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Compass investors see share price go north

5 February 2010

Compass Group’s share price rocketed today after the company announced improved operating margins and the acquisition of Canadian business Hurley.

The share price soared by over 5 per cent in early trading on Friday (5 Feb, 1010hrs), up 22.70 to 450.50, as investors applauded excellent cost cutting initiatives and improved revenues from new contracts with companies Aviva, Visa and CSN Brasil among others.

Compass’ management team today noted that the group’s £200 million sterling bond was repaid at its stated maturity from cash on 19 January 2010 and, other than this, there has been no significant change in the financial position of the group since the 2009 full year results.

The company released additional detail, noting that, ‘Encouragingly, organic revenue has improved from a decline of approximately 3 per cent in the fourth quarter of 2009, to a decline of 1.7 per cent in the first quarter of the year.

'The pipeline of new business remains strong. ‘Benefiting from the flow through of significant efficiency gains which accelerated through 2009 and the rigorous application of our management and performance programme, Compass has been able to deliver a further good improvement in operating margin compared to the same period last year and free cash flow conversion remains strong.

On Wednesday, What Investment.co.uk, reported that analysts were bullish on the stock and had issued guidance that the company was now a ‘buy’ (read here).

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