We have again delivered a very strong set of results that demonstrate the underlying strength of our business and reaffirm the long-term strategy that we set out two years ago to achieve sustainable growth and deliver increased value to our shareholders.
I am delighted to report a second consecutive year of good progress in delivering growth in organic revenue, operating profit, margin improvement and free cash flow generation.
These results maintain the positive momentum that we have built up and, whilst we have begun to see some indications of a slowdown in the global economy in the latter part of the year, I believe that the Group is well placed to continue to make progress in the face of the economic uncertainty ahead.
Through MAP, our Management and Performance framework, we continue to drive real focus on delivering good quality new business, like for like growth from our base estate and further cost efficiencies. We continue to see opportunities to deliver further improvement in all of these areas.
Our performance and the decisions we have taken over the last two years to strengthen our balance sheet have placed us in a strong financial position, giving us significant flexibility to invest in growing the business going forward.
We have a clear, focused strategy and, having successfully reduced the level of risk in the business over the last two years through the disposal of non-core activities and a programme of country exits, we have established a robust business model as a foundation for sustainable future growth.
In our core foodservice business we continue to see many exciting opportunities in our main market sectors as the trend towards outsourcing continues. Our increasing penetration of these sectors and our ability through innovation to deliver new services and exploit new segments provides us with a diverse and well-balanced spread of business without overexposure to any particular industry.
In March we acquired the remaining 50% interest in GR SA in Brazil, which is now one of our largest ten countries. I am delighted to welcome our team there fully into the Group. This business delivered 21% organic revenue growth this year and we remain excited by the long-term structural growth opportunities in Brazil and other parts of Latin America.
The decision to develop our support services capability alongside our foodservice offer continues to meet with a positive response from our clients and has placed us in a strong position to capitalise on opportunities that may arise from both new and existing clients looking to either further outsource or consolidate suppliers, as they review their own cost base in response to changes in the economic outlook. There are few global operators that can provide the scope, scale and depth of capability required by large national and international companies looking for consistently high service standards across their entire business and to achieve the economies of outsourcing to a single provider.
I take great pride in the reputation we have for the quality of the service we deliver and the loyalty that this inspires in our clients, as evidenced in our high retention rates and the growth in extending our services to existing clients. We greatly value the close relationships we have with our clients and we look forward to continuing to work with them to deliver greater value to their business through the services we provide.
We continue to make good progress on our commitment to set the highest standards for corporate governance and responsible business practice. In response to the commitment we made last year, we have developed a common set of Corporate Responsibility measures and targets, relevant to our business, which will enable our key stakeholders to evaluate our progress. These measures and targets are stated in Our 2008-2009 commitments.
To further improve the way we communicate the broad range of industry leading activity under way across the Group and to complement the Acting Responsibly section of this Report, we have created an expanded Corporate Responsibility report on the Compass Group website.
The Board is proposing a final dividend of 8.0 pence per share for payment on 2 March 2009. This brings our total dividend to 12.0 pence, a year on year increase of 11%.
During the year we returned £352 million to shareholders. This brings the total funds returned to shareholders since June 2006 to £1,072 million through the share buy-back programme.
I am delighted to welcome back Tim Parker, who briefly retired from the Board during the year, and to again be benefiting from his contribution to our deliberations. Sven Kado will be retiring from the Board with effect from the Annual General Meeting on 5 February 2009 and I would like to thank him for the contribution that he has made to the Board over the years.
We have a strong and stable Board with a breadth and diversity of expertise and experience which will be invaluable in guiding the Group through the period of economic uncertainty that lies ahead.
We have continued to strengthen the leadership at every level of the organisation and have in place solid succession and development processes to ensure that we have the strength in depth in leadership to grow the business both now and in the future.
In a business such as ours, people are at the heart of delivering excellent service to our clients and consumers and achieving our objectives. Our performance and results are a testament to the outstanding people that we have at every level in our business. On behalf of the Board, I offer my grateful thanks to all of our people for the success that we have achieved in the last year.
We are pleased with the results delivered in the last financial year against a background of weakening economic conditions. We have a clear and focused strategy, an internationally diversified and transparent business model and we are the market leader in an industry that has potential for significant structural growth. We see good opportunities to continue to grow revenue and to further improve operating efficiency. Our cash flow and balance sheet are strong. The strengths of the business that are highlighted in these results support the Board’s view that 2009 will be another year of progress for Compass Group.
Sir Roy Gardner
Chairman
28 November 2008
We have a clear, focused strategy that is delivering value for our shareholders and has created a well-balanced and sustainable business model with significant opportunities to deliver continued growth.
