Interim Results - Part 2

Compass Group PLC 17 May 2000 Part Two COMPASS GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Half year Half year Year Before ended ended ended goodwill Goodwill 31 Mar 31 Mar 30 Sep amortisation amortisation 2000 1999 1999 Reviewed Reviewed Audited Notes £m £m £m £m £m Turnover 1 2,657.2 - 2,657.2 2,370.3 4,814.6 Operating costs (2,528.1) (3.0) (2,531.1) (2,260.3)(4,563.2) -------------------------------------------------------- Operating profit 129.1 (3.0) 126.1 110.0 251.4 Share of operating profits of associated undertakings 3.9 (1.3) 2.6 1.3 6.4 ------------------------------------------------------- Total operating profit : Group and share of associated undertakings 1 133.0 (4.3) 128.7 111.3 257.8 Interest receivable and similar income 5.3 - 5.3 4.2 8.1 Interest payable and similar charges (43.3) - (43.3) (36.6) (75.9) ------------------------------------------------------- Profit on ordinary activities before taxation 95.0 (4.3) 90.7 78.9 190.0 Tax on profit on ordinary activities 2 (24.2) - (24.2) (20.3) (48.8) ------------------------------------------------------- Profit on ordinary activities after taxation 70.8 (4.3) 66.5 58.6 141.2 Equity minority interests (2.7) - (2.7) (2.4) (4.2) ------------------------------------------------------- Profit for the financial period 68.1 (4.3) 63.8 56.2 137.0 Equity dividends 3 (15.5) - (15.5) (13.6) (42.9) ------------------------------------------------------- Profit for the period retained 6 52.6 (4.3) 48.3 42.6 94.1 ============================================== Basic earnings per ordinary share 4 9.4p 8.4p 20.3p ====================== Basic earnings per ordinary share - excluding goodwill amortisation 4 10.0p 8.5p 20.9p ==== ============ Diluted earnings per ordinary share 4 9.2p 8.3p 19.9p ====================== Diluted earnings per ordinary share - excluding goodwill amortisation 4 9.8p 8.4p 20.4p ==== ============ The half year results are unaudited but have been reviewed by the auditors. The above activities are derived from continuing operations. The results for the year ended 30 September 1999 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 Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited £m £m £m Profit for the financial period 63.8 56.2 137.0 Currency translation differences on foreign currency net investments 23.9 (10.5) (5.9) ----------------------------------- Total gains and losses recognised in the period 87.7 45.7 131.1 ====== ====== ====== RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited £m £m £m Profit for the financial period 63.8 56.2 137.0 Dividends (15.5) (13.6) (42.9) ----------------------------------- 48.3 42.6 94.1 Other recognised gains and losses relating to the period (net) 23.9 (10.5) (5.9) New share capital subscribed 19.8 0.6 3.3 Goodwill arising on acquisitions prior to 1 October 1998 - (4.7) (13.7) Goodwill transferred on disposal of businesses - 5.1 5.8 ----------------------------------- Net addition to shareholders' funds 92.0 33.1 83.6 Opening shareholders' funds (798.0) (881.6) (881.6) ----------------------------------- Closing shareholders' funds (706.0) (848.5) (798.0) ====== ====== ====== COMPASS GROUP PLC CONSOLIDATED BALANCE SHEET 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited Notes £m £m £m Fixed assets Intangible assets 162.6 51.8 106.5 Tangible assets 475.5 411.6 432.0 Investments 91.2 35.7 94.7 ------------------------------------ 729.3 499.1 633.2 ------------------------------------ Current assets Stocks 104.5 96.9 100.3 Debtors: amounts falling due within one year 618.3 591.6 598.1 amounts falling due after more than one year 74.7 39.6 64.5 Cash at bank and in hand 138.2 82.8 121.4 ------------------------------------ 935.7 810.9 884.3 Creditors: amounts falling due within one year (1,308.8) (1,009.0) (1,043.6) ------------------------------------ Net current liabilities (373.1) (198.1) (159.3) ------------------------------------ Total assets less current liabilities 356.2 301.0 473.9 ------------------------------------ Creditors: amounts falling due after more than one year Other creditors (748.3) (827.9) (961.2) Convertible bond (215.7) (215.1) (215.4) ------------------------------------ (964.0) (1,043.0) (1,176.6) ------------------------------------ Provisions for liabilities and charges 5 (80.5) (92.9) (84.6) Equity minority interests (17.7) (13.6) (10.7) ------------------------------------ Net liabilities (706.0) (848.5) (798.0) ======= ======= ======= Capital and reserves Called up share capital 17.0 16.9 17.0 Share premium account 6 844.2 818.2 823.3 Profit and loss account 6 (1,567.2) (1,683.6) (1,638.3) ------------------------------------ Total equity shareholders' funds (706.0) (848.5) (798.0) ======= ======= ======= COMPASS GROUP PLC CONSOLIDATED CASH FLOW STATEMENT Half year Half year Year ended ended ended 31 March 31 March 30 Sep 2000 1999 1999 Reviewed Reviewed Audited £m £m £m £m £m £m Net cash inflow from operating activities (note I) 122.9 103.2 303.1 Dividends from associated undertakings - 0.1 1.5 Returns on investments and servicing of finance Interest received 4.6 4.2 9.2 Interest paid (37.1) (32.7) (72.4) Interest element of finance lease rental payments (0.6) (0.9) (2.4) Dividends paid to minority interests (0.4) - (1.0) ------ ------ ------ Net cash outflow from returns on investments and servicing of finance (33.5) (29.4) (66.6) Taxation Tax received 6.5 12.2 15.3 Tax paid (11.9) (18.3) (37.8) ------ ------ ------ Net tax paid (5.4) (6.1) (22.5) ------ ----- ----- Free cash flow 84.0 67.8 215.5 ------ ----- ----- Capital expenditure and financial investment Purchase of tangible fixed assets (85.4) (74.1) (137.4) Sale of tangible fixed assets 2.2 9.3 11.9 Sale/(purchase) of own shares, net (0.9) 0.5 1.8 ------ ------ ------ Total capital expenditure and financial investment (84.1) (64.3) (123.7) Acquisitions and disposals Purchase of subsidiary companies and investment in associated undertakings (93.8) (95.5) (188.3) Sale of subsidiary companies - 6.1 4.8 ------ ------ ------ Total acquisitions and disposals (93.8) (89.4) (183.5) Equity dividends paid - - (39.0) ------ ------ ------ Net cash outflow from investing activities (177.9) (153.7) (346.2) ------ ------ ------ Net cash outflow before financing (93.9) (85.9) (130.7) Financing Issue of ordinary share capital 2.6 0.6 1.8 Debt due within a year: Increase/(decrease) in bank loans and loan notes 19.7 (16.9) (87.0) Debt due after a year: Increase in bank loans and loan notes 104.3 122.1 278.8 Capital element of finance lease rentals (4.7) (6.1) (9.5) ------ ------ ------ Net cash inflow from financing 121.9 99.7 184.1 ------- ------ ------ Increase in cash in the period 28.0 13.8 53.4 ====== ===== ===== Reconciliation of net cash flow to movement in net debt (note II) Increase in cash in the period 28.0 13.8 53.4 Cash inflow from increase in debt and lease finance (119.3) (99.1) (182.3) ------ ------ ------ Change in net debt resulting from cash flows (91.3) (85.3) (128.9) Changes in finance leases (4.4) (5.4) (11.9) Effect of foreign exchange rate change 30.6 (5.3) 19.0 ------ ------ ------ Movement in net debt in the period (65.1) (96.0) (121.8) Opening net debt (1,065.6) (943.8) (943.8) -------- ------ ------ Closing net debt (1,130.7) (1,039.8) (1,065.6) ======= ======= ======= COMPASS GROUP PLC NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited £m £m £m I Reconciliation of operating profit to net cash inflow from operating activities: Operating profit 128.7 111.3 257.8 Depreciation and amortisation 50.4 41.0 86.0 Loss/(profit) on disposal of fixed assets and businesses 0.6 (1.1) (4.1) Share of profit of associated undertakings (2.6) (1.3) (6.4) Cash flow relating to provisions for liabilities and charges (5.1) (3.6) (10.6) Increase in stocks (4.7) (4.0) (4.9) Increase in debtors (54.2) (64.8) (73.5) Increase in creditors 9.8 25.7 58.8 --------------------------------- Net cash inflow from operating activities 122.9 103.2 303.1 ====== ====== ====== Other Cash Exchange non-cash 1 Oct 1999 flow movements changes 31 Mar 2000 Audited Reviewed Reviewed Reviewed Reviewed £m £m £m £m £m II Analysis of net debt: Cash at bank and in hand 121.4 27.4 (10.6) - 138.2 Overdrafts (15.9) 0.6 (0.3) - (15.6) ------------------------------------------------- 105.5 28.0 (10.9) - 122.6 ------------------------------------------------- Debt due within one year (25.9) (19.7) (0.1) (277.0) (322.7) Debt due after one year (1,108.5) (104.3) 41.5 277.0 (894.3) Finance leases (36.7) 4.7 0.1 (4.4) (36.3) ---------------------------------------------------- (1,171.1) (119.3) 41.5 (4.4) (1,253.3) ---------------------------------------------------- Total (1,065.6) (91.3) 30.6 (4.4) (1,130.7) ======= ===== ===== ===== ======= Other non-cash changes in respect of debt represent amounts which were previously repayable in more than one year now due in less than one year. COMPASS GROUP PLC NOTES TO THE FINANCIAL STATEMENTS 1. Turnover and operating profit Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited £m £m £m Turnover Foodservice Geographical analysis: - United Kingdom 419.3 386.5 813.2 - Continental Europe and the rest of the world 1,333.5 1,180.4 2,421.0 - North America 904.4 803.4 1,580.4 ------------------------------------ 2,657.2 2,370.3 4,814.6 ======= ======= ======= Operating profit (before goodwill amortisation) Foodservice - The Company and its subsidiary companies 129.1 110.7 254.0 - Associated undertakings 3.9 1.3 7.4 ------------------------------------ 133.0 112.0 261.4 ======= ======= ======= Geographical analysis: - United Kingdom 27.6 24.6 60.7 - Continental Europe and the rest of the world The Company and its subsidiary companies 61.2 52.2 118.1 Associated undertakings 3.9 1.3 7.4 - North America 40.3 33.9 75.2 ------------------------------------ 133.0 112.0 261.4 ======= ======= ======= Amortisation of goodwill - Continental Europe and the rest of the world (4.2) (0.7) (3.5) - North America (0.1) - (0.1) ------------------------------------ 128.7 111.3 257.8 ======= ======= ======= Operating profit after goodwill amortisation for the half year ended 31 March 2000 relates to foodservice analysed as UK £27.6m, Continental Europe and the rest of the world £60.9m, and North America £40.2m, (1999 half year: £24.6m, £52.8m and £33.9m respectively and full year ended 30 September 1999: £60.7m, £122.0m and £75.1m respectively). 2. Tax on profit on ordinary activities Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited £m £m £m UK corporation tax 3.2 4.0 10.0 Overseas tax payable 19.9 15.1 32.4 ------------ ----------- ----------- 23.1 19.1 42.4 ------------ ----------- ----------- UK deferred tax 1.4 1.2 1.4 Overseas deferred tax (0.1) 0.6 5.1 ------------ ----------- ----------- 1.3 1.8 6.5 ------------ ----------- ----------- Adjustments in respect of prior years: UK corporation tax 1.4 0.3 2.1 UK deferred tax - (2.4) (4.4) Overseas tax payable (2.8) 0.9 (0.2) Overseas deferred tax - - 0.3 ------------ ----------- ----------- (1.4) (1.2) (2.2) ------------ ----------- ----------- Overseas tax on share of profits of associated undertakings 1.2 0.6 2.1 ------------ ----------- ----------- 24.2 20.3 48.8 ======= ====== ====== 3. Dividends Half year Half year Year ended ended ended 31 March 2000 31 March 1999 30 Sep 1999 Reviewed Reviewed Audited Per share £m Per share £m Per share £m Dividends on ordinary shares of 2.5p each Interim 2.28p 15.5 2.00p 13.6 2.00p 13.6 Final - - - - 4.35p 29.5 ------------------------------------------------------ 2.28p 15.5 2.00p 13.6 6.35p 43.1 ===== ===== ===== ESOP dividends received - - (0.2) ------ ------ ---- 15.5 13.6 42.9 ==== ==== ==== 4. Earnings per share Half Half Half Half year year year year Year Year ended ended ended ended ended ended 31 31 31 31 30 30 Mar Mar Mar Mar Sep Sep 2000 2000 1999 1999 1999 1999 Before After Before After Before After good- good- good- good- good- good- will will will will will will amort- amort- amort- amort- amort- amort- isation isation isation isation isation isation Reviewed Reviewed Reviewed Reviewed Audited Audited £m £m £m £m £m £m Attributable profit for basic earnings per share 68.1 63.8 56.9 56.2 140.6 137.0 Interest on convertible bonds net of tax 4.4 4.4 4.4 4.4 8.8 8.8 -------------------------------------------------------- Attributable profit for diluted earnings per share 72.5 68.2 61.3 60.6 149.4 145.8 -------------------------------------------------------- millions millions millions millions millions millions Average number of shares in issue 680.0 680.0 677.4 677.4 677.5 677.5 Average number of shares held by ESOP (2.0) (2.0) (4.7) (4.7) (3.7) (3.7) -------------------------------------------------------- Average number of shares for basic earnings per share 678.0 678.0 672.7 672.7 673.8 673.8 Dilutive share options 7.7 7.7 5.3 5.3 4.8 4.8 Conversion of 5.75% convertible bond due 2007 53.0 53.0 53.0 53.0 53.0 53.0 -------------------------------------------------------- Average number of shares for diluted earnings per share 738.7 738.7 731.0 731.0 731.6 731.6 -------------------------------------------------------- Basic earnings per share 10.0p 9.4p 8.5p 8.4p 20.9p 20.3p ===== ===== ===== ===== ===== ===== Diluted earnings per share 9.8p 9.2p 8.4p 8.3p 20.4p 19.9p ===== ===== ===== ===== ===== ===== Earnings per share excluding goodwill amortisation has been shown to disclose the impact of goodwill amortisation on underlying earnings. 5. Provisions for liabilities and charges Pensions and other post employment Onerous Legal and Reorganisation benefits contracts other claims provisions Other Total £m £m £m £m £m £m At 1 October 1999 51.8 8.9 10.8 7.8 5.3 84.6 Arising from acquisitions 0.1 - - - - 0.1 Expenditure in the period (1.4) (1.3) (0.2) (2.2) - (5.1) Charged to profit and loss account 2.1 - - - - 2.1 Credited to profit and loss account - (1.5) - - - (1.5) Currency adjustment 0.1 - 0.2 - - 0.3 ------------------------------------------------------ At 31 March 2000 52.7 6.1 10.8 5.6 5.3 80.5 ===== ===== ===== ===== ===== ===== Pensions and other post employment benefits relate to the costs of self funded pension and insurance schemes or statutory retirement benefits principally for overseas subsidiary companies 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 costs of litigation in the USA and sundry other claims. The timing of the settlement of these claims is uncertain. Reorganisation provisions are for the committed costs of integration of businesses. Integration is ongoing and is anticipated to be substantially complete within the next one to two years. 6. Reserves Consolidated profit and loss account ------------------------------------ Share Before premium goodwill Goodwill account written off written off Total £m £m £m £m At 1 October 1999 823.3 505.3 (2,143.6) (1,638.3) Foreign exchange reserve movements - 23.9 - 23.9 Premium on ordinary shares issued, net of expenses 20.9 (1.1) - (1.1) Retained profit for the period - 48.3 - 48.3 ------------------------------------------- At 31 March 2000 844.2 576.4 (2,143.6) (1,567.2) ====== ======= ======= ======= 7. Year 2000 There was no material impact to the Group's systems and businesses as a result of the Year 2000. Costs incurred were not significantly different to previous estimates. 8. Exchange rates Translation Closing rate rate Exchange rates for major currencies used during the period after taking into account the Group's hedging arrangements were: Australian Dollar 2.43 2.63 Canadian Dollar 2.36 2.32 Danish Krone 11.15 12.41 Euro 1.50 1.67 Norwegian Krone 12.39 13.46 Swedish Krona 13.15 13.78 Swiss Franc 2.41 2.65 US Dollar 1.57 1.59

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