Dominic Blakemore: Thank you. Good morning and thank you for dialing in. You’ve seen today's results and heard our presentation. We are really, really pleased with what was achieved in 2021 and just as excited by the prospects for 2022. In particular, reinstating the dividend was a key staging post in our confidence in recovery.

So, what I think is most important is in my ten years in the business, I've never seen more opportunity and we've never been stronger or better placed in such an exciting market. What do I mean by that? The pipeline is exceptional. We've reported record wins in all regions. We are converting more first time outsourcing than ever. We’re seeing very strong recoveries and positive momentum in our factors.

You've got the digital and climate offers to win, we have the balance sheet to exploit all of these opportunities and we're the partner of choice for businesses wishing to sell or scale. That all points us to fully restoring our pre-COVID size and shape and growing faster than ever before. As we know there are short term challenges, but we have the experience, scale and means to deal with them. When I stepped back to take a longer-term view, these are tailwinds that will ultimately create more growth opportunity. I truly believe the actions we've taken over the past 18 months have set us up for a period of strong performance in the years ahead.

I'm joined by Palmer Brown, our new, permanent CFO this morning. Now let's open the call to questions. Thank you.

Operator: Thank you very much. [Operator Instructions] Okay, our first question comes from Bilal Aziz from UBS.

Please go ahead.

Bilal Aziz: Good morning, everyone. Thank you for taking my questions. And two from my side, please. And firstly, just on the rate of new business wins and you've clearly grown that by 15% this year, perhaps, what do you think a sustainable win rate is going forward now? One of your competitors was suggesting some normalization of that first time outsourcing trend, but Dominic you said that you were perhaps a bit more committed on the presentation.

And then number two, just on the revenue guidance, I appreciate the uncertainty. The low end implies more sequential improvement. Perhaps can you flesh out your expectation by Vertical and any comments, what you may have seen in October, November to get an idea of the pace of the improvement going forward? Thank you.

Dominic Blakemore: Yes, thanks Bilal. I'll take the second question first and then I'll ask Palmer to speak to the rate of new business wins.

So, in terms of that revenue guidance of 20% to 25%, that broadly means achieving 90% to 95% of 2019 revenues on a full year basis with an expectation of exiting at, or around the 100% level by the fourth quarter. In terms of what we've seen by sector, let me start with the stronger sectors first and perhaps it's probably worth just illustrating what we're seeing in terms of volume trend, but also in terms of what we're seeing in first-time outsourcing trends. And that might go some way to answering your first question too. So, if we start with the more defensive sectors our healthcare sector has performed consistently above 2019 levels. I think it's worth pointing out a couple of things.

Let's remember our retail business, which is around 10% of that portfolio is still some way from recovery. So, we would expect to see that come back in due course, separately. It's very clear that there are waiting lists for clinical treatments all around the world. And as we talk to our clients in that sector today, we do expect longer hours, additional days and potentially more shifts. And therefore, over time particularly once we are through the tricky next few months, we would expect to see higher volumes in that sector.

And then finally we've continued to win new business strongly and particularly in the senior living space. So, in the beginning of the new financial year, we've seen the biggest single, first-time outsourcing within the senior living space. And often when we see these things happen, like we did with Ascension and Texas A&M respectively in the healthcare and education spaces, they tend to put more pressure on the opening up of first-time outsourcing. So, we are really, really pleased with that. We move next to defense, offshore and remote again, consistently performed above 2019 levels.

Again, we've continued to take share in that sector through the pandemic. I think looking forward a couple of points again, the retail levels on sites are not back where they were, we would expect those to continue to recover. Secondly, we do expect there to be significant demand for oil, gas and commodities as we witness global economic recovery. And so, we are expecting to see higher volumes within that sector again, over time. And then lastly, there continues to be opportunities for new contract wins, and as we see the emergence of hydro, wind farms, and so forth, there's new sub-sectors and opportunity opening up within that market.

Thinking now about the sort of the three sectors that were a little bit more impacted, I’ll start with education. We've seen a very strong recovery in education. Again, that may slow a little as we go through the next few months in the northern hemisphere winter, but broadly we've seen a strong return. I think we've got less concerns today about virtual learning, particularly within the higher Ed space. It's very clear that both academics and students are keen on the campus experience.

And in particular, we've seen where students have returned. They are spending more, participating more and more social than ever. So, I think those are all positives in that factor. And of course, again, learnings of the pandemic have been around the provision of food in the lower Ed space and nutritional quality. And so, lots of opportunity we believe for investment from government there.

And in a higher Ed space, of course, we see institutions that are looking to sort of work their assets more, and therefore we expect roles to be strong. In Sports & Leisure, you've seen a very strong fourth quarter recovery up to 19% odd to 2019, but at the moment you've got to remember not everywhere we just open, conference centers, aren't open. We’re not yet seeing artists, international artists touring globally and therefore, there are lesser events still at the moment. So, we do expect all of those to recover. Again, as events go indoors, it may slow a touch over the coming months, but we expect it to be strong beyond the sort of spring and summer of next year.

And what we're also witnessing in that sector is strong per capita spend. So, whilst participation is probably 10% down, we're seeing anywhere between 20% and 30% higher levels of spend, which is more than compensating. And then finally in B&I, I think, we have to remember, we need to split that sector into manufacturing and offices. In the manufacturing part of that business, which is half of that 40% of our portfolio, we have continued to see people going into the workplace for obvious reasons and because of the kind of quite strict COVID protocols that operates, we have seen people participating strongly and the need for our services is as great as ever. Slightly different picture in the office space and we've talked about that today.

Slow return, particularly in large urban areas, probably around 50% on the average around our world, lower in some countries higher than others. We're obviously seeing a different pattern of days, which we've talked about. But again, we're seeing individual spend longer in the office, higher participation, higher spend rates, clients willing to offer free food programs as an attraction to the return to office and working with us on providing sort of compelling offers to bring them back in. So, I think we do believe that once we get beyond again, the spring, we would expect to see a degree more normalization in that sector, maybe a bit trickier through the winter months as, I think, we'd all be cautious only. But as I talked to a few CEOs and our clients, and I’m clear, the mood has moved from, we can work virtually to, we want to work on a hybrid basis to, we are now concerned about our culture, our productivity, the training of our colleagues and all of our wellbeing.

And there's definitely a sort of keenness to get that to more presence than there is today. So, I'm optimistic about what that could look like once we get through these winter months. And I should say as well, both in Sports & Leisure and B&I whilst highly outsource sectors, we are still seeing first time opportunities because of all these pressures we've described. So, I think momentum is positive. You've seen today as we talk about, 20% of our 2019 volumes sort of still potentially to come back as well as that net new business opportunity, which is what gives us the optimism.

And I’ll ask Palmer for the net new win rates.

Palmer Brown: I think this part of the question really hits to one of the things we're most excited about in the business now, and then looking ahead. I mean, Dominic talked about the opportunity for the recovery in the base business. But one of the other things that's quite exciting when it comes to the growth trajectory is the new business opportunity. When you look at the £1 billion of net new business that we mobilized in the year, that's on an annualized basis, the £2.1 billion of new business wins, the record retention rate that we established, that all has us feeling quite excited.

But I think when you drill down a bit, I think, it really speaks to the ongoing opportunity. 50% of those new business wins came from first-time outsourcing. We think that the market dynamics are ripe for that to continue. So, when you think about the macro-economic challenges, the things that make things quite difficult for our operators on a daily basis, things like supply chain disruption, labor shortages, inflation, those are things that can be a catalyst for outsourcing. And even if you look at those items and you'd think they may be temporary, there are other challenging complexities that are coming online, that are catalyst as well.

So, when you look at increased regulation, changing consumer sentiment, heightened expectations, when it comes to digital and technology, those are the kinds of things that really play to our favor and have us feeling quite comfortable about how we feel about things going forward. I think when you look at it the pipeline is quite strong at the moment, we have strongest pipelines ever in North America, the UK and Europe. North America pipeline is about five billion in total and about five billion on a weighted basis. That's what the probability greater than 50%, Europe is about three billion total and 700 million on a weighted basis. We've had a great start to the year.

We've won two contracts in excess of a hundred million, a piece that have yet to be reported. So, I think when you look at last year, the new business wins and the momentum and this year combined with the opportunity in the marketplace, it has this feeling quite good about what lies ahead. Exactly where that lands in terms of a normalized number, I think, it's a bit too early to tell. But I think it's quite reasonable to expect it will be north of where we've been historically.

Bilal Aziz: Thanks very much.

Operator: Okay. Thank you. Our question comes from the line of Jamie Rollo from Morgan Stanley. Please go ahead.

Jamie Rollo: Good morning.

Thanks for taking my questions. Three, please. I think at first you may have just answered on the £2.1 billion of new business wins. I'm probably reading too much into it, but versus the H1, £1.1 billion annualized, which is 20% higher. And I think on the May call you were talking about maybe 200 basis points of fast turn net gains and it's 100 now.

Is there a slowdown in the pace of signings in H2? It doesn't sound like a few comments just send, but keen for any sort of commentary there. And also, whether you're still seeing sort of discipline amongst your main competitors on the tendering process. Secondly, it'd be great if you could please give us a little stair on the cadence of margins in the year, how much stronger will H2 be than H1? And how much it will slow down H1 is cost inflation versus mobilization, it would, of course, second to those sorts of buckets? And then finally on cash returns, anything to stop you instigating a share buyback this year? Thank you.

Dominic Blakemore: I think I'm going to handle all three of those over to Palmer.

Palmer Brown: Thanks Jamie.

Sure. Jamie on your first one, I think, you are probably reading a little too much into it. I think when you look at the sales aspect, it can be lumpy at times. I just referred to a couple of new deals. Had they closed in peace well, as opposed to at the beginning of the year, you wouldn't ask the question at all.

So, I think, it doesn't speak to any overall trend you're seeing in the marketplace. In terms of cadence of margins in the year, we talked a little bit about the sort of the challenges that are happening on an operational basis. When you look at things like the supply chain, disruption, the labor shortage inflation, those are things that we're not sure how long they're going to be around then they might be around for a while. And I think we've got to be prepared to deal with it for a while. I think the good thing is, is we've got the business model and the track record to do just that.

But I think there are a couple things that will have an impact on the margin, specifically. One is the heightened mobilizations that are occurring, the reopening of the base business coupled with the mobilization of the new business wins. As the margin trajectory of contracts increases over the life cycle of the contracts that come online at dilutive margins, we absorbed the mobilization costs as they occur. So that's having a waiting because that has not yet normalized yet with the heightened activity that's happening. The other thing is there is simply the lag of pricing.

So, we've got the business model to deal with inflation, where we've shown the ability to digest it, whether it's on the mitigation side of things, or pricing, but pricing has a lag. We saw a pickup in pricing in the second half of last year, and we're going through lots of pricing activity at the moment. And something that will continue. I think the combination of the two really points to heightened margin in the second half, we expect the first quarter, most likely the first half to be flattish with our exit rate of Q4. And we will expect that to accelerate to around 7% by the end of the year, and then progressing onward toward our historical levels thereafter.

With respect to returns to shareholders you will recognize the capital allocation framework from before. I think over the last 10 years pre-COVID, we returned a little over £8 billion to shareholders. We fully anticipate that commuting again, and we think the reinstatement of the ordinary dividend is the first step of that.

Dominic Blakemore: Jamie I’ll just add two points of detail that you talked about, sort of a point of high net new. I mean, it's slightly above that, just on the annualized benefit of the net new we mobilized last year.

So, with the record new business ARO is what, I think, that range is probably one to two points.

Jamie Rollo: Thank you very much.

Operator: Thank you. Our next question comes from a line of James Ainley from Citi. Please go ahead.

James Ainley: Yes, good morning, everybody. Some sort of related questions on the margin outlook, please. When you blend together the sort of labor and food cost inflation that you're seeing, what does that imply in terms of an overall kind of cost, potential cost increase you need to offset? And as we then sort of roll forward, I know you are guiding on absolute level of EBIT margin. But how should we think about the sort of drop through on the revenue rebuild as it continues to ramp up? And I guess the final piece is on sort of labor cost inflation, one of your competitors mentioned – it's also easing in labor cost pressures in North America in recent weeks. Is that something you've seen too? Thank you.

Dominic Blakemore: Thank you, James. I think I'll, again, hand those questions over to Palmer. Just one comment to make. Of course, in the guidance we've given today we have reflected our view of by cost inflation, our pricing, and obviously the drop through on that volume recovery. So, all of those factors have been taken into account.

A little bit more color from Palmer.

Palmer Brown: Yes. I think your first one and your third one, are very similar when it comes to margin and inflation pressures. We’re currently seeing labor inflation around 5%, food inflation around 4%, that's what we're experiencing. We think the external market is about a 1 point to 1.5 point higher than that.

Usually, we’re a bit better in terms of mitigating on the food side of things with the supply chain disruption is playing a role in that. So, for instance our substitution levels, in terms of products, are running around 10% at the moment. Historically they have never been about 2%. So that certainly has an impact to our savings and what we're able to do on the mitigation front. Are we seeing a bit of easing on the labor inflation side of things? Perhaps.

I think it's a bit early. We've still got a lot of open positions in North America. I mean, we've hired about 240,000 employees globally since the trough of the pandemic, 140,000 in North America, we've got about 35,000 open positions at the moment and we're doing all kinds of things to try to fill those positions. So, I think, it's probably a bit early to tell. We certainly think it will subside over time.

But exactly, what time period, remains to be seen. And just in terms of the margin progression and the drop through, that really depends on the shape of the recovery. The base business coming back online will certainly have a higher drop through than the new business is mobilizing. So, I think, you've heard us talk about the significant opportunities we see on both fronts, and that will continue not only for this year, but a bit beyond this year as well. And so, it's going to really depend on that mix regardless as those volumes return, you will see the margin progression.

That's one of the other reasons why we think the margin progress will be second half weighted.

James Ainley: Okay. Very good. Thank you.

Dominic Blakemore: Thanks, James.

Operator: Thank you very much. Our next question comes from the line of Vicki Stern from Barclays. Please go ahead.

Vicki Stern: Yes, good morning. Just firstly, thinking about the incremental returns on the new business, you mentioned on the pre-recorded call that you are expecting roughly similar level of CapEx despite this higher growth rate.

Can you just help us understand that? And sort of why it is because it's more coming from first time outsourcing or it's about specific regions, or segments that that's falling in? And secondly, you also mentioned this higher participation rates in B&I coming from a few factors, just sort of how sustainable do you think that is? Is some of it really about companies sort of really trying to get people back into the office with a bit of an incentive, but that could fade in the future? And just generally where that leaves you versus sort of 3% to 4% potential structural headwind you'd called out for B&I or for the group from B&I in the future. And then just finally on Europe, really encouraging to see sort good portion of the winds are coming from Europe. Obviously, historically, that's been a slightly more challenging region for you. Just if you can remind us what are the reasons why that's been more of a challenge for you, and I suppose, do you think you're sort of turning the corner in Europe now? Thanks.

Dominic Blakemore: Yes.

Thank you, Vicki. Maybe I'll have a go the first one and then the second, and then I’ll ask Palmer to give you a fresh perspective, I guess, on Europe, which, I think, could be helpful. Look, first of all, in terms of the returns on new business yes, we we've said today our CapEx and Excel ratio is broadly the same as it’s been, and of course, in absolute numbers, that's lower, off of a suppress top line and for high new business. So, it's quite positive, we expect some of the CapEx to come into this financial year as we open that record new business. I think broadly the mixing being more first time has a slightly lower CapEx requirements and is more about driving efficiency and quality in the early years of a first-generation contract.

So, I think that opportunity and first-time outsourcing is particularly positive for us. And perhaps also the weighting would be towards the healthcare and senior living space as well is helpful. I think it's probably worth pointing out finally that one of the interesting opportunities around how we invest in our clients is to do that through the life of contract, through digital type deployment, through the unattended micro markets, which will become an investment that can get returns on through the life of a contract, but is attractive to our clients and is a different way rather than deploying the CapEx upfront. So, I think at the moment, we'll stick around that 3.5% level, even with the higher growth levels. And I think what's really important is that the move you would have heard from us today is it's an exciting market.

We should always buy us for growth. We believe we can share rate the returns on it. It would be exciting to see higher sustainable levels of growth and our ability to fund CapEx and use CapEx is one of those tools. On the B&I recovery, yes, look, I think, inevitably there will be some short-term measures that are taken and maybe some of that will be free food programs. But what we're also hearing is a number of our clients are keen to sustain those programs over time, particularly from a wellbeing standpoint.

So, I think there is a change going on there. Again, perhaps higher participation and higher spend will be there for a while. But it'll certainly help compensate until the volumes come back as I expect them to do for the clients that we are talking to. And net-net, I think, there is a broad change in behavior, which will be positive for us within the sector. What does that mean? Vis-à-vis the 3% to 4%, I mean, I think, we stand by that now.

I think we feel a little bit of that risk on the higher Ed side. Maybe a fraction more here on B&I, but I think only time will tell. But I don't think it's significantly different. And I think we think there is loads of opportunity, particularly when we talk about digital and sustainability and our ability to bring offers to clients that they can't do themselves and that others are struggling to build the differentiation around. Plamer, do you want to add?

Palmer Brown: Yes, when it comes to Europe, I think, it's one of the things we're quite excited about the sort of the positive movement that we've seen in the, I think, the momentum going into this year and what we think can carry forward.

I think the biggest thing I've probably seen in Europe is an expansion of the growth mentality. I think that's something that's existed in parts of our business globally, most notably North America, but has not been consistent overall. And it's one of the opportunities we see in the rest of the business. And I think you're starting to see that take shape in Europe. And what I'm really talking about there is a growth mentality throughout the entirety of the organization.

It's not just the sales team working in isolation to try to win new business, it's sales, ops, it's all the departments, it's everyone working together in tandem with that growth mentality. I think once that exists, you really start to see the momentum going forward. You are starting to see that take shape in Europe. We're starting to have a bit different mentality when it comes to the type of people that we want in certain roles, the types of training that we want to utilize. You are starting to see that take root in some of the results already.

You've seen where we've had net new business in Europe, it's 2.5 times what it was in fiscal 2019. You've heard me talk about the impressive pipeline that exists right now. There's every reason to think that that can continue going forward. So, we're quite positive on Europe.

Vicki Stern: Great.

Thanks very much.

Operator: Thank you. Our next question comes from Richard Clarke from Bernstein. Please go ahead.

Richard Clarke: Hi.

Good morning. Thanks for taking my questions. First one; three if I may. First one, I guess, throughout this pandemic, you've normally been given quite specific guidance into the – to the next course. It was you haven't given this time.

And I just wondered whether any specific commentary you'd give on Q1. Could margins be down from Q4 or anything is just keep them around for the high fives level? Second question, it looks like you're a little bit more positive on support services. Obviously, you've always done those in, in DOR healthcare, but it seems like you're getting a little bit more excited about education. So maybe you can just talk about that opportunity. You're seeing some higher margin opportunities to do support services and education.

What do those look like? And then I think Palmer, you said that you've won two contracts in 2022 – FY 2022 already, that are over $100 million in revenue. If I look at your Slide 27, it looks like you won no contracts in 2021 that are in fact kind of size. So, can you maybe talk to, are you beginning to see some bigger contracts either away, or am I kind of misreading that slide or your commentary? Are these – are these new winds getting bigger?

Dominic Blakemore: I'll ask Palmer to answer the questions one and three, and then I'll come back on support services.

Palmer Brown: Yes. I think Richard on the margin profile we are trying to get away from the quarterly margin progression.

I think it was appropriate over the pandemic, but I think at this point where we are in the business; I think we can look more towards a traditional view. And that's what you're seeing. You've heard me say earlier here on the call that we would expect Q1 and probably the first half to be flattish with the exit rate of Q4. Don't necessarily think that will be lower, but we wouldn't expect much margin progression in that first half and much more second half waited. In terms of the new business wins those two contracts over £100 million, not dollars to start with.

But you are right when it says that it is bigger than anything we won last year. I would not read too much into that. Again, its lumpy, sales can be lumpy and I think the biggest thing is to look at – look at the longer-term trends over time and the sort of the underlying growth profile, the strength of the pipeline, things of that, I think that's probably the better indicators.

Dominic Blakemore: And Richard on the support services; I think we've always said where we've got a point of differentiation and where it's embedded in that model, then we are minded toward support services. You heard in the presentation today, I talked about high-single-digit growth throughout the pandemic at accretive margins and the support service business has been good for us through the pandemic with particularly favor in healthcare and DOR.

Healthcare we've always talked about the pricing path and the importance of hygiene in that environment and that doesn't change. In DOR, it's always been about the challenges actually mobilizing labor into these locations. And now that's a point of differentiation for us. I think what's happening in Education is we're now seeing the importance of hygiene services within that space. We've got a terrific business in the U.S.

we acquired – we acquired a decade ago, which has grown very, very attractively throughout that period of time. So, we maybe mind it to the game where we believe it's critical and integral to the model and we have a great opportunity to cross out. At the moment we wouldn't see that in the other sectors, right. So, we are very focused in where we think we have that point of differentiation and if it can be growth to create, then at that the right margin, then we should absolutely pursue.

Richard Clarke: Very clear.

Thanks very much.

Operator: Thank you. Our next question comes from line of Kean Marden from Jefferies. Please go ahead.

Kean Marden: Good morning, all.

I've got three, if I can start with some of the big pipeline statistics that you provided earlier on Palmer. So would that suggest if we compare the sort of TCV versus sort of weighted and the un-weighted numbers, a win rate in the UK of about 25% to 30% assumed but the U.S. about 60%, and I guess within that, is therefore the U.S. one distorted by some of the recent wins. I think you referenced that may have not moved on the bid pipeline into the order book yet.

But I guess more generally your win rate higher in the space and have you seen the competitive field narrow a little bit unless your win rate percentage maybe drifting up? And then a couple of quick ones; just secondly have you treated the bad debt provisions this year? So, in common, lots of other companies EU increased provisions a lot – in the last fiscal year. Have any of them made their way back to the P&L in the final quarter of this year? And then thirdly I can see that you put some initiatives in place in the UK sort of big data collection and interrogation. I guess we think sort of more broadly about that. How does that play out and what sort of economic benefits does that deliver over the next year or two? And if there's any sort of particular territory that happens to be particularly sort of best-in-class, all fronts of the line with those initiatives, which one should we be following? Thank you.

Dominic Blakemore: Yes.

Thanks, Kean. I'll take the last one and then hand the other two to Palmer. Just with regard to data. We talked about before our E15 business in the U.S., which was established to effectively data mine on client accounts and particularly within the Sports & Leisure sector to create the opportunity to drive dynamic pricing, promotions and therefore really focus on what we can do as a partner to our clients on per capita spend. The benefit is weighted to them.

We benefit to, it becomes a unique point of opportunity. We are looking to do that in other parts of our world where we have the right – the right clients and opportunities, and the UK is one where we're focusing on that along with a significant investment in the digital opportunity. And then the first two to Palmer.

Palmer Brown: Yes. I think the win rate question; I think the best way to look at the win rate is historically we have been a good bit better in North America than we have elsewhere.

But one of the things we're seeing is that improving in both the UK, Europe and in rest of world. So, I think it's a good bit of self-help that's happening a lot of the good training that's taking place, hiring the right people a bit more of the growth mentality that there. So, we are seeing some improvements in that win rate. I'll say that on the flip side, I don't want to see a win rate this way too high, because that implies that maybe we're not going after enough. So, I do think that there's a – there's a right balance to play this there, but certainly you're seeing improvements in the sort of the overall mentality and the quality of what we're doing in the UK and Europe.

And I think your question on, on the bad debt provision. Kean is really getting to an overall quality of profits piece. The bad debt provision, yes, we did establish some visions at the beginning of the pandemic which we thought were appropriate for the time. We have not seen sort of that that downside really take place on the client's side. So that did have some movements over this past year, but there were some – there were some things on the other side as well.

So, when you look at an overall quality of profits perspective, it's almost an exact wash for the entire year. So, I do think you can look at our underlying operating margin is, is really reflective of, of the trading of the business.

Kean Marden: That's really helpful. Cheers.

Operator: Thank you.

Our next question comes from Stuart Gordon from Berenberg. Please go ahead.

Stuart Gordon: Yes. Good morning. Couple of things; that are kind of linked.

I think you've spoken historically about the flight to quality particularly from smaller players and is that still happening? And could you go into a bit of detail in this sort of mix of the gross wins that you saw this year and off the back of that, I think because of this flight quality, you also saw quite a lot of M&A opportunities. Now, there was nothing significant during 2021. How's the landscape for that looking just now? Thanks.

Dominic Blakemore: Yes. Well, I'll take the first point on flight to trust and Palmer pick on M&A.

Yes, on the flight to trust, it absolutely is still happening. I think we probably see that more in the first-time outsourcing. It's about self-operated clients who simply struggle with the operational complexities that are facing them at the moment, whether it's hygiene, it's the variability volume, its' the difficulty in sourcing labor. It's all of those challenges we've talked about, which we believe is the driver in that shift. If you look at our mix with first time outsourcing going 30% to 50% on a number which has grown, our wins from our share gains from others remain broadly in line with the historic levels.

And including within that, I think we are still seeing some of the factors that I described, but I think this is really about and unlocking that first time outsourcing opportunity. On the M&A, Palmer?

Palmer Brown: Yes. I think with respect to M&A, it is something that we're still looking at very keenly. If you look back to the two years pre-COVID, we spent about £1 billion on M&A in those two years. We certainly have the wherewithal to do a good bit of M&A, and we have the inclination to do it as well.

It's just a matter of finding the right deals. I mean, we've looked at a number of things that we passed on. We've done some smaller deals. We are looking at a number of things at the moment, but it's something that we do see as part of our overall strategy. We will be selective and disciplined, just like you've seen from us historically

Stuart Gordon: Very much.

Thank you.

Operator: Thank you. Our next question comes from Jaafar Mestari from BNP Paribas. Please go ahead.

Jaafar Mestari: Hi.

Good morning, everyone. I've got three questions if that's okay. Firstly, just on the new business signing, how much of this 2.1 billion that you've signed in 2021, would you say has already been opened in 2021 as part of the 7.2, how much would be truly left to roll out? And relate to that, could you give us some color on the Top 10 new wins in North America? Just very roughly by sector? Is it road based or are you seeing some of the big stuffs starting to move; I'm thinking for example, about self-operated university campuses? Some of those you've just been going after since 2013 [indiscernible] has won the first ever contract with Vrije University, for example, are they going towards that sort things? And just lastly, you seem to be talking if I piece together your comments about the Q4 2021 exit rates on the revenue side, it would be at/or around 100% of pre-COVID revenue. And on the margin side, it would be around 7%. You still think there have been structural cost improvements in the business that could allow you to deliver 7% margins with revenue below pre-COVID levels or is a picture now that you pretty much need 100% to get to 7%?

Dominic Blakemore: Yes.

Thank you, Jaafar. Just on the Top 10 new business wins broadly sort of a third of those would've been in the healthcare and senior living space, a couple within education and a couple in Sports & Leisure and B&I. So, I think most positively its broad based across all of the sectors. Healthcare is a great sector for us and we've done particularly well there. So, I think it goes to the story of – we were delighted with the big wins that we've had previously.

That's given us the reference sites and reference accounts to accelerate the first-time outsourcing. And I think we're seeing that again. I'll just take the Q4 volume and margin points. Look, I think broadly, we know in this business we could get to a margin outcome faster if we thought it was necessary, we don't want to do that. We want to continue to build this business back to the best it can possibly be.

As you've heard Palmer say today, whilst at 90% volume, 80% of that is like-for-like. So, there's a lot of new and pricing, which comes with different margin attributes. So, I think we are really pleased with the 7%. We see the ability to get back to pre-COVID margin beyond that with significant progress again in the following year. And we've learned a lot, right? So, it's all about how we deploy those additional efficiencies.

Right now, we're in a period of incredible reopening and incredible mobilization, which comes with the cost and we want to do that flawlessly to reward our client with whom the goodwill has been, absolutely outstanding throughout the pandemic. I think it's absolutely critical. We don't let any of our clients down through this phase and we know that we can – we can grow the margins up over time beyond that. So, it's a balance. We would be super excited to really exploit this growth opportunity and then margin thereafter.

Palmer Brown: I think when it comes to the new business signings and the mobilization roughly 40% or so was – has been mobilized and captured in fiscal 2021. So that would be mobilization in ITT within fiscal 2021. The remainder would be a role in to 2022 and perhaps a little beyond. I do think its worth – it's worth pointing out that even though you've seen mobilization you may not have seen full population. So, I think that is a very important factor.

You're certainly seeing that play out with some of the fiscal 2019 fiscal 2020 new business wins. I think that's the case in fiscal 2021, so that will continue to occur over time. So, when you look at the base volume that will return over a number of years, it won't be all this year. It will extend into 2023, certainly. But it is something to factor into the math.

Jaafar Mestari: Thanks. And you say 40% four zero has been moralized.

Palmer Brown: That's correct. That's correct.

Jaafar Mestari: Thank you very much.

Thanks.

Operator: Thank you. [Operator Instructions] Our next question comes from Joe Thomas from HSBC. Please go ahead.

Joe Thomas: Good morning.

Couple of questions, please. Firstly, you were talking about the ESG and decarbonization, I just wonder, well that's practically involving in terms of product sourcing, et cetera, and what the margin implications of that might be whether it extends the recovery further out. Also, just back to the point on transaction values being higher, it sounds as though that's being driven by some of the free food that's being given out in offices at the moment. Is there anything aside from that, I'm just wondering what sort of benefit that technology brings in the long-term? And then sorry, finally, if I may what is the status now with respect to contract renegotiations, things that you were – that you previously had on sort of temporary measures. Have they all been moved off those temporary measures now?

Dominic Blakemore: Thanks, Joe.

Just taking the points on transaction values. I don't think we should – we should read into it that this is about free food. I think it's about a number of factors. I think consumers are spending more. I think the fact that we are cashless creates less price sensitivity and I think there's a mood to enjoy the moment with colleagues or friends, whether it's in the office or the Sports & Leisure sector.

So, I think there's a number of positives to the driving that uplifting transaction values. Just on ESG and decarbonization, I mean, we address this through a number of measures. Of course, we are consolidating the commitment of our suppliers who are also seeking to achieve their own net zero target, so that's highly beneficial. A lot of what we are doing is looking at menu choices and how we nudge consumers to different choices. Some of those mean less animal protein and potentially less cost as opposed to it being more costly sourcing.

There may be an element of that in – at some point as we look at regenerative agriculture in the longer term. But we also think there there's an opportunity for premiumization and offer where it's a really critical requirement for our clients and their colleagues. We know that a lot of colleagues want to work for companies with the right values, and this is a very visible show of values that we can help our clients with. And if in the short-term before supply chains really address sort of alternative means that means a little bit of pricing. We think that that is something that we can work with our clients on.

So, look, I'm not sure it has tremendous margin implications in the short-term, but we're working through it all and just as an example, when [indiscernible] we have the low carbon menus with the carbon ratings, we're actually deploying that at 300 sites already in the UK. So, it is scaling up at some pace, and it's a real point of interest for a lot of our customers.

Palmer Brown: And with respect to the contract negotiations, don't think of this as simple conversation that took place at the beginning of COVID and then are yet to take place at another point in time, but rather about ongoing dialogue. That's the way that most of these work; it's an ongoing dialogue of the clients about the, the offers that they want to have about their population levels. And the like, and so what, what you're seeing take place is that a number of these are shifting back and forth over time, but it will be a function of a number of variables.

We fully expect – we expect that to continue over the course of the year. So, it's not like we have any definitive timeframe on when that will be complete, but these are ongoing conversations.

Joe Thomas: Thank you.

Operator: Our next question comes from Neil Tyler from Redburn. Please go ahead.

Neil Tyler: Good morning. Two follow-up questions from me, please. Firstly, I'm going back to your point on free food and the offering there. Can you explain whether that represents a meaningful proportion of the B&I or excuse me revenues at the moment. And whether there would be any meaningful margin implication of that proportion growing, where you're essentially where you are billing the customer, as opposed to the consumer? That's the first question.

And the other one is around M&A, and just picking up on the comments you made earlier around the pipeline. Is it the case, that the – the pipeline of opportunities that exist, but the prices have risen, the multiples have risen or that's perhaps slowing down the level of activity there, or is that not yet reflected in the way that you are viewing the opportunities there? Thank you.\

Dominic Blakemore: Yes. Thanks, Neil. Just on the free food points. I mean, the example I would give is within one of our B&I sectors around 40% of our clients offering free food programs.

So that would be just to dimensionalize it’s sort of 15% of our UK business. So, it is significant for that sub-sector. Obviously, behaviors are different in different sectors, but an interesting development in B&I. And broadly we work with our clients to ensure that we are getting a fair margin in line with our expectations and that it's not punitively costly for them. It's really important that, that it's fair on both sides.

And it's encouraging them to take this step, which we think is a great way of us building our position on site with all of the employees, then promises on M&A.

Palmer Brown: Just a little more on the free food margin impact, those are going to mostly be called reimbursable type of contracts that are there. Those clients would really be on the same type of contract structures already pre-COVID. So, the implications on margin really aren't significant. Ultimately, it's the client making that decision on what they want to spend.

I think the key for us is that we need to operate that with the P&L mentality so that we treat the clients’ dollars, like our dollars. With respect to M&A we are seeing some valuations that are really consistent with what we saw pre-COVID. I think there's a bit of sort of mental expectation in a lot of owner's minds that the business ultimate value really hasn't changed even though the current trading has. And so, when we get into to conversations about how to structure deals, it really comes down to the underwriting risk of the recovery and where that lies. So, we're willing to take that on in certain places, certain places where we want to share that a little bit more.

But we really aren't seeing any significant changes in value. I'll tell you it's not necessarily the value that's kept us from doing the deal; it's just a matter of the right deals that really work for us.

Neil Tyler: Got it. Thank you. Very clear.

Operator: Thank you very much. Our final question comes from the line of Tim Barrett of Numis. Please go ahead.

Tim Barrett: Ho. Good morning, everyone.

And I had two things left, please. One, we haven't really talk much about the retention rate and as you said, it's a good level. Can you talk a bit about non-retained business and any constituents that might be a bit different post-COVID? And then secondly, I just wanted to understand the dividend – the new dividend policy, and is the intention to go to 50% payout with one-third, two-third split as you had before? Thanks very much.

Dominic Blakemore: So, I think the answer on dividend is yes. And then on the retention rate, Tim, we really pleased that it's continued to improve.

We are already a very high level, so we've continued to nudge it on and we would hope to continue to do so. We use the pandemic as an opportunity to lock up a few contracts for longer. We've always sought to term out sort of the bigger contracts wherever we can. Hopefully that will give us a bit of benefit as we look forward. In terms of what we've not held onto, I don't think the reasons have changed.

And we're just very pleased with the improvement retention rate. I’m really pleased as well that it's crossroads free regions, that's really important for us to recognize.

Tim Barrett: Is there anything to call out in terms of customers going out of business or retrenching?

Dominic Blakemore: No. Do you know, I think it's been one of the positive surprises for us of how our client base has been able to withstand the pandemic? I mean, clearly, I think we typically trade B&I with resilient blue chips and they've been strong through this. So that hasn't been a feature as it were.

Palmer Brown: Did you think you...

Tim Barrett: Thank you very much.

Palmer Brown: I do think an interesting anomaly there is within the retention rate, it does pick up any what we call wide losses. So that would be our business is going out of business or being acquired by other businesses. And then we have seen a bit of that this happening.

I think the good thing is with the scale that we have in our clientele, we've been net winners when it comes to that kind of thing. It also would pick-up remote site businesses that would run their life – their natural life. So, all of those wide losses would be picked up in the – on the retention rate as well.

Tim Barrett: Thank you.

Dominic Blakemore: Thanks, Tim.

Operator: Okay. And I will hand you back over to your hosts.

Dominic Blakemore: So, thank you. Just thank you all for joining us today and thanks for questions and we'll look forward to speaking to you in February.