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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Compass Group Plc | LSE:CPG | London | Ordinary Share | GB00BD6K4575 | ORD 11 1/20P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-10.00 | -0.45% | 2,192.00 | 2,191.00 | 2,193.00 | 2,201.00 | 2,186.00 | 2,200.00 | 150,816 | 08:56:05 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Eating Places | 31.03B | 1.31B | 0.7696 | 28.48 | 37.43B |
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
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May 10, 2017 02:00 ET (06:00 GMT)
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