2568.11 kb - Compass Group

01 Compass Group PLC Annual Report 2007Our strong operating performanceis being driven by concentrating onthe five key profit drivers of MAP,our Group-wide Management andPerformance framework, which isnow embedded within our business.Clientsales andmarketingDelivering profitablegrowth from existingand new clients,and developing ourpenetration in ourchosen markets.Consumersales andmarketingDriving growth inconsumer volumeand spendingthrough innovationin our offer, theright pricing andthe right retail skills.Cost of foodBuying the optimalquality and rangeof food to meetthe needs of ourcustomers at thelowest cost, withthe most efficientdistribution andin-unit production.Unit costsDelivering the rightlevel of service inthe most efficientway, focusing onlabour productivityand controllinglabour and otherin-unit costs.Above unitoverheadsCreating a simplerorganisationalmodel, withfewer layers ofmanagement andless bureaucracy.2007 highlightsThrough the MAP process we havetransformed the performance of the businesswith good quality organic revenue growth,greater focus on like for like growth and costefficiencies together delivering £101 millionof operating profit growth at constantcurrency and driving the operating marginforward by 70 basis points. Our focus oncapital expenditure and working capital hasresulted in a step change in the delivery offree cash flow, up 68% to £357 million.Group revenue5% organic revenue growth on a constantcurrency basis. 1,5£9,768m£10,268mTotal operating profitA 24% increase in operating profit on a constantcurrency basis. 1,2£428m£529m2006 20072006 2007MarginA margin increase of 70 basis points. 1,6Basic earnings per shareAn underlying earnings per share increase of 62%. 4Free cash flowA step change in the delivery of free cash flow, up 68%.4.4%5.1%15.2p£357m9.4p£212m2006 20072006 20072006 2007The three main drivers of our £101 million ofoperating profit growth this year have been:Net new business achieved through newclients, new services to existing clients andmanaging retention of existing businesshas delivered £30 million of profit.Base estate growth resulting from like forlike price and volume growth and themanagement of cost inflation has delivered£35 million of profit.Reducing above unit costs by a net£36 million.Organic revenue growth 52006: 7%5%Capital expenditure as a % of revenue2006: 1.9%1.9%Return on capital employed2006: 11.3%12.5%Full year dividend2006: 10.1p10.8pAll figures shown relate to continuing operations.1. Constant currency restates the prior year results to 2007average exchange rates.2. Includes share of profit of associates. UK £3 million (2006:£1 million) and North America £1 million (2006: £1 million).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. Organic growth is calculated by adjusting for acquisitions(excluding current year acquisitions and including a full year inrespect of prior year acquisitions), disposals (excluded fromboth years) and exchange rate movements (translating theprior years at current year exchange rates) and compares theresults against 2006.6. Operating margin is based on revenue and operating profitexcluding share of profit of associates.Find out more onlineMore information on Compass Group can be found onour website: www.compass-group.com.For our Annual Review, go to our Investor Centre atwww.compass-group.com.You can also go to our website to register to receivefuture Annual Reports and Reviews and othershareholder information electronically.