Compass shareholders taste £1bn special dividend

Compass, the catering giant which runs staff restaurants for companies including Google, has served up a tasty £1bn special dividend for shareholders, which will take total returns since 2006 to £6bn.

The 56p-a-share special dividend comes on top of an 8.8p-per-share ordinary payout, an increase of 10pc on 2013.

The outsourcing group, which is now chaired by former Diageo boss Paul Walsh, is also still in the process of returning £500m through a share buyback programme announced last November, although that will be suspended until after the special dividend has been paid on July 29.

Compass announced the bumper return to shareholders on Wednesday alongside its half-year results, which showed a slight 1.6pc dip in revenue to £8.7bn during the six months to March 31 and 0.5pc decrease in underlying pre-tax profit to £608m due to negative currency fluctuations.

On a constant currency basis, stripping out the effect of currency swings, Compass said revenue grew 4.2pc to £8.7bn while underlying pre-tax profit was almost 6pc ahead at £608m, helped by strong growth and new contract wins in its key market of North America.

Richard Cousins, Compass’s long-standing chief executive, said the special dividend would return the group to a more “sensible” balance sheet leverage of 1.5 times net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) from 0.9.

The move would help the company to maintain “strong investment grade credit ratings”, he said.

Shares in Compass rose on Wednesday folllowing news of the £1bn return to shareholders, which marks £6bn of announced returns since 2006.

When Mr Cousins arrived at Compass, in 2006, the company was still reeling from a string of profit warnings and negative publicity, after TV chef Jamie Oliver rounded on it for serving school children Turkey Twizzlers.

The group, which had over-expanded and gone on a voracious acquisition spree between 1995 and 2005, has been transformed over the last eight years. A decade ago, it was still a European-based business with just over £11bn of revenue but now generates 48pc of its revenue in North America and 18pc in Australia and the emerging markets. In a presentation to analysts on Wednesday, Compass highlighted that in the next ten years, it expects revenue from fast-growth and emerging markets, including Australia, to have overtaken its combined Europe and Japan business.

On Wednesday, Mr Cousins, who has recently been the subject of speculation that he might soon step down, said the company was experiencing 20pc growth in countries such as China and India, which are building business parks, private hospitals and schools - all of which provide Compass is geared up to serve.

The group estimates the global “food service” or catering market is worth £200bn but only half of the industry is outsourced. “That should provide us with growth for a decade or so yet,” said Mr Cousins.

He insisted he would be "delighted" to carry on at the helm of the company "if the board wants me to".