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48 Compass Group PLC Annual Report 2007Accounting policiesfor the year ended 30 September 2007In relation to cash flow hedges (forwardforeign exchange contracts) to hedge firmcommitments which meet the conditions forhedge accounting, the portion of the gainor loss on the hedging instrument that isdetermined to be an effective hedge isrecognised directly in equity and the ineffectiveportion is recognised in the income statement.When the hedged firm commitment resultsin the recognition of an asset or liability, thenat the time the asset or liability is recognised,the associated gains or losses that hadpreviously been recognised in equity areincluded in the initial measurement of theacquisition cost of other carrying amount ofthe asset or liability. For all other cash flowhedges, the gains or losses that are recognisedin equity are transferred to the incomestatement in the same period in which thehedged firm commitment affects the net profitand loss, for example when the future saleactually occurs.For derivative financial instruments that donot qualify for hedge accounting, any gainsor losses arising from changes in fair valueare taken directly to the income statementin the period.Hedge accounting is discontinued whenthe hedging instrument expires or is sold,terminated or exercised, or no longer qualifiesfor hedge accounting. At that point in time,any cumulative gain or loss on the hedginginstrument recognised in equity is kept inequity until the forecasted transaction occurs.If a hedged transaction is no longer expectedto occur, the net cumulative gain or lossrecognised in equity is transferred to theincome statement in the period.Additional information can be found in note 20to the financial statements.R LeasesLeases are classified as finance leaseswhenever the terms of the lease transfersubstantially all the risks and rewards ofownership to the lessee. All other leases areclassified as operating leases.Assets held under finance leases arerecognised as assets of the Group at their fairvalue or, if lower, at the present value of theminimum lease payments, each determined atthe inception of the lease. The correspondingliability to the lessor is included in the balancesheet as a finance lease obligation. Leasepayments are apportioned between financecharges and reduction of the lease obligationso as to achieve a constant rate of interest onthe remaining balance of the liability. Financecharges are charged directly against income.Payments made under operating leases arecharged to income on a straight-line basisover the period of the lease. Any incentives toenter into an operating lease are also spreadon a straight-line basis over the lease term.S ProvisionsProvisions are recognised when the Grouphas a present obligation as a result of a pastevent and it is probable that the Group will berequired to settle that obligation. Provisionsare measured at the directors’ best estimateof the cost of settling these liabilities and arediscounted to present value where the effectis material.T Employee benefitsPension obligationsPayments made to defined contributionpension schemes are charged as an expensewhen they fall due. Payments made tostate-managed schemes are dealt with aspayments to defined contribution schemeswhere the Group’s obligations under theschemes are equivalent to those arising ina defined contribution pension scheme.For defined benefit pension schemes, the costof providing benefits is determined using theProjected Unit Credit Method, with actuarialvaluations being carried out at each balancesheet date. Actuarial gains and losses arerecognised immediately in the statement ofrecognised income and expense.Past service cost is recognised immediately tothe extent that the benefits are already vested,and otherwise is amortised on a straight-linebasis over the average period until the benefitsbecome vested.The pension obligation recognised in thebalance sheet represents the present value ofthe defined benefit obligation as adjusted forunrecognised past service cost, and as reducedby the fair value of scheme assets. Any assetresulting from this calculation is limited topast service cost, plus the present value ofavailable refunds and reductions in futurecontributions to the plan.Other post-employment obligationsSome Group companies provide otherpost-employment benefits. The expected costsof these benefits are accrued over the periodof employment using a similar basis to thatused for defined benefit pension schemes.Actuarial gains and losses are recognisedimmediately in the statement of recognisedincome and expense.Share-based paymentsThe Group issues equity-settled andcash-settled share-based payments to certainemployees. Equity-settled share-basedpayments are measured at fair value(excluding the effect of non market-basedvesting conditions) at the date of grant.The fair value determined at the grant dateof the equity-settled share-based payments isexpensed on a straight-line basis over thevesting period, based on the Group’s estimateof the shares that will eventually vest andadjusted for the effect of non market-basedvesting conditions.Fair value is measured using either thebinomial distribution or Black-Scholes optionpricing models as is most appropriate for eachscheme. The expected life used in the modelshas been adjusted, based on management’sbest estimate, for the effects of exerciserestrictions and behavioural considerations.For cash-settled share-based payments,a liability equal to the portion of the goodsor services received is recognised at thecurrent fair value determined at each balancesheet date.Holiday payPaid holidays and similar entitlements areregarded as an employee benefit and arecharged to the income statement as thebenefits are earned. An accrual is made atthe balance sheet date to reflect the fair valueof holidays earned but not taken.
49 Compass Group PLC Annual Report 2007Notes to the consolidated financial statementsfor the year ended 30 September 20071 Segmental reportingGeographical segmentsNorth Continental United Rest of IntraAmerica Europe Kingdom the World Group TotalRevenues £m £m £m £m £m £mYear ended 30 September 2007Total revenue 4,162 2,842 1,986 1,654 (18) 10,626Less: inter-segment revenue – (7) (7) (4) 18 –External revenue 4,162 2,835 1,979 1,650 – 10,626Less: discontinued businesses – (282) (48) (28) – (358)External revenue – continuing 4,162 2,553 1,931 1,622 – 10,268Year ended 30 September 2006Total revenue 4,437 3,321 2,815 1,730 (39) 12,264Less: inter-segment revenue – (13) (10) (16) 39 –External revenue 4,437 3,308 2,805 1,714 – 12,264Less: discontinued businesses (147) (824) (923) (103) – (1,997)External revenue – continuing 4,290 2,484 1,882 1,611 – 10,267Geographical segmentsNorth Continental United Rest of CentralAmerica Europe Kingdom the World activities TotalResult £m £m £m £m £m £mYear ended 30 September 2007Total operating profit before associates 261 181 107 57 (58) 548Less: discontinued businesses – (30) – 7 – (23)Operating profit before associates – continuing 261 151 107 64 (58) 525Add: Share of profit of associates 1 – 3 – – 4Operating profit – continuing 262 151 110 64 (58) 529Finance income 28Finance costs (115)Hedge accounting ineffectiveness (6)Profit before tax 436Income tax expense (124)Profit for the year from continuing operations 312Year ended 30 September 2006Total operating profit before associates 247 177 125 46 (66) 529Less: discontinued businesses (2) (55) (18) 1 – (74)Operating profit before associates – continuing 245 122 107 47 (66) 455Add: Share of profit of associates 1 – 1 – – 2Operating profit – continuing 246 122 108 47 (66) 457Finance income 15Finance costs (160)Hedge accounting ineffectiveness 11Profit before tax 323Income tax expense (61)Profit for the year from continuing operations 262Russia and Turkey were transferred from the Rest of the World to the Continental Europe segment during the current reporting period to ensure alignment with the new management reporting structure.The 2006 segmental results have been restated on a consistent basis. The combined revenue and operating profit of these businesses was £46 million and £3 million respectively for the year ended30 September 2006.
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2568.11 kb - Compass Group

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