Interim Results

Compass Group PLC 19 May 2004 19 May 2004 INTERIM UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004 COMPASS GROUP PLC: CONTINUING STRONG PERFORMANCE In the first half of 2004, Compass Group achieved strong like for like turnover and profit growth and another half year of significant increase in free cash flow generation. The Group is well placed to continue its organic growth and improve return on capital employed. Financial highlights Continuing Activities (1) ________ _________ _______ 6 months ended 31 March 2004 2003 2004 2003 Change Turnover (Â£m) 5,844 5,530 5,844 5,450 7% Total operating profit (Â£m) - reported 210 213 - before goodwill amortisation 348 343 346 319 8% Profit before tax (Â£m) - reported 145 112 - before goodwill amortisation and exceptional items 283 269 282 255 11% Basic earnings per share (pence) - reported 2.5 2.5 - before goodwill amortisation and exceptional items 8.8 8.4 8.8 8.0 10% - underlying at constant currency(2) 8.8 7.7 14% Interim dividend per share (pence)3.1 2.7 3.1 2.7 15% Free cash flow (Â£m) - reported 86 85 - before discontinued activities and exceptional items 86 75 15% Business highlights (2) â€¢ Like for like turnover growth of 7% driven by: - 12% new business gains, over half of which are new sites or from self operated - strong growth in Healthcare, Education and Defence, Offshore & Remote Site sectors - strong growth in North America and developing markets â€¢ Contract retention rate of 96%. Throughput remains (1)%. â€¢ Like for like margin up 20 basis points: + 30 basis points in North America + 30 basis points in Continental Europe and Rest of the World â€¢ Confidence in delivering 7% like for like turnover growth for the full year. Sir Francis Mackay, Chairman, said: 'I am delighted to report an excellent set of results for the first half of 2004 including a 14% increase in underlying earnings per share. The strength of the Group's results is reflected in a 15% increase in the interim dividend. As market leader, the Group only has a 5% market share and is well place to take advantage of the Â£250 billion market place. Looking forward, the Group remains absolutely focused on its strategy of driving organic growth and delivering increased return on capital employed.' Michael J. Bailey, Chief Executive, said: 'Compass Group has once again delivered strong results. The high level of visibility in the new business pipeline gives us confidence to re-iterate our targets for the full year of like for like turnover growth of 7%; an improvement in the like for like margin of 20 basis points; strong free cash flow and improving return on capital employed.' (1) On 13 April 2004, the Group disposed of its shareholding in Yoshinoya D&C for Â£61 million. During the first half of 2003, the Group disposed of its Little Chef and Travelodge businesses. Both of these have been presented as discontinued activities. There were no exceptional items in the first half of 2004. Excluding these discontinued activities, goodwill amortisation and 2003's exceptional items, the financial highlights from continuing activities are as above. (2) The bases for calculating like for like results, underlying and continuing activities performance are explained in more detail in the attached interim results for Compass Group for the six months ended 31 March 2004. Enquiries: Compass Group PLC 19 May 2004 - 020 7404 5959 (thereafter 01932 573000) Michael J Bailey Group Chief Executive Andrew Martin Group Finance Director Sarah Ellis Director of Investor Relations Brunswick 020 7404 5959 Timothy Grey / Pamela Small Website www.compass-group.com Presentation and teleconference details are in the attached notes. 19 May 2004 COMPASS GROUP PLC INTERIM UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004 Compass Group is the world's leading foodservice organisation. The global foodservice market is worth over Â£250 billion per annum and, as the market leader, the Group only has a 5% market share. The Group operates worldwide as one organisation through a senior and experienced international team, recently strengthened by the appointment of Andrew Lynch as Chief Executive of SSP, the Group's newly created travel concessions division. Andrew Martin replaces him as Group Finance Director. The Group has held firm to its strategic focus on foodservice. Its unique business model - employing sectorisation, brand ownership and vending, allied to its international coverage, scale and global purchasing strength - continues to help retain clients, whilst attracting significant new business as the outsourcing trend continues. Group Performance For the six months ended 31 March 2004, the Group reported turnover of Â£5,844 million (2003: Â£5,530 million), profit before tax of Â£145 million (2003: Â£112 million), basic earnings per share of 2.5 pence (2003: 2.5 pence) and free cash flow of Â£86 million (2003: Â£85 million). On 13 April 2004, the Group disposed of its 12.7% shareholding in Yoshinoya D&C for Â£61 million. During the first half of 2003, the Group disposed of its Little Chef and Travelodge businesses. Both of these have been presented as discontinued activities. There were no exceptional items in the first half of 2004. Excluding these discontinued activities, goodwill amortisation and 2003's exceptional items, the statistics below demonstrate the successful financial performance in the first half of 2004 from continuing activities. 2004 2003 Increase ________________________________ ________________ ________________ _____________ Turnover Â£5,844m Â£5,450m 7% Total operating profit Â£346m Â£319m 8% Profit before tax Â£282m Â£255m 11% Basic earnings per share 8.8p 8.0p 10% Free cash flow Â£86m Â£75m 15% Note: The above table excludes discontinued activities, goodwill amortisation and 2003's exceptional items. Movements in the profit and loss account translation rates for the Group's principal currencies had a net adverse effect on the presentation of 2004's results. Restating 2003's results at 2004's average translation rates gives an underlying increase in basic earnings per share from continuing activities before goodwill amortisation and exceptional items of 14%. Turnover and total operating profit, before goodwill amortisation, from continuing activities increased by 7% and 8% respectively, largely as a result of strong like for like growth of 7% and 11% respectively. Movements in translation rates reduced the year on year growth in turnover by 2% and total operating profit by 4%. The initial contribution from 2004's acquisitions and the effect of a full year's benefit from 2003's acquisitions added 2% to turnover and 1% to total operating profit. Yoshinoya contributed Â£1 million to profit before tax in the first half of 2004 (2003: half year Â£7 million, full year Â£10 million) and Little Chef and Travelodge contributed Â£7 million to profit before tax in the first half of 2003. Profit before tax from continuing activities before goodwill amortisation for the first half of 2004 was Â£282 million, giving a half year on half year increase of 11% compared to 2003 on the same basis. Free cash flow for the first half of 2004 was Â£86 million, a 15% increase over 2003's continuing activities free cash flow of Â£75 million. Reported free cash flow for the first half of 2003 of Â£85 million included Â£23 million absorbed by Little Chef and Travelodge up to their date of disposal and benefited from an exceptional tax receipt of Â£33 million. Divisional Performance Constant Like Reported currency for like Increase increase increase 2004 2003 % % % _________________________ __________ __________ __________ __________ __________ Turnover (Â£m) United Kingdom (continuing activities) 1,292 1,208 7 7 5 Continental Europe & rest of the world 2,549 2,196 16 12 7 North America 1,772 1,808 (2) 8 7 _________________________ __________ __________ __________ __________ __________ 5,613 5,212 8 10 7 Fuel 231 238 (3) (3) (3) _________________________ __________ __________ __________ __________ __________ Total - continuing activities 5,844 5,450 7 9 7 __________ __________ __________ Discontinued activities (UK) - 80 _________________________ __________ __________ Total 5,844 5,530 _________________________ __________ __________ Total operating profit (before goodwill amortisation) United Kingdom (continuing activities) 133 125 6 6 6 Continental Europe & rest of the world 128 110 16 15 13 North America 84 83 1 15 15 _________________________ __________ __________ __________ __________ __________ 345 318 8 12 11 Associates - continuing activities 1 1 - - - _________________________ __________ __________ __________ __________ __________ Total - continuing activities 346 319 8 12 11 __________ __________ __________ Discontinued activities 2 24 _________________________ __________ __________ Total 348 343 _________________________ __________ __________ Operating margin (%) United Kingdom 8.8 8.8 - - 10bps Continental Europe 5.0 5.0 - 10bps 30bps & rest of the world North America 4.7 4.6 10bps 20bps 30bps _________________________ __________ __________ __________ __________ __________ Total 5.9 5.8 10bps 10bps 20bps _________________________ __________ __________ __________ __________ __________ Like for like growth is calculated by adjusting for acquisitions (excluding current year acquisitions and including a full half year in respect of prior year acquisitions), disposals (excluded from both periods) and exchange rate movements and compares the results against the first half of 2003. Total operating profit is before goodwill amortisation and exceptional items of Â£138 million (2003 : Â£130 million). Fuel turnover comprises Â£218 million in the UK and Â£13 million in Continental Europe and the rest of the world (2003 : Â£220 million and Â£18 million respectively). Operating margin is based on operating profit excluding associates and turnover including fuel and is in respect of continuing activities. The Group's three geographic regions have continued to grow their turnover on a like for like basis. Like for like turnover growth was achieved as a result of new contract gains of 12% offset by contract losses of 4% and changes in throughput of (1)%. This strong performance was driven by new business wins across all sectors, with the continued trend to outsourcing in Healthcare and Education contributing to this growth. In addition to this, the continued high level of military activity around the globe and significant contract gains with clients such as ChevronTexaco and Schlumberger have generated significant incremental turnover in Defence, Offshore and Remote Site. In addition to securing new business, the Group has remained focused on client retention which remained strong at 96%, in line with the first half of 2003. The continuing economic weakness across most countries and its consequential effect on employment levels resulted in negative throughput. However, throughput varies by sector with Education and Healthcare unaffected by the economic cycle, each achieving positive throughput of 2% in the first half of 2004. Business and Industry had negative throughput of 2% with Vending at negative 3%, unchanged from this time last year. In better economic times, these latter two sectors would expect to achieve improved throughput performance. The Group has been successful in mitigating the impact of reductions in customer headcount by driving increased participation and spend, for example, through the utilisation of brands. United Kingdom The UK grew its turnover on a like for like basis by 5%, comprising Contract and Vending growth of 5% and Concessions growth of 6%. Contract and Vending benefited from a good performance in the Defence, Offshore and Remote Site sector. During the first half of the year, the UK signed numerous prestigious contract wins and renewals across all sectors. Today, the Group announces that its UK Sports & Leisure business, All Leisure, has been awarded a new contract with Arena Coventry, with an annual turnover of Â£6 million. The developments within the Sports & Leisure business are encouraging with new business of Â£12 million in aggregate having been secured since 1 October 2003. The Group also announces the renewal of its contract with East Kent Hospitals NHS Trust, with an annual turnover of Â£14 million and the renewal of its contract with Derby College, with an annual turnover of Â£1.2 million. UK total operating profit (excluding associates and goodwill amortisation) on continuing activities increased by 6% with the like for like operating margin increasing by 10 basis points. It is anticipated that the full year like for like operating margin will be broadly maintained in 2004 compared to 2003. Continental Europe and the rest of the world Achieving overall like for like turnover growth of 7% in Continental Europe and the rest of the world was particularly pleasing with strong contract gains in Business and Industry and a good performance in the Defence, Offshore and Remote Site sector. In Contract and Vending, like for like turnover grew by 10% with Concessions increasing by 2% excluding Seiyo Foods where loss-making contracts are being terminated. Significant progress has been made within Asia and Australasia; Australia, for example, has delivered double digit like for like turnover growth this half year. The Group is also delighted with the rapid progress of Seiyo Foods in Japan and new developments in China, for example, a new joint venture with Shanghai Railway Administration. This joint venture company is providing food onboard four new high-speed trains and its initial success positions the Group well for further development within this market. The Group's international reach continues to gain momentum with the following new contract gains being announced today: â€¢ In the Healthcare sector Maerkische Kliniken (Germany) and Groupe Le Tonkin- Merieux (France), with annual turnover of Â£1 million and Â£1.4 million respectively have been added. â€¢ In Japan, Seiyo Foods was awarded a new contract by Nissan Motors, with an annual turnover of Â£1.4 million. This contract will include the first Caffe Ritazza in Japan. â€¢ SSP Brazil entered the Brazilian metro market where it has been awarded a Â£2 million per annum contract to operate 18 locations throughout the Sao Paulo metro system. In the first half of the year, the Group's Defence, Offshore and Remote Site business, ESS, was awarded or has renewed contracts with such global organisations as Chevron Nigeria Limited/Texaco Operating Company Nigeria and ConocoPhillips Scandinavia. The Group is pleased to report today its newly awarded contract with Statoil, with an annual turnover of Â£5 million, to provide services on the Snorre A and Snorre B platforms in the North Sea. Continental Europe and the rest of the world total operating profit (excluding associates and goodwill amortisation) increased by 13% on a like for like basis with the operating margin increasing by 30 basis points on a like for like basis. Approximately half of the profit increase needed to achieve this margin increase comes from Onama (Italy) and Seiyo Foods (Japan) with the latter achieving an operating margin of over 3% in the first half of 2004. The balance comes primarily from improved purchasing as the Group rolls out its UK supply chain model across Continental Europe. Seiyo Foods is on track to achieve a 3% margin for 2004, rising to over 5% in the next two years. North America North America achieved a 7% like for like increase in turnover as a result of strong growth across all sectors. Contract and Vending grew by 7%. Concessions grew by 10% with a good performance from Sports and Events. The pipeline of North American contract gains and renewals remains strong, with Healthcare leading the way with some Â£97 million of new business signed in the first half of the year. Notable contract wins include the previously announced Jewish Hospital Medical Center and St. Michael's Hospital, with annual turnover of Â£2.1 million in aggregate. Today the Group is pleased to announce that Morrison Health Care Food Services has been awarded contracts by Johnson City Medical Center and Jackson County Hospital Authority, with a combined annual turnover of Â£3.5 million. In the Business and Industry sector, the Group today reports that Chef's Theater, New York, awarded Restaurant Associates a contract with an annual turnover of Â£3.9 million. Total operating profit (excluding associates and goodwill amorisation) increased by 15% on a like for like basis delivering a 30 basis points improvement in the like for like margin. The division has invested in replicating the UK purchasing and supply chain model and the benefits of this investment are beginning to be seen. Profit before Taxation Profit before taxation, goodwill amortisation and 2003's exceptional items increased by 5% from Â£269 million to Â£283 million. Yoshinoya contributed Â£2 million to total operating profit in the first half of 2004 (2003: half year Â£8 million, full year Â£12 million) and Little Chef and Travelodge contributed Â£16 million to total operating profit both in the first half and full year for 2003. Interest attributable to these businesses, based on the proceeds received, was Â£1 million (2003: half year Â£10 million, full year Â£11 million). Accordingly, these discontinued activities contributed Â£1 million to profit before tax in the first half of 2004 (2003: half year Â£14 million, full year Â£17 million). Adjusting for this, 2004's half year profit before tax on continuing activities increased by 11% from Â£255 million to Â£282 million. Taxation The overall Group tax charge for the half year was Â£73 million. The overall tax rate on ordinary activities was 25.8% of profit before goodwill amortisation which is below the UK corporate tax rate of 30%. The main reasons for the lower rate were tax losses brought forward, 3%, the tax deductibility of part of the Group's goodwill, 2%, and the benefit of prior year items, 2%, offset by higher overseas tax rates, 3%. Goodwill Amortisation The goodwill amortisation charge for the half year was Â£138 million (2003: Â£130 million). Earnings per Share Basic earnings per share for the half year on a reported basis was 2.5 pence (2003: 2.5 pence). Diluted earnings per share was 2.4 pence (2003: 2.5 pence). Basic earnings per share before goodwill amortisation and 2003's exceptional items was 8.8 pence (2003: 8.4 pence). There were no exceptional items in the first half of 2004 (2003: net Â£(1)million). Underlying basic earnings per share, adjusting further for discontinued activities and currency translation, is up by 14% half year on half year at 8.8 pence per share. Attributable profit and basic earnings per share are reconciled below. Attributable profit Basic earnings per share ______________________ ________________________ 2004 2003 2004 2003 Â£m Â£m Pence Pence Growth ____________________ __________ __________ ___________ __________ __________ Reported 53 56 2.5 2.5 - Goodwill amortisation 138 130 Exceptional items - 1 ____________________ __________ __________ Before goodwill amortisation and exceptional items 191 187 8.8 8.4 5% Discontinued activities - (8) ____________________ __________ __________ Continuing activities 191 179 8.8 8.0 10% Currency translation - (6) ____________________ __________ __________ Underlying 191 173 8.8 7.7 14% ____________________ __________ __________ Discontinued activities have been taxed at the UK rate of 30% and Yoshinoya's effective tax rate of 54%. The effect of currency translation is calculated by applying 2004's half year translation rates to 2003's attributable profit. Acquisitions The Group made a small number of infill acquisitions in the first half of 2004 with an aggregate consideration, including cash and debt acquired, of Â£49 million. In April 2004, the Group completed the acquisitions of Creative Host in the USA and Mitropa in Germany for Â£35 million in total. These two businesses considerably strengthen the Group's presence in airport restaurants in the USA and in railway stations and motorway service areas in Germany. The Group currently expects that the aggregate value of new acquisitions made in the current financial year will be approximately Â£150 million. The Group's strategic focus continues to be on the organic development of its core foodservice businesses. Cash Flow Free cash flow generation for the half year was Â£86 million (2003: Â£85 million). Adjusting for cash flows in respect of discontinued activities and exceptional items, as set out below, free cash flow from continuing activities for the half year increased by 15% from Â£75 million to Â£86 million. 2004 2003 Â£m Â£m Increase ________________________________________ _____________ _____________ ___________ Free cash flow Reported 86 85 1% Discontinued activities - 23 Exceptional items - (33) ________________________________________ _____________ _____________ ___________ Continuing activities 86 75 15% ________________________________________ _____________ _____________ ___________ Working capital from continuing activities absorbed Â£73 million (2003: Â£105 million), an improvement of Â£32 million on turnover up by Â£394 million. Payments in respect of provisions for liabilities and charges absorbed Â£24 million (2003: Â£23 million), comprising Â£8 million on reducing liabilities in respect of insurance, pensions and other post-employment benefits, Â£6 million settling onerous contracts and Â£10 million settling legal and other claims. Interest payments from continuing activities absorbed a net Â£58 million compared with Â£62 million in the first half of 2003. Net tax payments absorbed Â£35 million (2003: Â£37 million before an exceptional tax receipt of Â£33 million). The net tax paid in the first half of 2004 of Â£35 million represents 12% of profit before tax, goodwill amortisation and exceptional items and is significantly less than the overall Group tax charge for the half year of Â£73 million. The main reasons for this difference are deferred tax, items allowable for tax but 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. The Group anticipates that its current tax payments will increase to approximately 18% of profit before tax, goodwill amortisation and exceptional items for the full year 2004. Net capital expenditure from continuing activities absorbed Â£182 million compared with Â£136 million in the first half of 2003. Including Â£5 million purchased under finance lease contracts, net capital expenditure on continuing activities represents 3.2% of continuing turnover. Proportionally more of 2004's anticipated full year net capital expenditure has been incurred in the first half of 2004 than in the first half of 2003. Acquisition payments were Â£50 million, comprising Â£41 million of consideration paid in respect of current year acquisitions (excluding Â£2 million of loans and finance lease obligations in the companies when acquired) and Â£9 million of deferred consideration paid. The payment of dividends absorbed Â£183 million having paid both 2003's interim and final dividends in the first half of 2004 as the Group accelerates the payment of its dividends. The net cash outflow for the half year was Â£141 million, before Â£8 million of proceeds on the issue of ordinary shares, paying Â£91 million for shares repurchased completing the Â£300 million share buy back programme and Â£1 million net cost of the purchase of our own shares. Debt acquired with subsidiaries was Â£2 million, there was Â£5 million of new finance leases and a translation gain on net debt for the half year of Â£176 million principally as a result of the US dollar to pound sterling exchange rate moving from $1.66 to $1.84 and the Euro moving from â‚¬1.43 to â‚¬1.50 over the half year. Closing net debt as at 31 March 2004 was Â£2,364 million. Dividend An interim dividend of 3.1 pence per share has been declared on the existing share capital, an increase of 15% over last year's figure. This reflects the step change in dividends announced in December 2003. However, the increase in the total dividend for the year is expected to be broadly in line with the increase in underlying earnings, with the interim dividend representing approximately one third of the total annual dividend. Payment of the interim dividend will be made on 16 August 2004 to shareholders on the register at the close of business on 16 July 2004. The ex-dividend date will be 14 July 2004. Outlook The Group's broad geographic spread and business sector portfolio means that it is not particularly exposed to any one country, sector or client, whilst the Group's unique business model continues to deliver solid like for like turnover growth, continued margin improvement and strong free cash flow generation which will deliver incremental return on capital employed. The Group's focus on organic turnover growth allied to a quality contract retention rate and a strong pipeline of new business gives confidence that the Group is on track to deliver 7% like for like turnover growth this year; an improvement in the like for like margin of 20 basis points; strong free cash flow and improving return on capital employed. The Group looks forward to the remainder of 2004 with confidence. Michael J Bailey Sir Francis H Mackay Chief Executive Chairman NOTES 1. New contract gains and renewals announced today and previously released in the first half 2004. Please note that contract gains/renewals announced today are indicated with an '*'. UK Retail & Travel â€¢ First Great Western awarded Rail Gourmet UK a new contract to provide a full rail catering logistics service, which commenced 27 March 2004, with annual turnover of Â£6 million. The contract will run to the end of First Great Western's current franchise in March 2006. Sports & Leisure â€¢ * Arena Coventry awarded FMC (All Leisure) a new ten-year contract with annual turnover of Â£6 million. â€¢ London Zoo awarded All Leisure a new three-year retail catering contract with annual turnover of Â£2 million. This is in addition to the three-year extension of All Leisure's existing contract at the Zoo, with annual turnover of Â£1.3 million, to provide event catering and hospitality services. Education â€¢ * Derby College renewed its contract with Scolarest for a further five years with annual turnover of Â£1.2 million. â€¢ Old Swinford Hospital School in Stourbridge awarded Scolarest a new three-year contract with annual turnover of Â£0.6 million to provide catering and hospitality services. Healthcare â€¢ * East Kent Hospitals NHS Trust renewed its contract with Medirest for a further seven years with annual turnover Â£14 million. â€¢ Nottinghamshire Healthcare NHS Trust extended its contract with Medirest for a further three years with annual turnover of Â£3 million. â€¢ South West Yorkshire Mental Health NHS Trust awarded Medirest a new five-year contract with annual turnover of Â£0.6 million for patient, staff and visitor catering. Business & Industry â€¢ * Bristol Zoo Gardens' Clifton Pavilion awarded Milburns (Restaurant Associates) a new three-year contract with annual turnover of Â£0.4 million. â€¢ * Land Securities Trillium, property outsourcing provider to the Department for Work and Pensions, renewed its contract with Eurest for a further fourteen years with annual turnover of Â£12 million. â€¢ * Norwich Cathedral awarded Milburns (Restaurant Associates) a new three-year contract with annual turnover of Â£0.5 million. â€¢ * The Royal Mail renewed its contract with Quadrant Catering for a further five years with annual turnover of Â£75 million. â€¢ National Grid Transco awarded Eurest a new three year contract with annual turnover of Â£3 million. â€¢ Perkins Engines, a subsidiary of Caterpillar, awarded Eurest a new five-year contract with annual turnover of Â£0.85 million, to provide catering services to 3,000 employees at their 130 acre site in Peterborough. NORTH AMERICA Healthcare â€¢ * Jackson County Hospital Authority awarded Morrison Healthcare Food Services a new three-year contract with annual turnover of Â£0.78 million. â€¢ * Johnson City Medical Center awarded Morrison Healthcare Food Services a new five-year contract with annual turnover of Â£2.7 million. â€¢ Jewish Hospital Medical Center awarded Morrison Management Services a new five-year contract with annual turnover of Â£1.5 million. â€¢ St. Michael's Hospital, Toronto, awarded Crothall Services Canada a new five-year contract with annual turnover of Â£0.6 million. Business & Industry â€¢ * Avon Products awarded Flik International Inc. a new three-year contract with annual turnover of Â£0.7 million. â€¢ * Chef's Theater, New York, awarded Restaurant Associates a new three-year contract with annual turnover of Â£3.9 million. â€¢ 2005 US Open Golf Championship awarded Restaurant Associates a new one-year contract with turnover of Â£2.7 million. â€¢ New York's Strathmore museum awarded Restaurant Associates a new contract for ten years with annual turnover of Â£3 million. CONTINENTAL EUROPE AND REST OF THE WORLD Retail & Travel â€¢ * Denmark - DSB (Danish railways operator) awarded SSP (Denmark) a new ten-year contract with annual turnover of Â£5 million. â€¢ * Netherlands - Transavia awarded ILC and Eurest Inflight Services a new five-year contract with annual turnover of Â£2.4 million. â€¢ * Brazil - Select Service Partner has been awarded a new contract with annual turnover of Â£2 million to operate 18 locations in Sao Paulo's metro stations. â€¢ China - Shanghai Railway Administration entered into a fifteen-year joint venture contract with Rail Gourmet, creating the new company Shanghai Rail Gourmet Company Limited. Sports & Leisure â€¢ * Japan - Kurogi Town's Greenpia Yame leisure and resort awarded Seiyo Food Systems Kyushu a new ten-year contract with annual turnover of Â£4 million. â€¢ * Japan - Takaki Town's Ikoi-no-mura Nagasaki resort awarded Seiyo Food Systems Kyushu a new five-year contract with annual turnover of Â£2.5 million. â€¢ Japan - Kasadojima Heights guesthouse awarded Seiyo Foods Systems Kyushu a new five-year contract with annual turnover of Â£1.6 million. Education â€¢ * Australia - University of Wollongong renewed its contract with Eurest for a further ten years with annual turnover of Â£0.67 million. Healthcare â€¢ * France - Groupe Le Tonkin-Merieux awarded Medirest a new contract with annual turnover of Â£1.4 million. â€¢ * Germany - Maerkische Kliniken, Leudenscheid, awarded CCS Clinic Catering Service a contract with annual turnover of Â£1 million. â€¢ * Norway - Cato Center renewed its contract with Medirest for a further five years with annual turnover Â£0.7 million. â€¢ France - the Public Hospital System of Marseille (APHM) awarded Medirest a new contract for three years with annual turnover of Â£6 million. â€¢ Germany - HELIOS Kliniken, Wuppertal, awarded CCS Clinic Catering Service a new contract with annual turnover of Â£1.5 million. â€¢ Spain - Parc Sanitari Pere Virgili awarded Medirest a new ten-year contract with annual turnover of Â£0.6 million to provide patient and staff feeding as well as vending. Business & Industry â€¢ * Portugal - Ministerio Das Financas awarded Eurest a one-year contract with annual turnover of Â£1.3 million. â€¢ * Sweden - Saabtech awarded Eurest a new three-year contract with annual turnover of Â£0.9 million. â€¢ * Turkey - Four Turkish military units have awarded and renewed contracts with Eurest with a combined annual turnover of Â£7.6 million. â€¢ * Australia - Asian Pacific Building Corporation awarded Eurest a three-year contract with annual turnover of Â£0.53 million. â€¢ * Chile - Antofagasta Minerals - Minera Los Pelambres awarded ESS a new three-year contract with annual turnover of Â£2.3 million. â€¢ * Chile - OHL Agencia en Chile-Obrascon, Huarte y Lain awarded Compass Chile a new twenty-year contract with annual turnover of Â£3 million. â€¢ * Hong Kong - ASAT Holding Ltd awarded Eurest a new three year contract with annual turnover of Â£0.5 million. â€¢ * Japan - Nissan Motor Co., Ltd. awarded Seiyo Food Systems a new one-year contract with annual turnover of Â£1.4 million. Caffe Ritazza will be introduced into the corporate restaurant, the first in Japan. â€¢ France - Areva awarded Eurest a new five-year contract with annual turnover of Â£2.4 million. â€¢ France - Les Chantiers de l'Atlantique awarded Eurest a new five-year contract with annual turnover of Â£3 million. â€¢ Italy - the Ministry of Defence awarded Onama a new contract for three years with annual turnover of Â£7 million. â€¢ Sweden - Kraft Foods awarded Eurest a new three-year contract with annual turnover of Â£0.5 million for staff feeding services. â€¢ Chile - Vinci Construction Grand Projects (VCGP) awarded Compass Group a twenty-year contract with annual turnover of over Â£6 million to provide services to the Administration of Corrections, Chile. â€¢ Japan - Nippon Telegraph and Telephone East Corp. awarded Seiyo Food Systems a new one-year contract with annual turnover of Â£0.6 million. â€¢ Royal Philips Electronics extended its Global Foodservice Agreement with Compass Group for a further 10 years. Vending â€¢ * France - Club Med Gym awarded Selecta a new five-year contract with annual turnover of Â£0.3 million. â€¢ * Spain - Madrid Metro Expansion renewed its contract with Selecta for a further year with annual turnover of Â£0.3 million. â€¢ * Spain - RENFE (Spanish national rail operator) awarded Selecta a new one-year contract with annual turnover of Â£0.3 million. Defence, Offshore & Remote Service â€¢ * Norway - Statoil awarded ESS Offshore Norway a new three-year contract with annual turnover of Â£5 million for services provision on Snorre A & B platforms in the North Sea. â€¢ Scandinavia - ConocoPhillips Scandinavia AS renewed its six-year contract with ESS Offshore AS with annual turnover of Â£12 million. â€¢ Nigeria - Chevron Nigeria Limited / Texaco Operating Company Nigeria awarded ESS Support Services Worldwide a new five-year contract with annual turnover of Â£10 million. â€¢ ESS Support Services Worldwide was awarded two contracts with the United Nations. These two contracts have a combined annual turnover of Â£14 million. 2. Results presentation, teleconference, and webcast. A presentation for analysts and investors will take place at 9:30 am (BST) on Wednesday, 19 May 2004 at The Lincoln Centre, 18 Lincoln's Inn Fields, London WC2 (Holborn). The live presentation can also be accessed via both a webcast and dial-in teleconference starting at 9:30 am: â€¢ To listen to the live presentation via teleconference, dial +44 20 7019 9504 â€¢ To view the presentation slides and/or listen to a live audio webcast of the presentation, go to www.compass-group.com or www.cantos.com â€¢ Please note that remote listeners will not be able to ask questions during the Q&A session. A replay recording of the presentation will also be available via teleconference and webcast: â€¢ A teleconference replay of the presentation will be available for five working days, until 25 May 2004. To hear the replay, dial (UK) +44 20 7984 7578 or (US) +1 718 354 1112. The replay passcode is 435563# â€¢ A webcast replay of the presentation will be available for six months, at www.compass-group.com and www.cantos.com For North American based investors, there will be a conference call starting at 12:15 pm (EDT), with a replay of the morning's presentation followed by a live Q &A session. â€¢ To listen to the presentation and participate in the conference call, dial +1 718 354 1152 â€¢ To view synchronised slides of the presentation, go to www.compass-group.com or www.cantos.com 3. Management interviews. Interviews with Michael J Bailey and Andrew Martin in video, audio and text are available from 7:00 am (BST) on www.compass-group.com and www.cantos.com. Enquiries: Compass Group PLC 19 May 2004 - 020 7404 5959 (thereafter 01932 573000) Michael J Bailey Group Chief Executive Andrew Martin Group Finance Director Brunswick 020 7404 5959 Timothy Grey Pamela Small Website www.compass-group.com Compass Group is the world's largest foodservice company with annual revenues in excess of Â£11 billion. Compass Group has over 400,000 employees working in more than 90 countries around the world. For more information visit www.compass-group.com INDEPENDENT REVIEW REPORT TO COMPASS GROUP PLC Introduction We have been instructed by the company to review the financial information for the six months ended 31 March 2004 which comprises the consolidated profit and loss account, the consolidated statement of total recognised gains and losses, the reconciliation of movements in consolidated shareholders' funds, the consolidated balance sheet, the consolidated cash flow statement, the notes to the consolidated cash flow statement and related notes 1 to 11. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting polices and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 March 2004. Deloitte & Touche LLP Chartered Accountants London 19 May 2004 Compass Group PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 31 March 2004 Half-year Half-year Year Before ended ended ended 31 Mar 31 Mar 30 Sep goodwill Goodwill 2004 2003 2003 amortisation amortisation Reviewed Reviewed Audited Â£m Â£m Â£m Â£m Â£m _________________________________________________ ___________ __________ ________ ________ ________ Turnover (note 2) Continuing activities 5,826 - 5,826 5,450 11,206 Acquisitions 18 - 18 - - _________________________________________________ ___________ __________ ________ ________ ________ 5,844 - 5,844 5,450 11,206 Discontinued activities - - - 80 80 _________________________________________________ ___________ __________ ________ ________ ________ 5,844 - 5,844 5,530 11,286 Operating costs (5,499) (138) (5,637) (5,326) (10,780) _________________________________________________ ___________ __________ ________ ________ ________ Operating profit (note 2) Continuing activities 345 (138) 207 188 490 Acquisitions - - - - - _________________________________________________ ___________ __________ ________ ________ ________ 345 (138) 207 188 490 Discontinued activities - - - 16 16 _________________________________________________ ___________ __________ ________ ________ ________ 345 (138) 207 204 506 Share of operating profits of associated undertakings Continuing activities 1 - 1 1 3 Discontinued activities 2 - 2 8 12 _________________________________________________ ___________ __________ ________ ________ ________ Total operating profit: Group and share of associated undertakings (note 2) 348 (138) 210 213 521 _________________________________________________ ___________ __________ ________ ________ ________ Loss on disposal of business - discontinued activities (note 3) - - - (27) (27) _________________________________________________ ___________ __________ ________ ________ ________ Interest receivable and similar income 4 - 4 5 16 Interest payable and similar charges (69) - (69) (79) (152) _________________________________________________ ___________ __________ ________ ________ ________ Net interest (65) - (65) (74) (136) _________________________________________________ ___________ __________ ________ ________ ________ Profit on ordinary activities before taxation 283 (138) 145 112 358 Tax on profit on ordinary activities (note 4) (73) - (73) (44) (143) _________________________________________________ ___________ __________ ________ ________ ________ Profit on ordinary activities after taxation 210 (138) 72 68 215 Equity minority interests (19) - (19) (12) (31) _________________________________________________ ___________ __________ ________ ________ ________ Profit for the financial period 191 (138) 53 56 184 Equity dividends (note 5) (66) - (66) (60) (183) _________________________________________________ ___________ __________ ________ ________ ________ Profit/(loss) for the period retained 125 (138) (13) (4) 1 _________________________________________________ ___________ __________ ________ ________ ________ Basic earnings per ordinary share (note 6) 2.5p 2.5p 8.3p _________________________________________________ ___________ __________ ________ ________ ________ Basic earnings per ordinary share - excluding goodwill amortisation and exceptional items (note 6) 8.8p 8.4p 20.8p _________________________________________________ ___________ __________ ________ ________ ________ Diluted earnings per ordinary share (note 6) 2.4p 2.5p 8.3p _________________________________________________ ___________ __________ ________ ________ ________ Diluted earnings per ordinary share - excluding goodwill amortisation and exceptional items (note 6) 8.8p 8.4p 20.7p _________________________________________________ ___________ __________ ________ ________ ________ The half-year results are unaudited but have been reviewed by the auditors. The results for the year ended 30 September 2003 do not comprise statutory accounts for the purpose of Section 240 of the Companies Act 1985 and have been extracted from the Group's published accounts for that year which have been filed with the Registrar of Companies. The audit report on these accounts was unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985. Compass Group PLC Consolidated Statement of Total Recognised GAINS AND LOSSES For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited Â£m Â£m Â£m ______________________________________________________________ ___________ __________ __________ Profit for the financial period 53 56 184 Currency translation differences on foreign currency net investments 21 (31) (32) ______________________________________________________________ ___________ __________ __________ Total gains and losses recognised in the period 74 25 152 ______________________________________________________________ ___________ __________ __________ RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 2003 30 Sep 2003 Reviewed Reviewed Audited Â£m Â£m Â£m ______________________________________________________________ ___________ ___________ ___________ Profit for the financial period 53 56 184 Dividends (66) (60) (183) ______________________________________________________________ ___________ ___________ ___________ (13) (4) 1 Currency translation differences on foreign currency net investments 21 (31) (32) Issue of shares 8 6 12 Repurchase of shares (69) (55) (233) Purchase of own shares (1) - - ______________________________________________________________ ___________ ___________ ___________ Net reduction in shareholders' funds (54) (84) (252) Opening shareholders' funds 2,579 2,831 2,831 ______________________________________________________________ ___________ ___________ ___________ Closing shareholders' funds 2,525 2,747 2,579 ______________________________________________________________ ___________ ___________ ___________ Compass Group PLC CONSOLIDATED BALANCE SHEET As at 31 March 2004 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited Notes Â£m Â£m Â£m ______________________________________________________________ ______ ___________ __________ ____________ Fixed assets intangible assets 4,217 4,568 4,436 Tangible assets 1,735 1,684 1,734 Investments 75 114 73 ______________________________________________________________ ______ ___________ __________ ____________ 6,027 6,366 6,243 ______________________________________________________________ ______ ___________ __________ ____________ Current assets Stocks 251 217 229 Debtors: amounts falling due within one year 1,549 1,574 1,530 amounts falling due after more than one year 271 358 309 Cash at bank and in hand 284 281 303 ______________________________________________________________ ______ ___________ __________ ____________ 2,355 2,430 2,371 Creditors: amounts falling due within one year (2,900) (3,585) (3,093) ______________________________________________________________ ______ ___________ __________ ____________ Net current liabilities (545) (1,155) (722) ______________________________________________________________ ______ ___________ __________ ____________ Total assets less current liabilities 5,482 5,211 5,521 Creditors: amounts falling due after more than one year (2,500) (1,942) (2,457) Provisions for liabilities and charges 7 (399) (453) (429) Equity minority interests (58) (69) (56) ______________________________________________________________ ______ ___________ __________ ____________ Net assets 2,525 2,747 2,579 ______________________________________________________________ ______ ___________ __________ ____________ Capital and reserves Called up share capital 215 222 217 Share premium account 8 92 80 84 Capital redemption reserve 8 9 2 7 Merger reserve 8 4,170 4,170 4,170 Profit and loss account 8 (1,960) (1,727) (1,899) Less: own shares (1) - - ______________________________________________________________ ______ ___________ __________ ____________ Total equity shareholders' funds 2,525 2,747 2,579 ______________________________________________________________ ______ ___________ __________ ____________ Compass Group PLC Consolidated Cash Flow Statement For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited Â£m Â£m Â£m Â£m Â£m Â£m _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net cash inflow from operating activities (note I) 373 309 933 Dividends from associated undertakings 2 2 5 Returns on investments and servicing of finance Interest received 3 5 15 Interest paid (60) (75) (163) Interest element of finance lease rental payments (1) (1) (3) Dividends paid to minority interests (14) (2) (15) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net cash outflow from returns on investments and servicing of finance (72) (73) (166) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Taxation Tax received 1 36 41 Tax paid (36) (40) (86) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net tax paid (35) (4) (45) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Capital expenditure and financial investment Purchase of tangible fixed assets (196) (169) (376) Sale of tangible fixed assets 14 20 64 _____________________________________________________ _____ ___________ _____ __________ _______ _________ Total capital expenditure and financial investment (182) (149) (312) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Free cash flow 86 85 415 _____________________________________________________ _____ ___________ _____ __________ _______ _________ Acquisitions and disposals Purchase of subsidiary companies (50) (189) (296) Net proceeds from businesses held for resale - 31 30 Sale of subsidiary companies and associated undertakings 6 661 720 _____________________________________________________ _____ ___________ _____ __________ _______ _________ Total acquisitions and disposals (44) 503 454 Equity dividends paid (183) (47) (159) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net cash (outflow)/inflow from investing activities (227) 456 295 _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net cash (outflow)/inflow before financing (141) 541 710 Management of liquid resources: Sale of marketable securities - 3 3 Financing Issue of ordinary share capital 8 6 12 Repurchase of share capital (91) (45) (211) Purchase of own shares, net (1) (2) - Debt due within a year: Decrease in bank loans and loan notes (47) (545) (218) Debt due after a year: Increase/(decrease) in bank loans and loan notes 291 (93) (464) Capital element of finance lease rentals (14) (5) (16) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Net cash inflow/(outflow) from financing 146 (684) (897) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Increase/(decrease) in cash in the period 5 (140) (184) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Reconciliation of net cash flow to movement in net debt (note II) Increase/(decrease) in cash in the period 5 (140) (184) Cash flow from change in debt and lease finance (230) 643 698 _____________________________________________________ _____ ___________ _____ __________ _______ _________ Change in net debt resulting from cash flows (225) 503 514 Changes in finance leases and loans acquired with subsidiaries (7) (23) (41) Effect of foreign exchange rate changes 176 (116) (79) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Movement in net debt in the period (56) 364 394 Opening net debt (2,308) (2,702) (2,702) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Closing net debt (2,364) (2,338) (2,308) _____________________________________________________ _____ ___________ _____ __________ _______ _________ Compass Group PLC Notes to the Consolidated Cash Flow Statement For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited Â£m Â£m Â£m _________________________________________________________________ ____________ __________ ___________ I Reconciliation of operating profit to net cash inflow from operating activities: Operating profit before goodwill amortisation 348 343 797 Depreciation 130 119 243 _________________________________________________________________ ____________ __________ ___________ EBITDA 478 462 1,040 (Profit)/loss on disposal of fixed assets and businesses (5) 1 (8) Share of profit of associated undertakings (3) (9) (15) Expenditure in respect of provisions for liabilities and charges (24) (23) (46) Increase in stocks (37) (12) (33) Increase in debtors (105) (108) (64) Increase/(decrease) in creditors 69 (2) 59 _________________________________________________________________ ____________ __________ ___________ Net cash inflow from operating activities 373 309 933 _________________________________________________________________ ____________ __________ ___________ Acquisitions (excluding Other Cash Exchange cash and non-cash 1 Oct 2003 flow movements overdrafts) changes 31 Mar 2004 Â£m Â£m Â£m Â£m Â£m Â£m __________________________ __________ _________ ___________ ____________ ___________ ___________ II Analysis of net debt: Cash at bank and in hand 303 1 (20) - - 284 Overdrafts (98) 4 2 - - (92) __________________________ __________ _________ ___________ ____________ ___________ ___________ 205 5 (18) - - 192 __________________________ __________ _________ ___________ ____________ ___________ ___________ Debt due within one year (111) 47 12 - (61) (113) Debt due after one year (2,336) (291) 178 (1) 61 (2,389) Finance leases (66) 14 4 (1) (5) (54) __________________________ __________ _________ ___________ ____________ ___________ ___________ (2,513) (230) 194 (2) (5) (2,556) __________________________ __________ _________ ___________ ____________ ___________ ___________ Total (2,308) (225) 176 (2) (5) (2,364) __________________________ __________ _________ ___________ ____________ ___________ ___________ COMPASS GROUP PLC NOTES TO THE FINANCIAL STATEMENTS For the six months ended 31 March 2004 1. Basis of preparation The results of Compass Group PLC for the six months ended 31 March 2004 have been prepared on the basis of the accounting policies disclosed in the 2003 Annual Report with the exception of the introduction of UITF abstract 38 'Accounting for ESOP trusts' which has impacted prior periods for the disclosure of own shares in the consolidated balance sheet and the consolidated cash flow statement in respect of purchase of own shares. Half-year Half-year Year ended ended ended Continuing Discontinued 31 Mar 31 Mar 30 Sep 2004 2003 2003 activities Acquisitions activities Reviewed Reviewed Audited 2. Turnover and operating profit Â£m Â£m Â£m Â£m Â£m Â£m __________________________________________ _________ __________ __________ ________ ________ _______ Turnover Foodservice Geographical analysis: - United Kingdom - Continuing 1,505 5 - 1,510 1,428 2,980 - Discontinued - - - - 80 80 - Continental Europe and the rest of the 2,557 5 - 2,562 2,214 4,664 world - North America 1,764 8 - 1,772 1,808 3,562 __________________________________________ _________ __________ __________ ________ ________ _______ 5,826 18 - 5,844 5,530 11,286 __________________________________________ _________ __________ __________ ________ ________ _______ Operating profit (before goodwill amortisation) Foodservice - The Company and its subsidiary companies - Continuing 345 - - 345 318 766 - Discontinued - - - - 16 16 - Associated undertakings - Continuing 1 - - 1 1 3 - Discontinued - - 2 2 8 12 __________________________________________ _________ __________ __________ ________ ________ _______ 346 - 2 348 343 797 __________________________________________ _________ __________ __________ ________ ________ _______ Geographical analysis: - United Kingdom The Company and its subsidiary companies 133 - - 133 125 360 - Continuing - Discontinued - - - - 16 16 Associated undertakings 1 - - 1 1 2 - Continental Europe and the rest of the world The Company and its subsidiary companies 128 - - 128 110 229 Associated undertakings - Continuing - - - - - - - Discontinued - - 2 2 8 12 - North America The Company and its subsidiary companies 84 - - 84 83 177 Associated undertakings - - - - - 1 __________________________________________ _________ __________ __________ ________ ________ _______ 346 - 2 348 343 797 __________________________________________ _________ __________ __________ ________ ________ _______ Amortisation of goodwill - continuing: - United Kingdom (77) - - (77) (77) (155) - Continental Europe and the rest of the (38) - - (38) (28) (70) world - North America (23) - - (23) (25) (51) __________________________________________ _________ __________ __________ ________ ________ _______ (138) - - (138) (130) (276) __________________________________________ _________ __________ __________ ________ ________ _______ Total operating profit 208 - 2 210 213 521 __________________________________________ _________ __________ __________ ________ ________ _______ Total operating profit after goodwill amortisation for the half-year ended 31 March 2004 relates to foodservice analysed as UK Â£57 million, Continental Europe and the rest of the world Â£92 million and North America Â£61 million, (2003 half-year: Â£65 million, Â£90 million and Â£58 million respectively and full year ended 30 September 2003: Â£223 million, Â£171 million and Â£127 million respectively). COMPASS GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (continued) For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited 3. Exceptional items Â£m Â£m Â£m Loss on disposal of discontinued activities - Little Chef and - 27 27 Travelodge _________________________________________________________________ ___________ _________ ___________ Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 30 Sep 2003 2003 Reviewed Reviewed Audited 4. Tax on profit on ordinary activities Â£m Â£m Â£m ________________________________________________________________ _____________ __________ ___________ UK corporation tax 15 22 41 Overseas tax payable 53 36 89 Overseas tax on share of profits of associated undertakings 1 3 6 ________________________________________________________________ _____________ __________ ___________ 69 61 136 UK deferred tax 15 5 11 Impact of discounting UK deferred tax (1) (1) 5 Overseas deferred tax - 10 54 Impact of discounting overseas deferred tax (4) (3) (12) ________________________________________________________________ _____________ __________ ___________ 79 72 194 ________________________________________________________________ _____________ __________ ___________ Adjustments in respect of prior years: UK corporation tax (2) 5 (13) Overseas tax payable (3) 3 (12) UK deferred tax (1) (10) (16) Overseas deferred tax - (2) 16 Impact of discounting overseas deferred tax - 2 - ________________________________________________________________ _____________ __________ ___________ (6) (2) (25) ________________________________________________________________ _____________ __________ ___________ Total tax charge before exceptional items 73 70 169 ________________________________________________________________ _____________ __________ ___________ Exceptional items: UK corporation tax - 4 4 Overseas tax payable - 3 3 Prior year UK corporation tax - (33) (33) ________________________________________________________________ _____________ __________ ___________ Total exceptional tax credit - (26) (26) ________________________________________________________________ _____________ __________ ___________ Tax on profit on ordinary activities after exceptional items 73 44 143 ________________________________________________________________ _____________ __________ ___________ United Kingdom corporation tax has been charged at 30% (2003: 30%). The exceptional UK corporation tax charge, Â£4 million, and overseas tax charge, Â£3 million, both relate to the disposal of the Little Chef and Travelodge businesses. The prior year exceptional UK corporation tax credit, Â£(33) million, relates to the recovery of tax not previously recognised in respect of acquired businesses where the hindsight period for adjustments to goodwill has passed. Compass Group PLC NOTES TO THE FINANCIAL STATEMENTS (continued) For the six months ended 31 March 2004 Half-year Half-year Year ended ended ended 31 Mar 2004 31 Mar 2003 30 Sep 2003 Reviewed Reviewed Audited 5. Dividends Per share Â£m Per share Â£m Per share Â£m ________________________________ __________ __________ __________ __________ __________ __________ Dividends on ordinary shares of 10p each Interim 3.1p 66 2.7p 60 2.7p 60 Final - - - - 5.7p 123 ________________________________ __________ __________ __________ __________ __________ __________ 3.1p 66 2.7p 60 8.4p 183 ________________________________ __________ __________ __________ __________ __________ __________ Half-year Half-year Year Year ended ended ended ended Half-year Half-year 31 Mar 2003 31 Mar 2003 30 Sep 2003 30 Sep 2003 ended ended Before After Before After goodwill goodwill goodwill goodwill 31 Mar 2004 31 Mar 2004 amortisation amortisation amortisation amortisation Before After and and and and goodwill goodwill exceptional exceptional exceptional exceptional amortisation amortisation items items items items Reviewed Reviewed Reviewed Reviewed Audited Audited 6. earnings per share Â£m Â£m Â£m Â£m Â£m Â£m ________________________________ __________ __________ __________ __________ __________ __________ Attributable profit for basic 191 53 187 56 461 184 and diluted earnings per share ________________________________ __________ __________ __________ __________ __________ __________ millions millions millions millions millions millions Average number of shares for 2,162 2,162 2,233 2,233 2,218 2,218 basic earnings per share Dilutive share options 10 10 6 6 5 5 ________________________________ __________ __________ __________ __________ __________ __________ Average number of shares for 2,172 2,172 2,239 2,239 2,223 2,223 diluted earnings per share ________________________________ __________ __________ __________ __________ __________ __________ Basic earnings per share 8.8p 2.5p 8.4p 2.5p 20.8p 8.3p ________________________________ __________ __________ __________ __________ __________ __________ Diluted earnings per share 8.8p 2.4p 8.4p 2.5p 20.7p 8.3p ________________________________ __________ __________ __________ __________ __________ __________ Earnings per share before goodwill amortisation and exceptional items has been shown to disclose the impact of goodwill amortisation and exceptional items on underlying earnings. COMPASS GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (continued) For the six months ended 31 March 2004 Insurance, pensions and other post employment Onerous Legal and benefits contracts other Environmental Total claims 7. Provisions for liabilities and charges Â£m Â£m Â£m Â£m Â£m ___________________________________________ __________ __________ __________ ____________ ________ At 1 October 2003 279 48 91 11 429 Arising from acquisitions - - (2) - (2) Expenditure in the period (8) (6) (10) - (24) Charged to profit and loss account 8 - - - 8 Credited to profit and loss account (1) - - - (1) Currency adjustment (8) (1) (2) - (11) ___________________________________________ __________ __________ __________ ____________ ________ At 31 March 2004 270 41 77 11 399 ___________________________________________ __________ __________ __________ ____________ ________ Insurance, pensions and other post-employment benefits relate to the costs of self-funded pension and insurance schemes or statutory retirement arrangements 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 1 to 16 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. Consolidated profit and loss account _________________________________ Share Capital Before premium redemption Merger goodwill Goodwill account reserve reserve written written Total off off 8. Reserves Â£m Â£m Â£m Â£m Â£m Â£m _________________________________________ _______ _________ _______ _________ _________ _________ At 1 October 2003 84 7 4,170 233 (2,132) (1,899) Foreign exchange reserve movements - - - 21 - 21 Premium on ordinary shares issued, net of 8 - - - - - expenses Repurchase and cancellation of shares - 2 - (69) - (69) Retained loss for the period - - - (13) - (13) _________________________________________ _______ _________ _______ _________ _________ _________ At 31 March 2004 92 9 4,170 172 (2,132) (1,960) _________________________________________ _______ _________ _______ _________ _________ _________ COMPASS GROUP PLC NOTES TO THE FINANCIAL STATEMENTS (continued) For the six months ended 31 March 2004 9. Post balance sheet events On 2 April 2004, the Group acquired Mitropa for Â£11 million in order to strengthen its presence in catering at German railway stations and motorway service areas. On 13 April 2004, the Group acquired Creative Host in the USA for Â£24 million, which caters in airport restaurants. Also on this date, the Group disposed of its 12.74% interest in Yoshinoya D&C in Japan for Â£61 million. Translation 10. Exchange rates rate for Closing the six rate as at months 31 Mar ended 31 2004 Mar 2004 _________________________________________________________________________________ __________ __________ Exchange rates for major currencies used during the period were: Australian Dollar 2.40 2.41 Canadian Dollar 2.34 2.42 Danish Krone 10.84 11.13 Euro 1.46 1.50 Japanese Yen 191.29 191.20 Norwegian Krone 12.26 12.62 Swedish Krona 13.30 13.86 Swiss Franc 2.27 2.33 US Dollar 1.77 1.84 11. This announcement is being sent to all shareholders on the register at 19 May 2004 and is available to the general public at Compass House, Guildford Street, Chertsey, Surrey, KT16 9BQ (the company's registered office) during office hours. This information is provided by RNS The company news service from the London Stock Exchange

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