28th Nov 2007 07:00
Compass Group PLC28 November 2007 PART 1 Compass Group PLC Preliminary Results For The Year Ended 30 September 2007 ================================================================================ Delivering Profitable Growth • Revenue £10.3 billion, 5% organic growth. • Operating profit £529 million, up 16% reported basis, 24% constant currency. • Margin 5.1%, up 70 basis points. • Underlying earnings per share 15.2p, up 62%. • Total dividend up 7% to 10.8p. • Step change in free cash flow to £357 million, up £145 million, 68%. • Entering a new phase of sustainable value creation. ================================================================================ Richard Cousins, Chief Executive Officer, said: "Over the last 18 months we have simplified the business to focus on our corefood and support services offer by selling non core businesses and we haveconsiderably reduced our risk profile by exiting high risk or volatilebusinesses. Through the MAP process we have transformed the performance of thebusiness with good quality organic revenue growth, greater focus on like forlike growth and cost efficiencies together driving the operating margin forwardby 70 basis points. Our focus on capital expenditure and working capital hasresulted in a step change in the delivery of free cash flow, up 68% to £357million. Whilst there is still much to do, we have had an encouraging start to the newfinancial year and I am excited about the prospects for future growth ofrevenue, operating profit, margin and free cash flow." Sir Roy Gardner, Chairman, said: "The introduction of MAP has given us a common language and agenda resulting ingreater focus and visibility across the whole business. We have delivered a stepchange in profit and free cash flow generation as new processes begin to embedthroughout the organisation. Looking ahead, we believe we are entering a newphase of sustainable value creation, with exciting opportunities to growrevenues, improve margins and generate significant cash flow. With good growth in earnings per share and free cash flow we have decided toincrease the total dividend by 7% to 10.8 pence." ------------------------------------- ------------------ --------------------- ---------------Financial summaryFor the year ended 30 September 2007 2006 Increase------------------------------------- ------------------ --------------------- --------------- Continuing operations Revenue - constant currency (1) £10,268m £9,768m 5.1% - reported £10,268m £10,267m - Operating profit (2) - constant currency (1) £529m £428m 23.6% - reported £529m £457m 15.8% Operating margin (3) 5.1% 4.4% 70bps Profit before tax - underlying (4) £442m £312m 41.7% - reported £436m £323m 35.0% Free cash flow £357m £212m 68.4% Basic earnings per share - underlying (4) 15.2p 9.4p 61.7% - reported ((5)) 15.0p 9.7p 54.6% Total Group including discontinued operations Basic earnings per share 25.6p 13.3p 92.5% Total dividend per ordinary share 10.8p 10.1p 6.9% ------------------------------------- ------------------ --------------------- --------------- (1) Constant currency restates the prior year results to 2007's average exchange rates. (2) Includes share of profit of associates. (3) Excludes share of profit of associates. (4) Underlying profit before tax excludes revaluation gains and losses on swaps and hedging instruments (hedge accounting ineffectiveness) of £(6) million (2006: £11 million). Underlying basic earnings per share excludes these items net of tax. (5) Reported basic earnings per share before exceptional items. (6) Organic growth is calculated by adjusting for acquisitions (excluding current period acquisitions and including a full year in respect of prior year acquisitions), disposals (excluded from both periods) and exchange rate movements (translating the prior year at current year exchange rates) and compares the results against 2006. -------------------------------------------------------------------------------- Management and Performance (MAP) Our strong operating performance is being driven by concentrating on the fivekey profit drivers of MAP, which are now embedded within our business. Each MAPcomponent has its own set of key performance indicators. Performance is reviewedwith country management teams both monthly and in our detailed business reviewswhich ensure the business is constantly focused on profitable organic growth.MAP has enabled us to deliver the £101 million of constant currency operatingprofit growth as follows: £30 million of net new business growth driven by better quality new business andretention MAP 1 - Client Sales and Marketing, achieved through: better targetedbusinesses, tighter contracts and sharper contract evaluation. Included amongour new business wins: Asda in the UK; The House of Representatives, Dell andDreamWorks in the US; Continental in Germany; and Shell across Europe. £35 million of base estate profit growth driven by like for like revenue growthand cost efficiencies Driving like for like revenue growth: MAP 1 - Client Sales and Marketing: addresses driving like for like revenuethrough client pricing strategies and growing client volumes, for example:through additional services, such as: cleaning, portering, reception andconcierge. MAP 2 - Consumer Sales and Marketing: focuses on developing our retailphilosophy in order to increase participation and spend per head, for example:extending our offer to include breakfast and 'Grab & Go' concepts. Driving Cost Efficiencies: MAP 3 - Food Cost: addresses cost efficiencies through a systematic approach tomenu planning, purchasing & supply chain, and unit processes. MAP 4 - Unit Costs: we spend nearly £5.5 billion per year on unit costs and wehave been managing this through: Labour productivity and scheduling; control oflabour costs and in unit overhead opportunities. £36 million of above unit overhead savings after allowing for inflation MAP 5 - Above Unit Overheads: we spend £0.8 billion on above unit overheads peryear. The savings have been achieved through: management reorganisation,consolidated back office functions, change management processes and tightenedcontrol of discretionary spend. Food Cost Inflation We spend around £3.5 billion a year on food. We estimate that for last year wehave seen about a one percentage point increase in the rate of inflation. To putthis into context each one percentage point of food cost inflation adds about£35 million to the total cost base of £9.7 billion. This is before taking intoaccount that around one third of our contracts are cost plus. We believe thatour basket of goods is currently experiencing market increases of some 4-5%. In terms of its impact, most of the geographies in which we operate and mostfood categories have seen some inflation. However, the larger double digitinflationary increases have been in dairy, rice and pasta. Together thesecategories account for only about 10% of the Group's spend on food. Food price inflation is not a new phenomenon. We have managed it well for manyyears and continue to do so, but now, through the MAP framework, with greaterintensity. The specific actions we are taking to address food inflation fallinto three categories: purchasing and supply chain efficiencies; unit costefficiencies including menu re-engineering; client and consumer price increases. So, in conclusion, food price inflation is well understood and being acted upon.Crucially, despite the inflation we have seen this year, we have been able tohold our gross margins steady through the combination of cost efficiencies andprice increases. Strategy and Future Looking back over the achievements of the last 18 months, strategically, we havedefined a clearer focused strategy and launched MAP. We have made good progressin developing our Support Services business and we have simplified the businessby exiting non core businesses such as SSP, Selecta, Hotels and other non coreassets. We have also reduced the number of countries in which we operate andconsiderably reduced our risk profile. We believe we now have a focused and transparent business model which willgenerate significant opportunities to grow the top line organically, improvemargins and grow profitably and generate significant cash flow. We believe weare entering a new phase of sustainable value creation. There will be no change in our core strategy as we enter the next phase of ourdevelopment. We remain very excited by the prospects for growth with significantoutsourcing potential in our core food and support service markets. We estimatethat outsourcing growth in the food service market (valued at £150 Billion) isat least 5% per annum. The support services market is larger that the foodservices market and growing at a faster rate. Operationally we will stay focusedon MAP and embed it deeper into the organisation. The drive for like for likegrowth and increased operational efficiencies will also continue. From this wewill expect further significant cash flow generation. Process and People New monthly reporting processes and regular business reviews with countrymanagement teams ensure that we are all constantly focused on the management andperformance of the five MAP value drivers. Local managing directors are nowempowered to get on with running their businesses, operating within a clearlydefined MAP operating framework. The new measures have also led to tighter discipline and sounder governance.Approval processes have been strengthened and remuneration policies reviewed.The Corporate and Social Responsibility Committee, a sub committee of the Board,continues to oversee all aspects of health and food safety, environmentalimpacts, governance and its reporting. Over the past eighteen months significant management changes have beenimplemented at Board, Executive Committee and country levels. The introductionof MAP and the removal of divisional management structures have resulted ingreater transparency across the organisation. We now have greater managementstrength at both country and head office level and this new Global Leadershipteam has been central to driving the improved performance. Enquiries: Compass Group PLC +44 (0)1932 573000Investors/Analysts Andrew MartinMedia Chris King Website www.compass-group.com For presentation and teleconference details refer to the notes on page 12. GROUP TRADING REVIEW Compass Group today announces its preliminary results for the year ended 30September 2007. -------------------------------------------- -------------- --------------------- ----------------Financial summaryFor the year ended 30 September 2007 2006 Increase-------------------------------------------- -------------- --------------------- ---------------- Continuing operations Revenue - constant currency (1) £10,268m £9,768m 5.1% - reported £10,268m £10,267m - Operating profit (2) - constant currency (1) £529m £428m 23.6% - reported £529m £457m 15.8% Operating margin (3) 5.1% 4.4% 70bps Profit before tax - underlying (4) £442m £312m 41.7% - reported £436m £323m 35.0% Free cash flow £357m £212m 68.4% Basic earnings per share - underlying (4) 15.2p 9.4p 61.7% - reported ((5)) 15.0p 9.7p 54.6% Total Group including discontinued operations Basic earnings per share 25.6p 13.3p 92.5% Total dividend per ordinary share 10.8p 10.1p 6.9%-------------------------------------------- -------------- --------------------- ---------------- (1) Constant currency restates the prior year results to 2007's average exchange rates. (2) Includes share of profit of associates. (3) Excludes share of profit of associates. (4) Underlying profit before tax excludes revaluation gains and losses on swaps and hedging instruments (hedge accounting ineffectiveness) of £(6) million (2006: £11 million). Underlying basic earnings per share excludes these items net of tax. (5) Reported basic earnings per share before exceptional items. -------------------------------------------------------------------------------- Discontinued Operations On 2 July 2007, the Group completed the sale of its European vending business,Selecta, for a consideration of £772 million on a debt and cash free basis. TheGroup has also completed the sale and closure of a number of other smallbusinesses during the year as part of its exit from the travel concessionsbusiness. The 2006 revenue and operating profits of all of these businessesclosed in the year were £548 million and £51 million respectively. The resultsof these businesses are treated as discontinued operations and are thereforeexcluded from the results of continuing operations in 2007. The 2006 resultshave been restated on a consistent basis. Revenue Overall, organic revenue growth was 5%, comprising new business of around 8%,reflecting a slight but deliberate slow down of around one percentage point inthe rate of new contract wins as we have focused on gaining better qualitybusiness, retention of around 94%, about one percentage point lower than inprevious years due to the work we have been doing to exit loss making contracts,and like for like growth of just under 3%. The significant strengthening ofsterling, in particular against the US dollar, impacted revenues by 5%,resulting in reported revenues remaining flat. Organic growth is calculated byadjusting for acquisitions (excluding current period acquisitions and includinga full period in respect of prior period acquisitions), disposals (excluded fromboth periods) and exchange rate movements (translating the prior period atcurrent period exchange rates), and compares the results against 2006. The table below summarises the performance of the Group's continuing operationsby geographic segment. --------------------------------- ------- ------- ------------ ------------ ----------Segmental performance ConstantYear ended 30 September 2007 Reported currency Organic change change change 2007 2006 % % %--------------------------------- ------- ------- ------------ ------------ ----------Continuing operations Revenue (£m) North America 4,162 4,290 (3) 6 6 Continental Europe 2,553 2,484 3 4 4 United Kingdom 1,931 1,882 3 3 2 Rest of the World 1,622 1,611 1 8 9--------------------------------- ------- ------- ------------ ------------ ----------Total 10,268 10,267 - 5 5--------------------------------- ------- ------- ------------ ------------ ----------Operating profit (1) (£m) North America 261 245 Continental Europe 151 122 United Kingdom 107 107 Rest of the World 64 47 Unallocated overheads (58) (66) Associates 4 2--------------------------------- ------- -------Total 529 457--------------------------------- ------- ------- Operating margin (2) (%) North America 6.3 5.7 Continental Europe 5.9 4.9 United Kingdom 5.5 5.7 Rest of the World 3.9 2.9--------------------------------- ------- -------Total 5.1 4.4--------------------------------- ------- ------- (1) Operating profit includes share of profit of associates UK £3 million (2006: £1 million) & North America £1 million (2006: £1 million). (2) Operating margin is based on revenue and operating profit excluding share of profit of associates. -------------------------------------------------------------------------------- North America - 40.5% Group revenue (2006: 41.8%) North America continues to make excellent progress across a broad and wellbalanced portfolio. We have seen good organic revenue growth, with a much betterbalance between new contracts and like for like growth. The Business & Industrysector has been driven through innovation, delivering 4% like for like revenuegrowth. We have had considerable success in creating a multi-service business inthe Healthcare sector through cross-selling between Morrisons, our food servicebusiness, and Crothall, our support services business. To support this wecompleted an infill acquisition, after 30 September, of a company with £37million of revenues called Professional Services whose services and businessmodel align very closely to Crothall. Healthy eating programmes and the strengthof the Chartwells brand contributed to 9% organic revenue growth in theEducation sector. Combined with good progress in Levy, our Sports & Leisurebusiness, and in the Canadian business, North America delivered 6% organicrevenue growth overall. The pipeline into 2008 looks healthy. Operating profit increased by £39 million, or 18%, on a constant currency basisto £261 million (2006: £222 million on a constant currency basis), and we haveseen a step change in the margin of 60 basis points to 6.3%. Around half of themargin growth has come from a significant one-off reduction in overheads. Theremainder of the improvement is the result of better like for like growth andongoing operating efficiencies across the businesses, both in in unit and aboveunit overheads. We have seen an improvement in margin of 40 basis points, from6.1% in the first half to 6.5% in the second half. Continental Europe - 24.9% Group revenue (2006: 24.2%) Organic revenue growth in Continental Europe has doubled to 4%, with good growthopportunities for the future. In Spain, good like for like growth, driven by newofferings and an increase in consumer numbers, together with strong new businessin the Healthcare and Education sectors resulted in organic revenue growth of13%. The continued high activity in the oil and gas industry in the Nordicregion has contributed to 14% organic revenue growth, while the focus on healthyeating continues to drive increasing volumes through much of the region. We arebecoming more established in the Eastern European market with our businessesthere growing well. On a constant currency basis, growth of £31 million, or 26%, in operating profitfrom continuing operations to £151 million (2006: £120 million on a constantcurrency basis) represents a margin improvement of 100 basis points. Just overhalf of this improvement is attributable to the completion of the turnaround ofpreviously underperforming countries such as France and the Netherlands. Theremaining margin growth has come from improved like for like revenue growth,which is at a high drop through to margin, and focus on cost control across allcountries. It is important to remember that the seasonality of this business,with the reduction in headcounts in the Business & Industry sector over thesummer period and the closure of schools, means that we record stronger profitsand margin in the first half, 6.5%, compared to the second half, 5.3%. Theunderlying trends in the first and second half margin in 2007 are similar to2006. UK - 18.8% Group revenue (2006: 18.3%) The UK business has delivered a solid result with, as expected, operatingprofits in line with last year. Fundamentally we have a very strong business in the UK. We have continued towork hard to fix the basics and build a solid foundation for the future. Goodprogress has been made by the new senior management team: the work to improve orexit loss making contracts is now largely complete; we have continued toreorganise across the business to drive further efficiencies; and Education,after a difficult period, is now stabilised. Although the organisation of the business is much improved there is still morework to do. As such, we expect the performance of the business to be broadlysimilar in 2008. Rest of the World - 15.8% Group revenue (2006: 15.7%) In the Rest of the World our two largest businesses, Australia and Japan,together account for 52% of revenue. Australia has continued to deliver strongorganic revenue growth driven by the continued buoyancy of the extractiveindustries. In addition to this, with the help of the MAP programme, Australiahas made good progress in developing its margin. In Japan, the focus has been on driving efficiency. By restructuring thebusiness and increasing the focus on cost efficiency we have seen goodimprovement in the margin. There is still more to do and we need to work harderto drive revenue growth, but we are very encouraged by the progress in thebusiness over the last year. Good progress has been made in Latin America and the UAE with a healthy mix ofrevenue and profit growth. Overall, the Rest of the World has had another very strong year, delivering £64million operating profit from continuing operations (2006: £43 million on aconstant currency basis), an increase of £21 million, or 49%, on a constantcurrency basis. This represents margin growth of 100 basis points, approximatelyhalf of which has come from the step change in lower margin countries such asJapan and the mobilisation of strong new business particularly in Australia andLatin America. In August, the Group sold a significant part of its remaininghigh street retail restaurants business in Japan for £26 million - with annualoperating profits of around £4 million in the year. There remains significant opportunity to further develop our businesses in theRest of the World both in size and operating performance. Unallocated Overheads Unallocated overheads for the year were £58 million (2006: £66 million). Thedecrease is largely due to the absence of non-recurring restructuring costs lastyear and overhead efficiencies, partly offset by the strengthening of centralfunctions. Operating Profit Operating profit from continuing operations, including associates, was £529million (2006: £457 million), an increase of 16% on a reported basis. Theoperating profit increased by £101 million on a constant currency basis, up 24%.This represents a 70 basis point improvement in margin. Finance Cost Underlying net finance cost, excluding revaluation gains and losses on swaps andhedging instruments (hedge accounting ineffectiveness), was £87 million (2006:£145 million). With the full year benefit of the Selecta disposal proceeds goingforward, we expect the 2008 underlying finance charge to be around £70 million. Profit Before Tax Profit before tax from continuing operations was £436 million (2006: £323million). On an underlying basis, excluding revaluation gains and losses on swaps andhedging instruments (hedge accounting ineffectiveness), profit before tax fromcontinuing operations increased by 42% to £442 million (2006: £312 million). Income Tax Expense On an underlying basis, excluding revaluation gains and losses on swaps andhedging instruments (hedge accounting ineffectiveness), the tax charge fromcontinuing operations and before exceptional items was £126 million (2006: £101million), an effective tax rate of 29% (2006: 32%). Against the background ofreducing corporate tax rates in a number of territories, we now expect the Group's effective tax rate to average out at around the 29% level for the shortterm. Discontinued Operations The profit after tax from discontinued operations was £212 million (2006: £33million). Basic Earnings per Share Basic earnings per share were 25.6 pence (2006: 13.3 pence). Excluding theresults of discontinued operations and exceptional items, basic earnings pershare on an underlying basis, excluding revaluation gains and losses on swapsand hedging instruments (hedge accounting ineffectiveness), were 15.2 pence(2006: 9.4 pence). -------------------------------- ----------------- -------------------------------- Attributable Basic earnings Profit per share ----------------- -------------------------------- 2007 2006 2007 2006 Change £m £m Pence Pence % -------------------------------- --------- ------- ----------- --------- --------- Reported 515 285 25.6 13.3 92.5 Discontinued operations and exceptional items (212) (77) (10.6) (3.6) Hedge accounting ineffectiveness (net of tax) 4 (7) 0.2 (0.3) -------------------------------- --------- ------- ----------- --------- --------- Underlying 307 201 15.2 9.4 61.7 -------------------------------- --------- ------- ----------- --------- --------- Dividends A final dividend of 7.2 pence per share will be proposed (to be paid on 3 March2008 to shareholders on the register on 1 February 2008) and will result in atotal dividend for the year of 10.8 pence per share (2006: 10.1 pence pershare), a year on year increase of 7%. Dividend cover for 2007 was 2.5 timesreported earnings. On an underlying basis the dividend was covered 1.5 times onan earnings basis and 1.7 times on a free cash basis. Free Cash Flow Free cash flow from the continuing business totalled £357 million (2006: £212million). The major factors contributing to the increase were: £70 millionincrease in operating profit before associates, £56 million improvement inworking capital and £47 million lower net interest payments, offset in part by£24 million higher net tax payments. Gross capital expenditure of £192 million (2006: £198 million), includingamounts purchased by finance lease of £15 million (2006: £15 million),represents 1.9% of revenue (2006: 1.9% of revenue). We continue to expect thelevel of gross capital expenditure to remain at around 2% of revenue goingforward. Proceeds from the sale of assets were £22 million and we would expectthis to be around £12 million lower in 2008. We have seen a step change in the management of working capital. There has beena focus in all areas, but we have seen excellent improvements in trade debtorsand discounts receivable through quicker billing and collections, giving anoverall £38 million working capital inflow in the year. We believe there arefurther improvements possible and expect to achieve an average sustainableimprovement of £20 - £30 million a year for the foreseeable future, but withbetter improvement in the next couple of years. The cash tax rate for the year was 26% (2006: 30%), based on underlying profitbefore tax for the continuing operations, and we continue to expect the cash taxrate to average out at the mid to high 20s level over the short term. The net interest outflow of £127 million (2006: £174 million) continues toreflect the impact of the 2004 swap monetisation, which will be substantiallyunwound by the end of 2009. Acquisition Payments The acquisition of the remaining 5% interest in Onama, our Italian business, wascompleted in December 2006 for £7 million. A further £17 million was spent ondeferred consideration relating to prior year acquisitions and £7 million on newacquisitions. Disposal Proceeds The sale of the European vending business, Selecta, was completed in July 2007for gross consideration of £772 million, £725 million net of transaction costsand completion accounting adjustments. A further £37 million of deferredconsideration relating to prior year disposals was received in the year and £56million from the disposal of other operations in the year. Return on Capital Employed Return on Capital Employed (ROCE) was 12.5% (2006: 11.3%) based on thecontinuing business before exceptional items, excluding the Group's minoritypartner's share of total operating profit, net of tax at 30% and using anaverage capital employed for the year of £2,914 million (2006: £2,751 million)calculated from the IFRS balance sheet. Under UK GAAP, included within average capital employed was goodwill previouslywritten off to reserves, now extinguished under IFRS, and goodwill amortisedprior to 30 September 2004, the date at which the net book value of goodwill wasfrozen under IFRS. Including these adjustments, average capital employed for theyear (for the continuing businesses) would have been £5,899 million (2006:£5,736 million) and return on capital employed for the continuing business wouldhave been 6.5% (2006: 5.8%). Financial Targets The Group's three year targets for the continuing business for 2006 to 2008remain unchanged at: • 100 basis points improvement in ROCE • free cash flow from continuing operations of £800 million to £850 million. Pensions The Group has continued to review and monitor its pension obligations throughoutthe year working closely with the Trustees and members of schemes around theGroup to ensure proper prudent assumptions are used and adequate provision made. Particularly good progress has been made in respect of the Group's UK definedbenefit pension schemes where a further £45 million special contribution waspaid in during the year following completion of the sale of the Selecta UKvending operation. This follows special contributions in 2006 totalling £280million to the UK schemes following the sale of the SSP travel concessionsbusiness and the Strand Palace Hotel. In the UK defined benefit pension schemes we have again increased our longevityassumptions so that, for example, a female non-pensioner is now assumed tosurvive 24.7 years following retirement (2006: 23.7 years). The Group's totalpension deficit was reduced significantly in the year, despite the adoption ofthe more prudent assumptions, to £162 million (2006: £282 million). The deficitwould have reduced to only £70 million if the surplus on certain schemes hadbeen fully recognised. IFRIC 14 only permits the recognition of a pension fundsurplus where a company can clearly demonstrate that it can access the surplusthrough, for example, reduced future contributions. The Group has taken theprudent view that it will not be able to access these surpluses, totalling £92million, in the foreseeable future. The total pensions charge for defined contribution schemes in the year was £36million (2006: £33 million) and £22 million (2006: £35 million) for definedbenefit schemes. Of the defined benefit scheme costs, £2 million (2006: £11million) was charged to net finance cost. Outlook "The introduction of MAP has given us a common language and agenda resulting ingreater focus and visibility across the whole business. We have delivered a stepchange in profit and free cash flow generation as new processes begin to embedthroughout the organisation. Looking ahead, we believe we are entering a newphase of sustainable value creation, with exciting opportunities to growrevenues, improve margins and generate significant cash flow". Richard Cousins Sir Roy GardnerChief Executive Chairman NOTES (a) The results for the year ended 30 September 2007 were approved by theDirectors on 28 November 2007 and have been have been derived from the Company'sstatutory accounts for that year. The Auditors' Report on these accounts wasunqualified and did not contain statements under section 237(2) or 237(3) of theCompanies Act 1985. Whilst the financial information included in thispreliminary announcement has been computed in accordance with InternationalFinancial Reporting Standards (IFRS), this announcement does not itself containsufficient information to comply with IFRS. In addition the preliminary resultsdo not comprise statutory accounts within the meaning of section 240 of theCompanies Act 1985. The full statutory accounts, which comply with IFRS will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. (b) Forward looking statements This Press Release contains forward looking statements within the meaning ofSection 27A of the Securities Act 1933, as amended, and Section 21E of theSecurities Exchange Act 1934, as amended. These statements are subject to anumber of risks and uncertainties and actual results and events could differmaterially from those currently being anticipated as reflected in such forwardlooking statements. The terms 'expect', 'should be', 'will be', 'islikely to' and similar expressions identify forward looking statements. Factorswhich may cause future outcomes to differ from those foreseen in forward lookingstatements include, but are not limited to: general economic conditions andbusiness conditions in Compass Group's markets; exchange rate fluctuations;customers' and clients' acceptance of its products and services; the actionsof competitors; and legislative, fiscal and regulatory developments. (c) The timetable for the proposed final dividend of 7.2p per share is asfollows: Ex dividend date: 30 January 2008Record date: 1 February 2008Payment date: 3 March 2008 (d) A presentation for analysts and investors will take place at 9:30 a.m. (GMT/London) on Wednesday 28 November 2007 at Merrill Lynch Financial Centre, 2 KingEdward Street, London, EC1. The live presentation can also be accessed via both a webcast and dial-inteleconference starting at 09.30 a.m. (London): • To listen to the live presentation via teleconference, dial (UK) +44 0845 302 2580 or (Intl) +44 (0)1452 583 043. Conference access ID: 24263113 • To view the presentation slides and/or listen to a live webcast of the presentation, go to www.compass-group.com or www.cantos.com • Please note that remote listeners will not be able to ask questions during the Q&A session. A replay recording of the presentation will also be available via teleconferenceand webcast: • A teleconference replay of the presentation will be available for seven working days. To hear the replay, dial (UK) 0845 245 5205 or (Intl) +44 (0)1452 55 00 00. The replay access number is 24263113#. • A webcast replay of the presentation will be available for six months, at www.compass-group.com and www.cantos.com Enquiries: Compass Group PLC 01932 573000Investors/analysts Andrew Martin Media Chris King Website www.compass-group.com Consolidated income statement for the year ended 30 September 2007 2007 2006 -------------------------------- -------------------------------- Before Exceptional Before Exceptional exceptional items exceptional items items (Note 7) Total items (Note 7) Total Notes £m £m £m £m £m £m -------------------------------- -------- ------------ -------- ------- ------- -------- -------Continuing operations: Revenue 1 10,268 - 10,268 10,267 - 10,267Operating costs 2 (9,743) - (9,743) (9,812) - (9,812)-------------------------------- -------- ------------ -------- ------- ------- -------- -------Operating profit 1 525 - 525 455 - 455Share of profit of associates 4 - 4 2 - 2-------------------------------- -------- ------------ -------- ------- ------- -------- -------Total operating profit 529 - 529 457 - 457Finance income 4 28 - 28 15 - 15Finance costs 4 (115) - (115) (160) - (160)Hedge accounting ineffectiveness 4 (6) - (6) 11 - 11-------------------------------- -------- ------------ -------- ------- ------- -------- -------Profit before tax 436 - 436 323 - 323Income tax (expense)/credit 5 (124) - (124) (105) 44 (61)-------------------------------- -------- ------------ -------- ------- ------- -------- -------Profit for the year from continuing operations 1 312 - 312 218 44 262 Discontinued operations: Profit/(loss) for the year from discontinued operations 6 15 197 212 60 (27) 33 -------------------------------- -------- ------------ -------- ------- ------- -------- ------- Continuing and discontinued operations: -------------------------------- -------- ------------ -------- ------- ------- -------- -------Profit for the year 327 197 524 278 17 295-------------------------------- -------- ------------ -------- ------- ------- -------- ------- Attributable to: Equity shareholders of the Company 318 197 515 268 17 285Minority interest 9 - 9 10 - 10-------------------------------- -------- ------------ -------- ------- ------- -------- -------Profit for the year 327 197 524 278 17 295-------------------------------- -------- ------------ -------- ------- ------- -------- ------- Basic earnings per share (pence) From continuing operations 8 15.0p 11.7pFrom discontinued operations 8 10.6p 1.6p-------------------------------- -------- ------------ -------- ------- ------- -------- -------From continuing and discontinued operations 8 25.6p 13.3p -------------------------------- -------- ------------ -------- ------- ------- -------- ------- Diluted earnings per share (pence) From continuing operations 8 15.0p 11.7pFrom discontinued operations 8 10.4p 1.6p-------------------------------- -------- ------------ -------- ------- ------- -------- -------From continuing and discontinued operations 8 25.4p 13.3p -------------------------------- -------- ------------ -------- ------- ------- -------- ------- Consolidated statement of recognised income and expense for the year ended 30 September 2007 2007 2006 Notes £m £m --------------------------------------------------- ------- ------- -------- Net income/(expense) recognised in equity Fair value movement on cash flow hedges - 4 Currency translation differences (12) (7) Actuarial gains/(losses) on post-retirement employee benefits 23 38 (37) Tax on items taken directly to equity 5 8 3 Recognition of deferred tax asset relating to currency translation differences in prior years 5 37 - --------------------------------------------------- ------- ------- --------Income/(expense) recognised directly in equity 71 (37) Transfers Transfer to profit or loss from equity of cumulative translation differences on discontinued activities - 2 Transfer to profit or loss from equity on cash flow hedges - (6) --------------------------------------------------- ------- ------- --------Net transfer to profit or loss from equity - (4) Net gain/(loss) recognised directly in equity --------------------------------------------------- ------- ------- --------Net gain/(loss) recognised directly in equity 71 (41) Profit for the financial year Profit for the financial year 524 295 --------------------------------------------------- ------- ------- --------Total recognised income and expense for the year 25 595 254 --------------------------------------------------- ------- ------- -------- Attributable to: Equity shareholders of the Company 576 248 Minority interest 19 6 --------------------------------------------------- ------- ------- --------Total recognised income and expense for the year 25 595 254 --------------------------------------------------- ------- ------- -------- Consolidated balance sheet as at 30 September 2007 2007 2006 Notes £m £m --------------------------------------------------- ------- ------- --------- Non-current assets Goodwill 10 2,985 3,451 Other intangible assets 11 142 152 Property, plant and equipment 12 576 756 Interests in associates 13 25 39 Other investments 14 12 9 Deferred tax assets* 5 240 237 Trade and other receivables 16 66 117 Derivative financial instruments** 20 13 22 --------------------------------------------------- ------- ------- ---------Non-current assets 4,059 4,783 --------------------------------------------------- ------- ------- --------- Current assets Inventories 17 179 212 Trade and other receivables 16 1,343 1,424 Tax recoverable* 10 10 Derivative financial instruments** 20 2 9 Cash and cash equivalents** 18 839 848 --------------------------------------------------- ------- ------- ---------Current assets 2,373 2,503 --------------------------------------------------- ------- ------- --------- Total assets 6,432 7,286 --------------------------------------------------- ------- ------- --------- Current liabilities Short-term borrowings** 19 (151) (119) Derivative financial instruments** 20 - (2) Current tax liabilities* (171) (357) Trade and other payables 21 (1,833) (1,990) Provisions 22 (86) (65) --------------------------------------------------- ------- ------- ---------Current liabilities (2,241) (2,533) --------------------------------------------------- ------- ------- --------- Non-current liabilities Long-term borrowings** 19 (1,452) (1,835) Derivative financial instruments** 20 (15) (18) Post-employment benefit obligations 23 (162) (282) Provisions 22 (351) (242) Deferred tax liabilities* 5 (5) (18) Other payables 21 (36) (46) --------------------------------------------------- ------- ------- ---------Non-current liabilities (2,021) (2,441) --------------------------------------------------- ------- ------- --------- Total liabilities (4,262) (4,974) --------------------------------------------------- ------- ------- --------- --------------------------------------------------- ------- ------- ---------Net assets 2,170 2,312 --------------------------------------------------- ------- ------- --------- Equity Share capital 24,25 193 210 Share premium account 25 122 96 Capital redemption reserve 25 33 15 Less: own shares 25 (1) - Other reserves 25 4,312 4,288 Retained earnings 25 (2,511) (2,303) --------------------------------------------------- ------- ------- ---------Total equity shareholders' funds 2,148 2,306 Minority interests 25 22 6 --------------------------------------------------- ------- ------- ---------Total equity 2,170 2,312 --------------------------------------------------- ------- ------- --------- * Component of current and deferred taxes ** Component of net debt Approved by the board of directors on 28 November 2007 and signed on their behalf by Richard J Cousins, Director Andrew D Martin, Director Consolidated cash flow statement for the year ended 30 September 2007 2007 2006 Notes £m £m --------------------------------------------------- ------- ------- --------- Cash flow from operating activities Cash generated from operations 28 753 651 Interest paid (152) (186) Interest element of finance lease rentals (3) (3) Tax received 4 4 Tax paid (121) (97) --------------------------------------------------- ------- ------- ---------Net cash from/(used in) operating activities for continuing operations 481 369 Net cash from/(used in) operating activities for discontinued operations 29 (18) 178 --------------------------------------------------- ------- ------- ---------Net cash from/(used in) operating activities 463 547 --------------------------------------------------- ------- ------- --------- Cash flow from investing activities Purchase of subsidiary companies and investments in associated undertakings 27 (31) (167) Proceeds from sale of subsidiary companies and associated undertakings - discontinued activities 6 782 1,807 Proceeds from sale of subsidiary companies and associated undertakings - other activities 32 - Proceeds from sale of other investments 4 - Tax on profits from sale of subsidiary companies and associated undertakings (51) (50) Contribution of disposal proceeds to pension plans (45) (280) Purchase of property, plant and equipment (156) (153) Proceeds from sale of property, plant and equipment 22 20 Purchase of intangible assets and investments (21) (30) Dividends received from associated undertakings 6 2 Interest received 28 15 --------------------------------------------------- ------- ------- ---------Net cash from/(used in) investing activities by continuing operations 570 1,164 Net cash from/(used in) investing activities by discontinued operations 29 (30) (105) --------------------------------------------------- ------- ------- ---------Net cash from/(used in) investing activities 540 1,059 --------------------------------------------------- ------- ------- --------- Cash flow from financing activities Proceeds from issue of ordinary share capital 25 27 2 Purchase of own shares (net) (576) (148) Net increase/(decrease) in borrowings 30 (239) (647) Repayment of obligations under finance leases 30 (15) (15) Equity dividends paid 9, 25 (208) (213) Dividends paid to minority interests 25 (3) (11) --------------------------------------------------- ------- ------- ---------Net cash from/(used in) financing activities by continuing operations (1,014) (1,032) Net cash from/(used in) financing activities by discontinued operations 29 - - --------------------------------------------------- ------- ------- ---------Net cash from/(used in) financing activities (1,014) (1,032) --------------------------------------------------- ------- ------- --------- Cash and cash equivalents Net increase/(decrease) in cash and cash equivalents 30 (11) 574 Cash and cash equivalents at beginning of the year 30 848 281 Exchange gains and losses on cash and cash equivalents 30 2 (7) --------------------------------------------------- ------- ------- ---------Cash and cash equivalents at end of the year 30 839 848 --------------------------------------------------- ------- ------- --------- Reconciliation of free cash flow from continuing operations for the year ended 30 September 2007 2007 2006 £m £m --------------------------------------------------- ------- ------- --------- Net cash from operating activities for continuing operations 481 369 Purchase of property, plant and equipment (156) (153) Proceeds from sale of property, plant and equipment 22 20 Purchase of intangible assets and investments (21) (30) Dividends received from associated undertakings 6 2 Interest received 28 15 Dividends paid to minority interests (3) (11) --------------------------------------------------- ------- ------- ---------Free cash flow from continuing operations 357 212 --------------------------------------------------- ------- ------- --------- This information is provided by RNS The company news service from the London Stock Exchange MORE TO FOLLOWRelated Shares:
Compass Group