REG - Compass Group PLC - Interim Results Announcement <Origin Href="QuoteRef">CPG.L</Origin> - Part 4
15/07/2015 17:19
- Part 4: For the preceding part double click ID:nRSM9844Mc
Geographical segments
North Europe Fast Growing Central
America & Japan & Emerging activities Total
Result £m £m £m £m £m
Six months ended 31 March 2014
Underlying operating profit before joint ventures and associates, exceptional items and costs relating to acquisitions 350 212 99 (32) 629
Add: Share of profit of joint ventures - 1 11 - 12
Add: Share of profit of associates 3 3 - - 6
Underlying operating profit before costs relating to acquisitions and tax on share of profit of joint ventures1 353 216 110 (32) 647
Less: Amortisation of intangibles arising on acquisition (5) (3) (3) - (11)
Less: Tax on share of profit of joint venture - - (1) - (1)
Less: Adjustment to contingent consideration on acquisition - - (2) - (2)
Total operating profit - continuing 348 213 104 (32) 633
Finance income 3
Finance costs (42)
Profit before tax 594
1 Underlying operating profit before costs relating to acquisitions and tax on share of profit of joint ventures is the profit measure considered by the chief operating decision maker.
Geographical segments
North Europe Fast Growing Central
America & Japan & Emerging activities Total
Result £m £m £m £m £m
Year ended 30 September 2014
Underlying operating profit before joint venture and associates, exceptional items and costs relating to acquisitions 666 406 205 (65) 1,212
Add: Share of profit of joint ventures - 3 21 - 24
Add: Share of profit of associates 6 3 - - 9
Underlying operating profit before costs relating to acquisitions and tax on share of profit of joint ventures1 672 412 226 (65) 1,245
Less: Amortisation of intangibles arising on acquisition (12) (5) (8) - (25)
Less: Acquisition transaction costs (2) (1) - - (3)
Less: Tax on share of profit of joint ventures - (1) (2) - (3)
Add: Adjustment to contingent consideration on acquisition 1 - (1) - -
Total operating profit - continuing 659 405 215 (65) 1,214
Profit on disposal of US business 1
Profit on disposal of interest in associates 13
Finance income 5
Finance costs (91)
Change in the fair value of investments 2
Profit before tax 1,144
1 Underlying operating profit before costs relating to acquisitions and tax on share of profit of joint ventures is the profit measure considered by the chief operating decision maker.
Compass Group PLC
Condensed Financial Statements (continued)
4 Financing income, costs and related (gains)/losses
Finance income and costs are recognised in the income statement in the period in which they are earned or incurred.
Year ended
Six months to 31 March 30 September
Finance income and costs 2015 2014 2014
£m £m £m
Finance income
Bank interest 2 3 5
Total finance income 2 3 5
Finance costs
Interest on bank loans and overdrafts 8 5 11
Interest on other loans 41 31 69
Finance lease interest 1 1 1
Interest on bank loans, overdrafts, other loans and finance leases 50 37 81
Unwinding of discount on provisions 1 2 3
Interest on net post-employment benefit obligations 2 3 7
Total finance costs 53 42 91
Analysis of finance costs by defined IAS 391 category
Fair value through profit or loss (unhedged derivatives) 2 (1) 4
Derivatives in a fair value hedge relationship (12) (12) (28)
Derivatives in a net investment hedge relationship 2 2 3
Other financial liabilities 58 48 102
Interest on bank loans, overdrafts, other loans and finance leases 50 37 81
Fair value through profit or loss (unwinding of discount on provisions) 1 2 3
Outside of the scope of IAS 39 (net pension scheme charge) 2 3 7
Total finance costs 53 42 91
1 IAS 39 'Financial Instruments: Recognition and Measurement'.
The Group uses derivative financial instruments such as forward currency contracts, cross currency swaps and interest rate swaps
to hedge the risks associated with changes in foreign currency exchange rates and interest rates. As explained in section Q of
the Group's accounting policies in the Annual Report for the year ended 30 September 2014, such derivative financial instruments
are initially measured at fair value on the contract date, and are remeasured to fair value at subsequent reporting dates. For
derivative financial instruments that do not qualify for hedge accounting, any gains or losses arising from changes in fair
value are taken directly to the income statement in the period.
Compass Group PLC
Condensed Financial Statements (continued)
4 Financing income, costs and related (gains)/losses (continued)
Fair value measurement
All derivative financial instruments are shown at fair value in the balance sheet. All the derivatives held by the Group at fair value are considered to have fair values determined by Level 2 inputs as defined by the fair value hierarchy of IFRS 13 'Fair value measurement'. The fair values of derivative financial instruments represent the maximum credit exposure.
Year ended
Six months to 31 March 30 September
2015 2014 2014
Financing related (gains)/losses £m £m £m
Hedge accounting ineffectiveness
Unrealised net losses on unhedged derivative financial instruments1 5 - -
Unrealised net (gains)/losses on derivative financial instruments in a designated fair value hedge2 (38) 1 (23)
Unrealised net losses/(gains) on the hedged item in a designated fair value hedge 34 (1) 23
Total hedge accounting ineffectiveness losses 1 - -
Change in the fair value of investments
Gain from the changes in the fair value of investments 1,3 - - 2
1 Categorised as 'fair value through profit or loss' (IAS 39).
2 Categorised as derivatives that are designated and effective as hedging instruments carried at fair value (IAS 39).
3 Life insurance policies used by overseas companies to meet the cost of unfunded post-employment benefit obligations.
Compass Group PLC
Condensed Financial Statements (continued)
5 Tax
Year ended
Recognised in the income statement: Six months to 31 March 30 September
Income tax expense on continuing operations
2015 2014 Restated1 2014 Restated1
£m £m £m
Current tax
Current year 158 146 269
Adjustment in respect of prior years (5) (2) 1
Current tax expense 153 144 270
Deferred tax
Current year 3 3 9
Impact of changes in statutory tax rates 1 - 1
Adjustment in respect of prior years (2) - (4)
Deferred tax expense 2 3 6
Total income tax
Income tax expense on continuing operations 155 147 276
1 2014 has been restated for joint ventures in accordance with IFRS 11,
as detailed in note 16.
The Group does not recognise deferred tax assets in respect of tax losses
and other temporary differences where the recovery is uncertain.
Unrecognised deferred tax assets in respect of tax losses and other
temporary differences amount to £46 million (30 September 2014: £42
million). No deferred tax liability is recognised on temporary
differences relating to the unremitted earnings of overseas operations as
the Group is able to control the timing of the reversal of these
temporary differences and it is probable that they will not reverse in
the foreseeable future.
Compass Group PLC
Condensed Financial Statements (continued)
6 Earnings per share
The calculation of earnings per share is based on earnings after tax and the weighted average number of shares in issue during
the period. The adjusted earnings per share figures have been calculated based on earnings excluding the effect of discontinued
operations, the amortisation of intangible assets arising on acquisition, acquisition transaction costs, adjustment to
contingent consideration on acquisition, European exceptional, gains and losses on disposal of businesses, hedge accounting
ineffectiveness, change in fair value of investments and the tax attributable to these amounts. These items are excluded in
order to show the underlying trading performance of the Group.
Year ended
Six months to 31 March 30 September
Attributable profit 2015 2014 2014
£m £m £m
Profit for the year attributable to equity shareholders of the Company 462 445 865
Less: Profit for the period from discontinued operations - - (3)
Attributable profit for the period from continuing operations 462 445 862
Amortisation of intangible assets arising on acquisition (net of tax) 10 8 18
Acquisition transaction costs (net of tax) 1 - 2
Adjustment to contingent consideration on acquisition (net of tax) (1) 1 1
European exceptional (net of tax) - - (7)
Loss/(profit) on disposal of US businesses (net of tax) 1 - (1)
Profit on disposal of interest in associates (net of tax) - - (13)
Loss from hedge accounting ineffectiveness (net of tax) 1 - -
Profit from change in the fair value of investments (net of tax) - - (2)
Underlying attributable profit for the year from continuing operations 474 454 860
Year ended
Six months to 31 March 30 September
2015 2014 2014
Ordinary shares of 105/8p each Ordinary shares of 10p each Ordinary shares of 105/8p each
Average number of shares (millions of ordinary shares) millions millions millions
Average number of shares for basic earnings per share 1,668 1,795 1,766
Dilutive share options 4 6 5
Average number of shares for diluted earnings per share 1,672 1,801 1,771
Compass Group PLC
Condensed Financial Statements (continued)
6 Earnings per share (continued)
Year ended
Six months to 31 March 30 September
2015 2014 2014
Earnings Earnings Earnings
per share per share per share
pence pence pence
Basic earnings per share (pence)
From continuing and discontinued operations 27.7 24.8 49.0
From discontinued operations - - (0.2)
From continuing operations 27.7 24.8 48.8
Amortisation of intangible assets arising on acquisition (net of tax) 0.6 0.4 1.0
Acquisition transaction costs (net of tax) 0.1 - 0.1
Adjustment to contingent consideration on acquisition (net of tax) (0.1) 0.1 0.1
European exceptional (net of tax) - - (0.4)
Loss/(profit) on disposal of US businesses (net of tax) 0.1 - (0.1)
Profit on disposal of interest in associates (net of tax) - - (0.7)
Profit from change in the fair value of investments (net of tax) - - (0.1)
From underlying continuing operations 28.4 25.3 48.7
Diluted earnings per share (pence)
From continuing and discontinued operations 27.6 24.7 48.9
From discontinued operations - - (0.2)
From continuing operations 27.6 24.7 48.7
Amortisation of intangible assets arising on acquisition (net of tax) 0.6 0.4 1.0
Acquisition transaction costs (net of tax) 0.1 - 0.1
Adjustment to contingent consideration on acquisition (net of tax) (0.1) 0.1 0.1
European exceptional (net of tax) - - (0.4)
Loss/(profit) on disposal of US businesses (net of tax) 0.1 - (0.1)
Profit on disposal of interest in associates (net of tax) - - (0.7)
Profit from change in the fair value of investments (net of tax) - - (0.1)
From underlying continuing operations 28.3 25.2 48.6
Compass Group PLC
Condensed Financial Statements (continued)
7 Dividends
The interim dividend of 9.8 pence per share (2014: 8.8 pence per share), £163m in aggregate1, is payable on 27 July 2015 to shareholders on the register at the close of business on 26 June 2015. The dividend was approved by the Board after the balance sheet date, and has therefore not been reflected as a liability in the interim financial statements.
Year ended
Dividends on ordinary shares Six months to 31 March 30 September
2015 2014 2014
£m £m £m
Amounts recognised as distributions to equity shareholders during the year:
Final 2013 - 16.0p per share - 287 287
Interim 2014 - 8.8p per share - - 157
Final 2014 - 17.7p per share 295 - -
Total dividends 295 287 444
1 Based on the number of shares in issue at 31 March 2015 (1,664 million shares).
Compass Group PLC
Condensed Financial Statements (continued)
8 Provisions
Six months to 31 March
Provisions in
respect of Year ended
discontinued 30 September
and disposed Onerous Legal and Total Total 2014
Provisions Insurance businesses contracts other claims Reorganisation Other 2015 2014 Total
£m £m £m £m £m £m £m £m £m
Brought forward 232 46 29 64 36 31 438 531 531
Reclassified1 - - (1) (1) 1 - (1) (17) (21)
Expenditure in the year (2) (1) (4) (6) (17) (3) (33) (46) (89)
Charged to income statement 12 - 1 2 2 - 17 24 39
Credited to income statement - - (1) (5) - (3) (9) (15) (14)
Business acquisitions - - - - - - - 2 2
Business disposals - - - - - - - - (3)
Unwinding of discount on - - 1 - - - 1 2 3
provisions
Currency adjustment 20 - - (4) (1) (1) 14 (10) (10)
Carried forward 262 45 25 50 21 24 427 471 438
1 Including items reclassified
between accrued liabilities and
other balance sheet captions.
Year ended
Six months to 31 March 30 September
Provisions 2015 2014 2014
£m £m £m
Current 143 162 161
Non-current 284 309 277
Total provisions 427 471 438
The provision for insurance
relates to the potential
settlements in respect of claims
under self-funded insurance
schemes, primarily workers'
compensation schemes in the US,
and is essentially long term in
nature.
Provisions in respect of
discontinued and disposed of
businesses relate to estimated
amounts payable in connection
with onerous contracts and
claims arising from disposals.
The final amount payable remains
uncertain as, at the date of
approval of these financial
statements, there remains a
further period during which
claims may be received. The
timing of any settlement will
depend upon the nature and
extent of claims received.
Provisions for onerous
contracts represent the
liabilities in respect of short
term and long term leases on
unoccupied properties and other
contracts lasting under five
years.
Provisions for legal and other
claims relate principally to
provisions for the estimated
cost of litigation and other
sundry claims. The timing of the
settlement of these claims is
uncertain.
Provisions for reorganisation
include provision for redundancy
costs and these are expected to
be utilised over the next year.
Other provisions include
environmental provisions and
provisions relating to the 2012
and 2013 European exceptional
programme for property and
assets. Environmental provisions
are in respect of potential
liabilities relating to the
Group's responsibility for
maintaining its operating sites
in accordance with statutory
requirements and the Group's aim
to have a low impact on the
environment. These provisions
are expected to be utilised as
operating sites are disposed of
or as environmental matters are
resolved.
Provisions are discounted to
present value where the effect
is material using the Group's
weighted average cost of
capital.
Compass Group PLC
Condensed Financial Statements (continued)
9 Post-employment benefit obligations
Pension schemes operated
The Group operates a number of pension arrangements
throughout the world which have been developed in
accordance with statutory requirements and local
customs and practices. The majority of schemes are
self-administered and the schemes' assets are held
independently of the Group's assets. Pension costs
are assessed in accordance with the advice of
independent, professionally qualified actuaries.
The Group makes employer contributions to the
various schemes in existence within the range of 1%
to 39% of pensionable salaries. The arrangements
are described in more detail in note 23 of the
Company's Annual Report for the year ended 30
September 2014.
At 31 March 2015 the assets of the various schemes
were invested in a diversified portfolio that
consisted primarily of equities and debt
securities. The fair value of these assets is
shown below by major category:
Six months to 31 March Year ended30 September
Total Total Total
UK USA Other 2015 2014 2014
Movements in the fair value of plan assets £m £m £m £m £m £m
Brought forward 1,944 279 84 2,307 2,149 2,149
Currency adjustment - 27 2 29 (11) (6)
Interest income on plan assets 39 5 1 45 46 91
Return on plan assets, excluding interest income 239 8 8 255 45 137
Employee contributions - 11 1 12 10 17
Employer contributions 15 11 7 33 32 60
Benefits paid (30) (19) (6) (55) (53) (96)
Administration expenses paid from plan assets - (1) - (1) - (1)
Disposals and plan settlements - - (4) (4) (2) (44)
Carried forward 2,207 321 93 2,621 2,216 2,307
Movement in the present value of defined benefit obligations
Six months to 31 March Year ended30 September
Total Total Total
UK USA Other 2015 2014 Restated1 2014 Restated1
£m £m £m £m £m £m
Brought forward 1,920 390 167 2,477 2,352 2,352
Currency adjustment - 38 (2) 36 (16) (13)
Current service cost 1 5 3 9 9 16
Past service cost - - - - - (4)
Interest expense on benefit obligations 38 7 2 47 49 97
Remeasurements - demographic assumptions - - - - - 23
Remeasurements - financial assumptions 212 15 13 240 17 121
Remeasurements - experience - - - - - 2
Employee contributions - 11 1 12 11 17
Benefits paid (30) (19) (6) (55) (52) (95)
Disposals and plan settlements - - (4) (4) (2) (40)
Acquisitions - - - - 1 1
Carried forward 2,141 447 174 2,762 2,369 2,477
Post-employment benefit obligations recognised in the balance sheet 66 (126) (81) (141) (153) (170)
1 2014 has been restated for joint ventures in accordance with IFRS 11, as detailed in note 16.
Compass Group PLC
Condensed Financial Statements (continued)
9 Post-employment benefit obligations (continued) Year ended
Six months to 31 March 30 September
Post-employment benefit obligations recognised in the balance sheet 2015 2014 Restated1 2014 Restated1
£m £m £m
Present value of defined benefit obligations 2,762 2,369 2,477
Fair value of plan assets (2,621) (2,216) (2,307)
Post-employment benefit obligations recognised in the balance sheet 141 153 170
Year ended
Six months to 31 March 30 September
Remeasurements 2015 2014Restated1 2014Restated1
£m £m £m
Remeasurement of post-employment benefit obligations - loss (240) (17) (146)
Return on plan assets, excluding interest income - gain 255 45 137
Total recognised in the consolidated statement of comprehensive income 15 28 (9)
1 2014 has been restated for joint ventures in accordance with IFRS 11, as detailed in note 16.
Compass Group PLC
Condensed Financial Statements (continued)
10 Business combinations
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