Final Results
PRESS RELEASE
3 December 2002
COMPASS GROUP PLC
Preliminary RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2002
NEW BUSINESS WINS CONTINUE TO DRIVE GROWTH
Compass Group reports that 2002 has been an excellent year for the Group
despite difficult economic conditions in many countries in which it operates.
The Group has achieved strong turnover and profit growth and a significant
increase in free cash flow generation. The Group remains well placed for future
growth in a marketplace that continues to see a growth in outsourcing.
Financial Highlights
Turnover of £10.6 billion, up 22%.
Total operating profit* up 19% to £805 million.
Free cash flow improved to £368 million (2001: £33 million).
Final dividend per share up 25% to 7.1 pence per share for the year.
Like for like turnover growth up 7%.
Like for like margin improvement of 20 basis points.
Earnings per share* up 4% to 20.5 pence, 13% on an underlying basis.
* Before goodwill amortisation and exceptional items
Operational Highlights
New business gains of £1.1 billion signed in the year.
Contract retention continuing to be strong at 95%.
Acquisition of Seiyo Foods in Japan and Bon Appétit in North America completed
in the year and EU approval gained for acquisition of 60% of Onama since the
year-end.
Approval to open pilot sites for convenience stores in Moto.
Agreement with Marks & Spencer for a further forty Simply Food stores at UK
rail stations
New Business Gains
Compass Group is pleased to announce today new contract wins including:
North America
Canteen Correctional Services has been awarded a five-year contract worth $60
million in annual revenues by Corrections Corporation of America (CCA) to
provide food and vending.
Restaurant Associates has been awarded a four-year contract with annual
revenues of $3 million for the Wachovia golf tournament staged in Charlotte,
North Carolina.
UK
Eurest is to manage staff restaurant facilities, meeting rooms and hospitality
for all the UK offices of KPMG LLP in a new four-year contract. Eurest already
manages over half of KPMG LLP's offices and the new remit covers 11,000 staff
in locations as diverse as Aberdeen, Plymouth, Leeds and London. Annual
revenues for the expanded contract will be £8 million.
Continental Europe and the rest of the world
Eurest has been awarded a three-year contract with annual revenues of €18
million to cater for staff at the European Commission in Brussels.
Eurest Netherlands has been awarded a five-year contract with annual revenues
of €20 million by TPG the holding company for The Royal TPG Post and TNT.
Francis Mackay - Chairman - said:
'This is a challenging global economic environment. We are delighted that
Compass Group's unique business model, together with the Group's strong
management team, has and will continue to deliver. As global market leader we
still only have a small share of the significant global foodservice market and
we remain confident of continuing growth. The step change made in the dividend
underlines our confidence in future cash flows.'
Michael J Bailey - Chief Executive - said:
'These results represent an excellent performance and we are on track to
deliver at least 6% like for like turnover growth in 2003. We are also
confident of delivering a broadly similar level of like for like margin
improvement in 2003 to that achieved in 2002. I'm very pleased with the free
cash flow generation for 2002, which provides a solid base on which we will
continue to build. Success in these areas will help drive forward return on
capital employed for 2003.'
'The sale process for Travelodge and Little Chef that we announced in June 2002
has generated considerable interest and we are currently in negotiations with
one party and hope to conclude a sale in due course.'
Enquiries:
3 December 2002
Francis Mackay Chairman Compass Group PLC 020 7404 5959
Michael J Bailey Chief Executive Compass Group PLC 020 7404 5959
Andrew Lynch Finance Compass Group PLC 020 7404 5959
Director
Timothy Grey/Simon Brunswick Group 020 7404 5959
Sporborg Ltd
Thereafter
Francis Mackay Compass Group PLC 01932 573 000
Michael J Bailey Compass Group PLC 01932 573 000
Andrew Lynch Compass Group PLC 01932 573 000
Website
www.compass-group.com
Trading Report
The Group is pleased to report that it has enjoyed a very successful year in
2002 with like for like turnover growth for the year of 7% and a like for like
margin increase of 20 basis points. The Group has also achieved a significant
improvement in free cash flow generation.
Financial Performance
The figures below demonstrate the successful financial performance in 2002.
2002 Reported Like for
£m Growth % Like
Growth %
Turnover
UK (excluding fuel) 2,703 11 7
Continental Europe and the 3,751 24 7
rest of the world
North America 3,706 31 7
__________ ___________ ___________
10,160 23 7
UK fuel 457 2 1
__________ ___________ ___________
Total 10,617 22 7
__________ ___________ ___________
Operating Profit
UK 421 12 10
Continental Europe and the 191 25 9
rest of the world
North America 181 30 11
__________ ___________ ___________
Sub-total 793 19 10
Associates 12 71 -
__________ ___________ ___________
Total 805 19 10
__________ ___________ ___________
Like for like growth adjusts for acquisitions, disposals and exchange rate
movements. Operating profit is before goodwill amortisation and exceptional
items.
The significant reported growth rates above are driven by strong like for like
growth and by the impact of acquisitions, including Seiyo Foods in Japan and
Bon Appétit in North America.
The divisional mix of the business has changed between 2001 and 2002
principally as a result of the acquisition activity in North America (including
Morrisons and Crothall in 2001 and Bon Appétit in 2002) and in Continental
Europe and rest of the world (including Selecta in 2001 and Seiyo Foods in
2002). As a result of this, the proportion of the Group's turnover generated in
the UK has reduced from 33% in 2001 to 30% in 2002.
The Group's three geographic regions have continued to grow turnover both on a
reported basis and on a like for like basis. Turnover growth for the UK
(excluding fuel) was 11% in total and 7% on a like for like basis. The like for
like turnover increase has benefited from the inclusion of three hotels
previously accounted for as assets held for resale which are now fully
consolidated in the results. Without this, like for like turnover growth in the
UK was 5%. This growth rate has been achieved despite weakness in rail and air
passenger numbers. Turnover growth in Continental Europe & rest of the world
and in North America has been strong, with reported growth of 24% and 31%
respectively and like for like growth of 7% in both divisions. The Group's 7%
like for like growth in turnover has been achieved as a result of excellent new
business delivering 12% to the Group's like for like growth, strong contract
retention rates across the Group averaging 95% and a similar year on year
performance in the base business.
Operating profit before goodwill amortisation and exceptional items was up 19%
at £805 million (2001: £676 million) when compared to last year. On a like for
like basis, operating profit was 10% up, and like for like margins in all
operating divisions improved.
Basic earnings per share (before exceptional items and goodwill amortisation)
increased to 20.5 pence, a 4% increase (2001: 19.8 pence), this represents a
13% underlying increase when adjusting 2001 for tax on imputed interest income.
Business Performance
The strong performance in 2002 has been driven by new business wins in all
divisions and across all sectors. Major contract gains are highlighted in the
notes section.
UK
The UK has had a good year despite trading being more challenging with weakness
in rail and air passenger numbers.
Moto continues to be a core part of the Group's business and provides the
example that can be used in the bidding process for concessions on the European
motorway network. The Group continues to make good progress in its talks with
the Government on MSA deregulation and is delighted that the UK Government has
confirmed its intention to allow Moto to pilot branded convenience stores
initially at two locations.
North America
Turnover of £3,706 million was 31% up on the preceding year and operating
profit (before goodwill amortisation and exceptional items) of £181 million was
30% up (£139 million in 2001). Like for like turnover growth was 7% and the
margin increase on a like for like basis was 10 basis points.
Continental Europe and the rest of the world
Turnover of £3,751 million was 24% up from £3,013 million in the preceding year
and operating profit excluding associates (before goodwill amortisation and
exceptional items) of £191 million was 25% up from £153 million. Like for like
turnover was up 7% and the like for like margin increase was 10 basis points.
Disposals
In June 2002, following a strategic review, the Group announced that it was to
pursue the disposal of Little Chef and Travelodge as they lie outside the
Group's core focus on foodservice and vending. There has been considerable
interest in the sale and negotiations are currently taking place with one party
with a view to concluding a sale in due course.
Acquisitions
There have been a number of acquisitions during the year.
Japan
Japan is the world's second largest foodservice market with an estimated £21
billion of annual turnover. The Group has strengthened its position in this
important market with the acquisition of 84.7% of Seiyo Foods for £206 million
plus assumed net debt of £131 million. Since completing the transaction, Seiyo
has disposed of 120 loss-making CASA high street restaurants for £28 million
and reduced its shareholding in the fast food operator Yoshinoya D&C from 24.7%
to 20.2% generating proceeds of £31 million.
In August 2002, the Group's joint venture partner in Japan, Itochu Corporation,
expanded its existing relationship with Compass Group in Japan through an
investment in the Group's business. Compass Group and Itochu have also agreed
to integrate their existing joint venture into the wider Compass Group business
in Japan to be operated with Seiyo. As a result Itochu holds a 20% stake in the
Group's business in Japan. These transactions have generated net proceeds of £
46 million of which £42 million has been received in the 2002 financial year, £
35 million by way of a shareholder loan from Itochu.
The Group has made significant progress in divesting non-core assets and
creating a clear business structure in Japan, culminating in the delisting of
Seiyo Foods from the Tokyo Stock Exchange in October 2002. The management are
now looking forward to implementing the Group's business model in the Japanese
market and to deliver turnover and margin growth.
Other
During the year the Group has made a number of other acquisitions for a total
consideration of £365 million. These include the acquisition of Restorama, Rail
Gourmet and parts of Gourmet Nova from Swissair Group, Louis Catering and
Manpower Kantineservice AS in Continental Europe and the acquisitions of Bon
Appétit and Vendlink in North America.
In September 2002 the Group announced its intention to acquire a 60% stake in
Onama S.p.A., based in Milan, Italy for €127 million. This acquisition will
give the Group a market leading position in Italy, Europe's third largest
contract catering market. The deal has been given EU approval and is expected
to complete at the end of December.
Management reiterates its expectations that acquisitions made during the 2003
financial year will not exceed £200 million in total.
Cash Flow
There has been a significant increase in free cash flow with the generation of
£368 million in 2002 compared to £33 million in 2001. This results from
improved cash from operations up £177 million on the previous year, a decrease
in interest payments principally reflecting the receipt of the hotel disposal
proceeds in 2001 and a decrease in tax payable. The 2002 free cash flow of £368
million represents a solid base for future growth.
Free cash flow has benefited from an improvement in working capital with an
outflow of £28 million compared to £51 million in the previous year. The tax
paid in 2002 of £42 million is significantly less than the current tax charge
for the year of £116 million. The main reasons for this difference are items
allowable for tax, which are not charged to the profit and loss account, the
fact that the Group continues to adopt a prudent policy on recognising tax
planning benefits and the impact of timing differences in various
jurisdictions. These factors also broadly explain the reduction in tax paid
between 2001, £99 million and 2002, £42 million. The Group anticipates that its
tax payments will increase to 18% of profit before tax, exceptional items and
goodwill amortisation by 2004.
Net capital expenditure absorbed £330 million compared to £325 million in 2001.
The Group has reinvested £384 million in capital expenditure during 2002,
excluding £14 million purchased under finance lease contracts and has sold £54
million of tangible fixed assets. The majority of the capital expenditure is of
a project nature and is therefore discretionary.
Project expenditure totals approximately £255 million of which £93 million was
invested in the UK, £89 million in Continental Europe and rest of the world and
£73 million in North America. In aggregate, maintenance capital expenditure of
approximately £129 million was incurred during the year, including the
replacement of catering and vending equipment in airports, stations and client
premises and the purchase of office equipment and vehicles.
Acquisition payments were £406 million, comprising £395 million in respect of
current year acquisitions (excluding £267 million of loans and finance lease
obligations in the companies when acquired) and £11 million of deferred
consideration and costs in respect of acquisitions made in prior years.
Disposal proceeds and the sale of marketable securities generated £122 million
in 2002. Closing net debt as at 30 September 2002 was £2,702 million.
Exceptional items and goodwill amortisation
The exceptional item of £15 million relates to the final cost for the UK
integration of Granada Restaurants of £5 million and the final £10 million cost
of the commitment plan entered into at the time of the Granada Restaurants
acquisition to retain senior employees. The plan is payable in 9,610,685
Compass Group PLC shares of which 8,580,997 had been issued by 30 September
2002. The goodwill amortisation charge for the year was £257 million (2001: £
205 million).
Pensions
Actuaries to the Group's defined benefit pension arrangements, which are
principally in the UK, continue to advise the Pension Trustees on the funding
rates required by the Group. In total, the Group has charged £50 million to its
profit and loss account, before tax, in respect of all pension arrangements and
paid £51 million in cash during the year to the various pension providers in
order to enable the pension funds to fulfil their obligations.
Full disclosure in accordance with FRS17 (Retirement Benefits) will be provided
in the Group's 2002 Annual Report. This will show that, at 30 September 2002,
there was an unprovided pension deficit, net of deferred tax, of £50 million.
Had the Group adopted FRS17, the charge to the profit and loss account would
have been £34 million, net of a one-off curtailment credit of £9 million.
Taxation
The overall Group taxation charge is £138 million comprising a £175 million
charge relating to ordinary activities and a £37 million credit relating to
exceptional items. The overall taxation rate on ordinary activities is 26.7% of
profit before exceptional items and goodwill amortisation. The Group adopted
FRS 19 (Deferred Tax) for its 2002 results and has restated the comparatives in
accordance with this accounting standard. A tax reconciliation of the rate for
the year is included in note 4 to the attached preliminary results. This
reconciliation summarises why the Group's current tax rate of 18%, excluding
deferred tax, is below the UK corporate tax rate of 30%. The main reasons being
the utilisation of tax losses brought forward and the tax deductibility of part
of the amortisation of goodwill.
Dividend
The recommended final dividend is 5.0 pence per share resulting in a total
dividend for the year of 7.1 pence per share, an increase of 25%. This step
change reflects the Group's confidence in its ability to continue to generate
strong free cash flow. Dividend cover for 2002 was 2.9 times profit for the
financial year before goodwill amortisation and exceptional items. Looking
forward we anticipate that the dividend will grow broadly in line with
underlying earnings.
Outlook
Notwithstanding a challenging global economic environment Compass Group's
unique business model continues to deliver solid like for like turnover growth,
continued margin improvement and strong free cash flow generation. With
recently gained contracts which are being mobilised, a strong pipeline of
potential new business and an expected contract retention rate of 95% plus, the
Group is on track and well placed to deliver at least 6% like for like turnover
growth this year. The Group is also confident of delivering a broadly similar
level of like for like margin improvement in 2003 to that achieved in 2002. The
free cash flow generation for 2002 provides a solid base on which to continue
to build. Success in these areas will help drive forward return on capital
employed for 2003.
MJ Bailey FH Mackay
Chief Executive Chairman
NOTES
(a) CONTRACT GAINS
UK
Significant contract gains during the year included:
Business & Industry: Eurest & Restaurant Associates
Land Securities Trillium: a ten-year contract worth £15 million a year to
provide catering services to the BBC in London and Scotland.
HM Customs and Excise and the Inland Revenue: a five-year contract to provide
catering services at 20 sites worth £3 million in annual revenues.
Other significant B&I contract wins included Glaxo SmithKline; Britannia
Airlines; Hammond Suddards Edge; Clerical Medical; Pearson Education; SAP; the
National Marine Aquarium; Eurotunnel; Centrica; Orange; Seeboard; Online
Finance and Norwich Union Healthcare.
Leisure & Hospitality: Letheby & Christopher and Levy Restaurants
Arena Leisure: a five-year deal to provide specialist catering services at six
of the UK's most popular racecourses with an annual turnover of over £5
million.
Silverstone: a three-year contract with annual revenues of £5 million a year
with Octagon Motorsports to operate conferencing, banqueting and hospitality
catering services.
Manchester United PLC: an agreement has been signed with Levy Restaurants in
relation to catering and hospitality at the world famous Old Trafford ground.
Esporta Health and Fitness Clubs: a four-year contract worth £10 million in
annual revenues at 40 health clubs throughout the UK.
Education: Scolarest
Sandwell Borough Council: a three-year contract to prepare 16,000 meals a day
for 120 schools worth £4 million a year.
Bedfordshire County Council: a seven-year contract, worth over £5 million a
year to provide catering at 174 schools.
Essex County Council: a two-year contract, worth £11 million a year to provide
catering at 380 schools.
City University: a ten-year contract with annual turnover of £2 million.
University of North London: a ten-year contract with annual turnover of £1
million.
Remote Site: Eurest Support Services
North Sea: four contracts worth a total of £3 million per annum to provide
offshore catering and hospitality services for Kerr-McGee, Prosafe, Enterprise
Oil and Rasmussen.
BG Group: the first `life-of-field' contract for the Armada platform, which
supplies 4% of the UK's gas needs.
Concessions: SSP
M&S Simply Food: during the year three outlets have been opened at Liverpool
Street, Victoria and Marylebone stations. The Group is delighted with the
performance of these units and in October SSP and M&S announced plans to open a
further 40 stores at UK stations.
Glasgow Prestwick International Airport: a new ten-year contract with an annual
turnover of over £3 million.
Leeds Bradford International Airport: a new ten-year contract with an annual
turnover of £4 million.
North America
Business & Industry
Boeing: Canteen, Thompson Hospitality and Eurest were awarded a new 10-year
contract plus an extension of its existing contract with total annual revenues
of $40 million.
Lehman Brothers: Restaurant Associates has signed a five-year contract worth $5
million a year.
Herman Miller Inc.: a five year agreement with annual revenues of $5 million.
AutoNation: Canteen has won a three-year contract with the largest auto
retailer in the USA to provide vending services at 215 locations and in Canada
Eurest has signed contracts with TD Bank Financial Group, Celestica and Oracle.
Healthcare: Morrison
The Fountains Retirement Communities Inc.: an initial five-year agreement to
provide dining services management for 17 communities across the USA with over
$14 million annual turnover.
The University of Texas Medical Branch Galveston: a five-year agreement with
annual turnover of $3 million.
Education: Chartwells
Massachusetts Institute of Technology (MIT): Bon Appétit, acquired by the Group
in April 2002, has secured a five-year, $2.5 million management fee contract
with MIT one of the country's top universities worth over $2 million annually.
Weber State University, Utah: a ten-year $2 million contract.
University of North Florida, Jacksonville: a ten-year contract valued at $6
million a year.
Louisiana State University; State University of New of New York - Purchase;
Winston-Salem/Forsyth County Schools, North Carolina; Oakland University,
Michigan; Indiana University - Purdue University Indianapolis and Haverhill
Public Schools were contracts gained in the year representing $40 million in
annual revenues.
Sports & Events
2002 Winter Olympic Games, and the Paralympic Winter Games, in Salt Lake City,
Utah: Compass Group was the official catering services supplier for the Games,
serving 3,500 residents of the Olympic Village as well as more than 125,000
spectators daily during the Games at nine competition venues and six
non-competition venues spread over 5,000 square miles. More than 450 staff
served - among other items - 400,000 hot dogs, 310,000 boxed meals, 38,000
gallons of soup and 34,000 gallons of hot chocolate.
Greenbay Packers and Houston Arena: Levy Restaurants were awarded contracts at
the Houston Arena and at Lambeau Field, home of the NFL's Green Bay Packers.
The two contracts are worth $21 million annually.
World Youth Day: in Canada, our team was awarded the foodservice for the World
Youth Day, attended by around 450,000 people - including His Holiness, Pope
John Paul II. Total revenues for the event were $13 million over a two-week
period.
Defence, Off-shore & Remote
ChevronTexaco: a ten year preferred supplier agreement with ChevronTexaco
initially valued at more than $200 million a year. ChevronTexaco joins an
ever-growing portfolio of multinational clients with whom we have similarly
comprehensive agreements - a portfolio which includes world leaders such as
Philips, American Express and IBM.
Continental Europe and the Rest of the World
France
Le Printemps: Eurest has been awarded a fifteen-year contract worth over €2
million per annum to provide employee foodservice in this major department
store.
Mutuelles du Mans Assurances: Eurest will be providing foodservice and vending
at this prestigious insurance company site in LeMans, worth €4 million per
annum.
European Parliament, Strasbourg: Eurest is providing foodservice for over 1,800
customers a day with revenues of over €3 million per year.
Federal Express: A foodservice contract representing over €1 million annually.
Assistances Publiques des Hopiteaux de Paris: with annual revenues of €13
million Medirest has gained a contract for state hospitals in Paris, and
represents 13,000 meals per day for the patients and staff of six hospitals.
Germany
Accenture; DZ Bank; Hewlett Packard and Werder Bremen Stadium are recent
contract gains with combined annual revenues of €14 million.
Marienhospital, Witten; Diakonie, Mannheim and St. Elizabeth Krankenhause in
Cologne and Iserlohn are recent contract wins for Medirest with combined annual
revenues of €5 million.
Brazil: Eurest
Ford: three sites in Sao Paulo with annual sales of over £2 million.
Volkswagen: four sites with annual sales of over £6 million.
Scandinavia: Eurest
SAS: a three-year contract for the five staff restaurants of SAS in Oslo with
annual sales in excess of £1 million.
Romania: Eurest
Renault Dacia: Eurest won its first major contract in Romania with the award of
a contract with annual sales of over £1 million.
The results for the year ended 30 September 2002 have been prepared on the
basis disclosed in 2001 Annual Report with the exception that deferred taxation
is now stated in accordance with FRS19 Deferred Tax on a full liability basis.
Comparative information has been restated as disclosed in note 4.
The financial information set out in the announcement does not constitute the
Company's statutory accounts for the years ended 30 September 2002 or 30
September 2001 but is derived from those accounts. The auditors have reported
on these accounts; their reports were unqualified and did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985. The 2002
accounts will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
The timetable for the proposed final dividend of 5.0p per share is as follows:
Record date: 7 March 2003
Payment date: 4 April 2003
Share buy back: it is our intention to seek authority from shareholders at the
forthcoming AGM to purchase up to 10% of the Ordinary Share Capital of the
Company.
Presentation and Teleconference
A presentation to analysts will take place at 9.30am (GMT) on Tuesday 3
December 2002 at:
The Lincoln Centre, 18 Lincoln's Inn Fields, London WC2A 3ED.
A teleconference with investors, including a webcast of the presentation slides
will start at
9.30am (GMT) on Tuesday 3 December 2002.
To participate in the teleconference dial:
+44 (0)20 8781 0598
By dialling this number you will be requesting participation in any discussion
of the matters referred to in the analysts' presentation and of any other
matters raised at the presentation (including matters raised in questions or
referred to in the answers to questions).
To access the web presentation:
http://www.genesysrichmedia.com/compassgroup/03122002
A conference call for US analysts and investors will take place at 17:00 (GMT)
/ 12:00 New York time on Tuesday 3 December 2002. To participate in the
teleconference dial:
+1 703 925 2406.
By dialling this number you will be requesting participation in any discussion
of the matters referred to in the analyst's presentation and of any other
matters raised at the presentation (including matters raised in questions or
referred to in the answers to questions).
Synchronised slides can be accessed on the internet at:
http://www.genesysrichmedia.com/compassgroup/03122002
An interview with Group Finance Director Andrew Lynch in video/audio and text
will be available from 7 am on http://www.compass-group.com and http://
www.cantos.com
Enquiries:
3 December 2002
Francis Mackay Chairman Compass Group PLC 020 7404 5959
Michael J Bailey Chief Executive Compass Group PLC 020 7404 5959
Andrew Lynch Finance Compass Group PLC 020 7404 5959
Director
Timothy Grey/Simon Brunswick Group 020 7404 5959
Sporborg Ltd
Thereafter
Francis Mackay Compass Group PLC 01932 573 000
Michael J Bailey Compass Group PLC 01932 573 000
Andrew Lynch Compass Group PLC 01932 573 000
Website
www.compass-group.com
Compass Group is the world's largest foodservice company with annual
foodservice revenues in excess of £10bn. Compass Group has over 360,000
employees working in more than 90 countries around the world providing
foodservice and hospitality. For more information visit www.compass-group.com
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2002
Before
goodwill Goodwill
amortisation amortisation
and and
exceptional exceptional Total
items items 2002
Notes £m £m £m
___________ ___________ _________
Turnover
Continuing 9,959 - 9,959
operations
Acquisitions 658 - 658
___________ ___________ _________
Total turnover 1 10,617 - 10,617
Operating costs (9,824) (272) (10,096)
________ ___________ _________
Operating profit
Continuing 781 (259) 522
operations
Acquisitions 12 (13) (1)
___________ ___________ _________
793 (272) 521
Share of profits
of associated
undertakings
Continuing 1 1 - 1
operations
Acquisitions 11 - 11
___________ ___________ _________
Total operating
profit: Group and
share of 1 805 (272) 533
associated
undertakings
___________ ___________ _________
Reversal of
discounting of
net proceeds
from disposal of
businesses to net
present
value - - -
Other interest
receivable and
similar
income 18 - 18
________ ___________ _________
Total interest
receivable and
similar
income 18 - 18
Interest payable 3 (169) - (169)
and similar
charges
___________ ___________ _________
Net interest (151) - (151)
___________ ___________ _________
Profit on
ordinary
activities
before
taxation 654 (272) 382
Tax on profit on 4 (175) 37 (138)
ordinary
activities
___________ ___________ _________
Profit on
ordinary
activities after
taxation 479 (235) 244
Equity minority (22) - (22)
interests
___________ ___________ _________
Profit for the 457 (235) 222
financial year
Equity dividends 5 (159) - (159)
___________ ___________ _________
Profit for the 15 298 (235) 63
year retained
___________ ___________ _________
Basic earnings 6 10.0p
per ordinary
share
_________
Basic earnings
per ordinary
share -
excluding
goodwill
amortisation and
exceptional items 6 20.5p
___________
Diluted earnings 6 9.9p
per ordinary
share
_________
Diluted earnings
per ordinary
share -
excluding
goodwill
amortisation and
exceptional items 6 20.3p
___________
Before
goodwill Goodwill
amortisation amortisation Total
and and 2001
exceptional exceptional As
items items restated
As restated As restated (note 4)
Notes £m £m £m
__________ __________ _________
Turnover
Continuing 8,716 - 8,716
operations
Acquisitions - - -
__________ __________ _________
Total turnover 1 8,716 - 8,716
Operating costs (8,047) (327) (8,374)
________ __________ _________
Operating profit
Continuing 669 (327) 342
operations
Acquisitions - - -
__________ __________ _________
669 (327) 342
Share of profits
of associated
undertakings
Continuing 1 7 (2) 5
operations
Acquisitions - - -
__________ __________ _________
Total operating
profit: Group and
share of 1 676 (329) 347
associated
undertakings
__________ __________ _________
Reversal of
discounting of net
proceeds
from disposal of
businesses to net
present
value 127 - 127
Other interest
receivable and
similar
income 17 - 17
________ __________ _________
Total interest
receivable and
similar
income 144 - 144
Interest payable 3 (237) - (237)
and similar
charges
__________ __________ _________
Net interest (93) - (93)
__________ __________ _________
Profit on ordinary
activities before
taxation 583 (329) 254
Tax on profit on 4 (127) 35 (92)
ordinary
activities
__________ __________ _________
Profit on ordinary
activities after
taxation 456 (294) 162
Equity minority (16) - (16)
interests
__________ __________ _________
Profit for the 440 (294) 146
financial year
Equity dividends 5 (126) - (126)
__________ __________ _________
Profit for the 15 314 (294) 20
year retained
__________ __________ _________
Basic earnings per 6 6.6p
ordinary share
_________
Basic earnings per
ordinary share -
excluding goodwill
amortisation and
exceptional items 6 19.8p
__________
Diluted earnings 6 6.5p
per ordinary share
_________
Diluted earnings
per ordinary
share -
excluding goodwill
amortisation and
exceptional items 6 19.5p
__________
CONSOLIDATED BALANCE SHEET
As at 30 September 2002
Notes 2002 2001
As
restated
£m £m
Fixed assets
Intangible assets 7 4,522 4,200
Tangible assets 8 2,369 2,081
Investments 9 101 27
__________ __________
6,992 6,308
__________ __________
Current assets
Stocks 196 181
Debtors: amounts falling due within one 10 1,258 1,178
year
amounts falling due after more than one 10 293 285
year
Businesses held for resale 11 35 75
Investments 3 12
Cash at bank and in hand 406 692
__________ __________
2,191 2,423
Creditors: amounts falling due within one 12 (3,870) (2,838)
year
__________ __________
Net current liabilities (1,679) (415)
__________ __________
Total assets less current liabilities 5,313 5,893
Creditors: amounts falling due after more 13 (1,954) (2,699)
than one year
Provisions for liabilities and charges 14 (431) (377)
Equity minority interests (97) (35)
__________ __________
Net assets 2,831 2,782
__________ __________
Capital and reserves
Called up share capital 223 222
Shares to be issued 5 32
Share premium account 15 68 11
Merger reserve 15 4,170 4,170
Profit and loss account 15 (1,635) (1,653)
__________ __________
Total equity shareholders' funds 2,831 2,782
__________ __________
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2002
2002
___________ ___________
£m £m
Net cash inflow from operating
activities before exceptional items
(note I) 925
Exceptional reorganisation costs (17)
___________
Net cash inflow after exceptional 908
items
Dividends from associated 2
undertakings
Returns on investments and servicing
of finance
Interest received 17
Interest paid (175)
Interest element of finance lease (3)
rental payments
Dividends paid to minority interests (10)
___________
Net cash outflow from returns on (171)
investments and servicing of finance
Taxation
Tax received 31
Tax paid (73)
___________
Net tax paid (42)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (384)
Sale of tangible fixed assets 54
Sale of own shares, net 1
___________
Total capital expenditure and (329)
financial investment
___________
Free cash flow 368
___________
Acquisitions and disposals (note IV)
Purchase of subsidiary companies and
investments in associated
undertakings (406)
Net proceeds from businesses held 22
for resale
Sale of minority interest 7
Sale of subsidiary companies and 31
associated undertakings
Deferred consideration relating to -
previous disposals
___________
Total acquisitions and disposals (346)
Equity dividends paid (126)
___________
Net cash (outflow) / inflow from (472)
investing activities
___________
Net cash (outflow) / inflow before (104)
financing
Management of liquid resources: Sale 62
of marketable securities
Financing
Issue of ordinary share capital 5
Debt due within a year:
Decrease in bank loans and loan (505)
notes
Debt due after a year:
(Increase/decrease) in bank loans 289
and loan notes
Capital element of finance lease (14)
rentals
Net cash outflow from financing (225)
(Decrease) / increase in cash in the (267)
year
___________
Reconciliation of net cash flow to
movement in net debt (note II)
(Decrease) / increase in cash in the (267)
year
Cash outflow from change in debt and 230
lease finance
___________
Change in net debt resulting from (37)
cash flows
Changes in finance leases, loans
acquired with subsidiaries and other
non-cash changes (281)
___________
Effect of foreign exchange rate 6
changes
___________
Movement in net debt in the year (312)
Opening net debt (2,390)
___________
Closing net debt (2,702)
___________
2001
___________ ___________
£m £m
Net cash inflow from operating
activities before exceptional items
(note I) 748
Exceptional reorganisation costs (44)
___________
Net cash inflow after exceptional 704
items
Dividends from associated 2
undertakings
Returns on investments and servicing
of finance
Interest received 16
Interest paid (258)
Interest element of finance lease (3)
rental payments
Dividends paid to minority interests (5)
___________
Net cash outflow from returns on (250)
investments and servicing of finance
Taxation
Tax received 19
Tax paid (118)
___________
Net tax paid (99)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (355)
Sale of tangible fixed assets 30
Sale of own shares, net 1
___________
Total capital expenditure and (324)
financial investment
___________
Free cash flow 33
___________
Acquisitions and disposals (note IV)
Purchase of subsidiary companies and
investments in associated
undertakings (1,337)
Net proceeds from businesses held 2,806
for resale
Sale of minority interest -
Sale of subsidiary companies and -
associated undertakings
Deferred consideration relating to 25
previous disposals
___________
Total acquisitions and disposals 1,494
Equity dividends paid (121)
___________
Net cash (outflow) / inflow from 1,373
investing activities
___________
Net cash (outflow) / inflow before 1,406
financing
Management of liquid resources: Sale -
of marketable securities
Financing
Issue of ordinary share capital 24
Debt due within a year:
Decrease in bank loans and loan (430)
notes
Debt due after a year:
(Increase/decrease) in bank loans (440)
and loan notes
Capital element of finance lease (15)
rentals
Net cash outflow from financing (861)
(Decrease) / increase in cash in the 545
year
___________
Reconciliation of net cash flow to
movement in net debt (note II)
(Decrease) / increase in cash in the 545
year
Cash outflow from change in debt and 885
lease finance
___________
Change in net debt resulting from 1,430
cash flows
Changes in finance leases, loans
acquired with subsidiaries and other
non-cash changes (73)
___________
Effect of foreign exchange rate (51)
changes
___________
Movement in net debt in the year 1,306
Opening net debt (3,696)
___________
Closing net debt (2,390)
___________
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2002
I Reconciliation of operating profit to net cash inflow from operating
activities:
2002 2001
£m £m
Operating profit before goodwill amortisation and 805 676
exceptional items
Depreciation 230 170
___________ ___________
EBITDA 1,035 846
Profit on disposal of fixed assets and businesses (9) (7)
Share of profits of associated undertakings (12) (7)
Decrease in provisions for liabilities and charges (61) (33)
Increase in stocks (4) (8)
Increase in debtors (98) (153)
Increase in creditors 74 110
___________ ___________
Net cash inflow from operating activities before 925 748
exceptional items
___________ ___________
II Analysis of net debt:
Acquisitions
(excluding Other
1 Cash Exchange cash and non-cash 30 September
October
2001 flow movements overdrafts) changes 2002
£m £m £m £m £m £m
Cash at bank and 692 (284) (2) - - 406
in hand
Overdrafts (47) 17 1 - - (29)
________ ________ _________ __________ _______ _____________
645 (267) (1) - - 377
_______ _______ _______ __________ _______ _____________
Debt due within (437) 505 (107) (1,178) (1,217)
one year
Debt due after (2,547) (289) 5 (151) 1,178 (1,804)
one year
Finance leases (51) 14 2 (9) (14) (58)
________ ________ _________ __________ _______ _____________
(3,035) 230 7 (267) (14) (3,079)
________ ________ _________ __________ _______ _____________
Total (2,390) (37) 6 (267) (14) (2,702)
________ ________ _________ __________ _______ _____________
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (continued)
For the year ended 30 September 2002
III Purchase of subsidiary companies and investments in associated
undertakings:
2002 2001
£m £m
Net assets acquired:
Tangible fixed assets 88 197
Fixed asset investments 85 8
Businesses held for resale 28 -
Stocks 17 45
Debtors 165 180
Current asset investments 43 12
Cash 147 22
Bank overdrafts (4) (22)
Loans (258) (48)
Leases (9) (5)
Creditors (213) (314)
Provisions (67) (42)
Tax 27 (9)
Minority interests (46) 2
Share of net assets already owned - (39)
_________ ________
3 (13)
Goodwill acquired 610 1,281
_________ ________
613 1,268
_________ ________
Satisfied by:
Cash payable 538 1,248
Shares 7 -
Deferred consideration payable 68 20
_________ ________
613 1,268
_________ __________
IV Analysis of net outflow of cash in respect of the purchase of subsidiary
companies and investments in associated undertakings:
2002 2001
£m £m
P
Cash consideration paid 538 1,248
Cash (acquired) (147) (22)
Overdrafts acquired 4 22
_________ _______
395 1,248
Deferred consideration and costs relating to previous 11 89
acquisitions
_________ _______
406 1,337
_________ _______
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2002
1. Turnover and operating profit
Continuing
operations Acquisitions 2002 2001
£m £m £m £m
Turnover
Foodservice:
Geographical analysis:
- United Kingdom 3,104 56 3,160 2,877
- Continental Europe & rest of 3,325 426 3,751 3,013
the world
- North America 3,530 176 3,706 2,826
__________ __________ __________ __________
9,959 658 10,617 8,716
__________ __________ __________ __________
Operating profit
Before goodwill amortisation
and exceptional
items
Foodservice:
- The Company and its 781 12 793 669
subsidiary undertakings
- Associated undertakings 1 11 12 7
__________ __________ __________ __________
782 23 805 676
__________ __________ __________ __________
Geographical analysis:
- United Kingdom
The Company and its subsidiary 420 1 421 377
undertakings
Associated undertakings 1 - 1 1
- Continental Europe & rest of
the world
The Company and its subsidiary 184 7 191 153
undertakings
Associated undertakings - 11 11 6
- North America 177 4 181 139
__________ __________ __________ __________
782 23 805 676
__________ __________ __________ __________
Amortisation of goodwill:
- United Kingdom (164) - (164) (149)
- Continental Europe & rest of (32) (7) (39) (31)
the world
- North America (48) (6) (54) (25)
__________ __________ __________ __________
(244) (13) (257) (205)
__________ __________ __________ __________
Exceptional items:
- United Kingdom (12) - (12) (115)
- Continental Europe & rest of (2) - (2) (6)
the world
- North America (1) - (1) (3)
__________ __________ __________ __________
(15) - (15) (124)
(259) (13) (272) (329)
__________ __________ __________ __________
Total operating profit: Group
and share of
associated undertakings 523 10 533 347
__________ __________ __________ __________
Total operating profit after goodwill amortisation and exceptional items for
the year ended 30 September 2002 relates to foodservice analysed as UK £246
million, Continental Europe & rest of the world £161 million and North America
£126 million (2001: £114 million, £122 million and £111 million respectively).
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
2. Exceptional operating items - continuing operations
2002 2001
£m £m
Reorganisation
- costs incurred 5 40
- accrued costs - 12
- assets written off - 44
Employee share schemes 10 28
__________ __________
15 124
__________ __________
During 2000, the Group acquired Granada Restaurants and has combined this with
the Group's existing UK operations. Costs relate to reorganisation costs of the
business and the writing off of the net book amount of duplicate assets.
Employee share schemes relate to the Commitment Plan to retain senior employees
which matured on 27 January 2002. This will result in the issue of up to
9,610,685 Compass Group PLC shares of which 8,580,997 had been issued.
3. Interest payable and similar charges
2002 2001
£m £m
Bank loans and overdrafts 105 155
Other loans 64 82
__________ __________
169 237
__________ __________
4. Tax on profit on ordinary activities
2002 2001
As
restated
£m £m
UK corporation tax at 30% (2001:30%) 45 37
Overseas tax payable 66 52
Overseas tax on share of profits of associated 5 4
undertakings
__________ __________
116 93
UK deferred tax 51 25
Impact of discounting UK deferred tax (9) (2)
Overseas deferred tax 37 27
Impact of discounting overseas deferred tax (14) (14)
__________ __________
181 129
Adjustments in respect of prior years:
UK corporation tax (60) 1
Overseas tax payable 2 (3)
UK deferred tax 29 -
Overseas deferred tax 23 -
__________ __________
Total tax charge before exceptional items 175 127
__________ __________
Exceptional items:
UK corporation tax (5) (18)
UK deferred tax - (17)
Prior year UK corporation tax (32) -
__________ __________
Total exceptional tax credit (37) (35)
__________ __________
Tax on ordinary activities after exceptional items 138 92
__________ __________
The Prior Year Exceptional UK Corporation Tax Credit Relates To The Release Of
Provisions No Longer Required In Respect Of The Disposal Of Forte Hotels.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
4. Tax on profit on ordinary activities - continued
Factors affecting the future tax charge
The main factors affecting the future tax charge are expected to include
overseas tax rates, permanent differences and the reversal of unprovided
deferred tax assets.
2002 2001
% %
Reconciliation of the UK statutory tax rate to the
effective current tax rate
Tax charge on profit on ordinary activities before
goodwill amortisation and
exceptional items at the UK statutory rate of 30% 30 30
Increase / (decrease) resulting from:
Permanent items (2) 2
Amortisation of goodwill (2) (3)
Overseas taxes at higher rates 1 1
Losses bought forward (6) (3)
Tax credits (1) -
Capital allowances for the period in excess of (2) (2)
depreciation charged
Imputed interest on hotel net proceeds - (7)
Other timing differences - (2)
__________ __________
Current tax charge on profit before goodwill
amortisation and
exceptional items 18 16
__________ __________
FRS 19 'Deferred Tax' has been adopted with a consequential restatement of
prior periods. FRS 19 requires that deferred tax be recognised in respect of
all timing differences that have originated but not reversed by the balance
sheet date. The Group has decided to adopt the policy of discounting deferred
tax balances as permitted by FRS 19.
The effect of the restatement of 2001 is to increase the tax charge on profit
on ordinary activities before taxation, goodwill amortisation and exceptional
items, having excluded imputed interest income, which does not attract tax,
('the ordinary tax charge') by 1.3 percentage points. This equates to £6
million in the year to 30 September 2001.
The ordinary tax charge for the year to 30 September 2001 has increased by £6
million as described above, but there is an additional exceptional UK deferred
tax credit of £6 million. The total tax charge has thus remained constant at £
92 million. However, the restatement of deferred tax balances has increased the
currency translation loss on foreign currency net investment by £3 million from
£81 million to £84 million, and has also reduced goodwill by £54 million.
Dividends
Per 2002 Per 2001
share £m share £m
Dividends on ordinary shares of 10p
each:
Interim 2.1p 47 1.9p 42
Proposed final 5.0p 112 3.8p 84
__________ __________ __________ __________
7.1p 159 5.7p 126
__________ __________ __________ __________
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
Earnings per share
Before Including Before Including
goodwill goodwill goodwill goodwill
amortisation amortisation amortisation amortisation
and and and and
exceptional exceptional exceptional exceptional
items items items items
2002 2002 2001 2001
As restated As restated
£m £m £m £m
Attributable profit for
basic and diluted
earnings per share 457 222 440 146
___________ ___________ ___________ ____________
Millions Millions Millions Millions
Average number of shares in 2,227 2,227 2,215 2,215
issue
Shares to be issued 1 1 10 10
___________ ___________ ___________ ____________
Average number of shares
for basic earnings
per share 2,228 2,228 2,225 2,225
Dilutive share options 20 20 26 26
___________ ___________ ___________ ____________
Average number of shares
for diluted
earnings per share 2,248 2,248 2,251 2,251
___________ ___________ ___________ ____________
Basic earnings per share 20.5p 10.0p 19.8p 6.6p
___________ ___________ ___________ ____________
Diluted earnings per share 20.3p 9.9p 19.5p 6.5p
___________ ___________ ___________ ____________
Earnings per share excluding goodwill amortisation and exceptional items has
been shown to disclose the impact of these on underlying earnings. The average
number of shares for 2001 has been determined as if the post demerger capital
structure of Compass Group PLC had existed throughout the period.
7. Intangible fixed assets
Goodwill £m
Cost
At 1 October 2001 as previously reported 4,493
Prior year adjustment (note 4) (54)
__________
At 1 October 2001 as restated 4,439
Additions arising from acquisitions 610
Disposal (9)
Transfer from businesses held for resale 38
Currency adjustment (70)
__________
At 30 September 2002 5,008
__________
Amortisation
At 1 October 2001 239
Charge for the year 257
Currency adjustment (10)
__________
At 30 September 2002 486
__________
Net book amount
At 30 September 2002 4,522
__________
At 30 September 2001 as restated 4,200
__________
Additions to goodwill arising from acquisitions primarily relate to the
acquisitions of Seiyo Foods in Japan and Bon Appétit in the USA. Further
information on these acquisitions can be found in note 16. Goodwill on
acquisitions is being amortised over periods of up to 20 years which are
considered to be the estimated useful lives. The disposal relates to the
goodwill attaching to 4.5% of Yoshinoya D&C held by Seiyo Foods, disposed of on
1 July 2002 leaving a remaining investment of 20.2%.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
8. Tangible fixed assets
Freehold Long Short Plant Fixtures
land and leasehold leasehold and and
buildings property property machinery fittings Total
£m £m £m £m £m £m
Cost
At 1 October 2001 789 264 274 1,095 527 2,949
Currency adjustment (2) - (2) (34) (9) (47)
Additions 50 11 21 163 153 398
Businesses acquired 91 2 20 56 59 228
Transfer from businesses - - 95 27 16 138
held for resale
Disposals (44) - (8) (72) (37) (161)
Transfer between (22) (1) (14) 11 26 -
categories
________ ________ ________ ________ ________ ________
At 30 September 2002 862 276 386 1,246 735 3,505
________ ________ ________ ________ ________ ________
Depreciation
At 1 October 2001 27 7 36 565 233 868
Currency adjustment (1) - (1) (20) (2) (24)
Charge for the year 10 4 15 142 59 230
Businesses acquired 59 - 11 28 42 140
Transfer from businesses - - 11 12 7 30
held for resale
Disposals (19) - (5) (53) (31) (108)
Transfer between 2 (1) (6) (14) 19 -
categories
________ ________ ________ ________ ________ ________
At 30 September 2002 78 10 61 660 327 1,136
________ ________ ________ ________ ________ ________
Net book amount
At 30 September 2002 784 266 325 586 408 2,369
________ ________ ________ ________ ________ ________
At 30 September 2001 762 257 238 530 294 2,081
________ ________ ________ ________ ________ ________
The net book amount of the Group's tangible fixed assets includes, in respect
of assets held under finance leases, freehold buildings and long and short
leasehold property £12 million (2001: £4 million), plant and machinery £41
million (2001: £36 million) and fixtures and fittings £4 million (2001: £
10 million).
9. Investments held as fixed assets
Investment
in
associated
undertakings Own shares Total
£m £m £m
Cost
At 1 October 2001 26 1 27
Additions - 1 1
Businesses acquired 85 - 85
Disposals (22) (1) (23)
Share of retained profits less losses 7 - 7
Dividends received (2) - (2)
Currency adjustments/other movements 7 (1) 6
__________ __________ __________
At 30 September 2002 101 - 101
__________ __________ __________
Investment in associated undertakings at 30 September 2002 includes £75 million
being the Group's share of the net tangible assets of Yoshinoya D&C acquired
with the acquisition of Seiyo Foods. Yoshinoya is incorporated in Japan, draws
up its financial statements at the end of February each year and its main
business is retail catering. The market value of the investment at 30 September
2002 was ¥ 25 billion (£132 million).
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
10. Debtors
2002 2001
As
restated
£m £m
Amounts falling due within one year
Trade debtors 936 839
Amounts owed by associated undertakings 2 1
Overseas tax recoverable 12 5
Other debtors 107 162
Prepayments and accrued income 201 171
__________ __________
1,258 1,178
__________ __________
Amounts falling due after more than one year
Other debtors 208 116
Deferred tax 85 169
__________ __________
293 285
__________ __________
Provided
________________________
2002 2001
£m £m
Deferred tax analysis
UK capital allowances in excess (101) (149)
of depreciation
UK short term timing differences 96 191
Overseas deferred tax 93 120
Exceptional items - 18
Discount on timing differences (3) (11)
___________ ___________
85 169
___________ ___________
Deferred tax does not include any potential tax liabilities which might arise
in the event of the distribution of unappropriated profits or reserves of
overseas subsidiary companies as there is no intention to distribute such
profits or reserves.
Deferred tax assets of £160 million (2001:£nil) have not been recognised as
recovery is likely to be after more than one year.
£m
The movements on deferred tax are as follows:
At 1 October 2001 as restated 169
Arising from acquisitions 36
Charged to profit and loss account (117)
Other movements (3)
__________
At 30 September 2002 85
__________
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
11. Businesses held for resale
£m
Net present value of net proceeds receivable from disposal of 75
business as at 1 October 2001
Arising on acquisition 28
Net proceeds received (22)
Reclassified (46)
_________
35
_________
Businesses held for resale represents the outstanding amounts due in relation
to the disposal of Forte Hotels, shown in the opening balance, and the business
of CASA acquired but held for resale as part of the acquisition of Seiyo Foods.
The proceeds on the disposal of CASA were received in full in the year. Where
disposal of the hotels was not completed by 30 September 2002 the assets and
liabilities have been consolidated within appropriate balance sheet categories
of the financial statements in accordance with UK accounting standards. The
balance of £35 million due in relation to the disposal of Forte Hotels was
received in October 2002.
12. Creditors - amounts falling due within one year
2002 200
£m £m
Bonds 129 330
Loan notes 72 25
Bank loans 1,016 82
Bank overdrafts 29 47
Obligations under finance leases 14 12
Trade creditors 845 760
Amounts owed to associated undertakings 4 12
Corporation tax payable 138 163
Overseas tax 163 138
Other tax and social security costs 211 192
Other creditors 200 184
Deferred consideration 79 2
Accruals and deferred income 811 765
Proposed dividend 159 126
_________ _________
3,870 2,838
_________ _________
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
13. Creditors - amounts falling due after more than one year
2002 2001
£m £m
Bonds 1,143 614
Loan notes 611 161
Bank loans 50 1,772
Obligations under finance leases 44 39
Other creditors 68 60
Deferred consideration 38 53
_________ _________
1,954 2,699
_________ _________
All amounts due under bonds, loan notes and bank facilities are shown net of
unamortised issue costs.
Bonds are unsecured and consist of the following:
Sterling Eurobond with nominal value £100 million redeemable in 2003 and
bearing interest at 9.375% per annum.
Euro Eurobond with nominal value €600 million redeemable in 2009 and bearing
interest at 6.0% per annum.
Sterling Eurobond with nominal value £200 million redeemable in 2010 and
bearing interest at 7.125% per annum.
Sterling Eurobond with nominal value £200 million redeemable in 2012 and
bearing interest at 6.375% per annum.
Sterling Eurobond with nominal value £250 million redeemable in 2014 and
bearing interest at 7.0% per annum.
The bonds redeemable in 2003 and 2014 are recorded at their fair values to the
Group on acquisition.
The Group has fixed term, fixed interest private placements totalling US$1,047
million (£666 million) at interest rates between 6.0% and 8.015%. US$800
million (£509 million) is repayable in five to ten years.
Maturity of financial liabilities and other creditors falling due after more
than one year as at 30 September 2002 is as follows:
2002
Bonds and Loans and
loan overdrafts Other Total
notes
£m £m £m £m
In more
than one
year but
not more
than two 105 2 77 184
years
In more
than two
years but
not more
than five 125 48 52 225
years
In more
than five
years 1,524 - 21 1,545
_________ _________ _________ _________
1,754 50 150 1,954
In one
year or
less,
or on 201 1,045 93 1,339
demand
_________ _________ _________ _________
1,955 1,095 243 3,293
_________ _________ _________ _________
2001
Bonds and Loans and
loan overdrafts Other Total
notes
£m £m £m £m
In more
than one
year but
not more
than two 176 1,761 76 2,013
years
In more
than two
years but
not more
than five 76 10 58 144
years
In more
than five
years 523 1 18 542
_________ _________ _________ _________
775 1,772 152 2,699
In one
year or
less,
or on 355 129 14 498
demand
_________ _________ _________ _________
1,130 1,901 166 3,197
_________ _________ _________ _________
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
13 Creditors - amounts falling due after more than one year (continued)
2002 2001
£m £m
Bank loans:
Repayable otherwise than by instalments within five 1,066 1,854
years
Less: amounts falling due within one year 1,016 82
__________ ____________
Amounts falling due after more than one year 50 1,772
__________ ____________
14 Provisions for liabilities and charges
Insurance,
pensions and
other post
employment Onerous Legal and
benefits contracts other Environmental Total
claims
£m £m £m £m £m
At 1 October 2001 219 69 78 11 377
Arising from 35 16 16 - 67
acquisitions
Expenditure in (22) (27) (12) - (61)
the year
Charged to profit 13 - - - 13
and loss account
Credited to - (2) (1) - (3)
profit and loss
account
Reclassified 13 9 25 - 47
Currency (6) - (3) - (9)
adjustment
____________ __________ ___________ ____________ ___________
At 30 September 252 65 103 11 431
2002
____________ __________ ___________ ____________ ___________
Insurance, pensions and other post employment benefits relate to the costs of
self funded pension and insurance schemes or statutory retirement benefits and
are essentially long term in nature. Onerous contracts represent the
liabilities in respect of leases on non-utilised properties and other
contracts. The duration of these contracts ranges from 2 to 17 years. Legal and
other claims relate principally to provisions for the cost of litigation and
sundry other claims. The timing of the settlement of these claims is uncertain.
Environmental provisions are in respect of liabilities relating to the Group's
responsibility for maintaining its operating sites in accordance with statutory
requirements and the Group's aim to have a low impact on the environment.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
15 Reserves
Consolidated profit and
loss account
Share Before
premium Merger goodwill Goodwill
account reserve written written Total
off off
£m £m £m £m £m
At 1 October 2001 as 11 4,170 486 (2,132) (1,646)
previously reported
Prior year adjustment (note - - (7) - (7)
4)
________ _________ ________ _________ _________
At 1 October 2001 as restated 11 4,170 479 (2,132) (1,653)
Foreign exchange reserve - - (41) - (41)
movements
Premium on ordinary shares 57 - (4) - (4)
issued, net of expenses
Retained profit for the year - - 63 - 63
________ _________ _________ _________ ________
At 30 September 2002 68 4,170 497 (2,132) (1,635)
________ _________ _________ _________ ________
Goodwill written off represents the excess of the consideration for the
operations acquired prior to 1 October 1998 over the fair value of the net
assets acquired. The goodwill has been written off to profit and loss reserve
on consolidation.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
16. Acquisitions
Businesses acquired during the year are shown below.
Accounting Fair
value
Consideration Net Fair policy of
assets values assets
and costs acquired adjustment realignment acquired Goodwill
£m £m £m £m £m £m
Seiyo Foods 206 246 (188) (1) 57 149
Bon Appétit 114 10 (19) - (9) 123
Restorama, Rail 15 (17) (8) - (25) 40
Gourmet and parts
of Gourmet Nova
Louis Catering 28 5 (5) - - 28
Vendlink 28 11 (3) - 8 20
Manpower 22 2 - - 2 20
Kantineservice A/S
Other 158 22 (31) (2) (11) 169
___________ ________ _________ _________ ________ ________
Total acquisitions 571 279 (254) (3) 22 549
in the year
___________ ________ _________ _________ ________ ________
Adjustments to
prior periods:
Deferred 42 - - - - 42
consideration
payable
Adjustments to net - - (19) - (19) 19
assets acquired
___________ ________ _________ _________ ________ ________
42 - (19) - (19) 61
___________ ________ _________ _________ ________ ________
613 279 (273) (3) 3 610
Accounting
Net assets Fair value policy Fair value
to
acquired adjustments realignment the group
£m £m £m £m
Tangible fixed assets 142 (60) 6 88
Fixed asset investments 176 (91) - 85
Businesses held for resale - 28 - 28
Stocks 17 - - 17
Debtors 194 (29) - 165
Current asset investments 45 (2) - 43
Cash 147 - - 147
Loans and overdrafts (265) 3 - (262)
Leases - - (9) (9)
Creditors (139) (74) - (213)
Provisions (18) (49) - (67)
Tax (8) 35 - 27
Minority interests (12) (34) - (46)
___________ ___________ ___________ ___________
279 (273) (3) 3
___________ ___________ ___________ ___________
Fair value adjustments principally relate to the effect of recategorising
assets and liabilities to businesses held for resale, asset valuation
adjustments and recognising pension commitments and other liabilities not
previously recorded.
Adjustments made to the fair value of assets of businesses acquired in 2002 are
provisional owing to the short period of ownership.
All acquisitions were accounted for under the acquisitions method of
accounting.
Adjustments to prior year acquisitions relate to the restatement of the values
of assets and liabilities in the light of knowledge arising from a more
extended period of ownership and additional consideration and costs, all in
respect of acquisitions made during the year ended 30 September 2001.
There was no material difference between operating profits arising from
acquisitions and cash flows contributed by those acquisitions.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2002
Pensions
The assets and liabilities of the major plans operated by the Group and the
effect that adoption of FRS 17 would have had on the Group's profit and loss
reserves are shown below:
UK Plans US Plans Other Plans Total Plans
Long Term Long Term Long Term Long Term
expected expected expected expected
rate of rate of rate of rate of
30 September return £m return £m return £m return £m
2002
Equities 6.5% 335 7.8% 38 7.1% 24 6.7% 397
Bonds 5.0% 186 5.3% 18 3.9% 12 5.0% 216
Other assets 0.0% 14 1.8% 2 3.3% 29 2.2% 45
__________ _____ __________ _____ __________ ____ __________ ______
Market value 535 58 65 658
Liabilities (730) (131) (85) (946)
__________ _____ __________ _____ __________ ____ __________ ______
Deficit (195) (73) (20) (288)
Deferred tax 58 26 7 91
asset
__________ _____ __________ _____ __________ ____ __________ ______
Net FRS 17 (137) (47) (13) (197)
liability
__________ _____ __________ _____ __________ ____ __________ ______
Remove existing provisions/assets net of 150
deferred tax
Remove existing SSAP 24 prepayment for Group pension (3)
schemes
______
Net adjustment which would result from (50)
the adoption of FRS 17
Profit and loss reserve as reported (1,635)
______
Profit and loss reserve on a FRS 17 basis (1,685)
______
Full disclosure in accordance with FRS 17 is included in the Group's Annual
Report for the year ended 30 September 2002.
Exchange rates
Exchange rates for major currencies used during the period after taking into
account the Group's hedging arrangements were:
2002 2002
Translation Closing
rate rate
Australian Dollar 2.63 2.89
Canadian Dollar 2.08 2.49
Danish Krone 12.16 11.82
Euro 1.63 1.59
Norwegian Krone 12.95 11.65
Swedish Krona 15.14 14.58
Swiss Franc 2.48 2.32
US Dollar 1.37 1.57
With effect from the year ending 30 September 2003, the Group will translate
its overseas earnings into sterling at the actual average exchange rate for the
year.
COMPASS GROUP PLC
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