Compass shifts its trade to USD

This report comes from this week’s CNBC UK Exchange Newsletter. Like what you see? You can subscribe here.

send

compass Is it that rare beast? — A British company that is a true world leader in its field.

The world’s largest contract caterer supplies 5.5 billion meals a year to schools, colleges, workplaces, hospitals and sports venues in more than 25 countries and is considered a well-run business.

As such, its trading updates tend to be less than exciting, typically including news about organic sales growth, margin improvements and new business wins as workplace catering operations are increasingly outsourced around the world.

Last week’s update brought more surprises, though, as Compass announced that it would change the currency in which its shares trade from sterling to US dollars from April 1.

The company explained that the measure, which has been reporting in U.S. dollars since October 2023, will align the trading currency of its share price with its reporting currency, “reducing foreign exchange volatility in the share price and simplifying the investment case for global investors.”

On October 10, 2019, at the launch of the new banknote design at the Turner Contemporary Gallery in Margate, southeast England, people can see a large sample of the new £20 note featuring the late British painter JMW Turner.

Leon Neal | AFP | Getty Images

Compass gets about three-quarters of its revenue in U.S. dollars, which is troubling — Could be the next big British company to abandon London for the New York Stock Exchange.

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

In fact, Compass took advantage of recent changes to the so-called “ground rules” that govern membership in the index regulated by FTSE Russell, a unit of London Stock Exchange owner LSEG.

The bill, announced in March 2025 and taking effect last September, allows companies whose shares trade in dollars or euros to “be considered for inclusion in the FTSE UK Index Series”.

In doing so, London has shown greater flexibility than some other major financial centres. For example, the New York Stock Exchange insists that all stocks listed on the NYSE be quoted, traded, and settled exclusively in U.S. dollars.

In January this year, the first company to take advantage of the rule change was intercontinental hotel groupIt is the parent company of the Holiday Inn and Crowne Plaza hotel brands, and approximately 80% of its revenue and operating profits are denominated in U.S. dollars. If anything, it’s more British than the Compass, which has been in the UK for 249 years. It is also proud to have registered the UK’s first trademark — The famous Red Triangle of Bath — 1875.

“Accounts unacceptable”

In a sense, changing the currency in which a company’s stock trades is a logical next step in a process that began years ago.

When companies were allowed to publish reports and accounts in currencies other than sterling, many began to do so. The three largest companies in the FTSE 100 by market capitalization – HSBC, AstraZeneca and shell – Now all reported in US dollars. Unileverthe fourth largest, reported in euros. Others among the FTSE’s top 20 companies in dollar terms include mining companies Rio Tinto, Glencore and Anglo AmericanPetroleum Major blood pressure and international banks Standard Chartered Bank.

This is not a recent development. Back in 1989, car rental company Avis Europe began accounting in the old European currency unit (ecu), the synthetic currency that later became the euro.

This move caused some trouble for the business at the time. Alun Cathcart, chairman and chief executive, told the ECU Banking Association’s annual conference in Copenhagen in June 1991 that when Avis Europe first submitted its reports and accounts for 1990-91, the British authorities refused to accept them.

He recalled: “We were asked to produce coins and banknotes, and if we couldn’t produce the accounts would be unacceptable.

“They are prepared to accept reports in Icelandic krona or Australian dollars, but not in euros.”

In April 1997, Avis Europe was listed on the stock market and became the first London-listed company to report on ecus.

But at the time, Avis Europe was largely an outlier. Other stalwarts of British business have only recently made the switch. Shell began reporting its results only in U.S. dollars in early 1998, explicitly doing so to encourage meaningful comparisons with U.S. rivals, and BP followed suit a year later.

In the same industry, BG Group, a natural gas exploration and production company spun out of the original British Gas, was acquired by Shell in 2015 and began reporting in U.S. dollars in 2009.

All are beaten by Rio Tinto, which has been listed in London longer than any other major global mining company. London-listed Rio Tinto Zinc (RTZ) began accepting U.S. dollars in late 1995 after the company merged with its 49%-owned Australian associate Conzinc Riotinto of Australia (CRA).

So it’s surprising that Compass’ announcement last week attracted such intense attention. Perhaps the bigger surprise should be that British multinationals like GSK, british american tobacco plc, rolls royce, Diageo, Relax and Reckitt BenckiserAlthough most of their money comes from overseas, they remain loyal to the ancient pound.

CNBC Hot TV Picks

British Prime Minister Starmer soon in the world of politics: Opposition MPs

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

UK political uncertainty raises questions for investors: Barclays

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

Bailey: World economy stronger than expected

Bank of England Governor Andrew Bailey discusses the Monetary Policy Committee’s latest decision to keep interest rates at 3.75% amid heightened global uncertainty.

need to know

Britain’s latest political impasse could unleash a ‘Sword of Damocles’ for the country’s bond market, Jordan Rochester, head of FICC strategy for Europe, the Middle East and Africa at Mizuho, said in a note on Monday. The prospect of a leadership challenge could upend the policy path set by Starmer and his finance minister Rachel Reeves, which constitutes UK government bond investors face significant risks.

Jeffrey Epstein sparked a political crisis that threatens the British government. The release of more Epstein documents last week set off a chain of events that led to British Prime Minister Keir Starmer Fight for your political lifedespite the fact that he never knew the late financier and sex offender.

China slams UK expansion plans Hong Kong residents apply for a British National Overseas Visa (BNO Visa), known as “Despicable” and “reprehensible.” Britain’s move comes after a Hong Kong court sentenced pro-democracy media tycoon Jimmy Lai 20 years in prison According to the national security law.

Quote of the week

Labor appears equally confused and frightened by the bond market.

— Kallum Pickering, Chief Economist, Peel Hunt

in the market

this FTSE 100 Prices have traded lower over the past week, closing at 10,353.84 on Tuesday compared to 10,402.34 a week ago. The UK blue chip index closed down about 0.3% yesterday.

British poundMeanwhile, the UK government’s benchmark 10-year bond, also known as gilt — fell over the same period, closing Tuesday at 4.495%, compared with 4.552% a week ago.