Catering firm the Compass Group has announced it has launched a £2bn share offering in order to help increase its liquidity in face of the ongoing coronavirus pandemic.
In a trading update, Compass revealed that for the first six months of the year ending 31 March 2020 it saw revenues increase to 1.6% to £12.6bn however operating profits fell to £854m down 10% from £949m the previous year.
Due to the impact of the coronavirus Compass said that organic revenue had dropped by 20.4% in March and 46.1%in April. It added that the drop in revenue had the effect of a 23% drop in operating profit last month.
Along with the placing the group said that In April, it mitigated its cost base by around £500m per month by taking a “wide range of actions”.
These included a temporary reduction of 30% in the group chief executive’s salary, whilst the group board and executive committee also temporarily reduced their fees and salaries by 25%
It also said it has reduced its capital expenditure and paused all M&A and will not recommend a dividend for FY 2020.
Dominic Blakemore, group chief executive, said: ”Given the uncertainty in the short term outlook, today we have launched a £2 billion equity raise to reduce leverage and increase our liquidity.
“A strong balance sheet will allow us to weather the crisis whilst continuing to invest in the business to enhance our competitive advantages, support our long term growth prospects and further consolidate our position as the industry leader in food services.”
He added: “Alongside a placing to institutional shareholders, I am pleased that we are giving our valued retail investors an opportunity to participate in the fundraising through a separate retail offer.Although there are significant short term challenges, I firmly believe that Compass is now well-placed to succeed in a post Covid-19 world.
“The strengths which have delivered Compass success in the past are the same ones which will deliver success in the future. Our scale and focus on execution, our emphasis on trust and safety, and our financial resilience will put us in a strong position for the recovery and will allow us to generate sustainable long term value for all of our stakeholders.”