Final Results
Compass Group PLC
11 December 2001
PART 1
PRESS RELEASE
11 December 2001
COMPASS GROUP PLC
PRELIMINARY UNAUDITED RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2001
Compass Group reports a strong performance for the year ended 30 September
2001.
All divisions have demonstrated strong organic growth and margin improvement
which has continued into the new financial year. The Group remains well
placed for future growth in a marketplace which continues to grow.
Financial Highlights
* Strong like for like turnover growth
- UK +6%
- North America +8%
- Continental Europe & rest of the world +9%
Total +8%
* Free cash flow improved to £357 million (2000: £231 million).
* Operating profit before goodwill and exceptionals up 90% to £676 million
(2000: £356 million).
* Earnings per share 20.0 pence, up 45%.
* Final dividend per share 3.8 pence, total for year 5.7 pence per share.
Operational Highlights
* Contract retention at 95%.
* Forte Hotels successfully sold.
* Rebranding of motorway service areas to Moto.
* New Little Chef concept.
Compass Group is pleased to announce today new contract wins including:
UK
* A 10 year contract with British Airways to be the sole provider of the
airline's employee restaurant and vending services in the UK, and all
passenger lounge catering services in the UK, USA and Canada.
North America
* A US$21 million per annum contract with Aetna, North America's leading
healthcare and benefits organisation.
* A 5 year, US$10 million per annum contract with Agilent.
International
* A US$ 29 million per annum contract with American Express in eight
countries.
Francis Mackay - Chairman - said
'The markets in which Compass Group operates offer significant growth
potential as the trends to outsourcing and the further consolidation of the
industry continue. Compass Group is in a very strong position to take
advantage of these trends given its market leading position and strong
balance sheet.'
Michael J Bailey - Chief Executive - said
'Our consistent run of impressive, high profile contract gains demonstrates
the inherent strength of our business as the leading global foodservice
provider. Clearly, large companies and organisations increasingly recognise
the benefits of outsourcing their catering needs to us.
'Since the events of September 11, the global economic environment has become
more uncertain with general activity slowing across a number of regions.
However, we remain confident that Compass Group will continue to perform
well, achieving market share gains that will drive organic sales growth
within our target range of between six and nine percent, together with
increased margins, in 2002.'
Enquiries:
11 December 2001
Francis Mackay Chairman Compass Group PLC 020 7404 5959
Michael J Bailey Chief Executive Compass Group PLC 020 7404 5959
Andrew LynchFinance Director Compass Group PLC 020 7404 5959
Timothy Grey/Simon Sporborg Brunswick Group Ltd 020 7404 5959
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
______________
We are pleased to report that the Group has enjoyed a very successful year in
2001 as a focused foodservice business. This has been achieved through
excellent like for like sales growth and margin improvement in all divisions,
together with the benefit of acquisitions.
Financial Performance
_____________________
The figures below demonstrate the successful financial performance in 2001.
2001 2000 Increase
Turnover £8,716m £5,770m 51%
Profit before interest, tax and depreciation £846m £461m 83%
(PBITDA)
Basic earnings per share 20.0p 13.8p 45%
Free cash flow £357m £231m 54%
The significant year on year growth rates above are driven by the impact of
acquisitions, including Granada Restaurants, Morrison and Selecta, and by
strong organic growth.
Geographic Analysis
___________________
The results for the year ended 30 September 2001, analysed by geographic
division, are set out below.
Reported Like for like
2001 2000 increase increase
% %
Turnover (£m)
United Kingdom 2,877 1,200 140 6
Continental Europe & 3,013 2,758 9 9
rest of the world
North America 2,826 1,812 56 8
_____ _____ ___ _______
8,716 5,770 51 8
_____ _____ ___ _______
Operating Profit (£m)
United Kingdom 377 120 214 6
Continental Europe & 153 136 13 13
rest of the world
North America 139 89 56 10
_____ _____ ___ _______
669 345 94 8
Associates 7 11 (36)
_____ _____ ___
676 356 90
_____ _____ ___
Operating Margin (%)
United Kingdom 13.1 10.0
Continental Europe & 5.1 4.9
rest of the world
North America 4.9 4.9
_____ _____
7.7 6.0
_____ _____
Goodwill amortisation and exceptional items are excluded from the tables
above.
Strong performances were delivered in each of our geographic regions with
overall like for like turnover increasing by 8%. Turnover growth for the UK
was 6%. This growth rate has been achieved despite the impact of the foot and
mouth outbreak and the rail disruption earlier in the year which is estimated
to have held back turnover growth by 1%. Turnover in Continental Europe &
rest of the world and in North America has been particularly strong, at 9%
and 8% respectively.
Operating profit before goodwill amortisation and exceptional items was up
90% at £676 million (2000: £356 million) when compared to last year. On a
like for like basis, operating profit was 8% up, and adjusted basic earnings
per share (before exceptional items and goodwill amortisation) increased to
20.0 pence, a 45% increase (2000: 13.8 pence). Underlying margins in all
operating divisions improved.
Business Performance
____________________
i) Business and Industry (B&I)
Major developments during the year include:
International
A major international contract has been won to provide services for American
Express in eight countries with a turnover of US$29 million per annum.
UK
Eurest is the largest part of the Group's business in the UK serving almost
4,000 client companies. During the year, the merger integration was completed
with the migration to the Eurest brand name at sites previously branded
Eurest Sutcliffe and Shaw Summit. Major contract gains for Eurest included:
* Sainsbury's: a five year contract, with £40 million annual turnover, to
provide catering services for 150,000 staff at 427 Sainsbury's stores
in the UK;
* Royal Bank of Scotland: a £28 million annual turnover contract to be
the sole provider of catering at 51 offices, with 37,500 staff across
the UK and Ireland;
* Lloyds TSB: a £24 million annual turnover contract extension to
include new sites.
Other significant B&I contract wins included Merrill Lynch, Halifax Direct,
Credit Suisse First Boston, Powergen, RTE-Dublin, Scottish Widows, Bristol &
West, Glaxo SmithKline, Sun Microsystems, Mori, ITV Digital, Reckitt
Benckiser, AC Nielsen, npower, the Royal Mint, Norwich Union Healthcare,
Thomson Travel, Van den Burg and Britvic.
The business continues to benefit from shared skills and expertise across our
international operations. A Restaurant Associates team from our US division
has been set up to focus on the development of our premier fine dining and
City contracts in the UK. This is reinforcing our relationship with leading
chefs and restauranteurs Prue Leith and Albert Roux and builds on our success
in this area in the USA.
France
Although France has seen a part year effect from the introduction of a
reduced working week and changes in the minimum wage, we have still seen
growth in the year. Major contract awards included Nortel, Printemps, Alstom
and Le Monde.
North America
The USA market offers a sizeable growth opportunity for our Eurest team,
supported by our unique capability in Canteen Vending which enables us to
combine high quality vending in addition to foodservice. Highlights during
the year included the appointment of Eurest to provide Motorola's foodservice
in North America which was previously self operated. Under the agreement we
will manage foodservice operations at 37 Motorola sites in North America and
Mexico, serving 67,000 meals daily. This is in addition to the existing
contracts to provide foodservice for Motorola in Europe, China, Argentina and
Australia.
Raytheon, a world leader in defence, government and commercial electronics
and special mission aircraft, has renewed its foodservice contract with
Eurest for a further ten years. Eurest and Canteen Vending will feed more
than 45,000 Raytheon employees in 30 cities.
ii)Remote Sites - Eurest Support Services (ESS)
ESS is the market leader in the remote site, offshore and defence market. The
recent record of exceptional growth has been continued, with substantial
increases during the year. This growth has been delivered across all sectors,
and includes:
A strategically important defence contract for NATO, in Kosovo and Macedonia.
A large multi-activity remote-site contract for Bechtel, in Algeria.
The provision of a range of services on board a number of offshore
installations for Transocean.
The expansion of our worldwide contract with the US Navy Exchange Command
(NEXCOM) for the installation of a range of branded foodservice concepts
continues apace, with the gaining of both the Pentagon and Washington Navy
Yard contracts and with the construction of several TGI Friday restaurants in
Italy and new food courts in Guam, Bahrain and Spain.
iii)Motorways and Roadside
UK
The UK division operates motorway service areas in 33 locations with 47 sites
and manages the Little Chef roadside brand (at over 400 locations) and
Travelodge - the budget hotel brand which is an integral part of the roadside
division.
The rebranding of the Granada motorway services business to Moto was a high
profile event in 2001, heralding a fresh approach to customer service and
good food. The rebranding of all the Group's Motorway Service Area (MSA)
sites in the UK under the Moto name was completed within 8 weeks thanks to
the hard work of all our staff in those sites. Prompted awareness of the
European-style brand is already over 40% and 67% of customers positively rate
their experience at the sites compared with other UK MSA sites. Moto has
introduced Compass Group's own brands Upper Crust, Ritazza and Stopgap and
has harnessed the Group's worldwide expertise to introduce improved quality
hot food in its Fresh Express Restaurants.
Little Chef is Britain's favourite roadside restaurant, trading on major
trunk roads throughout the UK. A new development tested during the year
included the updating of Little Chef to provide 'grab and go' choices of
Upper Crust and Ritazza products as well as offering customers takeaway
choices from the Harry Ramsden's and Little Chef menus. This has been
designed to provide a service to meet the demands of our customers for a more
modern environment that builds on the Little Chef's traditional values. The
service range has been extended so that customers can select Little Chef for
an evening meal, have food to takeaway or just 'grab and go'. This concept
has proved very successful and is now being introduced to other Little Chef
sites in 2002.
The Travelodge business continues to expand with the opening of its 208th
hotel during the year. The Travelodge estate now offers more than 11,000
rooms.
Overseas
The Group currently has less extensive overseas operations in motorway
service areas in Portugal, Austria, Belgium and Luxembourg. These differ from
the UK business in that they are less capital intensive and operate in a very
similar way to our concession business in other markets. We are currently
exploring significant future opportunities for further expansion of the
Group's roadside business into Continental Europe following the concession
model.
iv)Healthcare - Medirest
Through Medirest, Morrison and Crothall, we provide foodservice and support
services throughout the healthcare sector worldwide - from acute care
hospitals to long term care and senior living. We have invested significantly
in this market during the year, which is the world's fastest growing market
in our sector portfolio. Major events in this year include:
UK
Aggregate new contract wins for Medirest totalled £34 million turnover and
included Kingston Hospital, Hammersmith Hospitals, Black Country Mental
Health, Mid-Essex and Bedford and Luton NHS Trusts. The Group is also working
to introduce a restaurant experience to hospital patients, as part of the
Government's Better Food in Hospitals programme.
North America
The Group's relatively small position in the North American healthcare
foodservice market has been addressed by the acquisitions of Morrison
Management Specialists and Crothall Services Group during the year.
Morrison Management Specialists, the second-largest US healthcare and senior
living/retirement foodservice company, was acquired in April for US$563
million. The Morrison management team is now responsible for all the USA
business in this sector, which operates from over 500 locations.
Crothall Services Group, a Pennsylvania-based healthcare facilities
management company, was acquired in August for an initial consideration of
US$170 million. Crothall serves more than 250 hospitals across the US and
Canada, employs 8,500 people and has been the fastest growing company in the
industry, securing a 9% market share position in less than 10 years.
Major contract gains during the year include:
- Sentara Hospital System, Virginia, with managed volumes of over US $10
million per annum.
- University Medical Center, Las Vegas, Nevada, with managed volume of almost
US $6 million per annum.
- Methodist Health System, Tennessee - seven hospitals with aggregate managed
volume of US $13 million per annum.
France
Contracts have been won with two significant groups during the year: Medica,
France and GDP Vendome. Two large hospital contracts have also been obtained:
The Polyclinique du Grand Sud and Polyclinique de Vauban.
Germany
Major contract awards in the year include:
- The University Hospital Eppendorf providing for 1,450 beds and staff
foodservice; and
- Five Evangeline hospitals in Berlin providing for 1,500 beds and staff
foodservice.
Brazil
Contracts signed within the last 12 months include:
- Associacao de Apoio a Crianca Defeituoso (Physically Handicapped Children's
Association);
- The Kidney Hospital - linked to the Federal University of Brazil;
- The Alvorada Hospital - a general hospital linked to health plans in the
city of Sao Paulo;
- APAE - Associacao de Pais e Amigos dos Excepcionais (Parents and Friends
Association of the Physically Handicapped); and
- The Ipanema Children's Clinic.
Australia
In Australia the Group has won A$6 million of residential business from one
of Australia's largest providers of senior care services, the Salvation Army.
Spread across three states the wins included the country's largest senior
care site located in Perth.
South Africa
In June 2001 we were awarded strategic partnership with the Afrox Healthcare
Group Ltd. They are the second largest group of hospitals in Africa with 45
hospitals.
v) Education - Scolarest
Scolarest provides foodservice to education establishments throughout the
world, from kindergartens through to higher education establishments in
universities and colleges.
UK
During the year, all the UK's education business was rebranded under
Scolarest, as part of the continued integration of the former Granada
business. Major contract wins by the business included a £2.4 million
turnover contract for Barnsley schools, and a multi-site contract with
Torfaen Borough Council in Wales to provide foodservice to over 7,000 pupils
in the region.
North America
Major awards include a contract to provide foodservice for the Loop and
Lincoln Park campuses of DePaul University in Chicago, Illinois. DePaul is
the largest Catholic institution in the US and comprises eight campuses
accommodating 20,000 students. Other contracts awarded include the Trinity
College, Sunnyside I.S.D. (Independent School District), Pontiac P.S. (Public
School) and Pender County P.S. (Public School).
Other
Contracts that have been awarded across the Group include:
- China with the international schools in Shanghai and Beijing;
- South Africa contracts with the University of Witwatersrand, Kingswood
College and Edgewood College; and
- France with Valence and Palaiseau, also with central kitchens opened at
Clichy Montfermeil and Sedan.
vi)Retail and Concession Catering - Select Service Partner (SSP)
The global retail and concession market continues to grow and consolidate and
Compass Group is well positioned to benefit from the opportunities that this
presents. SSP has further strengthened its position over the year as the
leading supplier of food and beverage to the travel market, with significant
business gains in both its core markets of airports and rail. Highlights
during the year have been:
UK
SSP continued to lead the retail and travel market in the UK with over 30 new
outlets opened during the year. New business with Stena Line Ferries included
the first Burger King to be introduced on-board a Stena vessel. SSP also
entered into a joint initiative with Marks & Spencer to trial M&S Simply Food
convenience stores at major railway stations.
Rest of the world
Airports
New contracts have been won in Zurich, Sydney, Reno, Basle-Mulhouse, Charles
de Gaulle, Dresden and New York JFK, with important contract extensions at
Oslo and Stockholm.
vii)Sports and Events
Compass Group caters for a number of sporting events throughout the world -
from Arsenal and Liverpool football clubs in the UK, Flushing Meadows tennis
and Ryder Cup golf on both sides of the Atlantic to numerous international
cricket, football, horse racing and other sporting events. We were caterers
at the Sydney Olympics, the 1998 football World Cup and will be catering for
the Winter Olympics at Salt Lake City in 2002.
Our position in the market was significantly enhanced with the investment in
Levy Restaurants in North America last year, which brings a new dimension in
quality and innovation to our business. With contracts in sports stadia,
arenas, convention facilities and music and performance venues across the US
they brought to the Group a number of important venues for baseball, American
football and basketball and created dining experiences for prestigious events
such as the Grammy awards.
Highlights for the year in this division include the following contract
gains:
- In Australia, the contract for the Sydney football stadium and cricket
ground.
- For Letheby & Christopher in the UK the Rockingham Motor Speedway contract.
- For Levy Restaurants in the USA a foodservice contract at Churchill Downs,
home of the Kentucky Derby.
- In the USA, a US$40 million per annum contract with Speedway Motorsports,
Inc.
New Contract Awards
New business gains across the group continue to be strong and we are pleased
to announce today the following major contract gains.
UK
- British Airways - A 10 year contract to be the sole provider of the employee
restaurants and vending services in the UK, and all passenger lounge catering
services in the UK, USA and Canada.
USA
- A US$21 million per annum contract with Aetna, North America's leading
healthcare and benefits organisation.
A US$10 million per annum contract with Agilent.
International
- American Express - international contract to provide foodservice in eight
countries, turnover US$29 million annually.
Brazil
- A new 10 year contract worth US$10 million per annum to operate foodservice
in the bus terminals in Sao Paulo.
France
- Printemps - a fifteen year contract to operate the catering at their flagship
Paris store, annual value £1.5 million.
Australia
- Sydney Convention and Exhibition Centre - in partnership with Accor a
contract over three, five year terms.
- David Jones - a contract to operate 45 outlets in 29 stores for Australia's
leading department store chain. A ten year contract worth A$20 million per
annum has been awarded.
Recent contract gains announced include:
- BBC, a ten year contract with Land Securities Trillium for all BBC sites in
London and Scotland.
- Speedway Motorsports Inc: a US$40 million annual turnover contract.
Disposals
Following the announcement by the Group in October 2000 of the proposed sale
of the Forte Hotels division, the sale process for the major brands was
concluded in May 2001 with the announcement of the sale of Le Meridien. To
date the Group has already received, in cash, £2,806 million of the net
proceeds of the sale.
Investments
There have been a number of notable investments during the year.
(i) Vending
In May 2001 we acquired the 66.7% of Selecta (the Swiss based vending group
operating in a number of our European markets) not already owned by Compass
Group in a recommended cash offer of CHF901 million.
Clients are increasingly seeking the choice of a combined foodservice and
vending offer. This move brought our number one vending company in North
America together with the number one vending company in Europe - combining
the expertise of Canteen Vending with Selecta.
Our position in the vending market was further strengthened in July with the
acquisition of Vendepac, the UK vending group, for £84 million. Vendepac is
the UK market leader with a 9% market share and together with Canteen and
Selecta makes us the world's largest food and beverage vending provider.
(ii)Healthcare
In April we acquired Morrison Management Specialists Inc., the second
Largest US healthcare and senior living/retirement foodservice company, for
US$563 million. This gave us a market-leading position in the US healthcare
sector, complementing our existing healthcare business worldwide.
In August we acquired Crothall Services Group, the US healthcare services
management company specialising in housekeeping, portering and laundry
services, for an initial consideration of US$170 million. Crothall is an
important addition to our business as it supports Morrison in building and
strengthening our presence in the healthcare market. Our focus continues to
be on foodservice but Crothall helps us meet the specific additional needs
of this market sector.
(iii)Other Investments
Other investments in the year include a small but strategically important
investment in Japan, and the acquisition of Au Bon Pain in the USA, which
was announced with our preliminary results last year.
We also announced in February the formation of a joint venture in the Middle
East with ADNH, creating a market leadership position in this US$1.3 billion
market.
A further investment was in Canada, where Beaver Foods was acquired in
November 2000 for C$150 million. Beaver Foods has tripled the volume of
business for Compass Group in Canada, positioning us as the leader in
education and remote site foodservice within that marketplace.
Cash flow
The business continues to demonstrate strong cash generation. The 2001 net
cash flow from operating activities before exceptional items was £748
million, up £395 million, 112% from 2000. The working capital movement in the
year was an outflow of £51 million (2000: outflow £71 million). Cash paid in
respect of provisions for liabilities and charges was £33 million (2000: £17
million). Interest and tax payments absorbed £344 million (2000: £118
million).
Free cash flow for the year was £357 million (2000: £231 million), an
increase of 54%. Free cash flow for the year is lower than would otherwise be
expected since cash generated from operations excludes any contribution from
Forte Hotels whereas free cash flow is after net interest paid of £245
million, including interest on debt subsequently repaid out of the hotel
disposal proceeds.
Net capital expenditure was £325 million, (excluding £20 million purchased
under finance lease contracts), an increase of £150 million over 2000. The
Group has in place stringent controls on capital expenditure which are
monitored centrally. There are fixed authority limits in place at each
subsidiary company and internal rate of return criteria which each project
must achieve to obtain approval. The majority of the capital expenditure is
of a project nature and is therefore discretionary. It includes expenditure
which relates to the further development of the Group's concession activities
and the continuing process of brand roll out. Development expenditure for
2001 was approximately £259 million (UK: £130 million, Continental Europe &
rest of the world: £47 million and North America: £82 million).
The payment of a dividend to Granada Compass plc absorbed £121 million.
Acquisition payments were £1,337 million, comprising £1,248 million in
respect of current year acquisitions (excluding £53 million of loans and
finance lease obligations in the companies when acquired) and £89 million of
deferred consideration, costs in respect of acquisitions made in prior years
and costs paid relating to the merger and demerger. Disposal proceeds
generated £2,831 million in 2001. Net debt as at 30 September 2001 was £2,390
million, a decrease of £1,306 million over the previous year end, primarily
as a result of the hotel proceeds received net of payments in respect of
acquisitions.
Exceptional items and goodwill amortisation
An exceptional item of £95 million, net of taxation, relates to the UK
integration of Granada Restaurants and includes integration costs of £52
million (2000: £8 million). The Group is confident of not exceeding the total
integration cash cost of £65 million predicted at the time of the merger. The
exceptional item also includes the non-cash write off of duplicate assets of
£44 million and the 2001 cost of the Commitment Plan of £28 million entered
into to retain senior employees. The plan is payable in Compass Group shares
which may be issued in January 2002.
The goodwill amortisation charge for the year was £205 million.
Taxation
The overall Group taxation charge is £92 million comprising a £121 million
charge relating to ordinary activities and a £29 million credit relating to
exceptional items. The overall taxation rate on ordinary activities is 20.7%
of profit before exceptional items, goodwill amortisation and taxation. This
rate benefits from the inclusion of £127 million of non-taxable imputed
interest income in profit before tax, without which the effective taxation
rate is 26.5%.
Dividend
A final dividend of 3.8 pence per share is being recommended. This will bring
the total dividend for the year to 5.7 pence.
Outlook
Our consistent run of impressive, high profile contract gains demonstrate the
inherent strength of our business as the leading global foodservice provider.
Clearly, large companies and organisations increasingly recognise the
benefits of outsourcing their catering needs to us.
Since the events of September 11, the global economic environment has become
more uncertain with general activity slowing across a number of regions.
However, we remain confident that Compass Group will continue to perform
well, achieving market share gains that will drive organic sales growth
within our target range of between six and nine percent, together with
increased margins, in 2002.
MJ Bailey FH Mackay
Chief Executive Chairman
NOTES
(a) Compass Group PLC was incorporated on 29 September 2000. On 2 February 2001,
Granada Compass plc transferred its hospitality business to Compass Group
PLC in exchange for the issue of shares by Compass Group PLC to the Granada
Compass plc shareholders. This hospitality business was created on 27 July
2000 when the former Compass Group PLC ('Former Compass') merged with
Granada Group PLC. On that date, the management of Former Compass took
Effective control of Granada's foodservice activities ('Granada
restaurants') and its hotels activities ('Forte Hotels'). On 16 October
2000 the intention to dispose of Forte Hotels was announced.
Accordingly the financial information for Compass Group PLC has been
Prepared as follows:
* Former Compass has been combined with Compass Group PLC using the
principles of merger accounting;
* Granada Restaurants has been consolidated with effect from 27 July 2000,
using the principles of acquisition accounting; and
* Forte Hotels has been included as a current asset investment at the net
present value of the anticipated net proceeds from its disposal.
(b) The results of Compass Group PLC for the year ended 30 September 2001 have
been prepared on the basis of the accounting policies previously adopted by
Former Compass as set out on pages 30 and 31 of the Introduction to the
Official List circulated to Granada Compass plc shareholders on 18 December
2000.
(c) The financial information set out in the announcement does not constitute
the Company's statutory accounts for the years ended 30 September 2001 or 30
September 2000 but is derived from those accounts. The statutory accounts
for the year ended 30 September 2001 will be finalised on the basis of the
financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following
the Company's Annual General Meeting.
(d) The timetable for the proposed final dividend of 3.80p per share is as
follows:
Record date: 1 March 2002
Payment date: 5 April 2002
(e) To provide the Group with additional flexibility, 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.
(f) Presentation and Teleconference
* A presentation to analysts will take place at 9.30am (GMT) on Tuesday 11
December 2001 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 11 December 2001.
* To participate in the teleconference dial:
+44 (0)20 8240 8242 or +44 (0)20 8240 8243
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).
* To access the web presentation:
http://62.210.134.37/minisites/compass/11122001/default.htm
* A conference call for US analysts and investors will take place at 16:45
(GMT) / 11:45 New York time on Tuesday 11 December 2001. To participate in
the teleconference dial:
+1 952 556 2801.
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://62.210.134.37/minisites/compass/11122001pm/default.htm
Enquiries:
11 December 2001
Francis Mackay ChairmanCompass Group PLC 020 7404 5959
Michael J Bailey Chief ExecutiveCompass Group PLC 020 7404 5959
Andrew Lynch Finance DirectorCompass Group PLC 020 7404 5959
Timothy Grey/Simon Sporborg Brunswick Group Ltd 020 7404 5959
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
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2001
Before goodwill Goodwill
amortisation amortisation
and exceptional and exceptional Total
items items 2001
Notes £m £m £m
_________________________________________________
Turnover
Continuing 8,088 - 8,088
operations
Acquisitions 628 - 628
_________________________________________________
Total turnover 1 8,716 - 8,716
Operating costs (8,047) (327) (8,374)
_________________________________________________
Operating profit
Continuing 640 (299) 341
operations
Acquisitions 29 (28) 1
_________________________________________________
669 (327) 342
Share of profits
of associated
undertakings
Continuing 1 7 (2) 5
operations
_________________________________________________
Total operating 1 676 (329) 347
profit: Group and
share of associated
undertakings
_________________________________________________
Reversal of 11 127 - 127
discounting of
net proceeds from
disposal of
businesses to net
present value
Other interest 17 - 17
receivable and
similar income
_________________________________________________
Total interest 144 - 144
receivable and
similar income
Interest payable 3 (237) - (237)
and similar
charges
_________________________________________________
Net interest (93) - (93)
_________________________________________________
Profit on ordinary 583 (329) 254
activities before
taxation
Tax on profit on 4 (121) 29 (92)
ordinary activities
_________________________________________________
Profit on ordinary 462 (300) 162
activities after
taxation
Equity minority (16) - (16)
interests
_________________________________________________
Profit for the 446 (300) 146
financial year
Equity dividends 5 (126) - (126)
_________________________________________________
Profit for the 15 320 (300) 20
year retained
_________________________________________________
Basic earnings 6 6.6p
per ordinary
share
____
Basic earnings 6 20.0p
per ordinary
share - excluding
goodwill
amortisation and
exceptional items
______
Diluted earnings 6 6.5p
per ordinary
share
____
Diluted earnings 6 19.8p
per ordinary
share - excluding
goodwill
amortisation and
exceptional items
______
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 September 2001
Before goodwill Goodwill
amortisation amortisation
and exceptional and exceptional Total
items items 2000
Notes £m £m £m
_________________________________________________
Turnover
Continuing 5,770 - 5,770
operations
Acquisitions - - -
_________________________________________________
Total turnover 1 5,770 - 5,770
Operating costs (5,425) (44) (5,469)
_________________________________________________
Operating profit
Continuing 345 (44) 301
operations
Acquisitions - - -
_________________________________________________
345 (44) 301
Share of profits
of associated
undertakings
Continuing 1 11 (3) 8
operations
_________________________________________________
Total operating 1 356 (47) 309
profit: Group and
share of
associated
undertakings
_________________________________________________
Reversal of 11 32 - 32
discounting of
net proceeds from
disposal of
businesses to net
present value
Other interest 17 - 17
receivable and
similar income
_________________________________________________
Total interest 49 - 49
receivable and
similar income
Interest payable 3 (127) - (127)
and similar
charges
_________________________________________________
Net interest (78) - (78)
_________________________________________________
Profit on 278 (47) 231
ordinary
activities before
taxation
Tax on profit on 4 (61) 3 (58)
ordinary
activities
_________________________________________________
Profit on 217 (44) 173
ordinary
activities after
taxation
Equity minority (4) - (4)
interests
_________________________________________________
Profit for the 213 (44) 169
financial year
Equity dividends 5 (137) - (137)
_________________________________________________
Profit for the 15 76 (44) 32
year retained
_________________________________________________
Basic earnings 6 11.0p
per ordinary
share
____
Basic earnings 6 13.8p
per ordinary
share - excluding
goodwill
amortisation and
exceptional items
______
Diluted earnings 6 10.9p
per ordinary
share
____
Diluted earnings 6 13.7p
per ordinary
share - excluding
goodwill
amortisation and
exceptional items
______
CONSOLIDATED BALANCE SHEET
As at 30 September 2001
Notes 2001 2000
£m £m
_____ _____
Fixed assets
Intangible assets 7 4,254 3,113
Tangible assets 8 2,081 1,756
Investments 9 27 160
_____ _____
6,362 5,029
_____ _____
Current assets
Stocks 181 130
Debtors: amounts falling due within one year 10 1,178 968
amounts falling due after more than one year 10 238 198
Businesses held for resale 11 75 2,754
Investments 12 -
Cash at bank and in hand 692 583
_____ _____
2,376 4,633
Creditors: amounts falling due within one year 12 (2,838) (3,421)
_____ _____
Net current (liabilities)/assets (462) 1,212
_____ _____
Total assets less current liabilities 5,900 6,241
Creditors: amounts falling due after more than 13 (2,699) (3,053)
one year
Provisions for liabilities and charges 14 (377) (362)
Equity minority interests (35) (28)
_____ _____
Net assets 2,789 2,798
_____ _____
Capital and reserves
Called up share capital 222 221
Shares to be issued 32 4
Share premium account 15 11 -
Merger reserve 15 4,170 4,158
Profit and loss account 15 (1,646) (1,585)
_____ _____
Total equity shareholders' funds 2,789 2,798
_____ _____
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2001
2001 2000
_______________ ______________________
£m £m £m £m
Net cash inflow from 748 353
operating activities
before exceptional items
(note I)
Exceptional (44) (4)
reorganisation costs
____ ___
Net cash inflow after 704 349
exceptional items
Dividends from associated 2 1
undertakings
Returns on investments
and servicing of finance
Interest received 16 23
Interest paid (258) (112)
Interest element of (3) (3)
finance lease rental
payments
Dividends paid to (5) (1)
minority interests
____ _____
Net cash outflow from (250) (93)
returns on investments
and servicing of finance
____ ___
Taxation
Tax received 19 10
Tax paid (118) (36)
____ _____
Net tax paid (99) (26)
____ ___
Free cash flow 357 231
____ ___
Capital expenditure and
financial investment
Purchase of tangible (355) (185)
fixed assets
Sale of tangible fixed 30 10
assets
Sale/(purchase) of own 1 (6)
shares, net
____ _____
Total capital expenditure (324) (181)
and financial investment
Acquisitions and
disposals (note IV)
Purchase of subsidiary (1,337) (98)
companies and investments
in associated undertakings
Net proceeds from hotel 2,806 -
disposal
Sale of subsidiary 25 (3)
companies
____ _____
Total acquisitions and 1,494 (101)
disposals
Equity dividends paid (121) (45)
____ ___
Net cash inflow/(outflow) 1,049 (327)
from investing activities
_____ ___
Net cash inflow/(outflow) 1,406 (96)
before financing
Financing
Issue of ordinary share 24 6
capital
Debt due within a year:
Decrease in bank loans (430) (209)
and loan notes
Debt due after a year:
(Decrease)/increase in (440) 301
bank loans and loan notes
Capital element of (15) (9)
finance lease rentals
____ _____
Net cash (outflow)/inflow (861) 89
from financing
____ ___
Increase / (decrease) in 545 (7)
cash in the year
____ ___
Reconciliation of net
cash flow to movement in
net debt (note II)
Increase / (decrease) in 545 (7)
cash in the year
Cash outflow/(inflow) 885 (83)
from change in debt and
lease finance
____ ___
Change in net debt 1,430 (90)
resulting from cash flows
Changes in finance (73) (2,543)
leases, loans acquired
with subsidiaries and
other non-cash changes
Effect of foreign (51) 3
exchange rate changes
____ ___
Movement in net debt in 1,306 (2,630)
the year
Opening net debt (3,696) (1,066)
______ _____
Closing net debt (2,390) (3,696)
______ _____
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2001
I RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES:
2001 2000
£m £m
Operating profit before goodwill amortisation and 676 356
exceptional items
Depreciation 170 105
______ ______
EBITDA 846 461
Profit on disposal of fixed assets and businesses (7) (9)
Share of profits of associated undertakings (7) (11)
Decrease in provisions for liabilities and charges (33) (17)
Increase in stocks (8) (9)
Increase in debtors (153) (143)
Increase in creditors 110 81
______ ______
Net cash inflow from operating activities before 748 353
exceptional items
______ ______
II Analysis of net debt:
1 October Cash Exchange Acquisitions Other 30
2000 flow movements (excluding non-cash September
£m £m £m cash and changes 2001
overdrafts) £m £m
£m
Cash at 583 114 (5) - - 692
bank and
in hand
Overdrafts (480) 431 2 - - (47)
________ ______ ________ ____________ ________ ________
103 545 (3) - - 645
________ ______ ________ ____________ ________ ________
Debt due (800) 430 - - (67) (437)
within one
year
Debt due (2,957) 440 (49) (48) 67 (2,547)
after one
year
Finance (42) 15 1 (5) (20) (51)
leases
________ ______ ________ ____________ ________ ________
(3,799) 885 (48) (53) (20) (3,035)
________ ______ ________ ____________ ________ ________
Total (3,696) 1,430 (51) (53) (20) (2,390)
________ ______ ________ ____________ ________ ________
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (continued)
For the year ended 30 September 2001
III Purchase and disposal of subsidiary companies and investments in
associated undertakings:
2001 2001 2000 2000
£m £m £m £m
Purchases Disposals Purchases Disposals
Net assets acquired/
(disposed of):
Tangible fixed assets 197 - 1,227 (1)
Investment in associated
undertakings 8 - 66 -
Businesses held for resale - - 2,722 -
Stocks 45 - 21 (4)
Debtors 180 - 182 (15)
Investments 12 - - -
Cash 22 - 445 (3)
Bank overdrafts (22) - (300) -
Loans (48) - (2,748) -
Leases (5) - (1) -
Creditors (314) - (664) 19
Provisions (42) - (291) -
Tax (9) - (109) 1
Minority interests 2 - (14) -
Share of net assets already owned (39) - - -
___________ __________ __________ ___________
(13) - 536 (3)
Profit on disposal and costs
and liabilities - - - (11)
retained
Goodwill acquired/(disposed of) 1,281 - 3,026 (11)
___________ __________ __________ ___________
1,268 - 3,562 (25)
___________ __________ __________ ___________
Satisfied by:
Cash payable 1,248 - 175 -
Shares - - 3,298 -
Deferred consideration payable 20 - 89 -
Deferred consideration receivable - - - (25)
___________ __________ __________ ___________
1,268 - 3,562 (25)
___________ __________ __________ ___________
IV Analysis of net outflow of cash in respect of the purchase and disposal of
subsidiary companies and investments in associated undertakings:
2001 2001 2000 2000
£m £m £m £m
Purchases Disposals Purchases Disposals
Cash consideration paid 1,248 - 175 -
Cash (22) - (445) 3
(acquired)/disposed of
Overdrafts acquired 22 - 300 -
_________ _________ _________ ___________
1,248 - 30 3
Deferred consideration 89 (25) 68 -
and costs relating to
previous
acquisitions/(disposals)
_________ _________ _________ ___________
1,337 (25) 98 3
_________ _________ _________ ___________
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