Interim Management Statement

RNS Number : 9595Z

Compass Group PLC

28 July 2008

Compass Group PLC

'Compass' or 'the Group'

Third Quarter Interim Management Statement

This statement updates investors on the Group's performance in the nine months to 30 June 2008.

The Group

The Group has had a strong third quarter with global revenues continuing to increase organically in line with the growth levels seen in the first six months of the year. We are performing well across our geographies as we continue to benefit from the operational focus provided by the MAP framework. Operating profits are running well ahead of those in the same quarter last year, as we deliver margin growth over the same quarter last year, in line with the level of margin growth seen in the first six months of the year. Free cash flow conversion remains extremely strong, due to our more intelligent investment in capital expenditure and day to day management of working capital.

We are continuing to see good progress in mitigating the impact of input cost increases through the delivery of efficiency savings including menu planning and labour scheduling and we are increasing our focus on in unit overheads in the same way as on food and labour costs.

North America

In North America, all sectors are generating organic revenue growth in the quarter at similar levels to those seen in the first six months of the year. For the year to date, the Remote business is performing particularly well as a result of the increased activity in the extractive industries. The Sports & Leisure business has benefited from trade shows at convention centres and good attendance at sports facilities including additional MLB and NFL play-off games.

The positive trend in quality revenue growth and tight control of costs (in particular overheads and a focus on purchasing compliance) have resulted in margin growth over the same quarter last year, in line with the level of margin growth seen in the first six months of the year.

Continental Europe

In Continental Europe, organic revenue growth in the quarter has continued at similar levels to those seen in the first six months of the year. Spain and the Nordic region are significant drivers of the improvement. In Spain, organic revenue growth in all sectors has been strong with a good balance of new business wins, excellent retention and like for like growth, whilst the Nordic region continues to benefit from the high activity in the oil and gas industry. Good progress is being made with the ongoing application of MAP across all countries and this is helping to deliver the strong improvement in margin, in line with the level of margin growth seen in the first six months of the year.

In the UK, revenues and operating profit for the quarter remain in line with the same period last year. As we outlined in May, we are continuing to simplify the business processes and are increasing our focus on generating quality revenue growth and improving our retention levels which will allow the business to move forward.

Rest of the World

Organic revenue growth in the third quarter has remained strong in the Rest of the World, in line with that seen in the first six months of the year. This has been driven by our Brazilian, South African, UAE and Remote businesses. Margin growth in the quarter is slightly ahead of that seen in the first six months of the year with good progress in the geographies listed above as well as in Japan and Australia.

Acquisitions

The Group is pleased to announce that it has completed the acquisition of Medi-Dyn, a provider of healthcare support services in the USA, from Messrs Larry Brown, Scott Brown and Randy Scott for approximately $50 million. The annual revenues of the business are $50 million and the services and business model align very closely to that of Crothall, the Group's support services business in the USA.

Share Buy Back Programme

The Group commenced a further £400 million share buy-back programme on 1 July 2008, as announced at the Interim Results. Between 1 July 2008 and 27 July 2008, the Group repurchased for cancellation six million ordinary shares for a total consideration of £21 million, excluding expenses.

There has been no significant change in the financial position of the Group in the period since the end of the first half.

Outlook

We have had another strong quarter, building on our improved trading performance since the introduction of MAP. Our diversified and robust business model continues to give us confidence about the full year and the future potential of the business.

Ahead of our preliminary results announcement on 26 November 2008, there will be a pre-close trading update issued on 29 September 2008.

ENDS

Notes to editors:

(a) Compass Group is the world's largest foodservice company with annual revenue of over £10 billion operating in 62 countries. For more information visit www.compass-group.com

(b) MAP (Management and Performance) is a simple, but clearly defined Group operating framework. MAP focuses on five key value drivers, enabling the businesses to deliver disciplined, profitable growth with the focus more on organic growth and like for like growth.

The five key value drivers are:

MAP 1: Client sales and marketing

MAP 2: Consumer sales and marketing

MAP 3: Cost of food

MAP 4: Unit costs

MAP 5: Above unit overheads

(c) Operating profit, a term used throughout this announcement, includes share of profit of associates and is wholly consistent with the presentation in the Group's 2007 Annual Report and Accounts.

(d) This Interim Management Statement contains forward looking statements within the meaning of Section 27A of the Securities Act 1933, as amended, and Section 21E of the Securities Exchange Act 1934, as amended. These statements are subject to a number of risks and uncertainties and actual results and events could differ materially from those currently being anticipated as reflected in such forward looking statements. The terms 'expect', 'should be', 'will be', 'is likely to' and similar expressions identify forward looking statements. Factors which may cause future outcomes to differ from those foreseen in forward looking statements include, but are not limited to: general economic conditions and business conditions in Compass Group's markets; exchange rate fluctuations; customers' and clients' acceptance of its products and services; the actions of competitors; and legislative, fiscal and regulatory developments.

A copy of this release, together with all other recent announcements can be found on Compass Group's website at www.compass-group.com. Copies of the presentation given to institutional investors and analysts are also available at this site.