- Pfizer’s mRNA vaccine offers hope to a beleaguered hospitality/foodservice industry
- Structural growth opportunities give way to cost mitigation
Insiders increased their exposure to Compass Group (CPG) the same week it revealed that the contract caterer had returned to profitability and a cash-neutral position in the fourth quarter of FY2020. Ian Meakins, a non-executive director and chairman-elect, purchased almost £821,000 in shares through a related third-party, while an individual associated with Ms Alison Yapp, group general counsel and company secretary, purchased almost £40,000 in shares.
The wider hospitality/foodservice industry, like so many others, will be hopeful that the accelerated vaccine programme, specifically the UK approval of Pfizer’s mRNA vaccine, will prefigure a return to normal commercial activity by late spring, but much depends on the extent to which the disruption will weigh on aggregate demand going forward.
The group has sufficient liquidity to maintain operations for the foreseeable future and it closed out its September year-end with net debt equivalent to around 1.5 times cash profits, once lease liabilities were excluded.
Earlier in the year, management at Compass said that the restrictions on travel and social gatherings would cost the group from 25 per cent to 30 per cent of its revenue. The eventual contraction was not quite as dramatic as expected, with business volumes gradually building through the summer.
Yet the severe, almost overnight, curtailment to many of its contract activities has forced a rethink on its operating model, with the emphasis now on reducing fixed-cost obligations, possibly through increased outsourcing channels where applicable. At its February trading update, management said it was “excited about the significant structural growth opportunities globally”, but that early promise swiftly gave way to cost mitigation efforts. Hold at 1,422p.
Last IC view: Hold, 1,400p, 24 Nov 2020
Buys | ||||
Company | Director/PDMR | Date | Price (p) | Aggregate value (£) |
Brewin Dolphin Holdings | Robin Beer (ce) | 26 Nov 20 | 266 | 100,890 |
Coats | Jacqueline Callaway | 01 Dec 20 | 66 | 49,544 |
Coats | David Gosnell | 25 Nov 20 | 69 | 96,665 |
Compass Group | Ian Meakins | 25 Nov 20 | 1,407 | 820,862 |
Future | Zillah Byng-Thorne | 30 Nov 20 | 1,680 | 81,232 |
Homeserve | Olivier Grémillon | 25 Nov 20 | 1,062 | 26,550 |
Robert Walters | Ron Mobed | 01 Dec 20 | 460 | 55,200 |
Sells | ||||
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Alpha FMC | Euan Fraser (gce) | 30 Nov 20 | 230 | 2,397,971 |
British Land | Chris Grigg | 23 Nov 20 | 474 | 1,042,162 |
British Land | Chris Grigg | 26 Nov 20 | 475 | 855,882 |
Gamma Communications | Andrew Stone | 27 Nov 20 | 1,620 | 40,509 |
Gamma Communications | Andrew Stone | 30 Nov 20 | 1,620 | 426,980 |
Hotel Chocolat | Matthew Margereson | 30 Nov 20 | 395 | 101,456 |
IG Design Group | John Charlton | 30 Nov 20 | 619 | 217,712 |
Liontrust Asset Mgmt | John Ions (ce) | 25 Nov 20 | 1,417 | 223,220 |
Liontrust Asset Mgmt | Vinay Abrol (cfo) | 25 Nov 20 | 1,417 | 223,220 |
Oxford Biomedica | Andrew Heath | 30 Nov 20 | 869 | 385,453 |