2568.11 kb - Compass Group

13 Compass Group PLC Annual Report 2007Business reviewThe Group achieved 5% organicrevenue growth in 2007 withexcellent performances in the NorthAmerica and the Rest of the Worldregions, a stronger performance inContinental Europe and continuingdifficult trading in the UK. The MAPprogramme and resulting actionshave led to improvements in financialperformance, in particular, strongfree cash flow generation, and goodprogress has been made in the yeartowards the achievement of theGroup’s 2006 – 2008 targets toincrease ROCE by 100 basis pointsand to deliver £800 – £850 millionof free cash flow over the period.Group trading reviewThe Group’s financial summary for the yearended 30 September 2007 is set out below.Financial summaryFor the year ended30 September 2007 2006 IncreaseContinuing operationsRevenue– constant currency 1 £10,268m £9,768m 5.1%– reported £10,268m £10,267m –Operating profit 2– constant currency 1 £529m £428m 23.6%– reported £529m £457m 15.8%Operating margin 6 5.1% 4.4% 70bpsProfit before tax– underlying 4 £442m £312m 41.7%– reported £436m £323m 35.0%Free cash flow £357m £212m 68.4%Basic earnings per share– underlying 4 15.2p 9.4p 61.7%– reported 5 15.0p 9.7p 54.6%Total Group including discontinued operationsBasic earnings per share 25.6p 13.3p 92.5%Total dividend per ordinary share 10.8p 10.1p 6.9%1. Constant currency restates the prior year results to 2007average exchange rates.2. Includes share of profit of associates.3. Excludes share of profit of associates.4. Underlying profit before tax excludes revaluation gains andlosses on swaps and hedging instruments (hedge accountingineffectiveness) of £(6) million (2006: £11 million). Underlyingbasic earnings per share excludes these items net of tax.5. Reported basic earnings per share before exceptional items.6. Operating margin is based on revenue and operating profitexcluding share of profit of associates.RevenueOverall, organic revenue growth was 5%,comprising new business of 8%, retentionof around 94%, about one percentage pointlower than in previous years due to the workwe have been doing to address loss-makingcontracts, and like for like growth of justunder 3%. The significant strengtheningof Sterling, in particular against the USDollar, impacted revenues by 5%, resultingin reported revenues remaining flat.Organic growth is calculated by adjustingfor acquisitions (excluding current yearacquisitions and including a full year inrespect of prior year acquisitions), disposals(excluded from both years) and exchangerate movements (translating the prior year atcurrent year exchange rates), and comparesthe results against 2006.The table above right summarises theperformance of the Group’s continuingoperations by geographic segment.Andrew MartinGroup Finance DirectorSegmental performanceFor the year endedConstant30 September Reported currency Organicchange change change2007 2006 % % %Continuing operationsRevenue (£m)North America 4,162 4,290 (3) 6 6ContinentalEurope 2,553 2,484 3 4 4UnitedKingdom 1,931 1,882 3 3 2Rest ofthe World 1,622 1,611 1 8 9Total 10,268 10,267 – 5 5Operating profit 1 (£m)North America 261 245ContinentalEurope 151 122UnitedKingdom 107 107Rest ofthe World 64 47Unallocatedoverheads (58) (66)Associates 4 2Total 529 457Operating margin 2 (%)North America 6.3 5.7ContinentalEurope 5.9 4.9UnitedKingdom 5.5 5.7Rest ofthe World 3.9 2.9Total 5.1 4.41. Operating profit includes share of profit of associates UK£3 million (2006: £1 million) and North America £1 million(2006: £1 million).2. Operating margin is based on revenue and operating profitexcluding share of profit of associates.