Final Results - Pre-tax Profit Up 21.7%, Part 2
Compass Group PLC
9 December 1999
Part 2
COMPASS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 1999
Before
goodwill Goodwill Total As restated
amortisation amortisation 1999 1998
Notes £m £m £m £m
Turnover
Continuing operations 4,699.5 - 4,699.5 4,213.8
Acquisitions 115.1 - 115.1 -
-------------------------------------------
Total turnover 1 4,814.6 - 4,814.6 4,213.8
Operating costs (4,560.6) (2.6)(4,563.2) (3,999.4)
-------------------------------------------
Operating profit
Continuing operations 250.1 (0.7) 249.4 214.4
Acquisitions 3.9 (1.9) 2.0 -
-------------------------------------------
254.0 (2.6) 251.4 214.4
-------------------------------------------
Share of profits of associated
undertakings
Continuing operations 5.5 - 5.5 3.6
Acquisitions 1.9 (1.0) 0.9 -
-------------------------------------------
1 7.4 (1.0) 6.4 3.6
-------------------------------------------
Total operating profit :
Group and share
of associated
undertakings 1 261.4 (3.6) 257.8 218.0
Interest receivable and
similar income 8.1 - 8.1 8.3
Interest payable and
similar charges 2 (75.9) - (75.9) (67.2)
-------------------------------------------
Profit on ordinary
activities before
taxation 193.6 (3.6) 190.0 159.1
Tax on profit on
ordinary activities 3 (48.8) - (48.8) (41.4)
-------------------------------------------
Profit on ordinary
activities after taxation 144.8 (3.6) 141.2 117.7
Equity minority interests (4.2) - (4.2) (3.2)
-------------------------------------------
Profit for the financial
year 140.6 (3.6) 137.0 114.5
Equity dividends 4 (42.9) - (42.9) (37.5)
-------------------------------------------
Profit for the year
retained 13 97.7 (3.6) 94.1 77.0
====== ====== ====== ======
Basic earnings per
ordinary share 5 20.3p 17.2p
====== ======
Basic earnings per
ordinary share -
excluding goodwill
amortisation 5 20.9p 17.2p
====== ======
Diluted earnings per
ordinary share 5 19.9p 17.0p
====== ======
Diluted earnings per
ordinary share -
excluding goodwill
amortisation 5 20.4p 17.0p
====== ======
COMPASS GROUP PLC
CONSOLIDATED BALANCE SHEET
AS AT 30 SEPTEMBER 1999
As restated
1999 1998
Notes £m £m
Fixed assets
Intangible assets 6 106.5 -
Tangible assets 7 432.0 372.9
Investments 8 94.7 32.2
-------------------
633.2 405.1
-------------------
Current assets
Stocks 100.3 90.0
Debtors:amounts falling due within one year 9 598.1 507.6
amounts falling due after more than one year 9 64.5 53.4
Cash at bank and in hand 121.4 72.8
-------------------
884.3 723.8
Creditors:amounts falling due within one year 10 (1,043.6) (982.7)
-------------------
Net current liabilities (159.3) (258.9)
-------------------
Total assets less current liabilities 473.9 146.2
-------------------
Creditors: amounts falling due after more than
one year 11
Other creditors (961.2) (714.0)
Convertible bond (215.4) (214.9)
--------------------
(1,176.6) (928.9)
--------------------
Provisions for liabilities and charges 12 (84.6) (93.3)
Equity minority interests (10.7) (5.6)
--------------------
Net liabilities (798.0) (881.6)
====== ======
Capital and reserves
Called up share capital 17.0 16.9
Share premium account 13 823.3 816.5
Profit and loss account 13 (1,638.3) (1,715.0)
--------------------
Total equity shareholders' funds (798.0) (881.6)
====== =======
COMPASS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 1999
1999 1998
£m £m £m £m
Net cash inflow from operating activities
(note I) 303.1 257.0
Dividends from associated undertakings 1.5 0.7
Returns on investments and servicing of
finance
Interest received 9.2 8.0
Interest paid (72.4) (59.2)
Interest element of finance lease rental
payments (2.4) (1.9)
Dividends paid to minority interests (1.0) (0.9)
--------- ---------
Net cash outflow from returns on
investments and servicing of finance (66.6) (54.0)
Taxation
Tax received 15.3 1.4
Tax paid (37.8) (46.2)
--------- ---------
Net tax paid (22.5) (44.8)
--------- ---------
Free cash flow 215.5 158.9
--------- ---------
Capital expenditure and financial
investment
Purchase of tangible fixed assets (137.4) (133.8)
Sale of tangible fixed assets 11.9 16.0
Sale/(purchase) of own shares, net 1.8 (1.6)
--------- ---------
Total capital expenditure and financial
investment (123.7) (119.4)
Acquisitions and disposals (note IV)
Purchase of subsidiary companies and
investment in associated undertakings (188.3) (76.4)
Sale of subsidiary companies 4.8 14.8
--------- ---------
Total acquisitions and disposals (183.5) (61.6)
Equity dividends paid (39.0) (33.8)
--------- ---------
Net cash outflow from investing activities (346.2) (214.8)
--------- ---------
Net cash outflow before financing (130.7) (55.9)
--------- ---------
Financing
Issue of ordinary share capital 1.8 4.2
Debt due within a year:
Decrease in bank loans and loan notes (87.0) (24.5)
Debt due after a year:
Increase in bank loans and loan notes 278.8 48.4
Capital element of finance lease rentals (9.5) (9.2)
--------- ---------
Net cash inflow from financing 184.1 18.9
--------- ---------
Increase /(decrease) in cash in the year 53.4 (37.0)
===== =====
Reconciliation of net cash flow to movement
in net debt (note II)
Increase /(decrease) in cash in the year 53.4 (37.0)
Cash inflow from increase in
debt and lease finance (182.3) (14.7)
--------- ---------
Change in net debt resulting from cash flows (128.9) (51.7)
Changes in finance leases (11.9) (27.7)
Effect of foreign exchange rate changes 19.0 12.3
--------- ---------
Movement in net debt in the year (121.8) (67.1)
Opening net debt (943.8) (876.7)
--------- ---------
Closing net debt (1,065.6) (943.8)
======= =====
COMPASS GROUP PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 1999
1999 1998
£m £m
I Reconciliation of operating profit to net
cash inflow from operating activities:
Operating profit 257.8 218.0
Depreciation and amortisation 86.0 74.3
Profit on disposal of fixed assets and businesses (4.1) (3.4)
Share of profit of associated undertakings (6.4) (3.6)
Cash flow relating to provisions for liabilities
and charges (10.6) (7.0)
Increase in stocks (4.9) (3.4)
Increase in debtors (73.5) (41.0)
Increase in creditors 58.8 23.1
----------------------
Net cash inflow from operating activities 303.1 257.0
====== ======
Other
Cash Exchange non-cash
1 Oct 1998 flow movements changes 30 Sep 1999
£m £m £m £m £m
II Analysis of net debt:
Cash at bank and in hand 72.8 58.2 (9.6) - 121.4
Overdrafts (12.2) (4.8) 1.1 - (15.9)
----------------------------------------------
60.6 53.4 (8.5) - 105.5
----------------------------------------------
Debt due within one year (99.5) 87.0 0.3 (13.7) (25.9)
Debt due after one year (869.1)(278.8) 25.7 13.7 (1,108.5)
Finance leases (35.8) 9.5 1.5 (11.9) (36.7)
----------------------------------------------
(1,004.4)(182.3) 27.5 (11.9) (1,171.1)
----------------------------------------------
Total (943.8)(128.9) 19.0 (11.9) (1,065.6)
===== ===== ===== ===== =======
COMPASS GROUP PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (continued)
1999 1999 1998 1998
£m £m £m £m
Purchases Disposals Purchases Disposals
IIIPurchase and disposal of subsidiary
companies and investments in
associated undertakings:
Net assets acquired/(disposed of):
Tangible fixed assets 10.9 (0.8) 24.0 (6.2)
Investment in associated undertakings 66.8 - 0.2 -
Stocks 7.1 (0.1) 4.3 (0.3)
Debtors 42.9 (1.7) 36.7 (7.1)
Cash 6.6 (1.6) 6.7 (0.9)
Bank overdrafts/loans (0.2) - (18.0) -
Creditors (54.9) 2.2 (58.9) 8.3
Provisions (1.5) - (1.0) 0.5
Tax 1.6 - (3.5) -
Minority interests 0.4 - (2.1) 1.2
Share of net assets already owned - - 4.5 -
------- ------- ------- -------
79.7 (2.0) (7.1) (4.5)
Profit on disposal and costs and
liabilities retained - (3.7) - (0.7)
Goodwill acquired/(disposed of) 125.7 (5.8) 137.5 (12.0)
------- ------- ------- -------
205.4 (11.5) 130.4 (17.2)
===== ==== ===== ====
Satisfied by:
Cash payable/(receivable) 145.1 (6.4) 73.1 (15.7)
Shares - - 35.9 -
Deferred consideration payable 60.3 - 21.4 -
Deferred consideration receivable - (5.1) - (1.5)
------- ------- ------- -------
205.4 (11.5) 130.4 (17.2)
===== ==== ===== ====
IV Analysis of net outflow of cash in respect of
the purchase and disposal of subsidiary
companies and investments in associated
undertakings:
Cash consideration paid/(received net
of liabilities settled) 145.1 (6.4) 73.1 (15.7)
Cash (acquired)/disposed of (6.6) 1.6 (6.7) 0.9
Overdrafts acquired 0.2 - 0.1 -
------- ------- ------- -------
138.7 (4.8) 66.5 (14.8)
Deferred consideration and costs
relating to previous acquisitions 49.6 - 9.9 -
------- ------- ------- -------
188.3 (4.8) 76.4 (14.8)
===== ==== ==== ====
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS
1. Turnover and operating profit
Continuing
operations Acquisitions 1999 1998
£m £m £m £m
Turnover
Foodservice:
Geographical analysis:
United Kingdom 813.2 - 813.2 746.6
Continental Europe and the
rest of the world 2,305.9 115.1 2,421.0 2,073.2
North America 1,580.4 - 1,580.4 1,394.0
----------------------------------------
4,699.5 115.1 4,814.6 4,213.8
======= ===== ======= =======
Operating profit (before goodwill amortisation)
Foodservice:
- The Company and its subsidiary
companies 250.1 3.9 254.0 214.4
- Associated undertakings 5.5 1.9 7.4 3.6
----------------------------------------
255.6 5.8 261.4 218.0
----------------------------------------
Geographical analysis:
United Kingdom 60.7 - 60.7 54.3
Continental Europe and the rest of
the world:
- The Company and its subsidiary
companies 114.2 3.9 118.1 98.5
- Associated undertakings 5.5 1.9 7.4 3.6
North America 75.2 - 75.2 61.6
----------------------------------------
255.6 5.8 261.4 218.0
----------------------------------------
Amortisation of goodwill:
- Continental Europe and the rest
of the world (0.6) (2.9) (3.5) -
- North America (0.1) - (0.1) -
----------------------------------------
254.9 2.9 257.8 218.0
===== ===== ===== =====
Operating profit after goodwill amortisation for the year ended 30 September
1999 relates to foodservice analysed as UK £60.7m, Continental Europe and
the rest of the world £122.0m, and North America £75.1m (1998: £54.3m,
£102.1m and £61.6m respectively).
2. Interest payable and similar charges
1999 1998
£m £m
Bank loans and overdrafts 38.8 32.1
Other loans 37.1 35.1
----------------
75.9 67.2
==== ====
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. Tax on profit on ordinary activities
1999 1998
£m £m
UK corporation tax 10.0 16.2
Overseas tax payable 32.4 21.8
------- -------
42.4 38.0
------- -------
UK deferred tax 1.4 3.0
Overseas deferred tax 5.1 4.8
------- -------
6.5 7.8
------- -------
Adjustments in respect of prior years:
UK corporation tax 2.1 (6.9)
UK deferred tax (4.4) (7.3)
Overseas tax payable (0.2) (15.0)
Overseas deferred tax 0.3 23.4
------- -------
(2.2) (5.8)
------- -------
Overseas tax on share of profits of associated
undertakings 2.1 1.4
------- -------
48.8 41.4
==== ====
United Kingdom corporation tax has been charged at 30.5% (1998: 31%). The
Group tax charge is reduced below this rate since tax is charged at a lower
effective rate on overseas earnings.
4. Dividends
1999 1998
Per share £m Per share £m
Dividends on ordinary shares of 2.5p each
Interim 2.00p 13.6 1.75p 11.8
Proposed final 4.35p 29.5 3.80p 25.7
----------------------------
6.35p 43.1 5.55p 37.5
==== ====
ESOP dividends received (0.2) -
----- -----
42.9 37.5
==== ====
The 1998 interim dividend was paid as a Foreign Income Dividend and has been
restated following the share sub-division on 12 June 1998.
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. Earnings per share
Before Including
goodwill goodwill
amortisation amortisation
1999 1999 1998
£m £m £m
Attributable profit for basic earnings
per share 140.6 137.0 114.5
Interest on convertible bonds net of tax 8.8 8.8 8.8
------------------------------
Attributable profit for diluted earnings
per share 149.4 145.8 123.3
===== ===== =====
millions millions millions
Average number of shares in issue 677.5 677.5 662.1
Shares to be issued - - 8.9
Average number of shares held by ESOP (3.7) (3.7) (6.2)
------------------------------
Average number of shares for basic
earnings per share 673.8 673.8 664.8
Dilutive share options 4.8 4.8 7.3
Conversion of 5.75% convertible bond
due 2007 53.0 53.0 53.0
------------------------------
Average number of shares for diluted
earnings per share 731.6 731.6 725.1
===== ===== =====
Basic earnings per share 20.9p 20.3p 17.2p
===== ===== =====
Diluted earnings per share 20.4p 19.9p 17.0p
===== ===== =====
Earnings per share excluding goodwill amortisation has been shown to disclose
the impact of goodwill amortisation on underlying earnings.
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
6. Intangible fixed assets
1999
£m
Goodwill
Cost
At 1 October 1998 -
Additions 125.7
Currency adjustment (16.8)
----------
At 30 September 1999 108.9
----------
Amortisation
At 1 October 1998 -
Charge for the year 2.6
Currency adjustment (0.2)
----------
At 30 September 1999 2.4
----------
Net book amount
At 30 September 1999 106.5
======
At 30 September 1998 -
======
At 30 September 1999 the above goodwill primarily relates to the acquisition
of 50% of GR SA and the acquisition of P&O Australia. Further information
on these acquisitions can be found in note 14.
Goodwill on the above acquisitions is being amortised over 20 years which is
considered to be its estimated useful life.
7. Tangible fixed assets
Freehold Long Short Plant Fixtures
land and leasehold leasehold and and
buildings property property machinery fittings Total
£m £m £m £m £m £m
Cost
At 1 October 1998
(as restated) 71.2 4.0 38.8 350.9 218.0 682.9
Currency adjustment (1.3) (0.1) 0.5 (4.3) (7.2)(12.4)
Additions 15.0 1.1 5.6 76.4 51.2 149.3
Businesses acquired 1.8 - - 17.5 5.2 24.5
Disposals (7.5) (0.1) (1.8) (19.0) (13.4)(41.8)
Businesses disposed of (0.9) - - - (2.9) (3.8)
Transfer between
categories (11.6) 0.2 0.1 2.3 9.0 -
--------------------------------------------------
At 30 September 1999 66.7 5.1 43.2 423.8 259.9 798.7
===== ===== ===== ===== ===== =====
Depreciation
At 1 October 1998
(as restated) 8.4 1.3 12.7 177.4 110.2 310.0
Currency adjustment (0.7) - 0.1 (2.9) (3.5) (7.0)
Charge for the year 3.8 0.3 2.6 48.3 28.4 83.4
Businesses acquired 0.3 - - 8.7 4.6 13.6
Disposals (0.2) (0.1) (0.4) (16.2) (13.4)(30.3)
Businesses disposed of (0.5) - - - (2.5) (3.0)
Transfer between categories(3.1) 0.3 - (0.2) 3.0 -
-------------------------------------------------
At 30 September 1999 8.0 1.8 15.0 215.1 126.8 366.7
===== ===== ===== ===== ===== =====
Net book amount
At 30 September 1999 58.7 3.3 28.2 208.7 133.1 432.0
-------------------------------------------------
At 30 September 1998 62.8 2.7 26.1 173.5 107.8 372.9
===== ===== ===== ===== ===== =====
The net book amount of the Group's tangible fixed assets includes, in
respect of assets held under finance leases, freehold buildings and long and
short leasehold property £1.8m (1998: £10.9m), plant and machinery £21.2m
(1998: £18.8m) and fixtures and fittings £8.2m (1998: £5.4m).
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
8. Investments held as fixed assets
Investment in
associated Own
undertakings shares Total
£m £m £m
Cost
At 1 October 1998 17.3 14.9 32.2
Additions 66.8 2.2 69.0
Disposals - (4.0) (4.0)
Share of retained profits
less losses 5.3 - 5.3
Dividends received (1.5) - (1.5)
Goodwill amortisation (1.0) - (1.0)
Amortisation - (3.7) (3.7)
Currency adjustments/other
movements (1.6) - (1.6)
------- ------- -------
At 30 September 1999 85.3 9.4 94.7
==== ==== ====
Investment in associated undertakings includes £81.1m being the Group's
share of the net tangible assets of Selecta Group and £50.4m of goodwill
shown net of accumulated amortisation of £1.0m. Additions in the year
relate principally to a further 13.3% of Selecta Group for £63.7m including
goodwill of £51.4m bringing the Group's total investment in the issued share
capital of Selecta Group to 33.3%. Selecta is incorporated in Switzerland,
draws up its annual accounts to 31 December each year and its main business
is in the operation of vending machines in Europe. Selecta Group is listed
on a recognised investment exchange and the market value of the Group's
holding was £195.4m at 30 September 1999.
Own shares held by the Group represent 2,247,967 (1998: 5,369,914) shares in
Compass Group PLC held by the Compass Group Employee Share Trust (ESOP).
These shares are listed on a recognised investment exchange and their market
value at 30 September 1999 was £13.4m (1998: £29.7m). The nominal value
held at 30 September 1999 was £0.1m (1998: £0.1m). The dividends on these
shares of £0.2m have been netted against external dividends paid.
The ESOP is a discretionary trust for the benefit of employees and the
shares held are used to satisfy the Group's liabilities to employees for
share options and long term incentive plans. All of the shares held by the
ESOP will be required to be made available in this way. The net cost to the
Group of these shares is charged to the profit and loss account over the
period to which they relate.
9.Debtors
As restated
1999 1998
£m £m
Amounts falling due within one year:
Trade debtors 492.4 408.1
Overseas tax recoverable 2.7 11.4
Other debtors 55.7 48.6
Prepayments and accrued income 47.3 39.5
-------- -------
598.1 507.6
===== =====
Amounts falling due after more than one year:
Overseas tax recoverable 2.1 1.1
Other debtors 43.6 34.2
Deferred tax 18.8 18.1
------- -------
64.5 53.4
===== =====
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
9.Debtors (continued)
Provided Unprovided
1999 1998 1999 1998
Deferred tax analysis £m £m £m £m
Depreciation in excess of
capital allowances 1.6 (3.4) - -
Other timing differences 9.4 10.3 0.5 -
Overseas deferred tax 7.8 11.2 64.4 60.4
------- ------- ------- -------
18.8 18.1 64.9 60.4
==== ==== ==== ====
The analysis of unprovided deferred tax does not include any potential tax
liabilities which might arise in the event of the distribution of
unappropriated profits or reserves of overseas subsidiary companies as there
is no intention to distribute such profits or reserves.
£m
The movements on deferred tax are as follows:
At 1 October 1998 18.1
Arising from acquisitions 3.4
Charged to profit and loss account (2.4)
Currency adjustment (0.1)
Other movements (0.2)
-------
At 30 September 1999 18.8
====
10.Creditors
As restated
1999 1998
£m £m
Amounts falling due within one year:
Loan notes 18.2 23.3
Bank loans 7.7 76.2
Bank overdrafts 15.9 12.2
Obligations under finance leases 8.8 8.5
Trade creditors 388.5 325.2
Corporation tax payable 22.3 19.9
Overseas tax 50.7 39.6
Other tax and social security costs 102.1 109.8
Other creditors 93.8 79.3
Deferred consideration 66.2 44.8
Accruals and deferred income 239.9 218.2
Proposed dividend 29.5 25.7
---------- ----------
1,043.6 982.7
====== ======
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. Creditors
As restated
1999 1998
£m £m
Amounts falling due after more
than one year:
Sterling bond 200.0 -
Loan notes 192.4 209.0
Bank loans 500.7 445.2
Obligations under finance leases 27.9 27.3
Other creditors 38.4 31.0
Deferred consideration 1.8 1.5
--------- ---------
961.2 714.0
Convertible bond 215.4 214.9
---------- ---------
1,176.6 928.9
====== =====
All amounts due under bonds, loan notes and bank facilities are shown net of
unamortised issue costs.
The sterling bond is a fixed term, fixed interest bond redeemable in 2010
and bears interest at a rate of 7.125% per annum. The sterling bond has
been swapped to floating rates based on LIBOR plus a margin for the whole
term of the bond.
The convertible bond is an unsubordinated bond with a coupon of 5.75%
maturing in 2007 and convertible into fully paid ordinary shares of 2.5p
each at a price of £4.15 per share. The Group has the option from October
2002 to redeem the bond in whole or in part. If the conversion rights
attaching to the bond outstanding at 30 September 1999 were exercised,
53,012,048 ordinary shares of 2.5p each would be issued.
The Group has fixed term, fixed interest private placements totalling
US$377.1m (£227.8m) at interest rates between 7.55% and 8.015%. Of this
amount 68% has been swapped to floating rates based on US LIBOR plus a
margin. US$185.0m (£111.7m) is repayable in five to twelve years.
Maturity of financial liabilities and other creditors falling due after more
than one year as at 30 September 1999 is as follows:
1999 1998
Bonds Bank Bonds Bank
and loan loans and and loan loans and
notes overdrafts Other Total notes overdrafts Other Total
£m £m £m £m £m £m £m £m
In more than one
year but not
more than two
years 12.9 358.5 21.8 393.2 13.0 10.3 21.2 44.5
In more than two
years but not
more than five
years 82.7 139.8 32.8 255.3 87.7 433.5 19.2 540.4
In more than
five years 512.2 2.4 13.5 528.1 323.2 1.4 19.4 344.0
---------------------------------------------------------------
607.8 500.7 68.1 1,176.6 423.9 445.2 59.8 928.9
In one year
or less, or
on demand 18.2 23.6 75.0 116.8 23.3 88.4 53.3 165.0
-----------------------------------------------------------------
626.0 524.3 143.1 1,293.4 447.2 533.6 113.1 1,093.9
===== ===== ===== ======= ===== ===== ===== =======
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. Creditors (continued)
As restated
1999 1998
£m £m
Bank loans:
Repayable by instalments within five years 11.0 7.2
Repayable otherwise than by instalments within five years 495.0 512.8
Repayable by instalments after five years 0.2 1.3
Repayable otherwise than by instalments after five years 2.2 0.1
------- -------
508.4 521.4
Less: amounts falling due within one year 7.7 76.2
-------- -------
Amounts falling due after more than one year 500.7 445.2
===== =====
12.Provisions for liabilities and charges
Insurance,
pensions and Legal
other post and
employment Onerous other Reorganisation
benefits contracts claims provisions Other Total
£m £m £m £m £m £m
At 1 October 1998
(as restated) 51.0 9.4 12.3 11.5 9.1 93.3
Arising from
acquisitions 0.5 1.0 - - - 1.5
Expenditure in the year (3.6) - (2.5) (4.2) (0.3)(10.6)
Charged to profit and
loss account 4.7 - 1.3 0.5 - 6.5
Credited to profit and
loss account - (1.5) - - (3.5) (5.0)
Reclassified (0.9) - (0.2) - - (1.1)
Currency adjustment 0.1 - (0.1) - - -
------------------------------------------------
At 30 September 1999 51.8 8.9 10.8 7.8 5.3 84.6
===== ===== ===== ==== ==== ====
Insurance, pensions and other post employment benefits relate to the costs
of self funded pension and insurance schemes or statutory retirement
benefits principally for overseas subsidiary companies and are essentially
long term in nature. Onerous contracts represent the liabilities in respect
of leases on non-utilised properties and other contracts. The duration of
these contracts ranges from 2 to 17 years. Legal and other claims relate
principally to provisions for the cost of litigation in the USA and sundry
other claims. The timing of the settlement of these claims is uncertain.
Reorganisation provisions are for the committed costs of integration of
businesses. Integration is ongoing and is anticipated to be substantially
complete within the next two years.
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
13. Reserves
Consolidated profit and loss account
Share Before
premium goodwill Goodwill
account written off written off Total
£m £m £m £m
At 1 October 1998 816.5 420.7 (2,135.7) (1,715.0)
Foreign exchange reserve
movements - (5.9) - (5.9)
Premium on ordinary shares
issued, net of expenses 6.8 (3.6) - (3.6)
Retained profit for the year - 94.1 - 94.1
Transfer on disposal of
subsidiary companies - - 5.8 5.8
Adjustments to goodwill arising
on purchase of subsidiary
companies and investments
in associated undertakings
prior to 1 October 1998 - - (13.7) (13.7)
--------------------------------------------
At 30 September 1999 823.3 505.3 (2,143.6) (1,638.3)
====== ====== ======= =======
Goodwill
Goodwill written off represents the excess of the consideration for the
operations acquired prior to 1 October 1998 over the fair value of the net
assets acquired. The goodwill has been written off to profit and loss
account on consolidation.
During the year, the Group contributed £3.6m, net of tax (1998: £2.4m) to
the Qualifying Employee Share Ownership Trust ('QUEST') for shares issued
during the year.
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. Acquisitions
Businesses acquired during the year are shown below. They principally
relate to the acquisition of 50% of GR SA, funded by £49.8 million in cash,
and the acquisition of P&O Australia, funded by £56.6 million in cash, paid
1 November 1999.
Other acquisitions represents a number of small businesses and minority
interests acquired.
Adjustments have been made to reflect the provisional fair value of assets
acquired as follows:
Accounting Fair value
Consideration Net assets Fair value policy of assets
and costs acquired adjustments realignment acquired Goodwill
£m £m £m £m £m £m
GR SA 49.8 8.9 (5.2) (5.4) (1.7) 51.5
P&O Australia 56.6 16.1 (4.9) (1.5) 9.7 46.9
Other
acquisitions
in the year 32.2 6.1 (0.6) (0.6) 4.9 27.3
-----------------------------------------------------------
Total
acquisitions
in the year 138.6 31.1 (10.7) (7.5) 12.9 125.7
===== ===== ===== ===== ===== =====
Net Accounting Fair value
assets Fair value policy to the
acquired adjustments realignment Group
£m £m £m £m
Intangible fixed assets 11.2 - (11.2) -
Tangible fixed assets 14.6 (2.3) (1.4) 10.9
Stocks 7.1 - - 7.1
Debtors 43.7 (0.8) - 42.9
Deferred tax 2.0 1.4 - 3.4
Cash 6.6 - - 6.6
Bank overdrafts (0.2) - - (0.2)
Creditors (45.7) (9.1) (0.1) (54.9)
Provisions (0.5) (1.0) - (1.5)
Tax (1.0) (0.8) - (1.8)
Minority interests (6.7) 1.9 5.2 0.4
------------------------------------------
31.1 (10.7) (7.5) 12.9
===== ===== ===== =====
Fair value and accounting policy realignment adjustments principally relate
to:- writing off intangible assets in accordance with Group accounting
policy, harmonisation of depreciation policies, and recognising pension
commitments and other liabilities not previously recorded.
All acquisitions were accounted for under the acquisitions method of
accounting.
Adjustments made to the fair value of assets are provisional owing to the
short period of ownership particularly with respect to P&O Australia which
was acquired on 24 September 1999.
The contribution of acquisitions to Group profit is shown in note 1.
There was no material difference between operating profits arising from
acquisitions and cash flows contributed by those acquisitions.
COMPASS GROUP PLC
NOTES TO THE FINANCIAL STATEMENTS (continued)
15. Exchange rates
Exchange rates for major currencies were:
1999 1999 2000
Translation Closing Translation
rate rate rate
Australian Dollar 2.73 2.53 2.43
Belgian/Luxembourg Franc 59.87 62.42 n/a
Canadian Dollar 2.38 2.43 2.36
Danish Krone 11.05 11.50 11.15
Dutch Guilder 3.27 3.41 n/a
French Franc 9.73 10.15 n/a
German Mark 2.90 3.03 n/a
Norwegian Krone 12.19 12.77 12.39
Portuguese Escudo 297.18 310.24 n/a
Spanish Peseta 246.38 257.48 n/a
Swedish Krona 12.80 13.52 13.15
Swiss Franc 2.41 2.47 2.41
US Dollar 1.63 1.66 1.57
Euro n/a n/a 1.50
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