REG - Compass Group PLC - Full-year results
26/11/2024 07:00
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RNS Number : 5888N Compass Group PLC 26 November 2024
Full-year results announcement for the year ended 30 September 2024
Underlying(1) results Statutory results
2024 Restated(2) Change 2024 Restated(2) Change
2023 2023
Revenue $42.2bn $38.1bn(3) 10.6%(4) $42.0bn $37.9bn 10.8%
Operating profit $2,998m $2,576m(3) 16.4%(3) $2,584m $2,313m 11.7%
Operating margin 7.1% 6.8% 30bps 6.2% 6.1% 10bps
Earnings per share 119.5c 104.3c(3) 14.6%(3) 82.3c 92.2c (10.7)%
Operating cash flow $2,642m $2,228m 18.6% $3,135m $2,536m 23.6%
Free cash flow $1,740m $1,516m 14.8%
Annual dividend per share 59.8c 52.6c 13.7% 59.8c 52.6c 13.7%
Another year of strong performance.
Confident in delivering high single-digit profit growth(5) in 2025.
Strong revenue and profit growth:
· Underlying operating profit growth of 16.4%(3)
- organic revenue increased by 10.6% with net new business growth of 4.2%,
which accelerated in H2
- underlying operating margin of 7.1% (+30bps year on year), with good
progress in all regions
· Underlying operating cash flow increased by 18.6% to $2.6bn,
providing flexibility for investment
· Invested $2.6bn in growth through capex (3.7% of underlying revenue)
and M&A ($1bn)
· Returned $1.5bn to shareholders through dividends and share buybacks
· Strong balance sheet (net debt to EBITDA of 1.3x) and consistent
capital allocation model
Strategic highlights:
· Increased focus and investment in the significant growth
opportunities across our core markets
· Acquired, or agreed to acquire, attractive businesses in Europe:
HOFMANN(S), CH&CO, Dupont Restauration and 4Service AS
· Further improved the quality of our portfolio by exiting, or agreeing
to exit, nine non-core markets
Outlook:
· For 2025, we expect high single-digit underlying operating profit
growth(5) driven by organic revenue growth above 7.5% and ongoing margin
progression
· Longer term, we are confident in sustaining mid-to-high single-digit
organic revenue growth, ongoing margin progression and profit growth ahead of
revenue growth
Statutory results:
· Revenue increased by 10.8% reflecting the strong trading performance
· Operating profit, including non-underlying charges related to
business acquisitions and reshaping our portfolio, increased by 11.7% to
$2,584m
· Basic earnings per share decreased by 10.7%, to 82.3c, as the higher
operating profit is more than offset by the impact of the reclassification of
cumulative currency translation differences on sale of businesses, higher
finance costs and higher effective tax rate
1. Reconciliation of statutory to underlying results can be found in notes 2
(segmental analysis) and 14 (non-GAAP measures) to the consolidated financial
statements.
2. With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The results for the year ended 30
September 2023 have been restated in US dollars.
3. Measured on a constant-currency basis.
4. Organic revenue change.
5. On a constant-currency basis, including announced acquisitions, disposals
and exits in 2024 and to date in 2025.
Business review
Dominic Blakemore, Group Chief Executive, said:
"2024 has been a year of strong operational and financial performance, with
net new business growth accelerating in the second half as expected. The
business continues to successfully capitalise on the dynamic market trends,
using its proven competitive advantages to drive higher revenue and profit
growth.
We have exited, or agreed to exit, nine non-core countries, further improving
the quality of our portfolio and enabling us to better focus on our core
markets with the greatest growth opportunities. To support this growth, we're
investing in capex to drive net new business and are currently prioritising
strategic acquisitions to further enhance our unique sectorised approach to
clients.
We have a proven track record of successful M&A in North America and are
using that blueprint to unlock growth in other regions. The integration of
recent high-quality acquisitions in Europe is progressing well, and we're
excited by the capabilities they bring to the Group.
In 2025, we expect high single-digit underlying operating profit growth,
driven by organic revenue growth above 7.5% and ongoing margin progression.
Longer term, we are confident in sustaining mid-to-high single-digit organic
revenue growth with ongoing margin progression, leading to profit growth ahead
of revenue growth. Our priority is to invest in the business through capex and
M&A to support future growth, with surplus capital being returned to
shareholders as we maintain our strong track record of delivering long-term,
compounding shareholder returns."
Results presentation today
Today, 26 November 2024, management will present Compass Group's Full Year
2024 results.
At 9:00 am (UK time), investors and analysts will be able to view a video
presentation which will stream live on the Compass Group website at
www.compass-group.com (http://www.compass-group.com) . An audio-only telephone
option is available if you are unable to watch the video.
Following the video presentation, management will host a live Q&A session
for investors and analysts. Participants must be connected by phone to ask a
question during the conference call.
Participant dial in details:
UK +44 (0) 33 0551 0200
UK Toll-Free 0808 109 0700
US +1 786 697 3501
US Toll-Free +1 866 580 3963
Enquiries
Investors Agatha Donnelly, Helen Javanshiri & Simon Bielecki +44 1932 573 000
Press Amy Shields, Compass Group +44 1932 573 000
Tim Danaher, Brunswick +44 207 404 5959
Website www.compass-group.com
Financial calendar
Ex-dividend date for 2024 final dividend 16 January
Record date for 2024 final dividend 17 January
Last day for dividend currency elections 3 February
Last day for DRIP elections 6 February
Q1 Trading Update / Annual General Meeting 6 February
Sterling equivalent of 2024 final dividend announced 11 February
Half-year results 14 May
Business review (continued)
Basis of preparation
With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The change in presentation currency
provides investors and other stakeholders with greater transparency in
relation to the Group's performance and reduces foreign exchange volatility on
earnings given that approximately three-quarters of the Group's underlying
operating profit originates in US dollars. The amounts for prior periods have
been translated into US dollars at average exchange rates for the relevant
periods for income statements and cash flows, with spot rates used for
significant transactions, and at the exchange rates on the relevant balance
sheet dates for assets and liabilities.
Throughout this Annual Results Announcement, and consistent with prior years,
underlying and other alternative performance measures are used to describe the
Group's performance alongside statutory measures (see page 6).
Strategy
Compass is focused on the provision of food services, with targeted support
services where appropriate. By divesting of non-core markets we have further
improved the quality of our portfolio. This also enables us to better focus on
our core markets, where there remain significant opportunities for growth. We
now operate in around 30 countries in North America, Europe, and Asia-Pacific.
Our addressable market in food services is worth c.$320bn, a significant
proportion of which remains self-operated. More demanding consumer
expectations and increased macroeconomic pressures have contributed to the
acceleration of first-time outsourcing, and we have clear competitive
advantages built over the last 30 years to capture these opportunities.
Our sector and sub-sector portfolio enables us to better differentiate our
offer compared to our competitors and create bespoke solutions for our
clients. We also leverage our scale, particularly in food procurement, and are
increasing the flexibility of our offer, ranging from different food models to
digital or sustainability initiatives.
Our thought leadership and solutions in these areas are also often cited by
clients as one of the reasons they outsource to Compass.
Performance
Compass has delivered another strong year, with organic revenue growth of
10.6%(1) and underlying operating margin improving by 30bps to 7.1%(1). As a
result, underlying operating profit grew by 16.4%(1) on a constant-currency
basis to $2,998m(1) (2023: $2,576m).
Statutory revenue increased by 10.8% reflecting the strong trading
performance. Statutory operating profit increased by 11.7% to $2,584m.
Cash flow generation remains robust, with underlying operating cash flow of
$2,642m(1) (2023: $2,228m) and underlying free cash flow of $1,740m(1) (2023:
$1,516m). Leverage (net debt to underlying EBITDA) remains well within the
Group's guided range at 1.3x(1) as at 30 September 2024.
Our strong balance sheet provides us with flexibility to invest in future
growth, both through M&A and capital expenditure, which was 3.7% of
underlying revenue(1). This was slightly higher than our guidance of 3.5% due
to catch-up from the prior year.
Net M&A expenditure was $1,040m, the main outflows being HOFMANN(S)
(Germany) and CH&CO (UK and Ireland), offset by an inflow from the
disposal of Brazil. Subsequent to the year-end, the Group also completed the
acquisition of Dupont Restauration, a food services business in France, and
agreed to acquire 4Service AS, a catering and facility management services
business in Norway.
The Group has refined its portfolio and has exited five countries during the
year, those being Argentina, Angola, Brazil, mainland China and the United
Arab Emirates. In addition, we have also agreed to exit Chile, Colombia,
Mexico and Kazakhstan, subject to regulatory approval and completion
procedures.
Revenue
Organic revenue growth was strong at 10.6%(1), including net new business
growth of 4.2%(1), which remains above our historical level of approximately
3%, pricing of around 4% and like-for-like volume growth of around 2%. As
expected, volume growth moderated during the year as we lapped strong prior
year comparatives. Client retention rates remained strong at 96.0%.
On a statutory basis, revenue increased by 10.8% to $42,002m (2023: $37,907m).
Profit
Underlying operating profit increased by 16.4%(1) on a constant-currency
basis, to $2,998m(1), with underlying operating margin at 7.1%(1) (2023:
6.8%). Strong margin progression was achieved across all regions, underpinned
by our operational scale, efficiencies and appropriate levels of pricing to
mitigate inflation.
1. Alternative Performance Measure (APM). The Group's APMs are defined in note 14
(non-GAAP measures) and reconciled to GAAP measures in notes 2 (segmental
analysis) and 14 to the consolidated financial statements.
Business review (continued)
Statutory operating profit was $2,584m (2023: $2,313m), an increase of 11.7%,
with statutory operating margin of 6.2% (2023: 6.1%).
Statutory profit before tax of $2,056m (2023: $2,137m) includes net charges of
$693m(1) (2023: $289m) which are excluded from underlying profit before tax,
including net charges of $373m (2023: $94m) in relation to our strategic
portfolio review to focus on the Group's core markets and acquisition-related
charges of $244m (2023: $153m).
Charges related to our strategic portfolio review include a net loss of $203m
(2023: net gain of $24m) on the sale and closure of businesses, including exit
costs of $92m (2023: $14m) and a charge of $250m (2023: credit of $1m) in
respect of the reclassification of cumulative currency translation
differences. We exited five countries during the year and, in July, the Group
agreed the sale of its businesses in Chile, Colombia and Mexico, subject to
regulatory approval and completion procedures. Subsequent to the year-end, we
agreed the sale of our business in Kazakhstan, subject to regulatory approval.
As part of our strategic portfolio review, and considering country exits,
ongoing advancement of technologies and the increased decentralisation of our
business, we have reviewed our European regional business transformation ERP
programme that commenced a number of years ago. We have decided to discontinue
the implementation and roll out of our cross-market ERP programme and,
accordingly, have recognised a charge of $160m as a specific adjusting item,
which includes $146m for the non-cash impairment of work-in-progress head
office (non-client-related) computer software assets. An impairment charge of
$10m has been recognised in respect of our business in Qatar.
In the prior year, the net charge included the exit from seven tail countries
and the sale of a business, site closures and contract renegotiations and
terminations in the UK.
2025 guidance
The Group expects to achieve high single-digit underlying operating profit
growth(2) in 2025 with organic revenue growth above 7.5%(1). We expect
underlying finance costs to be around $300m(1), with an underlying effective
tax rate of around 25.5%(1).
The net impact of announced acquisitions, disposals and exits in 2024 and to
date in 2025 is expected to reduce underlying operating profit by around
$30m(1) in 2025.
Capital allocation
Our capital allocation framework is clear and unchanged. Our priority is to
invest in the business to fund growth opportunities, target a strong
investment-grade credit rating with a leverage target of around 1x-1.5x net
debt to EBITDA and pay an ordinary dividend, with any surplus capital being
returned to shareholders.
Growth investment consists of: (i) capital expenditure to support organic
growth in both new business wins and retention of existing contracts; and (ii)
bolt-on M&A opportunities that strengthen our capabilities and broaden our
exposure. We have a proven track record of strong returns from our investment
strategy as evidenced by our historical returns on capital employed.
Shareholder returns
Our dividend policy is to pay out around 50% of underlying earnings through an
interim and final dividend, with the interim dividend reflecting around
one-third of the total annual dividend. The Board has proposed a final
dividend of 39.1c which, including the interim dividend of 20.7c, gives a
total dividend of 59.8c for 2024.
Shareholders appearing on the Register of Members or holding their shares
through CREST will automatically receive their dividends in sterling, but have
the option to elect to receive their dividends in US dollars. Details on how
to elect to receive the final dividend in US dollars are provided on page 10.
At the date of this Announcement, $476m of the $500m share buyback announced
in November 2023 had been completed, with the remainder scheduled to complete
in December 2024. We prioritise investment in the business through capex and
M&A to support future growth, with any surplus capital being returned to
shareholders as we maintain our strong track record of delivering long-term,
compounding shareholder returns.
People
Our team of about 580,000 colleagues delivers exceptional experiences to
clients and consumers worldwide every day. These dedicated professionals are
the core of our business, and our people strategy is designed to identify,
attract, develop, support, and retain the high-calibre talent essential for
achieving our objectives.
Our goal is to provide lifelong opportunities for diverse individuals from the
communities we serve, ensuring they work in a positive and secure environment.
This approach is bolstered by empowered teams and proactive leaders, grounded
in respect, teamwork, and growth.
1. Alternative Performance Measure (APM). The Group's APMs are defined in note 14
(non-GAAP measures) and reconciled to GAAP measures in notes 2 (segmental
analysis) and 14 to the consolidated financial statements.
2. On a constant-currency basis, including announced acquisitions, disposals and
exits in 2024 and to date in 2025.
Business review (continued)
When sourcing new talent, we assess the specific requirements of each sector
and organisational level, adjusting our recruiting strategies accordingly. For
example, our North America business employs targeted campaigns, process
automation, AI, and other tools to locate suitable candidates and facilitate
their engagement with the selection process in their preferred language and at
convenient times.
We aspire to cultivate a diverse and inclusive workforce at all levels. Our
focus is on treating everyone with fairness and respect, providing
opportunities for growth and development, and fostering a positive, supportive
workplace throughout their careers.
Recognising the challenges of daily life, we offer a variety of support
measures to ensure our employees' wellbeing, encompassing physical, financial,
and mental health.
Purpose
We are dedicated to building a sustainable future for everyone. We harness our
passion for food, advocate for responsible sourcing, and reduce food waste on
a large scale to drive global change and improve lives.
Through culinary innovation, collaboration, and partnerships, we are committed
to achieving climate net zero across our global operations by 2050 as part of
our Planet Promise. This isn't achievable through a single solution; instead,
we continually review and enhance our practices across the Group to amplify
our impact and expedite our progress towards sustainability goals.
One significant initiative demonstrating our commitment to reducing food waste
is linking a food waste-related KPI to the annual bonus plan of our executive
directors and senior management.
Our culinary teams and front-line staff understand the importance of
minimising food waste and are utilising various waste-reduction technologies.
For example, Waste Not 2.0 is our proprietary tablet-based online tracking
tool for chefs, and has been deployed in 12 countries, helping kitchen teams
to identify opportunities to reduce food waste and giving our unit managers
tools to report on their carbon footprint.
Whilst the Group's absolute Scope 1, 2 and 3 emissions increased year on year
due to new business wins, our overall greenhouse gas intensity ratio
(normalised for revenue growth) reduced by 4% compared to 2023.
Part of our core identity is being an ethical, sustainable, and inclusive
business. By integrating these principles into our culture, we aim to make a
meaningful difference and positively influence the world. Our customers and
partners increasingly align with these values, which are crucial for our
growth goals and long-term success.
Summary
Our 2024 results were strong across all our key performance metrics. We
delivered double-digit organic revenue growth and good margin progress,
driving strong underlying operating profit growth. The Group remains very cash
generative, enabling us to invest in future opportunities for growth and
return capital to shareholders, whilst maintaining a strong balance sheet.
We have further improved the quality of our portfolio, having exited, or
agreed to exit, nine countries. The Group is also increasing investment in its
core markets, particularly in Europe, where there are significant first-time
outsourcing opportunities. We are consistently delivering net new business
growth in our target 4 to 5% range, with excellent client retention.
The Group is continuing to develop its sub-sector portfolio, particularly in
Europe, where we have acquired, or agreed to acquire, four great businesses.
These also provide us with additional resources and talent to help drive
growth. We are also increasing investment in more flexible operating models
and innovating our offer to meet more sophisticated consumer demands.
We remain excited about the significant global structural opportunities and
continue to anticipate profit growth ahead of revenue growth. We expect our
established value creation model to continue to deliver strong earnings
momentum, rewarding shareholders with compounding returns over the long term.
Dominic Blakemore
Group Chief Executive Officer
26 November 2024
Financial review
Group performance
We manage and assess the performance of the Group using various underlying and
other Alternative Performance Measures (APMs). These measures are not defined
by International Financial Reporting Standards (IFRS) or other generally
accepted accounting principles (GAAP) and may not be directly comparable with
APMs used by other companies. Underlying measures reflect ongoing trading and,
therefore, facilitate meaningful year-on-year comparison. The Group's APMs,
together with the results prepared in accordance with IFRS, provide
comprehensive analysis of the Group's results. Accordingly, the relevant
statutory measures are also presented where appropriate. Certain of the
Group's APMs are financial Key Performance Indicators (KPIs) which measure
progress against our strategy. The Group's APMs are defined in note 14
(non-GAAP measures) and reconciled to GAAP measures in notes 2 (segmental
analysis) and 14 to the consolidated financial statements.
2024 Restated(1) Change
$m 2023
$m
Revenue
Underlying(2) 42,176 38,216 10.4%
Underlying (constant currency)(2) 42,176 38,147 10.6%
Organic(2) 41,021 37,075 10.6%
Statutory 42,002 37,907 10.8%
Operating profit
Underlying(2) 2,998 2,592 15.7%
Underlying (constant currency)(2) 2,998 2,576 16.4%
Statutory 2,584 2,313 11.7%
Operating margin
Underlying(2) 7.1% 6.8% 30bps
Statutory 6.2% 6.1% 10bps
Return on capital employed (ROCE)
ROCE 19.0% 19.3% (30)bps
Basic earnings per share
Underlying(2) 119.5c 105.2c 13.6%
Underlying (constant currency)(2) 119.5c 104.3c 14.6%
Statutory 82.3c 92.2c (10.7)%
Cash flow
Underlying - free cash flow(2) 1,740 1,516 14.8%
Statutory - net cash flow from operating activities 3,135 2,536 23.6%
Dividend
Full-year dividend per ordinary share 59.8c 52.6c 13.7%
1. With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The results for the year ended 30
September 2023 have been restated in US dollars.
2. Alternative Performance Measure (APM) (see pages 48 to 55).
Financial review (continued)
Income statement
2024 Restated(1)
2023
Statutory Adjustments Underlying(2) Statutory Adjustments Underlying(2)
$m $m $m $m $m $m
Revenue 42,002 174 42,176 37,907 309 38,216
Operating profit 2,584 414 2,998 2,313 279 2,592
Net (loss)/gain on sale and closure of businesses (203) 203 - 24 (24) -
Finance costs (325) 76 (249) (200) 34 (166)
Profit before tax 2,056 693 2,749 2,137 289 2,426
Tax expense (642) (60) (702) (525) (63) (588)
Profit for the year 1,414 633 2,047 1,612 226 1,838
Non-controlling interests (10) - (10) (5) - (5)
Attributable profit 1,404 633 2,037 1,607 226 1,833
Average number of shares 1,705m - 1,705m 1,743m - 1,743m
Basic earnings per share 82.3c 37.2c 119.5c 92.2c 13.0c 105.2c
EBITDA $4,145m $3,620m
1. With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The results for the year ended 30
September 2023 have been restated in US dollars.
2. Alternative Performance Measure (APM) (see pages 48 to 55).
Statutory income statement
Revenue
On a statutory basis, revenue increased by 10.8% to $42,002m (2023: $37,907m).
Operating profit
Statutory operating profit was $2,584m (2023: $2,313m), an increase of 11.7%,
with statutory operating margin of 6.2% (2023: 6.1%).
Statutory operating profit includes non-underlying item charges of $414m
(2023: $279m), including acquisition-related charges of $235m (2023: $153m)
and $170m (2023: $118m) of charges related to the strategic portfolio
review.
As part of our strategic portfolio review, and considering country exits,
ongoing advancement of technologies and the increased decentralisation of our
business, we have reviewed our European regional business transformation ERP
programme that commenced a number of years ago. We have decided to discontinue
the implementation and roll out of our cross-market ERP programme and,
accordingly, have recognised a charge of $160m as a specific adjusting item,
which includes $146m for the non-cash impairment of work-in-progress head
office (non-client-related) computer software assets. An impairment charge of
$10m has been recognised in respect of our business in Qatar. In 2023, the net
charge included the impact of site closures and contract renegotiations and
terminations in the UK.
A full list of non-underlying items is included in note 14 (non-GAAP
measures).
Net gain or loss on sale and closure of businesses
The Group has recognised a net loss of $203m (2023: net gain of $24m) on the
sale and closure of businesses, including exit costs of $92m (2023: $14m) and
a charge of $250m (2023: credit of $1m) in respect of the reclassification of
cumulative currency translation differences. As part of our strategic
portfolio review, we exited five countries during the year and, in July, the
Group agreed the sale of its businesses in Chile, Colombia and Mexico, subject
to regulatory approval and completion procedures. Subsequent to the year-end,
we agreed the sale of our business in Kazakhstan, subject to regulatory
approval.
Finance costs
Finance costs increased to $325m (2023: $200m) mainly reflecting both higher
net debt and interest rates during the year, together with a partial reversal
of the fair value gains on derivatives held to minimise volatility in
short-term underlying finance costs in previous years.
Tax expense
Profit before tax was $2,056m (2023: $2,137m) giving rise to an income tax
expense of $642m (2023: $525m), equivalent to an effective tax rate of 31.2%
(2023: 24.6%). The increase in rate primarily reflects the increase in the UK
corporate tax rate from 19% to 25% from 1 April 2023 and the impact of
non-taxable non-underlying items.
Financial review (continued)
Earnings per share
Basic earnings per share was 82.3c (2023: 92.2c), a decrease of 10.7%, as the
higher operating profit is more than offset by the impact of the
reclassification of cumulative currency translation differences on sale of
businesses, higher finance costs and higher effective tax rate.
Underlying income statement
Revenue
Organic revenue growth was strong at 10.6%, including net new business growth
of 4.2%, which remains above our historical level of approximately 3%, pricing
of around 4% and like-for-like volume growth of around 2%. As expected, volume
growth moderated during the year as we lapped strong prior year comparatives.
Growth in underlying revenue was broad-based reflecting double-digit organic
revenue growth, especially in North America and Europe, and also the
contributions from significant acquisitions during the year. This was partly
offset by the impact of exits from non-core countries as part of the Group's
strategy to focus on our larger developed markets and de-risk our portfolio.
Client retention rates remained strong at 96.0%.
Operating profit
Underlying operating profit increased by 16.4% on a constant-currency basis,
to $2,998m, with underlying operating margin at 7.1% (2023: 6.8%). Strong
margin progression was achieved across all regions, underpinned by our
operational scale, efficiencies and appropriate levels of pricing to mitigate
inflation.
Finance costs
Underlying finance costs increased to $249m (2023: $166m) mainly reflecting
both higher net debt and interest rates during the year.
Tax expense
On an underlying basis, the tax charge was $702m (2023: $588m), equivalent to
an effective tax rate of 25.5% (2023: 24.2%). The increase in rate primarily
reflects the increase in the UK corporate tax rate from 19% to 25% from 1
April 2023. The tax environment continues to be uncertain, with more
challenging tax authority audits and enquiries globally.
Earnings per share
On a constant-currency basis, underlying basic earnings per share increased by
14.6% to 119.5c (2023: 104.3c) reflecting the higher profit for the year.
Balance sheet
Liquidity
The Group finances its operations through cash generated by the business and
borrowings from a number of sources, including banking institutions, the
public and the private placement markets. The Group has developed long-term
relationships with a number of financial counterparties with the balance sheet
strength and credit quality to provide credit facilities as required.
The Group seeks to avoid a concentration of debt maturities in any one period
to spread its refinancing risk. A $352m US Private Placement (USPP) note
matured and was repaid in October 2023. In February 2024, the Group issued a
€750m ($806m) fixed-rate sustainable bond maturing in February 2031. The new
bond effectively pre-financed a €750m ($809m) bond which matured and was
repaid in July 2024. In September 2024, the Group issued a €500m ($557m)
fixed-rate sustainable bond maturing in September 2033. The maturity profile
of the Group's principal borrowings at 30 September 2024 shows that the
average period to maturity is 4.6 years (2023: 3.3 years).
The Group's USPP notes contain leverage and interest cover covenants which are
tested semi-annually at 31 March and 30 September. The leverage covenant test
stipulates that consolidated net debt must be less than or equal to 3.5 times
consolidated EBITDA. The interest cover covenant test stipulates that
consolidated EBITDA must be more than or equal to 3 times consolidated net
finance costs. Consolidated EBITDA and net finance costs are based on the
preceding 12 months. The leverage and interest cover ratios were 1.1 times and
19.6 times, respectively, at 30 September 2024. Net debt, consolidated EBITDA
and net finance costs are subject to certain accounting adjustments for the
purposes of the covenant tests.
At 30 September 2024, the Group had access to $3,236m (2023: $3,271m) of
liquidity, including $2,683m (2023: $2,441m) of undrawn bank facilities
committed to August 2026 and $553m (2023: $830m) of cash, net of overdrafts.
Our credit ratings remain strong investment grade: Standard & Poor's A/A-1
long-term/short-term (outlook Stable); and Moody's A2/P-1 long-term/short-term
(outlook Stable).
Financial review (continued)
Net debt
Net debt has increased by $932m to $5,391m (2023: $4,459m). The Group
generated $1,675m of free cash flow and received $327m in respect of the sale
of its 19% effective interest in ASM Global Parent, Inc., which was more than
offset by $999m spent on the acquisition of subsidiaries, joint ventures and
associates, net of disposal proceeds, dividends of $963m and share buybacks of
$577m. Adverse exchange translation was $143m. Cash net of lease liabilities
of $34m in Chile, Colombia and Mexico has been reclassified to held for sale
in the Group's balance sheet at 30 September 2024.
At 30 September 2024, the ratio of net debt to underlying EBITDA was 1.3x
(2023: 1.2x). Our leverage policy is to maintain strong investment-grade
credit ratings and to target net debt to underlying EBITDA in the range
of 1x‑1.5x.
Post-employment benefits
The Group has continued to review and monitor its pension obligations
throughout the year, working closely with the trustees and actuaries of all
schemes across the Group to ensure appropriate assumptions are used and
adequate provision and contributions are made.
The accounting surplus in the Compass Group Pension Plan is $542m at 30
September 2024 (2023: $525m). The deficit in the rest of the Group's defined
benefit pension schemes has increased to $1,274m (2023: $983m). The net
deficit in these schemes is $154m (2023: $130m) including investments of
$1,120m (2023: $853m) held in respect of unfunded pension schemes and the US
Rabbi Trust arrangements which do not meet the definition of pension assets
under IAS 19 Employee Benefits.
The total pensions operating charge for defined contribution schemes in the
year was $289m (2023: $254m) and $41m (2023: $37m) for defined benefit
schemes.
Return on capital employed
Return on capital employed was 19.0% (2023: 19.3%) based on net underlying
operating profit after tax. Excluding the effect of the higher underlying
effective tax rate of 25.5% (2023: 24.2%), the impact of recent business
acquisitions on capital employed was offset by the Group's strong trading
performance.
Cash flow
Free cash flow
Free cash flow totalled $1,675m (2023: $1,425m). During the year, we made cash
payments totalling $24m (2023: $70m) in relation to restructuring and
strategic programmes and the one-off pension charge. Adjusting for this, and
for acquisition transaction costs of $41m (2023: $21m) which are reported as
part of operating cash flow, underlying free cash flow was $1,740m (2023:
$1,516m), with underlying free cash flow conversion at 85.0% (2023: 82.5%).
Underlying profit for the year has replaced underlying operating profit as the
denominator in the calculation of underlying free cash flow conversion.
Underlying free cash flow conversion would be 58.0% (2023: 58.5%) using
underlying operating profit as the denominator.
Capital expenditure of $1,541m (2023: $1,098m) is equivalent to 3.7% (2023:
2.9%) of underlying revenue. The working capital inflow, excluding provisions
and pensions, was $186m (2023: outflow of $120m). The net interest outflow
increased to $228m (2023: $147m) consistent with the higher underlying finance
costs in the year. The net tax paid was $693m (2023: $539m), which is
equivalent to an underlying cash tax rate of 25.2% (2023: 22.2%).
Acquisition and disposal of businesses
The Group spent $1,224m (2023: $408m) on business acquisitions during the
year, net of cash acquired, including $878m on CH&CO in the UK and Ireland
and HOFMANN(S) in Germany (including the repayment of acquired borrowings),
$285m on bolt-on acquisitions and interests in joint ventures and associates,
and $61m of deferred and contingent consideration and other payments relating
to businesses acquired in previous years.
The Group received $225m (2023: $58m) in respect of disposal proceeds net of
exit costs, which primarily comprises the sale of businesses in five countries
during the year.
Including $41m (2023: $21m) of acquisition transaction costs included in net
cash flow from operating activities, the total net cash spent on the
acquisition and disposal of businesses is $1,040m (2023: $371m).
Sale of 19% effective interest in ASM Global Parent, Inc.
The Group received $327m in respect of the sale of its 19% effective interest
in ASM Global Parent, Inc. in August 2024.
Dividends paid
Dividends paid in 2024 of $963m represents the 2023 final dividend ($606m) and
the 2024 interim dividend ($357m).
Financial review (continued)
Purchase of own shares
The cash outflow in respect of share buybacks totalled $577m during the year,
which comprises $185m in respect of the completion of the share buyback
announced in May 2023 and $392m in respect of the $500m share buyback
announced in November 2023. The share buyback is scheduled to complete in
December 2024.
Foreign exchange translation
The $143m (2023: $91m) loss on foreign exchange translation of net debt
primarily arises in respect of the Group's sterling and euro debt.
Other movements
Other movements primarily comprises fair value movements on derivative
financial instruments used to manage the Group's interest rate exposure and
lease liabilities acquired through business acquisitions.
Shareholder returns
Our dividend policy is to pay out around 50% of underlying earnings through an
interim and final dividend, with the interim dividend reflecting around
one-third of the total annual dividend.
In determining the level of dividend in any year, the Board considers a number
of factors, which include but are not limited to:
· the level of available distributable reserves in the Parent Company
· future cash commitments and investment requirements to sustain the long-term
growth prospects of the business
· potential strategic opportunities
· the level of dividend cover
Further surpluses, after considering the matters set out above, may be
distributed to shareholders over time by way of special dividend payments,
share repurchases or a combination of both.
Compass Group PLC, the Parent Company of the Group, is a non-trading
investment holding company which derives its distributable reserves from
dividends paid by subsidiary companies. The level of distributable reserves in
the Parent Company is reviewed annually and the Group aims to maintain
distributable reserves that provide adequate cover for shareholder returns.
The distributable reserves of the Parent Company include the distributable
portion of retained earnings and the own shares reserve, which total £2,457m
at 30 September 2024 (2023: £2,379m).
An interim dividend of 20.7c per share (2023: 17.9c per share), $357m in
aggregate, was paid in July 2024. It is proposed that a final dividend of
39.1c per share (2023: 34.7c per share), $664m in aggregate, be paid on 27
February 2025 to shareholders on the register on 17 January 2025. This will
result in a total dividend for the year of 59.8c per share (2023: 52.6c per
share), $1,021m in aggregate (2023: $940m). The dividend is covered 2.0 times
on an underlying earnings basis.
Shareholders appearing on the Register of Members or holding their shares
through CREST will automatically receive their dividends in sterling, but have
the option to elect to receive their dividends in US dollars. The closing date
for the receipt of dividend currency elections is 3 February 2025. The
sterling equivalent of the 2024 final dividend will be announced on 11
February 2025.
For shares held in certificated form on the register, US dollar elections can
be made by contacting our share registrar, Link Group. Link's contact details
can be found on our website under Dividend Information.
A Dividend Reinvestment Plan (DRIP) will be available. The last date for
receipt of elections for the DRIP will be 6 February 2025.
The Group is in a strong position to fund its dividend, which is well covered
by cash generated by the business. Details of the Group's going concern
assessment can be found on page 29. The ability of the Board to maintain its
future dividend policy will be influenced by a number of the principal risks
identified on pages 17 to 20 that could adversely impact the performance of
the Group, although we believe we have the ability to mitigate those risks as
outlined on pages 17 to 20.
At the date of this Announcement, $476m of the $500m share buyback announced
in November 2023 had been completed, with the remainder scheduled to complete
in December 2024. We prioritise investment in the business through capex and
M&A to support future growth, with any surplus capital being returned to
shareholders as we maintain our strong track record of delivering long-term,
compounding shareholder returns.
Financial review (continued)
Treasury
The Group manages its liquidity, foreign currency exposure and interest rate
risk in accordance with the policies set out below.
The Group's financial instruments comprise cash, borrowings, receivables and
payables that are used to finance the Group's operations. The Group also uses
derivatives, principally interest rate swaps, forward currency contracts and
cross currency swaps, to manage interest rate and currency risks arising from
the Group's operations. The Group does not trade in financial instruments. The
Group's treasury policies are designed to mitigate the impact of fluctuations
in interest rates and exchange rates and to manage the Group's financial
risks. The Board approves any changes to the policies.
Foreign currency risk
The Group's policy is to balance its principal projected cash flows by
currency with actual or effective borrowings in the same currency. As currency
cash flows are generated, they are used to service and repay debt in the same
currency. Where necessary, to implement this policy, forward currency
contracts and cross currency swaps are taken out which, when applied to the
actual currency borrowings, convert these to the required currency.
The borrowings in each currency can give rise to foreign exchange differences
on translation. Where the borrowings are less than, or equal to, the net
investment in overseas operations, these exchange rate variances may be
treated as movements on reserves and recorded in the consolidated statement of
comprehensive income rather than in the consolidated income statement.
Non-dollar earnings streams are translated at the average rate of exchange for
the year. Fluctuations in exchange rates have given, and will continue to
give, rise to translation differences. The Group is only partially protected
against the impact of such differences through the matching of cash flows to
currency borrowings.
Interest rate risk
As set out above, the Group has effective borrowings in a number of currencies
and its policy is to ensure that, in the short term, it is not materially
exposed to fluctuations in interest rates in its principal currencies. The
Group implements this policy either by borrowing fixed rate debt or by using
interest rate swaps or options so that the interest rates on at least 80% of
the Group's projected debt are fixed or capped for one year. For the second
and third years, interest rates are fixed within ranges of 30% to 70% and 0%
to 40% of projected debt, respectively.
Tax
As a Group, we are committed to creating long-term shareholder value through
the responsible, sustainable and efficient delivery of our key business
objectives. This will enable us to grow the business and make significant
investments in the Group and its operations.
We adopt an approach to tax that supports this strategy and also balances the
various interests of our stakeholders, including shareholders, governments,
employees and the communities in which we operate. Our aim is to pursue a
principled and sustainable tax strategy that has strong commercial merit and
is aligned with our business strategy. We believe this will enhance
shareholder value whilst protecting our reputation.
In doing so, we act in compliance with the relevant local and international
laws and disclosure requirements, and we conduct an open and transparent
relationship with the relevant tax authorities that fully complies with the
Group's Code of Business Conduct and Business Integrity Policy.
After many years of operation, the Group has numerous legacy subsidiaries
across the world. Whilst some of these entities are incorporated in low-tax
territories, Compass does not seek to avoid tax through the use of tax havens.
In an increasingly complex international corporate tax environment, a degree
of tax risk and uncertainty is, however, inevitable. Tax risk can arise from
unclear regulations and differences in interpretation but, most significantly,
where tax authorities apply diverging standards in assessing intra-group
cross-border transactions. This is the situation for many multinational
organisations. We manage and control these risks in a proactive manner and, in
doing so, exercise our judgement and seek appropriate advice from relevant
professional firms. Tax risks are assessed as part of the Group's formal
governance process and are reviewed by the Board and the Audit Committee on a
regular basis.
Financial review (continued)
Risks and uncertainties
The Board takes a proactive approach to risk management aimed at protecting
the Group's employees, clients and consumers and safeguarding the interests of
the Company and its shareholders in a constantly changing environment.
The principal risks and uncertainties facing the business, and the activities
the Group undertakes to mitigate these, are set out on pages 17 to 20.
Related party transactions
Details of transactions with related parties are set out in note 12 to the
consolidated financial statements. These transactions have not had, and are
not expected to have, a material effect on the financial performance or
position of the Group.
Going concern
The factors considered by the directors in assessing the ability of the Group
to continue as a going concern are discussed on page 29.
The Group has access to considerable financial resources, together with
longer-term contracts with a number of clients and suppliers across different
geographic areas and industries. As a consequence, the directors believe that
the Group is well placed to manage its business risks successfully.
Based on the assessment discussed on page 29, the directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for at least the period to 31 March 2026. For this reason, they
continue to adopt the going concern basis in preparing the financial
statements.
Regional review
Underlying revenue(1) Change Statutory revenue Change
2024 Restated(2) Reported Constant Organic 2024 Restated(2) Reported
$m
$m
2023 rates currency % 2023 rates
$m % % $m %
North America 28,581 25,768 10.9% 10.9% 10.5% 28,557 25,745 10.9%
Europe 9,887 8,598 15.0% 14.3% 11.9% 9,737 8,312 17.1%
Rest of World 3,708 3,850 (3.7)% (0.8)% 8.5% 3,708 3,850 (3.7)%
Total 42,176 38,216 10.4% 10.6% 10.6% 42,002 37,907 10.8%
Underlying operating profit(1) Change Underlying operating margin(1) Statutory operating profit Statutory operating margin
2024 Restated(2) Constant 2024 2023 2024 Restated(2) 2024 2023
$m
%
%
$m
%
%
( )2023 currency 2023
$m
$m
%
North America 2,335 2,019 15.7% 8.2% 7.8% 2,251 1,931 7.9% 7.5%
Europe 583 479 22.0% 5.9% 5.6% 380 297 3.9% 3.5%
Rest of World 224 214 10.3% 6.0% 5.6% 224 205 6.0% 5.3%
Unallocated overheads (144) (120) (271) (120)
Total 2,998 2,592 16.4% 7.1% 6.8% 2,584 2,313 6.2% 6.1%
1. Alternative Performance Measure (APM) (see pages 48 to 55).
2. With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The results for the year ended 30
September 2023 have been restated in US dollars.
North America - 67.8% of Group underlying revenue (2023: 67.4%)
Underlying
Operating profit growth was 15.7% on a constant-currency basis, increasing to
$2,335m, driven by strong revenue growth and operating margin progression.
Organic revenue growth was 10.5%, driven by net new business growth,
appropriate levels of pricing and like-for-like volume growth. Client
retention rates remained strong at 96.4%.
Growth rates were high single-digit or greater across all sectors, and notably
strong in Business & Industry driven by net new business growth and
like-for-like volumes, which benefited from the continued 'return to office'
trend and value proposition versus the high street. Across our other sectors,
Sports & Leisure and Education continued to benefit from high attendance
levels and per capita spend levels, while Healthcare & Senior Living
business performance included strong retail sales and new business openings.
Operating margin increased by 40bps to 8.2% driven by management productivity
initiatives, cost control and appropriate levels of pricing.
The region continues to acquire high-quality businesses and talent within our
existing sectors, with a particular focus on vending.
Statutory
Statutory revenue increased by 10.9% to $28,557m reflecting the strong organic
revenue growth.
Statutory operating profit was $2,251m (2023: $1,931m), with the difference
from underlying operating profit being acquisition-related charges of $84m
(2023: $88m).
Regional review (continued)
Europe - 23.4% of Group underlying revenue (2023: 22.5%)
Underlying
The region continues to benefit from ongoing investments in its people, brands
and processes. Operating profit was $583m, representing growth of 22.0% on a
constant-currency basis, driven by double-digit revenue growth, strong margin
progression and the impact of acquisitions during the year.
Organic revenue growth of 11.9% comprised net new business growth, volume
growth and pricing. Client retention rates at 95.5% remain significantly above
historical levels. All sectors delivered high single-digit growth rates or
above, with double-digit growth rates achieved in Business & Industry,
Education and Defence, Offshore & Remote.
Operating margin increased by 30bps to 5.9%, reflecting management focus
across the portfolio, ongoing operational efficiencies and appropriate levels
of pricing.
We have increased our focus on M&A with significant acquisitions to deepen
our sectorisation and sub-sectorisation strategy, unlock new capabilities and
increase the flexibility of our operating model. During the year, we acquired
HOFMANN(S) in Germany and CH&CO in the UK and Ireland. Subsequent to the
year-end, we also completed the acquisition of Dupont Restauration in France
and agreed to acquire 4Service AS in Norway. Additionally, as part of our
focus on core markets, we exited our joint venture in the United Arab
Emirates.
Statutory
Statutory revenue increased by 17.1% to $9,737m, with the difference from
underlying revenue being the presentation of the share of results of our joint
ventures operating in the Middle East.
Statutory operating profit was $380m (2023: $297m), with the difference from
underlying operating profit mainly reflecting acquisition-related charges of
$151m (2023: $56m) and charges related to the Group's strategic portfolio
review of $43m (2023: $118m).
Rest of World - 8.8% of Group underlying revenue (2023: 10.1%)
Underlying
Operating profit grew by 10.3% on a constant-currency basis, to $224m, driven
by strong organic revenue growth and margin progression. This growth was
despite the impact of exits from our operations in four non-core countries
during the year.
Organic revenue growth was 8.5% and strongest in our Business & Industry
sector, particularly in India, driven by high levels of net new business
growth and the 'return to office' trend. All other sectors delivered
mid-to-high single-digit organic revenue growth underpinned by net new
business growth, like-for-like volume growth and pricing. Client retention
rates remained above historical levels at 94.3%.
Operating margin increased by a further 40bps to 6.0% reflecting the benefits
from strong focus on our core markets, including Australia, Japan and India.
As part of the Group's strategy to increase focus on its core markets, we
exited Argentina, Angola, mainland China and Brazil during the year and agreed
to exit our businesses in Chile, Colombia and Mexico, subject to regulatory
approval and completion procedures. Subsequent to the year-end, we agreed to
exit our business in Kazakhstan, subject to regulatory approval.
Statutory
Statutory revenue decreased by 3.7% to $3,708m reflecting the non-core
business disposals. There is no difference between statutory and underlying
revenue.
Statutory operating profit was $224m (2023: $205m), with the difference from
underlying operating profit in 2023 being acquisition-related charges of $9m.
Risk management
The Board takes a proactive approach to risk management aimed at protecting
the Group's employees, clients and consumers and safeguarding the interests of
the Company and its shareholders in a constantly changing environment.
Risk management is an essential element of business governance. The Group has
risk management policies, processes and procedures in place to ensure that
risks are properly identified, evaluated and managed at the appropriate level.
The identification of risks and opportunities, the development of action plans
to manage those risks and maximise the opportunities, and the continual
monitoring of progress against agreed key performance indicators (KPIs) are
integral parts of the business process and core activities throughout the
Group.
In compliance with provision 28 of the UK Corporate Governance Code 2018 (the
Code), the Board has conducted a robust assessment of the Company's emerging
and principal risks. The following pages set out the Board's approach to
assessing and mitigating risk, the principal risks of the Company, and the
procedures in place to identify emerging risks.
Risk management framework
The Board has overall responsibility for risk management. This includes
establishing policies and procedures to manage risk, overseeing the internal
control framework, reviewing the nature and extent of the principal risks,
setting risk appetite and embedding a mindset of risk management throughout
the business.
The Board has approved a Risk Management Policy. The Group operates a formal
risk management process in accordance with this policy, under which the
Group's principal risks (set out on pages 17 to 20) are assessed and
prioritised biannually. In accordance with the Financial Reporting Council's
Guidance on Risk Management, Internal Control and Related Financial Business
Reporting 2014 and in the Code, this process has been in place for the
financial year under review. These systems are designed to manage rather than
eliminate the risk of failure to achieve the Group's strategic objectives,
safeguard the Group's assets against material loss, fairly report the Group's
performance and position, and ensure compliance with relevant legislation,
regulation and best practice including that related to social, environmental
and ethical matters. These systems provide reasonable, but not absolute,
assurance against material misstatement or loss.
The Board delegates aspects of risk management, with the Executive Committee
responsible for the day-to-day management of significant risk, and the Audit
Committee responsible for the oversight of Compass' risk management systems
and internal financial controls. The Group Director of Risk and Internal Audit
maintains the risk management framework including the Risk Management Policy.
The Audit Committee annually reviews the effectiveness of the Group's approach
to risk management and any changes to the Risk Management Policy and
recommends the principal risks and uncertainties disclosures made in the
Annual Report and Accounts to the Board for approval.
Risks and the corresponding controls and mitigations are reviewed by country
and regional leadership teams on an ongoing basis. Risk updates are integral
to periodic management reviews and are regularly reviewed by the Regional
Governance Committees (RGCs) and the Executive Committee. A critical component
of the risk review process is the dynamic identification of emerging and
developing risks at a country, regional and Group-level. This bottom-up and
top-down approach provides a comprehensive assessment of the key risks facing
the Group. The findings of the risk reviews, including the principal risks and
any developing trends, are reported to and considered by the Board twice a
year.
Risks are considered at gross and net levels. This allows the impact of each
risk and likelihood of its occurrence both before and after controls and
mitigations to be assessed. Risk management plans are developed for all
significant risks. They include a clear description of the nature of the risk,
quantification of the potential impact and likelihood of occurrence, the
owners for each risk, and details of the controls and mitigations in place,
proportionate to the risk, and in line with the Company's business. The
identification and assessment of climate-related risks and opportunities are
incorporated within the risk management process. All country operating units
are mandated to consider climate-related risks and opportunities. These are
assessed in terms of percentage profit before interest and tax (PBIT) impact
in accordance with the criteria set out in the Board-approved Risk Management
Policy. All country and Group-level risks are assigned risk owners and,
together with the mitigations, are recorded in the central risk reporting
system.
Group companies also submit biannual risk and internal control assurance
letters to the Group CFO on internal control and risk management issues, with
comments on the control environment within their operations. The Chair of the
Audit Committee reports to the Board on any matters arising from the
Committee's review of how the risk management and internal control processes
have been applied.
The Audit Committee keeps under review the adequacy and effectiveness of the
Company's and Group's internal financial controls and risk management systems.
Risk management (continued)
Risk appetite
The Board interprets risk appetite as the level of risk that the Company is
willing to take to meet its strategic objectives. The Board's attitude to and
appetite for risk are communicated to the Group's businesses through the
strategy planning process and the internal risk governance and control
frameworks. In determining its risk appetite, the Board recognises that a
prudent and robust approach to risk mitigation must be carefully balanced with
a degree of flexibility so that the entrepreneurial spirit that has greatly
contributed to the Group's success is not inhibited.
In assessing risk appetite, the Board reviews the three-year business plan and
associated strategic risks. Risk appetite for specific financial risks such as
funding and liquidity, counterparty, foreign exchange and interest rate risk
are set out in the Board approved treasury policies. Compliance with legal and
regulatory requirements, such as those contained in the Companies Act, health
and safety and other risk-specific legislation, is mandatory.
New and emerging risks
The Board has established processes for identifying emerging risks, and
horizon scanning for risks that may arise over the medium to long-term.
Emerging and potential changes to the Group's risk profile are identified
through the Group's risk management framework and through direct feedback from
management, including in regard to changing operating conditions, and market
and consumer trends.
The democratisation of generative artificial intelligence (AI) has given
widespread access to powerful online AI services for content creation. This
opportunity presents several risks including breach of data confidentiality
and data privacy, and other intellectual property-related risks. In response,
to mitigate these risks, Compass has implemented principles-based rules that
apply globally, and we have developed a framework for responsible use of AI to
support all our markets.
The ongoing tensions in the Middle East and the Russia-Ukraine conflict have
elevated geopolitical risks and while we do not operate directly in those
countries currently affected, we do have interests elsewhere in Europe and the
Middle East. We continue to monitor these situations closely with the safety
and security of the Group's employees front of mind.
Our principal risks
Over recent years, we have reviewed our global portfolio of operations and as
part of this we have exited a number of countries deemed both higher-risk and
non-core to our long-term business objectives.
This has significantly reduced our risk exposure in certain areas including
political instability, economic volatility, employee welfare (particularly
foreign migrant labour risks) and international tax. Risks arising in the
immediate aftermath of the COVID-19 pandemic have also reduced.
As a result, certain risks (Political instability and International tax as set
out in Annual Report 2023) are no longer considered to be principal risks
while others have been combined and streamlined.
All risks disclosed in previous years can be found in the annual reports
available on our website, www.compass‑group.com. These risks remain
important to the business and are kept under regular review.
The principal risks and uncertainties facing the business at the date of this
Announcement are set out on pages 17 to 20. These risks are not listed in any
order of priority.
Other risks
The principal risks do not comprise all the risks that the Group may face. The
Group faces a number of operational risks on an ongoing basis, such as
litigation and financial risks. Additional risks and uncertainties not
presently known to management, or which are considered to be remote or are
deemed to be less material at the date of this Announcement, may also have an
adverse effect on the Group.
Principal risks
Risk and description Mitigation
Climate change The Group continues to focus on evaluating its exposure to climate change and
seeks to identify potential future issues early so that sourcing and
➊ ➋ ➌ ➍ ➎ operations can be adjusted, and menus adapted appropriately. The Task Force on
Climate-related Financial Disclosures scenario analysis helps inform the
2024 2023 materiality of these risks. Work continues with clients and suppliers to
propose, execute and measure solutions to support their efforts and those of
Strategic pillar link: Compass in reducing greenhouse gas (GHG) emissions. Compass has targeted
climate net zero GHG emissions by 2050 alongside validated science-based
The impact of climate change on the environment may lead to issues around food targets to reduce emissions by 2030 (from a 2019 base year) in line with the
sourcing and security, and supply chain continuity in some of the Group's 2015 Paris Agreement.
markets. Issues in these areas could affect the availability of some food
products, and potentially may lead to food cost inflation.
Food safety(1) Management meetings throughout the Group feature a health and safety update
(food safety and/or occupational safety) as one of their first substantive
➊ ➋ ➌ ➍ ➎ agenda items.
2024 2023 Food safety improvement KPIs are included in the annual bonus plans for each
of the businesses' management teams. The Group has policies, procedures and
Strategic pillar link: standards in place to ensure compliance with legal obligations and industry
standards.
Compass Group companies feed millions of consumers every day. For that reason,
setting the highest standards for food hygiene and safety is paramount. Safety The safety and quality of the Group's global supply chain are assured through
breaches could cause serious business interruption and could result in compliance with a robust set of standards which are regularly reviewed,
criminal and/or civil prosecution, increased costs and potential damage to the audited and upgraded as necessary to improve supply chain visibility and
Company's reputation. product integrity.
Further mitigations in place include our Global Safety Standards, Global
Supply Chain Integrity Standards and a Global Allergen Management Plan.
Occupational safety(1) In addition to the priority focus in management meetings, occupational safety
improvement KPIs are included in the annual bonus plans for each of the
➊ ➋ ➌ ➍ ➎ businesses' management teams.
2024 2023 Our safety framework outlines the methods for executing and reporting safety
measures, ensuring a secure environment for colleagues, contractors, and
Strategic pillar link: consumers. We regularly update and refine the health and safety framework to
address any challenges that may emerge from operational changes.
Compass Group companies employ hundreds of thousands of people globally.
Ensuring the safety of our employees, consumers, and suppliers is our top Group standards are supplemented in country with occupational safety standards
priority. Failure to comply with workplace safety standards can result in that meet local regulatory conditions.
injuries to employees, clients and consumers, or other third parties,
potentially causing operational disruptions and adverse financial, legal, and
reputational consequences.
1. Combined under Health and safety risk in Annual Report 2023.
Key Link to
Increased risk ➊ MAP 1: Client sales and marketing
Static risk ➋ MAP 2: Consumer sales and marketing
Decreasing risk ➌ MAP 3: Cost of food
New risk ➍ MAP 4: In-unit costs
➎ MAP 5: Above-unit overheads
Alignment with our strategic focus areas
People Performance Purpose
Principal risks (continued)
Risk and description Mitigation
Pandemic Operations and working practices have been adjusted to retain the skills and
experience of colleagues and provide flexibility in the event of another
➊ ➋ ➌ ➍ ➎ pandemic which leads to a resumption of containment measures.
2024 2023 To protect the Group's employees, clients and consumers, in the event of
another pandemic, enhanced health and safety protocols and personal protective
Strategic pillar link: equipment requirements and guidelines, hygiene requirements and site layout
solutions developed in consultation with expert advisers and with our clients,
The Group's operations were significantly disrupted due to the global COVID-19 would be adopted.
pandemic and associated containment measures. Compass recovered well and
learned from the pandemic, and this risk has now diminished. However, Careful management of the Group's cost base and robust measures to protect the
outbreaks of another pandemic, could cause further business risk. Group's liquidity position have ensured that we remain resilient and well
placed to take advantage of appropriate opportunities as they arise.
Robust incident management and business continuity plans are in place and are
monitored for effectiveness and regularly reviewed to ensure they reflect
evolving best practice.
Talent(1) Leadership succession planning is performed at Board, regional and
country-levels. The Group has established tools, training, development,
➍ ➎ performance management and reward programmes to help retain, develop, motivate
and support its skilled workforce, including an increasing focus on global
2024 2023 mobility and opportunities.
Strategic pillar link: The Group has a number of well-established initiatives which help to monitor
levels of engagement and to respond to the needs of employees. Specifically,
Attracting, retaining and motivating the best people with the right skills, at Compass has increased its local focus and employee support on mental health
all levels of the organisation, is key to the long-term success of the Group. awareness, stress management and resilience and the provision of financial
advice and assistance to better equip its people in times of uncertainty and
Changes to economic conditions may increase the risk of attrition at all change.
levels of the organisation.
Sales and retention2 Compass has strategies based on quality, value, innovation and investment in
new technologies that strengthen its long-term relationships with its clients
➊ ➋ and consumers.
2024 2023 The Group's business model is structured so that it is not reliant on one
particular sector or group of clients.
Strategic pillar link:
Technology is used to support the delivery of efficiencies and to contribute
The Group's growth ambitions rely on sustainably driving positive net new to growth through, for example, cashierless and cashless payment systems and
business through securing and retaining a diverse range of clients. the use of AI. This is beneficial to clients and consumers and positively
impacts retention and new business wins.
The Group's operating companies contract with a large number of clients.
Failure to comply with the terms of these contracts, including proper delivery Compass continues to focus on financial security and safety. In today's
of services, could lead to the loss of business and/or claims. environment, these are key strengths for clients.
The potential loss of material client contracts and the inability to secure Processes are in place to ensure that the services delivered to clients are of
additional new contracts in a competitive market is a risk to Compass' an appropriate standard and comply with the required contract terms and
businesses. conditions.
The emergence of new industry participants and traditional competition using Compass continues to evolve its offer to increase participation rates and
disruptive technology could adversely affect the Group's businesses. service sites of different sizes.
1. Combines and streamlines risks relating to Recruitment and Retention and
motivation as set out in Annual Report 2023.
2. Incorporates and streamlines risks relating to Service delivery,
contractual compliance and retention, and Competition and disruption as set
out in Annual Report 2023.
Key Link to
Increased risk ➊ MAP 1: Client sales and marketing
Static risk ➋ MAP 2: Consumer sales and marketing
Decreasing risk ➌ MAP 3: Cost of food
New risk ➍ MAP 4: In-unit costs
➎ MAP 5: Above-unit overheads
Alignment with our strategic focus areas
People Performance Purpose
Principal risks (continued)
Risk and description Mitigation
Geopolitical As a Group, Compass is monitoring the situation closely with the safety and
security of the Group's employees front of mind.
➊ ➋ ➌ ➍ ➎
Whilst we do not operate in Israel or the Palestinian territories, we do have
2024 2023 interests elsewhere in the Middle East. Compass has permanently exited the
Russian market and moved away from all known Russian suppliers.
Strategic pillar link:
The Group has in place strategies to manage economic volatility including cost
The conflict in the Middle East and the ongoing Russia-Ukraine war have inflation and cybersecurity threats.
increased geopolitical risks, heightened national security threats in those
regions, and disrupted the global energy market. These factors contribute to
risks such as economic volatility including cost inflation and cybersecurity
threats.
Economic volatility(1) As part of Compass' strategy, the Group is focused on productivity and
purchasing initiatives which help to manage the cost base.
➊ ➋ ➌ ➍ ➎
During adverse conditions, if necessary, actions can be taken to reduce labour
2024 2023 costs and action plans have been implemented to protect profitability and
liquidity.
Strategic pillar link:
As part of the MAP framework, and by sharing best practice across the Group,
Certain sectors of Compass' business could be susceptible to negative shifts Compass seeks to manage inflation by continuing to drive greater efficiencies
in the economy and employment rates. Compass has strategically exited a number through menu management, supplier rationalisation, labour scheduling and
of countries with high economic volatility. This move, coupled with improved productivity, and through the increased use of technology. Cost indexation in
economic conditions in our primary markets, has reduced the risks affecting our contracts also gives Compass the contractual right to review pricing with
the Group. clients.
Our success in managing cost inflation also provides an opportunity, as the
scale and maturity of our procurement operations allows us to manage supply
chain price increases more effectively than some of our competitors and
in-house operations. We believe this is a factor in increasing levels of
first-time outsourcing.
Business ethics and integrity(2) The Group's zero-tolerance-based Code of Business Conduct (CBC), Business
Integrity Policy (BIP) and Human Rights Policy (HRP), govern all aspects of
➊ ➋ ➌ ➍ ➎ its relationships with its stakeholders. Compass operates a continuous
improvement process as part of the Group's Ethics and Integrity programme
2024 2023 (EIP).
Strategic pillar link: The Group's risk management process helps identify major risks and informs the
regular monitoring, effectiveness testing and review of key areas of our
Ineffective compliance management systems, lack of an embedded business internal control framework.
integrity culture or serious violation of our policies, relevant laws, or
regulations (including but not limited to anti-bribery and corruption, A strong culture of integrity is promoted through Compass' EIP (including
anti-competitive behaviour, fraud, money laundering, tax evasion, trade and training and awareness activities) and its independently operated SpeakUp,
economic sanctions, human rights and modern slavery, and data protection), We're Listening helpline and web platform. All alleged breaches of the CBC,
could result in civil and/or criminal proceedings leading to significant BIP and the HRP, and other serious misconduct, are followed up and
fines, sanctions, financial loss and reputational harm. investigated (as appropriate).
Regulatory expectations and new laws in these areas are being introduced in To enhance its ability to counter risks to its businesses and supply chains
certain countries and regions, with a heightened focus on corporate from modern slavery, Compass has focused on the areas where its human rights
enforcement, accountability and supply chain resilience. strategy can have the greatest impact.
This has been done through the continued implementation of the HRP, the work
of the Human Rights Working Group, the engagement of external specialist
advisers, e-learning and continued efforts to improve the Group's human rights
due diligence through supplier evaluation and labour agency reviews.
The strategic exit of several countries has helped to lower the risk around
employee welfare.
1. Incorporates risk relating to Cost inflation as set out in Annual Report
2023.
2. Combines and streamlines risks relating to Social and ethical standards,
and Compliance and fraud as set out in Annual Report 2023.
Key Link to
Increased risk ➊ MAP 1: Client sales and marketing
Static risk ➋ MAP 2: Consumer sales and marketing
Decreasing risk ➌ MAP 3: Cost of food
New risk ➍ MAP 4: In-unit costs
➎ MAP 5: Above-unit overheads
Alignment with our strategic focus areas
People Performance Purpose
Principal risks (continued)
Risk and description Mitigation
Cybersecurity and data privacy Compass continually assesses its cyber risk, and monitors and manages the
maturity of its enterprise infrastructure, platforms and security controls to
➊ ➋ ➌ ➍ ➎ ensure that it can effectively prevent, detect and respond to current or
future cyber attacks.
2024 2023
Appropriate crisis management procedures are in place to manage issues in the
Strategic pillar link: event of a cyber incident occurring. Our response protocols are supported by
using industry-standard tooling, experienced IT and security professionals,
The digital world creates increasing risk for global businesses including, but and external partners to mitigate potential impacts. Assurance is provided by
not limited to, technology failures, loss of confidential data, data privacy regular compliance monitoring of our key information technology control
breaches and damage to brand reputation through, for example, the increased framework, which is designed to prevent and defend against cyber threats and
threat of cyber-attacks, and use and instantaneous nature of social media. other risks.
Disruption caused by the failure of key software applications, security The Group relies on a variety of digital and technology platforms to manage
controls, or underlying infrastructure, or disruption caused by cyber-attacks and deliver services and communicate with its people, clients, consumers and
could impact day-to-day operations and management decision-making or result in suppliers. Compass' decentralised model and infrastructure help to mitigate
a regulatory fine or other sanction and/or third-party claims. propagation of attacks across the Group's technology estate.
The incidence of sophisticated phishing and malware attacks (including Compass continues to be focused on the need to maximise the effectiveness of
ransomware) on businesses is rising with an increase in the number of its information systems and technology as a business enabler. As such, the
companies suffering operational disruption, unauthorised access to and/or loss Group continues to invest in technology and specialist resources in order to
of data, including confidential, commercial, and personal identifiable data. further strengthen its platforms, cyber-security defences and controls to
prevent and detect cyber threats and respond to attacks in order to mitigate
A combination of geopolitical instability and accessibility of sophisticated the risk of operational disruption, technology failure, unauthorised access to
AI enabled tools and techniques have contributed to an increase in the risk of and/or loss of data.
phishing and malware attacks including ransomware across all industries.
The Group has implemented configuration changes designed to block phishing
The democratisation of generative AI has given widespread access to powerful emails, increased awareness campaigns, and provided cyber training to help
online AI services for content creation. This opportunity presents several employees identify these kinds of attacks.
risks including to data privacy and confidentiality.
In response to the potential risks posed by AI, Compass has implemented
principles-based rules that apply globally, and we are currently developing a
framework for the responsible use of AI in all our markets.
Information systems, technology and cyber-security controls and risks are
assessed as part of the Group's formal governance processes and are reviewed
by the Audit Committee on a regular basis.
Key Link to
Increased risk ➊ MAP 1: Client sales and marketing
Static risk ➋ MAP 2: Consumer sales and marketing
Decreasing risk ➌ MAP 3: Cost of food
New risk ➍ MAP 4: In-unit costs
➎ MAP 5: Above-unit overheads
Alignment with our strategic focus areas
People Performance Purpose
Viability statement
In accordance with provision 31 of the UK Corporate Governance Code 2018, the
directors have assessed the Group's viability, considering its current trading
performance, financial position, financing, strategic plan and principal
risks.
Business prospects
The Board has considered the long-term prospects of the Group based on its
business model, strategy and markets. Compass is a global leader in food
services and the geographical and sector diversification of the Group's
operations helps to minimise the risk of serious business interruption or
catastrophic damage to its reputation. The Group's business model is
structured so that it is not reliant on one group of clients or sector. The
Group's largest client constitutes 2% of underlying revenue, with the top 10
clients accounting for 9%.
Assessment
The directors have determined that a three-year period to 30 September 2027 is
an appropriate period over which to provide the Group's viability statement on
the basis that it is the period reviewed by the Board in its strategic
planning process and is aligned to the typical length of the Group's contracts
(three to five years). The directors believe that this presents the Board and
readers of the Annual Report with a reasonable degree of confidence over this
longer-term outlook.
The Board's assessment of the Group's viability comprises the following
business processes:
· Risk management process
The Group operates a formal risk management process under which the Group's
principal risks are assessed and prioritised biannually. Risks and
corresponding controls and mitigations are reviewed by country and regional
leadership teams on an ongoing basis. The findings of the risk reviews,
including the principal risks and any developing trends, are reported to the
Board twice a year. In making its viability assessment, the Board carried out
a robust evaluation of the emerging and principal risks facing the Group (see
pages 17 to 20), including those that would threaten its business model,
future performance, solvency or liquidity.
· Strategic planning process
The Board considers annually a three-year, bottom-up strategic plan and a more
detailed budget which is prepared for the following year. Current-year
business performance is reforecast during the year. The plan is reviewed and
approved by the Board, with involvement throughout from the Group CEO, Group
CFO and the executive team. The Board's role is to consider the
appropriateness of key assumptions, taking into account the external
environment and business strategy. The most recent three-year plan was
approved by the Board in November 2024.
· Headroom and covenant analysis
At 30 September 2024, the Group had $2.7bn of undrawn committed bank
facilities and $0.6bn of cash net of overdrafts. Term debt maturities in the
three-year period total $1.4bn. Based on the forecast cash flows in the
strategic plan, the maturing debt is expected to be refinanced during the
three-year period to 30 September 2027 to maintain the desired level of
headroom. The $2.7bn of committed bank facilities mature in 2026, but are
expected to be refinanced during 2025. The Group's long-term (A/A2) and
short-term (A-1/P-1) credit ratings and well-established presence in the debt
capital markets provide the directors with confidence that the Group could
refinance the maturing debt and facilities as required.
A reverse stress test has been undertaken to identify the circumstances that
would cause the Group to breach the headroom against its committed facilities
or the financial covenants on its US Private Placement (USPP) debt. At
30 September 2024, the nominal value of USPP debt outstanding totalled $700m
(2023: $1,052m). The reverse stress test, which removes discretionary M&A
expenditure as a mitigating action, shows that underlying operating profit(1)
would have to reduce by more than 55% of the strategic plan level throughout
the three-year assessment period before the Group's committed facilities are
reached. The refinancing requirement is not accelerated in the reverse stress
test as a mitigating action given the strong liquidity position of the Group.
The principal risks that would have the most significant impact on the Group's
business model, future performance, solvency or liquidity are another pandemic
and associated containment measures and geopolitical tensions, and these,
together with the other principal risks identified on pages 17 to 20, have
been considered as part of the viability assessment. Specific scenarios based
on the principal risks have not been modelled on the basis that the level of
headroom to absorb the occurrence of such risks is substantial and there is a
range of other actions available that could be implemented to mitigate the
potential impact.
1. Alternative Performance Measure (APM). The Group's APMs are defined in note 14
(non-GAAP measures) and reconciled to GAAP measures in notes 2 (segmental
analysis) and 14 to the consolidated financial statements.
Viability statement (continued)
Substantial mitigating actions were identified and implemented as part of the
Group's COVID-19 pandemic response in 2020, including reducing capital
expenditure, resizing the cost base, renegotiating client contracts, pausing
M&A activity and shareholder returns, raising equity, negotiating covenant
waivers and securing additional committed funding. These actions illustrate
the flexibility the Group has to mitigate the impact of adverse events.
In the event that the financial covenants were to come under pressure,
mitigating actions include repaying the loan notes from available liquidity,
refinancing in advance of their maturity or negotiating covenant waivers.
Conclusion
Based on the results of this analysis, the Board has a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities
as they fall due over the three-year period to 30 September 2027.
Petros Parras
Group Chief Financial Officer
26 November 2024
Compass Group PLC
Consolidated Financial Statements
Consolidated income statement
For the year ended 30 September 2024
2024 Restated(1)
2023
Notes $m $m $m $m
Revenue 2 42,002 37,907
Operating costs (39,462) (35,662)
Operating profit before joint ventures and associates 2,540 2,245
Share of results of joint ventures and associates 2 44 68
Underlying operating profit2 2,14 2,998 2,592
Acquisition-related charges 3,14 (235) (153)
Charges related to the strategic portfolio review 3,14 (170) (118)
Other(3) 14 (9) (8)
Operating profit 2 2,584 2,313
Net (loss)/gain on sale and closure of businesses 10,14 (203) 24
Finance income 37 59
Finance expense (286) (225)
Acquisition-related charges 14 (9) -
Other financing items 14 (67) (34)
Finance costs (325) (200)
Profit before tax 2,056 2,137
Income tax expense 4 (642) (525)
Profit for the year 1,414 1,612
Attributable to
Equity shareholders 1,404 1,607
Non-controlling interests 10 5
Profit for the year 1,414 1,612
Basic earnings per share 5 82.3c 92.2c
Diluted earnings per share 5 82.2c 92.1c
1. See note 1.
2. Operating profit excluding specific adjusting items (see note 14).
3. Other specific adjusting items include one-off pension charge and tax on share
of profit of joint ventures (see note 14).
Compass Group PLC
Consolidated Financial Statements
Consolidated statement of comprehensive income
For the year ended 30 September 2024
Notes 2024 Restated(1)
$m
2023
$m
Profit for the year 1,414 1,612
Other comprehensive income
Items that will not be reclassified to the income statement
Remeasurement of post-employment benefit obligations (286) 33
Return on plan assets, excluding interest income 63 (331)
Change in asset ceiling, excluding interest income (1) 6
Change in fair value of financial assets at fair value through other 322 115
comprehensive income(2)
Tax (charge)/credit on items relating to the components of other comprehensive (37) 36
income
61 (141)
Items that may be reclassified to the income statement
Currency translation differences3 267 229
Change in fair value of financial assets at fair value through other 28 -
comprehensive income(2)
Reclassification of cumulative currency translation differences on sale of 10 250 (1)
businesses
Tax credit on items relating to the components of other comprehensive income 2 4
547 232
Total other comprehensive income for the year 608 91
Total comprehensive income for the year 2,022 1,703
Attributable to
Equity shareholders 2,012 1,698
Non-controlling interests 10 5
Total comprehensive income for the year 2,022 1,703
1. See note 1.
2. The credit totalling $350m (2023: $115m) from the change in fair value of
financial assets at fair value through other comprehensive income includes
$171m (2023: $69m) in respect of assets held by the Rabbi Trust arrangements
and $179m (2023: $46m) in respect of trade and other investments in the US.
3. Includes a gain of $318m (2023: $203m) in relation to the effective portion of
net investment hedges.
Compass Group PLC
Consolidated Financial Statements
Consolidated statement of changes in equity
For the year ended 30 September 2024
Attributable to equity shareholders
Notes Share capital Share premium Other reserves Retained earnings Non-controlling interests Total equity
$m $m $m $m $m $m
At 1 October 2023 (restated(1)) 346 317 4,582 1,018 37 6,300
Profit for the year - - - 1,404 10 1,414
Other comprehensive income
Remeasurement of post-employment benefit obligations - - - (286) - (286)
Return on plan assets, excluding interest income - - - 63 - 63
Change in asset ceiling, excluding interest income - - - (1) - (1)
Change in fair value of financial assets at fair value through other - - - 350 - 350
comprehensive income
Currency translation differences - - 267 - - 267
Reclassification of cumulative currency translation differences on sale of 10 - - 250 - - 250
businesses
Tax credit/(charge) on items relating to the components - - 2 (37) - (35)
of other comprehensive income
Total other comprehensive income for the year - - 519 89 - 608
Total comprehensive income for the year - - 519 1,493 10 2,022
Fair value of share-based payments - - - 68 - 68
Change in fair value of non-controlling interest put options - - 7 - - 7
Changes to non-controlling interests due to acquisitions and disposals - - (54) - 40 (14)
Reclassification of revaluation reserve on sale of businesses - - (14) 14 - -
Cost of shares transferred to employees - - 64 (64) - -
Purchase of own shares - share buyback - - (512) - - (512)
Tax credit on items taken directly to equity - - - 8 - 8
346 317 4,592 2,537 87 7,879
Dividends paid to equity shareholders 6 - - - (963) - (963)
Dividends paid to non-controlling interests - - - - (10) (10)
At 30 September 2024 346 317 4,592 1,574 77 6,906
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Consolidated statement of changes in equity
For the year ended 30 September 2024
Attributable to equity shareholders
Notes Share capital Share premium Other reserves Retained earnings Non-controlling interests Total equity
$m $m $m $m $m $m
At 1 October 2022 (restated(1)) 346 317 5,559 325 44 6,591
Profit for the year - - - 1,607 5 1,612
Other comprehensive income
Remeasurement of post-employment benefit obligations - - - 33 - 33
Return on plan assets, excluding interest income - - - (331) - (331)
Change in asset ceiling, excluding interest income - - - 6 - 6
Change in fair value of financial assets at fair value through other - - - 115 - 115
comprehensive income
Currency translation differences - - 229 - - 229
Reclassification of cumulative currency translation differences on sale of - - (1) - - (1)
businesses
Tax credit on items relating to the components of other comprehensive income - - 4 36 - 40
Total other comprehensive income/(loss) for the year - - 232 (141) - 91
Total comprehensive income for the year - - 232 1,466 5 1,703
Fair value of share-based payments - - - 54 - 54
Change in fair value of non-controlling interest put options - - 16 - - 16
Changes to non-controlling interests due to acquisitions and disposals - - (2) - 2 -
Reclassification of non-controlling interest put options reserve on exercise - - 7 - (7) -
of put options
Cost of shares transferred to employees - - 35 (35) - -
Purchase of own shares - share buyback - - (1,246) - - (1,246)
Purchase of own shares - employee share-based payments - - (19) - - (19)
Tax credit on items taken directly to equity - - - 4 - 4
346 317 4,582 1,814 44 7,103
Dividends paid to equity shareholders 6 - - - (796) - (796)
Dividends paid to non-controlling interests - - - - (7) (7)
At 30 September 2023 (restated(1)) 346 317 4,582 1,018 37 6,300
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Consolidated balance sheet
At 30 September 2024
Restated(1) Restated(1)
30 September 1 October
2023 2022
$m
$m
Notes 30 September
2024
$m
Non-current assets
Goodwill 7 6,899 6,105 5,715
Other intangible assets 3,325 2,480 2,188
Costs to obtain and fulfil contracts 1,525 1,316 1,235
Right-of-use assets 1,144 992 917
Property, plant and equipment 1,411 1,166 1,058
Interests in joint ventures and associates 203 298 301
Other investments 1,149 1,049 881
Post-employment benefit assets 542 525 649
Trade and other receivables 410 309 180
Deferred tax assets 179 237 256
Derivative financial instruments 69 55 85
Non-current assets 16,856 14,532 13,465
Current assets
Inventories 734 692 570
Trade and other receivables 5,686 5,094 4,452
Tax recoverable 141 109 119
Cash and cash equivalents 623 1,029 2,214
Derivative financial instruments 36 22 79
7,220 6,946 7,434
Assets held for sale 10 273 5 29
Current assets 7,493 6,951 7,463
Total assets 24,349 21,483 20,928
Current liabilities
Borrowings (822) (1,327) (774)
Lease liabilities (273) (237) (216)
Derivative financial instruments (21) (45) (6)
Provisions (370) (284) (301)
Current tax liabilities (235) (261) (274)
Trade and other payables (8,172) (7,166) (6,281)
10 (9,893) (9,320) (7,852)
Liabilities held for sale (179) -
-
Current liabilities (10,072) (9,320) (7,852)
Non-current liabilities
Borrowings (3,774) (2,787) (3,651)
Lease liabilities (1,042) (916) (803)
Derivative financial instruments (187) (253) (265)
Post-employment benefit obligations (1,274) (983) (847)
Provisions (344) (349) (346)
Deferred tax liabilities (287) (132) (178)
Trade and other payables (463) (443) (395)
Non-current liabilities (7,371) (5,863) (6,485)
Total liabilities (17,443) (15,183) (14,337)
Net assets 6,906 6,300 6,591
Equity
Share capital 346 346 346
Share premium 317 317 317
Other reserves 4,592 4,582 5,559
Retained earnings 1,574 1,018 325
Total equity shareholders' funds 6,829 6,263 6,547
Non-controlling interests 77 37 44
Total equity 6,906 6,300 6,591
1. See note 1.
Approved by the Board of Directors on 26 November 2024 and signed on its
behalf by:
Dominic Blakemore, Director
Petros Parras, Director
Compass Group PLC
Consolidated Financial Statements
Consolidated cash flow statement
For the year ended 30 September 2024
Notes 2024 Restated(1)
$m
2023
$m
Cash flow from operating activities
Cash generated from operations 8 4,095 3,283
Interest paid (267) (208)
Tax received 18 31
Tax paid (711) (570)
Net cash flow from operating activities 3,135 2,536
Cash flow from investing activities
Purchase of subsidiary companies (784) (389)
Purchase of interests in joint ventures and associates (9) (9)
Net proceeds from sale of subsidiary companies, joint ventures and associates 225 58
net of exit costs(2)
Purchase of intangible assets (329) (263)
Purchase of contract fulfilment assets (508) (380)
Purchase of property, plant and equipment (572) (445)
Proceeds from sale of property, plant and equipment/intangible assets/contract 81 78
fulfilment assets
Purchase of other investments (2) (4)
Proceeds from sale of other investments(3) 330 4
Dividends received from joint ventures and associates 65 60
Interest received 39 61
Loans to third parties (25) -
Net cash flow from investing activities (1,489) (1,229)
Cash flow from financing activities
Purchase of own shares - share buyback (577) (1,148)
Purchase of own shares - employee share-based payments - (19)
Increase in borrowings 1,381 1
Repayment of borrowings (1,161) (543)
Repayment of borrowings acquired through business acquisitions (431) -
Net cash flow from derivative financial instruments 46 157
Repayment of principal under lease liabilities (227) (215)
Purchase of non-controlling interests - (10)
Dividends paid to equity shareholders 6 (963) (796)
Dividends paid to non-controlling interests (10) (7)
Net cash flow from financing activities (1,942) (2,580)
Cash and cash equivalents
Net decrease in cash and cash equivalents (296) (1,273)
Cash and cash equivalents at 1 October 830 1,934
Currency translation gains on cash and cash equivalents 59 169
593 830
Cash reclassified to held for sale (40) -
Cash and cash equivalents at 30 September 553 830
Cash and cash equivalents(4) 623 1,029
Bank overdrafts(4) (70) (199)
Cash and cash equivalents at 30 September 553 830
1. See note 1.
2. 2024 includes $35m of tax payments arising on the disposal of businesses.
3. 2024 includes $327m received in respect of the sale of the Group's 19%
effective interest in ASM Global Parent, Inc. in August 2024.
4. As per the consolidated balance sheet.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
1 Basis of preparation
Introduction
The consolidated financial statements of Compass Group PLC (the Company) have
been prepared on a going concern basis, as discussed below, in accordance with
UK-adopted International Accounting Standards. The consolidated financial
statements have been prepared under the historical cost convention, as
modified by the revaluation of certain financial instruments.
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 30 September 2024 or 2023, but is
derived from those accounts. Statutory accounts for 2023 have been delivered
to the Registrar of Companies and those for 2024 will be delivered following
the Company's Annual General Meeting. The auditor has reported on those
accounts. The reports of the auditor were unqualified, did not draw attention
to any matters by way of emphasis without qualifying its reports and did not
contain statements under section 498 (2) or (3) of the Companies Act 2006.
Change in reporting currency
With effect from 1 October 2023, the reporting currency of the Group was
changed from sterling to US dollars. The change in presentation currency
provides investors and other stakeholders with greater transparency in
relation to the Group's performance and reduces foreign exchange volatility on
earnings given that approximately three-quarters of the Group's underlying
operating profit originates in US dollars. The amounts for prior periods have
been translated into US dollars at average exchange rates for the relevant
periods for income statements and cash flows, with spot rates used for
significant transactions, and at the exchange rates on the relevant balance
sheet dates for assets and liabilities. Share capital, share premium and other
equity items have been translated into US dollars at historical exchange rates
either at 1 October 2004, the date of transition to International Financial
Reporting Standards (IFRS), or on the date of each relevant transaction.
Going concern
The directors consider it appropriate to prepare the financial statements on a
going concern basis for the reasons stated below.
At 30 September 2024, the Group's financing arrangements included sterling and
euro bonds ($3.9bn) and US dollar US Private Placement (USPP) notes ($0.7bn).
In addition, the Group had a Revolving Credit Facility of $2.7bn, committed to
August 2026, which was fully undrawn, and $0.6bn of cash, net of overdrafts.
With the exception of a €296m ($321m) payment to acquire Dupont Restauration
on 31 October 2024 (see note 13), the liquidity position of the Group has
remained substantially unchanged at the date of approving these consolidated
financial statements.
For the purposes of the going concern assessment, the directors have prepared
monthly cash flow projections for the period to 31 March 2026 (the assessment
period) from the most recent three-year strategic plan approved by the Board
in November 2024. The directors consider 18 months to be a reasonable period
for the going concern assessment as it enables them to consider the potential
impact of macroeconomic and geopolitical factors over an extended period.
Debt maturities in the going concern period include, in December 2024, a $100m
USPP note and, in September 2025, a £250m ($335m) Eurobond and $300m USPP
note. No additional refinancing of debt is assumed in the going concern
assessment.
The USPP notes are subject to leverage and interest cover covenants which are
tested on 31 March and 30 September each year. The Group met both covenants at
30 September 2024. The Group's other financing arrangements do not contain any
financial covenants.
The cash flow projections show that the Group has significant headroom against
its committed facilities and meets its financial covenant obligations under
the USPP notes without any refinancing.
The Group has performed a stress test against the base case to determine the
performance level that would result in a reduction in headroom against its
committed facilities to nil or a breach of its covenants. The Group's
committed facilities would be reached in the event that underlying operating
profit reduced by more than 40% of the strategic plan level. The directors do
not consider this scenario to be likely. The stress test assumes no new
business acquisitions (with the exception of Dupont Restauration in October
2024 and 4Service AS in 2025) as a mitigating action.
Consequently, the directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as they fall due for at least the
period to 31 March 2026 and, therefore, have prepared the financial statements
on a going concern basis.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
1 Basis of preparation (continued)
Changes in accounting policies
There were no new accounting standards or amendments to existing standards
effective in the current year that had a significant impact on the Group's
consolidated financial statements. There are a number of changes to accounting
standards, effective in future years, which are not expected to significantly
impact the Group's consolidated financial statements.
Judgements
The preparation of the consolidated financial statements requires management
to make judgements in respect of the application of its accounting policies
which impact the reported amounts of assets, liabilities, income and expenses.
Whilst there are no judgements that management considers to be critical in the
preparation of these financial statements, there is a significant judgement in
respect of the classification of cash payments relating to contract fulfilment
assets in the cash flow statement.
With the exception of contract fulfilment assets, cash payments in respect of
contract balances are classified as cash flows from operating activities. The
Group classifies additions to contract fulfilment assets as cash flows from
investing activities as they arise from cash payments in relation to assets
that will generate long-term economic benefits. During the year, the purchase
of contract fulfilment assets in cash flows from investing activities was
$508m (2023: $380m).
Estimates
The preparation of the consolidated financial statements requires management
to make estimates which impact the reported amounts of assets, liabilities,
income and expenses. These estimates are based on historical experience and
other factors that are believed to be reasonable under the circumstances.
Actual results may differ from these estimates.
Major sources of estimation uncertainty
The Group's major sources of estimation uncertainty are in relation to
goodwill in the UK cash-generating unit and post-employment benefit
obligations on the basis that a reasonably possible change in key assumptions
could have a material effect on the carrying amounts of assets and liabilities
in the next 12 months.
Other sources of estimation uncertainty
In addition to the major sources of estimation uncertainty, tax and
acquisition intangibles have been identified as additional sources of
estimation uncertainty. Whilst not considered to be major sources of
uncertainty as defined by IAS 1 Presentation of Financial Statements, the
recognition and measurement of certain material assets and liabilities are
based on assumptions and/or are subject to longer-term uncertainties.
Climate change
Climate change is identified as a principal risk as its impact on the
environment may lead to issues around food sourcing and security, and supply
chain continuity in some of the Group's markets (see page 17). The potential
impact of climate change has been assessed with scenario analysis conducted in
line with the Task Force on Climate-Related Financial Disclosures (TCFD)
recommendations. The Group has a commitment to reach climate net zero
greenhouse gas (GHG) emissions across its global operations and value chain by
2050.
The potential impact of climate change and the Group's net zero commitments on
the following areas has been considered:
· going concern and viability assessments
· tax
· goodwill
· other intangible assets
· post-employment benefits
There was no impact on the reported amounts in the financial statements as a
result of this review.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
2 Segmental analysis
Geographical segments
Revenue by sector and geographical segment1,2 North America Europe Rest of World Total
$m
$m
$m
$m
Year ended 30 September 2024
Business & Industry 9,912 4,720 1,284 15,916
Education 5,932 1,393 259 7,584
Healthcare & Senior Living 7,991 1,479 503 9,973
Sports & Leisure 4,396 1,317 163 5,876
Defence, Offshore & Remote 350 978 1,499 2,827
Underlying revenue3,4 28,581 9,887 3,708 42,176
Less: Share of revenue of joint ventures (24) (150) - (174)
Revenue 28,557 9,737 3,708 42,002
Year ended 30 September 2023 (restated(5))
Business & Industry 8,078 3,985 1,360 13,423
Education 5,481 1,239 257 6,977
Healthcare & Senior Living 7,424 1,352 518 9,294
Sports & Leisure 4,409 1,123 162 5,694
Defence, Offshore & Remote 376 899 1,553 2,828
Underlying revenue3,4 25,768 8,598 3,850 38,216
Less: Share of revenue of joint ventures (23) (286) - (309)
Revenue 25,745 8,312 3,850 37,907
1. There is no inter-segment trading.
2. An analysis of revenue recognised over time and at a point in time is not
provided on the basis that the nature, amount, timing and uncertainty of
revenue and cash flows are considered to be similar.
3. Revenue plus share of revenue of joint ventures.
4. Underlying revenue arising in the UK, the Group's country of domicile, was
$3,461m (2023: $2,915m). Underlying revenue arising in the US region was
$27,136m (2023: $24,456m). Underlying revenue arising in all countries outside
the UK from which the Group derives revenue was $38,715m (2023: $35,301m).
5. See note 1.
Geographical segments
Profit by geographical segment North America Europe Rest of World Central activities Total
$m
$m
$m
$m
$m
Year ended 30 September 2024
Underlying operating profit/(loss) before results of joint ventures and 2,313 560 224 (144) 2,953
associates
Add: Share of profit before tax of joint ventures 1 16 - - 17
Add: Share of results of associates 21 7 - - 28
Underlying operating profit/(loss)1 2,335 583 224 (144) 2,998
Less: Acquisition-related charges2 (84) (151) - - (235)
Less: Charges related to the strategic portfolio review(2) - (43) - (127) (170)
Less: One-off pension charge(2) - (8) - - (8)
Less: Tax on share of profit of joint ventures(2) - (1) - - (1)
Operating profit/(loss) 2,251 380 224 (271) 2,584
Net loss on sale and closure of businesses2 (203)
Finance costs (325)
Profit before tax 2,056
Income tax expense (642)
Profit for the year 1,414
1. Operating profit excluding specific adjusting items (see note 14).
2. Specific adjusting item (see note 14).
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
2 Segmental analysis (continued)
Geographical segments
Profit by geographical segment North America Europe Rest of World Central activities Total
$m
$m
$m
$m
$m
Year ended 30 September 2023 (restated(1))
Underlying operating profit/(loss) before results of joint ventures and 2,001 429 214 (120) 2,524
associates
Add: Share of profit before tax of joint ventures 1 35 - - 36
Add: Share of results of associates 17 15 - - 32
Underlying operating profit/(loss)2 2,019 479 214 (120) 2,592
Less: Acquisition-related charges3 (88) (56) (9) - (153)
Less: Charges related to the strategic portfolio review(3) - (118) - - (118)
Less: One-off pension charge3 - (8) - - (8)
Operating profit/(loss) 1,931 297 205 (120) 2,313
Net gain on sale and closure of businesses3 24
Finance costs (200)
Profit before tax 2,137
Income tax expense (525)
Profit for the year 1,612
1. See note 1.
2. Operating profit excluding specific adjusting items (see note 14).
3. Specific adjusting item (see note 14).
3 Operating costs
Acquisition-related charges
Represent amortisation and impairment charges in respect of intangible assets
acquired through business combinations, direct costs incurred through business
combinations or other strategic asset acquisitions, business integration
costs, changes in consideration in relation to past acquisition activity and
other acquisition-related items.
Acquisition-related charges 2024 Restated(1)
$m
2023
$m
Amortisation - acquisition intangibles 162 122
Impairment losses - goodwill - 6
Acquisition transaction costs 41 21
Adjustment to contingent consideration payable on business acquisitions 67 4
Gains on bargain purchases (35) -
Total 235 153
1. See note 1.
Charges related to the strategic portfolio review
As part of our strategic portfolio review, and considering country exits,
ongoing advancement of technologies and the increased decentralisation of our
business, we have reviewed our European regional business transformation ERP
programme that commenced a number of years ago. We have decided to discontinue
the implementation and roll out of our cross-market ERP programme and,
accordingly, have recognised a charge of $160m as a specific adjusting item,
which includes $146m for the non-cash impairment of work-in-progress head
office (non-client-related) computer software assets. An impairment charge of
$10m has been recognised in respect of our business in Qatar.
In 2023, charges related to the strategic portfolio review reflect the impact
of site closures and contract renegotiations and terminations in the UK.
Charges related to the strategic portfolio review 2024 Restated(1)
$m
2023
$m
Other intangible assets 146 -
Right-of-use assets - 52
Property, plant and equipment - 8
Joint ventures and associates 10 -
Impairment losses 156 60
Write-off - other receivables - 25
Onerous contracts and other costs - provisions 14 24
Other costs - other payables - 9
Total 170 118
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
4 Tax
Income tax expense 2024 Restated(1)
$m
2023
$m
Current tax
Current year 703 593
Adjustment in respect of prior years (38) (47)
Current tax expense 665 546
Deferred tax
Current year (39) (12)
Impact of changes in statutory tax rates - (1)
Adjustment in respect of prior years 16 (8)
Deferred tax credit (23) (21)
Total 642 525
1. See note 1.
The income tax expense for the year is based on the effective UK statutory
rate of corporation tax for the period of 25% (2023: 22%). Overseas tax is
calculated at the rates prevailing in the respective jurisdictions.
The global nature of the Group's operations gives rise to various factors
which could affect the future tax rate. These include the mix of profits,
changes to overseas statutory tax rates or tax legislation and the foreign
exchange rates applicable when those profits are translated into US dollars.
The UK government enacted an increase in the UK corporation tax rate from 19%
to 25% with effect from 1 April 2023. In addition, the future tax charge may
be affected by the impact of acquisitions, disposals or other restructuring
activities and the resolution of open issues with tax authorities.
The Group has operations in around 30 countries. The tax position in each
country is often not agreed with the tax authorities until some time after the
relevant period end and, if subject to a tax audit, may be open for an
extended period. In these circumstances, the recognition of tax liabilities
and assets requires management estimation to reflect a variety of factors,
including historical experience, interpretations of tax law and the likelihood
of settlement.
The international corporate tax environment remains complex and the sustained
increase in audit activity from tax authorities means that the potential for
tax uncertainties and disputes remains high. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such
differences will impact the results in the year in which such determination is
made. In addition, the calculation and recognition of temporary differences
giving rise to deferred tax assets requires estimates to be made of the extent
to which future taxable profits are available against which these temporary
differences can be utilised.
Uncertain tax positions
Tax risk can arise from unclear regulations and differences in interpretation
but, most significantly, where tax authorities apply diverging standards in
assessing intra-group cross-border transactions. The Group has recognised
provisions in respect of uncertain tax positions, none of which is
individually material. In determining such liabilities, the Group assesses the
range of potential outcomes and estimates whether additional tax may be due.
The Group is currently subject to audits and reviews in a number of countries
that primarily relate to complex corporate tax issues.
The UK tax authority's inquiry into an intra-group refinancing was resolved
during the year consistent with the provision previously held.
The Group does not currently anticipate any material changes to the amounts
recorded at 30 September 2024.
Deferred tax assets
Deferred tax assets of $179m (2023: $237m) include $80m (2023: $103m) relating
to the carry forward of unused tax losses. It is considered probable that
sufficient taxable profits over a period of between one and five years will be
available against which the unused tax losses can be utilised. In evaluating
whether sufficient taxable profits will be available in the future, forecasts
have been derived from the most recent three-year strategic plan approved by
management adjusted for the effect of applicable tax laws and regulations
relevant to those future taxable profits. No reasonably possible change in any
of the key assumptions would result in a significant reduction in projected
taxable profits such that the recognised deferred tax assets would not be
realised.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
4 Tax (continued)
Regulatory developments
The legislation implementing the Pillar Two Model Rules in the UK will apply
from the financial year ending 30 September 2025. The Group is reviewing this
legislation and also monitoring the status of implementation of the model
rules worldwide. The impact is not expected to be material. The Group has
applied the temporary exception under IAS 12 Income Taxes in relation to the
accounting for deferred taxes arising from the implementation of the Pillar
Two Model Rules.
5 Earnings per share
Profit for the year attributable to equity shareholders 2024 Restated(1)
$m
2023
$m
Profit for the year attributable to equity shareholders 1,404 1,607
1. See note 1.
Weighted average number of ordinary shares 2024 2023
Ordinary shares of 111/20p each millions
Ordinary shares of
111/20p each millions
Weighted average number of ordinary shares for basic earnings per share 1,705 1,743
Dilutive effect of share-based payment plans 2 2
Weighted average number of ordinary shares for diluted earnings per share 1,707 1,745
Earnings per share 2024 Restated(1)
cents
2023
cents
Basic 82.3 92.2
Diluted 82.2 92.1
1. See note 1.
Underlying earnings per share for the year ended 30 September 2024 was 119.5c
(2023: 105.2c). Underlying earnings per share is calculated based on earnings
excluding the effect of acquisition-related charges, charges related to the
strategic portfolio review, one-off pension charge, gains and losses on sale
and closure of businesses and other financing items, together with the tax
attributable to these amounts (see note 14).
6 Dividends
A final dividend in respect of 2024 of 39.1c per share, $664m in aggregate1,
has been proposed, giving a total dividend in respect of 2024 of 59.8c per
share (2023: 52.6c per share). The proposed final dividend is subject to
approval by shareholders at the Annual General Meeting to be held on 6
February 2025.
2024 Restated(2)
2023
Dividends on ordinary shares Dividends $m Dividends $m
per share
per share
cents
cents
Amounts recognised as distributions to equity shareholders during the year
Final 2022 - - 27.7 462
Interim 2023 - - 17.9 334
Final 2023 34.7 606 - -
Interim 2024 20.7 357 - -
Total 55.4 963 45.6 796
1. Based on the number of ordinary shares in issue at 30 September 2024,
excluding shares held in treasury and the Compass Group PLC All Share Schemes
Trust (1,697m shares).
2. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
7 Goodwill
Goodwill 2024 Restated(1)
$m
2023
$m
Cost
At 1 October 6,748 6,323
Business acquisitions 618 225
Sale and closure of businesses (78) (33)
Transfer to held for sale (14) -
Currency adjustment 407 233
At 30 September 7,681 6,748
Impairment
At 1 October 643 608
Impairment - 6
Sale and closure of businesses (7) -
Transfer to held for sale (1) -
Currency adjustment 147 29
At 30 September 782 643
Net carrying amount
At 30 September 6,899 6,105
1. See note 1.
Goodwill by business segment 2024 Restated(1)
$m
2023
$m
US 2,961 2,889
Canada 328 265
North America 3,289 3,154
UK(2) 2,081 1,877
CH&CO(3) 352 -
Finland 159 151
HOFMANN(S 3) 125 -
Other 629 602
Europe 3,346 2,630
Japan 121 116
Other 143 205
Rest of World 264 321
Total 6,899 6,105
1. See note 1.
2. Includes $1.7bn which arose in 2000 on the Granada transaction.
3. Goodwill recognised on the acquisition of CH&CO and HOFMANN(S) (see note
10) has not yet been allocated to the UK and Germany CGUs, respectively,
pending completion of the integration of the businesses.
Goodwill is tested annually for impairment and is carried at cost less any
accumulated impairment losses. Goodwill is allocated to the cash-generating
units (CGUs) or groups of CGUs that are expected to benefit from the
acquisition, which is usually the geographical location of the operations of
the Group. Goodwill is subsequently monitored and tested for impairment at the
level at which it is allocated. The recoverable amount of a CGU is determined
based on value-in-use calculations.
Impairment testing
The key assumptions used in the value-in-use calculations are operating cash
flow forecasts from the most recent three-year strategic plan approved by
management, adjusted to remove the expected benefits of future restructuring
activities and improvements to assets, externally-derived long-term growth
rates and pre-tax discount rates.
The strategic plan is based on expectations of future outcomes taking into
account past experience, adjusted for anticipated revenue growth from both new
business and like-for-like growth, and taking into consideration macroeconomic
and geopolitical factors, including the impact of inflation.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
7 Goodwill (continued)
Cash flows beyond the three-year period covered by the plan are extrapolated
using estimated growth rates based on local expected economic conditions and
do not exceed the long-term average growth rate for the country. Cash flow
forecasts for a period of up to five years are used by exception to reflect
the medium-term prospects of the business if the initial level of headroom in
the impairment test for a country is low, with cash flows beyond five years
extrapolated using estimated growth rates that do not exceed the long-term
average growth rate for that country.
The pre-tax discount rates are based on the Group's Weighted Average Cost of
Capital (WACC) adjusted for specific risks relating to the country in which
the CGU operates. The beta and gearing ratio assumptions used in the
calculation of the discount rates represent market participant measures based
on the averages of a number of companies with similar assets.
2024 2023
Growth and discount rates Long-term Pre-tax Long-term Pre-tax
growth rates
discount rates
growth rates
discount rates
US 2.6% 11.3% 2.1% 11.3%
Canada 2.1% 11.5% 2.1% 11.8%
UK 2.0% 11.1% 2.1% 11.7%
Finland 2.0% 8.3% 2.0% 9.4%
Rest of Europe1 1.2% - 15.5% 10.3% - 27.1% 1.2% - 16.4% 10.7% - 31.3%
Japan 1.4% 10.5% 1.0% 10.6%
Rest of World 1.6% - 4.2% 10.3% - 15.9% 1.8% - 4.3% 10.6% - 20.2%
1. Rest of Europe includes Türkiye which has residual growth rate and pre-tax
discount rate assumptions of 15.5% (2023: 16.4%) and 27.1% (2023: 31.3%),
respectively. Excluding Türkiye, the residual growth rate and pre-tax
discount rate assumptions for Rest of Europe range from 1.2% to 2.2% (2023:
1.2% to 2.5%) and 10.3% to 13.3% (2023: 10.7% to 14.6%), respectively.
Consistent with prior years, the goodwill impairment testing was performed as
at 31 July. Subsequent to 31 July, management has considered whether there
have been any indicators that the goodwill may be impaired. There was no
impact on the reported amounts of goodwill as a result of this review.
Sensitivity analysis
The Group has performed a sensitivity analysis based on changes in key
assumptions considered to be reasonably possible by management. There was no
impact on the reported amounts of goodwill as a result of this review.
The UK CGU is sensitive to reasonably possible changes in key assumptions.
Most of the UK goodwill arose in 2000 on the Granada transaction. The
estimated recoverable amount of the Group's operations in the UK exceeds its
carrying value by $512m (2023: $227m). The associated impact of changes in key
assumptions on the impairment assessment is presented in the table below. The
sensitivity analysis presented is prepared on the basis that a change in each
key assumption would not have a consequential impact on other assumptions used
in the impairment review.
UK CGU
Decrease in recoverable amount 2024 2023
$m
$m
Increase in pre-tax discount rate by 1% (309) (243)
Decrease in projected operating profit by 3% (95) (77)
Decrease in the long-term growth rate by 0.1% (25) (23)
In order for the recoverable amount to be equal to the carrying value, the
pre-tax discount rate would have to be increased by 1.8% (2023: 0.9%),
projected operating profit decreased by 16% (2023: 9%) or the long-term growth
rate decreased to a decline of 0.6% (2023: growth of 1.0%).
Other than as disclosed above, the directors do not consider that any
reasonably possible changes in the key assumptions would cause the value in
use of the net operating assets of the individually significant CGUs disclosed
above to fall below their carrying values.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
8 Reconciliation of operating profit to cash generated from operations
Reconciliation of operating profit to cash generated from operations 2024 Restated(1)
$m
2023
$m
Operating profit before joint ventures and associates 2,540 2,245
Adjustments for:
Acquisition-related charges2 194 132
Charges related to the strategic portfolio review 170 118
One-off pension charge 8 8
Amortisation - other intangible assets(3) 150 134
Amortisation - contract fulfilment assets 306 282
Amortisation - contract prepayments 94 66
Depreciation - right-of-use assets 220 199
Depreciation - property, plant and equipment 374 337
Unwind of costs to obtain contracts 33 27
Impairment losses - non-current assets(4) 10 12
Impairment reversals - non-current assets (7) (2)
Gain on disposal of property, plant and equipment/intangible assets/contract (5) (4)
fulfilment assets
Other non-cash changes - (1)
Increase/(decrease) in provisions 7 (50)
Investment in contract prepayments (213) (88)
Increase in costs to obtain contracts5 (47) (45)
Post-employment benefit obligations net of service costs 7 (21)
Share-based payments - charged to profit 68 54
Operating cash flow before movements in working capital 3,909 3,403
Increase in inventories (36) (119)
Increase in receivables (670) (680)
Increase in payables 892 679
Cash generated from operations 4,095 3,283
1. See note 1.
2. Includes amortisation and impairment of acquisition intangibles. Excludes
acquisition transaction costs of $41m (2023: $21m) as acquisition transaction
costs are included in net cash flow from operating activities.
3. Excludes amortisation of acquisition intangibles.
4. Excludes impairment losses of $156m (2023: $60m) included in charges related
to the strategic portfolio review.
5. Cash payments in respect of contract balances are classified as cash flows
from operating activities, with the exception of contract fulfilment assets
which are classified as cash flows from investing activities as they arise out
of cash payments in relation to assets that will generate long-term economic
benefits. During the year, the purchase of contract fulfilment assets in cash
flows from investing activities was $508m (2023: $380m).
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
9 Financial instruments
Certain of the Group's financial instruments are held at fair value.
The fair value of a financial instrument is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the balance sheet date.
The fair value measurement hierarchy is as follows:
· Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities
· Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
· Level 3: Inputs for the asset or liability that are not based on observable
market data (i.e. unobservable inputs)
There were no transfers of financial instruments between levels of the fair
value hierarchy in either the year ended 30 September 2024 or 2023. The
carrying amounts of financial instruments measured at fair value are shown in
the table below:
Financial instruments measured at fair value Level 2024 Restated(1)
$m
2023
$m
Non-current
Rabbi Trust investments(2) 1 1,022 760
Mutual fund investments(2) 1 62 58
Other investments2 1 - 15
Life insurance policies(2) 2 36 35
Derivative financial instruments - assets 2 69 55
Derivative financial instruments - liabilities 2 (187) (253)
Trade investments2 3 29 181
Contingent consideration payable on business acquisitions(3) 3 (102) (97)
Non-controlling interest put options3 3 (65) (22)
Current
Money market funds4 1 126 510
Derivative financial instruments - assets 2 36 22
Derivative financial instruments - liabilities 2 (21) (45)
Contingent consideration payable on business acquisitions(3) 3 (250) (61)
Non-controlling interest put options3 3 (5) -
1. See note 1.
2. Classified as other investments in the consolidated balance sheet.
3. Classified as trade and other payables in the consolidated balance sheet.
4. Classified as cash and cash equivalents in the consolidated balance sheet on
the basis that they have a maturity of three months or less from the date of
acquisition.
Due to the variability of the valuation factors, the fair values presented at
30 September 2024 may not be indicative of the amounts the Group would expect
to realise in the current market environment. The fair values of financial
instruments at levels 2 and 3 of the fair value hierarchy have been determined
based on the valuation methodologies listed below:
Level 2
Life insurance policies Cash surrender values provided by third-party
insurance providers.
Derivative financial instruments Present values determined from future cash
flows discounted at rates derived from market-sourced data. The fair values of
derivative financial instruments represent the maximum credit exposure.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
9 Financial instruments (continued)
Level 3
Trade investments Estimated values using income and market value approaches.
Contingent consideration payable on business acquisitions Estimated amounts
payable based on the likelihood of specified conditions, such as earnings
targets, being met.
Non-controlling interest put options Estimated amounts payable based on the
likelihood of options being exercised by minority shareholders.
A reconciliation from opening to closing balances for Level 3 financial
instruments is as follows:
2024 Restated(1)
2023
Level 3 financial instruments Trade investments Contingent consideration payable on business acquisitions Non- Trade investments Contingent consideration payable on business acquisitions Non-
$m
$m
$m
$m
controlling interest put options
controlling interest put options
$m
$m
At 1 October 181 (158) (22) 142 (77) (50)
Change in fair value recognised in the income statement - (67) - - (4) -
Change in fair value recognised in the statement of comprehensive income 175 - - 39 - -
Change in fair value recognised in the statement of changes in equity - - 7 - - 16
Additions - (153) (54) - (121) (2)
Disposals (327) - - - - -
Purchase of non-controlling interests - - - - - 10
Payments relating to businesses acquired in previous years - 50 - - 44 4
Net present value adjustments - (9) - - (6) -
Currency translation - (15) (1) - 6 -
At 30 September 29 (352) (70) 181 (158) (22)
1. See note 1.
The directors do not consider that any reasonably possible changes in the key
assumptions would cause the fair value of the Level 3 financial instruments to
be significantly higher or lower.
With the exception of borrowings, the carrying amounts of financial
instruments measured at amortised cost approximate to their fair values.
Borrowings are measured at amortised cost unless they are part of a fair value
hedge, in which case amortised cost is adjusted for the fair value
attributable to the risk being hedged. The carrying amount of borrowings at 30
September 2024 is $4,596m (2023: $4,114m). The fair value of borrowings at 30
September 2024, calculated by discounting future cash flows to net present
values at current market rates for similar financial instruments (Level 2
inputs), is $4,625m (2023: $4,131m).
10 Acquisition, sale and closure of businesses
Acquisition of businesses
The total cash spent on the acquisition of subsidiaries during the year, net
of cash acquired, was $1,256m (2023: $410m), including $431m (2023: $nil) on
the repayment of borrowings acquired through business acquisitions, $61m
(2023: $48m) of deferred and contingent consideration and other payments
relating to businesses acquired in previous years, and $41m (2023: $21m) of
acquisition transaction costs included in net cash flow from operating
activities.
The Group made two individually material acquisitions during the year
(HOFMANN(S) and CH&CO). Detailed disclosures in respect of these
acquisitions are provided below.
HOFMANN(S)
On 19 December 2023, the Group acquired 100% of the issued share capital of
Hofmann-Menü Holdings GmbH (trading as HOFMANN(S)), a German producer of
high-quality cook and freeze meals, for cash consideration of €94m ($103m)
net of cash acquired. The cash consideration excludes third-party debt
acquired and repaid on the date of acquisition of €168m ($185m).
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
The goodwill of $123m represents the premium the Group has paid to acquire a
company that complements its existing businesses and creates significant
opportunities for synergies. In particular, the ability to offer additional
services to the Group's existing customers and to leverage cross-selling
opportunities with customers of HOFMANN(S) will deliver significant economies
of scale.
The fair value of net assets acquired includes $197m in respect of other
intangible assets which mainly relate to brands ($66m) and client contracts
($126m). The brands were valued using the relief from royalty method, with the
key assumptions being forecast revenue, royalty rate, useful life and discount
rate. The client contracts were valued using the multi-period excess earnings
method, with the key assumptions being forecast operating profit, attrition
rate, useful life and discount rate. The intangible assets were valued by
independent valuation experts.
The acquisition did not have a material impact on the Group's revenue or
profit for the year. If the acquisition had occurred on 1 October 2023, it
would not have had a material impact on the Group's revenue or profit for the
year.
The following table summarises the recognised amounts of assets acquired and
liabilities assumed at the date of acquisition of HOFMANN(S):
Fair value
$m
Net assets acquired
Other intangible assets 197
Right-of-use assets 5
Property, plant and equipment 30
Trade and other receivables 13
Inventories 18
Cash and cash equivalents 41
Borrowings (185)
Lease liabilities (5)
Current tax liabilities (18)
Trade and other payables (23)
Deferred tax liabilities (52)
Fair value of net assets acquired 21
Goodwill 123
Total consideration 144
Satisfied by
Cash consideration paid 144
Total consideration 144
Cash flow
Cash consideration paid 144
Less: Cash and cash equivalents acquired (41)
Cash consideration net of cash acquired 103
Add: Repayment of borrowings acquired through business acquisitions(1) 185
Add: Acquisition transaction costs(2) 7
Total cash outflow from purchase of subsidiary companies 295
Consolidated cash flow statement
Net cash flow from operating activities(2) 7
Net cash flow from investing activities 103
Net cash flow from financing activities(1) 185
Total cash outflow from purchase of subsidiary companies 295
1. Repayment of borrowings acquired through business acquisitions is included
in net cash flow from financing activities.
2. Acquisition transaction costs are included in net cash flow from operating
activities.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
CH&CO
On 30 April 2024, the Group acquired 100% of the issued share capital of
Orchestra Topco Limited (trading as CH&CO), a provider of premium contract
and hospitality services in the UK and Ireland, for cash consideration of
£274m ($344m) net of cash acquired. The cash consideration excludes
third-party debt acquired and repaid on the date of acquisition of £197m
($246m).
Contingent consideration is payable in 2025 and 2026 based on EBITDA for the
years ending 30 April 2025 and 2026, with an additional payment due in 2027 in
respect of contracts won but not mobilised by the end of the second year. The
fair value of these contingent payments, which has been estimated based on
forecast EBITDA and contract wins and losses, is £63m ($79m), with minimum
and undiscounted maximum values of £nil and £165m ($207m), respectively.
The goodwill of $329m represents the premium the Group has paid to acquire a
company that complements its existing businesses and creates significant
opportunities for synergies, including economies of scale in purchasing and
overhead cost savings.
The fair value of net assets acquired includes $452m in respect of other
intangible assets which relate to brands ($145m) and client contracts ($307m).
The brands were valued using the relief from royalty method, with the key
assumptions being forecast revenue, royalty rate, useful life and discount
rate. The client contracts were valued using the multi-period excess earnings
method, with the key assumptions being forecast operating profit, attrition
rate, useful life and discount rate. The intangible assets were valued by
independent valuation experts.
The acquisition did not have a material impact on the Group's revenue or
profit for the year. If the acquisition had occurred on 1 October 2023, it
would not have had a material impact on the Group's revenue or profit for the
year.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
The following table summarises the recognised amounts of assets acquired and
liabilities assumed at the date of acquisition of CH&CO:
Fair value
$m
Net assets acquired
Other intangible assets 452
Right-of-use assets 7
Property, plant and equipment 11
Trade and other receivables 113
Tax recoverable 2
Inventories 5
Cash and cash equivalents 12
Deferred tax assets 10
Borrowings (246)
Lease liabilities (5)
Provisions (5)
Trade and other payables (137)
Deferred tax liabilities (113)
Fair value of net assets acquired 106
Goodwill 329
Total consideration 435
Satisfied by
Cash consideration paid 356
Contingent consideration payable 79
Total consideration 435
Cash flow
Cash consideration paid 356
Less: Cash and cash equivalents acquired (12)
Cash consideration net of cash acquired 344
Add: Repayment of borrowings acquired through business acquisitions(1) 246
Add: Acquisition transaction costs(2) 16
Total cash outflow from purchase of subsidiary companies 606
Consolidated cash flow statement
Net cash flow from operating activities(2) 16
Net cash flow from investing activities 344
Net cash flow from financing activities(1) 246
Total cash outflow from purchase of subsidiary companies 606
1. Repayment of borrowings acquired through business acquisitions is included
in net cash flow from financing activities.
2. Acquisition transaction costs are included in net cash flow from operating
activities.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
All acquisitions
In addition to the acquisitions set out above, the Group also completed a
number of individually immaterial acquisitions during the year. A summary of
all acquisitions completed during the year is presented in aggregate below:
Fair value
Restated(1)
2023
$m
2024
$m
Net assets acquired
Other intangible assets 907 271
Contract fulfilment assets 3 -
Right-of-use assets 37 -
Property, plant and equipment 83 28
Trade and other receivables 144 18
Deferred tax assets 11 -
Inventories 30 13
Tax recoverable 3 -
Cash and cash equivalents 61 13
Borrowings (431) -
Lease liabilities (35) -
Provisions (5) -
Current tax liabilities (18) (2)
Trade and other payables (181) (21)
Post-employment benefit obligations (1) -
Deferred tax liabilities (184) (23)
Fair value of net assets acquired 424 297
Less: Step acquisitions (30) (29)
Less: Gains on bargain purchases (35) -
Less: Non-controlling interests (40) (2)
Goodwill 618 225
Total consideration 937 491
Satisfied by
Cash consideration paid 784 354
Deferred and contingent consideration payable 145 137
Non-cash consideration 8 -
Total consideration 937 491
Cash flow
Cash consideration paid 784 354
Less: Cash and cash equivalents acquired (61) (13)
Cash consideration net of cash acquired 723 341
Add: Repayment of borrowings acquired through business acquisitions(2) 431 -
Add: Acquisition transaction costs3 41 21
Net cash outflow arising on acquisition 1,195 362
Deferred and contingent consideration and other payments relating to 61 48
businesses acquired in previous years
Total cash outflow from purchase of subsidiary companies 1,256 410
Consolidated cash flow statement
Net cash flow from operating activities(3) 41 21
Net cash flow from investing activities 784 389
Net cash flow from financing activities(2) 431 -
Total cash outflow from purchase of subsidiary companies 1,256 410
1. See note 1.
2. Repayment of borrowings acquired through business acquisitions is included
in net cash flow from financing activities.
3. Acquisition transaction costs are included in net cash flow from operating
activities.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
Contingent consideration is an estimate at the date of acquisition of the
amount of additional consideration that will be payable in the future. The
actual amount paid can vary from the estimate depending on the terms of the
transaction and, for example, the actual performance of the acquired business.
The goodwill arising on the acquisition of the businesses represents the
premium the Group has paid to acquire companies which complement its existing
businesses and create significant opportunities for cross-selling and other
synergies. The goodwill arising is not expected to be deductible for tax
purposes.
The acquisitions did not have a material impact on the Group's revenue or
profit for the year. If the acquisitions had occurred on 1 October 2023, they
would not have had a material impact on the Group's revenue or profit for the
year.
Sale and closure of businesses
The Group has recognised a net loss of $203m (2023: net gain of $24m) on the
sale and closure of businesses, including exit costs of $92m (2023: $14m).
Activity in the year includes the sale of the Group's businesses in Argentina,
Brazil, mainland China and the United Arab Emirates, the exit from Angola and
sale of the final 5% shareholding in Highways Royal Co., Limited (Japanese
Highways).
A summary of business disposals completed during the year is presented in
aggregate below:
2024 Restated(1)
$m
2023
$m
Net assets disposed
Goodwill 71 33
Other intangible assets 13 21
Right-of-use assets 4 10
Property, plant and equipment 26 22
Interest in joint ventures and associates 61 -
Trade and other receivables 200 33
Deferred tax assets 14 1
Inventories 21 11
Tax recoverable 1 -
Cash and cash equivalents 30 35
Assets held for sale 5 32
Lease liabilities (4) (11)
Provisions (14) (2)
Current tax liabilities (15) -
Trade and other payables (210) (50)
Net assets disposed 203 135
Consolidated income statement
Cash consideration 319 102
Deferred consideration 24 70
Less: Net assets disposed (203) (135)
Less: Exit costs (92) (14)
Less: Loss on step acquisitions (1) -
(Less)/add: Reclassification of cumulative currency translation differences on (250) 1
sale of businesses(2)
Net (loss)/gain on sale and closure of businesses (203) 24
Consolidated cash flow statement
Cash consideration received 319 102
Tax payments arising on disposal of businesses (35) -
Exit costs paid (29) (9)
Cash and cash equivalents disposed (30) (35)
Net proceeds from sale of subsidiary companies, joint ventures and associates 225 58
net of exit costs
1. See note 1.
2. Includes cumulative foreign exchange gains of $8m (2023: losses of $4m) on
net investment hedges.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
10 Acquisition, sale and closure of businesses (continued)
Assets and liabilities held for sale
In July 2024, the Group agreed the sale of its businesses in Chile, Colombia
and Mexico. The disposals, which are subject to regulatory approval and
completion procedures, are expected to complete in the first half of the 2025
financial year. Accordingly, the assets and liabilities of the Group's
businesses in Chile, Colombia and Mexico are classified as held for sale at 30
September 2024. The Group's investment in its joint venture in Qatar is also
classified as held for sale at 30 September 2024, with a carrying value of
$nil.
Carrying value
$m
Assets held for sale
Goodwill 13
Other intangible assets 1
Costs to obtain contracts 1
Right-of-use assets 5
Property, plant and equipment 12
Trade and other receivables 165
Deferred tax assets 17
Inventories 11
Tax recoverable 8
Cash and cash equivalents 40
Total 273
Liabilities held for sale
Lease liabilities (6)
Provisions (8)
Current tax liabilities (8)
Trade and other payables (157)
Total (179)
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
11 Contingent liabilities
Litigation and claims
The Group is involved in various legal proceedings incidental to the nature of
its business and maintains insurance cover to reduce financial risk associated
with claims related to these proceedings. Where appropriate, provisions are
made to cover any potential uninsured losses.
Although it is not possible to predict the outcome or quantify the financial
effect of these proceedings, or any claim against the Group related thereto,
in the opinion of the directors, any uninsured losses resulting from the
ultimate resolution of these matters will not have a material effect on the
financial position of the Group. The timing of the settlement of these
proceedings or claims is uncertain.
During the period of the Group's ownership of its business in Brazil, which
was sold during the year, the federal tax authorities issued notices of
deficiency in respect of 2014 and 2017 relating primarily to the PIS/COFINS
treatment of certain food costs which we formally objected to and which are
proceeding through the appeals process. At 30 September 2024, the total amount
assessed in respect of these matters is $87m, including interest and
penalties. The possibility of further notices of deficiency for subsequent
years during the period of the Group's ownership cannot be ruled out and the
judicial process is likely to take a number of years to conclude. Based on the
opinion of our local legal advisers, we do not currently consider it likely
that we will have to settle a liability with respect to these matters and, on
this basis, no provision has been recorded.
The Group is currently subject to audits and reviews in a number of countries
that primarily relate to complex corporate tax issues. None of these audits is
currently expected to have a material impact on the Group's financial
position. We continue to engage with tax authorities and other regulatory
bodies on payroll and sales tax reviews, and compliance with labour laws and
regulations.
Food safety
In the ordinary course of business, food safety incidents are identified from
time to time and our businesses' operations receive external reviews of their
food hygiene and safety practices, both on a periodic basis and in connection
with identified incidents. At any point, a number of reviews will be ongoing.
Although it is not possible to predict the outcome or quantify the financial
effect of the outcome of these reviews, or any claim against Group companies
related thereto, in the opinion of the directors, any uninsured losses
resulting from the ultimate resolution of these ongoing reviews are not
expected to have a material effect on the financial position of the Group. The
timing of the outcome of these reviews is generally uncertain.
12 Related party transactions
The following transactions were carried out with related parties of Compass
Group PLC:
Subsidiaries
Transactions between the ultimate parent company and its subsidiaries, and
between subsidiaries, have been eliminated on consolidation.
Joint ventures
With the exception of the sale of the Group's joint venture in the United Arab
Emirates, there were no significant transactions between joint ventures or
joint venture partners and the rest of the Group during the year.
Associates
There were no significant transactions with associated undertakings during the
year.
Key management personnel
The remuneration of directors and key management personnel is set out in note
4 to the consolidated financial statements in the 2024 Annual Report. During
the year, there were no other material transactions or balances between the
Group and its key management personnel or members of their close families.
Post-employment benefit schemes
Details of the Group's post-employment benefit schemes are set out in note 24
to the consolidated financial statements in the 2024 Annual Report.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
13 Post-balance sheet events
On 31 October 2024, the Group acquired 100% of the issued share capital of DR
Holding (trading as Dupont Restauration), a provider of contract catering
services in France, for cash of €296m ($321m). If the acquisition had
occurred on 1 October 2023, it would not have had a material impact on the
Group's revenue or profit for the year ended 30 September 2024. Given the
proximity of the completion date to the date of this Announcement, certain
elements of the acquisition accounting are not yet available. Full disclosures
will be provided in the 2025 Half Year Results Announcement and Annual Report.
On 31 October 2024, the Group agreed the sale of its business in Kazakhstan,
subject to regulatory approval. The net assets of the business at 30 September
2024 are not material.
On 13 November 2024, the Group entered into an agreement to acquire 4Service
AS, a provider of catering and facility management services in Norway, for an
enterprise value of approximately NOK5.5bn ($494m). The acquisition is subject
to regulatory approval which we expect to receive during the 2025 financial
year.
In the period from 1 October to 26 November 2024, 2,356,198 shares were
repurchased for a total price, including transaction costs, of $77m under the
share buyback announced in November 2023. The share buyback is scheduled to
complete by 17 December 2024.
On 26 November 2024, a final dividend in respect of 2024 of 39.1c per share,
$664m in aggregate, was proposed.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures
Introduction
The Executive Committee manages and assesses the performance of the Group
using various underlying and other Alternative Performance Measures (APMs).
These measures are not defined by International Financial Reporting Standards
(IFRS) or other generally accepted accounting principles (GAAP) and may not be
directly comparable with APMs used by other companies. Underlying measures
reflect ongoing trading and, therefore, facilitate meaningful year-on-year
comparison. The Group's APMs, together with the results prepared in accordance
with IFRS, provide comprehensive analysis of the Group's results. Accordingly,
the relevant statutory measures are also presented where appropriate. Certain
of the Group's APMs are financial Key Performance Indicators (KPIs) which
measure progress against our strategy.
In determining the adjustments to arrive at underlying results, we use a set
of established principles relating to the nature and materiality of individual
items or groups of items, including, for example, events which: (i) are
outside the normal course of business; (ii) are incurred in a pattern that is
unrelated to the trends in the underlying financial performance of our ongoing
business; or (iii) are related to business acquisitions or disposals as they
are not part of the Group's ongoing trading business and the associated cost
impact arises from the transaction rather than from the continuing business.
Definitions
Measure Definition Purpose
Income statement
Underlying revenue Revenue plus share of revenue of joint ventures. Allows management to monitor the sales performance of the Group's subsidiaries
and joint ventures.
Underlying Operating profit excluding specific adjusting items(2). Provides a measure of operating profitability that is comparable over time.
operating profit
Underlying Underlying operating profit divided by underlying revenue. An important measure of the efficiency of our operations in delivering great
operating margin1 food and support services to our clients and consumers.
Organic revenue1 Current year: Underlying revenue excluding businesses acquired, sold and Embodies our success in growing and retaining our customer base, as well as
closed in the year. Prior year: Underlying revenue including a proforma 12 our ability to drive volumes in our existing businesses and maintain
months in respect of businesses acquired in the year and excluding businesses appropriate pricing levels in light of input cost inflation.
sold and closed in the year translated at current year exchange rates.
Where applicable, a 53rd week is excluded from the current or prior year.
Organic operating profit Current year: Underlying operating profit excluding businesses acquired, sold Provides a measure of operating profitability that is comparable over time.
and closed in the year. Prior year: Underlying operating profit including a
proforma 12 months in respect of businesses acquired in the year and excluding
businesses sold and closed in the year translated at current year exchange
rates.
Where applicable, a 53rd week is excluded from the current or prior year.
Underlying finance costs Finance costs excluding specific adjusting items(2). Provides a measure of the Group's cost of financing excluding items outside of
the control of management.
Underlying profit before tax Profit before tax excluding specific adjusting items(2). Provides a measure of Group profitability that is comparable over time.
Underlying income tax expense Income tax expense excluding tax attributable to specific adjusting items(2). Provides a measure of income tax expense that is comparable over time.
Underlying effective Underlying income tax expense divided by underlying profit before tax. Provides a measure of the effective tax rate that is comparable over time.
tax rate
1. Key Performance Indicator.
2. See page 52 for definitions of the specific adjusting items and a
reconciliation from the statutory to the underlying income statement.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Definitions (continued)
Measure Definition Purpose
Income statement (continued)
Underlying profit for the year Profit for the year excluding specific adjusting items(2) and tax attributable Provides a measure of Group profitability that is comparable over time.
to those items.
Underlying profit attributable to equity shareholders (underlying earnings) Profit for the year attributable to equity shareholders excluding specific Provides a measure of Group profitability that is comparable over time.
adjusting items(2) and tax attributable to those items.
Underlying earnings Earnings per share excluding specific adjusting items(2) and tax attributable Measures the performance of the Group in delivering value to shareholders.
per share1 to those items.
Net operating profit after tax (NOPAT) Underlying operating profit excluding the operating profit of non-controlling Provides a measure of Group operating profitability that is comparable over
interests, net of tax at the underlying effective tax rate. time.
Underlying EBITDA Underlying operating profit excluding underlying impairment, depreciation and Provides a measure of Group operating profitability that is comparable over
amortisation of intangible assets, tangible assets and contract-related time.
assets.
Balance sheet
Net debt Bank overdrafts, bank and other borrowings, lease liabilities and derivative Allows management to monitor the indebtedness of the Group.
financial instruments, less cash and cash equivalents.
Net debt to EBITDA Net debt divided by underlying EBITDA. Provides a measure of the Group's ability to finance and repay its debt from
its operations.
Capital employed Total equity shareholders' funds, excluding: net debt; post-employment benefit Provides a measure of the Group's efficiency in allocating its capital to
assets and obligations; and investments held to meet the cost of unfunded profitable investments.
post-employment benefit obligations.
Return on Capital Employed (ROCE)(1) NOPAT divided by 12-month average capital employed. ROCE demonstrates how we have delivered against the various investments we
make in the business, be it operational expenditure, capital expenditure or
bolt-on acquisitions.
Cash flow
Capital expenditure Purchase of intangible assets, purchase of contract fulfilment assets, Provides a measure of expenditure on long-term intangible, tangible and
purchase of property, plant and equipment and investment in contract contract-related assets, net of the proceeds from disposal of intangible,
prepayments, less proceeds from sale of property, plant and tangible and contract-related assets.
equipment/intangible assets/contract fulfilment assets.
Underlying operating cash flow Net cash flow from operating activities, including purchase of intangible Provides a measure of the success of the Group in turning profit into cash
assets, purchase of contract fulfilment assets, purchase of property, plant that is comparable over time.
and equipment, proceeds from sale of property, plant and equipment/intangible
assets/contract fulfilment assets, repayment of principal under lease
liabilities and share of results of joint ventures and associates, and
excluding interest and net tax paid, post-employment benefit obligations net
of service costs, cash payments related to the cost action programme and
COVID-19 resizing costs, strategic portfolio review and one-off pension
charge, and acquisition transaction costs.
1. Key Performance Indicator.
2. See page 52 for definitions of the specific adjusting items and a
reconciliation from the statutory to the underlying income statement.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Definitions (continued)
Measure Definition Purpose
Cash flow (continued)
Underlying operating cash flow conversion Underlying operating cash flow divided by underlying operating profit. Provides a measure of the success of the Group in turning profit into cash
that is comparable over time.
Free cash flow Net cash flow from operating activities, including purchase of intangible Provides a measure of the success of the Group in turning profit into cash
assets, purchase of contract fulfilment assets, purchase of property, plant that is comparable over time.
and equipment, proceeds from sale of property, plant and equipment/intangible
assets/contract fulfilment assets, purchase of other investments, proceeds
from sale of other investments, dividends received from joint ventures and
associates, interest received, repayment of principal under lease liabilities
and dividends paid to non-controlling interests.
Underlying free Free cash flow excluding cash payments related to the cost action programme Provides a measure of the success of the Group in turning profit into cash
cash flow1 and COVID-19 resizing costs, strategic portfolio review and one-off pension that is comparable over time.
charge, and acquisition transaction costs.
Underlying free cash flow conversion(2) Underlying free cash flow divided by underlying profit for the year. Provides a measure of the success of the Group in turning profit into cash
that is comparable over time.
Underlying cash Net tax paid included in net cash flow from operating activities divided by Provides a measure of the cash tax rate that is comparable over time.
tax rate underlying profit before tax.
Business growth
New business Current year underlying revenue for the period in which no revenue had been The measure of incremental revenue in the current year from new business.
recognised in the prior year.
Lost business Prior year underlying revenue for the period in which no revenue has been The measure of lost revenue in the current year from ceased business.
recognised in the current year.
Net new business New business minus lost business as a percentage of prior year organic The measure of net incremental revenue in the current year from business wins
revenue. and losses.
Retention 100% minus lost business as a percentage of prior year organic revenue. The measure of our success in retaining business.
1. Key Performance Indicator.
2. Underlying profit for the year has replaced underlying operating profit as the
denominator in the calculation of underlying free cash flow conversion.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Reconciliations
Income statement
Underlying revenue and operating profit are reconciled to GAAP measures in
note 2 (segmental analysis).
Geographical segments
Organic revenue North America Europe Rest of World Central activities Total
$m
$m
$m
$m
$m
Year ended 30 September 2024
Underlying revenue 28,581 9,887 3,708 - 42,176
Organic adjustments (105) (570) (480) - (1,155)
Organic revenue 28,476 9,317 3,228 - 41,021
Year ended 30 September 2023
Underlying revenue (restated(1)) 25,768 8,598 3,850 - 38,216
Currency adjustments (6) 49 (112) - (69)
Underlying revenue - constant currency 25,762 8,647 3,738 - 38,147
Organic adjustments 14 (322) (764) - (1,072)
Organic revenue 25,776 8,325 2,974 - 37,075
Increase in underlying revenue at reported rates - % 10.9% 15.0% (3.7)% - 10.4%
Increase in underlying revenue at constant currency - % 10.9% 14.3% (0.8)% - 10.6%
Increase in organic revenue - % 10.5% 11.9% 8.5% - 10.6%
1. See note 1.
Geographical segments
Organic operating profit North America Europe Rest of World Central activities Total
$m
$m
$m
$m
$m
Year ended 30 September 2024
Underlying operating profit/(loss) 2,335 583 224 (144) 2,998
Underlying operating margin - % 8.2% 5.9% 6.0% 7.1%
Organic adjustments 2 (61) (33) - (92)
Organic operating profit/(loss) 2,337 522 191 (144) 2,906
Year ended 30 September 2023
Underlying operating profit/(loss) (restated(1)) 2,019 479 214 (120) 2,592
Underlying operating margin - % 7.8% 5.6% 5.6% 6.8%
Currency adjustments - (1) (11) (4) (16)
Underlying operating profit/(loss) - constant currency 2,019 478 203 (124) 2,576
Organic adjustments 1 (24) (53) - (76)
Organic operating profit/(loss) 2,020 454 150 (124) 2,500
Increase in underlying operating profit at reported rates - % 15.7% 21.7% 4.7% 15.7%
Increase in underlying operating profit at constant currency - % 15.7% 22.0% 10.3% 16.4%
Increase in organic operating profit - % 15.7% 15.0% 27.3% 16.2%
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Reconciliations (continued)
Specific adjusting items
Underlying income statement 2024 1 2 3 4 5 2024 Underlying
Statutory
$m
$m
Operating profit 2,584 235 8 1 170 - 2,998
Net loss on sale and closure of businesses (203) - - - 203 - -
Finance costs (325) 9 - - - 67 (249)
Profit before tax 2,056 244 8 1 373 67 2,749
Income tax expense (642) (43) (2) (1) 1 (15) (702)
Profit for the year 1,414 201 6 - 374 52 2,047
Less: Non-controlling interests (10) - - - - - (10)
Profit attributable to equity shareholders 1,404 201 6 - 374 52 2,037
Earnings per share (cents) 82.3c 11.8c 0.4c - 22.0c 3.0c 119.5c
Effective tax rate (%) 31.2% 25.5%
Specific adjusting items
Underlying income statement (restated(1)) 2023 1 2 3 4 5 2023 Underlying
Statutory
$m
$m
Operating profit 2,313 153 8 - 118 - 2,592
Net gain on sale and closure of businesses 24 - - - (24) - -
Finance costs (200) - - - - 34 (166)
Profit before tax 2,137 153 8 - 94 34 2,426
Income tax expense (525) (32) (1) - (21) (9) (588)
Profit for the year 1,612 121 7 - 73 25 1,838
Less: Non-controlling interests (5) - - - - - (5)
Profit attributable to equity shareholders 1,607 121 7 - 73 25 1,833
Currency adjustments (15)
Profit attributable to equity shareholders - constant currency 1,818
Earnings per share (cents) 92.2c 7.0c 0.4c - 4.2c 1.4c 105.2c
Earnings per share - constant currency (cents) 104.3c
Effective tax rate (%) 24.6% 24.2%
1. See note 1.
Specific adjusting items are as follows:
1. Acquisition-related charges
Represent amortisation and impairment charges in respect of intangible assets
acquired through business combinations, direct costs incurred through business
combinations or other strategic asset acquisitions, business integration
costs, changes in consideration in relation to past acquisition activity,
other acquisition-related items (see note 3) and, from 2024, net present value
adjustments on deferred and contingent consideration payable on business
acquisitions.
2. One-off pension charge
Mainly reflects a past service cost following a change in legislation in
Türkiye eliminating the minimum retirement age requirement for certain
employees effective from March 2023.
3. Tax on share of profit of joint ventures
Reclassification of tax on share of profit of joint ventures to income tax
expense.
4. Gains and losses on sale and closure of businesses and charges related to
the strategic portfolio review
Profits and losses on the sale of subsidiaries, joint ventures and associates,
exit costs on closure of businesses (see note 10) and charges in respect of a
strategic portfolio review to focus on the Group's core markets (see note 3).
5. Other financing items
Financing items, including hedge accounting ineffectiveness, change in the
fair value of derivatives held for economic hedging purposes, change in the
fair value of investments and financing items relating to post-employment
benefits.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Reconciliations (continued)
Net operating profit after tax (NOPAT) 2024 Restated(1)
$m
2023
$m
Underlying operating profit 2,998 2,592
Deduct:
Tax on underlying operating profit at effective tax rate (762) (626)
Operating profit of non-controlling interests net of tax (10) (5)
NOPAT 2,226 1,961
1. See note 1.
Underlying EBITDA 2024 Restated(1)
$m
2023
$m
Underlying operating profit 2,998 2,592
Add back/(deduct):
Depreciation of property, plant and equipment and right-of-use assets 594 536
Amortisation of other intangible assets, contract fulfilment assets and 550 482
contract prepayments(2)
Impairment losses - non-current assets(3) 10 12
Impairment reversals - non-current assets (7) (2)
Underlying EBITDA 4,145 3,620
1. See note 1.
2. Excludes amortisation of acquisition intangibles.
3. Excludes impairment losses of $156m (2023: $60m) included in charges related
to the strategic portfolio review.
Balance sheet
Components of net debt 2024 Restated(1)
$m
2023
$m
Borrowings (4,596) (4,114)
Lease liabilities (1,315) (1,153)
Derivative financial instruments (103) (221)
Gross debt (6,014) (5,488)
Cash and cash equivalents 623 1,029
Net debt (5,391) (4,459)
1. See note 1.
Net debt reconciliation 2024 Restated(1)
$m
2023
$m
Net decrease in cash and cash equivalents (296) (1,273)
(Deduct)/add back:
Increase in borrowings (1,381) (1)
Repayment of borrowings 1,161 543
Repayment of borrowings acquired through business acquisitions 431 -
Net cash flow from derivative financial instruments (46) (157)
Repayment of principal under lease liabilities 227 215
Decrease/(increase) in net debt from cash flows 96 (673)
New lease liabilities and amendments (325) (323)
Borrowings acquired through business acquisitions (431) -
Amortisation of fees and discounts on issue of debt (4) (5)
Changes in fair value of borrowings in a fair value hedge (175) (32)
Lease liabilities acquired through business acquisitions (35) -
Lease liabilities derecognised on sale and closure of businesses 4 11
Changes in fair value of derivative financial instruments 115 (9)
Currency translation losses (143) (91)
Increase in net debt (898) (1,122)
Net debt at 1 October (4,459) (3,337)
Cash and lease liabilities transferred to held for sale (34) -
Net debt at 30 September (5,391) (4,459)
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Reconciliations (continued)
Net debt to EBITDA 2024 Restated(1)
$m
2023
$m
Net debt (5,391) (4,459)
Underlying EBITDA 4,145 3,620
Net debt to EBITDA (times) 1.3 1.2
1. See note 1.
Return on capital employed (ROCE) 2024 Restated(1)
$m
2023
$m
NOPAT 2,226 1,961
Average capital employed 11,722 10,138
ROCE (%) 19.0% 19.3%
1. See note 1.
Cash flow
Capital expenditure 2024 Restated(1)
$m
2023
$m
Purchase of intangible assets 329 263
Purchase of contract fulfilment assets 508 380
Purchase of property, plant and equipment 572 445
Investment in contract prepayments 213 88
Proceeds from sale of property, plant and equipment/intangible assets/contract (81) (78)
fulfilment assets
Capital expenditure 1,541 1,098
1. See note 1.
Underlying operating cash flow 2024 Restated(1)
$m
2023
$m
Net cash flow from operating activities 3,135 2,536
Purchase of intangible assets (329) (263)
Purchase of contract fulfilment assets (508) (380)
Purchase of property, plant and equipment (572) (445)
Proceeds from sale of property, plant and equipment/intangible assets/contract 81 78
fulfilment assets
Repayment of principal under lease liabilities (227) (215)
Share of results of joint ventures and associates 44 68
Add back/(deduct):
Interest paid 267 208
Net tax paid 693 539
Post-employment benefit obligations net of service costs(2) (7) 11
Cash payments related to the cost action programme and COVID-19 resizing costs 8 35
Cash payments related to the strategic portfolio review 8 24
Cash payments related to the one-off pension charge 8 11
Acquisition transaction costs 41 21
Underlying operating cash flow 2,642 2,228
1. See note 1.
2. 2023 excludes $10m of cash payments related to the one-off pension charge.
Underlying operating cash flow conversion 2024 Restated(1)
$m
2023
$m
Underlying operating cash flow 2,642 2,228
Underlying operating profit 2,998 2,592
Underlying operating cash flow conversion (%) 88.1% 86.0%
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
14 Non-GAAP measures (continued)
Reconciliations (continued)
Free cash flow 2024 Restated(1)
$m
2023
$m
Net cash flow from operating activities 3,135 2,536
Purchase of intangible assets (329) (263)
Purchase of contract fulfilment assets (508) (380)
Purchase of property, plant and equipment (572) (445)
Proceeds from sale of property, plant and equipment/intangible assets/contract 81 78
fulfilment assets
Purchase of other investments (2) (4)
Proceeds from sale of other investments(2) 3 4
Dividends received from joint ventures and associates 65 60
Interest received 39 61
Repayment of principal under lease liabilities (227) (215)
Dividends paid to non-controlling interests (10) (7)
Free cash flow 1,675 1,425
1. See note 1.
2. 2024 excludes $327m received in respect of the sale of the Group's 19%
effective interest in ASM Global Parent, Inc. in August 2024.
Underlying free cash flow 2024 Restated(1)
$m
2023
$m
Free cash flow 1,675 1,425
Add back:
Cash payments related to the cost action programme and COVID-19 resizing costs 8 35
Cash payments related to the strategic portfolio review 8 24
Cash payments related to the one-off pension charge 8 11
Acquisition transaction costs 41 21
Underlying free cash flow 1,740 1,516
1. See note 1.
Underlying free cash flow conversion 2024 Restated(1,2)
$m
2023
$m
Underlying free cash flow 1,740 1,516
Underlying profit for the year 2,047 1,838
Underlying free cash flow conversion (%) 85.0% 82.5%
1. See note 1.
2. As underlying free cash flow includes interest and tax cash flows, underlying
profit for the year has replaced underlying operating profit as the
denominator in the calculation of underlying free cash flow conversion.
Underlying free cash flow conversion would be 58.0% in 2024 (2023: 58.5%)
using underlying operating profit as the denominator.
Underlying cash tax rate 2024 Restated(1)
$m
2023
$m
Tax received 18 31
Tax paid (711) (570)
Net tax paid (693) (539)
Underlying profit before tax 2,749 2,426
Underlying cash tax rate (%) 25.2% 22.2%
1. See note 1.
Business growth
Net new business 2024 Restated(1)
$m
2023
$m
New business less lost business 1,573 1,472
Prior year organic revenue 37,075 31,872
Net new business (%) 4.2% 4.6%
1. See note 1.
Compass Group PLC
Consolidated Financial Statements
Notes to the consolidated financial statements
For the year ended 30 September 2024
15 Exchange rates
Average rates are used to translate the income statement and cash flow
statement. Closing rates are used to translate the balance sheet. Only the
most significant currencies are shown.
2024 2023
Average exchange rate for the year
Australian dollar 1.51 1.51
Brazilian real 5.20 5.09
Canadian dollar 1.36 1.35
Euro 0.92 0.94
Japanese yen 150.03 140.07
Pound sterling 0.79 0.82
Turkish lira 31.33 21.51
Closing exchange rate at 30 September
Australian dollar 1.44 1.55
Brazilian real 5.45 5.00
Canadian dollar 1.35 1.35
Euro 0.90 0.94
Japanese yen 143.04 149.22
Pound sterling 0.75 0.82
Turkish lira 34.19 27.41
Forward-looking statements
Certain information included in this Announcement is forward-looking and
involves risks, assumptions and uncertainties that could cause actual results
to differ materially from those expressed or implied by forward-looking
statements. Forward-looking statements cover all matters which are not
historical facts and include, without limitation, the direct and indirect
future impacts and implications of: public health crises such as the COVID-19
pandemic on the economy, nationally and internationally, and on the Group, its
operations and prospects; risks associated with changes in environmental
scenarios and related regulations including (without limitation) the evolution
and development of the global transition to a low carbon economy (including
increasing societal and investor expectations); disruptions and inefficiencies
in supply chains (such as resulting from the wars in Ukraine and the Middle
East); future domestic and global political, economic and business conditions
(such as inflation or the UK's exit from the EU); projections relating to
results of operations and financial conditions and the Company's plans and
objectives for future operations, including, without limitation, discussions
of expected future revenues, financing plans and expected expenditures and
divestments; risks associated with changes in economic conditions, levels of
economic growth and the strength of the food and support services markets in
the jurisdictions in which the Group operates; fluctuations in food and other
product costs and labour costs; prices and changes in exchange and interest
rates; and the impacts of technological advancements. Forward-looking
statements can be identified by the use of forward-looking terminology,
including terms such as 'believes', 'estimates', 'anticipates', 'expects',
'forecasts', 'intends', 'plans', 'projects', 'goal', 'target', 'aim', 'may',
'will', 'would', 'could' or 'should' or, in each case, their negative or other
variations or comparable terminology.
Forward-looking statements in this Announcement are not guarantees of future
performance. All forward-looking statements in this Announcement are based
upon information known to the Company on the date of this Announcement.
Accordingly, no assurance can be given that any particular expectation will be
met and readers are cautioned not to place undue reliance on forward-looking
statements when making their investment decisions. Additionally,
forward-looking statements regarding past trends or activities should not be
taken as a representation or warranty that such trends or activities will
continue in the future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority), the Company
undertakes no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
Nothing in this Announcement shall exclude any liability under applicable laws
that cannot be excluded in accordance with such laws.
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