Final Results - Part 2
Compass Group PLC
11 December 2001
PART 2
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2001
1. Turnover and operating profit
Continuing
operations Acquisitions 2001 2000
£m £m £m £m
Turnover
Foodservice:
Geographical analysis:
- United Kingdom 2,867 10 2,877 1,200
- Continental Europe & rest of the world 2,826 187 3,013 2,758
- North America 2,395 431 2,826 1,812
__________ ___________ ______ _____
8,088 628 8,716 5,770
__________ ___________ ______ _____
Operating profit
Before goodwill amortisation and exceptional
items
Foodservice:
- The Company and its subsidiary
undertakings 640 29 669 345
- Associated undertakings 7 - 7 11
__________ ___________ ______ _____
647 29 676 356
__________ ___________ ______ _____
Geographical analysis:
- United Kingdom
The Company and its subsidiary
undertakings 376 1 377 120
Associated undertakings 1 - 1 -
- Continental Europe & rest of the world
The Company and its subsidiary undertakings 143 10 153 136
Associated undertakings 6 - 6 11
- North America 121 18 139 89
__________ ___________ ______ _____
647 29 676 356
__________ ___________ ______ _____
Amortisation of goodwill:
- UK (149) - (149) (24)
- Continental Europe & rest of the world (23) (8) (31) (9)
- North America (5) (20) (25) (2)
Exceptional items:
- United Kingdom (115) - (115) (11)
- Continental Europe & rest of the world (6) - (6) -
- North America (3) - (3) (1)
__________ ___________ ______ _____
(301) (28) (329) (47)
__________ ___________ ______ _____
Total operating profit: Group and share of 346 1 347 309
associated undertakings
__________ ___________ ______ _____
Operating profit after goodwill amortisation and exceptional items for the
year ended 30 September 2001 relates to foodservice analysed as UK £114
million, Continental Europe & rest of the world £122 million, and North
America £111 million (2000: £85 million, £138 million and £86 million
respectively).
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
2.Exceptional operating items - continuing operations
2001 2000
£m £m
Reorganisation
- costs incurred 40 4
- accrued costs 12 4
- assets written off 44 -
Employee share schemes 28 4
____ ____
124 12
____ ____
During 2000, the Group acquired Granada Restaurants and is combining 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 which was
entered into with effect from 27 July 2000 to retain senior employees which
matures on 27 January 2002 and which is payable in Compass Group PLC shares.
3.Interest payable and similar charges
2001 2000
£m £m
Bank loans and overdrafts 155 32
Other loans 82 95
____ ___
237 127
____ ___
4.Tax on profit on ordinary activities
2001 2000
£m £m
UK corporation tax 37 16
Overseas tax payable 52 52
_____ ____
89 68
UK deferred tax 24 (5)
Overseas deferred tax 6 -
_____ ____
119 63
Adjustments in respect of prior years:
UK corporation tax 1 (1)
Overseas tax payable (3) (4)
_____ ____
117 58
Overseas tax on share of profits of
associated undertakings 4 3
Total tax charge before exceptional items 121 61
Exceptional items:
UK corporation tax (18) (1)
UK deferred tax (11) (2)
_____ ____
92 58
_____ ____
United Kingdom corporation tax has been charged at 30% (2000: 30%). The Group
tax charge is reduced below this rate since tax is charged at a lower
effective rate on overseas earnings.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
5.Dividends
Per 2001 Per 2000
share £m share £m
Dividends on ordinary shares of 10p each:
Interim 1.9p 42 - -
Proposed final 3.8p 84 - -
Interim dividend of Former Compass - - 1.1p 16
Final dividend payable to Granada Compass plc - - N/A 121
_____ _____ _____ ____
5.7p 126 N/A 137
_____ _____ _____ ____
The average number of shares for both 2000 and 2001 have been determined as
if the post demerger capital structure of Compass Group PLC had existed
throughout the period. The final dividend for 2000 was Former Compass's share
of the interim dividend of Granada Compass plc. Owing to the different basis
on which this dividend was calculated, a per share amount has not been
presented.
6.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
2001 2001 2000 2000
£m £m £m £m
Attributable profit 446 146 213 169
for basic earnings
per share
Interest on - - 7 7
convertible
bonds net of
tax
___________ ____________ ____________ ____________
Attributable 446 146 220 176
profit for
diluted
earnings per
share
Millions Millions Millions Millions
Average 2,215 2,215 1,541 1,541
number of
shares in
issue
Shares to be 10 10 2 2
issued
Average - - (1) (1)
number of
shares held
by ESOP
___________ ____________ ____________ ____________
Average 2,225 2,225 1,542 1,542
number of
shares for
basic
earnings per
share
Dilutive 26 26 21 21
share options
Conversion of - - 48 48
5.75%
convertible
bond due 2007
___________ ____________ ____________ ____________
Average 2,251 2,251 1,611 1,611
number of
shares for
diluted
earnings per
share
___________ ____________ ____________ ____________
Basic 20.0p 6.6p 13.8p 11.0p
earnings per
share
___________ ____________ ____________ ____________
Diluted 19.8p 6.5p 13.7p 10.9p
earnings per
share
___________ ____________ ____________ ____________
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 both 2000 and 2001 have been determined as if
the post demerger capital structure of Compass Group PLC had existed
throughout both periods.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
7.Intangible fixed assets
£m
Goodwill
Cost
At 1 October 2000 3,148
Additions arising from acquisitions 1,281
Transfer of goodwill previously included in investment in associates 110
Currency adjustment (46)
_____
At 30 September 2001 4,493
_____
Amortisation
At 1 October 2000 35
Charge for the year 203
Transfer of goodwill amortisation previously included in investment 6
in associates
Currency adjustment (5)
_____
At 30 September 2001 239
_____
Net book amount
At 30 September 2001 4,254
_____
At 30 September 2000 3,113
_____
Additions to goodwill arising from acquisitions primarily relate to the
acquisitions of Morrison Management Specialists in the USA and Selecta in
Continental Europe. Further information on these acquisitions can be found in
note 16. Transfer of goodwill consists of £51 million in respect of 13.3% of
Selecta already owned by the Group and £53 million in respect of Levy, which
was accounted for as an associate in 2000 but for which control has been
achieved in 2001. Goodwill on acquisitions is being amortised over periods of
up to 20 years which are considered to be the estimated useful lives.
8.Tangible fixed assets
Freehold Long Short
Land and leasehold leasehold
Buildings property property
£m £m £m
Cost
At 1 October 2000 737 243 231
Currency adjustment - - (1)
Additions 38 19 49
Businesses acquired 23 2 6
Disposals (9) - (11)
__________ ________ _________
At 30 September 2001 789 264 274
__________ ________ _________
Depreciation
At 1 October 2000 16 3 20
Currency adjustment - - -
Charge for the year 3 3 21
Businesses acquired 8 1 2
Disposals - - (7)
__________ ________ _________
At 30 September 2001 27 7 36
__________ ________ _________
Net book amount
At 30 September 2001 762 257 238
__________ ________ _________
At 30 September 2000 721 240 211
__________ ________ _________
Plant Fixtures
and and
machinery fittings Total
£m £m £m
Cost
At 1 October 2000 668 417 2,296
Currency adjustment (13) (6) (20)
Additions 165 102 373
Businesses acquired 362 33 426
Disposals (87) (19) (126)
__________ ________ _________
At 30 September 2001 1,095 527 2,949
__________ ________ _________
Depreciation
At 1 October 2000 323 178 540
Currency adjustment (8) (4) (12)
Charge for the year 96 47 170
Businesses acquired 196 22 229
Disposals (42) (10) (59)
__________ ________ _________
At 30 September 2001 565 233 868
__________ ________ _________
Net book amount
At 30 September 2001 530 294 2,081
__________ ________ _________
At 30 September 2000 345 239 1,756
__________ ________ _________
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 £4 million (2000: £2 million), plant and machinery £36
million (2000: £29 million) and fixtures and fittings £10 million (2000: £6
million).
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
9.Investments held as fixed assets
Investment in associated
undertakings Own shares Total
£m £m £m
Cost
At 1 October 2000 158 2 160
Additions 8 - 8
Transfer of investments to (143) - (143)
subsidiary undertakings
Disposals - (1) (1)
Share of retained profits less 3 - 3
losses
Dividends received (2) - (2)
Goodwill amortisation (2) - (2)
Currency adjustments/other 4 - 4
movements
________________ _________ ______
At 30 September 2001 26 1 27
________________ _________ ______
Investment in associated undertakings at 30 September 2001 comprises a number
of small unquoted investments. Transfers to subsidiary undertakings relate to
Selecta Group and Levy. In respect of Selecta Group the transfer relates to
the 33.3% of Selecta owned prior to the acquisition of the remaining 66.7%
stake on 9 May 2001. A 49% stake in Levy was purchased during 2000, however,
since that date, control of this entity has been achieved and the entity has
now been consolidated in the Group's results for the year ended 30 September
2001.
Own shares held by the Group represent 82,951 shares in Compass Group PLC
(2000: 316,851 shares in Granada Compass plc). 216,426 shares are also held
in Granada plc. All shares are held by the Compass Group Employee Share Trust
(ESOP). These shares are listed on a recognised investment exchange and their
market value at 30 September 2001 was £1 million (2000: market value of
Granada Compass plc shares £2 million). The nominal value held at 30
September 2001 was £0.1 million (2000: £0.1 million).
The ESOP is a discretionary trust for the benefit of employees and the shares
held are used to satisfy some of the Group's liabilities to employees for
share options and long term incentive plans. All of the shares held by the
ESOP will be required to be made available in this way. The net cost to the
Group of these shares is charged to the profit and loss account over the
period to which they relate.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
10.Debtors
2001 2000
£m £m
Amounts falling due within one year
Trade debtors 839 672
Amounts owed by associated undertakings 1 -
Overseas tax recoverable 5 3
Other debtors 162 149
Prepayments and accrued income 171 144
______ ____
1,178 968
______ ____
Amounts falling due after more than one year
Other debtors 116 57
Deferred tax 122 141
______ ____
238 198
______ ____
Provided Unprovided
____________ _______________
2001 2000 2001 2000
£m £m £m £m
Deferred tax analysis
UK capital allowances in excess of (18) (1) (114) (114)
depreciation
UK short term timing differences 123 128 51 51
Overseas deferred tax 6 12 101 57
Exceptional items 11 2 9 3
____________ _______________
122 141 47 (3)
____________ _______________
The analysis of unprovided 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.
£m
The movements on deferred tax are as follows:
At 1 October 2000 141
Arising from acquisitions 3
Charged to profit and loss account (30)
Other movements (3)
Exceptional items 11
____
At 30 September 2001 122
____
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
11.Businesses held for resale
£m
Total net proceeds from disposal discounted to 27 July 2000 2,722
Reversal of discounting in period from 27 July 2000 to 30 32
_____
September 2000
Net present value of net proceeds receivable from disposal of 2,754
business as at 30 September 2000
Reversal of discounting in the year to 30 September 2001 127
Net proceeds received as at 30 September 2001 (2,806)
_____
Net present value of net proceeds receivable from disposal of 75
business as
at 30 September 2001
_____
Businesses held for resale represents the businesses of Forte Hotels which
were acquired, but held exclusively for resale, on 27 July 2000 as a result
of the merger with Granada Group PLC. The net proceeds have been discounted
from the date of receipt of the cash proceeds back to 27 July 2000. The
effect of the discounting has been credited evenly to the profit and loss
account over the period from 27 July 2000 to the date of receipt of the
proceeds.
12.Creditors - amounts falling due within one year
2001 2000
£m £m
Bonds 330 466
Loan notes 25 9
Bank loans 82 325
Bank overdrafts 47 480
Obligations under finance leases 12 10
Trade creditors 760 597
Amounts owed to associated undertakings 12 -
Corporation tax payable 163 211
Overseas tax 138 110
Other tax and social security costs 192 120
Other creditors 184 169
Deferred consideration 2 79
Accruals and deferred income 765 724
Proposed dividend 126 121
_____ _____
2,838 3,421
_____ _____
Bonds consists of a 10% debenture loan stock due 2018 with a nominal value of
£200 million, which is recorded at its fair value to the Group on
acquisition, secured on cash deposits of £350 million. Negotiations are in
progress to redeem this loan stock. It is anticipated that redemption will
take place within the next year and therefore this loan stock has been
included in creditors falling due within one year.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
13.Creditors - amounts falling due after more than one year
2001 2000
£m £m
Bonds 614 621
Loan notes 161 165
Bank loans 1,772 2,171
Obligations under finance
leases 39 32
Other creditors 60 56
Deferred consideration 53 8
_____ _____
2,699 3,053
_____ _____
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.
- Sterling Eurobond with nominal value £200 million redeemable in 2010 and
bearing interest at 7.125% per annum.
- Sterling Eurobond with nominal value £250 million redeemable in 2014 and
bearing interest at 7% 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$324
million (£220 million) at interest rates between 7.55% and 8.015%. Of this
amount 75% has been swapped to floating rates based on US LIBOR plus a
margin. US$50 million (£34 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 2001 is as follows:
2001
_____________________________________
Bonds and Loans and
loan notes overdrafts Other Total
In more than one year but
not more than two years 176 1,761 76 2,013
In more than two years but
not more than five years 76 10 58 144
In more than five years 523 1 18 542
_____________________________________
775 1,772 152 2,699
In one year or less, or on demand 355 129 14 498
_____________________________________
1,130 1,901 166 3,197
_____________________________________
2000
_____________________________________
Bonds and Loans and
loan notes overdrafts Other Total
In more than one year but
not more than two years 11 41 41 93
In more than two years but not 196 2,130 40 2,366
more than five years
In more than five years 579 - 15 594
_____________________________________
786 2,171 96 3,053
In one year or less, or on demand 475 805 89 1,369
_____________________________________
1,261 2,976 185 4,422
_____________________________________
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
13.Creditors (continued)
2001 2000
£m £m
Bank loans:
Repayable by instalments within five years - 6
Repayable otherwise than by instalments within five years 1,854 2,490
______ ______
1,854 2,496
Less: amounts falling due within one year 82 325
______ ______
Amounts falling due after more than one year 1,772 2,171
______ ______
14. Provisions for liabilities and charges
Insurance
pensions and
other post Legal and
employment Onerous other
benefits contracts claims
£m £m £m
At 1 October 2000 199 83 66
Arising from acquisitions 20 6 15
Expenditure in the year (9) (19) (1)
Charged to profit and loss account 8 - -
Credited to profit and loss account (2) - (1)
Reclassified 4 - -
Currency adjustment (1) (1) (1)
________ _______ _________
At 30 September 2001 219 69 78
________ _______ _________
Re-
Organisation
Provisions Environmental Total
£m £m £m
At 1 October 2000 3 11 362
Arising from acquisitions - 1 42
Expenditure in the year (3) (1) (33)
Charged to profit and loss account - - 8
Credited to profit and loss account - - (3)
Reclassified - - 4
Currency adjustment - - (3)
__________ ___________ _______
At 30 September 2001 - 11 377
__________ ___________ _______
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. Reorganisation provisions were for the committed costs of
integration of businesses. 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 2001
15.Reserves
Consolidated profit and loss account
______________________________________
Share Merger Before
premium reserve Goodwill
account written off
£m £m £m
At 1 October 2000 - 4,158 547
Foreign exchange reserve movements - - (81)
Premium on ordinary shares issued,
net of expenses 11 12 -
Retained profit for the year - - 20
________ ________ ___________
At 30 September 2001 11 4,170 486
________ ________ ___________
Consolidated profit and loss account
______________________________________
Goodwill Total
Written off
£m £m
At 1 October 2000 (2,132) (1,585)
Foreign exchange reserve - (81)
movements
Premium on ordinary shares - -
issued, net of expenses
Retained profit for the year - 20
_______ ______
At 30 September 2001 (2,132) (1,646)
_______ ______
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 account
on consolidation.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the year ended 30 September 2001
16.Acquisitions
Businesses acquired during the year are shown below. They principally relate
to the acquisition of Morrison Management Specialists Inc., funded by £397
million in cash and Selecta Group funded by £361 million in cash.
Consideration Net assets
and costs acquired
£m £m
Morrison Management Specialists Inc. 397 (31)
Selecta Group 361 91
Crothall Services Group 138 11
Vendepac 85 15
Au Bon Pain 79 35
Beaver Foods 68 8
ADNH Middle East 46 2
Other 88 7
______________ __________
Total acquisitions in the year 1,262 138
Adjustments to prior periods 6 -
______________ __________
1,268 138
______________ __________
Fair value Fair value Goodwill
adjustments of assets
acquired
£m £m £m
Morrison Management Specialists Inc. (40) (71) 468
Selecta Group (17) 74 287
Crothall Services Group (17) (6) 144
Vendepac (8) 7 78
Au Bon Pain (17) 18 61
Beaver Foods (16) (8) 76
ADNH Middle East (2) - 46
Other (15) (8) 96
___________ __________ _______
Total acquisitions in the year (132) 6 1,256
Adjustments to prior periods (19) (19) 25
___________ __________ _______
(151) (13) 1,281
___________ __________ _______
Net assets Fair value Fair value to
acquired adjustments the group
£m £m £m
Intangible fixed assets 19 (19) -
Tangible fixed assets 212 (15) 197
Investment in associated undertakings 8 - 8
Stocks 46 (1) 45
Debtors 180 - 180
Investments 12 - 12
Cash 22 - 22
Bank loans and overdrafts (66) (4) (70)
Leases (5) - (5)
Creditors (235) (79) (314)
Provisions (36) (6) (42)
Tax 20 (29) (9)
Minority interests - 2 2
Share of net assets already owned (39) - (39)
__________ _________ ________
138 (151) (13)
__________ _________ ________
Fair value adjustments principally relate to: writing off intangible assets
in accordance with Group accounting policy, harmonisation of depreciation
policies, and recognising pension commitments and other liabilities not
previously recorded.
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 2000.
Adjustments made to the fair value of assets are provisional owing to the
short period of ownership.
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 2001
17. Exchange rates
Exchange rates for major currencies used during the period after taking into
account the Group's hedging arrangements were:
2001 2001 2002
Translation Closing Translation
rate rate rate
Australian Dollar 2.56 2.98 2.63
Canadian Dollar 2.09 2.32 2.08
Danish Krone 12.17 12.00 12.16
Euro 1.63 1.61 1.63
Norwegian Krone 13.07 13.04 12.95
Swedish Krona 13.68 15.68 15.14
Swiss Franc 2.49 2.38 2.48
US Dollar 1.41 1.47 1.37
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