Interim Results

RNS Number : 1436S

Compass Group PLC

13 May 2009

Compass Group PLC

Interim Results Announcement

For The Six Months Ended 31 March 2009

Significant progress in a challenging environment


Revenue £6.9 billion	+24% (constant currency +3.6%, organic +2.6%)

Underlying operating profit £455 million	+41% (constant currency +14%)

Underlying operating margin 6.5%	+60 basis points

Underlying earnings per share 15.4 pence	+43% (constant currency +15%)

Interim dividend 4.4 pence	+10%

Free cash flow £240 million	+33%

Richard Cousins, Chief Executive Officer, said:

'Against the backdrop of deteriorating economic conditions, Compass has had a positive first half. We are encouraged by our continued ability to win high quality new business at levels consistent with last year. We have demonstrated our ability to flex our cost base and respond to more variable demand. Furthermore, the rigorous application of MAP has enabled us to drive further operating and cost efficiencies of over £50 million, helping to deliver another significant step up in profit and margins. Looking forward, the trends in revenue seen in the first half of the year are expected to continue into the second half of the year. The acceleration in the rate of cost efficiencies should enable us to deliver further progress in the second half of the year.'

Sir Roy Gardner, Chairman, said:

'We have a clear and focussed strategy, an internationally diversified business model and we are the market leader in an industry with significant growth potential. The development of our support services capability is adding a new dimension to growth. Our drive to increase operating efficiency, whilst investing in the future development of the business, is delivering significant results. The strength of our cash flow and balance sheet is enabling us both to accelerate growth through value creating infill acquisitions and to reward shareholders. With this in mind, we are increasing the interim dividend by 10% to 4.4 pence. Whilst these are undoubtedly challenging times, we look forward to the future with confidence.'

Interim Management Report: Business Review

Group Overview

Organic revenue growth was 2.6% for the first half and constant currency revenue growth, including acquisitions, was 3.6%. Encouragingly, the level of new business wins in all sectors has remained strong at 8.5%, consistent with last year. As expected, like for like revenue has continued to weaken in parts of the Business & Industry and Sports & Leisure sectors, as clients have reduced discretionary spend on event catering and corporate hospitality and headcounts. However, like for like revenue growth in the Education, Healthcare and Defence, Offshore and Remote Site sectors has remained strong.

Our ability to flex our largely variable cost base has enabled us to manage our costs in line with the changes in demand. Furthermore, the continued application of the MAP framework has helped us to deliver incremental efficiency gains in each of our major unit costs: food, labour and overhead. We have also continued to deliver savings in above unit costs. Operating margins improved by 60 basis points with all four geographic segments contributing to this strong performance.

Management and Performance ('MAP')

A combination of excellent operational management and the MAP framework has enabled us to deliver £55 million of constant currency operating profit growth in the first half as follows:

£14 million from net new business: Encouragingly we have continued to see a good level of new business across all sectors and geographical regions at levels consistent with last year. Supporting the growth in new foodservice business, we are seeing increased demand to provide additional support services to both new and existing clients. We are also making good progress in developing international business, winning new clients and developing our existing client relationships. For example, with both Shell and American Express we have significantly extended our services this year.

Whilst we are seeing some limited business and site closures, mainly in the Business & Industry sector, core retention is stable. We are making good progress in building retention teams and driving consistent processes around the world.

Looking forward to the second half, we have good visibility on our future pipeline and expect similar trends in net new business to those seen in the first half of the year.

£28 million from like for like growth: Across the base estate we have achieved an appropriate level of price increases in the first half of the year given the input cost inflation we are experiencing in food and labour.

In Business & Industry and Sports & Leisure we have seen some pressure on like for like volumes in parts of the business as clients have reduced discretionary spend on event catering and corporate hospitality and headcounts. The considerable flexibility in our unit cost base has, however, enabled us to reduce costs in line with demand and hence contain the impact on profit of lower volume.

Conversely, through the rest of the estate we have continued to see like for like volume growth, which in turn has converted to good profit growth.

Importantly, our efficiency programme has accelerated and once again, through the MAP programme, we have made significant savings in food, labour and overhead.

On MAP 3, cost of food, we are continuing to drive the rationalisation process - the starting point for which is menu planning. Coupled with this, our product and supplier lists are being systematically narrowed which enables us to buy more competitively. In the USA, the ongoing roll out of our 'Model Market' approach takes procurement and logistics to the next level, fully automating the process on-line from order to delivery. This is driving compliance up towards the 100% level and is beginning to deliver significant benefits.

We are making good progress on MAP 4, in unit costs. We are continuing to focus on labour productivity and scheduling and in practice this means less need for expensive agency labour as we better utilise our core labour force. We are making some progress on reducing in unit overheads, but there is plenty of opportunity to do more.

In summary, we have made excellent progress in driving efficiencies in the first half of the year and we expect to see an acceleration in the rate of cost efficiencies, enabling us to deliver further progress in the second half of the year.

£8 million from above unit overhead savings: We continue to make good progress in MAP 5, reducing the above unit overhead whilst growing the business. Increasingly, we are challenging the business both to reduce the overall cost and to redeploy resources from back office to revenue generating overhead, for example strengthening our sales and retention teams and investing in product innovation.

£5 million from acquisitions and disposals: This relates mainly to the acquisition of the remaining 50% of the shares in GR S.A. in Brazil completed in March 2008.

Strategy

Our core strategy is to focus on foodservice, developing support services to complement our food offer, building scale within countries to drive efficiency and utilising our global reach to serve multi-national clients. Sectorisation has been a fundamental part of our strategy and we have built big businesses in all of the key sectors. The benefit of our significantly diversified portfolio across 55 countries and multiple sectors and sub sectors has offered good downside protection in a slowing economy.

Our primary focus is organic growth. We continue to benefit from the ongoing trend to outsourcing foodservice. As well as the Business & Industry sector, the under penetrated sectors of Healthcare and Education provide significant scope for growth. Aside from foodservice, clients are increasingly asking for a bundled service including both food and support services. Under the Eurest Services brand, we have organically developed a strong support services offering in most of our major countries. The Compass Service Framework, which is our unique operating model, differentiates us from our competitors and we have already had considerable success in winning new multi-service business.

The strength of our cash flow and balance sheet is enabling us to accelerate our organic revenue growth through selective in-fill acquisitions. The acquisition of Kimco in the USA strengthens our capability to deliver support services to the Business & Industry sector. In Germany, we are also starting to see acceleration in the trend to bundling food and support services and our acquisition of Plural strengthens our ability to deliver support services across the sectors, in particular Business & Industry and Healthcare. In the UK, we have had considerable success in extending our retail offer within hospitals. The acquisition of a number of McColl's food and retail outlets has strengthened our retail capability.

We have continued to drive performance in these more challenging times. The key to our success has been not only the flexibility in the cost base to respond to changes in volume, but also the momentum we have in driving additional cost efficiencies. We have excellent cash generation and significant headroom to service our debt and cover our medium term re-financing needs. Our balance sheet flexibility is enabling us to pursue value-creating opportunities and to continue to reward shareholders.

The MAP framework has helped us deliver the turnaround in performance in the last two and a half years and this, together with the excellent service delivered by our people, gives us confidence that we can continue to make progress.

Board Appointment

Don Robert, Chief Executive Officer of Experian plc, was appointed as a non Executive Director to the Board on 8th May 2009.

Financial Summary
For the six months ended 31 March	2009	2008	Increase

Continuing operations

Revenue
Constant currency	£6,927m	£6,685m	3.6%
Reported	£6,927m	£5,589m	23.9%

Total operating profit
Constant currency	£455m	£400m	13.8%
Underlying	£455m	£322m	41.3%
Reported	£453m	£322m	40.7%

Operating margin
Constant currency	6.5%	5.9%	60bps
Underlying	6.5%	5.7%	80bps
Reported	6.5%	5.7%	80bps

Profit before tax
Underlying	£405m	£289m	40.1%
Reported	£387m	£281m	37.7%

Basic earnings per share
Underlying	15.4p	10.8p	42.6%
Reported	14.7p	10.4p	41.3%

Free cash flow
Reported	£240m	£180m	33.3%

Total Group including discontinued operations

Basic earnings per share	15.4p	11.3p	36.3%

Interim dividend per ordinary share	4.4p	4.0p	10.0%

(1)	Constant currency restates the prior period results to 2009's average exchange rates.
(2)	Total operating profit includes share of profit of associates.
(3)	Underlying operating profit excludes the amortisation of intangibles arising on acquisition.
(4)	Operating margin is based on revenue and operating profit excluding share of profit of associates.
(5)	Underlying operating margin excludes the amortisation of intangibles arising on acquisition.
(6)	Underlying profit before tax excludes the amortisation of intangibles arising on acquisition, hedge accounting ineffectiveness and the change in fair value of investments and minority interest put options.
(7)	Underlying basic earnings per share excludes the amortisation of intangibles arising on acquisition, hedge accounting ineffectiveness, the change in fair value of investments and minority interest put options and the tax attributable to these amounts.

	Revenue		Revenue Growth
Segmental performance	2009	2008		Constant
Six months ended 31 March	£m	£m	Reported	Currency	Organic

Continuing operations

North America	3,082	2,267	36.0%	4.7%	4.4%
Continental Europe	1,769	1,488	18.9%	1.9%	1.2%
UK & Ireland	939	965	(2.7)%	(3.6)%	(3.6)%
Rest of the World	1,137	869	30.8%	10.2%	5.4%

Total	6,927	5,589	23.9%	3.6%	2.6%

	Operating Profit		Operating Margin
Segmental performance	2009	2008	2009	2008
Six months ended 31 March	£m	£m	%	%

Continuing operations

North America	234	153	7.6%	6.7%
Continental Europe	131	106	7.4%	7.1%
UK & Ireland	54	52	5.8%	5.4%
Rest of the World	60	38	5.3%	4.4%
Unallocated overheads	(28)	(29)	-	-

Excluding associates	451	320	6.5%	5.7%

Associates	4	2

Underlying	455	322

Amortisation of intangibles arising on acquisition	(2)	-

Total	453	322

(1)	Constant currency restates the prior period results to 2009's average exchange rates.
(2)	Underlying operating profit and margin excludes the amortisation of intangibles arising on acquisition.
(3)	Operating margin is based on revenue and operating profit excluding share of profit of associates.
(4)	Organic growth is calculated by adjusting for acquisitions (excluding current period acquisitions and including a full period in respect of prior period acquisitions), disposals (excluded from both periods) and exchange rate movements (translating the prior period at current period exchange rates) and compares the current period results against the prior period.

Revenue

Overall, organic revenue growth was 2.6%, comprising new business of 8.5%, retention of 93% and like for like growth of 1.1%. The significant weakening of Sterling increased reported revenues by 20.3% and acquisitions added a further 1.0%, resulting in reported revenue growth of 23.9%.

Operating Profit

Underlying operating profit from continuing operations, including associates but excluding the amortisation of intangibles arising on acquisition, was £455 million (2008: £322 million. Adjusting this to 2009 average exchange rates would increase the profit by £78 million to £400 million), an increase of 41% on a reported basis over the prior period. Underlying operating profit increased by £55 million, or 14%, on a constant currency basis. This represents a 60 basis points improvement in margin to 6.5% (2008: 5.9% on a constant currency basis).

Operating profit after the amortisation of intangibles arising on acquisition of £2 million (2008: £nil) was £453 million (2008: £322 million).

North America - 44.5% Group revenue (2008: 40.6%)

Despite the economic challenges, our North American business has made very good progress in the first half with organic revenue growth of 4.4%. Operating profit increased by £29 million, or 14%, on a constant currency basis to £234 million (2008: £205 million on a constant currency basis). The margin improvement seen in 2008 has continued throughout the first half, with 50 basis points improvement on a constant currency basis. Including the £2 million benefit of the one-off profit on the prior year disposal of a minority stake in Au Bon Pain, the margin was 7.6%.

We have once again seen excellent levels of new business and retention across all the key sectors. In addition, North America has made excellent progress in driving efficiencies, in particular through the purchasing process and on reducing overheads.

The Business & Industry sector has had another record half year of new business, including new contracts such as the World Bank Group, where we feed 10,000 staff representing over 160 countries. Retention has continued to be very strong. The softness we have seen in like for like volumes in parts of the Business & Industry sector has mainly been driven by a reduction in event catering and hospitality spend. Whilst there is some downward pressure from fewer employees on site, consumers have sought to take advantage of our 'grab & go' and 'value' offers and loyalty plans. Fast and decisive action on cost has enabled the Business & Industry business to deliver another half year of profit and margin growth.

The momentum behind our Healthcare food and support services business has once again delivered very strong organic revenue growth.

We are seeing very good like for like volume growth in Education, driven by increasing enrolments and take up of board plans. Together with the flow through from record new business wins last year, we have again delivered double digit organic revenue growth. We have recently won contracts with Indian Prairie School District in Illinois and Queens University of Charlotte, adding to the over 530 million meals we serve each year in schools, colleges and universities in North America.

Like for like volumes in the Sports & Leisure sector are being impacted by a reduction in corporate hospitality spend, however our ability to flex costs and drive efficiencies has enabled us to improve margins and we continue to see a strong pipeline for new business opportunities.

Continental Europe - 25.5% Group revenue (2008: 26.6%)

In the context of a difficult economic backdrop Continental Europe has delivered a good performance. Across the region we delivered organic revenue growth of 1.2% and operating profit was £131 million (2008: £124 million on a constant currency basis), an increase of 6%. This represents a further 30 basis points of margin improvement, delivering an overall margin of 7.4%.

The weakness seen in the automotive and related industries has put some pressure on like for like volumes in the Business & Industry sector in much of Europe. However, good control of food and labour costs has enabled the overall margin to continue to move forward.

We are having good success in winning new business and driving retention in all sectors. In Healthcare for example, we have secured five important new hospital contracts in Portugal where we will be serving around 600,000 patient meals a year. In Education, we have secured a significant school's contract in Rome and in the Business & Industry sector, we have been awarded the Statoil contract, the largest we have ever won in Norway. Furthermore, our multi-services offer is providing new opportunities to win business with major companies such as Electrolux in Sweden and Pfizer in Germany.

In France, despite the slowdown in like for like volumes in the Business & Industry sector, we are seeing new business wins at encouraging levels, positive organic revenue growth and good profitability.

Our business in Italy has been significantly impacted by the automotive industry. Factories closed over the Christmas and New Year period and there have been further stoppages since. However, the turnaround plan for our Italian business is on track and we are pleased with the improved margin.

Germany has for some time been one of our most efficient businesses and the continued focus on driving out cost has once again enabled the margin to move forward. However, the German economy remains tough and like for like volumes are challenging.

The Spanish operation is dominated by Education and Healthcare and both these sectors are continuing to see good new business and strong like for like revenue growth. Increased cost control has driven significant margin improvements.

On-going growth in the offshore business and a strengthening of the support services offer have driven double digit organic revenue growth in Norway. The roll out of electronic purchasing and an improvement in labour productivity have delivered good growth in margins.

UK & Ireland - 13.6% Group revenue (2008: 17.3%)

The extensive re-structuring of the UK over the past two years has enabled us to significantly improve the efficiency of our operations and, despite the difficult economic conditions, we have delivered a margin improvement of 40 basis points, with operating profit increasing to £54 million (2008: £53 million on a constant currency basis).

In the Business & Industry sector, like for like volumes are being impacted by lower levels of corporate catering and hospitality spend and reduced headcounts. We also experienced extended Christmas and New Year closures and also lost revenues due to the bad weather in February. Whilst we have seen some additional site closures as the economy has slowed, we continue to win high quality new business, increasingly with additional support services. National Grid plc is a good example of where we have extended our foodservice contract at 12 sites to now provide a range of support services in over 500 locations.

We are making good progress in Education and starting to see the benefits of our work over the last few years. We believe we now have the right offering and are in a strong position to move forward. Profitability has improved.

In the Healthcare sector we have seen steady like for like volume growth, driven by our strong retail proposition. The recent acquisition of a number of McColl's food and retail outlets is adding a new dimension to this exciting sector of the market.

The Jockey Club is a further example of where we have been able to extend our existing relationship with a client. In this landmark deal we have moved from the delivery of foodservices at four racecourses to all 14 racecourses operated by the Jockey Club. New contracts such as the Aviva Stadium in Ireland (formerly Lansdowne Road) and several other new stadium contracts reinforce our leading position in the Sports & Leisure sector.

Rest of the World - 16.4% Group revenue (2008: 15.5%)

The Rest of the World has delivered good organic revenue growth of 5.4%. Operating profit has increased by £14 million, or 30%, on a constant currency basis, to £60 million (2008: £46 million on a constant currency basis), in part through the acquisition of the remaining 50% of the shares of GR S.A. in Brazil completed in March 2008. The margin has increased by 80 basis points on a constant currency basis to 5.3%.

Overall we are continuing to see good levels of new business wins across all countries in the region, including a new contract with Cablevision in Argentina, Colégio Santo Américo in Brazil and growing our multi-national clients where we have added new sites with Citigroup. Like for like volumes in the energy and extractive industry remain strong. We have made good progress in leveraging our overhead base which has helped to deliver the growth in the margin.

In Australia we have seen strong levels of revenue growth in all sectors, including a new fully integrated services contract with the Australian Defence Force for bases in Tasmania and an extension to our BHP Billiton Iron Ore construction and expansion portfolio. The Healthcare sector has been outstanding. With a stable management team, good client relationships and a focus on operational efficiency we have seen significant margin improvement.

The economy in Japan has been particularly challenging with reduced volumes in the Business & Industry sector. With good progress on cost control, particularly in the supply chain, we are continuing to see improvement in the margin.

In Brazil there has been a sharp reduction in employment levels affecting like for like volumes. We have strengthened the management team and are now well placed to grow our business in this exciting market, where we are the market leader.

Our UAE joint venture has seen first half revenue growth of 25% and it has a healthy pipeline of potential new business.

Unallocated Overheads

Unallocated overheads were £28 million (2008: £31 million on a constant currency basis), reflecting good control over costs.

Finance Costs

Underlying net finance cost, excluding hedge accounting ineffectiveness and the impact of revaluing investments and minority interest put options, was £50 million (2008: £33 million). The increase from last year largely reflects the impact of exchange rates on the US Dollar and Euro denominated debt and lower interest income from cash deposits this year. We currently expect the underlying net finance cost for the full year to be around £100 million at current exchange rates.

Other Gains and Losses

Other gains and losses include an £11 million (2008: £8 million) cost of hedge accounting ineffectiveness and a £5 million (2008: £nil) cost of revaluing investments and minority interest put options.

Profit Before Tax

Profit before tax from continuing operations was £387 million (2008: £281 million).

Income Tax Expense

Income tax expense from continuing operations was £112 million (2008: £81 million).

On an underlying basis, excluding the amortisation of intangibles arising on acquisition, hedge accounting ineffectiveness and the impact of revaluing investments and minority interest put options, the tax charge on continuing operations was £117 million (2008: £83 million), equivalent to an effective tax rate of 29% (2008: 29%). Based on current corporate tax rates applicable to our major countries of operation, we expect a similar rate for the full year.

Discontinued Operations

The profit after tax from discontinued operations was £12 million (2008: £16 million).

Basic Earnings per Share

Basic earnings per share, including discontinued operations, were 15.4 pence (2008: 11.3 pence).

On an underlying basis, excluding discontinued operations, the amortisation of intangibles arising on acquisition, hedge accounting ineffectiveness, the impact of revaluing investments and minority interest put options and the tax attributable to these amounts, the basic earnings per share from continuing operations were 15.4 pence (2008: 10.8 pence).

	Attributable		Basic Earnings
	Profit		Per Share
	2009	2008	2009	2008	Change
Six months ended 31 March	£m	£m	pence	pence	%

Reported	284	213	15.4	11.3	36.3
Discontinued operations	(12)	(16)	(0.7)	(0.9)
Other adjustments	13	6	0.7	0.4
Underlying	285	203	15.4	10.8	42.6

Dividends

An interim dividend of 4.4 pence per share will be paid on 3 August 2009 to shareholders on the register on 3 July 2009. This represents a year on year increase of 10%.

Free Cash Flow

Free cash flow from continuing operations totalled £240 million (2008: £180 million). The major factors contributing to the increase were: £131 million increase in underlying operating profit before associates offset by £17 million higher net tax payments and £58 million higher net capital expenditure.

Gross capital expenditure of £133 million (2008: £84 million), including amounts purchased under finance leases of £1 million (2008: £3 million), is equivalent to 1.9% of revenues (2008: 1.5% of revenues). Around half of the increase in net capital expenditure is due to lower disposal proceeds this year and exchange rate movements. The other half is largely phasing. We currently expect the level of gross capital expenditure for the full year to be around 2% of revenues.

There has been a continued focus on all areas of working capital management, limiting the overall seasonal working capital outflow (including provisions and post-employment benefit obligations) to £65 million (2008: £61 million outflow). We believe that there remains further scope for improvement.

The cash tax rate was 21% (2008: 24%), based on underlying profit before tax for continuing operations. For the full year we expect a cash tax rate around the mid 20's level mainly because of the timing of some of the larger payments. We continue to expect the annual cash tax rate to average out over the medium term at the mid to high 20's level.

The net interest outflow was £44 million (2008: £32 million).

Acquisition Payments

We have considerably strengthened our ability to offer support services in two key markets, the USA and Germany, through the acquisitions of Kimco and Plural, with a net cash outflow in the period of £51 million and £17 million respectively. In the UK we have agreed to acquire from McColl's a number of food and retail outlets within hospitals. We have spent £4 million up to 31 March 2009, with a further £15 million expected in the second half of the year. With £6 million of other small acquisitions, the total cash spend on in-fill acquisitions was £78 million. £12 million was spent on the buyout of minority interests (including £11 million on the remaining 5% shareholding in Seiyo Foods, our Japanese business) and £4 million of deferred consideration relating to previous year acquisitions. The total cash spend on acquisitions was therefore £94 million.

Disposals

Payments made in respect of businesses disposed of or discontinued in prior years totalled £33 million in the period (2008: £15 million).

Purchase of Own Shares

The Group spent cash of £11 million (2008: £290 million) on the purchase of its shares in the period.

Pensions

The Group has continued to review and monitor its pension obligations throughout the year working closely with the Trustees and members of schemes around the Group to ensure proper and prudent assumptions are used and adequate provision and contributions are made.

The Group's pension deficit at 31 March 2009 was £257 million (2008: £177 million), principally reflecting the decrease in the value of pension scheme assets in the current market conditions.

Financial Position

During the first six months of the year net debt increased to £1,258 million (2008: £1,210 million).

On 30 October 2008, the Group raised £187 million in the private placement market and will be repaying the £380 million of Eurobonds and US Private Placements maturing in May 2009 out of surplus cash. In addition, the Group has an undrawn bank facility of circa £800 million committed through to 2012.

Looking forward, £230 million of debt is due for repayment in 2010 and £90 million in 2011. With strong ongoing free cash generation the Group believes that it is in a very strong financial position.

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 Company and its shareholders.

The principal risks and uncertainties facing the business and the activities the Group undertakes to mitigate these are set out in the section below, headed 'Managing Risk'.

Related Party Transactions

Details of transactions with related parties are set out in note 19. These transactions have not, and are not expected to have, a material effect on the financial performance or position of the Group.

Going Concern

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, we continue to adopt the going concern basis in preparing the financial statements.

Summary and Outlook

Compass has had a positive first half with consistent levels of new business and retention, and solid growth in like for like volume in the Healthcare, Education and Defence, Offshore and Remote sectors. We have been successful in managing the effect on profit of weakening like for like volume in the Business & Industry and Sport & Leisure sectors.

Looking forward, the trends in revenue seen in the first half of the year are expected to continue into the second half of the year. The acceleration in the rate of cost efficiencies should enable us to deliver further progress in the second half of the year.


Richard Cousins Group Chief Executive 13 May 2009	Andrew D Martin Group Finance Director

(1)	Unless stated otherwise all figures in this document relate to the six months ended 31 March.
(2)	Unless stated otherwise the data shown on pages 1 - 11 relates to the continuing business only.

Interim Management Report: Managing Risk

The Board takes a proactive approach to risk management with the aim of protecting its employees and customers and safeguarding the interests of the Company and its shareholders.

As set out on pages 45 and 46 of the Corporate Governance section of our 2008 Annual Report, the Group has policies and procedures in place to ensure that risks are properly evaluated and managed at the appropriate level within the business.

The identification of risks and opportunities; the development of action plans to manage the risks and exploit the opportunities; and the continual monitoring of progress against agreed Key Performance Indicators ('KPIs') is an integral part of the business process, and a core activity throughout the Group.

Control is exercised at Group and business level through MAP, the Group's Management and Performance framework, monthly monitoring of performance by comparison with budgets and forecasts and through regular business reviews with the Group Chief Executive and the Group Finance Director.

This is underpinned by a formal major risk assessment process which is an integral part of the annual business cycle. As part of the process, each of the Group's businesses is required to identify and document major risks and appropriate mitigating activities and controls, and monitor and report to management on the effectiveness of these controls on a biannual basis. Senior managers are also required to sign biannual confirmations of compliance with key procedures and to report any breakdowns in, or exceptions to, these procedures. The results are reviewed by the Executive Committee and the Board.

The Group also has formal procedures in place, with clearly designated levels of authority, for approving acquisitions and other capital investments. This is supported by a post-investment review process for selected acquisitions and major items of capital expenditure.

The table below sets out the principal risks and uncertainties facing the business at the date of this Report and the systems and processes the Group has in place to manage and mitigate these risks.

Risk		Mitigation

Health, safety and environment	Food safety	Compass feeds millions of consumers around the world every day, therefore setting the highest standards for food hygiene and safety is paramount. The Group has appropriate policies, processes and training procedures to ensure full compliance with legal obligations.
	Health and safety	Health and safety remains our number one operational priority. All management meetings throughout the Group feature a health and safety update as one of their first agenda items.
	Environment	Every day, everywhere, we look to make a positive contribution to the health and wellbeing of our customers, the communities we work in and the world we live in. Our 2008 Corporate Responsibility report which can be found at www.compass-group.com/CR08 describes our approach in more detail.
Clients and consumers	Client retention	We aim to build long-term relationships with our clients based on quality and value. Our business model is structured so that we are not reliant on one particular sector, geography or group of clients.
	Consolidation of food and support services	We have developed a range of support services to complement our existing foodservice offer. These services are underpinned by the Compass Service Framework, our standard operating platform for support services, which gives us the capability to deliver to the same consistent world-class standard globally.
	Bidding risk	The Group's operating companies bid selectively for large numbers of contracts each year and a more limited number of concession opportunities. Tenders are developed in accordance with a thorough process which identifies both the potential risks (including social and ethical risks) and rewards, and are subject to approval at an appropriate level of the organisation.
	Credit risk	There is limited concentration of credit risk with regard to trade receivables given the diverse and unrelated nature of the Group's client base.
	Service delivery and compliance with contract terms and conditions	The Group's operating companies contract with a large number of clients. Processes are in place to ensure that the services delivered to clients are of an appropriate standard and comply with the appropriate contract terms and conditions.
	Changes in consumer preferences	We strive to meet consumer demand for quality, choice and value by developing innovative and nutritious food offers which suit the lifestyles, tastes and preferences of our consumers.
People	People retention and motivation	The recruitment and retention of skilled employees is a challenge faced by the industry at large. The Group has established training and development programmes, succession planning and performance management programmes which are designed to align rewards with our corporate objectives and to retain and motivate our best people.
Supply Chain	Suppliers	The Group constantly strives to find the right balance between building long-term supply relationships based on the compatibility of values and behaviour with the requirements of the Group as well as quality and price. The Group seeks to avoid over-reliance on any one supplier.
	Traceability	To reduce risk we are focusing on traceability, clear specification of our requirements to nominated suppliers and the improvement of purchasing compliance by unit managers.
Economic risk	Economy	The diverse nature of the Group's business (spanning the Business & Industry, Education, Healthcare & Seniors, Sports & Leisure and Defence, Offshore & Remote sectors) and our broad geographical coverage (across 55 countries) have helped mitigate the impact of the recent turmoil in the world economy. In addition, our ability to flex our largely variable cost base has allowed us to manage our costs in line with changes in demand whilst continuing to deliver incremental efficiency gains. Whilst we are expecting economic conditions to remain challenging, we are confident that our business model will continue to perform. We have good visibility of our new business pipeline and, as such, we are confident of our continued ability to generate new business. Indeed, in times of economic uncertainty outsourcing is an attractive option for our clients, and we see good opportunities to continue to grow our business and to further improve operating efficiency, supported by our strong financial position.
	Food cost inflation	As part of our MAP programme we seek to manage food cost inflation through cost indexation in our contracts, giving us the contractual right to review pricing with our clients; menu management to substitute ingredients in response to any forecast shortages and cost increases; and continuing to drive greater purchasing efficiencies through supplier rationalisation and compliance.
	Labour cost inflation	Our objective is always to deliver the right level of service in the most efficient way. As part of our MAP programme we have been deploying tools and processes to optimise labour productivity and exercise better control over other labour costs such as absenteeism, overtime and third party agency spend; and to improve our management of salary and benefit costs and control labour cost inflation.
Regulatory, political and competitive environment	Political stability	Compass is a global company operating in countries and regions with diverse economic and political conditions. Our operations and earnings may be adversely affected by political or economic instability. However, we remain aware of these risks and look to mitigate them wherever possible. We have also taken the strategic decision to withdraw from a number of countries (and had completed most of these withdrawals by the date of this Report) where we consider the risks outweigh the rewards.
	Regulation	Changes to laws or regulations could adversely affect our performance. We engage with governmental and non-governmental organisations directly or through trade associations to ensure that our views are represented.
	Competition	Compass operates in a competitive marketplace. The level of concentration and outsource penetration varies by country. Some markets are relatively concentrated with two or three key players, others are highly fragmented and offer significant opportunities for consolidation and penetration into the self-operated market. Aggressive pricing from our competitors could cause a reduction in our revenues and margins. We aim to minimise this by building long-term relationships with our clients based on quality and value.
Acquisitions and investments	Acquisition risk	Potential acquisitions are identified by the operating companies and are subject to appropriate levels of due diligence and approval by Group management. Post-acquisition integration and performance is closely managed and subject to regular review.
	Investment risk	Capital investments are subject to appropriate levels of scrutiny and approval by Group management.
	Joint ventures	In some countries we operate through joint ventures. Procedures are in place to ensure that joint venture partners bring skills, experience and resources that complement and add to those provided from within the Group.
Information technology and infrastructure		The Group relies on a variety of IT systems in order to manage and deliver services and communicate with its customers, suppliers and employees. There is minimal inter-country dependence on IT systems, and all of the Group's major operating companies have appropriate disaster recovery plans in place.
Fraud and compliance		The Group's zero tolerance based Code of Ethics governs all aspects of our relationship with our stakeholders. All alleged breaches of the Code are investigated. The Group's procedures include regular operating reviews, underpinned by a continual focus on ensuring the effectiveness of internal controls.
Litigation		Though we do not operate in a litigious industry, we have in place policies and processes in all of our main operating companies to report, manage and mitigate against third-party litigation.
Reputation risk		Our brands are amongst the most successful and best established in our industry. They represent a key element of the Group's overall marketing and positioning. In the event that our brand or reputation is damaged this could adversely impact the Group's performance. The Group's zero tolerance based Code of Ethics is designed to safeguard the Company's assets, brands and reputation.
Financial risk	Overview	Compass Group's financial risk management strategy is based upon sound economic objectives and good corporate practice. The main financial risks concern the availability of funds to meet our obligations (liquidity risk), movements in exchange rates (foreign currency risk), movements in interest rates (interest rate risk), and counterparty credit risk. Derivative and other financial instruments are used to manage interest rate and foreign currency risks. Further details of our financial risks and the ways in which we mitigate them are set out below.
	Liquidity Risk	The Group finances its borrowings from a number of sources including banks, the public markets and the private placement markets. Borrowings are stated at their nominal value except for the bond redeemable in December 2014 which is recorded at its fair value to the Group on acquisition. The Group's undrawn committed bank facilities at 31 March 2009 were £793 million (2008: £664 million).
	Financial Instruments	The Group continues to manage its foreign currency and interest rate exposure in accordance with the policies set out below. The Group's financial instruments comprise cash, borrowings, receivables and payables that are used to finance the Group's operations. The Group also uses derivatives, principally interest rate, currency swaps and forward currency contracts, to manage interest rate and currency risks arising from the Group's operations. The Group does not trade in financial instruments. The Group's treasury policies are designed to mitigate the impact of fluctuations in interest rates and exchange rates and to manage the Group's financial risks. The Board approves any changes to the policies.
	Foreign Currency Risk	The Group's policy is to match as far as possible its principal projected cash flows by currency to actual or effective borrowings in the same currency. As currency cash flows are generated, they are used to service and repay debt in the same currency. To implement this policy, forward currency contracts or currency swaps are taken out which, when applied to the actual currency liabilities, convert these to the required currency. The borrowings in each currency give rise to foreign exchange differences on translation into Sterling. Where the borrowings are either less than, or equate to, the net investment in overseas operations, these exchange rate movements are treated as movements on reserves and recorded in the statement of recognised income and expense rather than in the income statement. Non-Sterling earnings streams are translated at the average rate of exchange for the year. This results in differences in the Sterling value of currency earnings from year to year. The table in note 21 to the condensed financial statements sets out the exchange rates used to translate the income statements, balance sheets and cash flows of non-Sterling denominated entities.
	Interest Rate Risk	As detailed above, the Group has effective borrowings in a number of currencies and its policy is to ensure that, in the short-term, it is not materially exposed to fluctuations in interest rates in its principal currencies. The Group implements this policy either by borrowing fixed rate debt or by using interest rate swaps or options so that at least 80% of its projected net debt is fixed or capped for one year, reducing to 60% fixed for the second year and 40% fixed for the third year.
Pensions risk		The Group's defined benefit pension schemes are closed to new entrants other than for transfers under public sector contracts in the UK where the Company is obliged to provide final salary benefits to transferring employees. In addition, over the last four years substantial one-off contributions have been made to reduce the deficit in the UK schemes. Steps have also been taken to reduce the investment risk in these schemes.
Tax risk		As a Group, we seek to plan and manage our tax affairs efficiently in the jurisdictions in which we operate. In doing so, we aim to act in compliance with the relevant laws and disclosure requirements. In an increasingly complex international tax environment, a degree of uncertainty is inevitable in estimating our tax liabilities. We exercise our judgement, and seek appropriate professional advice, in assessing the amounts of tax to be paid and the level of provision required. The effective rate of tax may be influenced by a number of factors, including changes in laws and accounting standards, which could increase the rate.

Condensed Financial Statements

Directors' responsibilities

The interim report complies with the Disclosure and Transparency Rules ('DTR') of the United Kingdom's Financial Services Authority in respect of the requirement to produce a half-yearly financial report. The interim report is the responsibility of, and has been approved by, the directors.

We confirm that to the best of our knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34;

• the interim management report includes a fair review of the important events during the first six months and description of the principal risks and uncertainties for the remaining six months of the year, as required by DTR 4.2.7R; 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.

On behalf of the Board

Mark J White

General Counsel and Company Secretary

13 May 2009

The directors are required to prepare financial statements for the Group in accordance with International Financial Reporting

Standards ('IFRS').

International Accounting Standard 34 defines the minimum content of an interim financial report, including disclosures, and identifies the accounting recognition and measurement principles that should be applied to an interim financial report.

Directors are also required to:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• 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 entity's financial position and financial performance; and

• prepare the accounts on a going concern basis unless, having assessed the ability of the Group to continue as a going concern, management either intends to liquidate the entity or to cease trading, or have no realistic alternative but to do so.

The directors are responsible for keeping proper accounting

records which disclose with reasonable accuracy at any time

the financial position of the Company, for safeguarding the

assets, for taking reasonable steps for the prevention and

detection of fraud and other irregularities and which

comply with the requirements of the Companies Acts 1985 and 2006. The directors, having prepared the financial statements, have permitted the auditors to take whatever steps and undertake

whatever inspections they consider to be appropriate for the

purpose of enabling them to give their review opinion.

The directors are also responsible for the maintenance and

integrity of the Compass Group PLC website.

Legislation in the United Kingdom governing the preparation

and dissemination of financial statements may differ from

legislation in other jurisdictions.

Independent review' report to the members of Compass Group PLC

Introduction

We have been engaged by Compass Group PLC ('the Company') to review the condensed set of financial statements in the interim report for the six months ended 31 March 2009 which comprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 21. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with

International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors responsibilities

The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on

the condensed set of financial statements in the interim report

based on our review.

Scope of review

We conducted our review in accordance with International Standard

on Review Engagements (UK and Ireland) 2410, 'Review of Interim

Financial Information Performed by the Independent Auditor of

the Entity' issued by the Auditing Practices Board for use in the

United Kingdom. A review of interim financial information consists

of making inquiries, primarily of persons responsible for financial

and accounting matters, and applying analytical and other review

procedures. A review is substantially less in scope than an audit

conducted in accordance with International Standards on Auditing

|(UK and Ireland) and consequently does not enable us to obtain

assurance that we would become aware of all significant matters

that might be identified in an audit. Accordingly, we do not express

an audit opinion.

Review conclusion

Based on our review, nothing has come to our attention that causes

us to believe that the condensed set of financial statements in the

interim report for the six months ended 31 March 2009 is not

prepared, in all material respects, in accordance with International

Accounting Standard 34 as adopted by the European Union and

the Disclosure and Transparency Rules of the United Kingdom's

Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditors

London, United Kingdom

13 May 2009

Consolidated income statement
for the six months ended 31 March 2009


		Six months to 31 March		Year ended
				30 September
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£m	£m	£m

Continuing operations
Revenue	3	6,927	5,589	11,440
Operating costs		(6,478)	(5,269)	(10,785)
Operating profit	3	449	320	655
Share of profit of associates	3	4	2	4
Total operating profit	3	453	322	659
Finance income	4	15	16	27
Finance costs	4	(65)	(49)	(100)
Hedge accounting ineffectiveness	4	(11)	(8)	(4)
Change in the fair value of investments and minority interest put options	4	(5)	-	(16)
Profit before tax		387	281	566
Income tax expense	5	(112)	(81)	(169)
Profit for the period from continuing operations	3	275	200	397

Discontinued operations
Profit for the period from discontinued operations	6,7	12	16	53

Continuing and discontinued operations
Profit for the period		287	216	450

Attributable to
Equity shareholders of the Company		284	213	443
Minority interest		3	3	7
Profit for the period		287	216	450

Basic earnings per share (pence)
From continuing operations	8	14.7p	10.4p	20.9p
From discontinued operations	8	0.7p	0.9p	2.8p
From continuing and discontinued operations	8	15.4p	11.3p	23.7p

Diluted earnings per share (pence)
From continuing operations	8	14.7p	10.4p	20.8p
From discontinued operations	8	0.6p	0.8p	2.8p
From continuing and discontinued operations	8	15.3p	11.2p	23.6p

(1) Impairment of goodwill, impairment of inventories, impairment of financial assets and net foreign exchange gains/(losses) recorded in the income statement, total £1million loss (2008: £nil).


Analysis of operating profit
for the six months ended 31 March 2009

		Six months to 31 March		Year ended
				30 September
		2009	2008	2008
		Unaudited	Unaudited	Audited
		£m	£m	£m

Continuing operations

Operating profit before associates and amortisation of intangibles arising on acquisition		451	320	658
Share of profit of associates		4	2	4
Operating profit before amortisation of intangibles arising on acquisition		455	322	662
Amortisation of intangibles arising on acquisition		(2)	-	(3)
Total operating profit		453	322	659

Consolidated statement of recognised income and expense
for the six months ended 31 March 2009

			Six months to 31 March
									Year ended
							Total	Total	30 September
			Retained	Revaluation	Translation	Minority	2009	2008	2008
			earnings	reserve	reserve	interest	Unaudited	Unaudited	Audited
		Notes	£m	£m	£m	£m	£m	£m	£m

Net income/(expense) recognised in equity
Currency translation differences			-	-	154	5	159	7	67
Actuarial gains/(losses) on post-retirement employee benefits	11		(100)	-	-	-	(100)	(18)	15
Tax on items taken directly to equity			30	-	-	-	30	9	5
Other			-	(1)	-	-	(1)	-	(1)
Net income/(expense) recognised directly in equity			(70)	(1)	154	5	88	(2)	86

Profit for the period
Profit for the period			284	-	-	3	287	216	450

Total recognised income and expense for the period	12		214	(1)	154	8	375	214	536

Attributable to
Equity shareholders of the Company			214	(1)	154	-	367	210	526
Minority interest			-	-	-	8	8	4	10
Total recognised income and expense for the period	12		214	(1)	154	8	375	214	536

Consolidated balance sheet
as at 31 March 2009

		As at 31 March		As at
				30 September
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£m	£m	£m

Non-current assets
Goodwill		3,645	3,147	3,290
Other intangible assets (1)		494	367	393
Property, plant and equipment (1)		548	458	463
Interests in associates		32	25	28
Other investments		39	13	17
Trade and other receivables (1)		61	59	66
Deferred tax assets*		321	244	256
Derivative financial instruments**		72	19	19
Non-current assets		5,212	4,332	4,532

Current assets
Inventories		245	197	213
Trade and other receivables		1,764	1,530	1,577
Tax recoverable*		15	14	19
Cash and cash equivalents**		730	400	579
Derivative financial instruments**		15	1	1
Current assets		2,769	2,142	2,389

Total assets		7,981	6,474	6,921

Current liabilities
Short-term borrowings**		(676)	(111)	(382)
Derivative financial instruments**		(13)	(8)	(4)
Provisions	10	(120)	(92)	(113)
Current tax liabilities*		(263)	(169)	(234)
Trade and other payables		(2,457)	(1,983)	(2,235)
Current liabilities		(3,529)	(2,363)	(2,968)

Non-current liabilities
Long-term borrowings**		(1,386)	(1,509)	(1,212)
Derivative financial instruments**		-	(2)	(6)
Post-employment benefit obligations	11	(257)	(177)	(131)
Provisions	10	(348)	(372)	(341)
Deferred tax liabilities*		(9)	(23)	(24)
Trade and other payables		(26)	(32)	(33)
Non-current liabilities		(2,026)	(2,115)	(1,747)

Total liabilities		(5,555)	(4,478)	(4,715)

Net assets		2,426	1,996	2,206

Equity
Share capital	12	185	185	184
Share premium account	12	196	144	178
Capital redemption reserve	12	44	42	44
Less: Own shares	12	(2)	(4)	(4)
Other reserves	12	4,547	4,342	4,401
Retained earnings	12	(2,563)	(2,729)	(2,616)
Total equity shareholders' funds		2,407	1,980	2,187

Minority interests	12	19	16	19

Total equity		2,426	1,996	2,206

* Component of current and deferred taxes ** Component of net debt

(1) Certain contract-related assets previously included within property, plant and equipment and other receivables have been reclassified as intangible assets. The 31 March 2008 balance sheet has
been restated accordingly. The 30 September 2008 balance sheet was originally published on this basis. There is no impact on the income statement.

Consolidated cash flow statement
for the six months ended 31 March 2009

		Six months to 31 March		Year ended
				30 September
		2009	2008	2008
		Unaudited	Unaudited	Audited
	Notes	£m	£m	£m

Cash flow from operating activities
Cash generated from operations (1)	14	497	349	915
Interest paid		(58)	(47)	(104)
Interest element of finance lease rentals		(1)	(1)	(2)
Tax received		3	6	16
Tax paid		(90)	(76)	(165)
Net cash from/(used in) operating activities of continuing operations		351	231	660
Net cash from/(used in) operating activities of discontinued operations		(2)	2	2
Net cash from/(used in) operating activities		349	233	662

Cash flow from investing activities
Purchase of subsidiary companies and investments in associated undertakings (2)	13	(94)	(146)	(181)
Proceeds/(payments) from the sale/closure of discontinued activities (2)	6	(31)	(10)	(17)
Proceeds/(payments) from the sale/closure of other activities (2)		(2)	-	12
Tax on profits from sale of subsidiary companies and associated undertakings		-	(5)	45
Purchase of intangible assets and investments (1)		(53)	(31)	(73)
Purchase of property, plant and equipment (1)		(79)	(50)	(119)
Proceeds from sale of property, plant and equipment / intangibles		7	14	26
Purchase of other investments		(3)	-	-
Proceeds from sale of other investments		-	-	1
Dividends received from associated undertakings		3	3	5
Interest received		15	16	25
Net cash from/(used in) investing activities by continuing operations		(237)	(209)	(276)
Net cash from/(used in) investing activities by discontinued operations		-	-	-
Net cash from/(used in) investing activities		(237)	(209)	(276)

Cash flow from financing activities
Proceeds from issue of ordinary share capital	12	9	22	58
Purchase of own shares (3)		(11)	(290)	(355)
Net increase/(decrease) in borrowings - excluding new leases / repayments	15	174	(61)	(141)
Repayment of obligations under finance leases	15	(7)	(6)	(11)
Equity dividends paid	9,12	(148)	(135)	(209)
Dividends paid to minority interests	12	(1)	(3)	(4)
Net cash from/(used in) financing activities by continuing operations		16	(473)	(662)
Net cash from/(used in) financing activities by discontinued operations		-	-	-
Net cash from/(used in) financing activities		16	(473)	(662)

Cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents	15	128	(449)	(276)
Cash and cash equivalents at beginning of the period		579	839	839
Currency translation gains/(losses) on cash and cash equivalents		23	10	16
Cash and cash equivalents at end of the period		730	400	579

(1) Certain contract-related assets previously included in property, plant and equipment, and other receivables have been reclassified as intangible assets. The cash flow for the six months to 31 March
2008 has been restated accordingly. The cash flow for the year ended 30 September 2008 was originally published on this basis. There is no impact on the income statement.
(2) Net of cash acquired or disposed and payments received or made under warranties and indemnities.
(3) Share buy-back and increase/(decrease) in own shares held to satisfy employee share-based payments.

Reconciliation of free cash flow from continuing operations
for the six months ended 31 March 2009

		Six months to 31 March		Year ended
				30 September
		2009	2008	2008
		Unaudited	Unaudited	Audited
		£m	£m	£m

Net cash from operating activities of continuing operations		351	231	660
Purchase of intangible assets and investments		(53)	(31)	(73)
Purchase of property, plant and equipment		(79)	(50)	(119)
Proceeds from sale of property, plant and equipment / intangibles		7	14	26
Purchase of other investments		(3)	-	-
Proceeds from sale of other investments		-	-	1
Dividends received from associated undertakings		3	3	5
Interest received		15	16	25
Dividends paid to minority interests		(1)	(3)	(4)
Other		-	-	(1)
Free cash flow from continuing operations		240	180	520

Notes to the condensed financial statements

for the six months ended 31 March 2009

1 Basis of preparation

The unaudited interim condensed financial statements for the six months ended 31 March 2009 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 ended 30 September 2009.

The unaudited interim condensed financial statements for the six months ended 31 March 2009, which were approved by the Board on 13 May 2009, and the comparative information in relation to the year ended 30 September 2008, do not comprise statutory accounts for the purpose of Section 240 of the Companies Act 1985 or Section 434 of the Companies Act 2006, and should be read in conjunction with the Annual Report for the year ended 30 September 2008. Those accounts have been reported upon by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors 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 237 (2) or (3) of the Companies Act 1985 or Section 498 (2) or (3) of the Companies Act 2006.

An online version of the Annual Report is available at www.compass-group.com/annualreport08 and a PDF version can be downloaded from the Investor Relations section of the Group website at www.compass-group.com. The Report is also available from the Company on request.

The accounting policies and method of computation adopted in the preparation of the unaudited interim condensed financial statements are consistent with the policies applied by the Group in its consolidated financial statements for the year ended 30 September 2008 except as described below.

Changes in accounting policy

In the current financial year, the Group has adopted IFRS 8 'Operating Segments' and IFRIC 13 'Customer Loyalty Programmes'.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments and to assess their performance and is effective in the EU for accounting periods beginning on or after 1 January 2009. The Group has elected to adopt this standard early. In contrast, the predecessor Standard (IAS 14 'Segment Reporting') required the Group to identify two sets of segments (business and geographical), using a risks and rewards approach, with the Group's system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments.

The Group has determined in accordance with IFRS 8 that its reported operating segments will be based on geographies (which were the basis of its primary operating segments under IAS 14), and the segmental information set out in note 3 is presented on this basis. IFRS 8 also requires the disclosure of information about products and services. The Group has determined that it is appropriate to provide such information by sector (enhancing the previous disclosure made under IAS 14). Comparative data has been restated accordingly.

IFRIC 13 requires companies to allocate revenue between the goods purchased and the fair value of the customer loyalty award, and is effective in the EU for accounting periods beginning on or after 31 December 2008. The Group has elected to adopt this interpretation early. The Group does not operate any significant customer loyalty programmes and there has been no impact on the reported results as a consequence of adopting IFRIC 13.

2 Seasonality of operations

Overall, seasonality is not a significant factor across the Group. However, within individual sectors and geographies we do see some seasonal effects.

Revenues in the Education sector are lower outside term time and activity in the Business & Industry sector in Continental Europe slows down throughout the summer.

3 Segmental reporting


		Operating segments: Geographies
		North	Continental	UK &	Rest of	Intra
		America	Europe	Ireland	the World	Group	Total
	Revenues	£m	£m	£m	£m	£m	£m

	Six months to 31 March 2009
	External revenue	3,082	1,769	939	1,138	-	6,928
	Less: Discontinued operations	-	-	-	(1)	-	(1)
	External revenue - continuing	3,082	1,769	939	1,137	-	6,927

	Six months to 31 March 2008
	External revenue	2,267	1,488	965	872	-	5,592
	Less: Discontinued operations	-	-	-	(3)	-	(3)
	External revenue - continuing	2,267	1,488	965	869	-	5,589

	Year ended 30 September 2008
	External revenue	4,553	3,021	1,926	1,947	-	11,447
	Less: Discontinued operations	-	-	-	(7)	-	(7)
	External revenue - continuing	4,553	3,021	1,926	1,940	-	11,440


	(1) There is no inter-segmental trading



		Products and services: Sectors
						Defence,
		Business		Healthcare	Sports	Offshore
		& Industry	Education	& Seniors	& Leisure	& Remote	Total
	Revenues	£m	£m	£m	£m	£m	£m

	Six months to 31 March 2009
	External revenue	3,133	1,204	1,296	648	647	6,928
	Less: Discontinued operations	-	-	-	-	(1)	(1)
	External revenue - continuing	3,133	1,204	1,296	648	646	6,927

	Six months to 31 March 2008
	External revenue	2,613	928	967	529	555	5,592
	Less: Discontinued operations	-	-	-	-	(3)	(3)
	External revenue - continuing	2,613	928	967	529	552	5,589

	Year ended 30 September 2008
	External revenue	5,432	1,632	1,997	1,194	1,192	11,447
	Less: Discontinued operations	-	-	-	-	(7)	(7)
	External revenue - continuing	5,432	1,632	1,997	1,194	1,185	11,440


	(1) There is no inter-segmental trading


	Operating segments: Geographies
	North	Continental	UK &	Rest of	Central
	America	Europe	Ireland	the World	activities	Total
Result	£m	£m	£m	£m	£m	£m

Six months to 31 March 2009
Total operating profit before associates and amortisation of intangibles arising on acquisition	234	131	54	60	(28)	451
Less: Discontinued operations	-	-	-	-	-	-
Operating profit before associates and amortisation of intangibles arising on acquisition - continuing	234	131	54	60	(28)	451
Less: Amortisation of intangibles arising on acquisition	-	-	-	(2)	-	(2)
Operating profit before associates - continuing	234	131	54	58	(28)	449
Add: Share of profit of associates	2	-	2	-	-	4
Operating profit - continuing	236	131	56	58	(28)	453

Finance income						15
Finance costs						(65)
Hedge accounting ineffectiveness						(11)
Change in the fair value of investments and minority interest put options						(5)

Profit before tax						387

Income tax expense						(112)

Profit for the period from continuing operations						275

Six months to 31 March 2008
Total operating profit before associates and amortisation of intangibles arising on acquisition	153	106	52	38	(29)	320
Less: Discontinued operations	-	-	-	-	-	-
Operating profit before associates and amortisation of intangibles arising on acquisition - continuing	153	106	52	38	(29)	320
Less: Amortisation of intangibles arising on acquisition	-	-	-	-	-	-
Operating profit before associates - continuing	153	106	52	38	(29)	320
Add: Share of profit of associates	1	-	1	-	-	2
Operating profit - continuing	154	106	53	38	(29)	322

Finance income						16
Finance costs						(49)
Hedge accounting ineffectiveness						(8)
Change in the fair value of investments and minority interest put options						-

Profit before tax						281

Income tax expense						(81)

Profit for the period from continuing operations						200

Year ended 30 September 2008
Total operating profit before associates and amortisation of intangibles arising on acquisition	311	197	108	103	(62)	657
Less: Discontinued operations	-	-	-	1	-	1
Operating profit before associates and amortisation of intangibles arising on acquisition - continuing	311	197	108	104	(62)	658
Less: Amortisation of intangibles arising on acquisition	-	-	-	(3)	-	(3)
Operating profit before associates - continuing	311	197	108	101	(62)	655
Add: Share of profit of associates	2	-	2	-	-	4
Operating profit - continuing	313	197	110	101	(62)	659

Finance income						27
Finance costs						(100)
Hedge accounting ineffectiveness						(4)
Change in the fair value of investments and minority interest put options						(16)

Profit before tax						566

Income tax expense						(169)

Profit for the year from continuing operations						397


	Operating segments: Geographies					Unallocated
	North	Continental	UK &	Rest of	Central	Current and	Net
	America	Europe	Ireland	the World	activities	deferred tax	debt	Total
Balance sheet	£m	£m	£m	£m	£m	£m	£m	£m

As at 31 March 2009
Total assets	2,585	1,175	2,130	935	3	336	817	7,981
Total liabilities	(1,011)	(975)	(357)	(514)	(352)	(272)	(2,074)	(5,555)
Net assets/(liabilities)	1,574	200	1,773	421	(349)	64	(1,257)	2,426

Total assets include:
Interests in associates -	5	-	27	-	-	-	-	32

As at 31 March 2008
Total assets	1,824	997	2,135	829	11	258	420	6,474
Total liabilities	(688)	(815)	(317)	(424)	(412)	(192)	(1,630)	(4,478)
Net assets/(liabilities)	1,136	182	1,818	405	(401)	66	(1,210)	1,996

Total assets include:
Interests in associates	2	-	23	-	-	-	-	25

As at 30 September 2008
Total assets	2,100	960	2,124	855	8	275	599	6,921
Total liabilities	(855)	(837)	(308)	(489)	(364)	(258)	(1,604)	(4,715)
Net assets/(liabilities)	1,245	123	1,816	366	(356)	17	(1,005)	2,206

Total assets include:
Interests in associates	1	-	27	-	-	-	-	28

4 Financing and other gains/losses

Finance income and costs are recognised in the income statement in the period in which they are earned or incurred.

	Six months to 31 March				Year ended
					30 September
	2009		2008		2008
Finance income and costs	£m		£m		£m

Finance income
Bank interest	11		15		25
Other interest	4		-		-
Expected return on pension scheme assets net of amount charged to scheme liabilities (note 11)	-		1		2
Total finance income	15		16		27

Finance costs
Bank loans and overdrafts	8		7		14
Other loans	49		41		84
Finance lease interest	1		1		2
Interest on bank loans, overdrafts, other loans and finance leases	58		49		100
Unwinding of discount on put options held by minority shareholders	1		-		-
Amount charged to pension scheme liabilities net of expected return on scheme assets (note 11)	6		-		-
Total finance costs	65		49		100

Finance costs by defined IAS 39(1) category
Fair value through profit and loss (unhedged derivatives)	4		-		4
Derivatives in a fair value hedge relationship	(4)		5		7
Derivatives in a net investment hedge relationship	(2)		(3)		(10)
Other financial liabilities	60		47		99
Interest on bank loans, overdrafts, other loans and finance leases	58		49		100
Fair value through profit or loss (put options held by minority interests)	1		-		-
Outside of the scope of IAS 39 (pension scheme charge)	6		-		-
Total finance costs	65		49		100

(1) IAS 39 'Financial instruments: Recognition and Measurement'.

The Group uses derivative financial instruments such as foreign currency contracts and interest rate swaps to hedge the risks associated with changes in foreign exchange rates and interest rates. As explained in section Q of the Group's accounting policies, such derivative financial instruments are initially measured at fair value on the contract date, and are remeasured to fair value at subsequent reporting dates. For derivative financial instruments that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to the income statement in the period. The Group has a small number of outstanding put options which enable minority shareholders to require the Group to purchase the minority interest shareholding at an agreed multiple of earnings. These options are treated as derivatives over equity instruments and are recorded in the balance sheet at fair value which is re-evaluated at each period end. Fair value is based on the present value of expected cash outflows. The movement in fair value is recognised as income or expense within the income statement.

		Six months to 31 March			Year ended
					30 September
		2009		2008	2008
Other (gains)/losses		£m		£m	£m

Hedge accounting ineffectiveness
Unrealised net (gains)/losses on unhedged derivative financial instruments (1)		9		8	4
Unrealised net (gains)/losses on derivative financial instruments in a designated fair value hedge(2)		(69)		(23)	(11)
Unrealised net (gains)/losses on the hedged item in a designated fair value hedge		71		23	11
Total hedge accounting ineffectiveness (gains)/losses		11		8	4

Change in the fair value of investments and minority interest put options
Change in the fair value of investments (1), (3)		2		-	-
Change in fair value of minority interest put options (credit)/charge (1)		3		-	16
Total		5		-	16

(1) Categorised as 'fair value through profit or loss' (IAS 39).
(2) Categorised as derivatives that are designated and effective as hedging instruments carried at fair value (IAS 39).
(3) Life insurance policies used by overseas companies to meet the cost of unfunded post-employment benefit obligations included in note 11.

5 Tax

The income tax expense on continuing operations for the period is based on an estimated full year effective tax rate of 29% (last full year 29%).(1)

	Six months to 31 March		Year ended
			30 September
Recognised in the income statement:	2009	2008	2008
Income tax expense on continuing operations	£m	£m	£m

Current year	112	79	176
Adjustment in respect of prior years	8	(8)	(3)
Current tax expense/(credit)	120	71	173

Current year deferred tax	7	10	(8)
Impact of changes in statutory tax rates	-	-	(1)
Adjustment in respect of prior years	(15)	-	5
Deferred tax expense/(credit)	(8)	10	(4)

Income tax expense/(credit) on continuing operations	112	81	169
(1) On an underlying basis.

The Group does not recognise deferred tax assets in respect of tax losses and other temporary differences where the recovery is uncertain. No deferred tax liability is recognised on temporary differences relating to the unremitted earnings of overseas operations as the Group is able to control the timing of the reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future.

There has been no material change to the level of unrecognised deferred tax assets since 30 September 2008 (£56 million).

6 Discontinued operations

Period ended 31 March 2009: The profit for the period from discontinued operations comprises the release of surplus provisions relating to prior period disposals and discontinued operations.

Period ended 31 March 2008: The profit for the period from discontinued operations comprises the release of surplus provisions and accruals relating to prior period disposals and discontinued operations.

Year ended 30 September 2008: The profit for the year from discontinued operations of £53 million is comprised of the profit arising on the sale of two properties formerly occupied by Selecta, the European vending business, which was disposed of in July 2007, of £nil; an adjustment to deferred tax liabilities forming part of the net assets of businesses disposed of in prior years of £9 million; the release of surplus provisions of £38 million and accruals relating to prior year disposals of £11 million; and a loss after tax from trading activities of £1 million.

	Six months to 31 March		Year ended
			30 September
	2009	2008	2008
Financial performance of discontinued operations	£m	£m	£m

Trading activities of discontinued operations (1)
External revenue	1	3	7
Operating costs	(1)	(3)	(8)
Trading activities of discontinued operations before exceptional costs	-	-	(1)
Exceptional operating costs	-	-	-
Profit before tax	-	-	(1)
Income tax (expense)/credit	-	-	-
Profit after tax	-	-	(1)

Exceptional items: Disposal of net assets and other adjustments relating to discontinued operations
Profit on disposal of net assets of discontinued operations	-	-	9
Increase in provisions related to discontinued operations	-	-	-
Release of surplus provisions and accruals related to discontinued operations (2), (3), (4)	12	16	49
Cumulative translation exchange loss recycled on disposals (5)	-	-	-
Profit on sale/closure of discontinued operations before tax	12	16	58
Income tax (expense)/credit	-	-	(4)
Total profit after tax	12	16	54

Profit/(loss) for the period from discontinued operations
Profit/(loss) for the period from discontinued operations	12	16	53

(1) The trading activity relates to the final run-off of activity in businesses earmarked for closure.
(2) Released surplus provisions of £12 million in the period ended 31 March 2009.
(3) Released surplus provisions of £7 million and surplus accruals of £9 million, total £16 million, in the period ended 31 March 2008.
(4) Released surplus provisions of £38 million and surplus accruals of £11 million, total £49 million, in the year ended 30 September 2008.
(5) The Group manages foreign currency exposures in accordance with the policies set out in note 20 of the Company's Annual Report for the year ended 30 September 2008, matching its
principal projected cash flows by currency to actual or effective borrowings in the same currency. As a result the cumulative exchange translation loss recycled on disposals is £nil (2008: £nil).

The profit/(loss) on disposal can be reconciled to the cash inflow/(outflow) from disposals as follows:

	Six months to 31 March		Year ended
			30 September
	2009	2008	2008
Net assets/(liabilities) disposed and disposal proceeds	£m	£m	£m

Net assets/(liabilities) disposed	-	-	(7)

Increase/(decrease) in retained liabilities (1), (2), (3)	(43)	(33)	(68)
Cumulative exchange translation loss recycled on disposals (4)	-	-	-
Profit on sale/closure of discontinued operations before tax	12	16	58

Consideration, net of costs	(31)	(17)	(17)

Consideration deferred to future periods	-	-	-
Cash disposed of	-	-	-

Cash inflow/(outflow) from current activity	(31)	(17)	(17)

Deferred consideration and other payments relating to previous disposals	-	7	-

Cash inflow/(outflow) from disposals	(31)	(10)	(17)

(1) Including the release of surplus provisions of £12 million and the utilisation of accruals / provisions in respect of warranty claims, legal claims and other indemnities of £31 million in the period ended
31 March 2009. Total £43 million.
(2) Including the release of surplus provisions of £7 million and surplus accruals of £9 million, and utilised accruals / provisions in respect of purchase price adjustments, warranty claims and other
indemnities of £17 million in the period ended 31 March 2008. Total £33 million.
(3) Including the release of surplus provisions of £38 million and surplus accruals of £11 million; the utilisation of provisions in respect of purchase price adjustments; warranty claims and other
indemnities of £25 million and the collection of other amounts totalling £6 million in the year ended 30 September 2008. Total £68 million.
(4) The Group manages foreign currency exposures in accordance with the policies set out in note 20 of the Company's Annual Report for the year ended 30 September 2008, matching its principal
projected cash flows by currency to actual or effective borrowings in the same currency. As a result the cumulative exchange translation loss recycled on disposals is £nil (2008: £nil).

There were no assets or liabilities included in disposal groups held for sale (on a debt free/cash free basis) at the balance sheet date.

7 Exceptional items

Exceptional items are disclosed and described separately in the interim financial statements where it is necessary to do so to clearly explain the financial performance of the Group. Items reported as exceptional are material items of income or expense that have been shown separately due to the significance of their nature or amount. All of the exceptional items occurring in the period relate to discontinued operations and are described in more detail in note 6.


	Six months to 31 March		Year ended
			30 September
	2009	2008	2008
Exceptional items	£m	£m	£m

Continuing operations
Continuing operations	-	-	-

Discontinued operations
Profit on disposal of net assets and other adjustments relating to discontinued operations net of tax (note 6)	12	16	54
Discontinued operations	12	16	54

Continuing and discontinued operations
Total	12	16	54

8 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 adjusted earnings per share figures have been calculated based on earnings excluding the effect of discontinued operations, the amortisation of intangible assets arising on acquisition, hedge accounting ineffectiveness, and the change in the fair value of investments and minority interest put options 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
	2009	2008	2008
Attributable profit	£m	£m	£m

Profit for the period attributable to equity shareholders of the Company	284	213	443
Less: Profit for the period from discontinued operations	(12)	(16)	(53)
Attributable profit for the period from continuing operations	272	197	390
Add back: Amortisation of intangible assets arising on acquisition (net of tax)	1	-	2
Add back: Loss/(profit) from hedge accounting ineffectiveness (net of tax)	8	6	3
Add back: Change in the fair value of investments and minority interest put options (net of tax)	4	-	16
Underlying attributable profit for the period from continuing operations	285	203	411

	Six months to 31 March		Year ended
			30 September
Average number of shares (millions of ordinary shares of 10p each)	2009	2008	2008

Average number of shares for basic earnings per share	1,846	1,886	1,868
Dilutive share options	5	9	13
Average number of shares for diluted earnings per share	1,851	1,895	1,881

Basic earnings per share (pence)
From continuing and discontinued operations	15.4	11.3	23.7
From discontinued operations	(0.7)	(0.9)	(2.8)
From continuing operations	14.7	10.4	20.9
Amortisation of intangible assets arising on acquisition (net of tax)	0.1	-	0.1
Hedge accounting ineffectiveness (net of tax)	0.4	0.4	0.2
Change in the fair value of investments and minority interest put options (net of tax)	0.2	-	0.8
From underlying continuing operations	15.4	10.8	22.0

Diluted earnings per share (pence)
From continuing and discontinued operations	15.3	11.2	23.6
From discontinued operations	(0.6)	(0.8)	(2.8)
From continuing operations	14.7	10.4	20.8
Amortisation of intangible assets arising on acquisition (net of tax)`	0.1	-	0.1
Hedge accounting ineffectiveness (net of tax)	0.4	0.3	0.2
Change in the fair value of investments and minority interest put options (net of tax)	0.2	-	0.8
From underlying continuing operations	15.4	10.7	21.9

9 Dividends

The interim dividend of 4.4 pence per share (2008: 4.0 pence per share), £81 million in aggregate(1), is payable on 3 August 2009 to shareholders on the register at the close of business on 3 July 2009. 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
	2009	2008	2008
Dividends on ordinary shares of 10p each	£m	£m	£m

Final 2007 - 7.2p per share	-	135	135
Interim 2008 - 4.0p per share	-	-	74
Final 2008 - 8.0p per share	148	-	-
Total dividends	148	135	209

(1) Based on the number of shares in issue at 31 March 2009 (1,847 million shares).

10 Provisions

	Six months to 31 March
								Year ended
		Discontinued						30 September
		and disposed	Onerous	Legal and		Total	Total	2008
	Insurance	businesses	contracts	other claims	Environmental	2009	2008	Total
Provisions	£m	£m	£m	£m	£m	£m	£m	£m

Brought forward	143	142	50	108	11	454	437	437
Reclassified(1)	-	(1)	1	1	-	1	16	20
Expenditure in the year	(2)	(21)	(3)	(6)	(1)	(33)	(25)	(51)
Charged to income statement	14	-	1	6	1	22	28	59
Credited to income statement	-	(12)	(1)	(2)	(1)	(16)	(9)	(55)
Fair value adjustments arising on acquisitions	-	-	-	-	-	-	11	26
Business disposals - other activities	-	-	-	-	-	-	-	(2)
Unwinding of discount on provisions	-	-	1	-	-	1	-	-
Currency adjustment	30	1	2	4	2	39	6	20
Carried forward	185	109	51	111	12	468	464	454


						As at 31 March		As at
								30 September
						2009	2008	2008
Provisions						£m	£m	£m

Current						120	92	113
Non-current						348	372	341
Total provisions						468	464	454

(1) Including items reclassified from accrued liabilities and other balance sheet captions.

The provision for insurance relates to the costs of self-funded insurance schemes and is essentially long-term in nature. Provisions in respect of discontinued and disposed businesses relate to estimated amounts payable in connection with onerous contracts and claims arising from disposals. The final amount payable remains uncertain as, at the date of approval of these financial statements, there remains a further period during which claims may be received. The timing of any settlement will depend upon the nature and extent of claims received. Surplus provisions of £12 million were credited to the discontinued operations section of the income statement in the period (six months ended 31 March 2008: £7 million, year ended 30 September 2008: £38 million). Provisions for onerous contracts represent the liabilities in respect of short-term and long-term leases on unoccupied properties and other contracts lasting under five years. Provisions for legal and other claims relate principally to the estimated cost of litigation and sundry other claims. The timing of the settlement of these claims is uncertain. Environmental provisions are in respect of potential liabilities relating to the Group's responsibility for maintaining its operating sites in accordance with statutory requirements and the Group's aim to have a low impact on the environment. These provisions are expected to be utilised as operating sites are disposed of or as environmental matters are resolved.

11 Post-employment benefit obligations

The Group operates a number of pension arrangements throughout the world which have been developed in accordance with statutory requirements and local customs and practices. The majority of schemes are self administered and the schemes' assets are held independently of the Group's finances. Pension costs are assessed in accordance with the advice of independent, professionally qualified actuaries. The Group makes employer contributions to the various schemes in existence within the range of 6% - 35% of pensionable salaries. The arrangements are described in more detail in note 23 of the Company's Annual Report for the year ended 30 September 2008.

	Six months to 31 March					Year ended
						30 September
				Total	Total	2008
Post-employment benefit obligations:	UK	USA	Other	2009	2008	Total
Total (surplus)/deficit	£m	£m	£m	£m	£m	£m

Brought forward	(17)	69	81	133	70	70
Business acquisitions	-	-	-	-	4	2
Current service cost	4	4	6	14	12	23
Past service cost/(credit)	-	-	-	-	-	(2)
Amount charged to plan liabilities	38	8	4	50	43	92
Expected return on plan assets	(36)	(6)	(2)	(44)	(44)	(94)
Actuarial (gains)/losses	88	9	2	99	31	77
Employer contributions	(11)	(5)	(9)	(25)	(27)	(56)
Other movements	-	-	-	-	-	3
Currency adjustment	-	18	13	31	9	18

Carried forward	66	97	95	258	98	133


The deficit can be reconciled to the post-employment benefit obligations reported in the consolidated balance sheet as follows:

				As at 31 March		As at
						30 September
Post-employment benefit obligations:				2009	2008	2008
Recognised in the balance sheet				£m	£m	£m

Total deficit of defined benefit pension plans per the above table				258	98	133
Surplus not recognised (1), (2)				1	79	-
Past service cost not recognised (1), (3)				(2)	-	(2)
Post-employment benefit obligations per the balance sheet				257	177	131

(1) The amount disclosed in 2009 relates to overseas schemes.
(2) The amount disclosed in 2008 relates to UK schemes.
(3) To be recognised over the remaining service life in accordance with IAS 19.


The actuarial gain/loss reported in the consolidated statement of recognised income and expense can be reconciled as follows:

				Six months to 31 March		Year ended
						30 September
				2009	2008	2008
Actuarial adjustments				£m	£m	£m

Actuarial (gains)/losses per the above table				99	31	77
Increase/(decrease) in surplus not recognised				1	(13)	(92)
Actuarial (gains)/losses per the statement of recognised income and expense				100	18	(15)

12 Reconciliation of movements in equity

The Company commenced an on market share buy-back programme following the disposal of Select Service Partner in June 2006. This programme was extended following the disposal of Selecta in July 2007. A third phase of the programme commenced on 1 July 2008. During the period, a total of 3,975,000 ordinary shares of 10 pence each were repurchased for consideration of £13 million(1) and cancelled. No shares were repurchased between 31 March 2009 and the date of this report.

	Six months to 31 March
		Share		Capital														Year ended
	Share	premium		redemption		Own		Other		Retained		Minority			Total		Total	30 September
Reconciliation of	capital	account		reserve		shares		reserves		earnings		interests			2009		2008	2008
movements in equity	£m	£m		£m		£m		£m		£m		£m			£m		£m	£m
`
Brought forward	184	178		44		(4)		4,401		(2,616)		19			2,206		2,170	2,170
Total recognised income and expense	-	-		-		-		153		214		8			375		214	536
Issue of shares (for cash)	1	8		-		-		-		-			-		9		22	58
Fair value of share-based payments	-	-		-		-		4		-		-			4		6	14
Settled in new shares (issued by the Company)	-	10		-		-		(10)		-		-			-		-	-
Settled in cash or existing shares (2)	-	-		-		-		(1)		-		-			(1)		-	(5)
Share buy-back (1)	-	-		-		-		-		(13)		-			(13)		(282)	(348)
Buy-out of minority interest	-	-		-		-		-		-		(7)			(7)		(6)	(6)
Fair value adjustments arising on acquisitions (3)	-	-		-		-		-		-		-			-		13	9
Other changes	-	-		-		-		-		-		-			-		-	(6)
	185	196		44		(4)		4,547		(2,415)		20			2,573		2,137	2,422
Dividends paid to Compass shareholders (note 9)	-	-		-		-		-		(148)		-			(148)		(135)	(209)
Dividends paid to minority interest	-	-		-		-		-		-		(1)			(1)		(3)	(4)
(Increase)/decrease in own shares held for staff compensation schemes(4)	-	-		-		2		-		-		-			2		(3)	(3)
Carried forward	185	196		44		(2)		4,547		(2,563)		19			2,426		1,996	2,206

			Six months to 31 March
																		Total other
											Equity					Total		reserves
			Share-based								adjustment			Total other		other		Year ended
			payment		Merger		Revaluation		Translation		for put			reserves		reserves		30 September
			reserve		reserve		reserve		reserve		options			2009		2008		2008
Other reserves			£m		£m		£m		£m		£m			£m		£m		£m

Brought forward			153		4,170		8		78		(8)			4,401		4,312		4,312
Total recognised income and expense			-		-		(1)		154		-			153		11		71
Fair value of share-based payments			4		-		-		-		-			4		10		14
Settled in new shares (issued by the Company)			(10)		-		-		-		-			(10)		-		-
Settled in cash or existing shares (2)			(1)		-		-		-		-			(1)		(4)		(5)
Fair value adjustments arising on acquisition			-		-		-		-		-			-		13		9
Carried forward			146		4,170		7		232		(8)			4,547		4,342		4,401

(1) Including stamp duty and brokers commission.
(2) It was originally anticipated these payments would be satisfied by the issue of new shares. However, they were settled in cash or existing shares purchased in the market.
(3) The fair value adjustments arose on the acquisition of the remaining 50% interest in GR SA and relate to 100% of the shareholding. The portion of the fair value adjustment pertaining to the Group's existing 50% shareholding in GR SA was credited to the revaluation reserve in accordance with IFRS 3.
(4) These shares are held in trust and are used to satisfy some of the Group's liabilities to employees for share options, share bonus and long-term incentive plans.

13 Business combinations

The Group acquired 100% of Kimco Corporation ('Kimco'), a provider of facilities management services to the US Business & Industry sector, on 31 December 2008 for a total consideration of £64 million (£63 million after adjusting for cash acquired). £52 million was paid at closing (£51m after adjusting for cash acquired), with the remaining £12 million being deferred.

In Germany, the Group strengthened its ability to provide support services with the acquisition of 100% of Plural Holding GmbH ('Plural') on 26 March 2009 for a total consideration of £28 million (£21 million after adjusting for cash acquired). £24 million was paid at closing (£17m after adjusting for cash acquired), with the remaining £4 million being deferred.

On 16 December 2008 the Group agreed to acquire a number of food and retail outlets within UK hospitals from the McColl group of companies for consideration of up to £19 million in order to provide additional services in our core Healthcare market. The leases are being transferred on a site-by-site basis. As at 31 March 2009 only two leases had been transferred for a total consideration of £2m.
The Group also made a number of small infill acquisitions in its US vending business for a total consideration of £7m.

On 9 October 2008 the Group bought out the remaining 40% minority interest in Stamfles Food Management Pte, its Singaporean subsidiary which provides food services; on 27 February 2009 it acquired the remaining 35% of Embaton SL, its Spanish subsidiary which provides event and banqueting services; and on 27 March 2009 it acquired the remaining 5% minority interest in Seiyo Food - Compass Group Inc, its Japanese subsidiary, bringing the holding in all three companies to 100%. The combined consideration for the three transactions was £12 million.

					Buy-out of
	Acquisition		Other		minority
	of Kimco		acquisitions		interests	Adjustments (1)	Total

	Book	Fair	Book	Fair	Fair	Fair	Fair
	value	value	value	value	value	value	value
	£m	£m	£m	£m	£m	£m	£m

Net assets acquired

Contract-related and other intangibles arising on acquisition	-	6	-	5	-	-	11
Property, plant and equipment	3	3	3	10	-	1	14
Inventories	1	1	-	-	-	-	1
Trade and other receivables	11	11	10	10	-	-	21
Cash and cash equivalents	1	1	7	7	-	-	8
Other assets	1	1	-	-	-	-	1
Short-term borrowings	-	-	(2)	(3)	-	-	(3)
Trade and other payables	(9)	(9)	(7)	(7)	-	2	(14)
Long-term borrowings	-	-	(6)	(12)	-	-	(12)
Deferred tax liabilities	-	-	-	-	-	15	15
Other liabilities	-	-	-	-	-	(1)	(1)
Minority interest (note 12)	-	-	-	-	7	-	7
Fair value of net assets acquired	8	14	5	10	7	17	48
Goodwill arising on acquisition		50		27	5	(19)	63
Total consideration		64		37	12	(2)	111

Satisfied by

Cash consideration and costs		52		32	12	-	96
Deferred consideration		12		5	-	(2)	15
		64		37	12	(2)	111

Cash flow

Cash consideration		52		32	12	-	96
Cash acquired		(1)		(7)	-	-	(8)
Net cash outflow arising on acquisition		51		25	12	-	88
Deferred consideration and other payments relating to previous acquisitions							4
Prepayment relating to the acquisition of food and retail outlets in hospitals in the UK							2
Total cash outflow arising from the purchase of subsidiary companies and investments in associated undertakings							94

(1) Adjustments to provisional amounts in respect of prior year acquisitions in accordance with International Financial Reporting Standard 3 'Business Combinations' (IFRS 3').

Adjustments made to the fair value of assets acquired include the value of intangible assets, provisions and other adjustments recognised on acquisition in accordance with International Financial Reporting Standard 3 'Business Combinations' ('IFRS 3'). The adjustments made in respect of the acquisitions in the six months to 31 March 2009 are provisional and will be finalised within 12 months of the acquisition date.

The goodwill arising on the acquisition of the businesses represents the premium the Group paid to acquire companies which complement the existing business and create significant opportunities for cross selling and other synergies.
In the period from acquisition to 31 March 2009 the acquisitions contributed revenue of £20 million and operating profit of £1 million to the Group's results. If the acquisitions had occurred on 1 October 2008, Group revenue for the period would have been £6,947 million and total Group operating profit (including associates) would have been £454 million.

14 Reconciliation of operating profit to cash generated by operations

	Six months to 31 March		Year ended
			30 September
	2009	2008	2008
Reconciliation of operating profit to cash generated by continuing operations	£m	£m	£m

Operating profit from continuing operations	449	320	655

Adjustments for:

Amortisation of intangible assets (2)	38	27	81
Amortisation of intangible assets arising on acquisition	2	-	3
Depreciation of property, plant and equipment (2)	68	57	125
(Gain)/loss on disposal of property, plant and equipment / intangible assets	2	-	2
(Gain)/loss on business disposals - other activities	-	-	(6)
Increase/(decrease) in provisions	8	17	21
Increase/(decrease) in post-employment benefit obligations	(10)	(15)	(33)
Share-based payments - charged to profits	4	10	14
Share-based payments - settled in cash or existing shares (1)	(1)	(4)	(5)

Operating cash flows before movement in working capital	560	412	857

(Increase)/decrease in inventories	4	(7)	(13)
(Increase)/decrease in receivables (2)	69	(81)	(108)
Increase/(decrease) in payables	(136)	25	179

Cash generated by continuing operations (2)	497	349	915

(1) It was originally anticipated these payments would be satisfied by the issue of new shares. However, they were settled in cash or existing shares purchased in the market.
(2) Certain contract-related assets previously included within property, plant and equipment and other receivables have been reclassified as intangible assets. The cash flow for the six months to
31 March 2008 has been restated accordingly. There is no impact on the income statement. The cash flow for the year ended 30 September 2008 was originally published on this basis.

15 Reconciliation of net cash flow to movement in net debt

On 30 October 2008, the Group raised and received a total of £187 million (1) in the US private placement market through the issue of five, seven and eight year loan notes.

Loan notes								Nominal value	Redeemable	Interest

US$ private placement								$105m	Oct 2013	6.45%
US$ private placement								$162m	Oct 2015	6.72%
Sterling private placement								£35m	Oct 2016	7.55%



The following 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 during the period.

	Six months to 31 March
										Net
				Total						debt
	Cash		Bank	overdrafts		Derivative	Total	Net	Net	Year ended
	and cash	Bank	and other	and	Finance	financial	gross	debt	debt	30 September
	equivalents	overdrafts	borrowings	borrowings	leases	instruments	debt	2009	2008	2008
Net debt	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m

Brought forward	579	(29)	(1,512)	(1,541)	(53)	10	(1,584)	(1,005)	(764)	(764)
Net increase/(decrease) in cash and cash equivalents	128	-	-	-	-	-	-	128	(449)	(276)
Cash (inflow) from private placement	-	-	(187)	(187)	-	-	(187)	(187)	-	-
Cash (inflow)/outflow from changes in other gross debt	-	(14)	27	13	-	-	13	13	61	141
Cash (inflow)/outflow from repayment of obligations under finance leases	-	-	-	-	7	-	7	7	6	11
(Increase)/decrease in net debt as a result of new finance leases taken out	-	-	-	-	(1)	-	(1)	(1)	(3)	(8)
Currency translation gains/(losses)	23	(13)	(196)	(209)	(10)	1	(218)	(195)	(54)	(121)
Acquisitions and disposals (excluding cash and overdrafts)	-	-	(8)	(8)	(7)	-	(15)	(15)	-	-
Other non-cash movements	-	(1)	(65)	(66)	-	63	(3)	(3)	(7)	12
Carried forward	730	(57)	(1,941)	(1,998)	(64)	74	(1,988)	(1,258)	(1,210)	(1,005)

Other non-cash movements are comprised as follows:

								Six months to 31 March		Year ended
										30 September
								2009	2008	2008
Other non-cash movements in net debt								£m	£m	£m

Bank overdrafts								(1)	-	-

Amortisation of the fair value adjustment in respect of the £250 million sterling Eurobond redeemable in 2014								2	2	4
Swap monetisation credit								4	4	9
Unrealised net gains/(losses) on bank and other borrowings in a designated fair value hedge								(71)	(23)	(11)
Bank and other borrowings								(65)	(17)	2

Changes in the value of derivative financial instruments								63	10	10

Other non-cash movements								(3)	(7)	12

(1) Originally estimated to be £185 million in note 35 of the Group's 2008 Annual Report.

16 Contingent liabilities

As at 31 March

As at

30 September

2009

2008

Performance bonds, guarantees and indemnities (1)

£m

Performance bonds, guarantees and indemnities (including those of associated undertakings)

350

229

301

(1) Excludes bonds, guarantees and indemnities in respect of self-insurance liabilities, post-employment obligations and borrowings (including finance and operating leases) recorded on the balance sheet

or disclosed in note 18.

Performance bonds, guarantees and indemnities

The Company and certain subsidiary undertakings have, in the normal course of business, given guarantees and entered into counter-indemnities in respect of such guarantees relating to the Group's own contracts and / or the Group's share of certain contractual obligations of joint ventures and associates. Where the Group enters into such arrangements, it does so in order to provide assurance to the beneficiary that it will fulfil its existing contractual obligations. The issue of such guarantees and indemnities does not therefore increase the Group's overall exposure and the disclosure of such performance bonds, guarantees and indemnities is given for information purposes only.

Eurest Support Services

On 21 October 2005, the Company announced that it had instructed Freshfields Bruckhaus Deringer to conduct an investigation into the relationships between Eurest Support Services ('ESS') (a member of the Group), IHC Services Inc. ('IHC') and the United Nations. Ernst & Young assisted Freshfields Bruckhaus Deringer in this investigation. On 1 February 2006, it was announced that the investigation had concluded.

The investigation established serious irregularities in connection with contracts awarded to ESS by the UN. The work undertaken by Freshfields Bruckhaus Deringer and Ernst & Young gave no reason to believe that these issues extended beyond a few individuals within ESS to other parts of ESS or the wider Compass Group of companies.

The Group settled all outstanding civil litigation against it in relation to this matter in October 2006, but litigation continues between competitors of ESS, IHC and other parties involved in UN procurement.

IHC's relationship with the UN and ESS was part of a wider investigation into UN procurement activity being conducted by the United States Attorney's Office for the Southern District of New York, and with which the Group co-operated fully. The current status of that investigation is uncertain and a matter for the US authorities. Those investigators could have had access to sources unavailable to the Group, Freshfields Bruckhaus Deringer or Ernst & Young, and further information may yet emerge which is inconsistent with, or additional to, the findings of the Freshfields Bruckhaus Deringer investigation, which could have an adverse impact on the Group. The Group has however not been contacted by, or received further requests for information from, the United States Attorney's Office for the Southern District of New York in connection with these matters since January 2006. The Group has cooperated fully with the UN throughout.

Eurest (Portugal) Sociedade Europeia Restaurantes LDA

In February 2007, the Group's Portuguese business, Eurest (Portugal) Sociedade Europeia Restaurantes LDA, was visited by the Portuguese Competition Authority ('PCA') as part of an investigation into possible past breaches of competition law by the Group and other caterers in the sector. The PCA investigation relates to a part of the Portuguese catering business which services mainly public sector contracts. The Group is cooperating fully with the PCA. The investigation has been ongoing for some while and it is likely that it will take sometime to complete. The outcome cannot be predicted at this point. Revenues of the Portuguese business for the year ended 30 September 2008 were £110 million (€145 million).

Other litigation

The Group is also involved in various other legal proceedings incidental to the nature of its business and maintains insurance cover to reduce financial risk associated with claims related to these proceedings. Where appropriate, provisions are made to cover any potential uninsured losses.

Outcome

Although it is not possible to predict the outcome of these proceedings, or any claim against the Group related thereto, in the opinion of the directors, any uninsured losses resulting from the ultimate resolution of these matters will not have a material effect on the financial position of the Group.

Minimum profits guarantee

The Group has provided a guarantee to one of its joint venture partners over the level of profits which will accrue to them in future periods. The maximum amount payable under this guarantee is £35 million, which would be payable in respect of the period from 1 July 2007 to 31 December 2010. Based on the latest management projections, no overall liability is expected to arise in relation to this guarantee; however, the phasing of profits over the period covered by this guarantee is expected to give rise to a number of annual payments / repayments between the parties.

17 Capital commitments

	As at 31 March		As at
			30 September
	2009	2008	2008
Capital commitments	£m	£m	£m

Contracted for but not provided for	69	23	28

18 Operating lease and concessions commitments

The Group leases offices and other premises under non-cancellable operating leases. The leases have varying terms, purchase options, escalation clauses and renewal rights. The Group has some leases that include revenue-related rental payments that are contingent on future levels of revenue.

There has been no material change to the level of future minimum rentals payable under non-cancellable operating leases and concession agreements since 30 September 2008.

19 Related party transactions

The following transactions were carried out with related parties of Compass Group PLC:

Subsidiaries

Transactions between the ultimate parent company and its subsidiaries, and between subsidiaries, have been eliminated on consolidation.

Joint ventures

There were no significant transactions between joint ventures or joint venture partners and the rest of the Group during the period save for a payment of £3 million (which is expected to be recovered in subsequent years) under the terms of the minimum profits guarantee referred to in note 16.

Associates

There were no significant transactions with associated undertakings during the period.

Key management personnel

During the period there were no material transactions or balances between the Group and its key management personnel or members of their close family, other than from remuneration.

20 Post balance sheet events

There have been no material post balance sheet events.

21 Exchange rates


	Six months to 31 March		Year ended
			30 September
Exchange rates	2009	2008	2008

Average exchange rate for period
Australian Dollar	2.24	2.24	2.19
Brazilian Real	3.39	3.56	3.40
Canadian Dollar	1.84	2.00	1.99
Euro	1.16	1.36	1.32
Japanese Yen	147.71	220.10	212.97
Norwegian Krone	10.25	10.84	10.53
South African Rand	14.59	14.53	14.66
Swedish Krona	12.18	12.77	12.40
Swiss Franc	1.75	2.23	2.14
UAE Dirham	5.60	7.41	7.25
US Dollar	1.52	2.02	1.97

Closing exchange rate as at end of period
Australian Dollar	2.06	2.17	2.26
Brazilian Real	3.26	3.46	3.44
Canadian Dollar	1.78	2.03	1.90
Euro	1.08	1.26	1.27
Japanese Yen	140.41	198.35	189.23
Norwegian Krone	9.51	10.17	10.54
South African Rand	13.71	16.08	14.76
Swedish Krona	11.68	11.85	12.43
Swiss Franc	1.64	1.99	2.00
UAE Dirham	5.26	7.31	6.55
US Dollar	1.43	1.99	1.78


(1) Average rates are used to translate the income statement and cash flow. Closing rates are used to translate the balance sheet. Only the most significant currencies are shown.

Notes to Editors:

(a) Compass Group is the world's largest foodservice company with annual revenue of over £11 billion operating in 55 countries.

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

The five key value drivers are:

MAP 1: Client sales and marketing

MAP 2: Consumer sales and marketing

MAP 3: Cost of food

MAP 4: Unit costs

MAP 5: Above unit overheads

Ex dividend date:	1 July 2009
Record date:	3 July 2009
Payment date:	3 August 2009

(d) The Interim Results Announcement was approved by the Directors on 13 May 2009.

The Interim Results Announcement does not comprise statutory accounts within the meaning of section 240 of the Companies Act 1985 or Section 434 of the Companies Act 2006.

(e) Forward looking statements

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

(f) A presentation for analysts and investors will take place at 9:30 a.m. (BST/London) on Wednesday 13 May 2009 at Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ.

The live presentation can also be accessed via both a teleconference and webcast:

To listen to the live presentation via teleconference, dial +44 (0) 20 8609 0581.
To view the presentation slides and/or listen to a live webcast of the presentation, go to www.compass-group.com or www.cantos.com.
Please note that remote listeners will not be able to ask questions during the Q&A session.

A replay recording of the presentation will also be available via teleconference and webcast:

A teleconference replay of the presentation will be available from 12:00 noon (BST/London) on Wednesday 13 May 2009 for five working days. To hear the replay, dial +44 (0) 208 609 0289, passcode 262220#.
A webcast replay of the presentation will be available for six months, at www.compass-group.com and www.cantos.com