, both sectors performed well within our 7.2% range. I know we talked in the past about the normal education. Actually, we see good trends there when it comes to our state. Remember, in education, we have a very tiered offer spanning consumers, visitors, faculty, all the populations we cater, and we see some really good performance there. The opportunity on first time outsourcing remains very significant in this sector. Remember, it's less penetrated. And in 2025, we mobilized a couple of very large institutions on the first-time outsourcing that gives us good credentials to keep up in this sector.

Healthcare, I would say similar trends, good growth volumes, positive volume contribution. I know in the past, we talked a bit of -- if there were any concerns on the tightening spend in this sector. We're not seeing anything. We're not seeing anything either through patient feeding or employee feeding in our restaurants. Again, this sector represents a massive first-time outsourcing opportunity for us as we go forward.

On pricing, just to remind everyone, the value for our clients is truly mitigating inflation before we discuss appropriate pricing. So if you think about our Q1 pricing is about 2.5%. The run rate market basket inflation is north of 3%, and we need to continue to do a great job for our clients as we go forward. If you compare to quarter 4 last year, call it is about 70 bps reduction on inflation. And this is what you see in the trajectory of our Q4 to Q1 print in organic, which is consistent to our expectations.

On leverage, I think just to remind everyone, we completed Vermaat for 2026. We have a good pipeline of M&A, and we discussed about opportunities we have within GPO and other bolt-ons. We're going to go through 2026 to adjust the investments we have executed. And as we go to 2026 September, we'll see where we end up on the leverage ratio. And then we're going to have to balance our M&A pipeline and consider other options as we move forward, which we'll provide an update at that time.

If I may just add to the first answer on health care and education. I think you're seeing in our results very strong performances in B&I and Sports & Leisure. In B&I, in particular, I think that's where we benefited from our subsectorization approach. And then separately in Sports & Leisure, we've really focused on our Sports & Leisure offer outside of North America, where we've seen some very exciting growth. We can't do all things, but I think there's even more opportunity in health care and education. And I'm very focused on working with our operators and teams to see what more we can do there. So I think the current trajectory is good, but it could yet be better, and that's the pressure we're putting on ourselves.

And our next question comes from Simon LeChipre of Jefferies.

Yes. Two questions, please. First of all, on margin and the phasing, I'm not sure if I missed it, but any specific phasing between H1 and H2 this year? And secondly, on inflation and I mean, where you -- the inflation on your cost base is currently trending, please?

Simon, good morning. On margin, we will continue to make progress on half 1 versus last year and half 2 versus last year as we go, and this is consistent within our growth and P&L algorithm, and we're confident in this. On inflation, we do expect inflation to continue to moderate a bit as we go to Q3 and Q4. And again, it will depend on some of the forward-looking indicators, you look at some of the commodities, supply chain impacts. But in our guidance, actually, we have factored that's more moderation as we go.

Thank you. And we'll now take our next question from Kate Xiao of Bank of America.

I have 2 questions, a follow-up on earlier points. First, on the AI, I guess, new opportunities. Thanks for putting the numbers there. You mentioned that your current market share is 1%. That would be a lot lower than your market share in North America B&I, for example. Can you talk a little bit about why that's a bit lower now? And what are the efforts there to kind of increase market share? Are you developing new brands kind of to gain your fair share? And what is the maybe target market share you're looking at in the long term? And then just a follow-up on the FY guide of margin and kind of bottom line. Petros you said clearly, it's a floor. So are you potentially looking to revisit this at first half results?

Thank you, Kate, for those 2 questions. I'll take the first. Yes, look, I think we've seen the data center opportunity being different. And largely, that's because of the scale of this generation of data centers. And that's either because they're being newly built or they're being expanded from their footprint. That, therefore, gets them to a level of service requirement that becomes attractive for us and also attractive for the clients to outsource. I think the second thing to that is that these are our clients already within the more traditional offers that we would provide in their offices or large-scale centers in major urban areas. So we're talking to our own clients about opportunities that we can now serve that are sufficiently scaled for us to address.

Typically, you need, I think, 3 core skills. You need some form of canteen and restaurant offer, you need a micro market vending offer and you need a level of support services. And we can package all of those together for those clients. So we're starting to see those come to market in bundles that when aggregated, they are attractive opportunities. We can provide services to those anywhere where they are developed across the U.S. and also in the major Western European countries. So we feel very well placed to exploit this. I think it's very much about it being effectively an emerging subsector as to why we have such a low market share. We have 20% or so share in most of what we do in the U.S. Why wouldn't we aspire to that? And I think it's an opportunity over time. But clearly, it's one that's going to be very much accelerated into the next several years.

Kate on the margin, I think we covered this. We're confident -- we had -- we have 3 months within the year. We're going to go through the first 6 months. We're going to see all the 3 levers I referenced before on how we're performing, and we reassess for half 1 where this leaves us for the full year expectation for the guidance, and we'll let you know in May.

I will now take the last question from Sabrina Blanc of Bernstein.

Just one question regarding the pipeline. Can you provide more color on in which areas you would like to develop? And notably, following the Vermaat acquisition in the Netherlands, do you see other opportunities to develop the sectorization in Europe?

Yes. So just to reground us $4 billion of new growth signings, around half of this is within B&I. B&I is the most outsourced sector. And having said this, we keep being surprised and keep delivering some great new signings in this sector. I think Sports & Leisure looks very strong. We launched nearly now 1.5 years ago internationally, our Levy franchise. We have won some very large accounts, and we have great prospects in all of our international regions. I think when you look at the construction of the pipeline and you think about health care and education, we truly have an opportunity within the first time outsourcing is less penetrated. It's a bit of a slow burn to unlock this opportunity, but we feel we have the sectorization, the expertise and the client credentials to unlock this over time.

To your point on sectorization, if you think about North America, I think we are sectorized and fully sectorized across our portfolio, and this is what you see consistent growth for the last 10 to 15 years. If you move to international, the acquisitions we have made in Europe has sectorized us nearly on B&I. We think on Levy, it's an organic play for us as we go. And we may explore some opportunities in education and health care as we go. We feel with the portfolio we have today, we're well placed to capitalize these opportunities across our key sectors.

I don't know if Dominic, you want to add on something?

Yes. I think that's a great answer, Petros. I'll just add on for Vermaat. Let's remind ourselves that Vermaat operators operates in Netherlands, France and Germany. So immediately, we effectively have a subsectorization opportunity in all of those markets. Separately, I see no reason why that offer can't be extended to other continental European countries. I think that will be about pace and timing to do that. I think what we've learned is that it's very hard to build brands organically within our own stable as it were. What comes from a great offer is the culture that comes with the leadership and the long-standing operation of that brand.

And so I think we feel very privileged to have acquired Vermaat, and we think that the strategy to subsectorize should be very much based on acquisition rather than on development. And as Petros rightly said, we think we can play in somewhere like Sports & Leisure with our own very well-developed brand internationally and the brand standards that come with that. Hopefully, that's helpful, Sabrina.

Thank you all very much and look forward to speaking with you.

Pardon the interruption, that was our last question. I will now hand it back to Dominic for closing remarks.

Thank you very much. Thank you all for joining us today and look forward to speaking to you again at the half year.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.

Good morning, and welcome to our full year results. 2025 was another great year for Compass. We delivered strong organic growth and margin progress with profit up nearly 12%. Cash conversion was also very good as we generated $2 billion of free cash flow for the first time. Net new business, the cornerstone of our growth was 4.5%, underpinned by strong new business wins and client retention of over 96%. This was the fourth consecutive year we've delivered net new growth within our 4% to 5% target range. This performance, together with a significant market opportunity, reinforces confidence in the sustainability of our growth algorithm and our ability to deliver long-term compounding shareholder returns.

I'll talk more about this later. But before I do, first over to Petros to give you more details on the financials.

Thanks, Dominic. Good morning, everyone. We've made good progress across all our key metrics as we delivered profit growth ahead of revenue growth. Importantly, free cash flow was also strong, growing faster than profit. Let's start by looking at revenue growth. Net new business continues to be in the middle of our 4% to 5% target range with pricing and volume growth consistent with the first half of the year. With our disposal program now complete, acquisitions are contributing to growth. Operating profit increased nearly 12% to over $3.3 billion. Interest was $315 million, reflecting higher debt due to acquisitions. For fiscal year '26, we expect an interest charge of around $350 million, reflecting the purchase of Vermaat, subject to regulatory approval.

As anticipated, our effective tax rate was 25.5%, and this is expected to be the rate in 2026. Importantly, earnings per share were up by just over 11% in constant currency. And turning to cash, CapEx was 3.3% of revenue. Consistent with our guidance, we expect CapEx to be around 3.5% of revenue this year. Working capital improved in the second half, in line with our normal seasonal profile and was broadly neutral for the year. We expect a similar profile in 2026. As a result of our strong cash management, free cash flow conversion improved to 88%.

Turning to the regions. In North America, organic revenue increased by over 9%. Operating profit was up nearly 11%, reflecting margin progress. In International, organic revenue growth was nearly 8%. Operating margin was up 20 basis points to 6.1% as the region benefited from overhead leverage, resulting in strong profit growth of nearly 13%. Group organic revenue growth was nearly 9%, with the fourth quarter particularly strong as we benefited from increased catering and hospitality events across certain sectors. Excluding these one-off factors, our underlying Q4 growth was around 8%. We expect this to moderate further in 2026, reflecting a lower inflation.

Group margin increased to 7.3% in the second half of 2025 with our unit margin now fully recovered. Looking forward, we are confident of further margin progress whilst balancing growth and investment. We see opportunities to improve margin in both regions and to leverage group overhead. We expect to continue to make incremental gains in North America as we continue to improve productivity across our MAP framework and better utilizing tech and data. In International, as you are aware, we've invested in sales and retention to drive higher net new business growth. We expect faster margin progress in this region as we leverage these investments and benefit from M&A synergies. Dominic will talk about this later.

Turning to the balance sheet. Net debt-to-EBITDA was 1.4x. As you are aware, last year, we acquired high-quality businesses, including Dupont and 4Service to capitalize on attractive growth opportunities through further subsectorization. This year, we expect to complete Vermaat along with other bolt-on deals. As a result, leverage is likely to be above our target range in 2026, peaking at the half year. However, our capital allocation model remains unchanged, and we expect to deleverage in 2027 as the business grows and we deliver the M&A synergies. With our disposal program now complete, M&A is contributing to profit. Including Vermaat, we expect acquisitions to add around 2% to profit growth in 2026.

Now turning to fiscal year '26 guidance. We expect operating profit growth of around 10% on a constant currency basis, driven by organic revenue growth around 7%, around 2% profit growth from M&A and ongoing margin improvement.

Now back to Dominic.

Thanks, Petros. As you've seen, the business continues to perform well and is in great shape. We're often asked, what's the secret to our success and continued market outperformance. There are 2 key factors. First, we have a unique sectorized business model, which is decentralized with many of our brands still led by the original founder owner entrepreneurs. This model, which was strengthened through M&A over many decades, is incredibly difficult to replicate. And second, we combine the advantages of this localized approach with the benefits of scale, particularly in food procurement and technology. In short, we combine the best of both worlds.

We operate in a hugely attractive market with a significant runway for growth, which is continuing to expand. We're investing organically and in M&A to provide us with additional capabilities to accelerate sub-sectorization. For food services alone, our addressable market is worth around $360 billion, of which we have less than 15% market share. And in addition, we see further growth opportunities in targeted high-value support services, where we estimate the market could be worth at least $800 billion. It's worth remembering we're already one of the world's leading support services businesses, generating more than $6 billion of revenue. The business and industry segment of the food services market is worth around $130 billion on its own.

You may think as the most outsourced sector, it would have one of the lowest growth rates. In fact, the opposite is true. This year, B&I is our best-performing sector with organic revenue up 11% and the highest net new business growth. We continue to invest in this hugely innovative and dynamic sector, increasing our addressable market by entering new subsectors or through flexible offers such as vending. Our experience in B&I bodes really well for the rest of the group. Our volumes are benefiting from increased participation in our restaurants as we deliver an even more attractive food proposition. The advantages of our business model mean we can provide a high-quality offer at a superior value compared to the high street.

As a reminder, we typically don't pay many of the expenses that retailers do as we operate on client premises. We also leverage our procurement scale and have more menu flexibility, allowing us to change ingredients more easily to help mitigate inflation. Our clients also recognize the importance of food and often subsidize our offer. They are hosting more events on site and increasingly use food as a cultural glue and a key enabler for networking and team collaboration. Acquisitions enhance our capabilities and accelerate subsectorization. Targets are usually sourced locally and have been known to us for several years.

We look for exceptional businesses with entrepreneurial teams and attractive returns. And the businesses we acquire benefit from continued autonomy under our decentralized model. We provide them with access to Foodbuy as well as global best practice sharing. Having completed many acquisitions over the years, we've established a proven track record of successful M&A. In vending and micro markets, we've been operating a rollout strategy of many small bolt-on deals in North America. Together with strong organic growth, Canteen has now grown revenues to over $4 billion. These acquisitions are hugely value accretive to Compass with returns typically above our cost of capital from year 1.

We're also investing in GPOs and recently acquired Regency Purchasing in the U.K. As well as scale, we've benefited from their technology and systems, helping build out sectorization. Regency volumes have doubled since we bought the business with double-digit ROCE in year 2. And most recently, we acquired 4Service in the Nordics, accelerating access to the multi-tenant building subsector in particular. Integration is ahead of schedule, delivering high single-digit growth with financials ahead of our investment case. We've also recently agreed to acquire Vermaat, subject to regulatory approval, a truly exceptional premium food services provider with a market-leading presence in the Netherlands.

Vermaat will further improve our ability to deliver tailored on-site concepts and innovative retail solutions as well as providing us with outstanding talent. Once approved, we expect Vermaat to be margin and EPS accretive to Compass in our first full year of ownership. As Petros said earlier, over recent years, we've invested in technology and data to support our sales processes, procurement functions and to drive operational efficiencies. We think of it as benefiting both growth and margin as well as automating some daily tasks for our colleagues.

For example, we're optimizing every stage of the sales funnel by using improved processes and data. We now have more visibility of future gross new wins by more accurately tracking the size of the pipeline, our probability and win rates. We've increased the use of automation tools for bid writing to improve their quality and to reduce preparation time. Tech and data are also transforming the client and consumer experience. We have a strong competitive advantage in this space, having invested in digital for many years with around 1,600 people now working in this area alone. With hubs in the U.S., U.K., France and India, we share innovations and best practice across our businesses, leveraging our breadth and our scale. We're using AI to improve our customer proposition using proprietary analytical tools to optimize our product mix and pricing. This helps us to better match our offer to changing customer demand as well as benchmarking pricing in our sites with the local high street.

And finally, when it comes to our frontline colleagues, we're increasingly using AI to automate day-to-day tasks such as recruitment. In the U.S., we streamlined our hiring process and reduced the number of recruiters. In Japan, we've implemented an AI chatbot for our frontline colleagues, which answers any queries they may have in seconds, delivering impressive productivity gains. In summary, 2025 has been another strong year for Compass as we continue to deliver on our growth algorithm. We expect to sustain this performance in the long term, delivering high single-digit profit growth with the building blocks being mid- to high single-digit organic revenue growth, ongoing margin progress and contributions from bolt-on M&A now that our disposal program is complete. For 2026, profit growth is expected to be even higher at around 10% as we benefit from the Vermaat acquisition.

Now over to Q&A. The operator will share instructions on how to ask questions. [Operator Instructions] Operator, over to you.

[Operator Instructions]

Our first question comes from Jamie Rollo from Morgan Stanley.

Three questions, please. First of all, could you talk a bit about what drove that very strong fourth quarter for organic sales, about 9%. I think you said 1% was from sort of one-offs. Maybe talk a bit about what those were. I think we saw a similar thing a year ago and even the year before that, the sort of one-off benefits to keep happening. But also the 7% guidance looks quite conservative even in the context of an underlying sort of plus 8% exit rate. So how should we think about the sort of cadence of organic sales through the year?

Secondly, again, it's a question on the guidance, but on the margin side, so 1% profit growth from underlying margins, about 7 basis points, again, looks a little bit conservative. I think for that alone adds about 5 basis points to the group because it's double-digit margin. So could you talk about the upside to margins? And also, how should we think about that 200 basis points gap between North America and International sort of closing, if at all?

And then finally, you've given us sort of lots of the AI benefits to the business and your clients on Slide 24. Could you talk a bit about how you might mitigate against sort of the impact of job losses driven by AI on sort of office meal demand in general, please?

Jamie, thanks for your questions. Let me hand over to Petros for the first 2 questions on run rate and margin guidance, then I'll pick up on the AI point.

We feel our Q4 underlying rate is about 8%, as you said. We had particularly strong volumes in B&I, Education and Sports & Leisure that we're pleased with. Some of this, we believe it's a onetime in nature. And practically, we have taken this in our guidance for '26. If you think about what has changed as we move to '26 versus '25, it's to do with inflation. We're seeing inflation slowing down a fraction faster than what we thought last year, end of the last year. Spot rate and inflation about 4% blended. We believe it's going to be close to 3%. And we mitigate part of this for our clients. So when you consider our guidance for next year, it assumes a lower rate of inflation within the 7%. It assumes a 4% to 5% corridor in a fifth consecutive year of delivering our strategy and a net positive contribution for volume.

When it goes to margin, I think you give us too much credit of being able to forecast 7 basis points or 10 basis points on a going-forward basis. I think our approach there is profit has to grow faster than revenue, call it the 10 basis points on average. What is interesting is our unit profit margin has exceeded what used to be pre-COVID, which gives us sound financials within the units in operations. We benefited from overhead leverage, and we expect to make consistent margin progression going forward. We do not see a ceiling to it. You will continue to see international business to grow faster with some group overhead leverage and some marginal gains in North America.

I'll take a pause, and I'll pass to Dominic.

Very good. Thank you, Petros. Jamie, when it comes to AI, I think in summary, we see it as a net positive for the business. As you rightly say, we shared some examples today of where we're deploying data and AI within the business, most specifically around our growth processes where we think we can get better outcomes on the pipeline build, the preparation for meetings and the conversion into growth. So we're very, very excited about what we're seeing there. We're also very targeted around purchasing and the value we can derive from our purchasing processes and the efficiencies we can introduce for our frontline teams to enable them to dedicate more of their time to their consumer and their clients.

When it comes more specifically to the question you raised around net employment numbers, I mean, first of all, just a reminder, B&I is our fastest-growing sector as a group and also both within North America and international. Over 50% of that growth is coming from first-time outsourcing, which is very exciting. And as you've heard Petros say, we had strong volumes in quarter 4 within B&I. So we think our B&I sector is in rude health right now. When it comes to AI, look, we're seeing new clients emerge, particularly on the West Coast, where we've got a number of smaller start-ups, which we are serving through our commissaries and SME type offer. We're seeing some of those scale into significant clients, and we're excited by that. When we talk to our clients in the technology sector, they're very focused on talent retention and attraction, particularly as they seek to get the right capabilities to be best placed with AI. And I think we have a very important role to play there in them helping address that.

And then lastly, we're seeing new subsectors emerge like data centers. So with regard to data centers, there's an opportunity for remote feeding through the construction phase. And then once in operation, there's an opportunity for us to provide on-site services, either in the form of restaurants and cafeterias or micro markets. And of course, there's a whole range of different FM services that we're well placed to provide to them in an environment where those services are very highly valued. So right now, we are seeing it as an opportunity, both in terms of what it's bringing to our business and the opportunity it's providing within our client estate.

We now take our next question from Kate Xiao from Bank of America.

My first question is also on AI. I guess thanks for explaining all of the benefits. I guess, any way you could help us quantify the positive impact on the business, either on the revenue enhancement side or cost savings? Any kind of examples or quantification you could give there would be really helpful. And then my second question is on your secured new business, $3.8 billion. That's up 11% year-on-year, which is very, very encouraging. I guess, could you elaborate a little bit on this number? I think the definition is the new business wins over the past 12 months. So would some of the business already be in the FY '25 revenue number already? Or is it mostly the pipeline for FY '26 growth?

Thank you, Kate, and welcome. I think this is your first call with us. When it comes to quantifying AI, look, we don't think we're in a place to do that right now. I think like many things we see, we see puts and takes that drive volumes and new business opportunity. At the moment, on the sort of volumes and new business side, as you heard me say, we think it's a net positive. And then with regard to the savings that we're generating within the business, I think what we're seeing most of all is an opportunity for greater effectiveness and the ability to redeploy our people's time on more value-creating opportunities. We're certainly seeing that within sales. And what would I say, maybe we're generating 15% to 20% time efficiency, which can be redirected into more value-creating preparation for meetings and bid preparation, for example. So that's really how we're thinking about it. It's how do we redeploy effort and time into the bigger opportunities.

And then specifically on the new business ARO, yes, $3.8 billion. We're super pleased. We need to continue to grow that relentlessly year in, year out. Our pipelines look very attractive. More importantly, almost than the gross new business wins, our pipelines are growing at the rate we need to see them grow. You've seen us speak today to the increase in the market that has come by way of some of the acquisitions we've made, which opens the total addressable market up for us. So we've now got a market which is over $360 billion. That's what's really exciting. The more we can target sectors and subsectors of opportunity where our operating model is best placed to win, then the more sustainable we believe the growth is. As you heard Petros say, we're super excited that this is 4 years now reported within 4% to 5%. We're well placed to see another year of growth within the 4% to 5%. And our objective is to continue to build our TAM and our processes deploying AI such that we can sustain those growth rates and those retention rates over the long term and deliver within the growth algorithm that we've shared with you.

As you rightly say, some of that business will have deployed in financial '25 and will be rolling into '26 on an annualized basis. Some of it will be yet to deploy in '26. And the odd contract would have been one which will deploy in future years as we've also witnessed in the past where we've got some business that comes online. So the correlation between new business won and the in the year benefit within that 4% to 5% range is rolling. But we're really pleased that we've delivered that 11% increase year-on-year, which gives us every confidence that we can sustain the 4% to 5% as the business scales and the absolute numbers get bigger.

And our next question comes from Simon LeChipre from Jefferies.

Three as well, if I may. First of all, on the $3.8 billion new business wins, I'm not sure you mentioned the mix of FTO within this number. I think it was 48% by Q3. So keen to get an update on this. Secondly, on net new, just wondering if net new was also within the 4% to 5% range for the international region. And lastly, I mean, in the U.S., you mentioned some opportunities in data centers. But more broadly, do you believe you could benefit from different investment plan going on like the Infrastructure investments, CHIPS Act and so on. Just wondering if it's something relevant for you.

Thank you, Simon. Yes, let me pick up on your third question, and then I'll hand the first 2 to Petros. Absolutely, we're super excited by investment in new -- all new forms of technology, and we see those as opportunities for us. So I obviously referenced data centers, but yes, semiconductor manufacturer where it's been onshore in particular, is presenting opportunities for us. We're seeing data centers all around the world as an area of opportunity for us. And particularly where we see the build of new energy technology, those present opportunities for us. So there are -- as we've always witnessed, there are new sectors and subsectors of business and industry that emerge at pace and scale. And we believe that we've got a range of offers that can play into those, which means we've always got what the client is looking for. What's really important is that we're spotting these trends. We're moving quickly, and we are building an offer that is compelling for the client in their needs. Petros?

On the $3.8 billion Dom referenced, it's growing 11%. FTO around 45%, which is very pleasing to see. If you go back to pre-COVID, it was about 1/3 of our source of new business wins, continues to be elevated, which plays back to the complexities of the clients and our ability to serve and solve some of the challenges. I would say it's broad-based and represents a fair share of our sectors. And as Dom referenced, particularly with B&I continue to have great momentum within this $3.8 billion. When it goes to net new international, let's take a step back here. And if you look at from 2019 all the way back, international was nearly flat. We have 4 years of consistent good growth. We have 4 years of elevated net new for this part of the business. And the most pleasing thing for us is retention.

You look at retention, we used to be in the low 90s. We are mid-90s sustainably. We would like to do better as we move forward in international business. We have opportunities. If you look in North American business, retention, some of our international business, the more sectorized we become, the more GPOs we deploy the Compass full toolkit, we should be in a position to drive marginal gains in international business. But we recognized consistent and good growth, and we're working towards sustaining this good growth in international part of the business.

Yes. I mean I would probably just add to that. If there's anything that pleases me most about the business, it's the performance of the international region. We've seen an acceleration in our net new and improvement in our retention. As Jamie pointed out earlier, there's still a couple of points difference between the margins of North America and International. We see an opportunity to close that gap over time. We think the North America margin will continue to nudge forward. We see an opportunity for the international margin to grow faster as we make margin-accretive acquisitions, as we move toward GPOs in each of the individual international geographies, we see a good opportunity on margin there. There's still a delta in retention between North America and international. We think we can close that gap too as we deploy our processes, and we're seeing consistent improvement.

What's most important, though, is the sustainability and consistency of that. And we're starting to build a bit of a track record, as Petros said, over the last few years, and we need to sustain that going forward, and we're confident we can. Having said all of that, I'd also just like to remind us that the North America performance was extremely strong last year, and we're incredibly proud of that. We think that we have every reason to believe that, that's sustainable, too.

And our next question will come from Jaafar Mestari from BNP Paribas.

I have 3 questions, if that's okay. Firstly, because you've provided this all-in guidance, which includes M&A and Vermaat, just a couple of questions on this. One, what timing of the Vermaat consolidation have you assumed in the guidance? And two, how should we look at the $350 million net finance cost guidance in this context? Is it $300 million run rate until the Vermaat consolidation and then it's $350 million as you pay for it? Or does the financing that you have in place mean that it's $350 million regardless of the exact timing of the deal closing?

And then more fundamentally, one of your competitors has announced they would be investing in sales force -- in their sales headcount in at least one large U.S. vertical because they signed so little. Another one of your competitors paid their sales team $25 million extra bonus because they signed so much this year. How do you keep and motivate your hunters? You've talked about the founders involvement. Could you give us some more color on the sales teams themselves who bring in $3.8 billion? How many are they? What sort of background? What sort of support do they have, how they run and how they paid?

I'll speak to the question on our sales resource, and then I'll hand over to Petros for the first 2 questions around Vermaat. Look, I think the first thing to say is the consistency of our track record. You've seen us deliver the new business growth now globally across North America and international, as I said, over 4 years. We've got great line of sight of the fifth year. More importantly, we've been doing that in North America for certainly the 13 years I've been with the group and probably over 20 years. So there is a consistency to our process and execution that I think is critical to the strength of our performance. We've got longevity and tenure in many of the people who work with us. Our organization, as we talk about often, is designed around sectors and subsectors. So we have dedicated sellers for each of the offers that we provide to our clients.

We have dedicated sellers who are focused on the first-time outsourcing opportunity. Often that's a longer sell. And so we are incentivizing them over multiyear rather than individual year's performances. I won't speak to the independent -- the individual reward structures, but we have processes that have worked for us repeatedly. Our pipeline looks out 1 and 3 years, and we're excited by that. When you speak about the different competitive pressures, again, having been around this business for a while now, I've seen the competitive pressures ebb and flow. I see no real difference today to that which we've experienced previously. I think it's really important that we keep doing what we're doing. And that starts with expanding the TAM so that we've got ever more opportunity, being relentlessly focused on what the pipelines look like 1, 2, 3 years out, being relentlessly focused on our retention and how we secure and preempt to minimize the retention risk. We've seen a consistent improvement in retention.

We put that down to our SAG processes, our non-SAG processes, which we're getting more dedicated to all of the time. And actually, the use of data around consumer NPS and our client feedback on an anonymized basis is allowing us to make even better decisions around that. So we just remain relentlessly focused on doing what we're doing on sharing our best practices and scaling our teams. We're always adding sellers into the business to ensure we can continue to grow at scale. But what I come back to is how important it is to continue to expand the TAM to give us the marketplace to grow into. And again, elevating the conversation, we have a 15% global market share in an industry that's still 50% self-op. There's huge runway for all of us to grow into.

On Vermaat, just to remind everyone, it's still subject to regulatory clearance. We have taken an assumption on contribution as of the first quarter of '26. We have line of sight we are in the final stint of this being closed, and we remain very excited to welcome the Vermaat team within the Compass Group family. When it goes to the interest expense for next year, about $350 million. This assumes Vermaat including the numbers and a bit of [ in-field ] M&A that we'll continue to invest in the business as we move forward.

So just to be clear, it's going to be $350 million regardless of that timing?

Yes.

Can I have a short follow-up on this, please? What's your assessment of the EPS accretion of the deal? You said positive for this year because you're presumably closing it late in the year, but you immediately have that higher finance costs. It doesn't look like we can justify even a decimal upside to consensus EPS. But if we annualize this on the full year, what sort of accretion do you think this deal if everything happened at the same time, interest costs and consolidation, please?

I think in Dominic's script, I think we say it's going to be accretive on EPS and a full year of ownership. You have to appreciate depending on when this deal is going to close, there is a different contribution of profit vis-a-vis the interest cost, will be accretive to growth as it closes. And importantly, with the synergy cases as we go in delivering good growth and some synergies on the cost lines, we should be able to drive further EPS accretion on a year 2 and year 3 basis.

Our next question will come from Leo Carrington from Citigroup.

If I could ask 3 as well, please. Firstly, on the North America H2 margins, which were flat despite the organic growth. Is there anything to call out as weighing on the margins this year, possibly the $440 million of M&A spend -- anything there would be useful. Secondly, I do appreciate the focus of yours is on B&I today. But in health care, your U.S. peer on a big multisite contract. Is this part of an acceleration in outsourcing in North America healthcare segment that you can also see or something of a one-off? And then lastly, I was interested in the Slide 29 showing the guidance evolution pre post pandemic. What exactly do you attribute the improvement, the increase in like-for-like volume growth to that you expect to see?

Okay. Thank you, Leo. Why don't I take your second and third question and then Petros can speak to North American margins. Look, first of all, yes, I mean, the health care sector remains incredibly exciting for us. It's one of the sectors with the most significant first-time outsourcing opportunity, both in North America and international. We are seeing contracts come out on a multisite, multiservice basis, which are first-time outsourcing opportunities. So whether we would call that an acceleration or it's the normal trend, I think we'll determine as we go. But there are some very exciting opportunities in the sector, and that's been the case both in North America and international. And I could say the same for higher ed as well. So look, our sectors remain vibrant. We see lots of opportunities, not just in B&I, but across all of the sectors and really informs our sort of confidence today in sustaining our net new growth algorithm and the ever-expanding TAM.

And then when it comes to like-for-like volume growth, look, I think there's quite a few puts and takes that we could pull apart, whether it's sort of return to office over time and so forth. But I think the biggest single trend to me is the one that we sort of called out in the slides today. And that is, I think, the greater appreciation of the value that we offer relative to the high street. I'm very confident that the quality of what we offer is on a par. I think we've got some exceptional consumer offers now within our estate, but we're providing that to our consumers at a very, very significant discount to the high street. And through this period of elevated pricing, that delta has become ever more. We talked about why that is. Obviously, it's the fact that we typically aren't paying utilities on site. But I think our scale of purchasing is just so much greater than the high street competitor set. That provides advantage and our menu flexibility is so much greater.

And I think therein lies a huge opportunity to create value for our consumer. That combined with the opportunity or the case where many of our clients are partially or fully subsidizing the offer. I think that's meant that we are capturing more people on our estate and they're having more daypart occasions with us. And I really do believe that, that is what is behind our successful volume growth. And I think you can see that in a number of our sectors. And then when you think more about where you've got the type of consumer that would be within the sort of Sports & Leisure, the event sector, I think we've got even better at retailing, understanding per capita spend, consumer trends. We've got data analytics businesses that are helping us drive an understanding of those. And we're working very closely with our clients because the clients see it such an important part of their hospitality performance to be able to drive that. And hence, we benefit from that, too. I think you see that in the Q4 volumes, where we have a positive calendar of events, we're also performing positively on volumes.

On North America, we're really pleased on what the business has achieved. If you really step back and you look at North America operating margin is fully recovered to pre-COVID. Within '25, there was noticeable margin progress as this business grows. I want to remind you, business is 65% bigger to pre-COVID and enjoying this elevated growth and still delivering margin progress is quite remarkable for our teams, I think. On a going-forward basis, we will expect still to do some marginal gains as we grow, more of an overhead leverage. And we remain positive on the trajectory of this business. If you're referring to the half 2 versus half 1, we made progress versus both halves of last year. And as we came to a fully normalized world on recovering the margin, there is some seasonality in there. North America has always been stronger margin in the first half to second half.

Yes. I would add on margins as a group, I probably feel as confident as I've ever been that we will see steady, consistent incremental margin progress in North America and International. Why is that? Just remind ourselves of the portfolio work we did where we exited a number of the more volatile markets. I think we've got much more consistent business now. We've got a much more sustainable foundation and base, and I think we can grow from that consistently from here. So that's what's informing our confidence both in North America and International that we should see consistent, steady margin progression.

Our next question will come from Estelle Weingrod from JPMorgan.

I've got a first question on North America. You talked about the very good performance of B&I. Can you give us an update on other segments, in particular, higher education? Any indication on the full terms enrollment numbers? And the second question on Europe. Can you provide a bit more granularity on the underlying momentum? You mentioned B&I and Sports & Leisure. Can you be more specific perhaps on a country basis or at least any country you call out underpinning this solid momentum? And have you noticed or have you witnessed any signs of a softer macro in some countries in Europe, like in France impacting volumes?

Petros, do you want to take the North American higher-ed question, and I'll speak to Europe.

So North America, as Dominic referenced, very strong B&I, low double-digit growth, broad-based across all subsectors. If you look in the rest of the sectors, we're in the high single-digit growth territory, which is quite pleasing. It's what we call broad-based growth. And actually, if you look at our sector footprint, we expect to be this way as we are fully sectorized and we're winning good businesses within every sector. When it comes to education, I think enrollments came in good, in line with our expectations, continues to have some good momentum in the education business as we move to the fiscal year '26 year.

And with regard to Europe, yes, I mean, actually, Estelle, you spoke to it. We are 2/3 of B&I business in Europe. So for us to grow, we need to be seeing positive growth in B&I, which is the case. We've got a very exciting pipeline. We've won some really nice opportunities in the Nordic region, in France, in Germany, we continue to perform extremely well in Spain and in Turkey. So we've got a strong portfolio of countries that are all growing together. Importantly, and going back to the earlier conversation, what's really stepped up has been our retention performance in Europe. Again, if we compare it to the years that Petros described when we were sort of flatlining for growth, the real difference there is that 3 percentage point improvement in our retention rates, which we believe are sustainable.

We've got very rigorous retention processes that we've trained out and we're managing through the region, and that gives us good confidence in momentum. We've got a very exciting pipeline for Europe. And I think the other feature is, for example, we've launched our Levy Sports & Leisure brand into Europe, and we're managing that across all of our international markets now actually. And we're seeing good momentum as we start to win our first accounts. Obviously, we talked about not in Europe, but the Australian Tennis Open, which was won last year. But also we're seeing our first ones in the sports areas in Europe, which is exciting. And then lastly, obviously, the acquisitions we've made 4Service in the Nordics and others are starting to give us access to new subsectors within B&I, which gives us even increased confidence on sustaining those growth rates in Europe. So look, we think that it's an ever-improving performance that we can expect in Europe, and we'll continue to nudge up within our net new growth range of 4% to 5%.

On the macro point, sorry, at this point, we aren't seeing any degradation on our volumes from the macro, but we remain watchful. And look, I know there's some concern out there about are we likely to enter any recessionary conditions across the piece. I think a reminder, first of all, we're not seeing it. And then secondly, we do believe that the resiliency of this business can demonstrate itself in those times. First of all, our clients look for value and cost savings. And whenever there's been a tighter macro, we've seen an acceleration in first-time outsourcing and also in rebidding of contracts for more value. And I think we're very, very well placed there. And then secondly, if the consumer is looking for value in tougher times, then I think everything I said about what's driving the volume performance will stand us in incredibly good stead. So look, I think we feel well placed whatever may be ahead of us.

The next question will come from Ivar Billfalk-Kellyfrom UBS.

You've mentioned FM a couple of times in passing on the calls, where it usually feels like we go several quarters without it being mentioned at all. Can this be an indication that it's a bigger focus going forward? And can you talk about the relative margin contribution of FM services compared to the traditional food service and the outlook for growth? Secondly, you're investing in M&A and GPOs in the U.K. You still don't have much in the way of GPOs in the rest of Europe. What would realistic time lines be for rollout of GPOs in your Continental European operations? And what's actually needed for them to be successful? And thirdly, on the health care in North America, as I understand, a lot of the U.S. health groups already have their own GPOs. And since GPOs are a key element of your offering, what is your relative positioning compared to your peers, given I understand the GPOs in health care actually like you to use them rather than your own procurement. Any comments there would be helpful.

Thank you for those questions. Actually, really interesting and thoughtful. First of all, FM, yes, look, we're predominantly a food services group, 85% of our business is food. But look, that 15% that we deliver support services across a spectrum of different services in FM is $6 billion. That makes us the fifth or sixth biggest support services company globally. We also operate support services with great capability in many markets. We've quietly got on with that. It's been growth neutral. So it's been growing at par with our food service business and actually is also margin neutral, so on a par with our food services business. So it's a good business for us. Where we sell it alongside our food as a multiservice offer or an integrated offer, it can be very sticky with clients. Typically, we've seen it in the defense sector, the remote sector, the health care sector and increasingly within the education sector.

Within B&I, it's often sold separately rather than as an integrated offer. But look, we think it's an attractive market that in a number of countries, we are well placed for. We quantified the market today within our slides $800 billion. It's very fragmented. So there's a long runway for opportunity for growth. We're clearly not prioritizing that over our food service business, but we will consistently execute. And we really just wanted to remind everyone today of the scale of that business and the capabilities that we offer. And that I think if you're very selective in the services you provide and where you work with clients, then it can be an attractive adjacency to food.

On the M&A for GPOs, you're absolutely right. We've been building out our U.K. Foodbuy business very successfully over time. We gave some great examples today, particularly Regency. Our U.S. Foodbuy business continues to be incredibly accretive for us and an important part of our portfolio. We have a Foodbuy business in Canada, Australia and the U.K. We already operate GPOs today in some of our European markets. So we operate them in the Scandinavian area within Belgium. We haven't yet built those out in some of the other bigger individual countries. It is an area of focus for us.

You asked what is the sort of recipe for success. Actually, when we take a step back, what enabled both the U.S. and the U.K. to build credible and scale Foodbuy offer was first acquiring the capabilities of a GPO and then bringing the Compass volumes into that GPO to get aggregate scale and then to franchise the capabilities and the services alongside the scale into the third-party market so that we can grow disproportionately with our own estate, our acquisitions and the third-party growth. And we think that really is the sort of the recipe for success in other markets, and it's one that you should expect to see us pursue over time.

And then finally, with regard to the North American health care GPOs. Yes, we partner with many health care GPOs that operate for themselves across their own health care estate. Remember, they're typically buying pharmaceuticals, equipment, linen and other nonfood categories where they've got significant scale, actually bringing their food volumes into our significant food buying volumes can yield even more value for them. So we think there's a really interesting and exciting way to partner with the North American health care GPOs to give them more value and bring more volume into our model.

We have time for one final question today. Neil Tyler from Rothschild.

Just a couple of quick follow-ups actually to previous questions. Firstly, just touching on the last question around FM support services. In your prepared remarks, I may have misheard, but I think you mentioned that you would consider adding to those services through M&A. I just wanted to make sure I understood that correctly in isolated instances, obviously, but if you could clarify there. And then secondly, Dominic, going back to the point or the focus you put on the expanded addressable market, the additional sort of $40 billion or so. Can you just talk a little bit more about where that's come from? You mentioned it's come through the acquired expertise over the last 12 months or so. And are there opportunities to continue to replicate what's happened over the last 12 months through further M&A?

Yes. Thank you, Neil. Look, on the first point, I think we'll consider tuck-in bolt-ons wherever appropriate within our portfolio to ensure that we've got the right offer for our clients and that we can continue to either defend our estate or to grow the TAM. And that would apply within bolt-ons within FM and Support Services as necessary. Separately, your question on the TAM, yes, I think it's been a really positive feature and one of the driving reasons for the M&A that we've done over recent years. If you think about 4Service, it's given us access to the multi-tenant market where previously we would seek to win business through our clients, we now partner with the real estate owners as they construct new facilities, which are multi-tenanted and multiservice. It's an exciting segment that we weren't previously as exposed to and didn't necessarily have the capabilities for. It's a trend in the Northern European countries, and it gives us the capabilities that we can build into other European markets. I think that's a great example.

We've done a number of micro market acquisitions in the U.K. to build a canteen type micro market offer in the U.K. That comes first with technology and then by building a regional presence such that we can offer our clients national coverage with a technology-enabled solution. That's opened up the micro market and vending subsector in the U.K. to us where we previously didn't have the capability or range of services to deliver that, that's something that we feel we can replicate in other international countries, given the learnings that we've had in the U.S. and Canada, in particular. The HOFMANN acquisition gave us access through a high-quality frozen offer into SMEs where we can deliver in at a lesser scale, a consistently high-quality offer that can be frozen and used over time. That's an exciting part of the market that we previously didn't necessarily access.

And with Vermaat, although not yet closed, they have an exciting joint program, which is a sort of technology-enabled delivered in solution, which, again, we can leverage and learn from. So I think all of the M&A, we talk about giving ourselves access to capability, both in terms of the business model and offer, but also the people running the businesses. And I think those are great examples of that and where we'll focus as we go forward.

With this, I'd like to hand the call back over to Dominic Blakemore for closing remarks. Over to you, sir.

I mean just quick to say thank you all for joining us today, and we look forward to hosting you with the first quarter results in February next year. In the meantime, wishing those of you a happy Thanksgiving or happy Christmas holidays.

6 Thank you. This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.