Compass moves transactions to dollars

This report is from this week’s CNBC UK Exchange newsletter. See what you see? You can subscribe here.

dispatch

compass That rare beast is a British company that is a true global leader in this field.

The world’s largest contract caterer serves 5.5 billion meals a year in schools, universities, workplaces, hospitals and sports venues in more than 25 countries and is considered financially sound.

The company’s trading updates therefore tend to be less exciting, routinely containing news of organic sales growth, improving margins and new business successes as workplace catering operations are increasingly outsourced around the world.

However, last week’s update raised even more eyebrows when Compass announced it would be changing its stock trading currency from sterling to the US dollar from April 1.

The company, which has been reporting in US dollars since October 2023, said the move will align the trading and reporting currencies of its stock prices, “reducing the exchange rate volatility of its stock prices and simplifying the investment case for global investors.”

The prospect of Compass, which derives about three-quarters of its revenue in dollars, becoming the next big British company to ditch London for the New York Stock Exchange is puzzling.

Compass’ protests that it would continue to pay dividends in pounds sterling unless shareholders chose to receive them in dollars fell on deaf ears.

In fact, Compass was taking advantage of relatively recent changes to the so-called “ground rules” governing index membership overseen by FTSE Russell, part of London Stock Exchange owner LSEG.

Announced in March 2025 and coming into force in September last year, it allows companies whose shares trade in dollars or euros to “consider potential inclusion in the FTSE UK Index Series”.

In doing so, London demonstrated considerable flexibility compared to other major financial centres. For example, the New York Stock Exchange maintains that all stocks listed on the New York Stock Exchange are quoted, traded, and settled exclusively in dollars.

The first companies to take advantage of this rule change in January of this year were InterContinental Hotels Groupis the parent company of the Holiday Inn and Crowne Plaza hotel brands and derives approximately 80% of its revenue and operating income in U.S. dollars. In fact, this country’s 249-year-old town is even more British than the Compass. We are also proud to have registered Britain’s first trade mark in 1875 – the famous red triangle of the bus.

“Account not accepted”

In some ways, changing the currency in which a company’s shares are traded is a logical next step in a process that began many years ago.

Once companies were able to publish their reports and accounts in currencies other than pounds sterling, many began to do so. Top 3 companies by market capitalization in the FTSE 100 — HSBC, AstraZeneca and shell — All currently reported in dollars. unileverThe fourth largest, reported in euros. FTSE’s top 20 dollar report also includes miners. rio tinto, glencore and anglo americanoil major blood pressure and international banks standard chartered.

It’s not a recent event. Back in 1989, car rental company Avis Europe began accounting in the former European Currency Unit (ecu), a synthetic currency that later evolved into the euro.

This move created some complications for businesses at the time. Alan Cathcart, chairman and chief executive, told the Ecu Banking Association’s annual general meeting in Copenhagen in June 1991 that when Avis Europe first submitted its 1990-1991 report and accounts, the British authorities refused to accept them.

He said: “We were asked to issue coins and notes, and if we could not do that, the account was not accepted.

“They were prepared to accept reports in Icelandic crowns or Australian dollars, but not in the EC.”

When Avis Europe floated on the stock market in April 1997, it became the first London-listed company to report on ECUS.

But at the time, Avis Europe was quite an anomaly. Other leading companies in the UK have also made the transition relatively recently. Shell began reporting its results in dollars only in early 1998, apparently to encourage meaningful comparisons with its American rivals, and BP followed suit a year later.

In the same space, gas exploration and production company BG Group, which was spun out of the former British Gas and acquired by Shell in 2015, began dollar reporting in 2009.

All of them lost to Rio Tinto, which has been listed in London longer than any other major global mining company. The company accepted the dollar following the merger of the former London-listed Rio Tinto Zinc (RTZ) and its 49%-owned Australian affiliate Conzinc Rio Tinto of Australia (CRA) in late 1995.

So it’s surprising that last week’s announcement from Compass triggered such an attack on Pearl Harbor. Perhaps the bigger surprise is that British multinationals GSK, british american tobacco, rolls royce, diageo, relax and Reckitt Benckiserremains loyal to the good old pound, even though it makes most of its money overseas.

Popular TV Shows on CNBC

Conservative MP Greg Stafford talks about the growing pressure on UK Prime Minister Keir Starmer.

Jack Mean, chief UK economist at Barclays, discusses the impact of political pressure on Starmer on markets and the outlook for the economy following the Bank of England’s latest decision.

Bank of England Governor Andrew Bailey spoke about the Monetary Policy Committee’s latest decision to keep interest rates unchanged at 3.75% amidst global uncertainty.

need to know

Jordan Rochester, head of FICC strategy at Mizuho EMEA, said in a note on Monday that recent political tensions in the UK could put a “sword of Damocles” on the country’s bond market. The prospect of a leadership challenge could upend the policy course set by Mr Starmer and Chancellor of the Exchequer Rachel Reeves, posing significant risks to gold investors.

Jeffrey Epstein has created a political crisis that threatens the British government. Last week’s release of more Epstein files set off a chain of events that left British Prime Minister Keir Starmer fighting for his political life, even though he had never known the deceased financier and sex offender.

China has slammed Britain’s expansion of the British National Overseas Visa (BNO) visa scheme for Hong Kong residents, calling it “despicable” and “reprehensible”. Britain’s move comes after a Hong Kong court sentenced pro-democracy media mogul Jimmy Lai to 20 years in prison under national security laws.

Quote of the week

at the market

of FTSE100 The stock has fallen over the past week, closing at 10,353.84 on Tuesday, compared to 10,402.34 a week ago. The British blue-chip stock index ended yesterday’s trading down about 0.3%.

british lbMeanwhile, it rose slightly against the dollar this week, with the yield on the UK government’s benchmark 10-year bond trading at $1.3665, up from $1.3650 last Wednesday. gold leaf — fell during the same period, ending Tuesday at 4.495%, compared to 4.552% a week ago.

— Hugh Leask

very soon

February 12: Fourth quarter GDP preliminary figures

February 17: December unemployment rate data

February 18: January CPI