In a trading update published yesterday (19 May), Compass chief executive Dominic Blakemore said the group had launched the £2bn share offer in order to raise extra cash to help it “weather” the Coronavirus crisis.
According to The Guardian, it is the biggest equity fundraising in the UK since the Covid-19 pandemic began, and was open to both institutional investors and retail investors through the PrimaryBid website and mobile app.
Outlining the group’s half year results to 31 March 2020, Dominic Blakemore said yesterday that the proceeds of the £2bn share offer would be used to strengthen Compass’ balance sheet and liquidity position.
While the first five months of results show “a continuation of the strong performance reported last year”, Compass saw organic revenue plunge 20.4% in March and 46.1% in April.
Operating profits fell 28.5% and 23% respectively over the two months.
In response, the group said it mitigated its cost base by around £500m per month by taking a wide range of actions that include a temporary reduction of 30% in the group chief executive’s salary; whilst the group board and executive committee have temporarily reduced their fees and salaries by 25%.
“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,” said Blakemore.
“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 group also said it had scrapped its previous growth and margin outlooks for 2020 as a result of the “profound impact” the pandemic had had on the company.