Caterer Compass To Hand Investors £1bn Payout

The FTSE-100 catering giant Compass Group (Other OTC: CMPGF - news) will unveil a £1bn shareholder payout on Wednesday when it shrugs off currency volatility to post strong half-year results.

Sky News has learnt that Compass, which is run by Richard Cousins, chief executive, will announce that it is returning up to £1bn to investors through a special dividend.

The windfall will reflect the substantial volumes of cash that Compass is throwing off following the improvement in its performance, as well as the difficulty it has had identifying suitable large acquisition targets.

The new special dividend will come on top of an ongoing £500m share buyback announced last November, which took the aggregate stock repurchases by Compass during the last two-and-a-half years to £1.4bn.

Some form of enhanced shareholder payout has been flagged as a possibility by City analysts in recent weeks.

"A move from 1x to 2x net debt to EBITDA [earnings before interest, tax, depreciation and amortisation], which does not seem implausible to us as a sustainable level, would imply up to £1.5bn of surplus cash availability by [the end of 2014] for either bolt-on [mergers and acquisitions] or cash returns," Bank of America Merrill Lynch said in a research note last week.

Compass operates in more than 50 countries, and is one of the world's largest private sector employers, with more than 470,000 staff.

More than 60,000 of those employees are based in the UK, with its highest-profile contracts including food-service operations at the Wimbledon tennis championships and Chelsea Football Club's Stamford Bridge home.

Mr Cousins has been in place since 2006, fuelling speculation that he may step down in the relatively near future.

The task of identifying his successor will fall to Paul Walsh, Compass's chairman, the former Diageo (LSE: DGE.L - news) chief executive who took the reins last year.

Compass, shares in which are trading at an all-time high, declined to comment on Tuesday.