2568.11 kb - Compass Group

79 Compass Group PLC Annual Report 200726 Share-based payments continuedIncome statement expense and carrying valueThe Group recognised expenses of £24 million (2006: £21 million) for continuing operations and £1 million (2006: £4 million) for discontinuedoperations in respect of equity-settled share-based payment transactions.Cash-settled share-based paymentsThe Group has granted phantom share options to certain employees under the terms of the Management Equity Bonus Plan which mirrorgrants made under the Management Plan. These require the Group to pay the intrinsic value of the option to the employee at the date of exercise.At 30 September 2007, the Group has recorded liabilities of £1 million (2006: £2 million). The fair value of the phantom options is determinedusing the binomial distribution option pricing model using the assumptions shown above. The Group recorded a total credit of £1 million(2006: expense £1 million) during the year in respect of cash-settled phantom share options.27 Business combinationsAcquisitions in the year included the purchase of the final 5% minority interest in Onama S.p.A. for a consideration of £7 million and a numberof smaller infill acquisitions for a consideration of £7 million. Total £14 million.£12 million goodwill was recognised in respect of these acquisitions. This included a fair value adjustment of £2 million which increasedliabilities acquired.Goodwill arising on acquisitions in the year is attributable to the anticipated profitability that will be generated from an extension to theGroup’s operations.Onama was previously accounted for as a subsidiary and therefore there is no impact on the Group’s consolidated revenue or operating profitsin acquiring the final 5%. The impact on the Group’s consolidated revenue and operating profits had the other investments been owned forthe full year would have been minimal.The Group also paid deferred consideration relating to prior year acquisitions of £17 million, leaving £6 million deferred consideration outstanding.The total amount of cash paid in the year was £31 million.28 Reconciliation of operating profit to cash generated by operations2007 2006Reconciliation of operating profit to cash generated by operations £m £mOperating profit from continuing operations 525 455Adjustments for:Depreciation of property, plant and equipment 142 151Amortisation of intangible fixed assets 31 37Loss on disposal of property, plant and equipment 5 5Increase/(decrease) in provisions 43 (3)Decrease in pensions liability (42) (35)Share-based payments – charged to profits 1 23 21Share-based payments – settled in cash or existing shares 2 (11) –Operating cash flows before movement in working capital 716 631(Increase)/decrease in inventories (7) (4)(Increase)/decrease in receivables 8 (33)Increase/(decrease) in payables 36 57Cash generated by operations 753 6511. £24 million share based payments charge – £1 million credit in respect of cash-settled phantom share options (credited back to the income statement).2. It was originally anticipated that these payments would be satisfied by the issue of new shares.