The directors submit their Annual Report and the audited consolidated accounts of the Company and its subsidiaries for the year ended 30 September 2008.
Compass Group PLC is a holding company, its subsidiaries are organised into four geographic areas and these are set out in the Chief Executive's statement. The principal activities of the Group are the provision of contract foodservice and support services to clients in some 55 countries around the world. Details of the development and performance of the Group’s businesses during the year and an indication of likely future key performance indicators and information regarding principal risks and uncertainties are set out together with the information that fulfils the requirements of the business review under; Performance highlights, Chairman’s statement, Chief Executive's statement and the Business review, and is incorporated into this Report by reference.
The Group’s Consolidated income statement shows an increase of 24.6% in Group operating profit from £529 million to £659 million. An analysis of revenue and operating profit is set out in note 1 to the consolidated financial statements. There have been no significant post balance sheet events.
The 2008 interim dividend of 4.0 pence per share (2007: 3.6 pence) was paid to shareholders on 4 August 2008. The directors recommend a final dividend of 8.0 pence per share (2007: 7.2 pence) making a total dividend for the year of 12.0 pence per ordinary share, an increase of 11% on the 10.8 pence paid in respect of last year. Payment of the recommended final dividend, if approved at the Annual General Meeting, will be made on 2 March 2009 to shareholders registered at the close of business on 30 January 2009. The shares will be quoted ex-dividend from 28 January 2009.
The Compass Group Employee Share Trust (‘ESOP’) and the Compass Group Employee Trust Number 2 (‘CGET’) were established on 13 January 1992 and 12 April 2001 respectively in connection with the Compass Group PLC share option plans. The Compass Group Long-Term Incentive Plan Trust (‘LTIP’) was established on 5 April 2001 in connection with the Compass Group Long-Term Incentive Plan. Details of all incentive plans are set out in the Directors’ remuneration report. Following purchases of ordinary shares in the capital of the Company made during the year, the trustees of the ESOP, CGET and LTIP hold 1,259,062, 17,209 and nil shares respectively. The average purchase price was 318.7 pence per share (excluding dealing costs). During the year, the trustees of each of the trusts waived their rights to receive dividends on any shares held by them. The amount of dividends waived in respect of the year ended 30 September 2008 was £51,863 (2007: £nil).
The Company’s dividend reinvestment plan will continue to be available to eligible shareholders. Shareholders who do not currently participate in the plan and wish to do so can obtain an application form and explanatory booklet from the Company’s Registrars, Capita Registrars (contact details for the Registrars are included in Shareholder information) or from the Investor centre on the Company's website. The latest date for receipt of new applications to participate in respect of the 2008 final dividend is 6 February 2009.
The Group’s strategic focus continues to be on the organic development of its existing core businesses together with appropriate acquisitions.
At the date of this Report, 1,844,101,494 ordinary shares of 10 pence each have been issued, are fully paid up and are quoted on the London Stock Exchange. In addition, the Company has entered into a level I American Depositary Receipt programme with the Bank of New York Mellon, under which the Company’s shares are traded on the over-the-counter market in the form of American Depositary shares.
During the year ended 30 September 2008, options were exercised pursuant to the Company’s share option schemes, resulting in the allotment of 21,950,879 new ordinary shares. A further 2,168,760 new ordinary shares have been allotted under these schemes since the end of the financial year to the date of this Report.
There are no restrictions on the transfer of ordinary shares in the capital of the Company other than certain restrictions which may from time to time be imposed by law, for example, insider trading law. In accordance with the Listing Rules of the Financial Services Authority, certain employees are required to seek the approval of the Company to deal in its shares.
The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and/or voting rights.
The Company’s Articles of Association may only be amended by special resolution at a general meeting of shareholders.
The Company is not aware of any significant agreements to which it is party that take effect, alter or terminate upon a change of control of the Company following a takeover.
More detailed information relating to the rights attaching to the Company’s ordinary shares is set out on pages 24 and 25 of the Annual Report for the year ended 30 September 2007. The Annual Report is published in the Investor Relations section of the Company’s website at www.compass-group.com and is available from the Company on request.
The Company commenced an on-market share buy-back programme following the disposal of Select Service Partner in June 2006. This programme was extended following the disposal of the Selecta vending business in July 2007 to repurchase a total of £1 billion of shares. This programme completed on 19 March 2008. On 14 May 2008, the Company announced that it would buy back a further £400 million of shares in order to maintain an efficient capital structure whilst at the same time retaining the flexibility to fund further infill acquisitions. During the year ended 30 September 2008 107,014,468 ordinary shares of 10 pence each of the Company (representing 5.55% of the ordinary shares in issue on 1 October 2007) were purchased and cancelled for a consideration of £348 million (including expenses).
Resolution 11 set out in the Notice of Meeting will be proposed as a Special Resolution to renew the directors’ limited authority last granted in 2008 to repurchase ordinary shares in the market. The authority sets the minimum and maximum prices which may be paid and it will be limited to a maximum of 10% of the Company’s issued ordinary share capital at the date of this Report. This authority will enable your directors to continue with the £400 million share buy-back programme announced on 14 May 2008. Furthermore, this authority will enable your directors to continue to respond promptly should circumstances arise in which they consider such a purchase would result in an increase in earnings per share and would be in the best interests of the Company.
Any purchases of ordinary shares will be by means of market purchases through the London Stock Exchange and any shares so purchased may be cancelled or may be placed into treasury in accordance with the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003. The Company currently holds no shares in treasury but the Regulations allow shares repurchased by the Company to be held as treasury shares that may be subsequently cancelled, sold for cash or used for the purpose of employee share schemes. The directors consider it desirable for these general authorisations to be available to provide flexibility in the management of the Company’s capital resources.
The directors propose Resolution 9 set out in the Notice of Meeting to renew the authority granted to them at the Annual General Meeting held in 2008 to allot equity shares up to an aggregate nominal value of £61,400,000 (representing approximately one-third of the ordinary shares issued at the date of this Report) (the ‘section 80 authority’). If approved at the forthcoming Annual General Meeting, the authority will expire no later than 15 months from the date on which the resolution is passed, or at the conclusion of the Annual General Meeting to be held in 2010, whichever is the sooner.
The limited power granted to the directors at last year’s Annual General Meeting to allot equity shares for cash other than pro rata to existing shareholders expires no later than 7 May 2009. Subject to the terms of the section 80 authority, your directors recommend that this authority should be renewed. Resolution 10 set out in the Notice of Meeting will be proposed as a Special Resolution to give your directors the ability (until the Annual General Meeting to be held in 2010) to issue ordinary shares for cash, other than pro rata to existing shareholders, in connection with a rights issue or up to a limit of 5% of the ordinary share capital issued at the date of this Report. In addition, and in line with best practice, the Company has not issued more than 7.5% of its issued share capital on a non pro rated basis over the last three years. Your directors have no present intention to issue ordinary shares, other than pursuant to the Company’s employee share schemes. The directors recommend that shareholders vote in favour of Resolutions 9 and 10 to maintain the Company’s flexibility in relation to future share issues, including any issues to finance business opportunities should appropriate circumstances arise.
Details of cancellations of existing shares and issues of new shares are set out in note 24 to the consolidated financial statements, which also contain details of options granted over unissued capital.
The following major shareholdings have been notified to the Company as at the date of this Report.
| % of issued capital | |
|---|---|
| Legal & General Group Plc | 5.99 |
| BlackRock, Inc | 5.09 |
| Harris Associates L.P. | 3.01 |
Brief particulars of the directors in office at the date of this Report are listed under Board of directors and further details of the Board composition are disclosed in the Corporate Governance report. Susan Murray was appointed as a non-executive director on 11 October 2007 and Tim Parker, who retired from the Board on 23 May 2008, was re-appointed as a non-executive director on 1 November 2008 and he will stand for election at the Annual General Meeting. The directors standing for re-election at the Annual General Meeting are Richard Cousins and Andrew Martin. Each director, being eligible, offers himself for election or re-election and each, following a performance evaluation during the year (save for Tim Parker), continues to be effective and demonstrates commitment to his respective role. It is the view of the Board that each of the non-executive directors brings considerable management experience and independent perspective to the Board’s discussions and they are considered to be independent of management and free from any relationship or circumstance that could affect, or appear to affect, the exercise of their independent judgement. Sven Kado will not seek re-election and he will retire from the Board at the conclusion of the Annual General Meeting. Peter Blackburn retired from the Board on 31 October 2007.
The directors in office on 30 September 2008 had the following interests in the ordinary shares of the Company.
| 30 September 2008 | 1 October 2007 (or on appointment) |
|
|---|---|---|
| Richard Cousins | 300,000 | 200,000 |
| Sir James Crosby | 34,000 | 34,000 |
| Sir Roy Gardner | 200,000 | 175,000 |
| Gary Green | 630,457 | 624,270 |
| Sven Kado | 33,000 | 33,000 |
| Steve Lucas | 1,000 | 1,000 |
| Andrew Martin | 158,559 | 158,559 |
| Susan Murray1 | 2,500 | – |
| Sir Ian Robinson | 6,289 | 6,289 |
There were no changes to the shareholdings of those directors in office on 30 September 2008 between 1 October 2008 and 26 November 2008.
With effect from 20 January 2007, the Listing Rules and the Disclosure and Transparency Rules were amended and updated by the Financial Services Authority to implement a new reporting regime set out in the EU Transparency Directive. One of the changes brought about by the Transparency Directive was to remove the requirement for companies to either send out half-yearly reports to all shareholders or to advertise the content in a national newspaper.
The Company intends to take advantage of the new reporting regime and will no longer publish half-yearly reports for individual circulation to shareholders. Information that would normally be included in a half-yearly report will, from 2009, be made available on the Company’s website at www.compass-group.com.
