TIDMCPG
RNS Number : 6648E
Compass Group PLC
10 May 2017
Half year results announcement for the six months ended 31 March
2017
Underlying(1) results Statutory results
HY 2017 HY 2016 Change HY 2017 HY 2016 Change
GBP11.6 GBP11.2 GBP11.5 GBP9.5
Revenue billion billion(2) +3.6%(3) billion billion +20.3%
Operating GBP894 GBP850 GBP877 GBP704
profit million million(2) +5.2%(2) million million +24.6%
Operating
margin 7.6% 7.4% +20bps 7.6% 7.4% +20bps
Earnings
per share 37.9 pence 36.4 pence(2) +4.1%(2) 37.5 pence 30.4 pence +23.4%
Free cash GBP502 GBP396
flow million million +26.8%
Interim dividend
per share 11.2 pence 10.6 pence +5.7% 11.2 pence 10.6 pence +5.7%
================== =========== ============== ========= =========== =========== =======
(1) Full details of the underlying results can be found on pages
33 - 35.
(2) Measured on a constant currency basis.
(3) Organic revenue growth.
Compass reports a good start to the year and proposes a GBP1bn
special dividend.
Organic revenue grew by 3.6% and operating margin improved by 20
basis points.
Full year expectations remain positive and unchanged.
Organic revenue growth of 3.6%
-- Growth in Q2 accelerated compared with Q1
-- Another strong six months in North America with organic revenue up 7.1%
-- Improving trends in Europe with organic revenue up 1.6%
-- Rest of World declined by 5.1% organically, but grew 2.6% excluding Offshore & Remote
Margin up 20bps
-- The Management and Performance (MAP) programme continues to drive operating efficiencies
-- Margin improvement aided by the end of restructuring plan in Offshore & Remote
Growth, performance and returns to shareholders: a proven and
sustainable model
-- Free cash flow of GBP502 million, up 26.8% on H1 2016
-- Proposed interim dividend up 5.7%
-- Remain committed to ongoing returns to shareholders with a proposed GBP1bn special dividend
Statutory results
-- On a statutory basis, revenue, operating profit and earnings
per share benefitted by over 15% from the translational effect of
weaker sterling
Chief Executive's Statement
Richard Cousins, Group Chief Executive, said:
"Compass had a good six months, with the business performing as
expected. North America continues to deliver excellent growth and
trends in Europe are improving. In Rest of World, reasonable growth
in Business & Industry, Healthcare and Education was offset by
ongoing weakness in Brazil and our Offshore & Remote
sector.
We continue to drive operating efficiencies around the business
which, combined with the end of the restructuring in our Offshore
and Remote business, resulted in margin improvement of 20bps in the
period.
Given our excellent cash generation and the strength of the
business, we are announcing a GBP1 billion special dividend. This
reflects our commitment to return surplus cash to shareholders
whilst maintaining an efficient balance sheet.
Our expectations for FY 2017 are positive and unchanged, with
growth weighted to the second half. Our pipeline of new contracts
is encouraging and our focus on organic growth, efficiencies and
cash gives us confidence in achieving another year of delivery.
In the longer term, we remain excited about the significant
structural growth opportunities globally and the potential for
further revenue growth, margin improvement, as well as continued
returns to shareholders."
Results presentation today
The results presentation for investors and analysts is being
held today, Wednesday 10(th) May 2017, at 9 a.m. at Bank of America
Merrill Lynch, 2 King Edward Street, London EC1A 1HQ. A live
webcast of the results presentation will be broadcast today at 9
a.m., accessible via the Company's website, www.compass-group.com.
At the end of the presentation you will be able to participate in a
question and answer session by dialling:
UK Toll Number: +44 (0) 203 139 4830
UK Toll-Free Number: +44 (0) 808 237 0030
US Toll Number: +1 718 873 9077
US Toll-Free Number: +1 866 928 7517
Participant PIN Code: 94454716#
Financial calendar
Ex-dividend date for 2017 interim dividend 18 May 2017
Record date for 2017 interim dividend 19 May 2017
2017 interim dividend payment 19 June 2017
Q3 Trading Update 26 July 2017
Full year results 21 November 2017
Enquiries
Investors Sandra Moura +44 1932 573 000
Press Gordon Simpson, Finsbury +44 207 251 3801
Website www.compass-group.com
Legal Entity Identifier (LEI) No. 2138008M6MH9OZ6U2T68
Chief Executive's Statement (continued)
Basis of preparation
Throughout the Interim Results Announcement, and consistent with
prior years, underlying measures are used to describe the Group's
performance. These are not recognised under IFRS or other generally
accepted accounting practice (GAAP).
The Executive Board of the Group manages and assesses the
performance of the business on these measures and believes they are
more representative of ongoing trading, facilitate meaningful year
on year comparisons, and hence provide more useful information to
shareholders. All underlying measures are defined in the glossary
of terms on page 37.
A summary of the adjustments from statutory results to
underlying results is shown in note 9 on pages 33 to 34 and further
detailed in the condensed income statement (page 16),
reconciliation of free cash flow (page 23), note 2 segmental
reporting (pages 25 to 26) and note 10 organic revenue and organic
profit (page 35).
Group overview
Revenue grew by 20% on a statutory basis, 16% of which was the
benefit of currency translation. On an organic basis it increased
by 3.6%. New business wins were 8.1% driven by strong MAP 1 (client
sales and marketing) performance in most countries, our retention
rate was 94.3% as a result of our ongoing focus and investment
while like for like revenue grew by 1.2% reflecting sensible price
increases and weak volumes in our commodity related business and in
Brazil.
Operating profit grew by 25%, with 18% a result of foreign
currency translations. Underlying operating profit increased by
5.2% on a constant currency basis. The operating profit margin
increased by 20 basis points as we continue to drive efficiencies
across the business using our Management and Performance (MAP)
framework. We benefitted from the end of the restructuring plan in
the Emerging Markets and Offshore & Remote last year and the
absence of these costs this year. We have maintained our focus on
MAP 3 (cost of food) with initiatives such as menu planning and
supplier rationalisation, as well as continually optimising MAP 4
(labour and in unit costs) and MAP 5 (above unit overheads). These
efficiencies combined with modest pricing increases enabled us to
offset inflation pressures and reinvestment to support the exciting
growth opportunities we see around the world.
Returns to shareholders continue to be an integral part of our
business model. As a result of continued strong cash flow
generation, the Group proposes a shareholder return by way of a
special dividend of GBP1 billion (61 pence per share) expected to
be paid in July and an interim dividend of 11.2 pence per share (up
5.7%). In the first half, we have also bought back GBP18 million of
shares. Our leverage policy remains unchanged: to maintain strong
investment grade credit ratings, returning any surplus cash to
shareholders to target net debt to EBITDA of around 1.5x.
Chief Executive's Statement (continued)
Regional performances
North America - 58.5% Group revenue (2016: 56.0%)
Underlying Change
Regional financial summary 2017 2016 Reported rates Constant currency Organic
============================ ========== ========== =============== ================== ========
Revenue GBP6,792m GBP5,418m 25.4% 6.6% 7.1%
Regional operating profit GBP580m GBP461m 25.8% 7.0% 7.6%
Regional operating margin 8.5% 8.5% -
============================ ========== ========== =============== ================== ========
Our North American business has delivered another strong
performance with organic revenue growth of 7.1%. This was driven by
good new business wins and an excellent retention rate. Like for
like revenues were positive with good pricing and broadly flat
volumes across the business - with the exception of the Offshore
& Remote sector which continues to be weak. The half year
benefitted from the positive impact of Easter, which more than
offset the negative impact of the 2016 Leap year. The quarterly
impact of Easter is estimated to be between 0.5% and 1%.
Strong net new business in our core Eurest sub-sector drove
solid organic growth in our Business & Industry sector. New
contract wins include Verizon and Comcast.
Organic revenue growth in Healthcare & Seniors was driven by
good levels of new business. New contract wins included the Mayo
Foundation, Texas Children's Hospital and Richfield Living.
The Education sector has enjoyed solid levels of net new
business with contract wins including food service contracts with
the Darden School of Business and Wichita Fall ISD, as well as a
support services contract with Dekalb County ISD.
In our Sports & Leisure business, excellent retention and
some improvements in like for like volumes continue to drive
organic revenue growth. Contract wins include the Nassau Veterans
Memorial Coliseum and the Toledo Mud Hens stadium.
Our Offshore & Remote business - which is small at around 2%
of revenues - saw a 5.7% decline in organic revenue due to
continued volume and pricing pressures. However, the rate of
decline is reducing and new contracts continue to be won, including
additional business with Shell.
Underlying operating profit of GBP580 million increased by 7.0%
(GBP38 million) on a constant currency basis. Margins were
unchanged as the benefits of ongoing efficiency initiatives across
MAPs 3 and 4, sensible price increases and leverage of the overhead
base were largely offset by the continued weakness in our Offshore
& Remote business, above average labour inflation and the
dilutive impact of the CulinArt acquisition.
Chief Executive's Statement (continued)
Europe - 26.0% Group revenue (2016: 28.2%)
Underlying Change
Regional financial summary 2017 2016 Reported rates Constant currency Organic
============================ ========== ========== =============== ================== ========
Revenue GBP3,023m GBP2,722m 11.1% 1.6% 1.6%
Regional operating profit GBP226m GBP201m 12.4% 2.3% 2.3%
Regional operating margin 7.5% 7.4% 10bps
============================ ========== ========== =============== ================== ========
Organic revenue in Europe grew by 1.6% reflecting good levels of
new business and the benefit of pricing in some countries, partly
offset by the negative impact of contract closures seen in the
second half of 2016. In addition, the first half of the year has
benefitted by the timing of Easter partially offset by the negative
impact of the 2016 Leap year. The quarterly impact of Easter is
estimated at around 2.5% percent.
Our new business performance reflects good levels of wins in
Turkey, Iberia and Central & Eastern Europe. New contracts
include the Institut Pasteur in France, Residencias Sanyres in
Spain, Aston Villa Football Club in the UK, Jacobs Douwe Egberts in
the Netherlands and Carrefour in Turkey. Contract extensions
include Siemens Real Estate in Denmark, Prosafe in Norway, ENI
Headquarters in Italy and Hospital de Basurto in Spain.
After a slowdown in new business in the UK post the Brexit
referendum, contracts are now mobilising as expected. The oil &
gas market in the North Sea continues to be weak with double digit
revenue declines. Challenging trading conditions remain in
France.
Underlying operating profit grew by 2.3% (GBP5 million) on a
constant currency basis. The ongoing focus on driving operational
efficiencies and sensible pricing allowed us to support the
creation of nine sub-regional business units, offset the impact of
lower volumes in the oil & gas business, and manage the
pressures of labour and food inflation, particularly in the UK. As
a result of our actions, the underlying operating margin improved
by 10 basis points to 7.5%.
Chief Executive's Statement (continued)
Rest of World - 15.5% Group revenue (2016: 15.8%)
Underlying Change
Regional financial summary 2017 2016 Reported rates Constant currency Organic
============================ ========== ========== =============== ================== ========
Revenue GBP1,802m GBP1,526m 18.1% (5.1)% (5.1)%
Regional operating profit GBP113m GBP97m 16.5% (6.6)% (6.6)%
Regional operating margin 6.3% 6.4% (10)bps
============================ ========== ========== =============== ================== ========
Organic revenue in our Rest of World region declined by 5.1%.
Excluding the Offshore & Remote business, organic revenue grew
by 2.6%. The Offshore & Remote business declined by 20%,
reflecting the continuing impact of the transition of construction
contracts to production in Australia and continued weakness in our
commodity related business around the region. In the half year the
benefit of Easter was offset by the negative impact of the 2016
Leap year. The quarterly impact of Easter is estimated to be up to
0.5%.
The Offshore & Remote business in Australia, as expected,
saw an acceleration in organic revenue declines to 28% reflecting
contracts continuing to move from their construction to production
phase and the ongoing pressures of site closures and lower volumes.
Similar challenges continue to be seen in our non-Australian
Offshore & Remote business across the region. Revenue declines
reached a low point in quarter one and while our commodity related
business will continue to be challenged, the trends are improving.
We continue to win and retain contracts including Anglo Gold
Ashanti in Australia, De Beers Group Services in South Africa and
Petrobras Urucu in Brazil.
The Business & Industry, Healthcare and Education sectors of
the region, continue to perform reasonably well. We have
experienced good growth in New Zealand, India, China, Australia and
our Spanish speaking Latin American businesses. However, Brazil is
still very tough. New business wins include the Massey University
in New Zealand, Adani in India, Tencent in China, National Bank of
Australia, Mazda in Mexico and Makro in Brazil. We continue to
retain contracts, including Citi Bank and Discovery Health in South
Africa, Coca Cola in Colombia and Sanofi in Mexico.
Underlying operating margins excluding Australia were slightly
positive, with the savings from the restructuring programme, along
with pricing and ongoing efficiencies, offsetting the impact of
weak volumes in our Offshore & Remote sector and Brazil. In
Australia, pricing pressures and site closures are reducing the
profitability of our business. Overall, underlying operating profit
therefore declined by 6.6% (GBP8 million) on a constant currency
basis, with the underlying margin down 10 basis points to 6.3%.
Chief Executive's Statement (continued)
Strategy
Focus on food
Food is our focus and our core competence. The food service
market is estimated to be more than GBP200 billion; with only
around 50% of the market currently outsourced, it represents a
significant structural growth opportunity. We believe the benefits
of outsourcing become further apparent as economic conditions and
regulatory changes put further pressure on organisations' budgets.
As one of the largest providers in all of our sectors, we are well
placed to benefit from these trends.
Our approach to support and multi services is low risk and
incremental, with strategies developed on a country by country
basis. Our largest sector in this market is Defence, Offshore &
Remote, where the model is almost universally multi service. In
addition, we have an excellent support services business in North
America and some operations in other parts of the world. This is a
complex segment and there are significant differences in client
buying behaviour across countries, sectors and sub-sectors.
Geographic spread
We have a truly international business, with operations in
around 50 countries.
North America (58% of Group revenue) is likely to remain the
principal growth engine for the Group. We have a market leading
business, which delivers high levels of growth by combining the
cost advantage of our scale with a segmented client facing sector
approach. The outsourcing culture is vibrant and the addressable
market is significant.
The fundamentals of our businesses in Europe (26% of Group
revenue) are good and we see many opportunities to drive growth in
revenue and margin. Our investment in MAP 1 sales and retention has
accelerated our organic revenue growth and with the creation of the
nine sub-regional business units, we continue to see opportunities
to deliver efficiencies and make our operations more
competitive.
Rest of World (16% of Group revenue) offers excellent long term
growth potential. Our largest markets are Australia, Japan and
Brazil, whilst India and China have strong long term growth
potential. Lower commodity prices and a weak macroeconomic backdrop
have impacted our Offshore & Remote business and some of our
emerging markets. We have concluded a restructuring of our business
to adapt to the changing market environment and remain excited
about the attractive long term growth prospects of the region.
Sectorised approach
We segment the market and create sectors and sub-sectors to
develop customised dining solutions that meet the requirements of a
growing range of clients and consumers. Our portfolio of B2B brands
enables us to differentiate these propositions and maximise our
market coverage, while benefitting from the cost advantages of
scale in food procurement and back office costs.
Scale
As we continue to grow, our scale enables us to achieve our goal
of being the lowest cost, most efficient provider of food and
support services. Scale is a benefit in terms of food procurement,
labour management and back office costs. It underpins our
competitiveness and enables us to deliver sustainable growth over
time.
MAP culture
We use the Management and Performance (MAP) framework across the
business. All our employees use this simple framework to drive
performance across the business. It helps us focus on a common set
of business drivers, whether it is winning new business in the
right sector on the right terms (MAP 1), increasing our consumer
participation and spend (MAP 2), reducing our food costs (MAP 3),
our labour costs (MAP 4) or our overhead (MAP 5).
Chief Executive's Statement (continued)
Uses of cash and balance sheet priorities
The Group's cash flow generation remains excellent and it will
continue to be a key part of the business model. Our priorities for
how we use our cash remain unchanged. We will continue to: (i)
invest in the business to support organic growth where we see
opportunities with good returns; (ii) pursue M&A opportunities;
our preference is for small to medium sized infill acquisitions,
where we look for returns greater than our cost of capital by the
end of year two; (iii) grow the dividend in line with underlying
constant currency earnings per share; and (iv) maintain strong
investment grade credit ratings returning any surplus cash to
shareholders to target net debt to EBITDA of around 1.5x.
In light of the above, the Group has announced a proposed
shareholder return by way of a special dividend of GBP1 billion (61
pence per share) expected to be paid in July.
Summary and outlook
Compass had a good six months, with the business performing as
expected. North America continues to deliver excellent growth and
trends in Europe are improving. In Rest of World, reasonable growth
in Business & Industry, Healthcare and Education was offset by
ongoing weakness in Brazil and our Offshore & Remote
sector.
We continue to drive operating efficiencies around the business
which, combined with the end of the restructuring in our Offshore
and Remote business, resulted in margin improvement of 20bps in the
period.
Given our excellent cash generation and the strength of the
business, we are announcing a GBP1 billion special dividend. This
reflects our commitment to return surplus cash to shareholders
whilst maintaining an efficient balance sheet.
Our expectations for FY 2017 are positive and unchanged, with
growth weighted to the second half. Our pipeline of new contracts
is encouraging and our focus on organic growth, efficiencies and
cash gives us confidence in achieving another year of delivery.
In the longer term, we remain excited about the significant
structural growth opportunities globally and the potential for
further revenue growth, margin improvement, as well as continued
returns to shareholders.
Richard Cousins
Group Chief Executive
10 May 2017
Business Review
Segmental performance
Six months ended
31 March Underlying revenue(1) Growth
---------------------- ---------------------------------- -----------------------------------------
2017 2016 Reported Constant
GBPm GBPm Rates Currency Organic
------------ -------------------- -------------------- --------- --------
North America 6,792 5,418 25.4% 6.6% 7.1%
Europe 3,023 2,722 11.1% 1.6% 1.6%
Rest of World 1,802 1,526 18.1% (5.1)% (5.1)%
Total 11,617 9,666 20.2% 3.3% 3.6%
---------------------- ------------ -------------------- -------------------- --------- --------
Underlying operating Underlying operating
profit(1) margin(1)
---------------------------------- -------------------------------
2017 2016 2017 2016
GBPm GBPm % %
------------ -------------------- -------------------- ---------
North America 580 461 8.5% 8.5%
Europe 226 201 7.5% 7.4%
Rest of World 113 97 6.3% 6.4%
Unallocated overheads (34) (32)
EM & OR restructuring - (11)
Total after EM
& OR restructuring 885 716 7.6% 7.4%
Associates 9 8
Total 894 724
---------------------- ------------ --------------------
(1) Definitions of underlying measures of performance can be
found in the glossary on page 37.
Business Review (continued)
Statutory results
On a statutory basis, revenue was GBP11,470 million (2016:
GBP9,536 million), growth of 20.3%, mainly driven by foreign
currency translation of 16% and organic growth of 3.6%.
Operating profit was GBP877 million (2016: GBP704 million), an
increase of 24.6% over the prior year driven by 18% of foreign
currency translation and 5.2% of underlying operating profit
growth.
Operating margin was 7.6% (2016: 7.4%).
Net finance costs were GBP47 million (2016: GBP38 million).
Profit before tax was GBP831 million (2016: GBP666 million)
giving rise to an income tax expense of GBP209 million (2016:
GBP162 million), equivalent to an effective tax rate of 25.2% (2016
FY: 24.3%).
Basic earnings per share were 37.5 pence (2016: 30.4 pence), an
increase of 23.4%, of which 19% relates to foreign currency
translation.
Underlying results
On an organic basis, revenue increased by 3.6%. This was broken
down as follows: new business wins were 8.1% driven by a strong
performance in most countries, our retention rate was 94.3% as a
result of our ongoing focus and investment, while like for like
revenue growth of 1.2% reflected sensible price increases and weak
volumes in our commodity related business and in Brazil.
Underlying operating profit was GBP894 million (2016: GBP724
million), an increase of 23.5%. If we restate 2016's profit at the
2017 average exchange rates, it would increase by GBP126 million to
GBP850 million. On a constant currency basis, underlying operating
profit has therefore increased by GBP44 million, or 5.2%.
The underlying operating margin increased by 20 basis points as
we continue to drive efficiencies across the business and
benefitted from the end of the Emerging Markets and Offshore &
Remote restructuring. The efficiencies, combined with modest
pricing increases, enabled us to offset inflation pressures and
reinvestment to support the exciting growth opportunities we see
around the world.
The underlying net finance cost increased to GBP52 million
(2016: GBP47 million) as a result of the weakness of sterling on
foreign denominated debt. This equates to an effective interest
rate of around 3% on gross debt. We continue to expect an
underlying net finance cost of around GBP110 million, including the
cost of additional debt to fund the proposed special dividend, as
well as the continued weakness of sterling on our foreign currency
borrowings.
On an underlying basis, the tax charge was GBP213 million (2016:
GBP166 million), equivalent to an effective tax rate of 25.3% (2016
FY: 24.5%). This increase is a consequence of both the changing
regulatory environment affecting all multinational groups, and
specifically the enactment into law in the UK of the OECD BEPS
legislation, and the impact of exchange rate movements. We expect
the underlying tax rate to be around the same level for the full
year. As previously noted, we are likely to see a continuing period
of significant uncertainty in the international corporate tax
environment.
On a constant currency basis, the underlying basic earnings per
share were 37.9 pence (2016: 36.4 pence), an increase of 4.1%.
Business Review (continued)
Interim dividend
An increase of 5.7% in our interim dividend to 11.2 pence per
share is above our first half constant currency earnings per share
growth, in recognition that our growth this year is second half
weighted. The dividend will be paid on 19 June 2017 to shareholders
on the register on 19 May 2017.
Special dividend
The Board is proposing to return 61 pence per share, or GBP1
billion in aggregate, to shareholders through a special dividend
and share consolidation. The special dividend and share
consolidation will be subject to shareholder approval at a General
Meeting on 7 June 2017. The special dividend, if approved, is
expected to be paid on 17 July 2017 to shareholders on the register
on 26 June 2017. Details of the share consolidation will be set out
in a separate circular to shareholders on or around 15 May 2017.
The resulting new ordinary shares are expected to be listed on the
London Stock Exchange on 27 June 2017. The Group has arranged a
committed bridge facility to fund the special dividend which it
plans to replace with longer term bond finance in due course.
Free cash flow
Free cash flow totalled GBP502 million (2016: GBP391 million).
In the first half of 2016, we made cash payments of GBP5 million
related to the European exceptional programme. Adjusting for this,
free cash flow on an underlying basis would have grown by GBP106
million or 26.8%. Underlying free cash flow conversion was 56%
(2016: 55%).
Gross capital expenditure of GBP337 million (2016: GBP264
million), including assets purchased under finance leases of nil
(2016: GBP1 million), is equivalent to 2.9% of underlying revenues
(2016: 2.7% of underlying revenues). We expect capex in the full
year to continue at these levels.
The working capital outflow, excluding provisions and pensions,
of GBP78 million (2016: GBP83 million) reflects the seasonality of
the business. Looking forward, annual trade working capital
movements are expected to average out at a small outflow.
The GBP5 million outflow (2016: GBP21 million) in respect of
post-employment benefit obligations reflects the reduction in
regular payments agreed with trustees of the UK scheme as a result
of the funding surplus following the triennial valuation in April
2016. We now expect a total outflow for the Group of around GBP20
million per annum.
The net interest outflow was GBP38 million (2016: GBP39
million).
The underlying cash tax rate was 19% (2016: 17%). For the full
year we expect the cash tax rate to be in range of 20 to 23
percent, reflecting the fact that proportionately more tax payments
are made in the second half.
Acquisition payments
The total cash spent on acquisitions in the first half, net of
cash acquired, was GBP63 million (2016: GBP144 million), comprising
GBP59 million on infill acquisitions, GBP1 million on acquisition
transaction costs and GBP3 million of deferred consideration
relating to prior years' acquisitions.
Disposals
The Group received GBP17 million (2016: GBP1 million) in respect
of the disposal of some small non-core businesses.
Post-employment benefit obligations
The Group has continued to review and monitor its pension
obligations throughout the period working closely with the trustees
and members of all schemes around the Group to ensure proper and
prudent assumptions are used and adequate provision and
contributions are made.
The Group's net pension surplus at 31 March 2017, calculated in
accordance with IAS 19, for all Group defined benefit schemes was
GBP17 million (30 September 2016: GBP21 million net deficit).
Business Review (continued)
Financial position
During the first six months of the year, net debt decreased to
GBP2,866 million (30 September 2016: GBP2,874 million). The Group
generated GBP502 million of free cash flow, including investing
GBP325 million in net capital expenditure, and spent GBP46 million
on acquisitions net of disposal proceeds. GBP347 million was paid
in respect of the final dividend for 2016 and GBP18 million
returned to shareholders through share buybacks.
The remaining GBP83 million movement in net debt related
predominantly to currency translation.
Related party transactions
Transactions with related parties have not had, and are not
expected to have, a material effect on the financial performance or
position of the Group.
Risks and uncertainties
The Board takes a proactive approach to risk management with the
aim of protecting its employees and customers and safeguarding the
interests of the Group and its shareholders.
A summary of the principal risks and uncertainties that face the
business is set out on page 13.
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in this Business Review, as is the financial position
of the Group, its cash flows, liquidity position, and borrowing
facilities. In addition, note 17 of the Consolidated Financial
Statements of our 2016 Annual Report includes the Group's
objectives, policies and processes for managing its capital, its
financial risk management objectives, details of its financial
instruments and hedging activities and its exposures to credit risk
and liquidity risk.
The Group has considerable financial resources together with
longer term contracts with a number of customers and suppliers
across different geographic areas and industries. As a consequence,
the directors believe that the Group is well placed to manage its
business risks successfully despite the current uncertain economic
outlook.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.
Johnny Thomson
Group Finance Director
10 May 2017
Focus on Risk
Identifying and managing risk
The Board continues to take a proactive approach to recognising
and mitigating risk with the aim of protecting its employees and
consumers and safeguarding the interests of the Company and its
shareholders in the constantly changing environment in which it
operates.
Details of the principal risks facing the Group are included on
pages 27-29 of the 2016 Annual Report. These remain unchanged, with
the exception of two specific updates highlighted, and are expected
to continue to be relevant for the remaining six months of this
financial year. A summary of the principal risks and uncertainties
is set out below:
-- Health and safety - Compass feeds millions of consumers and
employs thousands of people around the world every day, therefore
setting the highest standards for food hygiene and safety is
paramount
-- Client and consumer sales and retention - our business relies
on securing and retaining a diverse range of clients
-- Bidding - each year the Group could bid for a large number of opportunities
-- Service delivery and contractual compliance - the Group's
operating companies contract with a large number of clients.
Failure to comply with the terms of these contracts could lead to
loss of business
-- Competition - we operate in a highly competitive marketplace
where aggressive pricing from our competitors could cause a
reduction in our revenues and margins
-- Recruitment - failure to attract and recruit people with the
right skills at all levels could limit the success of the Group
-- Retention and motivation - retaining and motivating the best
people with the right skills at all levels of the organisation is
key to the long term success of the Group
-- Economy - some sectors of our business could be susceptible
to adverse changes in economic conditions and employment levels
-- Cost inflation - increases in labour or food costs could
hamper our ability to deliver the right level of service in the
most efficient way
-- Political stability - as a global business, our operations
and earnings may be adversely affected by political or economic
instability
-- Compliance and fraud - ineffective compliance management or
evidence of fraud could have an adverse effect on the Group's
reputation and performance
-- Tax compliance - as a Group we operate in an increasingly
complex international corporate tax environment. A degree of
uncertainty is inevitable and we note in particular the policy
efforts being led by the EU and the OECD
-- Information systems and technology - the digital world brings
risks such as technology failures, loss of confidential data and
damage to brand reputation
Updates to 'Economic and Political Environment' risks since the
2016 Annual Report:
-- Brexit - following the UK's decision to exit the European
Union (the 'EU') and the announcement of a UK general election on 8
June 2017, there is significant uncertainty about the withdrawal
process, its timeframe, the outcome of negotiations about future
arrangements between the UK and the EU, and the period for which
existing EU laws for member states will continue to apply to the
UK. The Board views the potential impact of Brexit as an integral
part of its Principal Risks rather than as a stand-alone risk. As
the process of Brexit evolves, the Board will continue to assess
its impact.
-- US Political reform - the Group has significant operations
and a substantial employee base in North America, where the new US
administration has signalled broad policy changes. Some of these
potential changes in policy are in respect of trade and tax, none
of which are clear at this stage. We are closely monitoring
developments from the new US administration and will continue to
assess the impact of changes when there is more clarity on the
nature of the changes and the extent to which they will be
enacted.
The identification of risks and opportunities, the development
of action plans to manage the risks and maximise the opportunities,
and the continual monitoring of progress against agreed key
performance indicators (KPIs) are integral parts of the business
process and core activities throughout the Group. In addition, the
geographic, sector and contract diversification of the Group helps
to minimise the impact of individual risks on its consolidated
results.
Compass Group PLC
Condensed Financial Statements
Directors' responsibilities
The Interim Report complies The directors are required
with the Disclosure and to prepare financial statements
Transparency Rules ('DTR') for the Group in accordance
of the United Kingdom's with International Financial
Financial Conduct Authority Reporting Standards ('IFRS').
in respect of the requirement
to produce a half-yearly International Accounting
financial report. The Standard 34 ('IAS 34'),
Interim Management Report defines the minimum content
is the responsibility of an interim financial
of, and has been approved report, including disclosures,
by, the directors. and identifies the accounting
recognition and measurement
We confirm that to the principles that should be
best of our knowledge: applied to an interim financial
report.
* the condensed set of financial statements has been
prepared in accordance with IAS 34; Directors are also required
to:
* the Interim Management Report includes a fair review * select suitable accounting policies and then apply
of the important events during the first six months them consistently;
and description of the principal risks and
uncertainties for the remaining six months of the
year, as required by DTR 4.2.7R; and * present information, including accounting policies,
in a manner that provides relevant, reliable,
comparable and understandable information; and
* the Interim Management Report includes a fair review
of disclosure of related party transactions and
changes therein, as required by DTR 4.2.8R. * provide additional disclosures when compliance with
the specific requirements in IFRS is insufficient to
enable users to understand the impact of particular
transactions, other events and conditions on the
On behalf of the Board entity's financial position and financial
performance.
The directors are responsible
for keeping adequate accounting
Mark J White records that are sufficient
General Counsel and Company to show and explain the
Secretary Parent Company's transactions
10 May 2017 and disclose with reasonable
accuracy at any time the
financial position of the
Parent Company and enable
them to ensure that its
financial statements comply
with the Companies Act 2006.
They have general responsibility
for taking such steps as
are reasonably open to them
to safeguard the assets
of the Group and to prevent
and detect fraud and other
irregularities.
The directors are also responsible
for the maintenance and
integrity of the corporate
and financial information
Compass Group PLC website.
Legislation in the UK governing
the preparation and dissemination
of financial statements
may differ from legislation
in other jurisdictions.
------------------------------------------------------------
Compass Group PLC
Condensed Financial Statements (continued)
Independent review report to Compass Group PLC
Introduction Our responsibility
We have been engaged by Our responsibility is to
the company to review the express to the Company a
condensed set of financial conclusion on the condensed
statements in the half-yearly set of financial statements
financial report for the in the half-yearly financial
six months ended 31 March report based on our review.
2017 which comprises the Scope of review
condensed income statement, We conducted our review in
the condensed statement accordance with International
of comprehensive income, Standard on Review Engagements
the condensed statement (UK and Ireland) 2410 Review
of changes in equity, the of Interim Financial Information
condensed balance sheet, Performed by the Independent
the condensed cash flow Auditor of the Entity issued
and the related explanatory by the Auditing Practices
notes. We have read the Board for use in the UK.
other information contained A review of interim financial
in the half-yearly financial information consists of making
report and considered whether enquiries, primarily of persons
it contains any apparent responsible for financial
misstatements or material and accounting matters, and
inconsistencies with the applying analytical and other
information in the condensed review procedures. A review
set of financial statements. is substantially less in
This report is made solely scope than an audit conducted
to the company in accordance in accordance with International
with the terms of our engagement Standards on Auditing (UK
to assist the company in and Ireland) and consequently
meeting the requirements does not enable us to obtain
of the Disclosure Guidance assurance that we would become
and Transparency Rules ("the aware of all significant
DTR") of the UK's Financial matters that might be identified
Conduct Authority ("the in an audit. Accordingly,
UK FCA"). Our review has we do not express an audit
been undertaken so that opinion.
we might state to the company Conclusion
those matters we are required Based on our review, nothing
to state to it in this report has come to our attention
and for no other purpose. that causes us to believe
To the fullest extent permitted that the condensed set of
by law, we do not accept financial statements in the
or assume responsibility half-yearly financial report
to anyone other than the for the six months ended
Company for our review work, 31 March 2017 is not prepared,
for this report, or for in all material respects,
the conclusions we have in accordance with IAS 34
reached. as adopted by the EU and
Directors' responsibilities the DTR of the UK FCA.
The half-yearly financial
report is the responsibility
of, and has been approved
by, the directors. The directors
are responsible for preparing Anthony Sykes
the half-yearly financial For and on behalf of KPMG
report in accordance with LLP
the DTR of the UK FCA. Chartered Accountants
15 Canada Square
The annual financial statements London
of the Group are prepared E14 5GL
in accordance with IFRSs 10 May 2017
as adopted by the EU. The
condensed set of financial
statements included in this
half-yearly financial report
has been prepared in accordance
with IAS 34 Interim Financial
Reporting as adopted by
the EU.
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED INCOME STATEMENT
FOR THE SIX MONTHSED 31 MARCH
2017
Six months
to 31 March
======================
2017 2016
Unaudited Unaudited
Year
ended
30 September
2016
Notes GBPm GBPm GBPm
Combined sales of Group and share
of equity accounted joint ventures 2 11,617 9,666 19,871
Less: share of sales of equity accounted
joint ventures (147) (130) (266)
=============================================== ====== ========== ========== ==============
Revenue 11,470 9,536 19,605
Operating costs (10,615) (8,853) (18,235)
=============================================== ====== ========== ========== ==============
Operating costs, excluding Emerging
Markets and Offshore & Remote restructuring (10,615) (8,842) (18,210)
Emerging Markets and Offshore & Remote
restructuring - (11) (25)
=============================================== ====== ========== ========== ==============
Operating profit before joint ventures
and associates 855 683 1,370
Share of profit after tax of joint
ventures and associates 22 21 39
=============================================== ====== ========== ========== ==============
Operating profit 877 704 1,409
=============================================== ====== ========== ========== ==============
Underlying operating profit(1) 2 894 724 1,445
Amortisation of intangibles arising
on acquisition (19) (14) (31)
Acquisition transaction costs (1) (1) (2)
Adjustment to contingent consideration
on acquisition 4 (4) -
Share based payment expense - non-controlling
interest put options - - (1)
Tax on share of profit of joint ventures (1) (1) (2)
=============================================== ====== ========== ========== ==============
Gain on disposal of business 1 - 1
Finance income 4 4 4
Finance costs (56) (51) (105)
Other financing items 5 9 12
Profit before tax 831 666 1,321
Income tax expense 3 (209) (162) (319)
=============================================== ====== ========== ========== ==============
Profit for the period 622 504 1,002
=============================================== ====== ========== ========== ==============
ATTRIBUTABLE TO
Equity shareholders of the Company 616 500 992
Non-controlling interests 6 4 10
Profit for the period 622 504 1,002
=============================================== ====== ========== ========== ==============
EARNINGS PER SHARE (PENCE)
Basic 4 37.5p 30.4p 60.4p
=============================================== ====== ========== ========== ==============
Diluted 4 37.4p 30.4p 60.3p
=============================================== ====== ========== ========== ==============
(1) Underlying operating profit excludes amortisation
of intangibles arising on acquisition, acquisition
transaction costs and adjustment to contingent consideration
on acquisition, but includes share of profit after
tax of associates and operating profit of joint ventures.
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 31 MARCH
2017
Six months
to 31 March
======================
Year
ended
2017 2016 30 September
Unaudited Unaudited 2016
GBPm GBPm GBPm
Profit for the period 622 504 1,002
=============================================== ========== ========== ==============
Other comprehensive income
Items that are not subsequently reclassified
to profit or loss
Remeasurement of post-employment benefit
obligations - gain/(loss) 84 (66) (500)
Return on plan assets, excluding interest
income - (loss)/gain (49) 74 480
Tax on items relating to the components
of other comprehensive income (8) (1) 6
27 7 (14)
=============================================== ========== ========== ==============
Items that may be subsequently reclassified
to profit or loss
Currency translation differences 6 61 158
6 61 158
=============================================== ========== ========== ==============
Total other comprehensive income for
the period 33 68 144
=============================================== ========== ========== ==============
Total comprehensive income for the
period 655 572 1,146
=============================================== ========== ========== ==============
ATTRIBUTABLE TO
Equity shareholders of the Company 649 568 1,136
Non-controlling interests 6 4 10
Total comprehensive income for the
period 655 572 1,146
=============================================== ========== ========== ==============
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX
MONTHSED 31 MARCH
2017
Attributable to equity shareholders
of the Company
=======================================================================
Share Capital
Share premium redemption Own Other Retained Non-controlling
capital account reserve shares reserves earnings interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2016 176 182 295 - 4,359 (2,507) 15 2,520
Profit for the
period - - - - - 616 6 622
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - - 6 - - 6
Remeasurement of
post-employment
benefit
obligations
- gain - - - - - 84 - 84
Return on plan
assets,
excluding
interest
income - loss - - - - - (49) - (49)
Tax on items
relating
to the
components
of other
comprehensive
income - - - - - (8) - (8)
================= ======== ========= ============ ======== ============ ============ ================= =========
Total other
comprehensive
income - - - - 6 27 - 33
================= ======== ========= ============ ======== ============ ============ ================= =========
Total
comprehensive
income for the
period - - - - 6 643 6 655
Fair value of
share-based
payments - - - - 10 - - 10
Tax on items
taken
directly to
equity - - - - - 1 - 1
Share buy
back(1) - - - - - (18) - (18)
Other changes - - - - (9) - - (9)
Non-controlling
interests
arising on
acquisition - - - - - - 4 4
================= ======== ========= ============ ======== ============ ============ ================= =========
176 182 295 - 4,366 (1,881) 25 3,163
Dividends paid
to
Compass
shareholders
(note 5) - - - - - (347) - (347)
Dividends paid
to
non-controlling
interests - - - - - - (9) (9)
At 31 March 2017 176 182 295 - 4,366 (2,228) 16 2,807
================= ======== ========= ============ ======== ============ ============ ================= =========
(1) Including stamp duty and brokers' commission.
Adjustment
for
non-controlling
interest
Share-based put Total
payment Merger Revaluation Translation options other
reserve reserve reserve reserve reserve reserves
OTHER RESERVES GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2016 193 4,170 7 (5) (6) 4,359
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - 6 - 6
Total other
comprehensive
income - - - 6 - 6
================= ======== ========= ============ ======== ============ ============ ================= =========
Fair value of
share-based
payments 10 - - - - 10
Other changes - - - - (9) (9)
At 31 March 2017 203 4,170 7 1 (15) 4,366
================= ======== ========= ============ ======== ============ ============ ================= =========
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 31 MARCH 2016
Attributable to equity
shareholders of the Company
=======================================================================
Share Capital
Share premium redemption Own Other Retained Non-controlling
capital account reserve shares reserves earnings interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=================
At 1 October
2015 176 182 295 (1) 4,189 (2,904) 13 1,950
Profit for the
period - - - - - 500 4 504
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - - 61 - - 61
Remeasurement of
post-employment
benefit
obligations
- loss - - - - - (66) - (66)
Return on plan
assets,
excluding
interest
income - gain - - - - - 74 - 74
Tax on items
relating
to the
components
of other
comprehensive
income - - - - - (1) - (1)
================= ======== ========= ============ ======== ============ ============ ================= =========
Total other
comprehensive
income - - - - 61 7 - 68
================= ======== ========= ============ ======== ============ ============ ================= =========
Total
comprehensive
income for the
period - - - - 61 507 4 572
Use of own
shares
to satisfy
employee
share options - - - 1 - - - 1
Fair value of
share-based
payments - - - - 8 - - 8
Tax on items
taken
directly to
equity - - - - - 3 - 3
Share buy
back(1) - - - - - (72) - (72)
Issue of
treasury
shares to
satisfy
employee share
scheme
awards
exercised - - - - - 2 - 2
Other changes - - - - - - (1) (1)
================= ======== ========= ============ ======== ============ ============ ================= =========
176 182 295 - 4,258 (2,464) 16 2,463
Dividends paid
to
Compass
shareholders
(note 5) - - - - - (322) - (322)
Dividends paid
to
non-controlling
interests - - - - - - (4) (4)
=================
At 31 March 2016 176 182 295 - 4,258 (2,786) 12 2,137
================= ======== ========= ============ ======== ============ ============ ================= =========
(1) Including stamp duty and brokers' commission.
Adjustment
for
non-controlling
interest
Share-based put Total
payment Merger Revaluation Translation options other
reserve reserve reserve reserve reserve reserves
OTHER RESERVES GBPm GBPm GBPm GBPm GBPm GBPm
================= ======== ========= ============ ======== ============ ============ ================= =========
At 1 October
2015 179 4,170 7 (161) (6) 4,189
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - 61 - 61
Total other
comprehensive
income - - - 61 - 61
================= ======== ========= ============ ======== ============ ============ ================= =========
Fair value of
share-based
payments 8 - - - - 8
At 31 March 2016 187 4,170 7 (100) (6) 4,258
================= ======== ========= ============ ======== ============ ============ ================= =========
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2016
Attributable to equity
shareholders of the Company
=======================================================================
Share Capital
Share premium redemption Own Other Retained Non-controlling
capital account reserve shares reserves earnings interests Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=================
At 1 October
2015 176 182 295 (1) 4,189 (2,904) 13 1,950
Profit for the
period - - - - - 992 10 1,002
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - - 158 - - 158
Remeasurement of
post-employment
benefit
obligations
- loss - - - - - (500) - (500)
Return on plan
assets,
excluding
interest
income - gain - - - - - 480 - 480
Tax on items
relating
to the
components
of other
comprehensive
income - - - - (2) 8 - 6
================= ======== ========= ============ ======== ============ ============ ================= =========
Total other
comprehensive
income - - - - 156 (12) - 144
================= ======== ========= ============ ======== ============ ============ ================= =========
Total
comprehensive
income for the
period - - - - 156 980 10 1,146
Fair value of
share-based
payments - - - 1 16 1 - 18
Tax on items
taken
directly to
equity - - - - - 9 - 9
Share buy
back(1) - - - - - (100) - (100)
Issue of
treasury
shares to
satisfy
employee share
scheme
awards
exercised - - - - - 3 - 3
Release of LTIP
award
settled by
issue of
new shares - - - - (2) - - (2)
Other changes - - - - - - 1 1
================= ======== ========= ============ ======== ============ ============ ================= =========
176 182 295 - 4,359 (2,011) 24 3,025
Dividends paid
to
Compass
shareholders
(note 5) - - - - - (496) - (496)
Dividends paid
to
non-controlling
interests - - - - - - (9) (9)
=================
At 30 September
2016 176 182 295 - 4,359 (2,507) 15 2,520
================= ======== ========= ============ ======== ============ ============ ================= =========
(1) Including stamp duty and brokers' commission.
Adjustment
for
non-controlling
interest
Share-based put Total
payment Merger Revaluation Translation options other
reserve reserve reserve reserve reserve reserves
OTHER RESERVES GBPm GBPm GBPm GBPm GBPm GBPm
================= ======== ========= ============ ======== ============ ============ ================= =========
At 1 October
2015 179 4,170 7 (161) (6) 4,189
================= ======== ========= ============ ======== ============ ============ ================= =========
Other
comprehensive
income
Currency
translation
differences - - - 158 - 158
Tax on items
relating
to the
components
of other
comprehensive
income - - - (2) - (2)
Total other
comprehensive
income - - - 156 - 156
================= ======== ========= ============ ======== ============ ============ ================= =========
Fair value of
share-based
payments 16 - - - - 16
Release of LTIP
award
settled by
issue of
new shares (2) - - - - (2)
At 30 September
2016 193 4,170 7 (5) (6) 4,359
================= ======== ========= ============ ======== ============ ============ ================= =========
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED BALANCE SHEET
AS AT 31 MARCH 2017
As at 31 March
======================
Year
ended
2017 2016 30 September
Unaudited Unaudited 2016
======================================== ============
Notes GBPm GBPm GBPm
======================================== ============ ========== ========== ==============
NON-CURRENT ASSETS
Goodwill 4,126 3,768 4,050
Other intangible assets 1,565 1,293 1,469
Property, plant and equipment 994 846 953
Interests in joint ventures and
associates 233 211 222
Other investments 48 42 50
Post-employment benefit assets(1) 216 209 192
Trade and other receivables 108 81 97
Deferred tax assets* 134 162 149
Derivative financial instruments** 7,8 112 105 184
======================================== ============ ========== ==============
Non-current assets 7,536 6,717 7,366
======================================== ============ ========== ========== ==============
CURRENT ASSETS
Inventories 373 316 347
Trade and other receivables 2,738 2,373 2,596
Tax recoverable* 82 60 77
Cash and cash equivalents** 7 418 356 346
Derivative financial instruments** 7,8 7 19 2
======================================== ============ ========== ==============
Current assets 3,618 3,124 3,368
======================================== ============ ========== ========== ==============
Total assets 11,154 9,841 10,734
======================================== ============ ========== ========== ==============
CURRENT LIABILITIES
Short term borrowings** 7 (42) (566) (321)
Derivative financial instruments** 7,8 (4) (9) (9)
Provisions (136) (129) (143)
Current tax liabilities* (234) (190) (195)
Trade and other payables (3,965) (3,405) (3,851)
Current liabilities (4,381) (4,299) (4,519)
======================================== ============ ========== ========== ==============
NON-CURRENT LIABILITIES
Long term borrowings** 7 (3,356) (2,816) (3,075)
Derivative financial instruments** 7,8 (1) (6) (1)
Post-employment benefit obligations(1) (199) (201) (213)
Provisions (279) (269) (280)
Deferred tax liabilities* (40) (37) (40)
Trade and other payables (91) (76) (86)
Non-current liabilities (3,966) (3,405) (3,695)
======================================== ============ ========== ========== ==============
Total liabilities (8,347) (7,704) (8,214)
======================================== ============ ========== ========== ==============
Net assets 2,807 2,137 2,520
======================================== ============ ========== ========== ==============
EQUITY
Share capital 176 176 176
Share premium account 182 182 182
Capital redemption reserve 295 295 295
Other reserves 4,366 4,258 4,359
Retained earnings (2,228) (2,786) (2,507)
Total equity shareholders' funds 2,791 2,125 2,505
Non-controlling interests 16 12 15
Total equity 2,807 2,137 2,520
======================================== ============ ========== ========== ==============
* Component of current and deferred
taxes.
** Component of net debt.
(1) Represented to reclassify post-employment benefit
obligations included within post-employment benefit assets
of GBP201m as at 31 March 2016 and GBP192m of post-employment
benefit assets included within post-employment benefit
obligations for the year ended 30 September 2016. As
a result, non-current assets and non-current liabilities
have also increased by GBP201m as at 31 March 2016 and
GBP192m as at 30 September 2016.
Compass Group PLC
Condensed Financial Statements (continued)
CONDENSED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 31 MARCH
2017
Six months
to 31 March
=========================
Year
ended
2017 2016 30 September
Unaudited Unaudited 2016
Notes GBPm GBPm GBPm
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations 6 1,021 782 1,768
Interest paid (42) (42) (98)
Tax received 5 2 17
Tax paid (164) (114) (263)
============================================== ====== =========== ============ ==============
Net cash from operating activities 820 628 1,424
============================================== ====== =========== ============ ==============
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of subsidiary companies and
investments in associated undertakings(1) (63) (144) (180)
Proceeds from sale of subsidiary companies
and associated undertakings(1) 17 1 2
Purchase of intangible assets (160) (113) (267)
Purchase of property, plant and equipment(2) (177) (150) (311)
Proceeds from sale of property, plant
and equipment/intangible assets 12 12 29
Purchase of other investments - - (6)
Proceeds from sale of other investments 1 1 2
Dividends received from joint ventures
and associates 11 14 33
Interest received 4 3 4
============================================== ====== =========== ============ ==============
Net cash used in investing activities (355) (376) (694)
============================================== ====== =========== ============ ==============
CASH FLOW FROM FINANCING ACTIVITIES
Purchase of own shares(3) (18) (72) (100)
Receipts from issue of treasury shares
to satisfy employee share scheme awards
exercised - 2 3
Increase in borrowings 35 395 194
Decrease in borrowings (59) (196) (309)
Repayment of obligations under finance
leases (2) (2) (3)
Equity dividends paid 5 (347) (322) (496)
Dividends paid to non-controlling
interests (9) (4) (9)
============================================== ====== =========== ============ ==============
Net cash used in financing activities (400) (199) (720)
============================================== ====== =========== ============ ==============
CASH AND CASH EQUIVALENTS
Net increase in cash and cash equivalents 65 53 10
Cash and cash equivalents at beginning
of the year 346 283 283
Currency translation gains on cash
and cash equivalents 7 20 53
============================================== ====== =========== ============ ==============
Cash and cash equivalents at end of
the period 418 356 346
============================================== ====== =========== ============ ==============
(1) Net of cash acquired or disposed
and payments received or made under
warranties and indemnities.
(2) Includes property, plant and equipment
purchased under client commitments.
(3) Includes stamp duty and brokers'
commission.
Compass Group PLC
Condensed Financial Statements (continued)
RECONCILIATION OF FREE CASH FLOW
FOR THE SIX MONTHSED 31 MARCH
2017
Six months
to 31 March
========================
Year
ended
30
2017 2016 September
Unaudited Unaudited 2016
GBPm GBPm GBPm
Net cash from operating activities 820 628 1,424
Purchase of intangible assets (160) (113) (267)
Purchase of property, plant and equipment (177) (150) (311)
Proceeds from sale of property, plant
and equipment/intangible assets 12 12 29
Purchase of other investments - - (6)
Proceeds from sale of other investments 1 1 2
Dividends received from joint ventures
and associated undertakings 11 15 33
Interest received 4 3 4
Dividends paid to non-controlling
interests (9) (5) (9)
Free cash flow from operations 502 391 899
Add back: Europe & Japan cash restructuring
costs in the period - 5 9
Underlying free cash flow 502 396 908
============================================== =========== =========== ===========
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
1 BASIS OF PREPARATION
The unaudited condensed financial statements for the
six months ended 31 March 2017 have been prepared in
accordance with International Accounting Standard 34
'Interim Financial Reporting' ('IAS 34'), and have
been prepared on the basis of International Financial
Reporting Standards ('IFRSs') and International Financial
Reporting Interpretations Committee ('IFRIC') interpretations
as adopted by the European Union that are effective
for the year ending 30 September 2017.
The unaudited condensed financial statements for the
six months ended 31 March 2017, which were approved
by the Board on 10 May 2017, and the comparative information
in relation to the half year ended 31 March 2016, do
not comprise statutory accounts for the purpose of
Section 434 of the Companies Act 2006, and should be
read in conjunction with the Annual Report for the
year ended 30 September 2016. Those accounts have been
reported upon by the Group's auditor and delivered
to the Registrar of Companies. The report of the auditor
was unqualified, did not include a reference to any
matters to which the auditors drew attention by way
of emphasis without qualifying their report and did
not contain statements under Section 498 (2) or (3)
of the Companies Act 2006.
The financial statements have been prepared on a going
concern basis. This is discussed in the Business Review
on page 12.
The accounting policies adopted in the preparation
of these unaudited condensed financial statements are
consistent with the policies applied by the Group in
its consolidated financial statements for the year
ended 30 September 2016. The following accounting standards,
interpretations and amendments have been adopted by
the Group in the current period:
Amendments to IAS 1 - Disclosure initiative
Amendments to IAS 16 and 38 - Clarification
of acceptable methods of depreciation and
amortisation
Amendments to IAS 27 - Equity method in
separate financial statements
Amendments to IFRS 11 - Accounting for acquisitions
of interests in joint operations
Improvements to IFRS - 2012-2014 cycle
There is no material impact on this interim financial
report as a result of adopting these new standards.
The following accounting standards, interpretations
and amendments that are applicable to the Group have
been issued by the IASB but had either not been adopted
by the European Union or were not yet effective in
the European Union at 31 March 2017. The Group is currently
analysing the impact these standards would have on
its consolidated results and financial position.
IFRS 9 - Financial instruments
IFRS 15 - Revenue from contracts with customers (see
further details below)
IFRS 16 - Leases
Amendments to IAS 7 - Disclosure initiative
Amendments to IAS 12 - Recognition of deferred tax
assets from unrealised losses
Amendments to IFRS 2 - Classification and measurement
of share based payment transactions
Improvements to IFRS - 2014-2016 cycle
IFRS 15 'Revenue from Contracts with Customers' (not
yet endorsed by the European Union): We have made good
progress in training our people and identifying areas
of divergence with current practice and based on this
assessment believe that IFRS 15 will not have a significant
impact on the timing and recognition of revenue, operating
profit margin or net assets. It is anticipated that
there will be some impact on the Group as a result
of changes in the disclosure of some client commitment
contract intangibles, variable payments to and variable
receipts from clients and the accounting for sales
commissions. The Group plans to apply IFRS 15 for the
year ended 30 September 2019 with a retrospective approach
to the restatement of comparatives.
In preparing these condensed financial statements,
management has made judgements, estimates and assumptions
that affect the application of accounting policies
and the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying
the Group's accounting policies and the key sources
of estimation uncertainty were the same as those that
applied to the consolidated financial statements as
at and for the year ended 30 September 2016.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED
31 MARCH 2017
2 SEGMENTAL REPORTING
Geographical
segments
========================================
North Rest
America Europe of Total
GBPm GBPm World GBPm
REVENUE(1) GBPm
================================ ============ ========== ============= =========== ============ ========
SIX MONTHSED 31 MARCH
2017(2,3)
Combined sales of Group and share
of equity accounted joint ventures 6,792 3,023 1,802 11,617
========================================================== ============= =========== ============ ========
SIX MONTHSED 31 MARCH
2016(2,3,)
Combined sales of Group and
share of equity accounted joint
ventures 5,418 2,722 1,526 9,666
============================================== ========== ============= =========== ============ ========
YEARED 30 SEPTEMBER
2016(2,3,)
Combined sales of Group and
share of equity accounted joint
ventures 11,198 5,458 3,215 19,871
Sectors
==================================================================
Defence,
Business Healthcare Sports Offshore
& Industry Education & Seniors & Leisure & Remote Total
REVENUE(1) GBPm GBPm GBPm GBPm GBPm GBPm
================================ ============ ========== ============= =========== ============ ========
SIX MONTHSED 31 MARCH
2017
Combined sales of Group
and share of equity accounted
joint ventures 4,433 2,346 2,620 1,315 903 11,617
================================ ============ ========== ============= =========== ============ ========
SIX MONTHSED 31 MARCH
2016
Combined sales of Group
and share of equity accounted
joint ventures 3,589 1,919 2,126 1,139 893 9,666
================================ ============ ========== ============= =========== ============ ========
YEARED 30 SEPTEMBER
2016
Combined sales of Group
and share of equity accounted
joint ventures 7,602 3,621 4,472 2,416 1,760 19,871
================================ ============ ========== ============= =========== ============
(1) There is no inter-segmental trading.
(2) This is the revenue
measure considered by the
chief operating decision
maker.
(3) Continuing revenue from external customers arising
in the UK, the Group's country of domicile, was GBP1,017
million (six months to 31 March 2016: GBP993 million,
year ended 30 September 2016: GBP1,981 million). Continuing
revenue from external customers arising in the US
was GBP6,321 million (six months to 31 March 2016:
GBP5,006 million, year ended 30 September 2016: GBP10,350
million). Continuing revenue from external customers
arising in all foreign countries from which the Group
derives revenue was GBP10,600 million (six months
to 31 March 2016: GBP8,673 million, year ended 30
September 2016: GBP17,890 million).
Geographical segments
North Rest Central
America Europe of Activities Total
GBPm GBPm World GBPm GBPm
RESULT GBPm
================================ ============ ========== ============= =========== ============ ========
SIX MONTHSED 31 MARCH
2017
Underlying operating profit
before joint ventures and associates 579 226 100 (34) 871
Add: Share of profit before
tax of joint ventures 1 - 13 - 14
================================ ============ ========== ============= =========== ============ ========
Underlying operating profit
before associates 580 226 113 (34) 885
Add: Share of profit of
associates 5 4 - - 9
============ ========== ============= =========== ============ ========
Underlying operating profit(1) 585 230 113 (34) 894
================================ ============ ========== ============= =========== ============ ========
(1) Underlying operating profit is the profit measure
considered by the chief operating decision maker.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED
31 MARCH 2017
2 SEGMENTAL REPORTING (CONTINUED)
Geographical
segments
===========================================
North Rest Central
America Europe of Activities Total
GBPm GBPm World GBPm GBPm
RESULT GBPm
SIX MONTHSED 31 MARCH
2016
Underlying operating profit before
joint ventures and associates and
Emerging Markets and Offshore & Remote
restructuring 461 201 83 (32) 713
Add: Share of profit before
tax of joint ventures - - 14 - 14
========================================== ========= ========= ======= ============ ========
Underlying operating profit before
associates and Emerging Markets and
Offshore & Remote restructuring 461 201 97 (32) 727
Add: Share of profit of
associates 5 3 - - 8
========= ========= ======= ============ ========
Underlying operating profit before
Emerging Markets and Offshore & Remote
restructuring 466 204 97 (32) 735
Less: Emerging Markets and Offshore
& Remote restructuring(1) - (3) (8) - (11)
Underlying operating profit(2) 466 201 89 (32) 724
========================================== ========= ========= ======= ============ ========
(1) The Group incurred charges resulting from the
restructuring and downturn in the trading conditions
of its Emerging Markets and Offshore & Remote activities
which include headcount reductions (GBP10 million)
and other expenses (GBP1 million).
(2) Underlying operating profit is the profit measure
considered by the chief operating decision maker.
Geographical
segments
===========================================
North Rest Central
America Europe of Activities Total
GBPm GBPm World GBPm GBPm
RESULT GBPm
YEARED 30 SEPTEMBER
2016
Underlying operating profit before
joint ventures and associates and
Emerging Markets and Offshore & Remote
restructuring 906 394 194 (65) 1,429
Add: Share of profit before
tax of joint ventures 2 - 24 - 26
========================================== ========= ========= ======= ============ ========
Underlying operating profit before
associates and Emerging Markets and
Offshore & Remote restructuring 908 394 218 (65) 1,455
Add: Share of profit of
associates 10 5 - - 15
========= ========= ======= ============ ========
Underlying operating profit before
Emerging Markets and Offshore & Remote
restructuring 918 399 218 (65) 1,470
Less: Emerging Markets and Offshore
& Remote restructuring(1) - (6) (19) - (25)
Underlying operating profit(2) 918 393 199 (65) 1,445
========================================== ========= ========= ======= ============ ========
(1) The Group incurred charges resulting from the
restructuring and downturn in the trading conditions
of its Emerging Markets and Offshore & Remote activities
which include headcount reductions (GBP22 million)
and other expenses (GBP3 million).
(2) Underlying operating profit is the profit measure
considered by the chief operating decision maker.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED
31 MARCH 2017
3 TAX
Six months
to 31
March
=================
RECOGNISED IN THE INCOME STATEMENT: INCOME Year
TAX EXPENSE ended
30 September
===================================================================
2017 2016 2016
================================================================
GBPm GBPm GBPm
================================================================
CURRENT TAX
Current year 219 171 315
Adjustment in respect
of prior years (16) (18) (38)
=================================================================== ======= ====================
Current tax expense 203 153 277
=================================================================== ======== ======= ====================
DEFERRED TAX
Current year 5 2 27
Impact of changes in statutory
tax rates 1 4 6
Adjustment in respect
of prior years - 3 9
=================================================================== ======= ====================
Deferred tax expense 6 9 42
TOTAL INCOME TAX
Income tax expense 209 162 319
=================================================================== ======== =======
Deferred tax assets have not been recognised in respect of tax losses of GBP93 million (31
March 2016: GBP115 million, 30 September 2016: GBP101 million) and other temporary differences
of GBP18 million (31 March 2016: GBP17 million, 30 September 2016: GBP16 million). These deferred
tax assets have not been recognised as the timing of recovery is uncertain.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL
STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
4 EARNINGS PER SHARE
The calculation of earnings per share is based on earnings after tax and the weighted average
number of shares in issue during the period. The underlying earnings per share figures have
been calculated based on earnings excluding the effect of the amortisation of intangibles
arising on acquisition, acquisition transaction costs, adjustment to contingent consideration
on acquisition, non-controlling interest put options, gains and losses on disposal of businesses,
other financing items, change in fair value of investments and the tax attributable to these
amounts. These items are excluded in order to show the underlying trading performance of the
Group.
Six months to 31 March
Year ended
30 September
2017 2016 2016
ATTRIBUTABLE PROFIT GBPm GBPm GBPm
Profit for the period attributable to
equity shareholders of the Company 616 500 992
Amortisation of intangibles arising on
acquisition (net of tax) 13 9 21
Acquisition transaction costs (net of
tax) 1 1 1
Adjustment to contingent consideration on
acquisition (net of tax) (3) 5 -
Non-controlling interest put options - - 1
Gain on disposal of businesses (net of
tax) - - (1)
Other financing items (net of tax) (4) (7) (10)
Profit from change in the fair value of
investments (net of tax) - (1) -
Underlying attributable profit for the
year from operations 623 507 1,004
Six months to 31 March Year ended
30 September
2017 2016 2016
Ordinary Ordinary Ordinary
shares of shares of shares of
AVERAGE NUMBER OF SHARES (MILLIONS OF
ORDINARY SHARES) 10(5/8) p each millions 10(5/8) p each millions 10(5/8) p each millions
Average number of shares for basic
earnings per share 1,644 1,645 1,643
Dilutive share options 2 2 3
Average number of shares for diluted
earnings per share 1,646 1,647 1,646
Six months to 31 March
Year ended
30 September
2017 2016 2016
Earnings Earnings Earnings
per share per share per share
pence pence pence
BASIC EARNINGS PER SHARE (PENCE)
From operations 37.5 30.4 60.4
Amortisation of intangibles arising on
acquisition (net of tax) 0.7 0.5 1.2
Acquisition transaction costs (net of
tax) 0.1 0.1 0.1
Adjustment to contingent consideration on
acquisition (net of tax) (0.2) 0.3 -
Non-controlling interest put options (net
of tax) - - 0.1
Gain on disposal of businesses (net of
tax) - - (0.1)
Other financing items (net of tax) (0.2) (0.4) (0.6)
Profit from change in the fair value of
investments (net of tax) - (0.1) -
From underlying operations 37.9 30.8 61.1
DILUTED EARNINGS PER SHARE (PENCE)
From operations 37.4 30.4 60.3
Amortisation of intangibles arising on
acquisition (net of tax) 0.7 0.5 1.2
Acquisition transaction costs (net of
tax) 0.1 0.1 0.1
Adjustment to contingent consideration on
acquisition (net of tax) (0.2) 0.3 -
Non-controlling interest put options (net
of tax) - - 0.1
Gain on disposal of businesses (net of
tax) - - (0.1)
Other financing items (net of tax) (0.2) (0.4) (0.6)
Profit from change in the fair value of
investments (net of tax) - (0.1) -
From underlying operations 37.8 30.8 61.0
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
5 DIVIDS
The interim dividend of 11.2 pence per share (2016: 10.6 pence per share), GBP184 million
in aggregate(1) , is payable on 19 June 2017 to shareholders on the register at the close
of business on 19 May 2017. The dividend was approved by the Board after the balance sheet
date, and has therefore not been reflected as a liability in the interim financial statements.
Six months to 31 March
Year ended
30 September
2017 2016 2016
DIVIDS ON ORDINARY SHARES GBPm GBPm GBPm
Amounts recognised as distributions to equity shareholders during the year:
Final 2015 - 19.6p per share - 322 322
Interim 2016 - 10.6p per share - - 174
Final 2016 - 21.1 per share 347 - -
Total dividends 347 322 496
(1) Based on the number of ordinary shares, excluding treasury shares, in issue at 31 March
2017 (1,644 million shares).
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
6 RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED FROM OPERATIONS
Six months to 31 March
2017 2016 Year ended 30 September 2016
GBPm GBPm GBPm
Operating profit 855 683 1,370
Adjustments for:
Acquisition transaction costs 1 1 2
Amortisation of intangible assets 110 85 179
Amortisation of intangible assets arising on acquisition 19 14 31
Depreciation of property, plant and equipment 129 104 216
(Gain)/Loss on disposal of property, plant and
equipment/intangible assets (1) 1 (1)
Decrease in provisions (19) (10) (19)
Decrease in post-employment benefit obligations (5) (21) (39)
Share-based payments - charged to profits 10 8 16
Operating cash flows before movement in working capital 1,099 865 1,756
Increase in inventories (15) (15) (13)
Increase in receivables (84) (96) (93)
Increase in payables 21 28 118
Cash generated from operations 1,021 782 1,768
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
This table is presented as additional information to show movement in net debt, defined as
overdrafts, bank and other borrowings, finance leases and derivative financial instruments,
net of cash and cash equivalents.
Six months to 31 March
Year
Cash Bank Total Derivative ended
overdrafts Net 30
and cash Bank and other and Finance financial debt Net debt September
equivalents overdrafts borrowings borrowings leases instruments 2017 2016 2016
Net debt GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Brought forward 346 (27) (3,355) (3,382) (14) 176 (2,874) (2,603) (2,603)
Net increase in
cash and cash
equivalents 65 - - - - - 65 53 10
Cash outflow from
repayment of
loan notes - - 35 35 - - 35 110 114
Cash
(inflow)/outflow
from bank loans - - (35) (35) - - (35) (394) 195
Cash
outflow/(inflow)
from other
changes in gross
debt - - - - - 24 24 85 (194)
Cash outflow from
repayment of
obligations
under finance
leases - - - - 2 - 2 2 3
Increase in net
debt as a result
of new finance
leases taken out - - - - - - - (1) (2)
Currency
translation
gains/(losses) 7 (2) (58) (60) - (23) (76) (161) (395)
Other non-cash
movements - - 56 56 - (63) (7) (8) (2)
Carried forward 418 (29) (3,357) (3,386) (12) 114 (2,866) (2,917) (2,874)
Other non-cash movements are comprised as follows:
Year
ended
Six months to 31 30
March September
Other non-cash movements in net debt 2017 2016 2016
GBPm GBPm GBPm
Amortisation of fees and discount on issuance (1) (1) (1)
Changes in the fair value of bank and other borrowings in a designated fair value hedge 57 (19) (24)
Bank and other
borrowings 56 (20) (25)
Changes in the value of derivative financial instruments including accrued income (63) 12 23
Other non-cash
movements (7) (8) (2)
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
8 FINANCIAL INSTRUMENTS
The Group held certain financial instruments at fair value at 31 March 2017.
The fair values have been determined by reference to Level 2 inputs as defined by the fair
value hierarchy of IFRS 13 'Fair value measurements'. There were no transfers between levels
in the current and comparative periods.
All derivative financial instruments are shown at fair value on the balance sheet and are
present values determined from future cashflows discounted at rates derived from market sourced
data. The fair values of derivative financial instruments represent the maximum credit exposure.
Six months to 31 March
Year ended
30 September
2017 2016 2016
DERIVATIVE ASSETS GBPm GBPm GBPm
Interest rate swaps:
Fair value hedges(1) 35 69 74
Not in a hedging relationship(2) 2 - -
Other derivatives:
Forward currency contracts and cross currency swaps(3) 82 55 112
Total 119 124 186
Six months to 31 March
Year ended
30 September
2017 2016 2016
DERIVATIVE LIABILITIES GBPm GBPm GBPm
Interest rate swaps:
Fair value hedges(1) - - -
Not in a hedging relationship(2) (2) (5) (4)
Other derivatives:
Forward currency contracts and cross currency swaps(3) (3) (10) (6)
Total (5) (15) (10)
(1) Derivatives that are designated and effective as hedging
instruments carried at fair value (IAS 39).
(2) Derivatives carried at 'fair value through profit or loss'
(IAS 39).
(3) Other derivatives include cross currency swaps that are
designated and effective as hedging instruments carried at fair
value (IAS 39) amounting to GBP75 million (31 March 2016: GBP35
million, 30 September 2016: GBP111 million).
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
9 STATUTORY AND UNDERLYING RESULTS
Six Months to 31 March 2017
==================
Adjustments
2017 2017
Statutory Underlying
GBPm 1 2 3 4 5 6 GBPm
Operating profit 877 19 1 (4) 1 - - 894
Gain on disposal of businesses 1 - - - - (1) - -
Net finance cost (47) - - - - - (5) (52)
Finance income 4 - - - - - - 4
Finance costs (56) - - - - - - (56)
Other financing items 5 - - - - - (5) -
Profit before tax 831 19 1 (4) 1 (1) (5) 842
Income tax expense (209) (6) - 1 (1) 1 1 (213)
Tax rate 25.2% 25.3%
Profit for the year 622 13 1 (3) - - (4) 629
Non-controlling interests (6) - - - - - - (6)
Profit attributable to equity
shareholders of the Company 616 13 1 (3) - - (4) 623
Average number of shares 1,644 1,644
BASIC EARNINGS PER SHARE (PENCE) 37.5 0.7 0.1 (0.2) - - (0.2) 37.9
Adjustments:
1. Amortisation of intangibles arising on acquisition.
2. Acquisition transaction costs.
3. Adjustment to contingent consideration on acquisition.
4. Tax on share of profit of joint ventures.
5. Gain on disposal of businesses.
6. Other financing items including hedge accounting ineffectiveness.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
9 STATUTORY AND UNDERLYING RESULTS (continued)
Six Months to 31 March 2016
===========
Adjustments
2016 2016
Statutory Underlying
GBPm 1 2 3 4 5 6 GBPm
Operating profit 704 14 1 4 1 - - 724
Net finance cost (38) - - - - (9) - (47)
Finance income 4 - - - - - - 4
Finance costs (51) - - - - - - (51)
Other financing items 9 - - - - (9) - -
Profit before tax 666 14 1 4 1 (9) - 677
Income tax expense (162) (5) - 1 (1) 2 (1) (166)
Tax rate 24.3% 24.5%
Profit for the year 504 9 1 5 - (7) (1) 511
Non-controlling interests (4) - - - - - - (4)
Profit attributable to equity shareholders of
the Company 500 9 1 5 - (7) (1) 507
Average number of shares 1,645 1,645
BASIC EARNINGS PER SHARE (PENCE) 30.4 0.5 0.1 0.3 - (0.4) (0.1) 30.8
Adjustments:
1. Amortisation of intangibles arising on acquisition.
2. Acquisition transaction costs.
3. Adjustment to contingent consideration on acquisition.
4. Tax on share of profit of joint ventures.
5. Other financing items including hedge accounting ineffectiveness.
6. Profit from change in the fair value of investments.
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
10 ORGANIC REVENUE AND ORGANIC PROFIT
Six Months to 31 March
Geographical segments
North America Europe Rest of World Other Group
GBPm GBPm GBPm GBPm GBPm
2017
Combined sales of Group and share of equity
accounted joint ventures 6,792 3,023 1,802 - 11,617
% growth actual rates 25.4% 11.1% 18.1% 20.2%
% growth constant currency 6.6% 1.6% (5.1)% 3.3%
Organic adjustments (27) (3) - - (30)
Organic revenue 6,765 3,020 1,802 - 11,587
% growth organic 7.1% 1.6% (5.1)% 3.6%
2016
Combined sales of Group and share of equity
accounted joint ventures 5,418 2,722 1,526 - 9,666
Currency adjustments 953 253 372 - 1,578
Constant currency underlying revenue 6,371 2,975 1,898 - 11,244
Organic adjustments (57) (2) - - (59)
Organic revenue 6,314 2,973 1,898 - 11,185
2017
Underlying operating profit 585 230 113 (34) 894
Move share of profit of associates to other (5) (4) - 9 -
Underlying operating profit 580 226 113 (25) 894
Underlying operating margin - Region 8.5% 7.5% 6.3%
Underlying operating margin - Group 7.6%
% growth actual rates 25.8% 12.4% 16.5% 23.5%
% growth constant currency 7.0% 2.3% (6.6)% 5.2%
Organic adjustments (1) - - - (1)
Organic profit 579 226 113 (25) 893
% growth organic 7.6% 2.3% (6.6)% 5.6%
2016
Underlying operating profit 466 201 89 (32) 724
Move share of profit of associates to other (5) (3) - 8 -
Move Emerging Markets and Offshore & Remote
restructuring costs to other - 3 8 (11) -
Underlying operating profit 461 201 97 (35) 724
Underlying operating margin - Region 8.5% 7.4% 6.4%
Underlying operating margin - Group 7.4%
Currency adjustments 81 20 24 1 126
Constant currency underlying profit 542 221 121 (34) 850
Organic adjustments (4) - - - (4)
Organic profit 538 221 121 (34) 846
Compass Group PLC
Condensed Financial Statements (continued)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 MARCH 2017
11 POST BALANCE SHEET EVENTS
The Board is proposing to return 61 pence per share, which is equivalent to GBP1 billion in
aggregate, to shareholders through a special dividend and share consolidation. The special
dividend and share consolidation will be subject to shareholder approval at a General Meeting
on 7 June 2017. If approved, the special dividend is expected to be paid on 17 July 2017 to
shareholders on the register on 26 June 2017. Details of the share consolidation will be set
out in a separate circular to shareholders. The Group has arranged a committed bank facility
to fund the special dividend which it plans to replace with longer term bond finance over
the coming months.
12 EXCHANGE RATES
Six months to 31 March
Year ended
30 September
2017 2016 2016
AVERAGE EXCHANGE RATE FOR THE PERIOD(1)
Australian Dollar 1.66 2.04 1.94
Brazilian Real 4.02 5.73 5.19
Canadian Dollar 1.66 1.98 1.88
Euro 1.16 1.34 1.28
Japanese Yen 138.07 174.46 159.94
Norwegian Krone 10.46 12.65 12.01
South African Rand 16.96 21.79 20.88
Swedish Krona 11.18 12.45 12.00
Swiss Franc 1.25 1.46 1.40
Turkish Lira 4.30 4.30 4.16
UAE Dirham 4.60 5.40 5.22
US Dollar 1.25 1.47 1.42
CLOSING EXCHANGE RATE AS AT THE END OF THE PERIOD(1)
Australian Dollar 1.64 1.87 1.70
Brazilian Real 3.97 5.09 4.22
Canadian Dollar 1.67 1.86 1.71
Euro 1.17 1.26 1.16
Japanese Yen 139.34 161.55 131.54
Norwegian Krone 10.74 11.89 10.38
South African Rand 16.77 21.14 17.86
Swedish Krona 11.16 11.65 11.13
Swiss Franc 1.25 1.38 1.26
Turkish Lira 4.55 4.05 3.90
UAE Dirham 4.59 5.28 4.77
US Dollar 1.25 1.44 1.30
(1) Average rates are used to translate the income statement and cash flow statement. Closing
rates are used to translate the balance sheet. Only the most significant currencies are shown.
Glossary of terms
Constant currency Restates the prior year results to current year's average exchange rates.
Underlying revenue The combined sales of Group and share of equity accounted joint ventures.
Underlying operating profit - Group Includes share of profit after tax of associates and profit before tax of joint
ventures but
excludes the specific adjusting items, as listed below.
Underlying operating profit - Region Includes share of profit before tax of joint ventures but excludes the specific
adjusting
items, as listed below, profit after tax of associates and EM & OR
restructuring.
Underlying operating margin - Group Based on underlying revenue and underlying operating profit excluding share of
profit after
tax of associates.
Underlying operating margin - Region Based on underlying revenue and underlying operating profit excluding share of
profit after
tax of associates and EM & OR restructuring.
Underlying net finance cost Excludes specific adjusting items.
Underlying profit before tax Excludes specific adjusting items.
Underlying basic earnings per share Excludes specific adjusting items and the tax attributable to those items.
Underlying EBITDA Based on underlying operating profit, adding back amortisation of intangible
assets and depreciation
of property, plant and equipment.
Underlying tax Excludes tax attributable to specific adjusting items.
Underlying effective tax rate Based on underlying tax charge and underlying profit before tax.
Underlying cash tax rate Based on net cash tax and underlying profit before tax.
Free cash flow Calculated by adjusting operating profit for non-cash items in profit, cash
movements in provisions,
post-employment benefit obligations and working capital, cash purchases and
proceeds from
disposal of non-current assets, cash interest received, dividends received from
joint ventures
and associated undertakings, and dividends paid to non-controlling interests.
Underlying free cash flow Adjusted for cash restructuring costs in the year relating to the 2012 and 2013
European exceptional
programme.
Free cash flow conversion Underlying free cash flow expressed as a percentage of underlying operating
profit.
Organic revenue Calculated by adjusting underlying revenue for acquisitions (excluding current
year acquisitions
and including a full period in respect of prior year acquisitions), disposals
(excluded from
both periods) and exchange rate movements (translating the prior period at
current year exchange
rates).
Organic revenue growth Calculated by adjusting underlying revenue for acquisitions (excluding current
year acquisitions
and including a full period in respect of prior year acquisitions), disposals
(excluded from
both periods) and exchange rate movements (translating the prior period at
current year exchange
rates) and compares the current year results against the prior year. In
addition, where applicable,
a 53rd week has been excluded from the prior year's underlying revenue.
Organic profit Calculated by adjusting underlying operating profit for acquisitions (excluding
current year
acquisitions and including a full period in respect of prior year acquisitions),
disposals
(excluded from both periods) and exchange rate movements (translating the prior
period at
current year exchange rates)
Organic operating profit growth Calculated by adjusting underlying operating profit for acquisitions (excluding
current year
acquisitions and including a full period in respect of prior year acquisitions),
disposals
(excluded from both periods) and exchange rate movements (translating the prior
period at
current year exchange rates) and compares the current year results against the
prior year.
In addition, where applicable, a 53rd week has been excluded from the prior
year's underlying
operating profit.
Specific adjusting items amortisation of intangibles arising on acquisition;
acquisition transaction costs;
adjustment to contingent consideration on acquisition;
share-based payments expense - non-controlling interest call option;
tax on share of joint ventures;
profit/(loss) on disposal of businesses;
change in the fair value of investments;
other financing items.
EM & OR restructuring Emerging Markets and Offshore & Remote restructuring.
Net debt Overdrafts, bank and other borrowings, finance leases and derivative financial
instruments,
net of cash and cash equivalents.
Net debt to EBITDA Net debt divided by underlying EBITDA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGGKLLNGNZM
(END) Dow Jones Newswires
May 10, 2017 02:00 ET (06:00 GMT)
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