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nnual Report 2011

SustainablegrowthAnnual Report 2011

Compass Group PLCCompass HouseGuildford StreetChertseySurrey KT16 9BQUnited Kingdom

Registered in England and Wales No. 4083914

Tel +44 1932 573 000Fax +44 1932 569 956

Find this Report online atwww.compass-group.com/annualreport11

Our business

45,000 We operate in over 45,000 client locations

470,000 We have more than 470,000 great people delivering great service every day

4bn We serve more than 4 billion meals a year

50 We operate in around 50 countries

This Report is printed on a combination of Revive 100 White Silk and Revive 100 Premium White Uncoated. Revive 100 White Silk is produced using 100% recycled waste, the pulp is bleached using a Totally Chlorine Free (TCF) process. Revive 100 Premium White Uncoated is produced using 100% de-inked post-consumer waste, the pulp is bleached using an Elemental Chlorine Free (ECF) process. Both materials are Forest Stewardship Council® (FSC) certified and are produced at mills that hold the ISO 14001 environmental management standard. Printed in the UK by Pureprint Group using vegetable inks and their and printing technology. Pureprint Group is ISO 9001:2000, ISO 14001, EMAS and FSC certified.

Focusing on sustainablegrowthMillions of people around the world rely on us every day to provide their breakfasts, lunches and dinners. As more and more organisations are choosing to outsource their food and support services to us, we retain our focus on disciplined, sustainable growth to meet their needs.

Contents1 CompassGroupPLC4 Performancehighlights8 Oursectors10 Chairman’sstatement14 ChiefExecutive’sstatement24 Businessreview32 Corporateresponsibility42 BoardofDirectors43 IndextoReport44 Governance61 Consolidatedfinancialstatements118 ParentCompanyfinancialstatements126Shareholderinformation135Indextothefinancialstatements

SeethisReportandourfullCorporateResponsibilityReportonlineat:www.compass-group.com/

annualreport11

Compass Group PLC Annual Report 2011 1

Compass Group PLC

Creating memorableexperiences

Wellness and nutritionWeofferourcustomershealthierchoicesandgivethemeasytounderstandnutritionalinformation,forexample,withournewlylaunched‘Whole+Sum’concept.Developedbyourowndieticians,inpartnershipwithexternalexperts,itoffersconsumerstheopportunitytocreatetheirownmealwithaperfectbalanceofvegetables,wholegrainsandprotein,givingthemaconsistentandhealthynutritionalprofileregardlessofthecombinationtheychoose.So,whatevertheyfancy,theirmealwon’texceedacertaincaloriecountandfatcontent,ensuringtheycanenjoytheirchoiceofourfoodwithouthavingtoworryaboutitsnutritionalvalue.Theyalsodon’tloseoutonflavourwithrecipesfeaturingdishesfromacrosstheworld,includingtheMediterranean,theMiddleEast,LatinAmericaandAsia,ensuringwealwaysoffervariedanddeliciousmeals.

We’re all about great food. We provide a wide choice of high quality, nutritious and well balanced food to meet the needs of our consumers throughout their day.

2 Compass Group PLC Annual Report 2011

Sustainable growth

20m+consumers served

every day

As well as serving food that tastes great, it’s important to serve food that makes people feel great.


Revenues 9.2%revenuegrowthonaconstantcurrencybasis

£13,444m09�

£14,468m10

£15,833m11

Total underlying operating profit 8.6%increaseinunderlyingoperatingprofitonaconstantcurrencybasis

£884m09�

£1,003m10

£1,091m11

Highlights 2011

1Constantcurrencyrestatestheprioryearresultsto2011’saverageexchangerates.

2TotalunderlyingoperatingprofitincludesshareofprofitofassociatesbutexcludesUKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.

NorthAmericaContinentalEuropeUK&IrelandRestoftheWorld

North AmericaRevenue

£6,849m (2010:£6,369m)

Underlying operating profit

£538m(2010:£491m)

% of Group revenue

43%(2010:44%)

Regional performance

Group performance

Compass has had another good year, despite the headwinds of high food cost inflation, a mixed economic backdrop and the impact of the tragic events in Japan. We have delivered further progress in operating profit and strong free cash flow generation.

£40mfromnetnewbusiness

£23mfromourexistingbaseestate

£4mofaboveunitcostsavings

£19mfromacquisitionsnetofrestructuringcosts

Onaconstantcurrencybasis,underlyingoperatingprofitincreasedby£86million(8.6%)fromthefollowingkeyareas:

3Underlyingoperatingprofitbyregionexcludesshareofprofitofassociates,UKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.

4Underlyingoperatingmarginisbasedonrevenueandoperatingprofitexcludingshareofprofitofassociates,UKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.


Performance highlights

Underlying basic earnings per share 9.2%increaseinunderlyingbasicearningspershare

30.0p09�

35.7p10

39.0p11

Dividends per ordinary share 10.3%increaseinthefullyeardividendperordinaryshare

13.2p09�

17.5p10

19.3p11

Free cash flow 6.9%decreaseinfreecashflow

£593m09�

£744m10

£693m11

Underlying operating margin 6.9%consistentwithlastyear

6.5%09�

6.9%10

6.9%11

Reported profit before tax 4.9%increaseinreportedprofitbeforetax

£773m09�

£913m10

£958m11

Operating with scale in around 50 countries in both developed and, increasingly, emerging markets, we are well placed to benefit from the growing outsourcing opportunity in food and support services, delivering an efficient and cost-effective solution to the multi-service requirements of our local, regional and multinational clients.

Continental EuropeRevenue

£3,717m(2010:£3,506m)


£259m(2010:£248m)

% of Group revenue

24%(2010:24%)

UK & IrelandRevenue

£1,951m(2010:£1,782m)


£114m (2010:£114m)

% of Group revenue

12%(2010:12%)

Rest of the WorldRevenue

£3,316m(2010:£2,811m)


£234m(2010:£204m)

% of Group revenue

21%(2010:20%)

5UnderlyingbasicearningspershareexcludesUKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption,hedgeaccountingineffectiveness,thechangeinthefairvalueofinvestmentsandnon-controllinginterestputoptions,gainonremeasurementofjointventureinterestonacquisitionofcontrolandthetaxattributabletotheseamounts.

6Organicgrowthiscalculatedbyadjustingforacquisitions(excludingcurrentyearacquisitionsandincludingafullyearinrespectofprioryearacquisitions),disposals(excludedfrombothperiods)andexchangeratemovements(translatingtheprioryearatcurrentyearexchangerates)andcomparesthecurrentyearresultsagainsttheprioryear.

7Unlessstatedotherwise,allfiguresinthisdocumentrelatetotheyearended30September2011.

8Thedatashownonpages4,5and18to21relatestothecontinuingbusinessonly.


Broadening our offerIncreasingly, organisations are relying on us to provide a range of soft support services such as cleaning, reception services and building maintenance, in addition to our core foodservice.

Compass Service FrameworkThe‘CompassServiceFramework’isour‘supportservicestoolkit’whichoutlinestheservicesweoffer,howweprovidethemandthemanagementprocesseswehaveinplacetoensureourservicesaremeetingourclients’expectations.Therearemanybenefitsfromthe‘CompassServiceFramework’forbothusandourclients.Itisaprovenmethodofcapturinginnovationsfromaroundtheworldandsharingandimplementingtheseacross

Our delivery model is based on ‘self-performance’ meaning that wherever possible, our people are looking after your people.

192%growth in our multi-service

revenue since 2006


Sustainable growth

oursupportservicesclientsglobally.‘Continuousimprovement’isnotaone-offprojectforus;itisanintegralpartofhowweoperate.Itprovidesuswithawayofauditingandcheckingthatwearemeetingthedemandsmadeofusandensuresthatweareprovidingaconsistentlygreatservice.Italsoenablesustodeploynewservicesornewcontracts,givingourclientsthebestpossibleserviceasquicklyaspossible.


Continuing to build on our sector expertise, while recognising that each of them has specific requirements, is a key driver of differentiation for our clients and fully underpins our drive for innovation and operating efficiency.

For consumers, this means speedier access to sector focused best practices and market-leading innovations that are delivered by our people, from award-winning chefs to service ‘practice experts’.

(2010:41%)

42%Group revenue 2011

Business & Industry

Increasingly,ourclientsareseekingbroaderserviceofferingsfortheirbusinesses.Combiningourrenowned‘customerfirst’hospitalitymindsetandreputationforgreatfoodwiththe‘industrialefficiency’ofour‘CompassServiceFramework’,weprovideclientswithmultipleservicestothehigheststandard,atthebestvalue,onaninternationalscale.

Major sector brands

Our sectors


Education

(2010:16%)

Fromkindergartentocollege,weprovidefun,nutritiousdiningsolutionsthathelpsupportacademicachievementatthehighestlevels.Oursimplesetofcommitments–‘Eat,Learn,Live’–helpsustoeducateyoungpeopleabouthowtohaveahappy,safeandhealthylifestylewhilecontributingtoasustainableworld.

Major sector brands


Our sectors


Healthcare & Seniors

(2010:19%)

Wearespecialistsinhelpinghospitalsinthepublicandprivatesectorsontheirjourneyofmanagingefficiencyandenhancingqualityacrossallservices.Withasignificantpresenceinthegrowingseniorlivingmarket,wealsoprovidecareservicestoresidentialhomesandhomemealdeliveryservices.


Sports & Leisure

(2010:11%)

Operatingatsomeoftheworld’smostprestigioussportingandleisurevenues,exhibitioncentres,visitorattractionsandmajorevents,wehaveanenviablereputationforprovidinghospitalityandtrueserviceexcellence.


Defence, Offshore & Remote

(2010:13%)

Throughourhealthandsafetycultureweareamarketleaderinprovidingfoodandsupportservicestomajorcompaniesintheoilandgasandminingandconstructionindustries,operatinginsomeofthemostdemandingenvironmentsintheworld.Forourdefencesectorclients,weareapartnerwhomeetsthechallengesofrunningefficientoperationsoutsideofareasofconflict.

Major sector brands Major sector brands Major sector brands


Sustainability and discipline

Sir Roy GardnerChairman

Iamdelightedtoreportanotheryearinwhichwehavedeliveredfurtherprogressinoperatingprofitandstrongfreecashflowgeneration.Wehaveachievedthisagainstabackdropofcontinuingeconomicuncertainty,highfoodcostinflationandthetragiceventsearlierthisyearinJapan.IamimmenselyproudofthehardworkandcommitmenttoachievingthesegoalsshownbymycolleaguesaroundtheGroup.

Ourstrategyisunchanged.Ourcorefocusremainsondeliveringshareholdervaluefromthesignificantstructuralopportunityinfoodservicearoundtheworldandinbuildingourcapabilityinsupportservices.Wearenowwellintothegrowthphaseofourjourney,aphaseinwhichourcoreaimissustainableanddisciplinedgrowth.Andwearemakinggoodprogress,buildingonthestrongfoundationswehaveputinplace,andretainingouremphasisonoperationalexcellenceinourpursuitofgrowth.

Theeconomicbackdropisstillveryvolatileandislikelytoremainsoforsometime.Ourflexiblecostbaseandthesignificantcostbenefitsofoutsourcinggiveusconfidencethatamidstthechallengesofthiseconomicenvironmenttherearealsoopportunitiesforus.OurManagementandPerformanceprogramme,MAP,isfullyembeddedacrosstheGroupandcontinuestodriveefficienciesandactasaframeworkaroundwhichtosharebestpracticesbetweenourteams.

Whilstorganicgrowthremainsourpriority,overthelasttwoyearswehaveincreasedourfocusonsmall,infillacquisitionsandthesearenowmakingameaningfulcontributiontogrowth.Thecombinationofasolidtoplineandthecontinueddeliveryofsignificantefficiencygainshasdeliveredstrongprofitgrowthandcashflowgenerationandhasenabledustoincreaseourinvestmentintheexcitingopportunitiesweseearoundtheworld.Theacquisitionswhichwehavemadethisyearhavetakenusfurtherintotheemerging

Compass Group share price performance vs FTSE 100 Index over the last 3 years

Our clear and consistent focus on our growth strategy has enabled us to meet economic and operational challenges head on and come away a better and stronger business.

35Position in the FTSE 100 Indexasat30September2011(2010:36)

10.3%Total dividend up 10.3% to 19.3p(2010:17.5p)

46.8%

36.4%

5.8%1 year

2 years

3 years


Chairman’s statement

marketsaswellasstrengtheningourofferinsupportservices.

ThisyearwehavemorethandoubledourpresenceinTurkeywiththeacquisitionoftheremaining50%ofourformerjointventurebusiness,SOFRA.SincetheyearendwehavealsoacquiredObasan,aleadingfoodservicebusinessinTurkey.InIndia,wehavedevelopedasignificantnationalpresenceinbothfoodandsupportserviceswiththerecentacquisitionsofVipul,UHSandIndus.WehavecontinuedtobuildourcapabilityinsupportservicesinNorthAmericawithanumberofacquisitionsacrossCanadaandtheUnitedStates.AndourcommitmenttobuildingscaleinEuropeandJapancanbeseeninthenumberofacquisitions,whichtotalovertenthisyear,thatwehavemadeintheregion,includingtheDutchbusinessofElior,aswellasVSGandCygnetintheUK.

IamdelightedtowelcomeallofouracquiredbusinessesintotheGroupandIlookforwardtomorevaluecreatingacquisitionsasweutilisethestrengthofourbalancesheettodriveourgrowthplanforward.

Commitment to corporate responsibility Corporateresponsibilityunderpinstheresponsibleandsustainabledeliveryofourkeybusinessdriversand,assuch,isanintegralpartofachievingouroverallstrategy.TheBoardbelievesthattheintegrationofcorporateresponsibilityacrosstheGroupandtheinclusionofbroadersocialandenvironmentalissuesintoourdecisionmakingwillhelpCompasstoachieveourbusinessgoals,actasabuildingblockforgrowthinshareholdervalueandbenefitthecommunitiesinwhichweoperate.Assuch,theBoardremainsfullycommittedtothisimportantaspectofhowweoperate.

WearenowintoourfourthyearofmeasuringourprogressandourdriveforcontinuousimprovementissetoutintheActingResponsiblysectionofthisReportonpages32to41.

OnbehalfoftheBoardIwouldliketothankAndrewforhisexcellentstewardshipoftheGroup’sfinancesandtowelcomeDominictotheGroup.

Our peopleOvertheyear,wehavefacedeconomicandoperationalchallenges.Butourclearandconsistentfocusonourgrowthstrategyhasenabledustomeetthemheadonandcomeawayasabetterandstrongerbusiness.

Noneofwhatwehaveachievedwouldhavebeenpossiblewithoutourpeople.OnbehalfoftheBoard,IwouldlikethankallofmyCompasscolleaguesfortheircontinuedcontributionstothebusiness.

OutlookAswelookforward,weremainveryoptimisticabouttheopportunitiestogrowthebusiness.Whilstthecurrenteconomicuncertaintyislikelytoputongoingpressureonlikeforlikevolumesinpartsofthebusiness,theopportunitiestogrowthebusinessareverypositiveandourflexiblecostbasewillenableustorespondquicklyandeffectively.Wearewellplacedtocapitaliseonthesignificantstructuralgrowthopportunitiesinbothfoodandsupportservicesaroundtheworldandweareencouragedbythepipelineofnewbusiness.Whilstweseegrowthpotentialacrossallourgeographies,weareincreasingourfocusonexpandingourpresenceinthefastgrowingandemergingeconomies.Wewillalsocontinuetodrivecostefficiency,underpinningourexpectationoffurtherprogressintheoperatingmarginoverthemedium-term.Strongcashflowsshouldcontinuetoenableusbothtorewardshareholdersandinvestinvaluecreatinginfillacquisitions.

Sir Roy Gardner Chairman23November2011

Dividend increaseOurcommitmenttocreatingshareholdervalueremainsstrong.Wehavethisyearcompletedtherebasingofourdividendwithaninterimdividendincreaseof30%.TheBoardisnowproposingafinaldividendof12.8penceforpaymenton27February2012.Thisbringsourtotaldividendfor2011to19.3pence,ayearonyearincreaseof10.3%.

Withthevisibilitywehaveonourbusinessperformanceandourcurrentinvestmentrequirements,wehavetakenthedecisiontorestructureanddrivegreaterefficiencyintothebalancesheetthrougha£500millionsharebuybackwhichwehopetocompleteoverthenexttwelvemonths.

Afterconcludingthebuyback,weexpecttoretainourexistingcreditratingsandconserveanappropriateamountoffinancialflexibility.

LeadershipTheopportunitiesandchallengesthatfaceusaroundtheworlddifferfromregiontoregion.Wearethereforeadaptingourmanagementstructuretogiveeachareatherequiredfocus.OurGroupwillbesplitintothreeregions:NorthAmerica,EuropeandJapanandourfastgrowingandemergingcountries.

Arisingfromthissharpeningofourgeographicstrategy,wewillbemakingsomeimportantmanagementchanges.OurcurrentGroupFinanceDirector,AndrewMartin,andourcurrentGroupManagingDirectorofNorthAmerica,GaryGreen,willtakeuppositionsasGroupChiefOperatingOfficers.GarywillcontinuetoleadtheNorthAmericanbusinessandAndrewwillheadEuropeandJapan.

WithAndrewdepartinghisroleasGroupFinanceDirector,wearealsopleasedtohaveannouncedtheappointmentofDominicBlakemorewhowillassumetheroleofGroupFinanceDirectorfromnextApril.

Our strategyWehaveaclear,focusedstrategythatisdeliveringvalueforourshareholdersandhascreatedawell-balancedandsustainablebusinessmodelwithsignificantopportunitiesto delivercontinuedgrowth.

•Focusonourcontractfoodservicebusiness

•Growoursupportservicesbusiness•Committedtogivingourcustomers

superiorlevelsofservice•Focusondrivingcostefficiencies

Compass Group share price performance vs FTSE 100 Index 2011

470

500

530

560

590

620

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011

(1.8%)

(7.6%)

Compass Group share price performance vs FTSE 100 Index 2011 Compass FTSE 100

Over the last 3 years

The FTSE 100 Index has been rebased to the Compass Group share price on 30 September 2010 (530.50 pence)

3years

2years

1year

+00%

+00%

+00%


Focusingon growthThe launch of our ‘Mapping for Growth’ programme in 2010 marked the start of a new phase where quality, sustainable growth became a greater focus of the Group.

5.4%Group organic growth

We’re placing greater emphasis on growing revenues whilst retaining our relentless focus on efficiency.


Sustainable growth

market,whichisofasimilarsizebutwithanevenloweroutsourcingrate.Inordertocapturesomeofthisgrowth,ourcorestrategyisunchanged:weremainfocusedonbeingaworld-classproviderofcontractfoodandsupportservices,renownedforourgreatpeople,ourgreatserviceandourgreatresults.Wewillcontinuetoinvestinbothorganicgrowthandinfillacquisitionswithoutlosingsightofourrelentlessfocusonefficiency.

Attractive Structural Growth OpportunityDespitethegoodlevelsofgrowthwehaveachievedoverthelastseveralyears,westillbelievethereareplentyofopportunitiestocapitaliseoninboththefoodandsoftsupportservicesmarkets.Thepotentialsizeoftheopportunityinbothmarketsishuge.Thetotalfoodserviceindustryisestimatedatabout£200billion,ofwhichlessthan50%isbelievedtobecurrentlyoutsourced.Thesameistrueofthesoftsupportservices


overthepasttwoyearsisdeliveringimprovedwinratesandamoreconsistentqualityofnewbusiness.Inadditiontothegoodgrowthinfoodservice,weareseeinghighratesofnewbusinessinsupportandmulti-services.Internationalclientsareanimportantpartofourgrowthstrategyandwehaveagainmadegoodprogressinthisarea,winningorextendingourglobalrelationshipswithSAP,Shell,PeugeotandChevron.

Overthelasttwoyears,wehaveputmorefocusonretentionandweareveryencouragedtoseeasignificantimprovementintheGroupretentionrate,whichhasmovedfrom93%inthefirsthalfof2010to94.5%inthesecondhalfof2011.

£23 million of base estate profit growth Thelikeforlikerevenuegrowthof2.4%largelyreflectspriceincreases,drivenbygraduallyincreasingfoodcostinflationthroughouttheyear.

Inthefirsthalfoftheyear,againstveryweakcomparatives,weexperiencedalittlevolumegrowth.Aswemovedintothesecondhalf,wefacedthecombinationofmuchtoughercomparativestogetherwithsomefurtherweaknessinthemacroeconomicbackdropintheUKandContinentalEurope,aswellastheimpactoftheearthquakeinJapan.Overall,likeforlikevolumeinthesecondhalfoftheyearwasmarginallypositiveinNorthAmericaandtheRestoftheWorldandalittlenegativeintheUK&IrelandandContinentalEurope.WhilstthemacroeconomicbackdropisputtingsomepressureonheadcountsandspendatourBusiness&Industryclients’sites,weareworkinghardtodriveincreasedparticipationandspendthroughexcellentconsumerpropositions,intelligentmarketing,retailskillsandattractivepricing.Althoughdifficulttopredict,lookingatthemacrodata,wecontinuetoexpectlikeforlikevolumestoremaindullthroughout2012.

Themajorityofourcostbaseisvariableandwecontinuetomanageitinresponsetoanydeclineinlikeforlikevolumes.Aswewentthroughthedownturnof2009and2010,wewereabletoflexthecostbaseanddriveefficienciesquickly,whichoffsettheprofitimpactofthefallinlikeforlikevolumes.Thetoolsweusedthenremainavailabletoustodayandweseethisascrucialtoourbusinessmodel.

Wehaveseenasteadyincreaseinfoodcostinflationthroughouttheyear.Whilstthisisclearlybeyondourcontrol,therearemanyactionsthatwetaketohelpmitigatetheimpactandmanageinflation.Menumanagement,forexample,isakeytoolthatenablesustoavoidoruselessofthefoodstuffsthataremostaffectedbyinputcostinflation.Inadditiontothis,wearecontinuingtodrivegreaterefficiencyinpurchasingandlogistics.Finally,ourcontractstructuresgenerallyallowustosensiblyincreasepriceswherewehaveexperiencedinputcostinflation.

Reportedrevenuehasgrownby9.4%intheyearand9.2%onaconstantcurrencybasis.Afteradjustingfortheimpactofacquisitionsanddisposals,wehaveseengoodorganicrevenuegrowthof5.4%fortheyear.

Underlyingoperatingprofitincreasedby9%intheyear,withtheoperatingmarginremainingflat.Duringtheyearweincurredarounda£15millionprofitimpactfollowingtheJapaneseearthquakeinMarchandahigherthannormallevelofrestructuringcostsofaround£15millionrelatingtoacquisitions.Excludingtheimpactofthese,theoperatingmarginwouldhaveimprovedby20basispoints.

£40 million profit from net new business Wehavedeliverednewbusinessrevenuegrowthof8.8%throughouttheyear.Theinvestmentwehavemadeinsalestraining

A clearand focused strategy

Richard CousinsGroupChiefExecutive


Chief Executive’s statement

Wehavemadefurtherprogressintheyearonour£5billionMAP3costoffoodandournearly£9billionMAP4unitcosts.WecontinuetoworkhardtoimproveproductivityandweseemanyongoingopportunitiestodrivegreaterefficiencyacrosstheGroup.

£4 million of net above unit overhead savingsWearecontinuingtodriveaboveunitoverheadefficiencies,holdingthecostbroadlyflatwhilstabsorbinginflationandbringinginanumberofinfillacquisitions.Overthelastfiveyears,wehavereducedaboveunitoverheadsbyaround£100million,inabsoluteterms,whilegrowingtherevenueby£3.6billion,soreflectingasignificantproductivitysaving.

£19 million from acquisitionsThisrelatestotheincrementaloperatingprofit,afterrestructuringcosts,oftheacquisitionsmadeinboth2010and2011.

StrategyFocus on food Ourstrategyremainsunchanged.Foodisourcorebusiness.Thestructuralgrowthopportunityissignificantwithanestimatedmarketsizeofaround£200billionofwhichlessthan50%isalreadyoutsourced.AlthoughBusiness&Industryisthemostpenetratedsector,thereremainsexcellentgrowthpotentialasthereisastrongpropensitytooutsourcewithinthesector.Lesspenetratedsectors,suchasHealthcareandEducationalsooffergreatopportunitiesforgrowth.Thesemarketsaresignificantand,aseconomicconditionscontinuetoputincreasingpressureonboththepublicandprivatesectors,webelievethebenefitsofoutsourcingwillbecomeevermoreapparent.

Fast growing support services Supportandmulti-servicesarebecominganincreasinglyimportantpartoftheGroupandnowrepresent22%,or£3.5billion,ofGrouprevenues.Withinthe22%,7%relatestothefoodelementofmulti-servicecontractsand15%tosupportservices.Countrybycountry,wearecontinuingtobuildastrongsupportservicesoffer.Althoughorganicgrowthisthepriority,wehaveacquiredover20supportservicesbusinessesduringthepast10yearstohelpaccelerategrowthandbringnewcapabilitiestotheGroup.WehavehadanotherexcellentyearofnewbusinesswinsincludingasignificantcontractwithAscensionHealth,oneofthelargestnon-profithealthcaresystemsintheUS.Wewillbeprovidingfoodandsupportservicesto86sitesacrosstheUS.

Geographic spread Increasingly,weseeourbusinessinthreesegments:NorthAmerica,themoredevelopedmarketsofEuropeandJapanandourfastgrowingandemergingmarkets.Thesesegmentscomprisecountrieswhichareatsimilarstagesofdevelopmentanddemonstratesimilarcharacteristics.NorthAmericaaccountsfornearly£7billionofrevenueandremainsourbiggestgrowth

engine.TheUScultureisopentooutsourcingandthecurrenteconomicclimateisresultinginsomeincreasedactivity.Wehaveanexcellentpipelineofnewbusiness,highretentionratesandongoingopportunitiestodriveefficiencies.EuropeandJapan,which,atjustover£6billionofrevenue,accountforaround40%oftheGroup,offergoodgrowthpotential,althoughcurrentperformanceisbeingaffectedbytheweakeconomicbackdrop.AswellascoreBusiness&Industry,therearegoodopportunitiesinHealthcareandEducationandincreasinglyinmulti-services.WithoperatingmarginscurrentlybelowtheGroupaverageweseelotsofpotentialtodrivegreaterefficiency.Thefastgrowingandemergingcountries,whichtogethergeneraterevenuesof£2.8billion,arebecomingmuchmoreimportanttotheGroup.Havingexitedover40difficultandsub-scalecountriesinthemiddleofthelastdecadeandwiththeconfidencederivedfromrapidmarginexpansion,wehavebeenincreasinglyfocusingonandinvestinginAustraliaandtheemergingcountries.Weenjoyhighratesoforganicgrowthinthesecountriesandwewouldhopetoseedoubledigitgrowthformanyyearstocome.OnedaythissegmentwillbeamuchlargerproportionoftheGroup.

Management changes Withthedifferingopportunitiesandchallengesineachgeographicregion,weareevolvingourmanagementstructuretobringamoreincisivefocustoeacharea.WearethereforepleasedtohaveannouncedtheappointmentofAndrewMartin,GroupFinanceDirector,asaGroupChiefOperatingOfficer.AndrewwillassumeresponsibilityfortheGroup’soperationsinEuropeandJapanfrom2April2012.FromthesamedateGaryGreen,currentlyGroupManagingDirectorforNorthAmerica,willalsoassumethetitleofaGroupChiefOperatingOfficerwithresponsibilityforNorthAmerica.BothMessrsMartinandGreenwillremainDirectorsoftheCompany.

On27February2012,DominicBlakemorewillbeappointedasGroupFinanceDirectorDesignate.MrBlakemore,42,willsucceedMrMartinasGroupFinanceDirectoron2April2012.MrBlakemoreiscurrentlyChiefFinancialOfficerofIgloFoodsGroupLimited,whichhejoinedfromCadburyPlc,wherehewasEuropeanFinanceandStrategyDirector,havingpreviouslyheldseniorfinancerolesasCorporateFinanceDirectorandGroupFinancialController.PriortojoiningCadburyPlc,MrBlakemorewasaDirectoratPricewaterhouseCoopers.

Acquisitions Intandemwithourconcentrationonorganicgrowth,overthelastcoupleofyearswehaveplacedmorefocusonmakingselectiveinfillacquisitions.Overthepasttwoyears,wehaveinvestedover£600millioninsmalltomedium-sizedinfillacquisitions,withagoodmixbetweenfoodandsupportservicesandanincreasingamountinthefastgrowingandemergingmarkets,forexample,more

thandoublingourpresenceinTurkeyandestablishingastrongnationalfootprintinIndia.Wecontinuetohaveastrongpreferenceforsmalltomedium-sizedinfillacquisitions,buildingscaleinfoodandsupportservicesinourexistinggeographies.Asappropriateacquisitionopportunitiesarise,wewillinvestinfoodandsupportservices,inbothdevelopedandemergingmarkets.

Shareholder returns Inadditiontopursuingourstrategyofinfillacquisitions,thestrengthofourcashflowhasenabledustoinvestinorganicgrowthandtorewardourshareholders.Ourcommitmenttoaprogressivedividendpolicyremainsstrong,andtodrivegreaterefficiencyinthebalancesheet,wewillnowcommencea£500millionsharebuybackwiththeintentiontocompletethisoverthenexttwelvemonths.Theincreasingpredictabilityofthebusinessandcashflowsgivesusconfidencethatweshouldretainourexistingcreditratings(A-withStandard&Poor’sandBaa1withMoody’s)andanappropriateleveloffinancialflexibility.

OutlookCompasshashadagoodyear.StrongorganicrevenuegrowthhasbeendrivenbygoodlevelsofnewbusinesswinsacrosstheGroupandanimprovementintheunderlyingrateofretention.Ongoingcostefficienciesaredrivingfurtherimprovementintheunderlyingoperatingmarginandenablingustoreinvestinthebusiness.Infillacquisitionsarealsomakingameaningfulcontributiontogrowth.ThisstrongperformanceisdespitetheimpactofthetragiceventsinJapan,risingfoodcostsandeconomicweaknessinsomeofourmarkets.Thefundamentalsofthebusinessareworkingwell.

Aswelookforward,weremainverypositiveabouttheopportunitiestogrowthebusiness.Whilstthecurrenteconomicuncertaintyislikelytoputongoingpressureonlikeforlikevolumeinpartsofthebusiness,theopportunitiestogrowthebusinessareverypositiveandourflexiblecostbasewillenableustorespondquicklyandeffectively.Wearewellplacedtocapitaliseonthesignificantstructuralgrowthopportunitiesinbothfoodandsupportservicesaroundtheworldandweareencouragedbythepipelineofnewbusiness.Whilstweseegrowthpotentialacrossallourgeographies,weareincreasingourfocusonexpandingourpresenceinthefastgrowingandemergingeconomies.Wewillalsocontinuetodrivecostefficiency,underpinningourexpectationoffurtherprogressintheoperatingmarginoverthemedium-term.Strongcashflowsshouldcontinuetoenableusbothtorewardshareholdersandinvestinvaluecreatinginfillacquisitions.

Richard CousinsGroupChiefExecutive23November2011


£2.8bnrevenue from

fast growing and emerging markets

We expect these fast growing and emerging markets to become a larger part of the Group over time.

Expanding in fast growing marketsWe are becoming increasingly excited about the fast growing and emerging markets, which now account for almost 20% of our business.


Sustainable growth

HavinghadapresenceinTurkeyforover20years,wearenowoneofthemarketleadingcompaniesinfoodservice,withagrowingsupportservicesbusiness.Weemployaround16,000peopleandin2011,proformarevenueswereover£200million.Weprovidefoodandsupportservicestomanyofthelargestcompanies,schools,universitiesandhospitalsinTurkey.Thebusinessisgeneratinggoodlevelsofrevenuegrowthandweareexcitedaboutthepotentialforfurtherprogress.

Compass in TurkeyOneofourfastgrowingmarketsisTurkey,whichcontinuestoexperiencestrongeconomicactivityaswellasdemonstratingsignificantpositivetrendsinoutsourcingfoodandsupportservices.InMay,weacquiredtheoutstanding50%ofSOFRA,ourformerjointventureinTurkey.AndinAugust,weagreedthepurchaseoffoodservicecompany,Obasan.ThedealcompletedinearlyOctober.



North America43%of Group revenue (2010:44%)

£6,849mRevenue (2010:£6,369m)

7.9%Operating margin (2010:7.7%)

£538mOperating profit(2010:£491m)

7.4%Organic revenue growth (2010:5.8%)

InHealthcare,oursupportservicesoffer,strengthenedbyrecentacquisitions,hascontributedtothedeliveryofgoodnewbusinesswinsandexcellentlevelsofretention.InadditiontoourappointmentbyAscensionHealth,wehavealsobeenappointedtoprovidesupportservicestoTheNewYorkCityHealthandHospitalsCorporation,thelargestmunicipalhealthcareorganisationintheUSA,andtheMemorialHermannHealthcareSystem,thelargestnot-for-profithospitalsysteminHouston,Texas.WehavealsobeenappointedbytheSt.FrancisHospitalandMedicalCenterinConnecticuttoprovidefoodservicesandretailoperations.

ImprovedmealplanparticipationoncampuseshasdrivenincreasedlikeforliketradingintheEducationsector.WehaverecentlywonthefoodservicecontractsatseveraluniversitiesincludingMissouriStateUniversity,thestate’ssecondlargestuniversity,andTheUniversityofMassachusettsDartmouth,oneoffivecampusesoftheUniversityofMassachusetts,andwehavecommencedfoodserviceandretailoperationsatthelongestablishedUniversityofRegina,inSaskatchewan,Canada.

InLevy,ourSports&Leisurebusiness,retentionratesremainexcellent.TheUSCellularField,homeoftheChicagoWhiteSoxMajorLeagueBaseballteam,hasrecentlyrenewedourcontracttoprovidebothpremiumfoodandbeverageconcessions.IthasbeenaclientofLevy’ssince1982.Wehaveachievedmarginimprovementsdespitepressureonlikeforlikevolumes.Thishasbeendrivenbyakeenfocusoncostefficienciescombinedwiththeabilitytoflexthecostbasequickly.InAugust,weboughta49%stakeinAEGFacilities,LLCfromAnschutzEntertainmentGroup.AEGFacilities,LLCmanagesnumerousvenuesaroundtheworld,includingarenas,theatres,stadiaandconventioncentres.ThisacquisitionbringstogetherCompass’marketleadingfoodservicebusinessandAEGFacilities,LLC’svenuemanagementskills,enablingCompasstodeliveritsservicestomoreclientsandconsumersworldwide.

TheintegrationoftheMarquiseGroup,asupportservicesproviderinCanadaacquiredearlierintheyear,isproceedingwell.

Our North American business has delivered an excellent performance.Revenueshavegrownby7.4%onanorganicbasisandtheongoingefficiencyinitiativeshavecontributedtoafullyearoperatingmarginimprovementof20basispoints.

TheBusiness&Industrysectorhasdeliveredasolidresultwithgoodlevelsofnetnewbusinessandamodestrecoveryinlikeforliketradingagainstthelowercomparativesof2010.Anincreasedfocusonmarketingandretailsalestodriveparticipation,combinedwithtightcostmanagement,hasenabledthesectortodeliveranotheryearofincreasedoperatingprofit.NewcontractwinsincludeBlueCrossBlueShield,alargeinsurancecompany.

Revenue by sector

Business&Industry31%Education24%Healthcare&Seniors25%Sports&Leisure14%Defence,Offshore&Remote6%


Chief Executive’s statement continued

Continental Europe24%of Group revenue (2010:24%)

£3,717mRevenue (2010:£3,506m)


£259mOperating profit (2010:£248m)


Economic conditions in parts of Continental Europe have remained quite challenging during the year.Whilstwehaveseengoodlevelsofnewbusiness,likeforlikerevenuetrendshaveremaineddifficult.Overall,organicrevenuegrowthof0.9%isslightlyaheadoflastyear.Managementoftheflexiblecostbaseandongoingefficiencygainshaveresultedinanunderlyingoperatingmarginimprovementofaround20basispoints,beforetheimpactofcirca£12millionofrestructuringcostsassociatedwithacquisitions.

IntheNorwayESSbusinesswehavewonanewmulti-servicecontractwithTotalE&PNorgeAS,wherewewillprovideservicesattheclient’sheadofficeinNorwayand,intheCzechRepublic,wehaverecentlyrenewedourimportantfoodservicecontractwithSkodaAutoa.s.,apartofVWGroup.InDenmark,wehavewonanewfoodservicecontractwithPARKENVENUESA/S,Scandinavia’sleadingarenaformajorsportingandentertainmenteventsforbothhospitalityandpublicsales.

Thevenuehas700,000spectatorsand50,000VIPguestsannually.AdditionallyinDenmark,thesuccessfulintegrationoftherecentlyacquiredIDAServiceA/S,amulti-servicebusiness,isprovidingbothcross-sellingopportunitiesandsynergies.

WehavecontinuedtowingoodqualitynewbusinessinFranceandinvestmentinourretentionprocessisstartingtoshowimprovements.AfocusondrivingcostefficienciesacrossallareasofMAPhasmovedthemarginforward,againstthebackgroundofflatlikeforlikerevenues.

InGermany,wehaveseengoodlevelsofrevenuegrowthdespitechallengingtradingconditions.IntheBusiness&IndustrysectorwehavewonanexcitingnewcontractwithBoschSolarEnergyAGwherewewillprovidefoodservicestothe2,000employeesonsite,andwehaveextendedoursupportservicescontractwithSalzgitterAGtoincludefoodservices.

Italyhasonceagaindeliveredanencouragingmarginimprovementdrivenlargelybygrowthinthesupportservicesbusinessandthecontinuingreductionofourcostbase.SignificantnewbusinesswinsincludeacontracttoprovidesupportservicestotheEuropeanInstituteofOncologyinMilanandwehaveextendedourfoodservicebusiness

withPfizerbybeingawardedtheirlargestsiteinItaly,inCatania,aswellasrenewingourcontractinAscoli.

Encouragingly,Spainhasdelivereddoubledigitgrowthinnewbusiness,despitetheeconomicchallenges.Althoughlikeforlikevolumesremainverydifficult,marginsaresolid,benefitingfromamuchsimplifiedmanagementstructure.ExcellentcontractwinsintheyearincludeCentroMedicoTeknon,oneoftheleadingprivatehospitals,wherewehaveintroducedanewexclusiveconcepttopromotehealthyeating,andtheJesuitSchoolsinCatalonia.WehavealsosuccessfullywidenedourrelationshipwithResidenciasBallesol,aleadingseniorlivinggroupinSpain,toprovidefoodserviceatafurthersevenseniorlivinghomes.RetentionrateshavecontinuedtoimprovewithsignificantrenewalssuchasTele5andSabadellMunicipalitySchools.

InTurkey,theacquisitionoftheremaining50%shareofSOFRAandthesubsequentacquisitionofObasan,whichwascompletedaftertheyearend,havefurtherstrengthenedourcapabilities.Theintegrationisprogressingwellandwehaveseensomeexcitingwins,includingVodafoneand24DogaSchools,oneofthemostprestigiousgroupsofprivateschools.Renewalsincludetheextensionofourmulti-sitesecurityservicescontractwithMetroCash&Carry.

Revenue by sector




UK & Ireland12%of Group revenue (2010:12%)

£1,951mRevenue (2010:£1,782m)



(0.1)%Organic revenue growth (2010:(3.3)%)

Revenue by sector


Theimprovementisdrivenpredominantlybyahigherrateofretentionwherewehaveinvestedinboththeprocessandtheteam.Thereremainsanongoingfocusoncosts,bothtomitigatetheimpactofreducedvolumesandtointegratetherecentacquisitions.

IntheBusiness&Industrysectorwehavecontinuedtowinandretainqualitybusinessinbothfoodandsupportservices.Forexample,wehavewonacontracttoprovidesecurityservicestoThomsonReutersandretainedfoodservicecontractswithCitiandBNPParibas,wherewewillnowprovidediningandhospitalityaswellasthestaffrestaurants.Inresponsetopressureonlikeforlikevolumes,drivinglabourcostefficiencieshasremainedafocus.

WehaveseengoodgrowthintheHealthcaresector,throughlikeforlikerevenuegrowthandafocusonretention,althoughwecontinuetoseepressureoncostsasclientslookforcostsavinginitiatives.Oursupportservicescapabilityhasenabledustoretainourmulti-servicecontractswithbothWestHertfordshireHospitalsandNewhamGatewaySurgicalCentre.Ourabilitytoflexthecostbaseanddriveefficiencies,aswellasofferawiderrangeofservices,makesuswellplacedtoworkwithclientsastheylooktotakecostsout.

Despite challenging economic conditions continuing to impact like for like volumes in Business & Industry, we have continued to see improvement in organic revenue trends in the UK & Ireland business, from a 3.3% decline last year to broadly flat this year.

WehavecontinuedtomakeprogressintheEducationsector,illustratedbytheretentionofkeycontractswithWestminsterCityCounciltoprovidecateringto39primaryschools,WestSussexSchoolsandUniversityCollegeLondon,wherewewillbeprovidinganinnovativeretailsolution.

ThepictureintheSports&Leisuresectorremainsmixed.Theretailandhospitalitybusinessatmajoreventshasperformedwellwithincreasedspendperhead.However,conferencesandeventshasexperiencedmorepressurefromdeferralofactivities,althoughtherearenowsomesignsofvolumestabilisation.Wehaveacontinuedfocusoncosts,particularlylabour,tomitigatetheimpactonprofitofanydeclineinlikeforlikerevenues.

Withourongoingdesiretofocusonourcoreactivitieswehavedecidedtoexitorrundownasmallnumberofnon-coreactivitiesintheUK,includingprovidingcateringinhotelsandmobilefoodunitsatsportingevents.Theoveralllossofrevenuewillbearound£70million.Wehavetakena£55millionexceptionalcostintheyear,whichisalmostallnon-cash,includinggoodwillof£20million,otherintangiblewrite-offsof£10millionandassetwrite-downsof£15million.Goingforward,theUKbusinesswillbemorefocused.


Chief Executive’s statement continued

Rest of the World21%of Group revenue (2010:20%)

Revenue by sector


£3,316mRevenue (2010:£2,811m)




Our Rest of the World businesses have continued to deliver excellent organic revenue growth of 10.0%.Theunderlyingmarginhasincreasedbyaround20basispoints,beforeabsorbingthe£15millionimpactoftheJapaneseearthquake.Thereportedoperatingmargindecreasedby20basispointsto7.1%.

Wearecontinuingtoseegoodlevelsofnewbusinesswinsacrossmostcountriesintheregion.Forexample,inChina,wehaverecentlybeenawardedthefoodservicecontractswithDowChemicalsfortheirShanghaioperation,andwithTencent,oneofChina’slargestInternetserviceportalproviders.InColombia,wehavewonanewmulti-servicecontractwithPhilipMorrisInternational(Coltabaco)andwehavealsorenewedourcontractwithoneoftheleadinghealthcareinstitutionsinColombia,theClínicadelCountry.InIndia,wehavebeenawardedacontractbyDelltoprovidefoodservicesatitslocationinBangaloreandinArgentina,we

haverenewedourcontractattheMineraAlumbreracopperandgoldmine,operatedbyXstrataCopper.

DoubledigitorganicrevenuegrowthinAustraliahasbeendrivenbystronglevelsofnewbusinesswinsandlikeforlikerevenuegrowth,inparticularintheremotesitebusiness.WehavebeenawardedanewcontractbyBHPBillitontomanageandoperatetheWarrawanduvillageaspartoftheJimblebarmineconstructionprojectinthePilbara.InEducation,wehavewonacontracttoprovidefoodservicestoScotchCollegeinWesternAustralia,aprestigiousindependentschool.Furthermarginimprovementhasbeendeliveredthroughmanagementoflabourschedulingandthesupplychain.

InJapan,thetragiceventsoftheearthquakeandtsunamiinMarchcauseddisruptiontopartsofthecountry’smanufacturingbaseandlikeforlikevolumesinBusiness&IndustryandSports&Leisurehavethereforebeenwellbelownormallevelsinthesecondhalfoftheyear.Oursupplychainwassignificantlyimpactedandwehaveworkedhardtoreducecostsandhencemitigatetheprofitimpactofthereductioninrevenue,toaround£15million,whichisbelowourinitialestimates.Itislikelytotakeafurther12monthstoreturntopre-earthquakerunratesforthebusiness.

InBrazil,excellentnewbusinesswinsandafocusonretentionhavedelivereddoubledigitorganicrevenuegrowth.Thepipelinecontinuestolookstrong.TheacquisitionofthesupportservicesspecialistCleanMalllastyearhascontributedtonewcontractwinswithEricssonforsupportserviceswherewealreadyprovidedfoodservices.

InSouthAfrica,wehaveachievedencouraginglevelsofnewbusiness.WehaverecentlybeenawardednewcontractwinsbytheStellenboschAcademyofSporttoprovidemulti-servicesattheirprofessionalrugbytrainingcomplexandbyNokiaSiemensNetworkstoprovidefoodservicesattheirCenturionbuilding.Inaddition,wehaverenewedourfoodservicescontractwithNedbank,aclientfor10years,throughdemonstratinginnovationandgreeninitiatives.

OurUAEbasedbusinesshasseengoodlevelsofnewbusinessandexcellentretentionratestodeliverdoubledigitorganicgrowth,withgoodgrowthinsupportservicesintheBusiness&IndustryandEducationsectors.

Ourbusinessesservingtheenergyandextractionsectors,whichhaveafocusonbluechipinternationalclients,havecontinuedtodeliversolidorganicrevenuegrowthandmaintainedexcellentretentionrates.


Accelerating through acquisitionThe strength of our balance sheet underpins our confidence in pursuing infill acquisitions. We are supplementing our good organic growth with strategic and value creating acquisitions across the world.

Our strong preference is for small to medium- sized infill acquisitions in both food and support services.


Sustainable growth

£426mspent on infill acquisitions

Compass in IndiaManyeconomistspredictthatIndiawillbecomethethirdlargesteconomyintheworldby2050,behindChinaandtheUS.Recognisingitsimportanceasahighgrowthmarket,wehaveinvestedinbothourorganicgrowthandinsupplementingthatgrowthwithinfillacquisitions.Inthelastthreeyears,wehaveacquiredfourfoodservicebusinessestobuildourcapabilityacrossregionsandsectors.Inaddition,wehavealsoboughtasupportservicesbusiness,whichgives

usagoodpresenceinthatfastgrowingmarket.Alloftheseacquisitionshavebeenrelativelysmallbutstrategicallyimportantandvaluecreating.Todate,thebusinesshasgrownorganicallybyover100%andwenowhavearound10,000employeesoperatinginnearly300clientsitesacrossthecountry.Witheightregionalofficescovering44cities,wehaveastronggeographicalpresencethroughoutthecountryservicingbothlargeIndiancompaniesandthegrowingnumberofinternationalbluechipclientswithapresenceinIndia.


A strong financialperformanceWe have had another good year in which we have delivered further progress in operating profit and strong free cash flow generation.

Andrew MartinGroupFinanceDirector

Financial summary2011 2010 Increase

Continuing operationsRevenueConstantcurrency £15,833m £14,504m 9.2%Reported £15,833m £14,468m 9.4%Organicgrowth 5.4% 3.2% –Total operating profitConstantcurrency £1,091m £1,005m 8.6%Underlying £1,091m £1,003m 8.8%Reported £1,016m £989m 2.7%Operating marginConstantcurrency 6.9% 6.9% –Underlying 6.9% 6.9% –Reported 6.4% 6.8% (40)bpsProfit before taxUnderlying £1,020m £922m 10.6%Reported £958m £913m 4.9%Basic earnings per shareUnderlying 39.0p 35.7p 9.2%Reported 36.4p 35.3p 3.1%Free cash flow £693m £744m (6.9%)

Total Group including discontinued operationsBasicearningspershare 38.5p 36.0p 6.9%Fullyeardividendperordinaryshare 19.3p 17.5p 10.3%

Segmental performanceRevenue Revenuegrowth

2011£m

2010£m Reported

Constantcurrency Organic

Continuing operationsNorthAmerica 6,849 6,369 7.5% 10.1% 7.4%ContinentalEurope 3,717 3,506 6.0% 5.2% 0.9%UK&Ireland 1,951 1,782 9.5% 9.5% (0.1)%RestoftheWorld 3,316 2,811 18.0% 11.7% 10.0%Total 15,833 14,468 9.4% 9.2% 5.4%

Operatingprofit Margin

2011£m

2010£m

2011%

2010%

Continuing operations NorthAmerica 538 491 7.9 7.7%ContinentalEurope 259 248 7.0 7.1%UK&Ireland 114 114 5.8 6.4%RestoftheWorld 234 204 7.1 7.3%Unallocatedoverheads (60) (60) – –Excludingassociates 1,085 997 6.9 6.9%Associates 6 6 – –

Underlying 1,091 1,003 6.9 6.9%Amortisationoffairvalueintangibles (12) (7)Acquisitiontransactioncosts (9) (5)Adjustmenttocontingentconsiderationonacquisition 1 –Share-basedpaymentsexpense–non-controllinginterestcalloption – (2)UKre-organisation (55) –Total 1,016 989

1 Constantcurrencyrestatestheprioryearresultsto2011’saverageexchangerates.2 Totaloperatingprofitincludesshareofprofitofassociates.3 UnderlyingoperatingprofitandmarginexcludesUKre-organisation,amortisationof

intangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.

4 Operatingmarginisbasedonrevenueandoperatingprofitexcludingshareofprofitofassociates.

5 UnderlyingoperatingmarginexcludesUKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.

6 UnderlyingprofitbeforetaxexcludesUKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption,hedgeaccountingineffectivenessandthechangeinfairvalueofinvestmentsandnon-controllinginterestputoptions.

7 UnderlyingbasicearningspershareexcludesUKre-organisation,amortisationofintangiblesarisingon acquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisition,share-basedpayments–non-controllinginterestcalloption,hedgeaccountingineffectiveness,thechangeinfairvalueofinvestmentsandnon-controllinginterestputoptions,gainonremeasurementofjointventureinterestonacquisitionofcontrolandthetaxattributabletotheseamounts.

8 Organicgrowthiscalculatedbyadjustingforacquisitions(excludingcurrentyearacquisitionsandincludingafullyearinrespectofprioryearacquisitions),disposals(excludedfrombothperiods)andexchangeratemovements(translatingtheprioryearatcurrentyearexchangerates)andcomparesthecurrentyearresultsagainsttheprioryear.


Business review

RevenueOverall,organicrevenuegrowthfortheyearwas5.4%,comprisingnewbusinessof8.8%,aretentionrateof94.2%andlikeforlikegrowthof2.4%.Acquisitionslessdisposalsincreasedrevenueby3.8%andtheweakeningofSterling,inparticularagainsttheAustralianDollarandBrazilianReal,increasedreportedrevenuesby0.2%,resultinginreportedrevenuegrowthof9.4%.

£13,444m09�

£14,468m10

£15,833m11

Operating profitUnderlyingoperatingprofitfromcontinuingoperationswas£1,091million(2010:£1,003million),anincreaseof8.8%.Onaconstantcurrencybasis,underlyingoperatingprofitincreasedby£86million(8.6%).

Operatingprofit,aftertheUKre-organisationcostsof£55million(2010:£nil),amortisationofintangiblesarisingonacquisitionof£12million(2010:£7million),acquisitiontransactioncostsof£9million(2010:£5million),adjustmenttocontingentconsiderationonacquisitionof£1millioncredit(2010:£nil)andshare-basedpaymentsexpense–non-controllinginterestcalloption£nil(2010:£2million),was£1,016million(2010:£989million).

£884m09

£1,003m10

£1,091m11

Operating margin Theunderlyingoperatingprofitincreasedby£86million,or8.6%,onaconstantcurrencybasis.Thishasresultedinanunderlyingoperatingmarginof6.9%,consistentwithlastyear.

6.5%09

6.9%10

6.9%11

North America43.3% Group revenue (2010: 44.0%)OurNorthAmericanbusinesshasdeliveredanexcellentperformance.Revenueshavegrownby7.4%onanorganicbasisandtheongoingefficiencyinitiativeshavecontributedtoafullyearoperatingmarginimprovementof20basispoints.

Continental Europe 23.5% Group revenue (2010: 24.2%)EconomicconditionsinpartsofContinentalEuropehaveremainedquitechallengingduringtheyear.Whilstwehaveseengoodlevelsofnewbusiness,likeforlikerevenuetrendshaveremaineddifficult.Overall,organicrevenuegrowthof0.9%isslightlyaheadoflastyear.Managementoftheflexiblecostbaseandongoingefficiencygainshaveresultedinanunderlyingoperatingmarginimprovementofaround20basispoints,beforetheimpactofcirca£12millionofrestructuringcostsassociatedwithacquisitions.

UK & Ireland12.3% Group revenue (2010: 12.3%)DespitechallengingeconomicconditionscontinuingtoimpactlikeforlikevolumesinBusiness&Industry,wehavecontinuedtoseesomeprogressiveimprovementinorganicrevenuetrendsintheUK&Irelandbusiness,froma3.3%declinelastyeartobroadlyflatthisyear.Theimprovementisdrivenpredominantlybyahigherrateofretentionwherewehaveinvestedinboththeprocessandtheteam.Thereremainsanongoingfocusoncosts,bothtomitigatetheimpactofreducedvolumesandtointegratetherecentacquisitions.

Rest of the World20.9% Group revenue (2010: 19.5%)OurRestoftheWorldbusinesseshavecontinuedtodeliverexcellentorganicrevenuegrowthof10.0%.Theunderlyingmarginhasincreasedbyaround20basispoints,beforeabsorbingthe£15millionimpactoftheJapaneseearthquake.Thereportedoperatingmargindecreasedby20basispointsto7.1%.

Regional reviewsAdditionalinformationontheperformanceofeachregioncanbefoundintheregionalreviewsonpages18to21.

Unallocated overheadsUnallocatedoverheadsfortheyearwere£60million(2010:£60million),reflectingcontinuedgoodcontrolsovercentralcostsasthebusinessgrows.

Finance costs Theunderlyingnetfinancecostwas£71million(2010:£81million),includinga£14million(2010:£15million)chargerelatingtothepensiondeficit.Thisreflectsaloweraveragecostofborrowingcomparedtolastyear.Atcurrentexchangerates,wenowexpecttheunderlyingnetfinancecostfor2012tobearound£85million.Thisincludesa£15millionchargerelatingtothepensiondeficitandaround£15millionofshort-terminefficiencieshavingraised$1billion(£625million)ofnewmoniesintheUSPrivatePlacementmarketinSeptember2011,aheadofthescheduledrepaymentof£614millionofloansinMay2012.The£85millionexcludesanyadditionalfinancingcostrelatingtothe£500millionsharebuyback.

Other gains and lossesOthergainsandlossesincludea£5millioncost(2010:£4millioncredit)relatingtohedgeaccountingineffectiveness,a£2millioncredit(2010:£1millioncredit)impactofrevaluinginvestmentsandnon-controllinginterestputoptionsand£16million(2010:£nil)gainonremeasurementofourexistingjointventureinterestinTurkeyfollowingacquisitionofcontrol.

Profit before taxProfitbeforetaxfromcontinuingoperationswas£958million(2010:£913million).

Onanunderlyingbasis,profitbeforetaxfromcontinuingoperationsincreasedby11%to£1,020million(2010:£922million).

Income tax expenseIncometaxexpensefromcontinuingoperationswas£264million(2010:£246million).

Onanunderlyingbasis,thetaxchargeoncontinuingoperationswas£276million(2010:£248million),equivalenttoaneffectivetaxrateof27%(2010:27%).Wenowexpectthetaxratetoaverageoutaroundthe26%levelintheshorttomedium-term,reflectinginpartthatthereareafewcorporatetaxratesaroundtheworldthataredecreasing.

Discontinued operationsTheprofitaftertaxfromdiscontinuedoperationsof£40million(2010:£13million)principallyaroseonthereleaseofprovisionsnowdeemedsurplus(includingincometaxprovisions).


Workingcapitalcontinuestobewellmanaged.Attheendof2010wehadthebenefitofsomecut-offtimingdifferences,whichaccountedforanestimated£74millionofthefreecashflowof£744million.Atthestartof2011,wehadareversalofthesecut-offtimingdifferences.Overthelasttwoyears,wehavedeliveredaninflowof£29millionintotal.Webelievethatthereremainsfurtherscopeforimprovement,averagingoutovertimeatneutraltoasmallinflow.

Thecashtaxratefortheyearwas20%(2010:22%),basedonunderlyingprofitbeforetaxforthecontinuingoperations,benefitingfromoneortwolargerefundsreceivedintheyear.Wecurrentlyexpectthecashtaxratetoaverageoutaroundthe26%levelfortheshorttomediumterm.

Thenetinterestoutflowfortheyearwas£55million(2010:£72million).

Freecashflowfromdiscontinuedoperationswasanoutflowof£6million(2010:£3millioninflow).

Acquisition paymentsSpendonacquisitionsintheyeartotalled£426million.Thisincludes£352milliononinfillacquisitions(including£91millionontheremaining50%ofSofraYemekÜretimVeHizmetAnouimSirketiinTurkey,£57milliononCoffeeDistributingCorpandBWHLSHoldings,IncintheUSA,£51milliononEliorNederlandBV,£30milliononthebusinessandassetsofMarquiseFacilitiesCorporation&MHCServicesCorporationinCanadaand£11milliononPPPInfrastructureManagementLimitedintheUK),£47milliononinterestsinassociates(includinga49%shareinAEGFacilities,LLCintheUSA),£18milliondeferredconsiderationandotherpaymentsrelatingtopreviousacquisitionsand£9millionofacquisitiontransactioncosts.

Sincetheyearend,wehavecommittedafurther£90milliontoacquisitions,includingtheObasanGıdaÍnsaatSanayiveTicaretAnonimSirketifoodbusinessinthefastgrowingTurkishmarketandIntegratedCleaningManagementLimitedintheUK,ahighqualitycleaningbusiness.

DisposalsTherewerenopaymentsmadeinrespectofbusinessesdisposedofordiscontinuedinprioryears(2010:£9million),and£3million(2010:£nil)taxonprofitsfromsaleofsubsidiarycompaniesandassociatedundertakings.

Proceeds from issue of share capitalTheGroupreceivedcashof£31millionintheyear(2010:£97million)fromtheissueofsharesfollowingtheexerciseofemployeeshareoptions.

Return on capital employedReturnoncapitalemployedwas19.9%(2010:20.3%)basedoncontinuingoperations,excludingtheGroup’snon-controllingpartners’shareoftotaloperatingprofit,netoftaxat27%andusinganaveragecapitalemployedfortheyearof£3,979million(2010:£3,591million)calculatedfromthebalancesheet.

Pensions TheGrouphascontinuedtoreviewandmonitoritspensionobligationsthroughouttheyearworkingcloselywiththeTrusteesandmembersofschemesaroundtheGrouptoensureproperandprudentassumptionsareusedandadequateprovisionandcontributionsaremade.

TheGroup’stotalpensionfunddeficitat30September2011was£292million(2010:£389million).Thetotalpensionschargefordefinedcontributionschemesintheyearwas£58million(2010:£54million)and£35million(2010:£37million)fordefinedbenefitschemes.Includedinthedefinedbenefitschemecostswasa£14millionchargetonetfinancecost(2010:£15million).

DuringtheyearwecompletedtheApril2010actuarialvaluationofthetwoUKpensionschemes.Wehavealsonowmergedthetwoschemes,simplifyingtheadministration,andmadea£50millionpaymenttowardsthecombinedApril2010actuarialvaluationdeficitof£178million.TheGroupcurrentlypaysapproximately£25millioneachyearintotheUKpensionplaninexcessoftheincomestatementcharge,inordertoaddresstheoutstandingactuarialdeficit.

Basicearningspershare,includingdiscontinuedoperations,were38.5pence(2010:36.0pence).

Onanunderlyingbasis,excludingdiscontinuedoperations,thebasicearningspersharefromcontinuingoperationswere39.0pence(2010: 35.7pence).

30.0p09

35.7p10

39.0p11

DividendsItisproposedthatafinaldividendof12.8pencepersharewillbepaidon27February2012toshareholdersontheregisteron27January2012.Thiswillresultinatotaldividendfortheyearof19.3pencepershare(2010:17.5pencepershare),ayearonyearincreaseof10.3%.

13.2p09

17.5p10

19.3p11

Thedividendiscoveredjustover2timesonanunderlyingearningsbasisand1.9timesonafreecashbasis.

Free cash flowFreecashflowfromcontinuingoperationstotalled£693million(2010:£744million).

£593m09

£744m10

£693m11

Grosscapitalexpenditureof£372million(2010:£334million),includingamountspurchasedbyfinanceleaseof£2million(2010:£3million)andcapitalcreditors£nil(2010:£2million),isequivalentto2.3%ofrevenues(2010:2.3%ofrevenues).Wecurrentlyexpecttheratioofgrosscapitalexpenditurefor2012tobeatasimilarlevel.Proceedsfromthesaleofassetswere£30millionandweexpectthesewillbeminimalin2012.

Basic earnings per shareAttributableprofit Basicearningspershare

2011 £m

2010£m

2011pence

2010pence

Change%

Reported 728 675 38.5 36.0 7%Discontinuedoperations (40) (13) (2.1) (0.7)Otheradjustments 50 7 2.6 0.4Underlying 738 669 39.0 35.7 9%


Business review continued

TheGroup’sundrawncommittedbankfacilitiesat30September2011were£700million(2010:£696million).

Financial instrumentsTheGroupcontinuestomanageitsforeigncurrencyandinterestrateexposureinaccordancewiththepoliciessetoutbelow.TheGroup’sfinancialinstrumentscomprisecash,borrowings,receivablesandpayablesthatareusedtofinancetheGroup’soperations.TheGroupalsousesderivatives,principallyinterestrateswaps,forwardcurrencycontractsandcrosscurrencyswaps,tomanageinterestrateandcurrencyrisksarisingfromtheGroup’soperations.TheGroupdoesnottradeinfinancialinstruments.TheGroup’streasurypoliciesaredesignedtomitigatetheimpactoffluctuationsininterestratesandexchangeratesandtomanagetheGroup’sfinancialrisks.TheBoardapprovesanychangestothepolicies.

Foreign currency riskTheGroup’spolicyistomatchasfaraspossibleitsprincipalprojectedcashflowsbycurrencytoactualoreffectiveborrowingsin thesamecurrency.Ascurrencycashflowsaregenerated,theyare usedtoserviceandrepaydebtinthesamecurrency.Wherenecessarytoimplementthispolicy,forwardcurrencycontractsandcrosscurrencyswapsare takenoutwhich,whenappliedtotheactualcurrencyliabilities,convertthesetotherequiredcurrency.Areconciliationofthe30 September2011actualcurrencyliabilitiestotheeffectivecurrency borrowedis setoutinnote20oftheconsolidatedfinancialstatements.Theborrowingsineachcurrencygiveriseto foreignexchangedifferencesontranslationintoSterling.Wherethe borrowingsareeitherlessthan, orequateto,thenetinvestmentinoverseasoperations,theseexchangeratemovementsaretreatedasmovementsonreservesandrecordedintheconsolidatedstatementof comprehensiveincomeratherthanintheincomestatement.Non-Sterlingearningsstreamsaretranslatedattheaveragerateofexchangefortheyear.ThisresultsindifferencesintheSterlingvalueofcurrencyearningsfromyeartoyear.Thetableinnote35oftheconsolidatedfinancialstatementssetsouttheexchangeratesusedtotranslatetheincomestatements,balancesheetsandcashflowsofnon-Sterlingdenominatedentities.

Interest rate riskAsdetailedabove,theGrouphaseffectiveborrowingsinanumberof currenciesanditspolicyistoensurethat,intheshort-term,itisnot materiallyexposedtofluctuationsininterestratesinitsprincipalcurrencies.TheGroupimplementsthispolicyeitherbyborrowingfixedratedebtorbyusinginterestrateswapssothatatleast80%ofitsprojectednetdebtisfixedforoneyear,reducingto60%fixedforthesecondyearand40%fixedforthethirdyear.

Other risks and uncertaintiesTheBoardtakesaproactiveapproachtoriskmanagementwiththeaimofprotectingitsemployeesandcustomersandsafeguardingtheinterestsoftheCompanyanditsshareholders.

TheprincipalrisksanduncertaintiesfacingthebusinessandtheactivitiestheGroupundertakestomitigatethesearesetoutinthesectionheaded‘Recognisingandmitigatingrisk’onpages30to31.

Shareholder returnThemarketpriceoftheGroup’sordinarysharesatthecloseofthefinancialyearwas521.00pencepershare(2010:530.50pencepershare).

Going concernTheGroup’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandpositionaresetoutintheBusinessReview,asisthefinancialpositionoftheGroup,itscashflows,liquiditypositionandborrowingfacilities.Inaddition,note20includestheGroup’sobjectives,policiesandprocessesformanagingitscapital,itsfinancialriskmanagementobjectives,detailsofitsfinancialinstrumentsandhedgingactivitiesanditsexposurestocreditriskandliquidityrisk.

TheGrouphasconsiderablefinancialresourcestogetherwithlonger-termcontractswithanumberofcustomersandsuppliersacrossdifferentgeographicareasandindustries.Asaconsequence,theDirectorsbelievethattheGroupiswellplacedtomanageitsbusinessriskssuccessfullydespitethecurrentuncertaineconomicoutlook.

Aftermakingenquiries,theDirectorshaveareasonableexpectationthattheGrouphasadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingthefinancialstatements.

Andrew Martin GroupFinanceDirector23November2011

Financial positionTheratioofnetdebttomarketcapitalisationof£9,886millionasat30September2011was8%(2010:6%).

Attheendoftheyear,netdebtwas£761million(2010:£621million).

At30September2011,followingaUS$1billionprivatedebtplacement,theGrouphadcashreservesof£1,110million.Inaddition,theGrouphadanundrawnbankfacilityofapproximately£700million,committedthroughto2016.

Lookingforward,£614millionofbondsandprivateplacementdebtareduetoberepaidduringthe2012financialyearanditisenvisagedthatthesewillberepaidfromcashreserves.Withstrongongoingfreecashflowgeneration,theGroupbelievesthatitisinasolidfinancialposition.

TheEBITtonetinterestratiohasincreasedfrom5.6timesin2006to15.2timesin2011andEBITDAtonetinteresthasincreasedfrom8.2timesto19.2timesinthesameperiod.Thisisadjustedwherenecessaryforcovenantdefinitionsandincludestheshareofprofitsofassociatesanddiscontinuedoperations,butexcludestheamortisationofintangiblesarisingonacquisition,hedgeaccountingineffectivenessandthechangeinfairvalueofnon-controllinginterestputoptions.TheGroupremainscommittedtomaintainingstronginvestmentgradecreditratings.Followingthe£500millionsharebuybackasannounced,theGroupexpectstoretainitscurrentcreditratings(A-withStandard&Poor’sandBaa1withMoody’s)andanappropriateleveloffinancialflexibility.

Liquidity riskTheGroupfinancesitsborrowingsfromanumberofsourcesincludingbanks,thepublicmarketsandtheprivateplacementmarkets.ThematurityprofileoftheGroup’sprincipalborrowingsat30September2011showstheaverageperiodtomaturityis4.8years.

Maturity profile of principal borrowingsasat30September2011

£ bonds US$ private placement

£ private placement

bank

1 Based on borrowings and facilities in place as at 30 September 2011, maturing in the �nancial year ending 30 September.

2 The average life of the Group's principal borrowings as at 30 September 2011 is 4.8 years (2010: 2.7 years).

0 100 200 300 400 500 600 700

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

£m


Reinvestingfor growth

94%+Group retention rate

The continued delivery of significant efficiency gains is enabling us to drive margin improvement as well as to reinvest in the exciting growth opportunities we see around the world.

Increasingly, we’re seeing countries share best practice across the world and we’ve invested more in resource and training to support this.


Sustainable growth

Strategic Alliance GroupEncouragingly,thisyearwehaveseenanimprovementintherateofretentioninover70%ofcomparablecountries.So,howhaveweachievedthis?OurbestpracticeretentionframeworkisbasedonasimplemodelcreatedbyourbusinessintheUSA,whichwecallthe‘StrategicAllianceGroup’.Itisasemi-independentteamthatfocusessolelyonretention,firstly,byinterviewingclientstodeterminehowwecanimproveourqualityandserviceand,secondly,byproactivelyrenegotiatingcontracts.Thisprocessissystematicandwelldefined.Whereweadoptthismodel,weconsistentlyseeimprovementandwe’reoptimisticthattheongoingrolloutofthisapproachwillresultinabetterretentionperformanceacrosstheGroup.


The identification of risks and opportunities is a core activity throughout the Group.

Recognising and mitigating risk

TheBoardcontinuestotakeaproactiveapproachtorecognisingandmitigatingriskwiththeaimofprotectingitsemployeesandcustomersandsafeguardingtheinterestsoftheCompanyanditsshareholders.

Assetoutonpages47to49oftheCorporateGovernancesection,theGrouphaspoliciesandproceduresinplacetoensurethatrisksareproperlyevaluatedandmanagedattheappropriatelevelwithinthebusiness.

Theidentificationofrisksandopportunities,thedevelopmentofactionplanstomanagetherisksandexploittheopportunities,andthecontinualmonitoringofprogressagainstagreedKeyPerformanceIndicators(‘KPIs’)isanintegralpartofthebusinessprocess,andacoreactivitythroughouttheGroup.

ControlisexercisedataGroupandbusinesslevelthroughMAP,theGroup’sManagementandPerformanceframework,monthlymonitoringofperformancebycomparisonwithbudgetsandforecastsandthroughregularbusinessreviewswiththeGroupChiefExecutiveandtheGroupFinanceDirector.

Thisisunderpinnedbyaformalmajorriskassessmentprocesswhichisanintegralpartoftheannualbusinesscycle.Aspartoftheprocess,eachoftheGroup’sbusinessesisrequiredtoidentifyanddocumentmajorrisksandappropriatemitigatingactivitiesandcontrols,andmonitorandreporttomanagementontheeffectivenessofthesecontrolsonabiannualbasis.Seniormanagersarealsorequiredtosignbiannualconfirmationsofcompliancewithkeyproceduresandtoreportanybreakdownsin,orexceptionsto,theseprocedures.TheresultsarereviewedbymanagementandtheBoard.

TheGroupalsohasformalproceduresinplace,withclearlydesignatedlevelsofauthority,forapprovingsignificantclientcontractsandcapitalinvestmentsaswellasacquisitions.Thesearesupportedby

apost-investmentreviewprocessforselectedacquisitionsandmajoritemsofcapitalexpenditure.

ThetablesetsouttheprincipalrisksanduncertaintiesfacingthebusinessatthedateofthisReportandthesystemsandprocessestheGrouphasinplacetomanageandmitigatetheserisks.ThesedonotcomprisealloftherisksthattheGroupmayfaceandarenotlistedinanyorderofpriority.AdditionalrisksanduncertaintiesnotpresentlyknowntomanagementordeemedtobelessmaterialatthedateofthisReportmayalsohaveanadverseeffectonthe Group.

TheGroupfacesanumberofoperationalrisksonanongoingbasisincludingsupplychain;informationtechnologyandinfrastructure;litigation;financialandtaxrisk,eachofwhichweredisclosedinlastyear’sAnnualReport.Werecognisethatthesecontinuetobeimportanttothebusinessandtheycontinuetobereviewed.Thisyear,however,wehavesoughttofocusourdisclosuresonthoserisksthatareconsideredtobemoresignificanttotheGroup.

Health, safety and environment

Risk: Health and safety

Mitigation: Healthandsafetyremainsournumberoneoperationalpriority.AllmanagementmeetingsthroughouttheGroupfeatureahealthandsafetyupdateasoneoftheirtopagendaitems.

Risk:Food safety

Mitigation:Compassfeedsmillionsofconsumersaroundtheworldeveryday,thereforesettingthehigheststandardsforfoodhygieneandsafetyisparamount.TheGrouphasappropriatepolicies,processesandtrainingproceduresinplacetoensurefullcompliancewithlegalobligations.

Risk: Environment

Mitigation:Everyday,everywhere,welooktomakeapositivecontributiontothehealthandwellbeingofourconsumers,thecommunitiesweworkinandtheworldwelivein.OurCorporateResponsibilitystatementonpages32to41describesourapproachinmore detail.

Clients and consumers

Risk: Client retention

Mitigation:Weaimtobuildlong-termrelationshipswithourclientsbasedonqualityandvalue.Ourbusinessmodelisstructuredsothatwearenotreliantononeparticularsector,geographyorgroupofclients.

Risk: Service delivery and compliance with contract terms and conditions

Mitigation: TheGroup’soperatingcompaniescontractwithalargenumberofclients.Processesareinplacetoensurethattheservicesdeliveredtoclientsareofanappropriatestandardandcomplywiththeappropriatecontracttermsandconditions.

Risk: Changes in consumer preferences

Mitigation: Westrivetomeetconsumerdemandforquality,choiceandvaluebydevelopinginnovativeandnutritiousfoodofferswhichsuitthelifestyleandtastesofourconsumers.

Risk: Consolidation of food and support services

Mitigation:Wehavedevelopedarangeofsupportservicestocomplementourexistingfoodserviceoffer.Theseservicesareunderpinnedbythe‘CompassServiceFramework’,ourstandardoperatingplatformforsupportservices,whichgivesusthecapabilitytodelivertoaconsistentworld-classstandardglobally.

Risk: Bidding risk

Mitigation:TheGroup’soperatingcompaniesbidselectivelyforlargenumbersofcontractseachyearandamorelimitednumberofconcessionopportunities.Tendersaredevelopedinaccordancewithathoroughprocesswhichidentifiesboththepotentialrisks(includingsocialandethicalrisks)andrewards,andaresubjecttoapprovalatanappropriateleveloftheorganisation.

Risk: Credit risk

Mitigation: ThereislimitedconcentrationofcreditriskwithregardtotradereceivablesgiventhediverseandunrelatednatureoftheGroup’sclientbase.


Business review continued

People

Risk: People retention and motivation

Mitigation: Therecruitmentandretentionofskilledemployeesisachallengefacedbymanyindustries.TheGrouphasestablishedtraininganddevelopmentandperformancemanagementprogrammeswhicharedesignedtoalignrewardswithourcorporateobjectivesandtoretainandmotivateourbestpeople.

Risk: Succession planning

Mitigation:TheGrouphascontinuedtodevelopsuccessionplanningaspartofthedevelopmentprogrammesforourpeople.TheGrouphasawell-establishedemploymentengagementinitiative,themostrecentresultsofwhichareshowninourCorporateResponsibilitystatementonpage36.

Acquisitions and investments

Risk:Acquisition and investment risk

Mitigation:Capitalinvestmentsandpotentialacquisitionsaresubjecttoappropriatelevelsofduediligenceandapproval.Postacquisitionintegrationandperformanceiscloselymanagedandsubjecttoregularreview.

Risk:Joint ventures

Mitigation:Insomecountriesweoperatethroughjointventures.Proceduresareinplacetoensurethatjointventurepartnersbringskills,experienceandresourcesthatcomplementandaddtothoseprovidedfromwithintheGroup.

Economic risk

Risk: Economy

Mitigation: Around50%ofourbusiness,theHealthcare,EducationandDefence,Offshore&Remotesitesectors,islesssusceptibletoeconomicdownturns.Revenuesintheremaining50%,theBusiness&IndustryandSports&Leisuresectors,aremoresusceptibletoeconomicconditionsandemploymentlevels.However,withthevariableandflexiblenatureofourcostbase,itisgenerallypossibletocontaintheimpactoflikeforlikevolumedeclines.

Risk:Food cost inflation

Mitigation: AspartofourMAPprogramme,weseektomanagefoodpriceinflationthrough:costindexationinourcontracts,givingusthecontractualrighttoreviewpricingwithourclients;menumanagementtosubstituteingredientsinresponsetoanyforecastshortagesandcostincreases;andcontinuingtodrivegreaterpurchasingefficienciesthroughsupplierrationalisationandcompliance.

Risk:Labour cost inflation

Mitigation: Ourobjectiveisalwaystodelivertherightlevelofserviceinthemostefficientway.AspartofourMAPprogramme,wehavebeendeployingtoolsandprocessestooptimiselabourproductivityandexercisebettercontroloverotherlabourcostssuchasabsenteeism,overtimeandthirdpartyagencyspend;andtoimproveourmanagementofsalaryandbenefitcostsandcontrollabour costinflation.

Regulatory, political and competitive environment

Risk: Political stability

Mitigation:Weareaglobalbusinessoperatingincountriesandregionswithdiverseeconomicandpoliticalconditions.Ouroperationsandearningsmaybeadverselyaffectedbypoliticaloreconomic instability.

Risk:Regulation

Mitigation: Changestolawsorregulationscouldadverselyaffectourperformance.Weengagewithgovernmentalandnon-governmentalorganisationsdirectlyorthroughtradeassociationstoensurethatourviewsarerepresented.

Risk:Competition

Mitigation: Weoperateinacompetitivemarketplace.Thelevelofconcentrationandoutsourcepenetrationvariesbycountry.Somemarketsarerelativelyconcentratedwithtwoorthreekeyplayers,othersarehighlyfragmentedandoffersignificantopportunitiesforconsolidationandpenetrationintotheself-operatedmarket.Aggressivepricingfromourcompetitorscouldcauseareductioninourrevenuesandmargins.Weaimtominimisethisbybuildinglong-termrelationshipswithourclientsbasedonqualityandvalue.

Fraud and compliance Reputation risk Pensions risk

Mitigation: TheGroup’szerotolerancebasedCodesofBusinessConductandEthicsgovernallaspectsofourrelationshipwithourstakeholders.AllallegedbreachesoftheCodesareinvestigated.TheGroup’sproceduresincluderegularoperatingreviews,underpinnedbyacontinualfocusonensuringtheeffectivenessofinternal controls.

Mitigation: Ourbrandsareamongstthemostsuccessfulandbestestablishedinourindustry.TheyrepresentakeyelementoftheGroup’soverallmarketingandpositioning.IntheeventthatourbrandorreputationisdamagedthiscouldadverselyimpacttheGroup’sperformance.TheGroup’szerotolerancebasedCodesofBusinessConductandEthicsaredesignedtosafeguardtheCompany’sassets,brandsandreputation.

Mitigation: TheGroup’sUKdefinedbenefitpensionschemesareclosedtofutureaccrualandtonewentrantsotherthanfortransfersunderpublicsectorcontractsintheUKwheretheCompanyisobligedtoprovidefinalsalarybenefitstotransferringemployees.StepshavebeentakentomergetheUKdefinedbenefitschemesandtoreducetheinvestmentriskinthem.Furtherinformationissetoutinnote23oftheconsolidatedfinancialstatementsonpages101to105.


ActingresponsiblyCorporate Responsibility (‘CR’) underpins the responsible and sustainable delivery of our key business drivers of strong customer relationships, employee performance, and food and service quality, all of which depend upon having motivated and productive employees. Our CR strategy meets the needs of our business and stakeholders in a cost effective, responsible and reputable manner.

Our values:Openness, trust and integrityPassion for qualityWin through teamworkCan-doResponsibility

Findoutmoreonlineat:www.compass-group.com/CR11

Interested?


Corporate responsibility

WeregardCRasalong-term,sustainableapproachtobusinessthatseeksbenefitsforallourstakeholdersandwehaveawellestablishedcommitmenttosupportthewellbeingofourcustomers,employees,suppliers,localcommunitiesandtheenvironment.Weareworkinghardtocontinuallyimprovethepositivecontributionwemakethroughouroperationsbytheresponsibleuseofresources,thehealthandwellnessofourcustomersandtheemploymentopportunitiesthatwecreateinlocalcommunities.

Overthepastyear,wehavecontinuedtodrivefurtherimprovementacrossourbusiness,particularlyintheareasofsupplychainandglobalhealthandsafetystandards,aswellasincreasingthescopeofourenvironmentalperformancereporting.TheBoardbelievesthattheprogressiveintegrationofCRacrosstheGroupandtheinclusionofbroadersocialandenvironmentalissuesintoourdecisionmakingwillhelpustoachieveourbusinessgoals,actasabuildingblockforgrowthinshareholdervalueandbenefitthecommunitiesinwhichweoperate.

Inthepastyear,wehavefurtherdevelopedourglobal‘CRFramework’toarticulateourlonger-termvisionandclearlydefinethestepswewishourbusinessestoimplementalongtheirCRjourney.WehaveshapedthecontentoftheFrameworkinresponsetofeedbackfromarangeofstakeholdersincludingemployees,customers,investorsandnon-governmentalorganisations.TheytoldusthattheywouldliketoseegreaterconsistencyinthewayinwhichweimplementourCRactivityglobally,enhancedscopetoourperformancereportingandbettercommunicationofourlonger-termCRvision.The‘CRFramework’,underpinnedbyanumberofprovenbestpracticeinitiativesfromaroundourbusiness,providescountrieswiththestrategicdirection,practicalstepsandtoolsnecessarytodeliverourFrameworkin practice.

A commitment to develop performance indicatorsOurKeyPerformanceIndicators(‘KPIs’)continuetoberelevanttoourbusinessstrategyandtodrivethesustainabledevelopmentofourbusiness.SincewestartedourCRjourneyin2007,wehaveseencontinuedimprovementinoursustainabilityperformanceagainstourbaselinedata.Thisyear,wehaveincreasedthescopeofourenvironmentalmeasurementtocoverour‘TopTwenty’countrieswhichrepresent93%oftotalGrouprevenue,aswellasreportingonnewareassuchasfoodwastereductionandadditionalpeoplerelatedmetrics.OurlatestCRperformanceagainstpublishedtargetsissetoutonpages34to35.

Corporate cultureGovernance and ethicsOurstructureisunderpinnedbythehighestlevelsofcorporategovernance.Thisempowersourlocalmanagementteamstomanagetheirbusinessestobecompetitiveintheirmarketplace,whilstoperatingwithinastrictcorporateframeworkwithclearlydefinedparameters.OurCodesofBusinessConductandEthicssetoutoursocial,ethicalandenvironmentalcommitmentstowardseachofourstakeholdersandthecommunitiesinwhichweoperate.

Wehaveaglobalwhistle-blowingprogramme,‘SpeakUp’,whichismanagedbyanindependentcompany,sothatouremployeescanraise,inconfidence,anyconcernstheymayhaveabouthowweconductourbusiness.Thisyear,wehaverefreshedthe‘SpeakUp’programmetoensurethatitremainsrelevantandthatweoptimiseemployeeawareness.

Corporate Responsibility Committee OuroverallcommitmenttogoodcorporategovernanceisoverseenbytheCorporateResponsibilityCommitteeoftheBoard.Establishedin2007,theCorporateResponsibilityCommitteecontinuestoprovidedirectionandguidanceonallaspectsofbusinesspracticeandresponsibility,ensuringconsistentapplicationwhereverweoperate.TheCommittee’sprimaryresponsibilitiesinclude:endorsementofCRpolicies;overseeingoccupationalhealthandfoodsafetyperformance;environmentalpractices;businessconductandthepositivepromotionofemployeeengagement,diversityandcommunityinvestment.AkeyfocusoftheCommitteehasbeentoimprovethescopeofourCRcommitmentsanddevelopourlonger-termCRvisionandperformancemeasurement.

75%of employees surveyed

believe that we are a good corporate citizen


Our CR commitments and progress

Basis for consolidationUnlessotherwiseindicated,progressisreportedforour‘TopTen’countriesagainst2009-2010performance.‘TopTen’countries,asat2008-2009,representing81%ofGrouprevenue:Australia,Canada,France,Germany,Italy,Japan,Netherlands,Spain,UK&IrelandandUSA.

targetachieved targetremainsworkinprogress

Key Performance IndicatorTarget 2010-2011

Performance2010-2011

Review 2010-2011

Target 2011-2012

Env

iro

nmen

t

Energy efficiency Reductioninenergyconsumptionofourcorporateoffices

• NaturalGas

• PurchasedElectricity

10% Thetrendacrosstheoperationsispositivewithimprovementsbeingachievedfromthe2008baseline.Someincreasesinconsumptionaretheresultofgrowthinbusinessoperations.Weaimtoreviewthewaywenormalisedatametricstoaddresstheanomalybetweenagrowingbusinessandshowingourtruegainsinsustainabilityperformancefornextyear’sreporting.

10%reductionby2012(against2007-2008baseline)

Vehicle efficiency Reductionincompanyvehiclefuelconsumption(directfuelpurchased)

10% Wecontinuetoinvestinlowemissionandelectricvehiclestoreducefuelemissions,aswellaspromoteresponsibledrivingbehaviours.


Water consumption Reductioninwaterconsumptionofourcorporateoffices 10% Wearemakinggoodprogressinreducingourwaterconsumptionandcontinuetoinvestinwaterefficiencyequipmentandpractices.


General waste reporting

Complianceinwasteperformancereporting 100%datacapture Wehavefurtherimprovedtheaccuracyofourdatathisyearincludingthecompositionofourwastebycollaboratingwithourcontractorsandclients.

100%datacapture

Food waste NEWImplement‘TrimTrax’foodwastereductionprogramme

100%datacapture Wesuccessfullyimplementedourfoodwastereductionprogrammecalled‘TrimTrax’acrossour‘TopTen’countriesandwillextendthescopeofcountriesreportingfor2012.

100%implementationacross‘TopTwenty’countries

Our

cus

tom

ers

Wellness and nutrition Improvementinthetotalnumberofoperatingsitesproviding‘BalancedChoices’(orequivalenthealthyeatingprogramme)totheircustomers

25%by2012 Wearemakinggoodprogresswiththeimplementationofhealthyeatingprogrammes.WedisplaycalorieandGDAlabellingwhichhelpourconsumersmakeinformedchoicestowardsmaintainingahealthy,balanceddiet.

25%improvementby2012(against2007-2008baseline)

Food safety ImproveourglobalFoodSafetyIncidentRate(FSIR) %improvement WecontinuetoimproveourfoodsafetyperformanceonaglobalbasiswithstrongsitecompliancewithourglobalFoodSafetystandards.

Report%improvement

Supply chain assurance ImplementthenewCompassSupplierAssuranceStandard(includingCorporateResponsibilityelements)


Wehavemadegoodprogressbuthavemoreworktodoincompletingtheimplementationacrossour‘TopTwenty’countries–deadlineApril2012.

100%implementationacross‘TopTwenty’countriesbyApril2012

Our

peo

ple

Occupational health and safety

ImproveourglobalLostTimeInjuryRate(LTIR)

%improvement Buildingonthesignificantperformanceimprovementachievedandreportedin2010,wehaveseenourperformanceplateauinsomecountries.Weareworkinghardtoimproveoursafetyleadershipandculturetosupportcontinuousimprovementthroughout2012.

Sadly,wehadonework-relatedfatalityasaresultofamotorvehicleaccident.

Report%improvement

Employee retention Measureemployeeretentionrateforallemployees %totalemployeeretention

Datacollectionrelatingto:

%managementretention

%sitemanagementretention

Weachievedanotheryearofimprovingemployeeretentiononaglobalbasis.

WeareworkingwithourcountryHRteamstofurtherimproveourreportingsystemsregardingthecollectionofmanagementandsitemanagementdata.

Report%retentionimprovement

Diversity Measurenumberofwomenappointedtoourgloballeadershipteam

%increase 20.8%ofourgloballeadershipteampositionsareheldbywomen(19.2%in2009-2010). Report%increase

Business ethics Measuretotalnumberofconcernsreportedbyemployeesglobally,via‘SpeakUp’

Measureandreportconcerns Allourcountrieshaveaccesstotheindependentlyoperated‘SpeakUp’whistle-blowingprogramme,whichenablesemployeestoreportmaterialconcernsforreviewandfollow-up.Thereisaclearescalationprocessinplacetoconsidereachconcernraised.Whereappropriate,afullinvestigationandremedialactionsaretaken.

Measureandreportconcerns

Employee survey 2011‘YourVoice’survey

• Improvementinparticipationrating

• Improvementinengagementrating

74%participationrating

72%engagementrating

Wearepleasedtohaveexceededourtargetforemployeeparticipationinourglobal‘YourVoice’surveythisyear.

Wearetakingstepstoimproveouremployeeengagementperformanceaheadofournextglobalsurveyin2013.

Wewillconductthenext‘YourVoice’surveyin2013


Corporate responsibility continued

Key Performance IndicatorTarget 2010-2011

Performance2010-2011

Review 2010-2011

Target 2011-2012

Env

iro

nmen

t

Energy efficiency Reductioninenergyconsumptionofourcorporateoffices

• NaturalGas

• PurchasedElectricity

10% Thetrendacrosstheoperationsispositivewithimprovementsbeingachievedfromthe2008baseline.Someincreasesinconsumptionaretheresultofgrowthinbusinessoperations.Weaimtoreviewthewaywenormalisedatametricstoaddresstheanomalybetweenagrowingbusinessandshowingourtruegainsinsustainabilityperformancefornextyear’sreporting.


Vehicle efficiency Reductionincompanyvehiclefuelconsumption(directfuelpurchased)

10% Wecontinuetoinvestinlowemissionandelectricvehiclestoreducefuelemissions,aswellaspromoteresponsibledrivingbehaviours.


Water consumption Reductioninwaterconsumptionofourcorporateoffices 10% Wearemakinggoodprogressinreducingourwaterconsumptionandcontinuetoinvestinwaterefficiencyequipmentandpractices.


General waste reporting

Complianceinwasteperformancereporting 100%datacapture Wehavefurtherimprovedtheaccuracyofourdatathisyearincludingthecompositionofourwastebycollaboratingwithourcontractorsandclients.

100%datacapture

Food waste NEWImplement‘TrimTrax’foodwastereductionprogramme

100%datacapture Wesuccessfullyimplementedourfoodwastereductionprogrammecalled‘TrimTrax’acrossour‘TopTen’countriesandwillextendthescopeofcountriesreportingfor2012.


Our

cus

tom

ers

Wellness and nutrition Improvementinthetotalnumberofoperatingsitesproviding‘BalancedChoices’(orequivalenthealthyeatingprogramme)totheircustomers

25%by2012 Wearemakinggoodprogresswiththeimplementationofhealthyeatingprogrammes.WedisplaycalorieandGDAlabellingwhichhelpourconsumersmakeinformedchoicestowardsmaintainingahealthy,balanceddiet.

25%improvementby2012(against2007-2008baseline)

Food safety ImproveourglobalFoodSafetyIncidentRate(FSIR) %improvement WecontinuetoimproveourfoodsafetyperformanceonaglobalbasiswithstrongsitecompliancewithourglobalFoodSafetystandards.

Report%improvement

Supply chain assurance ImplementthenewCompassSupplierAssuranceStandard(includingCorporateResponsibilityelements)


Wehavemadegoodprogressbuthavemoreworktodoincompletingtheimplementationacrossour‘TopTwenty’countries–deadlineApril2012.

100%implementationacross‘TopTwenty’countriesbyApril2012

Our

peo

ple

Occupational health and safety

ImproveourglobalLostTimeInjuryRate(LTIR)

%improvement Buildingonthesignificantperformanceimprovementachievedandreportedin2010,wehaveseenourperformanceplateauinsomecountries.Weareworkinghardtoimproveoursafetyleadershipandculturetosupportcontinuousimprovementthroughout2012.

Sadly,wehadonework-relatedfatalityasaresultofamotorvehicleaccident.

Report%improvement

Employee retention Measureemployeeretentionrateforallemployees %totalemployeeretention

Datacollectionrelatingto:

%managementretention

%sitemanagementretention

Weachievedanotheryearofimprovingemployeeretentiononaglobalbasis.

WeareworkingwithourcountryHRteamstofurtherimproveourreportingsystemsregardingthecollectionofmanagementandsitemanagementdata.

Report%retentionimprovement

Diversity Measurenumberofwomenappointedtoourgloballeadershipteam

%increase 20.8%ofourgloballeadershipteampositionsareheldbywomen(19.2%in2009-2010). Report%increase

Business ethics Measuretotalnumberofconcernsreportedbyemployeesglobally,via‘SpeakUp’

Measureandreportconcerns Allourcountrieshaveaccesstotheindependentlyoperated‘SpeakUp’whistle-blowingprogramme,whichenablesemployeestoreportmaterialconcernsforreviewandfollow-up.Thereisaclearescalationprocessinplacetoconsidereachconcernraised.Whereappropriate,afullinvestigationandremedialactionsaretaken.

Measureandreportconcerns

Employee survey 2011‘YourVoice’survey

• Improvementinparticipationrating

• Improvementinengagementrating

74%participationrating

72%engagementrating

Wearepleasedtohaveexceededourtargetforemployeeparticipationinourglobal‘YourVoice’surveythisyear.

Wearetakingstepstoimproveouremployeeengagementperformanceaheadofournextglobalsurveyin2013.

Wewillconductthenext‘YourVoice’surveyin2013

Thisyear,followingconsultationwithkeystakeholdersincludingemployees,customers,non-governmentalorganisations(‘NGOs’)andfinancialanalysts,wehaveincreasedthescopeofourenvironmentalreportingtoincludeour‘TopTwenty’countriesforgreatercoverageacrossthebusiness.Theadditionaltencountries’performancewillbereportedin2012.Ourultimategoalistobeabletoachievereportingfromallcountriesinwhichweoperate.

Interested? Forfulldetailsofourperformance,includingprioryears,pleasevisitourCRsiteonlineat:www.compass-group.com/CR11


Our people

Oursuccessdependsonourpeopleprovidingthebestpossibleservicetoourcustomers.Weemploymorethan470,000peopleinaround50countries.Toachieveconsistencyinourapproachglobally,weuseacommonmanagementframework,‘PeopleMAP’,whichdetailsourstrategytoattract,retain,developandengageourpeople.Tohelpgrowourbusiness,wemustencourageourpeopletodevelopandtheycanonlydothatifwefocusonnurturingtheircareerwithusandourrelationshipwiththem.

Industry recognition for our peopleIn2011,FedeleBauccio,ahighlymotivatedandengagedemployeeinourUSbusiness,wasrecognisedforhiscommitmentanddedication.Fedele,ofSanFrancisco-basedBonAppétitManagementCompany,hasbeennamedasoneoftenlistedhonoureesofthe‘JamesBeardLeadershipAward’,selectedforspecificoutstandinginitiativesaswellasbodiesofworkandlifetimeachievement.Fedelereceivedtheaccoladefor‘hiscommitmenttoqualityfoodandsociallyresponsiblesourcing’.OtherhonoureesincludetheUS’sFirst Lady,MichelleObama.

Employee engagementCommunicationiskeyinallorganisationsandinkeepingwithour‘openness,trustandintegrity’value,wehavebeenrunningabiennial‘YourVoice’surveyprogrammesince2007,providingourpeoplewiththeopportunitytogivefeedbackonourbusiness.Theopinionofouremployeesisimportantandthediversefeedbackwereceivefromalllevelsandsectorsofourbusinessisinvaluable.

Having well trained, motivated and productive employees is an essential component of our business model, both in terms of cost management and service delivery. Our people are ambassadors of our service and reputation and we recognise their positive contribution to our CR activities.

Thisyear,weachievedanimpressiveresponseratewithmorethan120,000colleaguesacross42countriesrespondingtoour‘YourVoice’survey,givingusaparticipationrateof79%(2009:71%).Wearedelightedthatsomanyemployeeshavebeenabletocommunicatetheirviews.Theytoldusthatwehavebuiltastrongperformanceculture,thattheyareclearaboutwhatisexpectedofthemandtheyreceivehelpfulfeedbackfromtheirmanagersontheirperformance.

Developing our peopleTraininganddevelopmentprogrammesareimportantbothforouremployeestofulfiltheirpotentialandtohelpourbusinessachieveits goals.

Webelieveinnurturingtalentfromwithinourbusiness,providingexperienceandformalqualificationstocreatemanagersandleadersofthefuture.Asanexample,inourUKbusinessweofferapprenticeshipopportunitiestoallsite-basedemployees.Since2009,around1,700frontlineemployeeshavesuccessfullycompletedtheirapprenticeshipsinareassuchasfoodandbeverage,hospitality,businessservicesandfacilitiesmanagement.

Throughourglobalemploymentbrand,talentmanagementandvariouslearninganddevelopmentprogrammes,weencourageourpeopletodeveloptheirskillsandfurthertheircareerswithinourbusiness.ExamplesofglobaltrainingprogrammesthathavehelpedustoembedourManagementandPerformanceoperatingframework(‘MAP’)principlesandstructuresdeeperintoourorganisationare‘MappingforValue’and

‘MappingforAction’.Collectively,theseprogrammeshaveresultedinmorethan7,000employeesofdifferentlevelswithinourorganisationbeingtrainedsince2009.

Equal opportunitiesWevaluethediversityofourpeopleandstronglybelievethatthemoreouremployeesreflectthediversityofourclientsandconsumers,thebetterequippedwearetoservicetheirneeds.Asanexampleofourongoingcommitment,womennowhold20.8%ofgloballeadershipteamroles,whichrepresentsa1.6%increasecomparedtolastyear.

20%+of global leadership roles

at Compass are held by women



A safe and healthy workplace

WebelievethateveryoneatCompasshasamoralobligationtosafeguardeachother,ourcustomersandtheenvironmentbyoperatingasafe,injury-freeandhealthyworkplace,servingfoodthatissafetoeat,nutritionalandwhichminimisesourimpactontheenvironment.

WeoperateaglobalHealth,SafetyandEnvironmental(HSE)ManagementSystemsupportedbypolicies,standardsandmetrics.Thissystemunderpinsconsistentoperatingstandardsacrossallofthediversemarketsinwhichweoperate,butenablescountriestoadaptitforlocalculturalorlegislativeneeds.Inour2011global‘YourVoice’employeesurveywithmorethan120,000respondents,ouremployeestoldusthattheyhaveaccesstothetoolsandtrainingthattheyneedtoperformtheirjobsafelyand well.

AllmanagementandboardmeetingsthroughouttheGroupfeatureahealthandsafetyupdateasoneoftheirtopagendaitems.TheCorporateResponsibilityCommitteereviewstheHSEpoliciesannuallytoensurethattheycontinuetoreflectouraimsandaspirations,andmeetwithcurrentlegislation.

SupportingtheBoardisourglobalHSEForum,madeupoftechnicalspecialistsfromaroundtheCompassglobe.TheForumisresponsiblefordefiningpolicies,settingstandards,measuringcomplianceandsharingbestpracticeacrossthe Group.

Health and safety is our number one operational priority. A strong safety culture is important to our clients and is critical to protect the wellbeing of our colleagues and consumers. Reducing the number of incidents we have results in effective cost management through improved incident and absentee rates, with reduced costs to the business.

79%of employees surveyed believe that we place

a high priority on health and safety

Asaclearexampleoftheircommitmenttomakinghealthandsafetythenumberonepriority,ourteamatthePearlGTLsiteinQatarreachedanimportantsafetymilestonewhentheyachievedmorethansixmillionman-hoursworkedwithnolost-timeinjuries.Wehaveover800employeesatthissitewhoperformadiverserangeofservices.Suchservicesaredeliveredinaverychallengingenvironment,toaclientwhodemandstheveryhighestoperationalstandardswhereattentiontohealthandsafetymeasuresiscritical.

Success in Latin AmericaOurbusinessinArgentinademonstratedtheirdedicationtohighstandardsoffoodsafetybybecomingoneofthefirstLatinAmericanfoodservicebusinessestobeawardedISO 22000:2005atitsremotesitecontractinMineraAlumbrera.Thisachievementdemonstratestheirongoingcommitmenttoprovidingthehighestqualityservicetotheircustomers,whilstoperatinginaverychallengingenvironment.TheISO 22000standarddefinesandspecifiesrequirementsfordevelopingandimplementingaFoodSafetyManagementSystemateachlevelofthefoodchain.

External recognitionItishighlyrewardingwhenourcommitmenttohealthandsafetyisrecognisedexternally.WewereproudwhenourbusinessinAustraliawasawardedwiththe‘BestImplementationofaSpecificOccupationalHealthandSafetyManagementSystem’award,bytheNationalSafetyCouncilofAustralia/GIOWorkersCompensationNationalSafetyAwardsofExcellence,fortheimplementationoftheiremployeeSafetyHandbook.Recognitionbysuchaprestigiousbodyfortheintegrationofexcellentsafetypracticesintotheiroperationswasagreatachievement.


Wellness and nutritionBy pursuing a passion for wellness and nutrition, we contribute to the health and wellbeing of our consumers. We help our clients to deliver improved employee performance and satisfaction, encouraging client retention in our business.

Asaglobalfoodservicecompany,werecognisethatwehaveanenormousimpactonwhatour20+millionconsumerschoosetoeatanddrink.Ourpositivecontributiontotheirdietandnutritionisourmostsignificantimpactandweareproudoftheroleweplayinpromotinghealth,wellnessandnutrition,particularlyasinsomeofthemarketswhereweoperate,thefoodweprovidemaybetheonlynutritiousmealeatenbyourconsumersthat day.

Nutritional labellingCompassiscommittedtoleadingthewaywithinthefoodserviceindustryinunderstandingtheneedsofconsumersandisattheforefrontofprovidingnutritionalinformation.Ourconsumersarebecomingincreasinglyinterestedinthenutritionalcontentoftheirfoodchoices.Wecontinuetorolloutourhealthyeatingframework‘BalancedChoices’globally,providinghealthyfoodchoicesacrossourmenuoffer.Wegiveourconsumersthenutritionalinformationthattheyneedtomakeinformedchoices.Morethan11,000sites(2010:7,498)arenowqualifiedtooperate‘BalancedChoices’.

Thisyear,wealsolaunchedanewhealthyeatingprogramme,‘Whole+Sum’.Thisinnovativeprogrammeenablesconsumerstoselectahealthyandbalancedmealbyaddingtogethercaloriecontrolledfoodoptionsto

thevalueof600caloriesorlesspermeal.‘Whole+Sum’reflects

consumertrendsbycombiningpopularworldcuisineflavourprofilesandcomfortfoods,

withenoughvarietythattheyenjoytheirvisittoour‘Whole+Sum’stationeveryday.BasedonthesuccessinourUSbusiness,wherewealready

operateover200sites,‘Whole+Sum’isbeingprogressivelyrolledouttotheUKandothermarkets.

Responsibility dealIntheUK,weareactivelysupportingaGovernmentinitiativecalledthe‘ResponsibilityDeal’,aimedataddressinghealthandwellbeingwithintheUKpopulationbyencouragingthenationtoadoptamorebalancedlifestyle.Asademonstrationofourcommitmenttotheinitiative,wehavepledgedtoimprovethenutritionallabellinginoursites,includingtheintroductionofcaloriecounts.Wecontinuetoreducethelevelsofsaltandartificialtransfatsinthefoodweserve.

Fight against childhood obesityWetakeour‘responsibility’valueveryseriously.Thisyear,inresponsetogrowingconcernoverchildhoodobesitywehaveinitiatedanumberofprogrammesintheEducationsector.Theseprogrammeshighlighttheimportanceofeducatingschoolchildrenandtheirparentsonthebenefitsoffollowinghealthyeatinghabitsandadoptinganactivelifestyle.

LaunchedbyourSpanishbusiness,agreatexampleisthe‘GrowwithUs’campaign.Theprogrammetargetsschoolchildrenagedbetweenthreeandtwelveyearsandhasseen160,000childrenparticipateacrossnearly1,200sites.Sessionssuchas‘GrowinHealth’,‘MediterraneanLifestyle’and‘ASafeandHealthyPlanet’havebeenpromotedaspartoftheschoolmealsservice,improvingknowledgeandawarenessofthebenefitsofabalanced,nutritionaldiet.

SimilarlyinTurkey,oneofourfastgrowingmarkets,wehaveinitiatedahealthandwellnessprogrammeforschoolchildreninvolvingtheproductionofanutritionalguidebookandstorybookcontainingnutritionalinformationpresentedinafunandengagingway.Thebookscovertopicssuchasnutritionalvalues,caloriemeasurement,growthchartsandmenuplanningforspecificagegroups.Todate,25,000bookshavebeendistributedtoover65schoolsand25,000schoolchildren.

51%increase in the number of

sites operating healthy eating programmes



1.5mpounds (lbs) reduction in

the purchase of non-sustainable seafood

in the US

Responsible supply chain

Sustainable oceansTheprovenanceofourfoodisalwaysaprimeconsideration,andweareproudtohavealong-standingrelationshipwiththeMarineStewardshipCouncil(‘MSC’)inthecertificationofthefishandseafoodweuse.

OurteaminFrancehasachievedtheaccoladeofbecomingthefirstfoodservicecompanyinFrancetobeawardedwithMSCcertificationacrossitssupplychainfromfisheriestoconsumers.Arobustsustainablefishandseafoodpolicyhasbeendevelopedwhichincorporatesanumberofelementssuchasa‘ResponsibleFishingCompact’and‘ResponsibleFishList’,featuringthosespeciesthatshouldbepromoted,controlledorprohibited.InadditiontoFrance,wecontinuetoimproveourMSCcertificationcoveragearoundtheworld.CountriesthatalreadyoperateMSCprogrammesincludeAustralia,Canada,Germany,NetherlandsandUK&Ireland.OurUScolleaguesalsocontinuetodriveuptheirvolumesofsustainablefishandseafood,supportedbytheMontereyBayAquarium.

Theprovenanceandoriginofthefoodwepurchaseisakeyconsiderationforus.Weaimtopurchasefoodonlyfromauthorisedsuppliersandweworkcloselywithoursupplypartnerstoensurethattheymeetourglobalsupplychainstandards.During2011,werefreshedtheseglobalstandardstoensurethattheyremain‘fitforpurpose’inourevolvingbusinessenvironment,particularlyourgrowthinemergingmarkets.

Reducing food milesLogisticsplaysanimportantroleinthefoodserviceindustryand,assuch,wehavearesponsibilitytoreduceourimpactontheenvironmentwherewecan.In2011,wehavebeenworkinghardwithoursupplierstoimprovelogisticalefficiency,toincreaseemissionsavingsandreduceourcarbonfootprint.

OurUK&Irelandbusinesshasbeenactivelyconsolidatingsuppliersanddeliveriesintoacentralisedlogisticsplatform.Workingwithourlogisticspartner,wearenowusingfour‘supercentres’acrosstheUKwiththecapabilitytodeliverallproductstositesinasingledelivery.WeanticipatethattheconsolidatedlogisticsplatformwillremoveoverfourmillionfoodmilesfromourUKbusiness,reducingourCO2emissionsbyaround6,000tonnesayear.

OurbusinessinGermanyhasachieveda2.5 millionkilometrereductioninfreshproducefoodmiles,throughaninitiativethathasseenthemswitchingfromanetworkofregionalfruitandvegetablesupplierstoasinglelogisticsplatform.Thisreductioninkilometresequatestoasavingofnearly2,000tonnesofCO2peryear.

Having a responsible supply chain is important for us to deliver the quality of foodservice that is a key business driver for Compass. As a result of our actions, we are able to build the confidence of our clients and consumers, reduce potential risks and develop sustainable relationships.

Wearepleasedtoreportthatforthethirdconsecutiveyear,ourUKbusinesswasawardedtheMidasAwardfor‘EthicalSourcingandFairtrade’.Theawardrecognisesindustry-leadingsupportofFairtrade.WewerecommendedforourongoingdedicationtoFairtradeandthesignificantincreaseintheamountofFairtradeproductswepurchaseandsellyearonyear.

In2011,togetherwithkeyglobalclients,weparticipatedonceagainintheSupplyChainmoduleoftheCarbonDisclosureProject(‘CDP’),whichisdesignedtomeasurecarbonrisksandliabilitiesthroughthesupplychainandhelpsustoidentifyopportunitiestoreduceourenvironmentalimpact.


Environment

Reducing our food wasteAcrossallofourcountries,weareworkinghardtoreducetheimpactoffoodwaste.Inmanycountries,foodwasteaccountsformorethan15%ofthematerialsbeingsenttolandfillsitesandthefooddegradationprocessproducesmethane,agreenhousegasthatismorepotentthancarbondioxide.Inaddition,thereisalsoasignificanteconomicimpactfromthedisposaloffoodwaste.Compasshascreatedasustainableprogrammeforbuildingemployeeawareness,behaviouralchangeandminimisingtheimpactoffoodwastecalled‘Trim Trax’.

Wearepleasedtoreportthattheprogrammehashadgreatsuccess,withmorethan70%ofourcountriesnowparticipating.ThisyearourteamintheUAEreceivedanEnvironmentalAwardfromtheirclient,ADNOCGroupCompany,inrecognitionofthe‘TrimTrax’programmeoperatingattheDasIslandsite,fortheirsignificantreductioninfood waste.

Environmental performance reporting2011representedourfourthyearimplementingaweb-basedreportingtooltotrackandreportglobally,inaconsistentmanner,onourgreenhousegasemissions.Thisyear,wehaveextendedthescopeofourenvironmentalreportingfromthe‘TopTen’(83%oftotalrevenue)tothe‘TopTwenty’countries(93%oftotalrevenue).Wecontinuetosharebestpracticeideasacrosscountriestoimproveourenvironmentalperformance.

Agreatexampleisthe‘CarbonFoodprintToolkit’.CreatedbyourUSteam,thetoolkitisasolutionforclientswhowanttolowertheircarbonemissionsaswellastheiroperatingcosts.Thisweb-basedtoolissufficientlyflexibletooperateacrossmultiplesectors.Itenablesuserstobuildastepbystepstrategyforminimisingthecarbonfootprintoftheirfoodserviceoperations.

Our close working relationship with the agricultural industry provides us with a constant reminder that the planet has limited resources. As a consequence, our environmental programmes focus on the improved use of resources, which help us to manage our costs effectively and reduce our impact on the environment.

Employee involvementOurbusinessinSwedendevelopedaninnovativewayofengagingemployeesintheirenvironmentaldrive.A‘climate-friendly’competitionwascreated,withpointsbeingawardedforenvironmentally-friendlytraveltoandfromwork,suchasbyfootorbybike.1,300employeestookpart,demonstratinghowitispossibletoreduceenvironmentalenergyconsumptionandstartlivingahealthierlifestylewithsmall,everydaychanges.Eachmonth,theemployeewiththehighestnumberofpointsreceivesareward,recognisingtheirpersonalcontributiontoreducingourcarbon footprint.

Greenest employerInCanada,ourbusinesshasbeenlistedasoneofCanada’s50GreenestEmployersforthesecondconsecutiveyear.Thisveryspecialdesignationisgiventoemployersleadingthenationincreatingacultureofenvironmentalawarenessintheirorganisations.

In2011,wewerepleasedtoonceagainparticipateintheCarbonDisclosureProject(‘CDP’)whichoperatesinmorethan60countriesaroundtheworld.Thisprogrammeenablescompaniestomeasureanddisclosetheirgreenhousegasemissionsandclimatechangestrategiessothattheycansetreductiontargetsandmakeperformanceimprovements.WecontinuetousethefeedbackfromtheCDPtohelpshapeourfutureenvironmentalstrategyandbuildoursustainabilityframework.

70%+of countries are operating the ‘Trim Trax’ food waste

reduction programme



Compass in the community

Mentoring programmeAmentoringprogrammeinCanada,launchedbytheTorontoRegionImmigrantEmploymentCouncilbringstogethertraineesandestablishedprofessionalsinoccupation-specificmentoringrelationships.Ourcolleaguesareproudtobepartofthisprogrammewhichhasfacilitatedover5,800mentoringrelationships.Whilstthoseenteringtheprogrammehavetheeducation,experienceandlanguageskillstheyrequiretosucceedinthelabourmarket,Compassisabletoofferthemlocalinsightsandinvaluableaccesstoprofessionalnetworksthatonlyaone-to-oneprofessionalconnectionwithamentorcan offer.

Our global community2011hasbeenachallengingyearforJapan,animportantmarkettoCompass.Thecatastrophicearthquakeandsubsequenttsunamitragicallyresultedinmorethan15,000peoplelosingtheirlivesand5,500seriouslyinjured.TheseeventshadasignificantpersonalimpactonourteaminJapanandtheirclients.Throughtheheroiceffortsofourpeople,werestoredourservicestoourclientsandhelpedthemtoreturnto‘businessasusual’asquicklyaspossible.Wesupportedouremployeeswithtemporaryhousingandwelfareprovisionsanddespitethechallengestheyfaced,ouremployeesraisedmorethan£325,000inaidoftheRedCrossfund.

Inour2010CRreport,wespokeaboutourinvolvementwiththeHaitiearthquakereliefproject.Eighteenmonthslaterthecountrystillfacesanumberofchallenges.VolunteersfromourCrothallEnvironmentalServicesteamatFloridaHospitalflewtotheAdventistHospitalinHaititoteachsafehygienepracticestoemployees;acriticalpartofthe

Wehaveastrongtrackrecordincommunityengagementandinvestment,operatingcommunity-basedinitiativesthatencouragehealthylifestyles,tacklesocialexclusion,improveemploymentchancesandpromotesustainabilityanddiversity.Whilstitisnotpossibletolistherealltheprojectsthatweareinvolvedin,outlinedbelowarejustafewofthemanygoodnewsstoriesfrom2011.Furtherexamplescanbeviewedonlineatwww.compass-group.com/CR11.

Engaging with our communities helps us build positive, longer-term relationships with our employees, clients and consumers, encouraging improved client retention and employee engagement.

care-givingprocess.TheUSbusinesshasalsobeenheavilyinvolvedintornadoreliefworkthisyearacrosstheUSA.BothourMorrisonandChartwellsbusinesseshavedonatedthroughfund-raisinginitiativesandgiventheirtimeworkingontornadorelief programmes.

WevalueourmembershipofBusinessintheCommunity(‘BITC’),aUKbasedorganisationwhichseekstoinspire,engage,supportandchallengecompaniestocontinuallyimprovetheimpacttheyhaveonsocietyandthe environment.

AsaresultoftheeffortsofourUKemployees,weareproudtohaveraisedover£800,000forourpartnerCancerResearchUK.TheywillcontinuetosupportCancerResearchUKwithfund-raisinginitiativesduring 2012.

DonationsDuringtheyearto30September2011charitabledonationswere£5.9million(2010:£5.8million).

£800,000+raised for Cancer Research UK

by our employees in the UK


Our Board

A | Sir Roy Gardner3,6ChairmanAge66AppointedChairmaninJuly2006havingjoinedasaNon-ExecutiveDirectorinOctober2005.SirRoyisasenioradvisortoCreditSuisse,aNon-ExecutiveDirectorofWillisGroupHoldingsplc,ChairmanofMainstreamRenewablePowerLimited,ChairmanoftheAdvisoryBoardoftheEnergyFuturesLabofImperialCollegeLondon,PresidentofCarersUK,ChairmanoftheApprenticeshipAmbassadorsNetwork,ChairmanofEnServeGroupLimitedandaDirectorofCilantroJerseyLimited.HewasformerlyChiefExecutiveofCentricaplcandChairmanofPlymouthArgyleFootballClub,ManchesterUnitedplc,ConnaughtplcandaDirectorofBritishGasplc,GEC-MarconiLtd,GECplcandLaporteplc.HewasalsoChairmanoftheBritishOlympicsAppealCommitteefortheBeijingGames 2008.

B | Richard Cousins6,8,9,10GroupChiefExecutiveAge52AppointedGroupChiefExecutivein2006.RichardhadpreviouslyspentsixyearsasCEOofBPBplc,havingheldanumberofpositionswiththatcompany.HisearliercareerwaswithCadburySchweppesplcandBTRplc.HeisaNon-ExecutiveDirectorofReckittBenckiserGroupplc,amemberoftheAdvisoryBoardofLancasterUniversityBusinessSchoolandaformerNon-ExecutiveDirectorofP & OplcandHBOSplc.

C | Gary Green8,9GroupManagingDirector–USA&CanadaAge54AppointedtotheBoardinJanuary2007.GaryjoinedtheGroupin1986inaseniorfinanceroleintheUKandbecameaUKdirectorin1992.HerelocatedtotheUSAin1994asChiefFinanceOfficeroftheGroup’sNorthAmericanbusinessandin1999becameChiefExecutiveOfficer.Heisacharteredaccountantandin2001receivedanhonorarydoctoratefromJohnson&WalesUniversityintheUSA.

D | Andrew Martin6,7,8,9

GroupFinanceDirectorAge51AppointedtotheBoardinMarch2004.AndrewisaNon-ExecutiveDirectorofeasyJetplcandwaspreviouslyapartnerwithArthurAndersenandheldseniorfinancialpositionswithFortePlcandGranadaGroupPLC.FollowingthedisposaloftheHotelsDivisionin2001,hejoinedFirstChoiceHolidaysPLCasFinanceDirector.AndrewisanAssociateoftheInstituteofCharteredAccountantsinEnglandandWalesandanAssociateoftheCharteredInstituteofTaxation.

E | Sir James Crosby4,5,6,10

SeniorIndependentNon-ExecutiveDirectorAge55AppointedtotheBoardinFebruary2007.SirJamesisChairmanofMisysplc,ChairmanofDunctonplcandTreasurerandTrusteeofCancerResearch(UK).HewasformerlyChiefExecutiveofHBOSplc,DeputyChairmanoftheFinancialServicesAuthorityandaNon-ExecutiveDirectorofITVplc.HeisaFellowoftheFacultyof Actuaries.

F | John Bason1,6,10,11Non-ExecutiveDirectorAge54AppointedtotheBoardinJune2011.JohnisFinanceDirectorofAssociatedBritishFoodsplc.HewaspreviouslyFinanceDirectorofBunzlplcandisamemberoftheInstituteofCharteredAccountantsinEnglandandWales.HeisaTrusteeofVoluntaryServiceOverseasandisDeputyChairmanofthecharity Fareshare.

G | Susan Murray2,5,10,11

Non-ExecutiveDirectorAge54AppointedtotheBoardinOctober2007.SusanisNon-ExecutiveChairmanofFarrow&BallandaNon-ExecutiveDirectorofPernodRicard,EnterpriseInnsPlcandImperialTobaccoPLC.SheisaformerNon-ExecutiveDirectorofAberdeenAssetManagementPLC,SSLInternationalPLCandWmMorrisonSupermarketsPLC,formerChiefExecutiveofLittlewoodsStoresLimitedandformerWorldwidePresidentandChiefExecutiveofThePierreSmirnoffCompany,partofDiageoplc,andaformerCouncilMemberoftheAdvertisingStandardsAuthority.SusanisaFellowoftheRoyalSocietyofArts.

H | Don Robert5,6,10,11

Non-ExecutiveDirectorAge52AppointedtotheBoardinMay2009.DonisChiefExecutiveOfficerofExperianplc,havingjoinedtheBoardofExperianinJuly2006aspartofthedemergerofGUSplc.HeisaTrusteeoftheEducationandEmployersTaskforce.DonwasformerlyChairmanoftheConsumerDataIndustryAssociationandpreviouslyheldpositionswithFirstAmericanCorporation,Credco,Inc.andUSBancorp.

I | Sir Ian Robinson5,6,10,11

Non-ExecutiveDirectorAge69AppointedtotheBoardinDecember2006.SirIanisaformerChairmanofLadbrokesplc,HiltonGroup plcandAmeyplc,andaformerChiefExecutiveofScottishPowerplcandNon-ExecutiveDirectorofASDAplc,RMCplc,Scottish&NewcastleplcandSiemensHoldingsplcwhereheremainsamemberoftheAdvisoryBoard.HeisaFellowoftheRoyalAcademyofEngineersandaMemberoftheTakeoverPanel.

General Counsel and Company SecretaryJ | Mark White6,7,8,12

GeneralCounsel&CompanySecretaryAge51AsolicitorwhojoinedCompassGroupon1 June2007.MarkisSecretarytotheAudit,GeneralBusiness,NominationandRemunerationCommitteesandisamemberoftheCorporateResponsibilityCommittee.MarkwaspreviouslyGroupCompanySecretaryandCounselofWolseleyplcandCompanySecretaryofEnterpriseOilplcandRotorkplc.

1 ChairmanoftheAuditCommittee2 ChairmanoftheCorporateResponsibilityCommittee3 ChairmanoftheNominationCommittee4 ChairmanoftheRemunerationCommittee5 MemberoftheAuditCommittee6 MemberoftheCorporateResponsibilityCommittee7 MemberoftheDisclosureCommittee8 MemberoftheExecutiveCommittee9 MemberoftheGeneralBusinessCommittee10 MemberoftheNominationCommittee11 MemberoftheRemunerationCommittee12 TrusteeoftheCompassPensionPlanandtheCompass

RetirementIncomeSavingsPlan

A B C D E

F I JG H


Board of directors

Report Governance44 Directors’report46 Corporategovernance53 Directors’remunerationreport

Consolidated financial statements61 Directors’responsibilities62 Independentauditor’sreport63 Consolidatedincomestatement63 Analysisofoperatingprofit64 Consolidatedstatementofcomprehensiveincome65 Consolidatedstatementofchangesinequity67 Consolidatedbalancesheet68 Consolidatedcashflowstatement68 Reconciliationoffreecashflowfromcontinuingoperations69 Accountingpolicies74 Notestotheconsolidatedfinancialstatements

Parent Company financial statements118Directors’responsibilities119 Independentauditor’sreport120ParentCompanybalancesheet121ParentCompanyaccountingpolicies122NotestotheParentCompanyfinancialstatements

Shareholder information126Generalshareholderinformation128Noticeofmeeting

Index to the financial statements135Indextotheconsolidatedfinancialstatements135IndextotheParentCompanyfinancialstatements

SeethisReportonlineat:www.compass-group.com/

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Governance

Directors’ report

TheDirectorssubmittheirAnnualReportandtheauditedconsolidatedaccountsoftheCompanyanditssubsidiariesfortheyearended30 September2011.TheCorporateGovernanceReportsetoutonpages46to52formspartoftheDirectors’Report.

Principal activities and business review CompassGroupPLCisaholdingcompany;itssubsidiariesareorganisedintofourgeographicareasandthesearesetoutonpages4to5.TheprincipalactivitiesoftheGrouparetheprovisionofcontractfoodserviceandsupportservicestoclientsinaround50countries.DetailsofthedevelopmentandperformanceoftheGroup’sbusinessesduringtheyearandanindicationoflikelyfuturekeyperformanceindicatorsandinformationregardingprincipalrisksanduncertaintiesaresetout togetherwiththeinformationthatfulfilstherequirementsoftheBusinessReviewonpages24to27andareincorporatedintothisReportbyreference.

Results and dividendsTheGroup’sconsolidatedincomestatement,setoutonpage63,showsanincreaseof2.7%inGroupoperatingprofitfrom£989millionto£1,016million.Ananalysisofrevenueandoperatingprofitis set outonpages74to75innote1totheconsolidatedfinancialstatements.Acquisitionsmadesubsequenttotheyearendarediscussedinnote34totheconsolidatedfinancialstatementsonpage115.Therehavebeennofurthersignificantpostbalancesheetevents.

The2011interimdividendof6.5pencepershare(2010:5.0pence)waspaidtoshareholderson1August2011.TheDirectorsrecommendafinaldividendof12.8pencepershare(2010:12.5pence)makingatotaldividendfortheyearof19.3penceperordinaryshare,anincreaseof10.3%onthe17.5pencepaidinrespectoflastyear.Paymentoftherecommendedfinaldividend,ifapprovedattheAnnualGeneralMeeting(‘theAGM’)tobeheldon2February2012,willbemadeon27February2012toshareholdersregisteredatthecloseofbusinesson27January2012.Theshareswillbequotedex-dividendfrom25January2012.

Duringtheyear,theTrusteesofeachoftheemployeebenefittrustswhichoperateinconnectionwiththeCompany’sshareplanswaivedtheirrightstoreceivedividendsonanysharesheldbythem.Detailsof theTrustscanbefoundonpage51ofthisReport.Theamountofdividendswaivedduringtheyearended30September2011was£54,403(2010:£61,168).

Adividendreinvestmentplanisavailabletoeligibleshareholders.Detailscanbefoundonpage126.

Future developmentTheGroup’sstrategicfocuscontinuestobeontheorganicdevelopmentofitsexistingcorebusinessestogetherwithappropriateinfillacquisitions.

Share capitalGeneralAtthedateofthisReport,1,897,640,073ordinarysharesof10penceeachhavebeenissued,arefullypaidupandarequotedontheLondonStockExchange.Inaddition,theCompanysponsorsaLevelIAmericanDepositaryReceiptprogrammewithBNYMellon,underwhichtheCompany’ssharesaretradedontheover-the-countermarketintheformofAmericanDepositaryshares.

Duringtheyearended30September2011,optionswereexercisedandawardsreleasedpursuanttotheCompany’sshareoptionschemesandLTIP,resultingintheallotmentof11,241,181newordinaryshares.Afurther55,880newordinaryshareshavebeenallottedundertheseschemessincetheendofthefinancialyeartothedateof thisReport.

TherearenorestrictionsonthetransferofordinarysharesinthecapitaloftheCompanyotherthancertainrestrictionswhichmayfromtimetotimebeimposedbylaw,forexample,insidertradinglaw.InaccordancewiththeListingRulesoftheFinancialServicesAuthority,certainemployeesarerequiredtoseektheapprovaloftheCompanytodealinitsshares.

TheCompanyisnotawareofanyagreementsbetweenshareholdersthatmayresultinrestrictionsonthetransferofsecuritiesand/orvoting rights.

TheCompany’sArticlesofAssociationmayonlybeamendedbyspecialresolutionatageneralmeetingofshareholders.

TheCompanyisnotawareofanysignificantagreementstowhichitis partythattakeeffect,alterorterminateuponachangeofcontroloftheCompanyfollowingatakeover.

MoredetailedinformationrelatingtotherightsattachingtotheCompany’sordinarysharesissetoutonpages24and25oftheAnnualReportfortheyearended30September2007.The2007AnnualReportisavailableontheCompany’swebsiteatwww.compass-group.com.

Repurchase of sharesAttheAGM,aspecialresolutionwillbeproposedtorenewtheDirectors’limitedauthoritytorepurchaseordinarysharesinthemarket,lastgrantedin2011.Theauthoritysetstheminimumandmaximumpriceswhichmaybepaidanditwillbelimitedtoamaximumof10%oftheCompany’sissuedordinarysharecapitalatthedateofthisReport.

On23November2011,theCompanyannounceditsintentiontocommencea£500millionsharerepurchaseprogramme,tobeexecutedoverthe12-monthperiodtotheendof2012.

ThisauthoritywillenableyourDirectorstocontinuetoexecutethe£500millionsharerepurchasereferredtoaboveandtorespondpromptly,shouldcircumstancesariseinwhichtheyconsidersuchapurchasewouldresultinanincreaseinearningspershareandwouldbeinthebestinterestsoftheCompany.ThiswouldalsoenabletheCompanytomaintainanefficientcapitalstructurewhilstatthesametimeretainingtheflexibilitytofundfurtherinfillacquisitions.


AnypurchasesofordinaryshareswillbebymeansofmarketpurchasesthroughtheLondonStockExchangeandanysharespurchasedmaybecancelledorplacedintotreasuryinaccordancewiththeCompanies(AcquisitionofOwnShares)(TreasuryShares)Regulations2003.TheCompanycurrentlyhasnosharesintreasury.TheDirectorsconsideritdesirableforthesegeneralauthorisationsto beavailabletoprovideflexibilityinthemanagementoftheCompany’scapitalresources.

Noshareswerepurchasedinthefinancialyearsended30September2010and2011.

Issue of sharesAtthe2012AGM,theDirectorswillseektorenewtheauthoritylastgrantedtothematthe2011AGMtoallotequitysharesuptoanaggregatenominalvalueof£63,254,650(representingapproximatelyonethirdoftheordinarysharesissuedatthedateofthisReport)(‘thesection551authority’)and,inaccordancewiththeAssociationofBritishInsurers(‘ABI’)AllotmentGuidelines,theDirectorsagainproposetoextendthisbyafurther£63,254,650(representingapproximatelyafurtheronethirdoftheCompany’sissuedordinarysharecapital)providedthatsuchamountshallonlybeusedinconnectionwitharightsissue.Ifapproved,theauthoritywillexpirenolaterthan15monthsfromthedateonwhichtheresolutionispassed,orattheconclusionoftheAGMtobeheldin2013,whicheveristhesooner.

ThelimitedpowergrantedtotheDirectorsatlastyear’sAGMtoallotequitysharesforcashotherthanproratatoexistingshareholdersexpiresnolaterthan2May2012.Subjecttothetermsofthesection551authority,theDirectorsrecommendthatthisauthorityshouldberenewed.Ifgranted,thisauthoritywillgivetheDirectorstheability(until theAGMtobeheldin2013)toissueordinarysharesforcash,otherthanproratatoexistingshareholders,inconnectionwitharightsissueoruptoalimitof5%oftheordinarysharecapitalissuedatthedateofthisReport.Inlinewithbestpractice,theCompanyhas notissuedmorethan7.5%ofitsissuedsharecapitalonanonproratedbasisoverthelastthreeyears.TheDirectorshavenopresent intentiontoissueordinaryshares,otherthanpursuanttotheCompany’semployeeshareschemes,andthisauthoritywillmaintaintheCompany’sflexibilityinrelationtofutureshareissues,includinganyissuestofinancebusinessopportunitiesshouldappropriatecircumstancesarise.

Detailsoftheissuesofnewsharesmadeduringtheyear,togetherwithdetailsofoptionsgrantedoverunissuedcapital,aresetoutinnote24totheconsolidatedfinancialstatementsonpages105to107.

Substantial shareholdingsThefollowingmajorshareholdingshavebeennotifiedtotheCompanyasatthedateofthisReport.

%ofissuedcapital1

%ofCompass

GroupPLC’svotingrights1

BlackRock,Inc. 11.75 11.75

1Atthedateofdisclosure.

Sincethedisclosuredate,theshareholder’sinterestintheCompanymayhavechanged.

DirectorsParticularsoftheDirectorsinofficeatthedateofthisReportarelistedonpage42.TimParkerretiredfromtheBoardon31 December2010and,aftersevenyears’service,SteveLucassteppeddownasaDirectorandChairmanoftheAuditCommitteeon21June2011.JohnBasonwasappointedasaDirectorandsucceededMrLucasasChairmanoftheAuditCommitteeonthesameday.

InaccordancewiththeUKCorporateGovernanceCode,withtheexceptionofJohnBasonwhowillsubmithimselfforelectioninlinewiththeprovisionsoftheCompany’sArticlesofAssociation,eachDirectorwillretireandsubmithimorherselfforre-electionatthe2012AGMandannuallythereafter.

On10May2011,thecompositionofeachoftheAudit,CorporateResponsibility,NominationandRemunerationCommitteeswasalteredtocomprisealloftheNon-ExecutiveDirectors.DetailsaredisclosedintheCorporateGovernanceReport.

Directors’ interests in sharesTheDirectorsinofficeon30September2011hadthefollowinginterestsintheordinarysharesoftheCompany.

30 September 2011 1October2010

JohnBason 3,688 –RichardCousins 1,173,827 1,034,611SirJamesCrosby 34,000 34,000SirRoyGardner 196,878 215,878GaryGreen 1,132,272 1,226,669AndrewMartin 777,500 620,531SusanMurray 10,000 7,000DonRobert 30,000 30,000SirIanRobinson 15,000 15,000

Total number of shares held 3,373,165 3,183,689Percentage of issued share capital 0.17% 0.17%

TherewerenochangestotheshareholdingsofthoseDirectorsinofficeon30September2011between1October2011and23November2011.


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Corporate governance

UK Corporate Governance Code complianceTheBoardiscommittedtothehigheststandardsofcorporategovernancesetoutintheUKCorporateGovernanceCode(‘theCode’).TheBoardisaccountabletotheCompany’sshareholdersforgoodgovernanceandthisReport,togetherwiththeDirector’sRemunerationReportsetoutonpages53to60,describeshowtheBoardhasappliedthemainprinciplesofgoodgovernancesetoutin theCodeduringtheyearunderreview.ItistheBoard’sviewthattheCompanyhasbeenfullycompliantwiththeprovisionsoftheCode inforceduringtheyearto30September2011.

The BoardAsat30September2011andasatthedateofthisReport,theBoard ofDirectorswasmadeupofninemembers,comprisingtheChairman,threeExecutiveDirectorsandfiveNon-ExecutiveDirectors. JohnBasonwasappointedasaDirectoroftheCompanyon21June2011.TimParkerandSteveLucasretiredfromtheBoardon31December2010and21June2011respectively.

Followingtheyearend,itwasannouncedthatDominicBlakemorewouldbeappointedasanExecutiveDirectorwitheffectfrom27February2012,andwouldsucceedAndrewMartinasGroupFinanceDirectoron2April2012.ItwasalsoannouncedthatMrMartinwouldremainasanExecutiveDirectorinthenewroleofChiefOperatingOfficerforEuropeandJapanfrom2April2012,andthatGaryGreenwouldbecomeChiefOperatingOfficer,NorthAmericaonthesameday.

AlloftheNon-ExecutiveDirectorsareconsideredbytheBoardtobeindependentof managementandfreeofanyrelationshipwhichcouldmateriallyinterferewiththeexerciseoftheirindependentjudgment.TheBoardconsidersthateachoftheNon-ExecutiveDirectorsbringstheirownseniorlevelofexperience,gainedineachoftheirownfields,mainlyin internationaloperations.

BiographicaldetailsoftheDirectorscurrentlyinofficeareshownonpage42.TheCompany’spolicyrelatingtothetermsofappointmentandtheremunerationofbothExecutiveandNon-ExecutiveDirectorsisdetailedintheDirectors’RemunerationReportonpages53to60.

TheBoardmeetsregularlyduringtheyearaswellasonanadhocbasis,asrequiredbybusinessneed.EachDirectoralsoattendstheAGMtoanswershareholderquestions.

TheBoardmanagesthebusinessoftheCompanyandmay,subjecttotheArticlesofAssociationandapplicablelegislation,borrowmoney,guarantee,indemnify,mortgageorchargethebusiness,propertyand assets(presentandfuture)andissuedebenturesandothersecuritiesandgivesecurity,whetheroutrightorasacollateralsecurity,foranydebt,liabilityorobligationoftheCompanyorofanythirdparty.TheBoardhasaformalscheduleofmattersreservedforitsdecision,althoughitsprimaryroleistoprovideentrepreneurialleadershipandtoreviewtheoverallstrategicdevelopmentoftheGroupasawhole.In addition,theBoardsetstheGroup’svaluesandstandardsandensuresthatitactsethicallyandthatitsobligationstoitsshareholdersareunderstoodandmet.TheBoardmaydelegateanyofitspowersto anyCommitteeconsistingofoneormoreDirectors.TheCompanyhasdelegatedday-to-dayoperationaldecisionstotheExecutiveCommitteereferredtoonpage49.TheBoardmetninetimesduringtheyearandDirectorattendanceforeachmeetingisshowninthetableonpage49.

TheBoardhasestablishedaprocedureforDirectors,ifdeemednecessary,totakeindependentprofessionaladviceattheCompany’sexpenseinthefurtheranceoftheirduties.ThisisinadditiontotheaccessthateveryDirectorhastotheGeneralCounselandCompanySecretary,whoischargedwithensuringthatBoardproceduresarefollowedandthatgoodcorporategovernanceandcomplianceisimplementedthroughouttheGroup.TogetherwiththeGroupChiefExecutiveandtheGeneralCounselandCompanySecretary,theChairmanensuresthattheBoardiskeptproperlyinformedandisconsultedonallissuesreservedtoit.BoardpapersandotherinformationaredistributedattimestoallowDirectorstobeproperlybriefedinadvanceofmeetings.InaccordancewiththeCompany’sArticlesofAssociation,DirectorshavebeengrantedanindemnityissuedbytheCompanytotheextentpermittedbylawinrespectofliabilitiesincurredasaresultoftheiroffice.Theindemnitywouldnot provideanycoveragewhereaDirectorisprovedtohaveactedfraudulentlyordishonestly.TheCompanyhasalsoarrangedappropriateinsurancecoverinrespectoflegalactionagainstitsDirectorsandOfficers.

TherolesofChairmanandGroupChiefExecutiveareseparateandclearlydefinedwiththedivisionofresponsibilitiessetoutinwritingand agreedbytheBoard.

Inaccordancewithbestpractice,theChairmanaddressesthedevelopmentalneedsoftheBoardasawhole,withaviewtofurtherdevelopingitseffectivenessasateamandensuresthateachDirectorrefreshesandupdateshisorherindividualskills,knowledgeandexpertise.TheappointmentofJohnBasonduringtheyearfurtherstrengthenstheexistinginternationalandstrategiccapabilityoftheBoard.

During2011,theBoardconductedanevaluationofitsperformanceandthatoftheAudit,NominationandRemunerationCommitteestoensurethattheycontinuetobeeffectiveandthateachoftheDirectorsdemonstratescommitmenttohisorherrespectiveroleandhassufficienttimetomeethisorhercommitmenttotheCompany.

ThecompositionofthemainBoardCommitteeswasreviewedandmembershipextendedtoalloftheNon-ExecutiveDirectorstoencouragebroaderdiscussionandtoassistinthedecisionmaking process.

ItistheviewoftheBoardthateachoftheNon-ExecutiveDirectorsbringsconsiderablemanagementexperienceandanindependentperspectivetotheBoard’sdiscussionsandtheyareconsideredtobeindependentofmanagementandfreefromanyrelationshiporcircumstancethatcouldaffect,orappeartoaffect,theexerciseoftheirindependentjudgment.

InlightofthechangesmadetotheBoardandtothecompositionofthemainBoardCommitteesduringtheyear,anindependentformalexternalevaluationoftheBoardhasbeendeferred,butwillbecarriedoutinaccordancewiththeprovisionsoftheCode.

MeetingsbetweentheNon-ExecutiveDirectors,bothwithandwithout thepresenceoftheGroupChiefExecutive,arescheduledin theBoard’sannualprogramme.BoardmeetingsarealsoregularlyheldatGroupbusinesslocationstohelpallBoardmemberstogaina deeperunderstandingofthebusiness.ThisalsoprovidesseniormanagersfromacrosstheGroupwiththeopportunitytopresenttotheBoardaswellastomeettheDirectorsonmoreinformaloccasions.


Aspartoftheirongoingdevelopment,theExecutiveDirectorsmay seekoneexternalnon-executiveroleonanon-competitorboard,forwhichtheymayretaintheremunerationinrespectoftheappointment.Inordertoavoidanyconflictofinterest,allappointments aresubjecttotheBoard’sapprovalandtheBoardmonitorstheextentofDirectors’otherintereststoensurethatitseffectivenessisnotcompromised.

EachDirectorhasadutyundertheCompaniesAct2006(‘theCA2006’)toavoidasituationinwhichheorshehasorcanhaveadirectorindirectinterestthatconflictsorpossiblymayconflictwiththeinterestsoftheCompany.ThisdutyisinadditiontothedutythatheorsheowestotheCompanytodisclosetotheBoardanytransactionorarrangementunderconsiderationbytheCompany.TheCA2006allowsdirectorsofpubliccompaniestoauthoriseconflictsandpotentialconflictswheretheArticlesofAssociationcontainaprovisiontothateffect.TheCompany’sArticlesofAssociationincludeprovisionsgivingtheDirectorsauthoritytoapprovesuchsituationsandtoincludeotherprovisionstoallowconflictsofinteresttobedealtwith.TheBoardhasaprocedurewhendecidingwhethertoauthoriseaconflictorpotentialconflictofinterest.Firstly,onlyindependentDirectors(i.e.thosewhohavenointerestinthematterunderconsideration)willbeabletotaketherelevantdecision.Secondly,intakingthedecisiontheDirectorsmustactinawaytheyconsider,ingoodfaith,willbemostlikelytopromotetheCompany’ssuccess.Inaddition,theDirectorswillbeabletoimposelimitsorconditionswhengivingauthorisationiftheythinkthisisappropriate.

Anyauthoritiesgivenarereviewedatleastevery15months.TheBoardconsideredandauthorisedeachDirector’sreportedactualandpotentialconflictsofinterestatitsJuly2011Boardmeeting.

SuccessionplanningisamatterforthewholeBoardratherthanforaCommittee.TheCompany’sArticlesofAssociationprovidethatonethirdoftheDirectorsretirebyrotationeachyearandthateachDirectorwillseekre-electionattheAGMeverythreeyears.However,inaccordancewiththeCode,allDirectorssubmitthemselvesforannualre-electionbyshareholders.NewDirectorsmaybeappointedbytheBoard,butaresubjecttoelectionbyshareholdersatthefirstopportunityaftertheirappointment.TheArticlesofAssociationlimitthenumberofDirectorstonotlessthantwoandnotmorethan20savewhereshareholdersdecideotherwise.Non-ExecutiveDirectorsarenormallyappointedforaninitialtermofthreeyearswhichisreviewedandmaybeextendedforafurtherthreeyears.ItisBoardpolicythatNon-ExecutiveDirectorappointmentsshouldlastfornomorethannineyears.

Followingtheirappointment,aformal,comprehensiveandtailoredinductionisgiventoallNon-ExecutiveDirectors.Thisincludesvisitsto keylocationswithintheGroupandmeetingswithmembersoftheExecutiveCommitteeandotherkeyseniorexecutives.TheinductionalsocoversareviewoftheGroup’sgovernancepolicies,structuresandbusiness,includingdetailsoftherisksandoperatingissuesfacingtheGroup.

TheChairmanensuresthattheBoardmaintainsanappropriatedialoguewithshareholders.SirJamesCrosbyistheCompany’sSeniorIndependentNon-ExecutiveDirector.TheBoardbelievesthatSirJamesCrosbycontinuestohavetheappropriateexperience,knowledgeandindependencetocontinueinthisrole.

AlthoughtheNon-ExecutiveDirectorsarenotformallyrequiredtomeettheshareholdersoftheCompany,theirattendanceatpresentationsoftheinterimandannualresultsisencouraged.

TheformalTermsofReferenceforthemainBoardCommittees,approvedbytheBoardandcomplyingwiththeCode,toassistinthedischargeofitsduties,areavailablefromtheGeneralCounselandCompanySecretaryandcanalsobefoundontheCompany’swebsiteatwww.compass-group.com.TheTermsofReferenceofthemainBoardCommitteesarereviewedannuallyandupdatedwherenecessary.ThecompositionoftheprincipalBoardCommitteeswaschangedon10 May2011andmembershipoftheAudit,CorporateResponsibility,NominationandRemunerationCommitteesnowcomprisesalloftheNon-ExecutiveDirectors.DetailsofthevariousCommitteesareshownonpages47to49.TheGeneralCounselandCompanySecretaryactsasSecretarytoallBoardCommittees.

Audit CommitteeTheAuditCommitteecomprisesalloftheNon-ExecutiveDirectorsinofficeatthedateofthisReport.MembersoftheAuditCommittee(‘theCommittee’)areappointedbytheBoardfollowingrecommendationsbytheNominationCommitteeandtheCommittee’smembershipisreviewedbytheNominationCommitteeandaspartoftheannualBoardperformanceevaluation.

EachmemberoftheCommitteebringsrelevantseniorlevelfinancialexperience.TheexpertiseandexperienceofthemembersoftheCommitteearesummarisedonpage42.TheBoardconsidersthateachmemberoftheCommitteeisindependentwithinthedefinitionsetoutintheCode.TheCommittee’sChairman,JohnBason,isconsideredbytheBoardtohavesignificant,recentandrelevantfinancialexperienceasFinanceDirectorofAssociatedBritishFoodsplc,asdidhispredecessorSteveLucas,formerFinanceDirectorofNationalGridplc.

AllmembersoftheCommitteereceiveanappropriateinduction,whichincludesanoverviewofthebusiness,itsfinancialdynamicsandrisks.AuditCommitteemembersareexpectedtohaveanunderstandingoftheprinciplesof,anddevelopmentsin,financialreporting,includingtheapplicableaccountingstandardsandstatementsofrecommendedpractice,keyaspectsoftheCompany’spolicies,financing,internalcontrolmechanisms,andmattersthatrequiretheuseofjudgmentinthepresentationofaccountsandkeyfiguresaswellastheroleofinternalandexternalAuditors.MembersoftheCommitteeundertakeongoingtrainingas required.

TheCommitteemeetsregularlythroughouttheyearanditsagendaislinkedtoeventsintheCompany’sfinancialcalendar.EachmemberoftheCommitteemayrequirereportsonmattersofinterestinadditiontotheregularitems.TheCommitteemetfourtimesduringtheyearandMembers’attendanceatthemeetingsissetoutinthetableonpage49.

TheCommitteeinvitestheGroupChairman,theGroupChiefExecutive,theGroupFinanceDirector,theGroupFinancialControllerandtheDirectorofGroupInternalAudit,togetherwithseniorrepresentativesoftheexternalAuditors,toattendeachmeetingalthough,fromtimetotime,itreservestimefordiscussionswithoutinviteesbeingpresent.OtherseniormanagementareinvitedtopresentsuchreportsasarerequiredfortheCommitteetodischargeitsduties.

TheChairmanoftheAuditCommitteeattendstheAGMtorespondtoanyshareholderquestionsthatmightberaisedonitsactivities.TheremunerationofthemembersoftheCommitteeissetoutonpage55andthepolicywithregardtotheremunerationoftheNon-ExecutiveDirectorsissetoutonpage59.


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TheCommitteeassiststheBoardtofulfilitsresponsibilitiesrelatedtoexternalfinancialreportingandassociatedannouncements.Duringtheyear,theAuditCommitteeevaluated,reviewedandmonitoredthefollowing:

• theinterimandannualfinancialstatements;• theinterimandannualresults’announcementsmadetothe

LondonStock Exchange;• significantaccountingissuesincludingtheconsiderationofany

goodwillimpairmentassessments;• operationoftheGroup’s‘SpeakUp’whistle-blowingpolicy;• theGroup’sinternalauditfunctionandapprovaloftheinternal

auditplan;• theeffectivenessoftheexternalauditprocess;• objectivity,termsandfeesoftheexternalAuditors;• scopeofauditandnon-auditservicesprovidedbythe

external Auditors;• litigationandcontingentliabilities;and• taxmatters,includingcompliancewithstatutorytax

reporting obligations.

TheCommitteeisalsoresponsibleforthedevelopment,implementationandmonitoringoftheCompany’spolicyonexternalaudit.TheCommitteereservesoversightresponsibilityformonitoringtheAuditors’independence,objectivityandcompliancewithethical,professionalandregulatoryrequirements.TheCommitteerecommendstheappointment,reappointmentandremovaloftheCompany’sexternalAuditors,andconsiderstherisksassociatedwiththeirwithdrawalfromthemarketinitsriskevaluationandplanning.TheCommitteealsoreviewstheterms,areasofresponsibilityandscopeoftheauditassetoutintheexternalAuditors’engagementletter;theoverallworkplanfortheforthcomingyear,togetherwiththeassociatedfeeproposalandcost-effectivenessoftheaudit;anymajorissueswhichariseduringthecourseoftheauditandtheirresolution;keyaccountingandauditjudgments;theleveloferrorsidentifiedduringtheaudit;therecommendationsmadetomanagementbytheAuditorsandmanagement’sresponse;andtheAuditors’overallperformance.TheCommitteealsoensuresthatkeypartnerswithintheexternalAuditorsarerotatedfromtimetotimeinaccordancewithapplicableUKrules.TheCommitteealsomonitorstheextentofnon-auditworkwhichtheexternalAuditorscanperform,toensurethattheprovisionofthosenon-auditservicesthatcanbeundertakenbytheexternalAuditorsfallswithintheagreedpolicyanddoesnotimpairtheirobjectivityorindependence.InthisrespecttheCommitteehasagreedthat,unlessthereisnoothercompetentandavailableprovider,theexternalAuditorsshouldbeexcludedfromprovidingtheCompanywithgeneralconsultancyandallothernon-auditandnon-tax-relatedservices.Engagementsfornon-auditservicesthatarenotprohibitedaresubjecttoformalapprovalbytheCommitteebasedontheleveloffeesinvolved.Non-auditservicesthatarepre-approvedareeitherroutineinnaturewithafeethatisnotsignificantinthecontextoftheauditorareauditrelatedservices.

WithintheconstraintsofapplicableUKrules,theexternalAuditorsundertakesomeduediligencereviewsandprovideassistanceontaxmattersgiventheirin-depthknowledgeoftheGroup’sbusiness,althoughassistanceonthesemattersisalsoobtainedfromotherfirms.Theprovisionofnon-auditserviceswithinsuchconstraintsandtheagreedpolicyisassessedonacase-by-casebasissothatthebest-placedadvisorisretained.Principalnon-auditservicesapprovedbytheAuditCommitteeduringtheyearended30September2011comprisedtheprovisionofduediligenceadviceinrespectofacquisitionsinTurkey,DenmarkandSwedenandassistanceontaxmatters.

DeloitteLLPwereappointedasAuditorstotheCompanyonitsincorporation,andaresubjecttoannualreappointmentbyshareholders.Toensureobjectivity,keymembersoftheauditteamrotateofftheCompany’saudit.Duringtheyear,theCommitteereviewedDeloitteLLP’sfees,effectivenessandwhethertheagreedauditplanhadbeenfulfilledandthereasonsforanyvariationfromtheplan.TheCommitteealsoconsidereditsrobustnessandthedegreetowhichDeloitteLLPwasabletoassesskeyaccountingandauditjudgmentsandthecontentofthemanagementletter.TheCommitteeconcludedthattheauditwaseffectiveandthattherelationshipandeffectivenessoftheexternalAuditorsbekeptunderreview.DeloitteLLPalsoauditssignificantsubsidiariesoftheGroup.

ThetotalfeespaidtoDeloitteLLPintheyearended30 September2011were£6.9million(2010:£5.4million)ofwhich£3million(2010: £1.8million)relatedtonon-auditwork.Furtherdisclosureofthe non-auditfeespaidduringtheyearended30September2011canbefoundinnote2totheconsolidatedfinancialstatementson page78.

TheCommitteereviewstheeffectivenessoftheGroup’sinternalauditfunctionanditsrelationshipwiththeexternalAuditors,includinginternalauditresources,plansandperformanceaswellasthedegreetowhichthefunctionisfreeofmanagementrestrictions.Throughouttheyear,theCommitteereviewedtheinternalauditfunction’splansanditsachievementsagainstthoseplans.TheCommitteeconsideredtheresultsoftheauditsundertakenbytheinternalauditfunctionandconsideredtheadequacyofmanagement’sresponsetomattersraised,includingthetimetakentoresolveanysuchmatters.

TheCommitteealsoreviewstheintegrityofmaterialfinancialstatementsmadebytheCompany.TheCommitteemonitorsandreviewstheeffectivenessoftheGroup’sinternalcontrolsystems,accountingpoliciesandpracticesandcompliancecontrolsaswellas theCompany’sstatementsoninternalcontrolbeforetheyareagreedbytheBoardforeachyear’sAnnualReport.TheBoardretains overallresponsibilityforinternalcontrolandtheidentificationandmanagementofbusinessrisk.

TheCompanyhasreviewedandupdateditspoliciesinlightoftheenactmentoftheBriberyAct2010whichcameintoforceon1 July2011.TheCompanyremainscommittedtothehigheststandardsofbusinessconductandexpectsallofitsemployeestoactaccordingly.

TheGroup’s‘SpeakUp’policy(anextensionoftheCodeofEthicsnowincorporatedwithintheGroup’sCodeofBusinessConductwhichwaslaunchedin40languagesduringtheyearandisavailableontheCompany’swebsiteatwww.compass-group.com)wasrefreshedduringtheyearandsetsoutarrangementsforthereceipt,inconfidence,ofcomplaintsonaccounting,riskissues,internalcontrols,auditingissuesandrelatedmatterswhichwould,asappropriate,bereportedtotheCommittee,and‘SpeakUp’isastandardreviewitemonallinternalworkprogrammes.CopiesoftheCodesofBusinessConductandEthicsareavailableontheCompany’swebsiteatwww.compass-group.com.TheCommitteealsoreceivesregularupdatesonbriberyandfraudtrendsandactivityinthebusiness,ifany,atleasttwiceeachyearwithindividualupdatesbeinggiventotheCommittee,asneeded,inmoreseriouscasesofallegedbribery,fraudorrelatedactivities.TheGroup’santi-fraudpoliciesareasubsetoftheCodeofBusinessConductwhichdoesnottolerateanyactivityinvolvingfraud,dishonestyordeception.Thesepolicies,forwhichtheCommitteeretainsoverallresponsibility,setouthowallegationsoffraudorbriberyaredealtwith,suchasbythelocalhumanresourcesorfinanceteam,andthefrequencyoflocalreportingthatfeedsintotheregularupdates,whicharepresentedtotheCommittee.ReportingofthesematterstotheCommitteeis


managedandoverseenbyinternalaudit.The‘SpeakUp’policyoperateswhenthecomplaintisreceivedthroughthewhistle-blowingchannelandthatpolicywillredirecttheallegedfraudorbriberyforinvestigationatthemostappropriateleveloftheorganisationwhichmay,forexample,bebyamemberofthelocalhumanresourcesteamor,onoccasion,theCommitteeitself.

EachyeartheCommitteereviewscriticallyitsownperformanceandconsiderswhereimprovementscanbemade.

Nomination CommitteeTheNominationCommitteecomprisesSirRoyGardner(Chairman),RichardCousinsandalloftheNon-ExecutiveDirectorsinofficeatthe dateofthisReport.

TheNominationCommitteemeetsonanasneededbasis.TheCommitteemettwiceduringtheyearandMembers’attendanceisset outinthetablebelow.

DuringtheyeartheNominationCommitteereviewedthestructure,sizeandcompositionoftheBoardanditscommitteesandmaderecommendationswithregardtoanychangesconsiderednecessary,bothintheidentificationandnominationofnewDirectorsandappointmentofmemberstotheBoard’scommittees.ItalsoassessedtherolesoftheexistingDirectorsinofficetoensurethattherecontinuestobeabalancedBoardintermsofskills,knowledge,experienceanddiversity.

TheCompanyadoptsaformal,rigorousandtransparentprocedurefortheappointmentofnewDirectorsandseniorexecutiveswithdueregardtodiversityandgender.Priortomakinganappointment,theCommitteewillevaluatethebalanceofskills,knowledge,independence,experienceanddiversityontheBoardand,inthelightofthisevaluation,willprepareadescriptionoftheroleandcapabilitiesrequired,withaviewtoappointingthebestplacedindividualfortherole.Inidentifyingsuitablecandidates,theCommittee:

• usesopenadvertisingortheservicesofexternaladvisorstofacilitatethesearch;

• considerscandidatesfromdifferentgendersandawiderangeofbackgrounds;and

• considerscandidatesonmeritandagainstobjectivecriteriaensuringthatappointeeshavesufficienttimetodevotetotheposition,inlightofothersignificantcommitments.

TheNominationCommitteeretainedexternalsearchconsultantsinrespectoftheappointmentsofJohnBasonandDominicBlakemoreandwilldosointhefuture,asappropriate.TheNominationCommitteereviewstheseniorleadershipneedsoftheGrouptoenableittocompeteeffectivelyinthemarketplace.TheNominationCommitteealsoadvisestheBoardonsuccessionplanningforexecutiveBoardappointmentsalthoughtheBoarditselfisresponsibleforsuccessiongenerally.

Remuneration CommitteeTheRemunerationCommitteecomprisesSirJamesCrosby(Chairman)andalloftheotherNon-ExecutiveDirectorsinofficeatthedateofthisReport.TheCommitteemetfourtimesduringtheyearandDirectors’attendancecanbefoundinthetableopposite.

TheRemunerationCommitteeisresponsibleformakingrecommendationsonremunerationtotheBoard.TheDirectors’RemunerationReportissetoutonpages53to60.TheChairmanoftheRemunerationCommitteeattendstheAGMtorespondtoanyshareholderquestionsthatmightberaisedontheRemunerationCommittee’sactivities.

General Business CommitteeTheGeneralBusinessCommitteecomprisesalloftheExecutiveDirectorsandmeetsasrequiredtoconducttheCompany’sbusinesswithinclearlydefinedlimitsdelegatedbytheBoardandsubjecttothosemattersreservedtotheBoard.

Corporate Responsibility CommitteeTheCorporateResponsibilityCommitteecomprisesSusanMurray(Chairman),SirRoyGardner,RichardCousins,AndrewMartin,MarkWhite(GeneralCounselandCompanySecretary),JaneKingston(GroupHumanResourcesDirector)andalloftheNon-ExecutiveDirectorsinofficeatthedateofthisReport.

TheCorporateResponsibilityCommittee’sprimaryresponsibilitiesinclude:health,safetyandenvironmentalpractices,businessconduct,thepromotionofemployeeengagementanddiversityand communityinvestment.

TheCommitteemetthreetimesduringtheyearandMembers’attendanceisshowninthetablebelow.

Disclosure CommitteeTheDisclosureCommitteecomprisesAndrewMartin,MarkWhite,theGroupFinancialControllerandtheDirectorofCorporateStrategy,MediaandInvestorRelations,andmeetsasrequiredtodealwithallmattersrelatingtopublicannouncementsoftheCompanyandtheCompany’sobligationsundertheListingRulesandDisclosureandTransparencyRulesoftheUKListing Authority.

Executive CommitteeTheExecutiveCommitteeisthekeymanagementcommitteeandcomprisestheExecutiveDirectorsoftheCompany,GeneralCounselandCompanySecretary,GroupHumanResourcesDirectorandGroupManagingDirectors.TheCommitteemeetsregularlyandisresponsiblefordevelopingtheGroup’sstrategyandcapitalexpenditureandinvestmentbudgetsandreportingontheseareastotheBoardforapproval,implementingGrouppolicy,monitoringfinancial,operationalandcustomerqualityofserviceperformance,healthandsafety,purchasingandsupplychainissues,successionplanning,andday-to-daymanagementoftheGroup.

Meetings attendanceThefollowingtableshowstheattendanceofDirectorsinofficeat30 September2011atmeetingsoftheBoard,Audit,CorporateResponsibility(‘CR’),NominationandRemunerationCommitteesduringtheyearto30September2011:

NameBoard

Attendance*

AuditCommitteeAttendance*

CRCommitteeAttendance*

NominationCommitteeAttendance*

RemunerationCommitteeAttendance*

JohnBason1 4of4 1of1 1of1 1of1 1of1RichardCousins 9of9 – 3of3 2of2 –SirJamesCrosby 9of9 1of1 1of1 2of2 4of4SirRoyGardner 9of9 – 3of3 2of2 –GaryGreen 9of9 – – – –AndrewMartin 9of9 – 3of3 – –SusanMurray 9of9 1of1 3of3 2of2 4of4DonRobert 7of9 3of4 1of1 2of2 0of1SirIanRobinson 9of9 4of4 1of1 2of2 1of1

*On10May2011,thecompositionofeachoftheAudit,CorporateResponsibility,NominationandRemunerationCommitteeswasalteredtoincludealloftheNon-ExecutiveDirectors.ThetableshowsthenumberofmeetingsattendedoutofthenumberofmeetingswhicheachDirectorwaseligibleto attend.

1JohnBasonwasappointedtotheBoardon21June2011.


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managementandinternalcontrolprogramme.TheinternalandtheexternalAuditorshavereviewedtheoverallapproachadoptedbytheGrouptowardsitsriskmanagementactivitiessoastoreinforcetheseinternalcontrolrequirements.

Control procedures TheBoardreviewsitsstrategicplansandobjectivesonanannualbasisandapprovesGroupcompanybudgetsandstrategiesinlightofthese.ControlisexercisedatGroupandbusinesslevelthroughtheGroup’sManagementandPerformance(‘MAP’)frameworkandmonthlymonitoringofperformancebycomparisonwithbudgets,forecastsandcashtargetsandbyregularvisitstoGroupbusinessesbytheGroupChiefExecutiveandtheGroupFinanceDirector.GroupbusinessesapproveandsubmitriskreportsfortheBoardonabiannualbasis,summarisingthekeyrisksfacingtheirbusinessesandthecontrolsinplacetomanagethoserisks.Thesereports,togetherwithreportsoninternalcontrolanddepartures,ifany,fromestablishedGroupprocedurespreparedbytheinternalandexternalAuditors,arereviewedbytheGroupFinanceDirectorandtheAuditCommittee.TheGroupcompaniesalsosubmitbiannualriskandinternalcontrolassuranceletterstotheGroupFinanceDirectoroninternalcontrolandriskmanagementissues,withcommentsonthecontrolenvironmentwithintheiroperations.TheGroupFinanceDirectorsummarisesthesesubmissionsfortheAuditCommitteeandtheChairmanoftheAuditCommitteereportstotheBoardonanymattersthathavearisenfromtheCommittee’sreviewofthewayinwhichriskmanagementandinternalcontrolprocesseshavebeen applied.

TheBoardhasformalproceduresinplaceforapprovalofinvestmentandacquisitionprojects,withdesignatedlevelsofauthority,supportedbypostinvestmentreviewprocessesforselectedacquisitionsandmajorcapitalexpenditure.TheBoardconsiderssocial,environmentalandethicalmattersinrelationtotheGroup’sbusinessandassessesthesewhenreviewingtherisksfacedbytheGroup.TheBoardisconsciousoftheeffectsuchmattersmayhaveontheshortandlong-termvalueoftheCompany.TheexternalAuditorsoftheCompanyandtheDirectorofGroupInternalAuditattendAuditCommitteemeetingsandreceiveitspapers.TheReportoftheAuditCommitteeissetoutonpages47to49andtheAuditCommitteemembersmeetregularlywiththeDirectorofGroupInternalAuditandtheexternalAuditorswithoutthepresenceofexecutivemanagement.

TherewerenochangestotheCompany’sinternalcontroloverfinancialreportingthatoccurredduringtheyearended30September2011thathaveaffectedmaterially,orarereasonablylikelytoaffectmaterially,theCompany’sinternalcontroloverfinancialreporting.

Recruitment of former auditorsTosafeguardtheindependenceoftheCompany’sexternalauditors andtheintegrityoftheauditprocess,therecruitmentofseniorstafffromtheCompany’sauditorsisnotpermittedforaperiodoftwoyearsaftertheyceasetobeinvolvedintheprovisionofservicestotheCompany.

Compliance statementTheCompanyappliedalloftheprinciplessetoutintheCodefortheperiodunderreviewandhas,throughouttheyear,compliedwiththedetailedprovisionssetouttherein.

TheCompany’sAuditors,DeloitteLLP,arerequiredtoreviewwhethertheabovestatementreflectstheCompany’scompliancewiththeprovisionsoftheCodespecifiedforitsreviewbytheListingRulesoftheUKListingAuthorityandtoreportifitdoesnotreflectsuchcompliance.Nosuchreporthasbeenmade.

Internal auditTheinternalauditfunctionisinvolvedintheassessmentofthequalityofriskmanagementandinternalcontrolandhelpstopromoteandfurtherdevelopeffectiveriskmanagementwithinthebusiness.Certaininternalauditassignments(suchasthoserequiringspecialistexpertise)continuetobeoutsourcedbytheDirectorofInternalAudittoKPMGLLPasappropriate.TheAuditCommitteereviewsinternalauditreportsandconsiderstheeffectivenessofthefunction.

Internal controlInahighlydecentralisedGroup,wherelocalmanagementhaveconsiderableautonomytorunanddeveloptheirbusinesses,awelldesignedsystemofinternalcontrolisnecessarytosafeguardshareholders’investmentsandtheCompany’sassets.TheDirectorsacknowledgethattheyhaveoverallresponsibilityfortheGroup’ssystemsofinternalcontrolandforreviewingtheeffectivenessofthosecontrols.InaccordancewiththeguidancesetoutintheTurnbullReport,‘InternalControl:GuidanceforDirectorsontheCombinedCode’,andintheCodeitself,anongoingprocesshasbeenestablishedfor identifying,managingandevaluatingtherisksfacedbytheGroup.Thisprocesshasbeeninplaceforthefullfinancialyearanduptothedateonwhichthefinancialstatementswereapproved.

Thesystemsaredesignedtomanageratherthaneliminatetheriskof failuretoachievetheGroup’sstrategicobjectives,safeguardtheGroup’sassetsagainstmaterialloss,fairlyreporttheGroup’sperformanceandpositionandtoensurecompliancewithrelevantlegislation,regulationandbestpracticeincludingthatrelatedtosocial,environmentalandethicalmatters.Thesystemsprovidereasonable,notabsolute,assuranceagainstmaterialmisstatementorloss.SuchsystemsarereviewedbytheBoardtodealwithchangingcircumstances.

AsummaryofthekeyfinancialrisksinherentintheGroup’sbusinessisgivenonpages30to31.Riskassessmentandevaluationisanintegralpartoftheannualplanningcycle.EachbusinessdocumentsthestrategicobjectivesandtheeffectivenessoftheGroup’ssystemsofinternalcontrol.Aspartofthereview,eachsignificantbusinessandfunctionhasbeenrequiredtoidentifyanddocumenteachsubstantialrisk,togetherwiththemitigatingactionsimplementedtomanage,monitorandreporttomanagementontheeffectivenessofthesecontrols.Seniormanagersarealsorequiredtosignbiannualconfirmationsofcompliancewithkeyproceduresandtoreportanybreakdownsin,orexceptionsto,theseprocedures.Summarisedresultshavebeenpresentedtoseniormanagement(includingtotheExecutiveCommittee)andtotheBoard.Theseprocesseshavebeeninplacethroughoutthefinancialyearended30September2011andhavecontinuedtothedateofthisReport.TheBoardhasreviewedtheeffectivenessoftheGroup’ssystemofinternalcontrolfortheyearunderreviewandasummaryoftheprincipalcontrolstructuresandprocessesinplaceacrosstheGroupissetout below.

Control environment WhilsttheBoardhasoverallresponsibilityfortheGroup’ssystemofinternalcontrolandforreviewingitseffectiveness,ithasdelegatedresponsibilityfortheoperationoftheinternalcontrolandriskmanagementprogrammetotheExecutiveCommittee.ThedetailedreviewofinternalcontrolhasbeendelegatedtotheAuditCommittee.ThemanagementofeachbusinessisresponsibleforinternalcontrolandriskmanagementwithinitsownbusinessandforensuringcompliancewiththeGroup’spoliciesandprocedures.EachbusinesshasappointedariskchampionwhoseprimaryroleinsuchcapacityistoensurecompliancebylocalmanagementwiththeGroup’srisk


Communication with shareholdersTheCompanyplacesconsiderableimportanceoncommunicationwithitsshareholders,includingitsprivateshareholders.TheGroupChiefExecutiveandtheGroupFinanceDirectorarecloselyinvolvedininvestorrelationsandaseniorexecutivehasday-to-dayresponsibilityforsuchmatters.TheviewsoftheCompany’smajorshareholdersarereportedtotheBoardbytheGroupChiefExecutiveandtheGroupFinanceDirectoraswellasbytheChairman(whoremainsincontactwiththe10largestshareholders)andarediscussedatitsmeetings.

Duringtheyear,theCompanyintroducedelectroniccommunicationsasthedefaultmethodofcommunicatingwithitsshareholders,helpingtomaketheCompanymoreenvironmentallyfriendlybyreducingwasteandpollutionassociatedwiththeprintingandpostingofitsAnnualReport.TheAnnualReportandAccountsareavailabletoallshareholdersandcanbeaccessedviatheCompany’swebsiteatwww.compass-group.comorcanbeobtainedinpaperform.

ThereisregulardialoguewithinstitutionalshareholdersandthishasbeenextendedtoincludeprivateshareholdersthroughtheAGMandmeetingswiththeUnitedKingdomShareholders’Association.Contactwithinstitutionalshareholders(andwithfinancialanalysts,brokersandthemedia)iscontrolledbywrittenguidelinestoensuretheprotectionofsharepricesensitiveinformationthathasnotalreadybeenmadegenerallyavailabletotheCompany’sshareholders.Contactisalsomaintained,whenappropriate,withshareholderstodiscussoverallremunerationplansandpolicies.TheGroup’sannualandinterimresults,aswellasallannouncementsissuedtotheLondonStockExchange,arepublishedontheCompany’swebsiteatwww.compass-group.com.TheCompanyissuesregulartradingupdatesandinterimmanagementstatementstothemarketandthese,togetherwithcopiesofinterviewsandpresentationsbytheGroupChiefExecutiveandGroupFinanceDirector,arepostedontheCompany’swebsite.

TheNoticeofAGMiscirculatedtoallshareholdersatleast20workingdaysbeforesuchmeetinganditisCompanypolicynottocombineresolutionstobeproposedatgeneralmeetings.AllshareholdersareinvitedtotheCompany’sAGMatwhichtheyhavetheopportunitytoputquestionstotheBoardanditisstandardpracticetohavetheChairmenoftheAudit,CorporateResponsibility,NominationandRemunerationCommitteesavailabletoanswerquestions.Theresultsofproxyvotingforandagainsteachresolution,aswellasabstentions,areannouncedtotheLondonStockExchangeandarepublishedontheCompany’swebsiteshortlyafterthemeeting.

DonationsTheCompany’sCorporateResponsibilityReportissetoutonpages32to41.TheGroup’scharitabledonationsin2011totalled£5.9million(2010:£5.8million).

Since2004,shareholdershavepassedanannualresolution,onaprecautionarybasis,toapprovedonationstoEUpoliticalorganisationsandtoincurEUpoliticalexpenditure(assuchtermsweredefinedunderthethenrelevantlegislation)notexceeding£125,000perannum.TheBoardhasconsistentlyconfirmedthatitoperatesapolicyofnotgivinganycashcontributiontoanypoliticalpartyintheordinarymeaningofthosewordsandthatithasnointentionofchangingthatpolicy.TheDirectors,however,proposetorenewtheauthoritygrantedin2011fortheGrouptomakepoliticaldonationsandincurpoliticalexpenditure(assuchtermsaredefinedinsections362to365oftheCA2006)ofnotmorethan£125,000in

totaluntiltheCompany’snextAGM,whichtheymightotherwisebeprohibitedfrommakingorincurringunderthetermsoftheCA2006andwhichwouldnotamountto‘donations’intheordinarysenseoftheword.

Employee Share TrustsTheCompassGroupEmployeeShareTrust(‘ESOP’)andTheCompassGroupEmployeeTrustNumber2(‘CGET’)wereestablishedon13January1992and12April2001respectivelyinconnectionwiththeCompany’sshareoptionplans.TheCompassGroupLongTermIncentivePlanTrust(‘LTIPT’)wasestablishedon5April2001inconnectionwiththeCompany’slong-termincentiveplans.DetailsofallincentiveplansaresetoutintheRemunerationReportonpages56to57.TheTrusteesoftheESOP,LTIPTandCGEThold251,332(2010:344,655),17,209(2010:17,209)andnil(2010:nil)ordinarysharesrespectively.

TheCompassGroupExecutiveOptionShareTrustandtheCompassGroupExecutiveShareTrustwereestablishedon15and22 February2010respectivelyinrelationtotheoperationofshareincentiveplansinAustralia.NoordinarysharesareheldbytheseTrusts.

Awards under employee share schemesInNovember2010andMay2011,optionsweregrantedundertheCompassGroupShareOptionPlan2010over118,900and4,297,050ordinaryshares(2010:4,102,900)tosenioremployeesoftheGroupatoptionpricesof566.00penceand575.00pencepersharerespectively.

TheCompanyalsooperatesanallemployeeshareincentiveplanapprovedbyHMRevenue&CustomsunderwhichUKemployeescanpurchasetheCompany’ssharesatmarketprice.NoDirectororPersonDischargingManagerialResponsibilityparticipatesineitheroftheseplans.

Furtherdetailsregardingtheplans,includingthetotalnumberofoptionsoutstanding,aresetoutinnotes24and25totheconsolidatedfinancialstatementsonpages105to110.Conditionalawardsover1,360,106shareswerealsomadetoExecutiveDirectorsandseniorexecutivesundertheCompassGroupLongTermIncentivePlan2010inNovember2010(2010:awardsover264,912sharesweremadeunderthatplan,aswellasawardsover1,606,550sharesundertheCompassGroupLong-TermIncentivePlan).Detailsofthese,andthetotalnumberofextantLTIPawardsheldbyExecutiveDirectorsasat30September2011,aresetoutonpage57oftheDirectors’RemunerationReport.

Employee policies and involvementTheGroupplacesparticularimportanceontheinvolvementofitsemployees,keepingthemregularlyinformedthroughinformalbulletinsandotherin-housepublications,meetingsandtheCompany’sinternalwebsites,onmattersaffectingthemasemployeesandontheissuesaffectingtheirperformance.ThoseGroupbusinessesintheEuropeanEconomicAreawhichhavedomesticinformationandconsultationprocessesinplace,suchasworkscouncils,areabletoselectrepresentativestoparticipateintheCompassEuropeanCouncil,whichhasbeeninoperationsince1996andprovidesaforumforexchanginginformationandengaginginconsultationontheGroup’sperformanceandplans,andrelevanttransnationalissues.AtthedateofthisReportthereare22employeerepresentativesfrom12countriesontheCompassEuropeanCouncil.


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PermanentUKemployeesareusuallyinvitedtojointheCompany’sdefinedcontributionschemeCompassRetirementIncomeSavingsPlan(‘CRISP’)ortheCompany’sstakeholderpensionarrangement.CRISPhasacorporateTrustee.TheChairman,TonyAllen,isindependent.TheothersixTrusteeDirectorsareUK-basedemployeesoftheGroup,threeofwhomhavebeennominatedbyCRISPmembers.

However,thoseUKemployeeswhotransferfromthepublicsectorundertheTransferofUndertakings(ProtectionofEmployment)Regulations2006areeligibletojointheCompassGroupPensionPlan(‘thePlan’),adefinedbenefitpensionarrangementwhichisotherwiseclosedtonewentrants.ThePlanalsohasacorporateTrustee.TheChairman,PeterMorriss,isindependent.ThereareafurthersixTrusteeDirectorswhoareeitherUK-basedemployeesorformeremployeesoftheGroup,threeofwhomhavebeennominatedbyPlan members.

AcloseddefinedbenefitarrangementwasalsoinplaceduringtheyearundertheCompassPensionScheme(‘theScheme’).On5April2011,followingconsultation,theSchemewasmergedintothePlanandallmemberstransferredtothePlan.Furtherdetailsofthemergerareshowninnote23totheconsolidatedfinancialstatementsonpage101ofthisReport.

PermanentemployeesoutsideoftheUKareusuallyofferedmembershipoflocalpensionarrangementsifandwheretheyexistorlimitedglobalarrangementswhereitisappropriatetohaveCompanysponsoredarrangements.

Employeesareofferedarangeofbenefitsdependingonthelocalenvironment,suchasprivatemedicalcover.Priorityisgiventothetrainingofemployeesandthedevelopmentoftheirskillsisofprimeimportance.Employmentofdisabledpeopleisconsideredonmeritwithregardonlytotheabilityofanyapplicanttocarryouttherole.Arrangementstoenabledisabledpeopletocarryoutthedutiesrequiredwillbemadeifitisreasonabletodoso.Anemployeebecomingdisabledwould,whereappropriate,beofferedretraining.TheGroupcontinuestooperateonadecentralisedbasis.Thisprovidesthemaximumencouragementforthedevelopmentofentrepreneurialflair,balancedbyarigorouscontrolframeworkexercisedbyasmallheadofficeteam.Localmanagementteamsareresponsibleformaintaininghighstandardsofhealthandsafetyandforensuringthatthereisappropriateemployeeinvolvementindecisionmaking.

Creditor payment policyAllGroupcompaniesareresponsibleforestablishingtermsandconditionswiththeirsuppliersanditisGrouppolicythatpaymentsaremadewithinsuchagreedtermsandconditions.TheamountoftradecreditorsfortheGroupasat30September2011wasequivalentto69days(2010:63days)oftradepurchases.

Shareholder servicesTheSharePortalisaserviceofferedbyourRegistrars,CapitaRegistrars,whichallowsshareholdersonlineaccesstoarangeofshareholderinformation.TheSharePortalprovidesaccesstodetailsofshareholdingsintheCompanyandpracticalhelpontransferringsharesandupdatingpersonaldetails.ItenablesshareholderstoregistertoreceiveshareholdercommunicationselectronicallyanditalsoenablesshareholderstoappointproxiestoattendandvoteatgeneralmeetingsoftheCompany.Toregister,shareholdersshouldgotowww.capitashareportal.comandfollowtheinstructionsprovided.ShareholderswillneedtheirinvestorcodewhenregisteringfortheSharePortal.Thiscanbefoundonyoursharecertificate.

TheCompany’sordinarysharescanbetradedthroughmostbanks,buildingsocieties,stockbrokersor‘shareshops’intheUKand,inaddition,CapitaRegistrarsprovidesasharedealingservice(maximumdealsize£25,000)whichisavailabletoshareholdersresidentintheUK,EEA,ChannelIslandsandtheIsleofMan.ThisisasimpleandconvenientwaytobuyandsellsharesoverthetelephoneandontheInternetwithouttheneedtopre-registerandcompleteapplicationforms.DetailsofthisserviceandothershareholderservicescanbefoundintheGeneralShareholderInformationsectiononpage126ofthisReportorontheCompany’swebsiteatwww.compass-group.com.

CRESTTheCompany’sordinarysharesandSterlingEurobondsareinCREST,thesettlementsystemforstocksandshares.

AuditorsDeloitteLLPhaveexpressedtheirwillingnesstocontinueasAuditorsoftheCompany.SeparateResolutionsproposingtheirreappointmentanddeterminationoftheirremunerationwillbeproposedatthe2012AGM.TheDirectorsconfirmthat,sofarastheyareeachaware,thereisnorelevantauditinformationofwhichDeloitteLLPareunawareandeachDirectorhastakenallthestepsthatoughttohavebeentakenasaDirectortobeawareofanyrelevantauditinformationandtoestablishthatDeloitteLLPareawareofthatinformation.

AGMTheNoticeofMeetingsettingouttheResolutionstobeproposedattheAGMtobeheldon2February2012,togetherwithexplanatorynotes,issetoutonpages128to134ofthisAnnualReportandisalsoavailableontheCompany’swebsiteatwww.compass-group.com.TheDirectorsconsiderthateachoftheResolutionsisinthebestinterestsoftheCompanyandtheshareholdersasawholeandrecommendthatshareholdersvoteinfavourofalloftheResolutions.

OnbehalfoftheBoard

Mark J White GeneralCounselandCompanySecretary23November2011

CompassGroupPLCRegisteredinEnglandandWalesNo.4083914


Directors’ Remuneration Report

TheBoardpresentsitsRemunerationReport,whichhasbeenpreparedontherecommendationoftheRemunerationCommittee(‘theCommittee’)andinaccordancewiththerequirementsoftheCompaniesAct2006(‘theCA2006’).ShareholderswillbeinvitedtoapprovetheReportattheAnnualGeneralMeeting(‘theAGM’)on2February2012.TheReportcoversthefollowingmatters:

• Executiveremunerationpolicyfortheyearended30September2011andtheintendedpolicyfortheyearending30September2012;and

• Directors’remuneration,incentiveplanparticipationandpensionprovision.

Withtheexceptionoftheannualperformancerelatedaward,serviceagreementdetails,disclosureofremunerationofotherseniorexecutivesandexternaldirectorships,theinformationsetoutonpages53to60ofthisRemunerationReportrepresentstheauditabledisclosuresreferredtointheAuditor’sReportonpage62asspecifiedbytheUKListingAuthorityandunderRegulation11ofandSchedule8totheLargeandMediumSizedCompaniesandGroups(AccountsandReports)Regulations2008.

Role of the CommitteeTheBoardsetstheCompany’sremunerationpolicyandtheCommitteeisresponsible,withintheauthoritydelegatedbytheBoard,fordeterminingspecificremunerationpackagesandthetermsandconditionsofemploymentforthemembersoftheExecutiveCommittee,whichcomprisestheExecutiveDirectorsandotherseniorexecutives.TheCommitteeensuresthatthemembersoftheExecutiveCommitteeareprovidedwiththeappropriateincentivestoenhancetheGroup’sperformanceandtorewardthemfortheirpersonalcontributiontothesuccessofthebusiness.TheCommitteereviewstheremunerationarrangementsforGroupemployeeswhosesalariesexceedaspecifiedlevelandadministerstheCompany’sshareincentiveplans.TheCommitteealsodeterminestheChairman’sremunerationalthoughtheBoarditselfdeterminestheleveloffeespaidtotheNon-ExecutiveDirectors.NoDirectorsareinvolvedindecidingtheirownremuneration.

TheCommitteealsomaintainsanactivedialoguewithshareholderrepresentativesanditsfullTermsofReferencearesetoutontheCompany’swebsiteatwww.compass-group.com.

Membership of the CommitteeTheCommitteeconsistsentirelyofindependentNon-ExecutiveDirectors,asdefinedintheUKCorporateGovernanceCode(‘theCode’).DuringtheyeartheCommitteecomprisedthefollowingNon-ExecutiveDirectors:

SirJamesCrosby(Chairman,SeniorIndependentNon-ExecutiveDirector)JohnBason(appointed21June2011)SteveLucas(retired21June2011)SusanMurrayTimParker(retired31December2010)DonRobert*SirIanRobinson*

*JoinedtheCommitteeon10May2011.

BiographicaldetailsofthecurrentmembersoftheCommitteearesetoutonpage42.TheGeneralCounselandCompanySecretaryactsastheSecretarytotheCommittee.TheCommitteemetonfouroccasionsduringtheyear.Attendancedetailsareshowninthetableonpage49.

Advisors to the CommitteeTheCommitteehasaccesstodetailedexternalinformationandresearchonmarketdataandtrendsfromindependentconsultants.Duringtheyear,PricewaterhouseCoopersLLP(whoalsoprovideexpatriateassignmentadvice)wasengagedbytheCommitteetoadviseongeneralhumanresourcesandcompensationrelatedmatters(includingthedesignofincentivearrangements).AlithosLimitedprovidedinformationforthetestingofthetotalshareholderreturn(‘TSR’)performanceconditionsfortheCompany’slong-termincentiveplans.

TheChairmanandtheGroupChiefExecutive,togetherwithJaneKingston(GroupHumanResourcesDirector),andtheDirectorofGroupReward,arenormallyinvitedtoattendeachCommitteemeetingandprovideadviceandguidancetotheCommittee(otherthaninrespectoftheirownremuneration).

Summary of activity during the yearDuringtheyear,theCommitteeconducteditsannualreviewofremunerationphilosophyandreviewedtheCompany’sremunerationpracticetoensurethattheoverallremunerationstructurecontinuestopromotetheCompany’sbusinessstrategy.TheChairman’spayandbenefitsandtheExecutiveDirectors’rewardpackageswerereviewed.TheperformancetargetsoftheCompany’sbonusandshareincentiveplanswereconsidered,andthevestingamountsofmaturingawardsapproved.TheCommitteealsoconsideredtheheadroomavailableinissuedsharecapitalbeforethemakingofshareplanawards,considereddevelopmentsinbestpracticeandengagedwithshareholderrepresentativesandadvisorybodies.

Remuneration policy and componentsTheCommitteereviewstheCompany’sremunerationphilosophyandstructureeachyeartoensurethattheremunerationframeworkremainseffectiveinsupportingtheCompany’sbusinessobjectives,isinlinewithbestpractice,andfairlyrewardsindividualsforthecontributionthattheymaketothebusiness,havingregardtothesizeandcomplexityoftheGroup’soperationsandtheneedtomotivateandattractemployeesofthehighestcalibre.

TheCommitteeintendsthatbasesalaryandtotalremunerationofExecutiveDirectorsshouldbeinlinewiththemarket.Remunerationisbenchmarkedagainstrewardsavailableforequivalentrolesinasuitablecomparatorgroupwiththeaimofpayingneithersignificantlyabovenorbelowthemedianforeachelementofremunerationatparperformancelevels.TheCommitteealsoconsidersgeneralpayandemploymentconditionsofallemployeeswithintheGroupandissensitivetothese,toprevailingmarketconditions,andtogovernancetrendswhenassessingthelevelofsalariesandremunerationpackagesofExecutiveDirectorsandothermembersoftheExecutiveCommittee.SaveforpromotionalincreasesawardedtosomeGroupManagingDirectors,percentageincreasestobasicsalaryawardsforExecutiveDirectorsandothermembersoftheExecutiveCommitteeduringtheyearended30September2011wereinlinewiththoseawardedtootheremployeesintheGroupworkinginthesamecountryinthatperiod.


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Thetotalremunerationpackagelinkscorporateandindividualperformancewithanappropriatebalancebetweenshortandlong-termelements,andfixedandvariablecomponents.ThepolicyisdesignedtoincentiviseexecutivestomeettheCompany’skeyobjectives,suchthatasignificantportionoftotalremunerationisperformancerelated,basedonamixtureofinternaltargetslinkedtotheCompany’skeybusinessdrivers(whichcanbeappropriatelymeasured,understoodandacceptedbybothexecutivesandshareholders)andappropriateexternalcomparatorgroups.

TheCommitteeconsidersthatthetargetssetforthedifferentelementsofperformancerelatedremunerationarebothappropriateanddemandinginthecontextofthebusinessenvironmentandthechallengeswithwhichtheGroupisfacedaswellascomplyingwiththeprovisionsoftheCode.

Thefollowingchartshowstheaverageproportionsofsalary,target(orpar)bonus,pension,benefitsandtheexpectedvalueoflong-termincentivesgrantedtoeachoftheExecutiveDirectorsduringtheyearended30September2011.ThisisthesameforeachExecutiveDirector.

Executive Directors’ remuneration package elementsYear ended 30 September 2011

Salary 32% Annual bonus 24% Pension 11% Benefits 1% LTIP 32%

Salary Basesalariesareappropriatelybenchmarkedandreflecttherole,jobsizeandresponsibilityaswellasindividualperformanceandeffectiveness.Considerationisalsogiventoprevailingmarketandeconomicconditionsandtogovernancetrends,aswellastosalarylevelsthroughouttheorganisation.TheGroupChiefExecutive’ssalaryisreviewedannuallybytheCommitteewithanyincreasetakingeffecton1Julyofeachyear.Otherexecutives’salariesaresubjecttoannualreviewwithanyincreasestakingeffecton1Januaryofeachyear.ItisnotenvisagedthatremunerationelementsforExecutiveDirectorsfortheyearending30September2012willbesubstantiallydifferenttothoseinplaceinthefinancialyearended30September2011.

TheannualbasesalariesoftheExecutiveDirectorsare:

RichardCousins £937,500(effective1July2011,increasedby2.99%from£910,350)

GaryGreen US$1,136,000(effective1January2011,increasedby3.99%from$1,092,420)

AndrewMartin £568,000(effective1January2011,increasedby3.99%from£546,210)

Benefits ThesecomprisehealthcareinsuranceforExecutiveDirectorsandtheirdependents,limitedfinancialadvice,lifeassuranceandcarbenefit.BenefitsforExecutiveDirectorsandtheirdependentsfortheyearending30September2012willnotbesubstantiallydifferenttothoseofferedinthefinancialyearended30September2011.

PensionsTheGroup’spolicyisnottoofferdefinedbenefitarrangementstonewemployeesatanylevel(savewhererequiredbyapplicablelegislation).IncomingExecutiveDirectorsareinvitedeithertojointheCompany’smoneypurchasearrangementortotakeafixedsalarysupplement,calculatedasapercentageofbasesalary,whichisexcludedfromanybonuscalculation.

At30September2011therewerenoExecutiveDirectorsactivelyparticipatinginanyCompassGroupdefinedbenefitpensionarrangementsandnoneoftheExecutiveDirectorsareaccruingadditionalentitlementtobenefitunderanyarrangementsthatexistedpriortotheirappointmentasExecutiveDirectors.

Asreportedinpreviousyears,RichardCousinsandGaryGreenreceiveasalarysupplementequalto35%oftheirbasicsalariesinlieuofpension;and,asreportedin2006,AndrewMartinhasreceivedasalarysupplementfrom6April2006,equalto35%ofbasicsalaryandhaswaivedallrightstohisfinalsalarypension,moneypurchasepensionandunfundedunapprovedpensionrelatingtohisemploymentpriortothatdate.

Annual bonusTheannualbonusisearnedbytheachievementofperformancetargetssetbytheCommitteeatthestartofeachfinancialyearandisdeliveredincash.Thetarget(orpar)awardfortheyearended30September2011was75%ofbasesalary,withafurthermaximumof75%ofbasesalaryavailableforsuperiorperformance.

Fortheyearended30September2011,thebonusmeasuresfortheExecutiveDirectorswereasfollows:

MeasureRichard Cousins

Gary Green

Andrew Martin

ProfitBeforeInterestandTax(‘PBIT’)

55%1 55%2 55%1

GroupFreeCashFlow(‘GFCF’)

15% 15%

12MonthAverageWorkingCapitalBalance(‘AWCB’)

15%3

OrganicRevenueGrowth(‘ORG’)

15%4 15%5 15%4

PersonalTargets 15% 15% 15%

Total 100% 100% 100%

1PBITonaGroup-widebasis.2PBITsplitbetweenGroupPBIT(15%)andLocalPBIT(USAandCanada)(40%).3 12MonthAWCB(USAandCanada).4ORGonaGroup-widebasis.5ORGforUSAandCanada.

BonusmeasuresdependentonGFCFaresubjecttothecaveatthatGFCFshouldnotbeaffectedbyBoardapprovedcapitalexpenditureorotherunusualorirregulartimingdifferences.PBITandORGtargetsareadjustedtotakeaccountofacquisitionsanddisposals.Asupplementaryfinancialunderpinappliessuchthattheamountpayablepursuanttotheachievementofthenon-PBITmeasuresmaynotexceedtheon-targetpaymentunlessthethresholdGroupPBITmeasurehasbeenachieved.


EmolumentsTheaggregateremunerationoftheDirectorswhoservedduringthefinancialyearended30September2011wasasfollows:

Directors’ remuneration

NameofDirector

Salaryand fees

£000

Salarysupplement1

£000

Annualperformance-

relatedbonus

£000Benefits6

£000

2011Total£000

2010Total£000

ChairmanSirRoyGardner 433 – – 44 477 477Executive DirectorsRichardCousins 917 321 1,055 41 2,334 2,560GaryGreen2 701 245 985 44 1,975 1,992AndrewMartin 563 197 652 48 1,460 1,551

Non-Executive DirectorsSirJamesCrosby 125 – – – 125 110JohnBason3 29 – – – 29 –SteveLucas4 75 – – – 75 90SusanMurray 93 – – – 93 77TimParker5 21 – – – 21 70DonRobert 81 – – – 81 70SirIanRobinson 81 – – – 81 70

Total 3,119 763 2,692 177 6,751 7,067

1Asupplementof35%ofbasicsalaryispaidinmonthlyinstalmentsinlieuofpensionparticipation.2GaryGreen’ssalaryofUS$1.125millionandotheremolumentsaregiveninSterlingusinganexchangerateofUS$1.6059/£1(2010:US$1.5596/£1).3JohnBasonwasappointedasaDirectoron21June2011.4SteveLucasresignedasaDirectoron21June2011.5TimParkerresignedasaDirectoron31December2010.6Benefitscomprisehealthcareinsurance,limitedfinancialadvice,lifeassuranceandcarbenefit.

FollowingtheCommittee’sassessmentoftheextenttowhichthevariousperformancemeasuresinrespectofthebonusfortheyearended30September2011wereachieved,thepercentagesofbasesalarywhichwereactuallypaidtotheDirectors,bywayofannualbonus,fortheyearended30September2011,togetherwiththeoutcomesagainsteachcategoryofannualbonusmeasure,areshownbelow:

Richard Cousins

Gary Green

Andrew Martin

Measure

Actualbonusearnedas%

ofannualbasesalary


ofannualbasesalary


ofannualbasesalary

FinancialTargets 93.75% 112.50% 93.75%PersonalTargets 18.75% 22.50% 21.00%

Total 112.50% 135.00% 114.75%

TheCommitteecontinuestobesatisfiedthattheperformancetargetsarechallengingandpromotetheCompany’sbusinessstrategy.

TheCommitteehasagreedthat,fortheyearending30September2012,toensurethatperformanceconditionscontinuetobealignedwithcurrentstrategy,theORGperformancetargetshouldremainasanelementoftheannualbonustotheextentthatPersonalTargetsandORGtargetseachrepresent15%ofthebonusmeasures,thePBITmeasuresrepresent55%andtheGFCFandAWCBmeasures15%respectively.Achievementofnon-PBITmeasuresmaynotexceedon-target(par)paymentunlessthethresholdGroupPBITmeasureisachieved.


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Current share plansTheLTIPhasbeentheprimaryformofequity-basedincentivefortheyearended30September2011,andthiswillcontinuetobethepolicyfortheyearending30September2012.

Long Term Incentive Plan 2010 Alllong-termincentiveplanawardsmadetoseniorexecutivessinceFebruary2010havebeenmadeunderTheCompassGroupPLCLongTermIncentivePlan2010(‘the2010LTIP’).ExecutiveDirectorsreceivedtheirfirstawardunderthe2010LTIPduringtheyear.Underthe2010LTIP,executivesmayreceiveaconditionalawardofshareswhichmayvestafterasinglethree-yearperformanceperiod,basedontheachievementofstretchingperformanceconditions.Awardswillnotexceed200%ofbasesalaryandaremadebyreferencetothesharepriceatthedateofaward.Awardsmaybesettledinsharesorcash,ifrequired(forexample,becauseofsecuritieslaws),atanytimeuptothereleaseofanaward,subjecttothediscretionoftheCommittee.

50%ofanyawardisbasedonGFCFoverthethree-yearperformanceperiodand50%ontheCompany’sTSRoverthesameperiodrelativetothecompaniescomprisingtheTSRcomparatorgroupatthestartoftheperformanceperiod.ThepreciseGFCFtargetforeachawardislinkedtotheGroup’swiderbusinesstargetsandissetbytheCommitteeatthetimeofawardbasedonGroupprojectionsandmarketexpectations.TheGFCFmeasureissetbytheCommitteesubjecttothecaveatthatGFCFshouldnotbeaffectedbyBoardapprovedcapitalexpenditureorotherunusualorirregulartimingdifferences.

NosharesvestunlesstheGroupachievesthresholdperformance.25%oftheportionoftheawardbasedonGFCFvestsontheachievementofthresholdperformance.Awardsvestonastraight-linebasisbetween25%and100%whereGFCFisbetweenthresholdandmaximumperformance.

TSRistheaggregateofsharepricegrowthanddividendspaid(assumingreinvestmentofthosedividendsintheCompany’ssharesduringthethree-yearperformanceperiod).TheaveragingperiodforthedeterminationoftheTSRperformanceconditionisthreemonths.

100%oftheportionoftheawardbasedonTSRwillvestifperformanceisinthetopquartileand25%oftheawardwillvestifperformanceisatthemedian.Whereperformanceisbetweenthemedianandtopquartile,awardswillvestonastraight-linebasisbetweenthemedianandtopquartile.NoshareswillbereleasediftheCompany’sTSRperformanceisbelowthemedian.

TheCommitteemustalsobesatisfiedthattheunderlyingfinancialperformanceoftheGroupjustifiesthevestingofanaward.CalculationsoftheachievementofthetargetsareindependentlyperformedandareapprovedbytheCommittee.

TheCommitteeconsidersTSRandGFCFastheperformanceconditionswhichmostcloselyaligntheinterestsofparticipantswiththoseofshareholders.The2010LTIPrewardstheachievementofGFCFtargets(whicharekeybusinesstargetsfortheGroup)aswellastheCompany’srelativeTSRoutperformanceagainstadefinedlistofcomparatorcompanies.

Ifaparticipantceasestobeanemployee,unvestedawardswillnormallylapseunlesstheCommitteedeterminesinitsabsolutediscretion,inwhichcaseitshallpermitawardstocontinueandbesatisfied,subjecttotheachievementoftheperformancecondition.In suchcircumstances,anysharesvestingwillbeproratedbasedontheperiodofserviceunlessotherwisedeterminedbytheCommittee.Intheeventofachangeofcontrol,anyunvestedawardswillvestimmediately,subjecttosatisfactionofperformanceconditionsandreductiononatime-apportionmentbasis.

InthecaseofintendedfraudormisconductbyaparticipantwhichcontributestoanerrorinfinancialinformationthatmateriallyaffectstheCompany’ssharevalue,theCompanywillbeentitledtorecoverthevalueofanysharesreleasedorthepaymentofcashequivalentsunderthe2010LTIP.Benefitsunderthe2010LTIParenotpensionable.

ThetablebelowsetsoutthepercentageofeachawardmadetoExecutiveDirectorswithinthelastfiveyearswhichhasvestedandthepercentageofeachextantaward,haditvestedon30September2011:

Long-Term Incentive Plan performance Yearofaward Maturitydate

Performanceconditions TSRposition

TSRpercentagevestedonmaturityorindicativevestingpercentage

2006–2007 1October2009 TSR/GFCF1 5 100%2007–2008 1October2010 TSR/GFCF 5 100%2008–2009 1October2011 TSR/GFCF 11 100%2009–2010 1October2012 TSR/GFCF 13(performanceafter24months) 100%(performanceafter24months)2010–2011 1October2013 TSR/GFCF 46(performanceafter12months) 0%(performanceafter12months)

1Asreportedin2008,followingthesaleoftheSelectavendingbusinessinJuly2007,theGFCFtargetwasadjustedinordertomaintainthosetargetsoriginallysetinrespectoftheremainingbusiness.


Directors’ interests in the long-term incentive plans DetailsofexistingawardsasatthedateofthisReportandawardsconditionallymadeunderthelong-termincentiveplanstotheExecutiveDirectorsinofficeduringtheyearended30September2011areshowninthetablebelow:

NameofDirector

Asat30Sep

2010:numberof

shares

Awardedduring

theyear:numberof

shares

Releasedduring

theyear:numberof

shares

Lapsedduring

theyear:numberof

shares

Asat30Sep

2011:numberof

shares

Marketprice

atdateofaward:

penceDateofaward

Maturitydate

RichardCousins 529,800 – 529,800 – – 322.75 20Dec2007 1Oct2010381,540 – – – 381,540 306.25 28Nov2008 1Oct2011350,182 – – – 350,182 440.00 1Dec2009 1Oct2012

– 321,678 – – 321,678 548.00 25Nov2010 1Oct2013

1,261,522 321,678 529,800 – 1,053,400

GaryGreen 323,522 – 323,522 – – 322.75 20Dec2007 1Oct2010256,856 – – – 256,856 306.25 28Nov2008 1Oct2011269,198 – – – 269,198 440.00 1Dec2009 1Oct2012

– 185,630 – – 185,630 548.00 25Nov2010 1Oct2013

849,576 185,630 323,522 – 711,684

AndrewMartin 331,126 – 331,126 – – 322.75 20Dec2007 1Oct2010228,924 – – – 228,924 306.25 28Nov2008 1Oct2011210,108 – – – 210,108 440.00 1Dec2009 1Oct2012

– 144,754 – – 144,754 548.00 25Nov2010 1Oct2013

770,158 144,754 331,126 – 583,786

50%ofeachawardisbasedonathree-yearGFCFtarget,and50%isbasedongrowthintheCompany’sTSRrelativetotheFTSE100,excludingitsfinancialservicesconstituents.

AggregategrossgainsrealisedbyMessrsCousins,MartinandGreenwere£6,759,604intheyearended30September2011.ThesharepriceatthetimeofreleaseofMrCousin’sawardwas576.50ppershare,and566.00ppershareatthetimeofreleaseofMessrsMartin’sandGreen’sawards.Themarketpriceon17November2011,theprovisionaldateofvestingoftheawardmadeon28November2008,was568.00pence.Allawardsweregrantedfornilconsideration.Thehighestmid-marketpriceoftheCompany’sordinarysharesduringtheyearwas612.00penceandthelowestwas511.50pence.Theyearendpricewas521.00pence.

Compass Group Share Option Plan 2010 (‘the CSOP 2010’)EligibleseniorexecutivesareabletoparticipateintheCSOP2010.OptionsgrantedundertheplanareexercisableinfullorpartsubjecttotheachievementofGFCFperformancetargetsoverathree-yearperiod.TheCSOP2010wasapprovedbyshareholdersin2010andfurtherdetailsaresetoutinthe2010AnnualReport,whichisavailableontheCompany’swebsiteatwww.compass-group.com.NoExecutiveDirectorsorPersonsDischargingManagerialResponsibility(‘PDMRs’)areeligibletoparticipate.

All-employee share schemesTheCompanyoperatesanHMRevenue&CustomsUKapprovedsharepurchasescheme,underwhichUKemployeescaninvestuptoamaximumof£125permonthtobuysharesintheCompanyatmarketvalue.Theschemeisnotsubjecttoperformanceconditions.NoExecutiveDirectorsorPDMRswillparticipate.

Superseded share plansCompass Group Long-Term Incentive Plan (‘the 2000 LTIP’)Long-termincentiveplanawardspriorto2010weremadeunderthe2000LTIP.Underthe2000LTIP,executivesreceivedaconditionalawardofsharesofuptoanannualmaximumof200%ofbasesalarywhichwouldvestafterasinglethree-yearperformanceperiod,subjecttotheachievementofstretchingperformanceconditions.50%ofanyawardmadeunderthe2000LTIPwasbasedonGFCFand50%ontheCompany’sTSR.Furtherdetailsofthe2000LTIPmaybefoundinthe2010AnnualReport.DetailsofthenumberofexistingawardsheldbyDirectorsunderthe2000LTIPareincludedinthetableabove.

Other discretionary share plansAwardspriorto2005weremadeundertheCompassGroupBonusMatchingSharesPlan(‘theMSP’)andtheCompassGroupShareOptionPlan(‘theCSOP2000’).Furtherdetailsoftheplansmaybefoundinprioryears’AnnualReports.NofurtherawardscanbemadeundertheCSOP2000whichexpiredon27July2010.ShareholderapprovalwillbesoughtshouldtheCompanywishtomakeanyfurtherawardstoExecutiveDirectorsundertheMSP.

TherearenooutstandingawardsundertheMSP.ExistingrightsundertheCSOP2000remainandmayresultinthevestingoffurthersharesinthecapitaloftheCompany.UndertheCSOP2000,ExecutiveDirectorswereeligibletoreceiveawardsequatingtoanannualmaximumof200%ofbasicsalary,atanexercisepricenotlowerthanthemarketvalueoftheCompany’ssharesonthedaypriortogrant.Optionswouldnormallybeexercisablebetweenthethirdandtenthanniversariesofthedateofgrant,onaslidingscale,subjecttosatisfactionofanearningspershareperformancecondition,afterwhichtheywouldlapse.DetailsofthenumberofoptionsheldbyDirectorsinofficeduringtheyearundertheCSOP2000areshowninthetableonpage58.


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Directors’ interests in share options

NameofDirector

Asat30Sep

2010:numberof

shares

Exercisedduringthe

year:numberof

shares

Lapsedduring

theyear:numberof

shares

Asat30Sep

2011:numberof

shares

Exerciseprice:

pence Normalexerciseperiod

GaryGreen 350,000 350,000 – – 430.00 19Sep2004–18Sep2011350,000 – – 350,000 422.00 23May2005–22May2012

700,000 350,000 – 350,000

Ifaverageearningspersharegrowthisatleast6%overathree-yearperiodbetweengrantandexercise,onethirdofsharesunderoptionbecomeexercisable.Optionsareexercisableinfullat12%growthandonastraight-linebasisinbetween.

TheaggregategrossgainrealisedbyMrGreenwas£554,750intheyearended30September2011.Nooptionsweregrantedduringtheyearended30September2011.EarningspersharemeasureswereadjustedtoachieveconsistencybetweenIFRSandUKGAAPreporting.Thehighestmid-marketpriceoftheCompany’sordinarysharesduringtheyearwas612.00penceandthelowestwas511.50pence.Theyearendpricewas521.00pence.

Dilution limitsAlloftheCompany’sequity-basedincentiveplansincorporatethecurrentAssociationofBritishInsurers(‘ABI’)Guidelinesonheadroomwhichprovidethatoveralldilutionunderallplansshouldnotexceed10%overa10-yearperiodinrelationtotheCompany’sissuedsharecapital(orre-issueoftreasuryshares),withafurtherlimitationof5%inany10-yearperiodforexecutiveplans.

TheCommitteeregularlymonitorsthepositionandpriortothemakingofanyawardconsiderstheeffectofpotentialvestingofoptionsorshareawardstoensurethattheCompanyremainswithintheselimits.Anyawardswhicharerequiredtobesatisfiedbymarketpurchasedsharesareexcludedfromsuchcalculations.Notreasuryshareswereutilisedintheyearended30September2011.

Asat30September2011,theCompany’sheadroomposition,whichremainswithincurrentABIGuidelines,wasasshowninthechartbelow.

Scheme limits headroom

10% in 10 years Headroom 4.35% Discretionary options 2.95% LTIP 0.68% All-Employee 2.02%

5% in 10 years Headroom 1.37% Discretionary options 2.95% LTIP 0.68%

Total shareholder returnTheperformancegraphbelowshowstheCompany’sTSRperformanceagainsttheperformanceoftheFTSE100overthefive-yearperiodto30September2011.TheFTSE100IndexhasbeenchosenasabroadequitymarketindexofwhichtheCompanyhasbeenaconstituentmemberthroughouttheperiod.

50

100

150

200

Sep2011

Sep2010

Sep2009

Sep2008

Sep2007

Sep2006

Total return indices – Compass Group vs FTSE 100—— Compass —— FTSE 100

Executive Directors’ service agreementsItistheCompany’spolicythatservicecontractsfortheExecutiveDirectorshavenofixedtermbutarecapableofterminationon12months’noticefromtheCompanyandsixmonths’noticefromtheDirector(12monthsforRichardCousins).TheCompanyalsoretainstherighttoterminatethecontractimmediatelybymakingapaymentinlieuofnoticeequalto12months’pay,on-targetbonus,pensionsupplementandanamountequalto10%ofbasicpayinrespectofbenefits,tobepaidinmonthlyinstalments,subjecttoanobligationontheDirectortomitigatehisloss,suchthatpaymentsmayeitherreduceorceasecompletelyincircumstanceswherethedepartingExecutiveDirectorgainsnewemployment.Nospecialprovisionsapplyintheeventofachangeofcontrol.


Directors’serviceagreementswerereviewedbytheCommitteein2007.TheCommitteeissensitivetoshareholders’concernsregardingbonuspaymentstoDirectorsduringtheirnoticeperiod.ItbelievestheobligationtomitigateadequatelyaddressestheissueandhasalsoconfirmedthatfuturecontractsfornewExecutiveDirectorsshouldnotincludeanelementofbonusinrespectofthenoticeperiod.

Servicecontractsoutlinethecomponentsofremunerationpaidtotheindividualbutdonotprescribehowremunerationlevelsaretobemodifiedfromyeartoyear.

TheExecutiveDirectorsholdserviceagreementsassetoutbelow:

Dateofcontract

RichardCousins 22November2007GaryGreen 27November2007AndrewMartin 27November2007

External appointmentsExecutiveDirectorsmaytakeuponenon-executivedirectorshipoutsideoftheGroup,providedthatsuchappointmentisnotlikelytoleadtoaconflictofinterest,subjecttotheBoard’sapproval.Itisrecognisedthatnon-executivedutiescanbroadenexperienceandknowledgewhichcanbenefittheCompany.RichardCousinsandAndrewMartinreceivedfeesof£85,000and£4,583duringtheyearinrespectoftheirDirectorshipsofReckittBenckiserGroupplcandeasyJetplcrespectively,whichtheywerepermittedtoretain.

Share ownership guidelinesInorderthattheirinterestsarealignedwiththoseofshareholders,ExecutiveDirectorsareexpectedtobuildupandmaintainapersonalshareholdingintheCompany.

Theshareownershipguidelineswerereviewedwitheffectfrom1 October2010.Undertheguidelines,theChiefExecutiveisrequiredtoholdapersonalshareholdingequaltotwicehisbasicsalary.OtherExecutiveDirectorsarerequiredtoholdapersonalshareholdingequaltooneandahalftimestheirbasicsalary,andmembersoftheExecutiveCommitteeonetimestheirbasicsalary.Non-ExecutiveDirectorsarerequiredtoholdapersonalshareholdingequaltoonetimestheirbasicfee.

ForExecutiveDirectorsandmembersoftheExecutiveCommittee,theguidelineshareholdingmaybeachievedbyretainingsharesreceivedasaresultofparticipatingintheCompany’sshareplans.Theprogrammespecificallyexcludestheneedtomakeapersonalinvestmentshouldawardsnotvest.Non-ExecutiveDirectorsareexpectedtopurchasesharesequatingtoaminimumvalueofonethirdoftheirnetoftaxfeeeachyearuntiltheguidelineismet.Therequiredlevelofshareholdingisexpectedtobeachievedwithinafour-yearperiod,commencingon1October2010oronthedateofappointmenttotheBoardortheExecutiveCommittee.

TheCommitteereviewedandnotedthattheguidelinesweresatisfiedbyallDirectorsduringtheyear.TheDirectors’currentshareholdingsaresetoutonpage45.

ChairmanThefeefortheChairmanisreviewedannuallybytheCommitteeeachJunewithanyincreasetakingeffecton1July.Followingadetailedbenchmarkingexerciseduringtheyear,theChairman’sfeeof£432,806perannumwasdeterminedtobeappropriateandnoincreasewaseffected.TheChairmanhasaletterofengagementforaperiodofthreeyears,whichisrenewableatthree-yearintervalsbymutualconsentandwhichisterminablewithoutcompensationonsixmonths’noticefromtheCompanyorfromtheChairman.

TheChairmanisnoteligibleforpensionschememembership,bonusorincentivearrangements.Heisentitledtotheprovisionoflifeandmedicalinsuranceforhimselfandhisspouse,financialplanningassistanceandcarbenefit.

Policy on remuneration of Non-Executive DirectorsThefeesfortheNon-ExecutiveDirectorsarereviewedanddeterminedbytheBoardeachyear.Noincreaseshadbeenmadesince1October2009.FollowingadetailedbenchmarkingexerciseandareviewofBoardCommitteemembershipduringtheyear,theNon-ExecutiveDirectors’feesfortheyearended30September2011wereincreasedandareasshowninthetableonpage55.

EachoftheNon-ExecutiveDirectorswasappointedtoactoneachBoardCommitteewitheffectfrom10May2011andsuchadditionalmembershipisincludedwithintherevisedfees.Afeeof£22,000perannumispayablewhereaNon-ExecutiveDirectoractsasChairmanofeithertheAuditorRemunerationCommittee(2010:£20,000and£15,000respectively),and£12,000ispayabletotheChairmanoftheCorporateResponsibilityCommittee(2010:£7,500).Anadditionalfeeof£27,000perannumisalsopayablefortheDirectornominatedasSeniorIndependentNon-ExecutiveDirector(2010:£25,000).Non-ExecutiveDirectorsarenoteligibleforpensionschememembership,bonusorincentivearrangements.

Non-ExecutiveDirectorshavelettersofengagementsettingouttheirdutiesandthetimecommitmentexpected.Theyareappointedforaninitialperiodofthreeyears,afterwhichtheappointmentisrenewableatthree-yearintervalsbymutualconsent.InaccordancewiththeCode,allDirectorssubmitthemselvesforannualre-electionbyshareholders.Detailsoftheirappointments,whichareterminablewithoutcompensation,aresetoutinthetablebelow.

Non-ExecutiveDirector

Originaldateofappointment

Letterofengagement

Totallengthofserviceat30Sep

2011

SirRoyGardner 1Oct2005 15Sep2005(rev.8May2009)

6years

SirJamesCrosby 17Feb2007 16Feb2007(rev.21Sep2009)

4years,7months

JohnBason 21Jun2011 10May2011 3monthsSusanMurray 11Oct2007 11Oct2007

(rev.16Mar2010)4years

DonRobert 8May2009 8May2009 2years,5months

SirIanRobinson 1Dec2006 1Dec2006(rev.21Sep2009)

4years,10months


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Other senior executives and managementAnumberofseniorexecutivesandtheExecutiveDirectorscomprisetheExecutiveCommittee.ThesekeymanagementrolesinfluencetheabilityoftheGrouptomeetitsstrategictargets.TheCommitteehasregardtotheremunerationlevelandstructureofthisgroupwhosetotalremunerationincludingsalaryandothershort-termbenefits,target(orpar)bonusandtheexpectedvalueoflong-termincentivesissummarisedinthetablebelow:

Totalremunerationfortheyearended30September2011£000

Numberinband(2010inbrackets)

501–1,000 4(5)1,001–1,500 5(3)1,501–2,000 –(1)2,001–2,500 1(–)

OnbehalfoftheBoard

Sir James Crosby ChairmanoftheRemunerationCommittee23November2011


Consolidated financial statements

Directors’ responsibilitiesTheAnnualReportandAccountscomplieswiththeDisclosureandTransparencyRules(‘DTR’)oftheUnitedKingdom’sFinancialServicesAuthorityinrespectoftherequirementtoproduceanannualfinancialreport.

TheAnnualReportandAccountsistheresponsibilityof,andhasbeenapprovedby,theDirectors.

Weconfirmthattothebestofourknowledge:

• theconsolidatedfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(‘IFRS’);

• thefinancialstatementsgiveatrueandfairviewoftheassets,liabilities,financialpositionandprofitorlossoftheCompanyandtheundertakingsincludedintheconsolidationtakenasawhole;and

• theAnnualReportandAccountsincludesareviewofthedevelopmentandperformanceofthebusinessandthepositionoftheCompanyandtheundertakingsincludedintheconsolidationtakenasawhole,togetherwithadescriptionoftheprincipalrisksanduncertaintiesthattheyface.

OnbehalfoftheBoard

Mark J WhiteGeneralCounselandCompanySecretary23November2011

TheDirectorsareresponsibleforpreparingtheAnnualReportandtheconsolidatedfinancialstatements.TheDirectorsarerequiredtoprepareconsolidatedfinancialstatementsfortheGroupinaccordancewithInternationalFinancialReportingStandards(‘IFRS’).CompanylawrequirestheDirectorstopreparesuchfinancialstatementsinaccordancewithIFRS,theCompaniesAct2006andArticle4oftheIASRegulation.

InternationalAccountingStandard1requiresthatfinancialstatementspresentfairlyforeachfinancialyeartheGroup’sfinancialposition,financialperformanceandcashflows.Thisrequiresthefaithfulrepresentationoftheeffectsoftransactions,othereventsandconditionsinaccordancewiththedefinitionsandrecognitioncriteriaforassets,liabilities,incomeandexpensessetoutintheInternationalAccountingStandardsBoard’s‘FrameworkforthePreparationandPresentationofFinancialStatements’.In virtuallyallcircumstances,afairpresentationwillbeachievedbycompliancewithallapplicableInternationalFinancialReportingStandards.Directorsarealsorequiredto:

• properlyselectandapplyaccountingpolicies;• presentinformation,includingaccountingpolicies,

in a mannerthatprovidesrelevant,reliable,comparableandunderstandableinformation;and

• provideadditionaldisclosureswhencompliancewiththespecificrequirementsinIFRSisinsufficienttoenableuserstounderstandtheimpactofparticulartransactions,othereventsandconditionsontheentity’sfinancialpositionandfinancialperformance.

TheDirectorsareresponsibleforkeepingadequateaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompany,forsafeguardingtheassets,fortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularitiesandforthepreparationofaDirectors’ReportandDirectors’RemunerationReportwhichcomplywiththerequirementsoftheCompaniesAct2006.TheDirectors,havingpreparedthefinancialstatements,havepermittedtheAuditorstotakewhateverstepsandundertakewhateverinspectionstheyconsidertobeappropriateforthepurposeofenablingthemtogivetheirauditopinion.

TheDirectorsareresponsibleforthemaintenanceandintegrityoftheCompassGroupPLCwebsite.

LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.


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Independent auditor’s report to the members of Compass Group PLC

IntroductionWehaveauditedtheGroupfinancialstatementsofCompassGroupPLCfortheyearended30September2011whichcomprisetheconsolidatedincomestatement,theconsolidatedstatementofcomprehensiveincome,theconsolidatedbalancesheet,theconsolidatedcashflowstatement,theconsolidatedstatementofchangesinequity,theaccountingpoliciesandtherelatednotes1to36.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandInternationalFinancialReportingStandards(IFRSs)asadoptedbytheEuropeanUnion.

ThisReportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisReport,orfortheopinionswehaveformed.

Respective responsibilities of directors and auditorAsexplainedmorefullyintheDirectors’ResponsibilitiesStatement,thedirectorsareresponsibleforthepreparationoftheGroupfinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopinionontheGroupfinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.

Scope of the audit of the financial statementsAnauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:whethertheaccountingpoliciesareappropriatetotheGroup’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;thereasonablenessofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.Inaddition,wereadallthefinancialandnon-financialinformationintheAnnualReporttoidentifymaterialinconsistencieswiththeauditedfinancialstatements.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

Opinion on financial statementsInouropiniontheGroupfinancialstatements:• giveatrueandfairviewofthestateoftheGroup’saffairsas

at30September2011andofitsprofitfortheyearthenended;• havebeenproperlypreparedinaccordancewithIFRSsas

adoptedbytheEuropeanUnion;and• havebeenpreparedinaccordancewiththerequirementsofthe

CompaniesAct2006andArticle4oftheIASRegulation.

Opinion on other matters prescribed by the Companies Act 2006Inouropinion:• thepartoftheDirectors’RemunerationReporttobeauditedhas

beenproperlypreparedinaccordancewiththeCompaniesAct2006;and

• theinformationgivenintheDirectors’ReportforthefinancialyearforwhichthefinancialstatementsarepreparedisconsistentwiththeGroupfinancialstatements.

Matters on which we are required to report by exceptionWehavenothingtoreportinrespectofthefollowing:

UndertheCompaniesAct2006wearerequiredtoreporttoyouif,inouropinion:• thepartoftheDirectors’RemunerationReporttobeauditedisnot

inagreementwiththeaccountingrecordsandreturns;• certaindisclosuresofdirectors’remunerationspecifiedbylaware

notmade;or• wehavenotreceivedalltheinformationandexplanationswe

requireforouraudit.

UndertheListingRuleswearerequiredtoreview:• thedirectors’statementcontainedwithintheBusinessReviewin

relationtogoingconcern;• thepartoftheCorporateGovernanceStatementrelatingtothe

Company’scompliancewiththenineprovisionsoftheUKCorporateGovernanceCodespecifiedforourreview;and

• certainelementsofthereporttoshareholdersbytheBoardondirectors’remuneration.

Other mattersWehavereportedseparatelyontheParentCompanyfinancialstatementsofCompassGroupPLCfortheyearended30September2011.

Ian Waller (Senior Statutory Auditor)

forandonbehalfofDeloitteLLPCharteredAccountantsandStatutoryAuditorLondon,UnitedKingdom23November2011


Consolidated income statementfortheyearended30September2011

Notes

BeforeUK re-

organisation2011

£m

UK re-organisation

2011£m

Total2011

£m

Total2010

£m

Continuing operationsRevenue 1 15,833 – 15,833 14,468Operatingcosts 2 (14,768) (55) (14,823) (13,485)

Operating profit 1 1,065 (55) 1,010 983Shareofprofitofassociates 1,13 6 – 6 6

Total operating profit 1 1,071 (55) 1,016 989Financeincome 4 4 – 4 5Financecosts 4 (75) – (75) (86)Hedgeaccountingineffectiveness 4 (5) – (5) 4Changeinthefairvalueofinvestmentsandnon-controllinginterestputoptions 4 2 – 2 1Gainonremeasurementofjointventureinterestonacquisitionofcontrol 5 16 – 16 –

Profit before tax 1,013 (55) 958 913Incometaxexpense 6 (273) 9 (264) (246)

Profit for the year from continuing operations 1 740 (46) 694 667

Discontinued operationsProfit for the year from discontinued operations 7 40 – 40 13

Continuing and discontinued operationsProfit for the year 780 (46) 734 680

Attributable toEquityshareholdersoftheCompany 774 (46) 728 675Non-controllinginterests 6 – 6 5

Profit for the year 780 (46) 734 680

Basic earnings per share (pence)Fromcontinuingoperations 8 36.4p 35.3pFromdiscontinuedoperations 8 2.1p 0.7p

Fromcontinuinganddiscontinuedoperations 8 38.5p 36.0p

Diluted earnings per share (pence)Fromcontinuingoperations 8 36.1p 35.1pFromdiscontinuedoperations 8 2.1p 0.7p

Fromcontinuinganddiscontinuedoperations 8 38.2p 35.8p

Analysis of operating profitfortheyearended30September2011

Notes

Total2011 £m

Total2010£m

Continuing operationsUnderlyingoperatingprofitbeforeshareofprofitofassociates 1,085 997Shareofprofitofassociates 6 6

Underlyingoperatingprofit1 1,091 1,003Amortisationofintangiblesarisingonacquisition (12) (7)Acquisitiontransactioncosts (9) (5)Adjustmenttocontingentconsiderationonacquisition 1 –Share-basedpaymentsexpense–non-controllinginterestcalloption – (2)

OperatingprofitaftercostsrelatingtoacquisitionsanddisposalsbeforeUKre-organisation 1,071 989

UKre-organisation 2 (55) –

Total operating profit 1,016 989

1UnderlyingoperatingprofitexcludesUKre-organisation,amortisationofintangiblesarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisitionandshare-basedpaymentsexpense–non-controllinginterestcalloption.


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Notes2011

£m2010

£m

Profit for the year 734 680

Other comprehensive incomeCurrencytranslationdifferences 6 34Actuarialgains/(losses)onpost-retirementemployeebenefits 23 17 (57)Taxonitemsrelatingtothecomponentsofothercomprehensiveincome 6 (8) 12

Total other comprehensive income/(loss) for the year 15 (11)

Total comprehensive income for the year 749 669

Attributable toEquityshareholdersoftheCompany 743 664Non-controllinginterests 6 5

Total comprehensive income for the year 749 669

Consolidated statement of comprehensive incomefortheyearended30September2011



Consolidated statement of changes in equityfortheyearended30September2011

Attributable to equity shareholders of the Company

Share capital

£m

Share premium account

£m

Capital redemption

reserve £m

Own shares

£m

Other reserves

£m

Retained earnings

£m

Non- controlling

interests £m

Total £m

At1October2010 189 317 44 (1) 4,521 (2,002) 5 3,073

Profitfortheyear – – – – – 728 6 734

OthercomprehensiveincomeCurrencytranslationdifferences – – – – 6 – – 6Actuarialgains/(losses)onpost-retirement

employeebenefits – – – – – 17 – 17Taxonitemsrelatingtothecomponents

ofothercomprehensiveincome – – – – (3) (5) – (8)

Totalothercomprehensiveincome – – – – 3 12 – 15

Totalcomprehensiveincomefortheyear – – – – 3 740 6 749

Issueofshares(forcash) 1 30 – – – – – 31Fairvalueofshare-basedpayments – – – – 10 – – 10Taxonitemstakendirectlytoequity(note6) – – – – – 3 – 3ReleaseofLTIPawardsettledbyissue

ofnewshares – 6 – – (6) – – –Transferonexerciseofputoptions – – – – 1 (1) – –Otherchanges – – – – – – 3 3

190 353 44 (1) 4,529 (1,260) 14 3,869DividendspaidtoCompassshareholders

(note9) – – – – – (360) – (360)Dividendspaidtonon-controllinginterests – – – – – – (6) (6)

At30September2011 190 353 44 (1) 4,529 (1,620) 8 3,503

Other reserves

Share-based payment

reserve £m

Merger reserve

£m

Revaluation reserve

£m

Translation reserve

£m

Equity adjustment

for put options

£m

Total other reserves

£m

At1October2010 145 4,170 7 200 (1) 4,521

OthercomprehensiveincomeCurrencytranslationdifferences – – – 6 – 6Taxonitemsrelatingtothecomponentsofother

comprehensiveincome – – – (3) – (3)Totalothercomprehensiveincome – – – 3 – 3

Totalcomprehensiveincomefortheyear – – – 3 – 3

Fairvalueofshare-basedpayments 10 – – – – 10ReleaseofLTIPawardsettledbyissueofnewshares (6) – – – – (6)Transferonexerciseofputoptions – – – – 1 1

At30September2011 149 4,170 7 203 – 4,529

OwnsharesheldbytheGrouprepresent268,541sharesinCompassGroupPLC(2010:361,864shares).251,332sharesareheldbytheCompassGroupEmployeeShareTrust(‘ESOP’)and17,209sharesbytheCompassGroupLongTermIncentivePlanTrust(‘LTIPT’).Thesesharesarelistedonarecognisedstockexchangeandtheirmarketvalueat30September2011was£1.4million(2010:£1.9million).Thenominalvalueheldat30September2011was£26,854(2010:£36,186).

ESOPandLTIPTarediscretionarytrustsforthebenefitofemployeesandthesharesheldareusedtosatisfysomeoftheGroup’sliabilitiestoemployeesforshareoptions,sharebonusandlong-termincentiveplans.AllofthesharesheldbytheESOPandLTIPTarerequiredtobemadeavailableinthisway.

Themergerreservearosein2000followingthedemergerfromGranadaCompassplc.Theequityadjustmentforputoptionsarosein2005ontheaccountingfortheoptionsheldbytheGroup’snon-controllingpartnersrequiringtheGrouptopurchasethosenon-controllinginterests.


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Consolidated statement of changes in equityfortheyearended30September2011

AttributabletoequityshareholdersoftheCompany

Sharecapital

£m

Sharepremiumaccount

£m

Capitalredemption

reserve£m

Ownshares

£m

Otherreserves

£m

Retainedearnings

£m

Non-controllinginterests

£mTotal

£m

At1October2009 185 215 44 (2) 4,489 (2,395) 9 2,545

Profitfortheyear – – – – – 675 5 680

OthercomprehensiveincomeCurrencytranslationdifferences – – – – 34 – – 34Actuarialgains/(losses)onpost-retirement

employeebenefits – – – – – (57) – (57)Taxonitemsrelatingtothecomponentsof

othercomprehensiveincome – – – – (6) 18 – 12Totalothercomprehensiveincome – – – – 28 (39) – (11)

Totalcomprehensiveincomefortheyear – – – – 28 636 5 669

Issueofshares(forcash) 4 93 – – – – – 97Fairvalueofshare-basedpayments – – – – 9 – – 9Taxonitemstakendirectlytoequity(note6) – – – – – 17 – 17Share-basedpaymentsexpense–

non-controllinginterestcalloption – – – – – 2 – 2ReleaseofLTIPawardsettledbyissue

ofnewshares – 9 – – (9) – – –Releaseofsharebonusawardsettledincash

orexistingsharespurchasedinthemarket – – – – (1) – – (1)Transferonexerciseofputoptions – – – – 5 2 – 7Buy-outofnon-controllinginterests – – – – – (6) (5) (11)

189 317 44 (2) 4,521 (1,744) 9 3,334DividendspaidtoCompassshareholders

(note9) – – – – – (258) – (258)Dividendspaidtonon-controllinginterests – – – – – – (4) (4)(Increase)/decreaseinownsharesheldfor

staffcompensationschemes1 – – – 1 – – – 1

At30September2010 189 317 44 (1) 4,521 (2,002) 5 3,073

1ThesesharesareheldintrustandareusedtosatisfysomeoftheGroup’sliabilitiestoemployeesforshareoptions,sharebonusandlong-termincentiveplans.

Other reserves

Share-basedpayment

reserve£m

Mergerreserve

£m

Revaluationreserve

£m

Translationreserve

£m

Equityadjustment

forputoptions

£m

Totalotherreserves

£m

At1October2009 146 4,170 7 172 (6) 4,489

OthercomprehensiveincomeCurrencytranslationdifferences – – – 34 – 34Taxonitemsrelatingtothecomponentsofother

comprehensiveincome – – – (6) – (6)

Totalothercomprehensiveincome – – – 28 – 28

Totalcomprehensiveincomefortheyear – – – 28 – 28

Fairvalueofshare-basedpayments 9 – – – – 9ReleaseofLTIPawardsettledbyissueofnewshares (9) – – – – (9)Releaseofsharebonusawardsettledincashorexisting

sharespurchasedinthemarket (1) – – – – (1)Transferonexerciseofputoptions – – – – 5 5

At30September2010 145 4,170 7 200 (1) 4,521



Consolidated balance sheetasat30September2011

Notes2011

£m2010

£m

Non-current assetsGoodwill 10 4,060 3,833Otherintangibleassets 11 719 570Property,plantandequipment 12 655 581Interestsinassociates 13 79 32Otherinvestments 14 41 37Tradeandotherreceivables 16 77 72Deferredtaxassets* 6 240 296Derivativefinancialinstruments** 20 64 81Non-currentassets 5,935 5,502

Current assetsInventories 17 270 238Tradeandotherreceivables 16 2,030 1,830Taxrecoverable* 36 31Cashandcashequivalents** 18 1,110 643Derivativefinancialinstruments** 20 29 10Currentassets 3,475 2,752

Total assets 9,410 8,254

Current liabilitiesShort-termborrowings** 19 (711) (148)Derivativefinancialinstruments** 20 (3) (5)Provisions 22 (138) (130)Currenttaxliabilities* (238) (273)Tradeandotherpayables 21 (2,900) (2,683)Currentliabilities (3,990) (3,239)

Non-current liabilitiesLong-termborrowings** 19 (1,247) (1,200)Derivativefinancialinstruments** 20 (3) (2)Post-employmentbenefitobligations 23 (292) (389)Provisions 22 (301) (302)Deferredtaxliabilities* 6 (35) (15)Tradeandotherpayables 21 (39) (34)Non-currentliabilities (1,917) (1,942)

Total liabilities (5,907) (5,181)

Net assets 3,503 3,073

EquitySharecapital 24 190 189Sharepremiumaccount 353 317Capitalredemptionreserve 44 44Less:Ownshares (1) (1)Otherreserves 4,529 4,521Retainedearnings (1,620) (2,002)

Total equity shareholders’ funds 3,495 3,068

Non-controlling interests 8 5

Total equity 3,503 3,073

*Componentofcurrentanddeferredtaxes.**Componentofnetdebt.

ApprovedbytheBoardofDirectorson23November2011andsignedontheirbehalfby

Richard J Cousins,DirectorAndrew D Martin,Director


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Consolidated cash flow statementfortheyearended30September2011

Notes2011

£m2010

£m

Cash flow from operating activitiesCashgeneratedfromoperations 27 1,298 1,330One-offemployercontributionstopost-employmentbenefitobligations (60) –Interestpaid (56) (75)Premiumpaidonoptions (1) –Interestelementoffinanceleaserentals (2) (2)Taxreceived 24 24Taxpaid (233) (227)

Netcashfrom/(usedin)operatingactivitiesofcontinuingoperations 970 1,050Netcashfrom/(usedin)operatingactivitiesofdiscontinuedoperations 28 (6) 3Net cash from/(used in) operating activities 964 1,053

Cash flow from investing activitiesPurchaseofsubsidiarycompaniesandinvestmentsinassociatedundertakings1 26 (426) (205)Proceedsfromsaleofsubsidiarycompaniesandassociatedundertakings–discontinuedactivities1 7 – (9)Taxonprofitsfromsaleofsubsidiarycompaniesandassociatedundertakings (3) –Purchaseofintangibleassets 11 (126) (122)Purchaseofproperty,plantandequipment (244) (207)Proceedsfromsaleofproperty,plantandequipment/intangibleassets 30 19Purchaseofotherinvestments 14 (2) (3)Dividendsreceivedfromassociatedundertakings 13 7 6Interestreceived 4 5

Netcashfrom/(usedin)investingactivitiesbycontinuingoperations (760) (516)Netcashfrom/(usedin)investingactivitiesbydiscontinuedoperations 28 – –Net cash from/(used in) investing activities (760) (516)

Cash flow from financing activitiesProceedsfromissueofordinarysharecapital 31 97Netincrease/(decrease)inborrowings 29 610 (306)Repaymentofobligationsunderfinanceleases 29 (12) (15)Equitydividendspaid 9 (360) (258)Dividendspaidtonon-controllinginterests (6) (4)

Netcashfrom/(usedin)financingactivitiesbycontinuingoperations 263 (486)Netcashfrom/(usedin)financingactivitiesbydiscontinuedoperations 28 – –Net cash from/(used in) financing activities 263 (486)

Cash and cash equivalentsNet increase/(decrease) in cash and cash equivalents 29 467 51Cashandcashequivalentsatbeginningoftheyear 29 643 588Currencytranslationgains/(losses)oncashandcashequivalents 29 – 4

Cash and cash equivalents at end of the year 29 1,110 643

1Netofcashacquiredordisposedandpaymentsreceivedormadeunderwarrantiesandindemnities.

Reconciliation of free cash flow from continuing operationsfortheyearended30September2011

2011 £m

2010£m

Net cash from operating activities of continuing operations 970 1,050One-offemployercontributionstopost-employmentbenefitobligations 60 –Purchaseofintangibleassets (126) (122)Purchaseofproperty,plantandequipment (244) (207)Proceedsfromsaleofproperty,plantandequipment/intangibleassets 30 19Purchaseofotherinvestments (2) (3)Dividendsreceivedfromassociatedundertakings 7 6Interestreceived 4 5Dividendspaidtonon-controllinginterests (6) (4)

Free cash flow from continuing operations 693 744



Accounting policiesfortheyearended30September2011

IntroductionThesignificantaccountingpoliciesadoptedinthepreparationoftheGroup’sfinancialstatementsaresetoutbelow.

A Accounting convention and basis of preparationThefinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(‘IFRS’)andInternationalFinancialReportingInterpretationsCommittee(‘IFRIC’)interpretationsasadoptedbytheEuropeanUnionthatareeffectivefortheyearended30September2011.Theyhavebeenpreparedunderthehistoricalcostconventionasmodifiedbytherevaluationofcertainfinancialinstruments.

Thefinancialstatementshavebeenpreparedonagoingconcernbasis.ThisisdiscussedintheBusinessReviewonpage27.

TherehavebeenonlyminorimprovementstoexistingInternationalFinancialReportingStandardsandinterpretationsthatareeffectiveforthefirsttimeinthecurrentfinancialyearwhichhavebeenadoptedbytheGroupwithnoimpactonitsconsolidatedresultsorfinancialposition.

Certainnewstandards,amendmentsandinterpretationsofexistingstandardshavebeenpublishedthat,oncetheyhavebeenendorsedbytheEuropeanUnion,willbemandatoryfortheGroup’saccountingperiodbeginningon1October2011orforlaterperiods.TheGroupdoesnotcurrentlybelievethattheadoptionofthesestandardsorinterpretationswouldhaveamaterialeffectontheconsolidatedresultsorfinancialpositionoftheGroupunlessstatedotherwise.

IFRS9‘Financialinstruments’(notyetendorsedbytheEuropeanUnion)removesthemultipleclassificationandmeasurementmodelsforfinancialassetsrequiredbyIAS39andintroducesamodelthathasonlytwoclassificationcategories:amortisedcostandfairvalue.Classificationisdrivenbythebusinessmodelformanagingthefinancialassetsandthecontractualcashflowcharacteristicsofthoseassets.TheaccountingandpresentationforfinancialliabilitiesandforderecognisingfinancialinstrumentsisrelocatedfromIAS39withoutanysignificantchanges.TheGroupiscurrentlyassessingtheimpactthisstandardwouldhaveonitsconsolidatedresultsandfinancialposition.

IFRS10‘Consolidatedfinancialstatements’(notyetendorsedbytheEuropeanUnion)replacestheguidanceofcontrolandconsolidationinIAS27‘Consolidatedandseparatefinancialstatements’andSIC12‘Consolidation–specialpurposeentities’.Thecoreprinciplethataconsolidatedentitypresentsaparentanditssubsidiariesasiftheywereasingleentityremainsunchanged,asdothemechanicsofconsolidation.

IFRS11‘Jointarrangements’(notyetendorsedbytheEuropeanUnion)requiresjointarrangementstobeaccountedforasajointoperationorasajointventuredependingupontherightsandobligationsofeachpartytothearrangement.Proportionateconsolidationforjointventureswillbeeliminatedandequityaccountingwillbecompulsory.Itisanticipatedthattheapplicationofthestandard(whichwillbeeffectivefortheGroupintheyearending30September2014)willresultinadecreasetoGrouprevenues,expenses,assetsandliabilitiesbutwillhavenoimpactontheGroup’snetprofitornetassets.DetailsoftheGroup’sjointventurearrangementsaresetoutinnote15.

IFRS12‘Disclosureofinterestsinotherentities’(notyetadoptedbytheEuropeanUnion)requiresenhanceddisclosuresofthenature,

risksandfinancialeffectsassociatedwiththeGroup’sinterestsinsubsidiaries,associatesandjointventures.

IFRS13‘Fairvaluemeasurement’(notyetadoptedbytheEuropeanUnion)explainshowtomeasurefairvalueandaimstoenhancefairvaluedisclosures.Thestandarddoesnotchangethemeasurementoffairvaluebutcodifiesitinoneplace.

AmendmentstoIAS19‘Employeebenefits’(notyetadoptedbytheEuropeanUnion)changeanumberofdisclosurerequirementsforpost-employmentarrangementsandrestrictstheoptionscurrentlyavailableonhowtoaccountfordefinedbenefitpensionplans.ThemostsignificantchangethatwillimpacttheGroupisthattheamendmentrequiresexpectedreturnsonpensionplanassets,currentlycalculatedbasedonmanagement’sexpectationofexpectedreturnstobereplacedbyacreditonthepensionplanassetscalculatedattheliabilitydiscountrate.TheGroupdoesnotexpectthatthischangewillhaveamaterialimpactoneitherfinancecostsortheGroup’snetassets.

AmendmenttoIAS1‘Presentationoffinancialstatements’(effectivefortheGroupintheyearending30September2013).

IAS24(revised)‘Relatedpartydisclosures’

IAS27(revised)‘Separatefinancialstatements’

IAS28(revised)‘Associatesandjointventures’

AmendmenttoIAS34‘Interimfinancialreporting’

AmendmenttoIFRS7‘Disclosureofthefinancialeffectoftheextenttowhichcollateralandothercreditenhancementsmitigatecreditrisk’

AmendmenttoIFRS7‘Disclosures–transfersoffinancialassets’

AmendmenttoIFRIC13‘Customerloyaltyprogrammes’

AmendmenttoIFRIC14‘IAS19:Thelimitondefinedbenefitassets,minimumfundingrequirementsandtheirinteraction’

B Use of assumptions and estimatesThepreparationoftheconsolidatedfinancialstatementsrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheapplicationofpoliciesandreportedamountsofassetsandliabilities,incomeandexpenses.Theseestimatesandassumptionsarebasedonhistoricalexperienceandotherfactorsthatarebelievedtobereasonableunderthecircumstances.Actualresultsmaydifferfromtheseestimates.Theestimatesandassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingvalueofassetsandliabilitiesinthenextfinancialyeararediscussedbelow.

Income taxesTheGroupissubjecttoincometaxesinnumerousjurisdictions.Significantjudgmentisrequiredindeterminingtheworldwideprovisionforincometaxesastherearemanytransactionsandcalculationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.TheGrouprecognisesliabilitiesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillimpacttheresultsfortheyearandtherespectiveincometaxanddeferredtaxprovisionsintheyearinwhichsuchdeterminationismade.


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GoodwillTheGrouptestsannuallywhethergoodwillhassufferedanyimpairmentinaccordancewiththeaccountingpolicysetoutinsectionM.Therecoverableamountsofcash-generatingunitshavebeendeterminedbasedonvalueinusecalculations.Thesecalculationsrequiretheuseofestimatesandassumptionsconsistentwiththemostup-to-datebudgetsandplansthathavebeenformallyapprovedbymanagement.Thekeyassumptionsusedforthevalueinusecalculationsaresetoutinnote10tothefinancialstatements.

Post-employment benefitsDefinedbenefitschemesarereappraisedannuallybyindependentactuariesbasedonactuarialassumptions.Significantjudgmentisrequiredindeterminingtheseactuarialassumptions.Theprincipalassumptionsusedaredescribedinnote23tothefinancialstatements.

C Basis of consolidationTheconsolidatedfinancialstatementsconsistofthefinancialstatementsoftheCompany,entitiescontrolledbytheCompany(itssubsidiaries)andtheGroup’sshareofinterestsinjointventuresandassociatesmadeupto30Septembereachyear.

D Subsidiaries, associates and joint venturesSubsidiariesSubsidiariesareentitiesoverwhichtheGrouphasthepowertogovernthefinancialandoperatingpolicies.Theexistenceandeffectofpotentialvotingrightsthatarecurrentlyexercisableorconvertibleareconsideredwhenassessingcontrol.

Joint venturesJointventuresareentitiesinwhichtheGroupholdsaninterestonalong-termbasisandwhicharejointlycontrolledbytheGroupandotherventurersunderacontractualagreement.TheGroup’sshareisaccountedforusingtheproportionateconsolidationmethod.

TheconsolidatedincomestatementandbalancesheetincludetheGroup’sshareoftheincome,expenses,assetsandliabilities.

AssociatesAssociatesareundertakingsthatarenotsubsidiariesorjointventuresoverwhichtheGrouphassignificantinfluenceandcanparticipateinfinancialandoperatingpolicydecisions.Investmentsinassociatedundertakingsareaccountedforusingtheequitymethod.TheconsolidatedincomestatementincludestheGroup’sshareoftheprofitaftertaxoftheassociatedundertakings.InvestmentsinassociatesincludegoodwillidentifiedonacquisitionandarecarriedintheGroupbalancesheetatcostpluspost-acquisitionchangesintheGroup’sshareofthenetassetsoftheassociate,lessanyimpairmentinvalue.

AdjustmentsWherenecessary,adjustmentsaremadetothefinancialstatementsofsubsidiaries,associatesandjointventurestobringtheaccountingpoliciesusedinlinewiththoseusedbytheGroup.

Acquisitions and disposalsTheresultsofsubsidiaries,associatesorjointventuresacquiredordisposedofduringtheperiodareincludedintheconsolidatedincomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal,asappropriate.

Intra-group transactionsAllintra-grouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.WhereaGroupsubsidiarytransactswithajointventureoftheGroup,profitsorlossesareeliminatedtotheextentoftheGroup’sinterestintherelevantjointventure.

E AcquisitionsTheacquisitionofsubsidiariesisaccountedforusingthepurchasemethod.Thecostofacquisitionismeasuredattheaggregateofthefairvalues,atthedateofexchange,ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissued.

Identifiableassetsacquiredandliabilitiesandcontingentliabilitiesassumedarerecognisedatthefairvaluesattheacquisitiondate,exceptfornon-currentassets(ordisposalgroups)thatareclassifiedasheldforsalewhicharerecognisedandmeasuredatfairvaluelesscoststosell.

ThecostoftheacquisitioninexcessoftheGroup’sinterestinthenetfairvalueoftheidentifiablenetassetsacquiredisrecordedasgoodwill.Ifthecostoftheacquisitionislessthanthefairvalueofthenetassetsofthesubsidiaryacquired,thedifferenceisrecogniseddirectlyintheincomestatement.

F Foreign currencyTheconsolidatedfinancialstatementsarepreparedinpoundsSterling,whichisthefunctionalcurrencyoftheCompany.

InpreparingthefinancialstatementsofindividualcompanieswithintheGroup,transactionsincurrenciesotherthanpoundsSterlingarerecordedattheratesofexchangeonthedatesofthetransaction.Ateachbalancesheetdate,monetaryassetsandliabilitiesthataredenominatedinforeigncurrenciesareretranslatedattheratesonthebalancesheetdate.Gainsandlossesarisingonretranslationareincludedintheincomestatementfortheperiod,exceptforwheretheyariseonitemstakendirectlytoothercomprehensiveincome,inwhichcasetheyarealsorecognisedintheconsolidatedstatementofcomprehensiveincome.

InordertohedgeitsexposuretocertainforeignexchangeriskstheGroupentersintoforwardcurrencycontractsandcrosscurrencyswaps(seesectionQfortheGroup’saccountingpoliciesinrespectofderivativefinancialinstruments).

Onconsolidation,theassetsandliabilitiesoftheGroup’soverseasoperations(expressedintheirfunctionalcurrencies,beingthecurrencyoftheprimaryeconomicenvironmentinwhicheachentityoperates)aretranslatedattheexchangeratesonthebalancesheetdate.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesfortheperiod.Exchangedifferencesarising,ifany,areclassifiedasequityandtransferredtotheGroup’stranslationreserve.Suchtranslationdifferencesarerecognisedasincomeorexpenseintheperiodinwhichtheoperationisdisposedof.

Goodwillandfairvalueadjustmentsarisingontheacquisitionofaforeignentityaretreatedasassetsandliabilitiesoftheforeignentityandtranslatedattheclosingrate.

G RevenueRevenueisrecognisedintheperiodinwhichservicesareprovidedinaccordancewiththetermsofthecontractualrelationshipswiththirdparties.Revenuerepresentsthefairvalueoftheconsiderationreceivedorreceivableforgoodsandservicesprovidedinthenormalcourseofbusiness,excludingtradediscounts,valueaddedtaxandsimilarsalestaxes.



Management fee contractsRevenuefrommanagementfeecontractscomprisesthetotalofsalesmadetoconsumers,thesubsidychargedtoclients,togetherwiththemanagementfeechargedtoclients.

Fixed price contractsRevenuefromfixedpricecontractsisrecognisedinproportiontothevolumeofservicesthattheGroupiscontractedtosupplyineachperiod.

Inter-segment transactionsThereislittleornointra-grouptradingbetweenthereportedbusinesssegments.Wheresuchtradingdoestakeplaceitisonsimilartermsandconditionstothoseavailabletothirdparties.

H Rebates and other amounts received from suppliersRebatesandotheramountsreceivedfromsuppliersincludeagreeddiscountsfromsuppliers’listprices,valueandvolume-relatedrebates.

Incomefromvalueandvolume-relatedrebatesisrecognisedbasedonactualpurchasesintheperiodasaproportionoftotalpurchasesmadeorforecasttobemadeovertherebateperiod.

Agreeddiscountsrelatingtoinventoriesarecreditedtotheincomestatementasthegoodsareconsumed.

Rebatesrelatingtoitemspurchasedbutstillheldatthebalancesheetdatearedeductedfromthecarryingvalueoftheseitemssothatthecostofinventoriesisrecordednetofapplicablerebates.

Rebatesreceivedinrespectofplantandequipmentaredeductedfromthecostscapitalised.

I Borrowing costsBorrowingcostswhicharedirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalisedaspartofthecostofthatasset.

J Operating profitOperatingprofitisstatedbeforetheshareofresultsofassociates,investmentrevenueandfinancecosts.

K Exceptional itemsExceptionalitemsaredisclosedanddescribedseparatelyinthefinancialstatementswhereitisnecessarytodosotoprovidefurtherunderstandingofthefinancialperformanceoftheGroup.Theyarematerialitemsofincomeorexpensethathavebeenshownseparatelyduetothesignificanceoftheirnatureoramount.

L TaxIncometaxexpensecomprisescurrentanddeferredtax.Taxisrecognisedintheincomestatementexceptwhereitrelatestoitemstakendirectlytotheconsolidatedstatementofcomprehensiveincomeorequity,inwhichcaseitisrecognisedintheconsolidatedstatementofcomprehensiveincomeorequityasappropriate.

Currenttaxistheexpectedtaxpayableonthetaxableincomefortheperiod,usingtaxratesthathavebeenenactedorsubstantivelyenactedbythebalancesheetdate.

Deferredtaxisprovidedusingthebalancesheetliabilitymethod,providingfortemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandtheamounts

usedfortaxpurposes.Deferredtaxliabilitiesaregenerallyrecognisedforalltaxabletemporarydifferencesanddeferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichdeductibletemporarydifferencescanbeutilised.Suchassetsandliabilitiesarenotrecognisedifthetemporarydifferencearisesfromgoodwillorfromtheinitialrecognition(otherthaninabusinesscombination)ofotherassetsandliabilitiesinatransactionthataffectsneitherthetaxableprofitnortheaccountingprofit.

Deferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiariesandassociates,andinterestinjointventures,exceptwheretheGroupisabletocontrolthereversalofthetemporarydifferenceanditisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

Thecarryingamountofdeferredtaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

Deferredtaxiscalculatedatthetaxratesthatareexpectedtoapplyintheperiodwhentheliabilityissettledortheassetrealised.

DeferredtaxassetsandliabilitiesareoffsetagainsteachotherwhentheyrelatetoincometaxesleviedbythesametaxjurisdictionandtheGroupintendstosettleitscurrenttaxassetsandliabilitiesonanetbasis.

M Intangible assetsGoodwillGoodwillarisingonconsolidationrepresentstheexcessofthecostofacquisitionoverthefairvalueoftheGroup’sshareoftheidentifiableassetsandliabilitiesoftheacquiredsubsidiary,associateorjointventureatthedateofacquisition.Goodwillistestedannuallyforimpairmentandiscarriedatcostlessanyaccumulatedimpairmentlosses.

Goodwillisallocatedtoeachcash-generatingunit(‘CGU’)forthepurposeofimpairmenttesting.ACGUisidentifiedatthelowestaggregationofassetsthatgeneratelargelyindependentcashinflows,andthatwhichislookedatbymanagementformonitoringandmanagingthebusiness.Thisisgenerallythetotalbusinessforacountry.However,insomeinstances,wheretherearedistinctseparatelymanagedbusinessactivitieswithinacountry,theCGUisidentifiedatalowerlevel.

IftherecoverableamountoftheCGUislessthanthecarryingamount,animpairmentlossisallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtotheunitandthentotheotherassetsoftheunitprorataonthebasisofthecarryingamountofeachassetintheunit.Anyimpairmentisimmediatelyrecognisedintheincomestatementandanimpairmentlossrecognisedforgoodwillisnotsubsequentlyreversed.

Ondisposal,theattributableamountofgoodwillisincludedinthedeterminationofthegainorlossondisposal.

GoodwillarisingonacquisitionsbeforethedateoftransitiontoIFRShasbeenretainedatthepreviousUKGAAPamountssubjecttobeingtestedforimpairmentatthatdate.GoodwillwrittenofftoreservesunderUKGAAPpriorto1998hasnotbeenreinstatedandisnotincludedindetermininganysubsequentgainorlossondisposal.


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Other intangible assetsIntangibleassetsacquiredseparatelyarecapitalisedatcostor,ifacquiredaspartofabusinesscombination,arecapitalisedatfairvalueasatthedateoftheacquisition.Internallygeneratedintangibleassetsarenotcapitalised.Amortisationischargedonastraight-linebasisovertheexpectedusefullivesoftheassets.

ThefollowingratesappliedfortheGroup:

• Contract-relatedintangibleassets:thelifeofthecontract;and• Computersoftware:6%to33%perannum.

Thetypicallifeofcontract-relatedintangiblesis2to20years.

Contract-relatedintangibleassetsarisingonacquisitionofabusinessarerecognisedatfairvalueandamortisedoverthelifeofthecontract.Underlyingoperatingprofitandunderlyingearningspershareexcludetheamortisationofcontract-relatedintangibleassetsarisingonacquisitionofabusinessasitisnotconsideredtoberelevanttotheunderlyingtradingperformanceoftheGroup.

N Property, plant and equipmentAlltangiblefixedassetsarereviewedforimpairmentwhenthereareindicationsthatthecarryingvaluemaynotberecoverable.Freeholdlandisnotdepreciated.Allotherproperty,plantandequipmentassetsarecarriedatcostlessaccumulateddepreciationandanyrecognisedimpairmentinvalue.

Depreciationisprovidedonastraight-linebasisovertheanticipatedusefullivesoftheassets.

ThefollowingratesappliedfortheGroup:

• Freeholdbuildingsandlong-termleaseholdproperty:2%perannum;

• Short-termleaseholdproperty:thelifeofthelease;• Plantandmachinery:8%to33%perannum;and• Fixturesandfittings:8%to33%perannum.

Whenassetsaresold,thedifferencebetweensalesproceedsandthecarryingamountoftheassetsisdealtwithintheincomestatement.

O Assets held for saleNon-currentassetsanddisposalgroupsareclassifiedasheldforsaleifthecarryingamountwillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobable,managementiscommittedtoasaleplan,theassetisavailableforimmediatesaleinitspresentconditionandthesaleisexpectedtobecompletedwithinoneyearfromthedateofclassification.Theseassetsaremeasuredatthelowerofcarryingvalueandfairvaluelesscoststosell.

P InventoriesInventoriesarevaluedatthelowerofcostandnetrealisablevalue.Costiscalculatedusingeithertheweightedaveragepriceorthefirstin,firstoutmethodasappropriatetothecircumstances.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseofbusiness,lessapplicablevariablesellingexpenses.

Q Financial instrumentsFinancialassetsandfinancialliabilitiesarerecognisedontheGroup’sbalancesheetwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.Financialassetsandliabilities,including

derivativefinancialinstruments,denominatedinforeigncurrenciesaretranslatedintopoundsSterlingatperiod-endexchangerates.Gainsandlossesaredealtwiththroughtheincomestatement,unlesshedgeaccountingtreatmentisavailable.

Cash and cash equivalentsCashandcashequivalentscomprisecashatbankandinhandandshort-termdepositswithanoriginalmaturityofthreemonthsorless.

BorrowingsBorrowingsarerecognisedinitiallyattheproceedsreceived,netofdirectissuecosts.Borrowingsaresubsequentlystatedatamortisedcost;anydifferencebetweentheproceeds(netofdirectissuecosts)andtheredemptionvalueisrecognisedintheincomestatementovertheperiodoftheborrowingsusingtheeffectiveinterestmethod,unlessincludedinafairvaluehedge.

Equity instrumentsEquityinstrumentsissuedbytheCompanyarerecordedattheproceedsreceived,netofdirectissuecosts.

Liabilities in respect of option agreementsOptionagreementsthatallowminorityshareholderstorequiretheGrouptopurchasetheminorityinterestaretreatedasderivativesoverequityinstruments.Thesearerecordedinthebalancesheetatfairvaluewhichisre-evaluatedateachperiodend.Fairvalueisbasedonthepresentvalueofexpectedcashoutflows.Themovementinfairvalueisrecognisedasincomeorexpensewithintheincomestatement.

Derivative financial instruments and hedge accountingTheGroupusesderivativefinancialinstrumentssuchasforwardcurrencycontracts,crosscurrencyswapsandinterestrateswapstohedgetherisksassociatedwithchangesinforeignexchangeratesandinterestrates.Suchderivativefinancialinstrumentsareinitiallymeasuredatfairvalueonthecontractdate,andareremeasuredtofairvalueatsubsequentreportingdates.

TheuseoffinancialderivativesisgovernedbytheGroup’spoliciesapprovedbytheBoardofDirectorsthatprovidewrittenprinciplesontheuseoffinancialderivativesconsistentwiththeGroup’sriskmanagementstrategy.TheGroupdoesnotusederivativefinancialinstrumentsforspeculativepurposes.

Thefairvalueofforwardcurrencycontractsiscalculatedbyreferencetocurrentforwardexchangeratesforcontractswithsimilarmaturityprofiles.Thefairvalueofinterestrateswapsandcrosscurrencyswapsisdeterminedbyreferencetomarketvaluesforsimilarinstruments.

Forthepurposeofhedgeaccounting,hedgesareclassifiedaseitherfairvaluehedgeswhentheyhedgetheexposuretochangesinthefairvalueofarecognisedassetorliability;orcashflowhedgeswheretheyhedgetheexposuretovariabilityincashflowsthatiseitherattributabletoaparticularriskassociatedwitharecognisedassetorliabilityoraforecastedtransaction.

Inrelationtofairvaluehedges(interestrateswaps)whichmeettheconditionsforhedgeaccounting,anygainorlossfromremeasuringthehedginginstrumentatfairvalueisrecognisedimmediatelyintheincomestatement.Anygainorlossonthehedgeditemattributabletothehedgedriskisadjustedagainstthecarryingamountofthehedgeditemandrecognisedintheincomestatement.Wheretheadjustmentistothecarryingamountofahedgedinterest-bearingfinancialinstrument,theadjustmentisamortisedtothenetprofitandlosssuchthatitisfullyamortisedbymaturity.


Whenfairvaluehedgeaccountingisdiscontinued,anyadjustmenttothecarryingamountofthehedgeditemforthedesignatedriskforinterest-bearingfinancialinstrumentsisamortisedtoprofitorloss,withamortisationcommencingnolaterthanwhenthehedgeditemceasestobeadjusted.

TheGroup’spolicyistoconvertaproportionofitsfloatingratedebttofixedrates,usingfloatingtofixedinterestrateswaps.TheGroupdesignatestheseascashflowhedgesofinterestraterisk.

Inrelationtocashflowhedges(forwardcurrencycontracts)tohedgefirmcommitmentswhichmeettheconditionsforhedgeaccounting,theportionofthegainorlossonthehedginginstrumentthatisdeterminedtobeaneffectivehedgeisrecogniseddirectlyinequityandtheineffectiveportionisrecognisedintheincomestatement.

Whenthehedgedfirmcommitmentresultsintherecognitionofanassetorliability,thenatthetimetheassetorliabilityisrecognised,theassociatedgainsorlossesthathadpreviouslybeenrecognisedinequityareincludedintheinitialmeasurementoftheacquisitioncostandcarryingamountoftheassetorliability.Forallothercashflowhedges,thegainsorlossesthatarerecognisedinequityaretransferredtotheincomestatementinthesameperiodinwhichthehedgedfirmcommitmentaffectsthenetprofitandloss,forexamplewhenthefuturesaleactuallyoccurs.

Forderivativefinancialinstrumentsthatdonotqualifyforhedgeaccounting,anygainsorlossesarisingfromchangesinfairvaluearetakendirectlytotheincomestatementintheperiod.

Hedgeaccountingisdiscontinuedwhenthehedginginstrumentexpiresorissold,terminatedorexercised,ornolongerqualifiesforhedgeaccounting.Atthatpointintime,anycumulativegainorlossonthehedginginstrumentrecognisedinequityiskeptinequityuntiltheforecastedtransactionoccurs.Ifahedgedtransactionisnolongerexpectedtooccur,thenetcumulativegainorlossrecognisedinequityistransferredtotheincomestatementintheperiod.

R LeasesLeasesareclassifiedasfinanceleaseswheneverthetermsoftheleasetransfersubstantiallyalltherisksandrewardsofownershiptothelessee.Allotherleasesareclassifiedasoperatingleases.

AssetsheldunderfinanceleasesarerecognisedasassetsoftheGroupattheirfairvalueor,iflower,atthepresentvalueoftheminimumleasepayments,eachdeterminedattheinceptionofthelease.Thecorrespondingliabilitytothelessorisincludedinthebalancesheetasafinanceleaseobligation.Leasepaymentsareapportionedbetweenfinancechargesandreductionoftheleaseobligationsoastoachieveaconstantrateofinterestontheremainingbalanceoftheliability.Financechargesarechargeddirectlyagainstincome.

Paymentsmadeunderoperatingleasesarechargedtoincomeonastraight-linebasisovertheperiodofthelease.Anyincentivestoenterintoanoperatingleasearealsospreadonastraight-linebasisovertheleaseterm.

S ProvisionsProvisionsarerecognisedwhentheGrouphasapresentobligationasaresultofapasteventanditisprobablethattheGroupwillberequiredtosettlethatobligation.ProvisionsaremeasuredattheDirectors’bestestimateofthecostofsettlingtheseliabilitiesandarediscountedtopresentvaluewheretheeffectismaterial.

T Employee benefitsPension obligationsPaymentsmadetodefinedcontributionpensionschemesarechargedasanexpensewhentheyfalldue.Paymentsmadetostate-managedschemesaredealtwithaspaymentstodefinedcontributionschemeswheretheGroup’sobligationsundertheschemesareequivalenttothosearisinginadefinedcontributionpensionscheme.

Fordefinedbenefitpensionschemes,thecostofprovidingbenefitsisdeterminedusingtheProjectedUnitCreditMethod,withactuarialvaluationsbeingcarriedoutateachbalancesheetdate.Actuarialgainsandlossesarerecognisedimmediatelyintheconsolidatedstatementofcomprehensiveincome.

Pastservicecostisrecognisedimmediatelytotheextentthatthebenefitsarealreadyvested,andotherwiseisamortisedonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.

Thepensionobligationrecognisedinthebalancesheetrepresentsthepresentvalueofthedefinedbenefitobligationasadjustedforunrecognisedpastservicecost,andasreducedbythefairvalueofschemeassets.Anyassetresultingfromthiscalculationislimitedtopastservicecost,plusthepresentvalueofavailablerefundsandreductionsinfuturecontributionstothescheme.

Other post-employment obligationsSomeGroupcompaniesprovideotherpost-employmentbenefits.Theexpectedcostsofthesebenefitsareaccruedovertheperiodofemploymentusingasimilarbasistothatusedfordefinedbenefitpensionschemes.Actuarialgainsandlossesarerecognisedimmediatelyintheconsolidatedstatementofcomprehensiveincome.

Share-based paymentsTheGroupissuesequity-settledandcash-settledshare-basedpaymentstocertainemployees.InaccordancewiththerequirementsofIFRS2‘Share-basedPayments’,theGrouphasappliedIFRS2toallequity-settledshareoptionsgrantedafter7November2002thathadvestedbefore1January2005.Equity-settledshare-basedpaymentsaremeasuredatfairvalue(excludingtheeffectofnonmarket-basedvestingconditions)atthedateofgrant.Thefairvaluedeterminedatthegrantdateoftheequity-settledshare-basedpaymentsisexpensedonastraight-linebasisoverthevestingperiod,basedontheGroup’sestimateofthesharesthatwilleventuallyvestandadjustedfortheeffectofnonmarket-basedvestingconditions.

FairvalueismeasuredusingeitherthebinomialdistributionorBlack-Scholespricingmodelsasismostappropriateforeachscheme.Theexpectedlifeusedinthemodelshasbeenadjusted,basedonmanagement’sbestestimate,fortheeffectsofexerciserestrictionsandbehaviouralconsiderations.

Forcash-settledshare-basedpayments,aliabilityequaltotheportionofthegoodsorservicesreceivedisrecognisedatthecurrentfairvaluedeterminedateachbalancesheetdate.

Holiday pay Paidholidaysandsimilarentitlementsareregardedasanemployeebenefitandarechargedtotheincomestatementasthebenefitsareearned.Anaccrualismadeatthebalancesheetdatetoreflectthefairvalueofholidaysearnedbutnottaken.


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Notes to the consolidated financial statementsfortheyearended30September2011

1 Segmental reporting

Geographicalsegments

Revenues

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Intra-Group

£mTotal

£m

Year ended 30 September 2011External revenue 6,849 3,717 1,951 3,316 – 15,833Less:Discontinuedoperations – – – – – –

External revenue – continuing 6,849 3,717 1,951 3,316 – 15,833

Year ended 30 September 2010External revenue 6,369 3,506 1,782 2,811 – 14,468Less:Discontinuedoperations – – – – – –

External revenue – continuing 6,369 3,506 1,782 2,811 – 14,468

Productsandservices:Sectors

Revenues

Business&Industry

£mEducation

£m

Healthcare&Seniors

£m

Sports&Leisure

£m

Defence,Offshore

&Remote£m

Total £m

Year ended 30 September 2011External revenue 6,751 2,477 2,905 1,688 2,012 15,833Less:Discontinuedoperations – – – – – –

External revenue – continuing 6,751 2,477 2,905 1,688 2,012 15,833

Year ended 30 September 2010External revenue 5,949 2,308 2,739 1,639 1,833 14,468Less:Discontinuedoperations – – – – – –

External revenue – continuing 5,949 2,308 2,739 1,639 1,833 14,468

1Thereisnointer-segmentaltrading.2ContinuingrevenuesfromexternalcustomersarisingintheUK,theGroup’scountryofdomicile,were£1,873million(2010:£1,709million).Continuingrevenuesfrom

externalcustomersarisinginallforeigncountriesfromwhichtheGroupderivesrevenueswere£13,960million(2010:£12,759million).



1 Segmental reporting continued


Result

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Operatingprofitbeforeassociates,UKre-organisation

andcostsrelatingtoacquisitions 538 259 114 234 (60) 1,085UKre-organisation – – (55) – – (55)

Totaloperatingprofitbeforeassociatesandcostsrelatingtoacquisitions 538 259 59 234 (60) 1,030

Less:Discontinuedoperations – – – – – –

Operating profit before associates and costs relating to acquisitions 538 259 59 234 (60) 1,030

Less:Amortisationofintangiblesarisingonacquisition (3) (2) (2) (4) (1) (12)Less:Acquisitiontransactioncosts (1) (3) (2) (2) (1) (9)Less:Share-basedpaymentsexpense–non-controlling

interestcalloption – – – – – –Add:Adjustmenttocontingentconsiderationonacquisition 1 – – – – 1

Operating profit before associates – continuing 535 254 55 228 (62) 1,010Add:Shareofprofitofassociates 3 – 3 – – 6

Total operating profit – continuing 538 254 58 228 (62) 1,016

Financeincome 4Financecosts (75)Hedgeaccountingineffectiveness (5)Changeinthefairvalueofinvestmentsandnon-controlling

interestputoptions 2Gainonremeasurementofjointventureinterest

onacquisitionofcontrol 16

Profit before tax 958

Incometaxexpense (264)

Profit for the year from continuing operations 694

Year ended 30 September 2010Operatingprofitbeforeassociates,UKre-organisation

andcostsrelatingtoacquisitions 491 248 114 204 (60) 997UKre-organisation – – – – – –

Totaloperatingprofitbeforeassociatesandcostsrelatingtoacquisitions 491 248 114 204 (60) 997

Less:Discontinuedoperations – – – – – –

Operating profit before associates and costs relating to acquisitions 491 248 114 204 (60) 997

Less:Amortisationofintangiblesarisingonacquisition (1) – (1) (4) (1) (7)Less:Acquisitiontransactioncosts (1) (2) (1) – (1) (5)Less:Share-basedpaymentsexpense–non-controlling

interestcalloption – – – (2) – (2)Add:Adjustmenttocontingentconsiderationonacquisition – – – – – –

Operating profit before associates – continuing 489 246 112 198 (62) 983Add:Shareofprofitofassociates 4 – 2 – – 6

Total operating profit – continuing 493 246 114 198 (62) 989

Financeincome 5Financecosts (86)Hedgeaccountingineffectiveness 4Changeinthefairvalueofinvestmentsandnon-controlling

interestputoptions 1Gainonremeasurementofjointventureinterest

onacquisitionofcontrol –

Profit before tax 913

Incometaxexpense (246)

Profit for the year from continuing operations 667


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1 Segmental reporting continuedGeographicalsegments Unallocated

Balance sheet

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£m

Currentanddeferredtax

£m

Netdebt

£mTotal

£m

As at 30 September 2011Totalassets 2,986 1,416 2,236 1,286 7 276 1,203 9,410Totalliabilities (1,352) (964) (395) (708) (251) (273) (1,964) (5,907)

Net assets/(liabilities) 1,634 452 1,841 578 (244) 3 (761) 3,503

Total assets include:Interests in associates 45 – 34 – – – – 79

Non-current assets 2,210 712 1,986 717 6 240 64 5,935

As at 30 September 2010Totalassets 2,663 1,136 2,239 1,148 7 327 734 8,254Totalliabilities (1,186) (943) (510) (638) (261) (288) (1,355) (5,181)

Net assets/(liabilities) 1,477 193 1,729 510 (254) 39 (621) 3,073

Total assets include:Interests in associates 6 – 26 – – – – 32

Non-current assets 1,964 504 1,993 656 8 297 80 5,502

1Non-currentassetsintheUK,theGroup’scountryofdomicile,were£1,981million(2010:£1,989million).Non-currentassetsinallforeigncountriesinwhichtheGroupholdsassetswere£3,650million(2010:£3,136million).


1 Segmental reporting continued Geographicalsegments

Additions to other intangible assets

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Total additions to other intangible assets 98 16 8 4 – 126

Year ended 30 September 2010Total additions to other intangible assets 85 10 23 4 – 122


Additions to property, plant and equipment

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Total additions to property, plant and equipment1 86 66 41 52 1 246

Year ended 30 September 2010Total additions to property, plant and equipment1 69 53 36 54 – 212


Amortisation of other intangible assets

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Total amortisation of other intangible assets2 79 11 21 9 1 121

Year ended 30 September 2010Total amortisation of other intangible assets2 68 10 10 8 1 97


Depreciation of property, plant and equipment

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Total depreciation of property, plant and equipment 58 44 34 31 – 167

Year ended 30 September 2010Total depreciation of property, plant and equipment 54 40 26 27 1 148


Other non-cash expenses

NorthAmerica

£m

ContinentalEurope

£m

UK&Ireland

£m

RestoftheWorld

£m

Centralactivities

£mTotal

£m

Year ended 30 September 2011Total other non-cash expenses3 3 1 1 2 3 10

Year ended 30 September 2010Total other non-cash expenses3 2 1 1 2 3 9

1Includesleasedassetsof£2million(2010:£3million)andcreditorforcapitalcreditorsof£2million(2010:£2million).2Includingtheamortisationofintangiblesarisingonacquisition.3Othernon-cashexpensesaremainlycomprisedofshare-basedpayments.


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2 Operating costs

Operating costs

Before UK re-

organisation2011

£m

UK re-organisation

2011£m

Total2011

£m

Total2010

£m

Cost of food and materials:Costofinventoriesconsumed 5,013 – 5,013 4,654

Labour costs:Employeeremuneration(note3) 7,146 6 7,152 6,444

Overheads:Depreciation–ownedproperty,plantandequipment 152 7 159 138Depreciation–leasedproperty,plantandequipment 8 – 8 10Amortisation–ownedintangibleassets 94 15 109 90

Propertyleaserentals 82 3 85 74Otheroccupancyrentals–minimumguaranteedrent 65 – 65 57Otheroccupancyrentals–rentinexcessofminimumguaranteedrent 15 – 15 16Otherassetrentals 72 – 72 81

Auditandnon-auditservices(seebelow) 7 – 7 5

Otherexpenses 2,094 24 2,118 1,902

Operatingcostsbeforecostsrelatingtoacquisitions 14,748 55 14,803 13,471

Amortisation–intangibleassetsarisingonacquisition 12 – 12 7Acquisitiontransactioncosts 9 – 9 5Adjustmenttocontingentconsiderationonacquisition (1) – (1) –Share-basedpaymentsexpense–non-controllinginterestcalloption – – – 2

Totalcontinuingoperations 14,768 55 14,823 13,485

1ImpairmentofgoodwillrecordedinincomestatementincludedinUKre-organisation£5million(2010:£nil). 2Withourongoingdesiretofocusonourcoreactivitieswehavedecidedtoexitorrundownasmallnumberofnon-coreactivitiesintheUK,includingproviding

cateringinhotelsandmobilefoodunitsatsportingevents.Theoveralllossofrevenuewillbearound£70million.Wehavetakena£55millionexceptionalcost,whichisalmostallnon-cash.Thisincludesgoodwillof£20millionshownasimpairmentof£5millionanddisposalof£15million(includedwithinotherexpenses).

Audit and non-audit services2011

£m2010

£m

Audit servicesFeespayabletotheCompany’sAuditorsfortheauditoftheCompany’sannualfinancialstatements 0.4 0.4FeespayabletotheCompany’sAuditorsandtheirassociatesforotherservicestotheGroup: TheauditoftheCompany’ssubsidiariesandjointventurespursuanttolegislation 3.5 3.2

Totalauditfees 3.9 3.6

Non-audit servicesAuditrelatedassurance 0.2 0.2Taxationcompliance 0.3 0.3Othertaxadvisory 1.5 1.1Corporatefinanceservices 0.9 0.1Otherservices 0.1 0.1

Totalnon-auditfees 3.0 1.8

Total audit and non-audit servicesTotalauditandnon-auditservices 6.9 5.4


3 Employees Average number of employees, including Directors and part-time employees

2011 Number

2010Number

NorthAmerica 189,302 174,734ContinentalEurope 98,505 86,633UK&Ireland 62,967 59,380RestoftheWorld 120,334 107,455

Totalcontinuingoperations 471,108 428,202Discontinuedoperations – –

Totalcontinuinganddiscontinuedoperations 471,108 428,202

Aggregate remuneration of all employees including Directors2011

£m2010

£m

Wagesandsalaries 5,920 5,345Socialsecuritycosts 1,143 1,014Share-basedpayments 10 9Pensioncosts–definedcontributionplans 58 54Pensioncosts–definedbenefitplans 21 22

Totalcontinuingoperations 7,152 6,444Discontinuedoperations – –

Totalcontinuinganddiscontinuedoperations 7,152 6,444

Inadditiontothepensioncostshowninoperatingcostsabove,thereisapensions-relatednetchargewithinfinancecostsof£14million(2010:netchargeof£15million).

TheremunerationofDirectorsandkeymanagementpersonnel1issetoutbelow.AdditionalinformationonDirectors’andkeymanagementremuneration,shareoptions,long-termincentiveplans,pensioncontributionsandentitlementscanbefoundintheauditedsectionoftheDirectors’RemunerationReportonpages53to60andformspartoftheseaccounts.

Remuneration of key management personnel2011

£m2010

£m

Salaries 6.9 7.1Othershort-termemployeeremuneration 6.3 7.3Share-basedpayments 4.4 5.3Terminationbenefits – 3.1Pension 2.1 1.8

Total 19.7 24.6

1KeymanagementpersonnelisdefinedastheBoardofDirectorsandthemembersoftheExecutiveCommittee.Since2010,onenewmemberhasbeenappointedtotheExecutiveCommittee.


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4 Financing income, costs and related (gains)/lossesFinanceincomeandcostsarerecognisedintheincomestatementintheperiodinwhichtheyareearnedorincurred.

Finance income and costs2011 £m

2010£m

Finance incomeBankinterest 4 5

Totalfinanceincome 4 5

Finance costsInterestonbankloansandoverdrafts 7 4Interestonotherloans 51 64Financeleaseinterest 2 2

Interestonbankloans,overdrafts,otherloansandfinanceleases 60 70Unwindingofdiscountonprovisions 1 1Amountchargedtopensionschemeliabilitiesnetofexpectedreturnonschemeassets(note23) 14 15

Totalfinancecosts 75 86

Analysis of finance costs by defined IAS 391 categoryFairvaluethroughprofitorloss(unhedgedderivatives) 1 10Derivativesinafairvaluehedgerelationship (31) (36)Derivativesinanetinvestmenthedgerelationship 5 4Otherfinancialliabilities 85 92

Interestonbankloans,overdrafts,otherloansandfinanceleases 60 70Fairvaluethroughprofitorloss(unwindingofdiscountonprovisions) 1 1OutsideofthescopeofIAS39(netpensionschemecharge) 14 15

Totalfinancecosts 75 86

1IAS39‘FinancialInstruments:RecognitionandMeasurement’.

TheGroupusesderivativefinancialinstrumentssuchasforwardcurrencycontracts,crosscurrencyswapsandinterestrateswapstohedgetherisksassociatedwithchangesinforeigncurrencyexchangeratesandinterestrates.AsexplainedinsectionQoftheGroup’saccountingpolicies,suchderivativefinancialinstrumentsareinitiallymeasuredatfairvalueonthecontractdate,andareremeasuredtofairvalueatsubsequentreportingdates.Forderivativefinancialinstrumentsthatdonotqualifyforhedgeaccounting,anygainsorlossesarisingfromchangesinfairvaluearetakendirectlytotheincomestatementintheperiod.

TheGrouphadasmallnumberofoutstandingputoptionswhichhavenowmatured.Thisenabledcertainnon-controllingshareholderstorequiretheGrouptopurchasethenon-controllinginterestshareholdingatanagreedmultipleofearnings.Theseoptionsaretreatedasderivativesoverequityinstrumentsandarerecordedinthebalancesheetatfairvaluewhichisre-evaluatedateachperiodend.Fairvalueisbasedonthepresentvalueofexpectedcashoutflows.Themovementinfairvalueisincludedintheprofitfortheyear.

Financing related (gains)/losses2011 £m

2010£m

Hedge accounting ineffectiveness Unrealisednet(gains)/lossesonunhedgedderivativefinancialinstruments1 2 (2)Unrealisednet(gains)/lossesonderivativefinancialinstrumentsinadesignatedfairvaluehedge2 4 (10)Unrealisednet(gains)/lossesonthehedgediteminadesignatedfairvaluehedge (1) 8

Totalhedgeaccountingineffectiveness(gains)/losses 5 (4)

Change in the fair value of investments and non-controlling interest put optionsChangeinthefairvalueofinvestments1,3 – (1)Changeinthefairvalueofnon-controllinginterestputoptions(credit)/charge1 (2) –

Total (2) (1)

1Categorisedas‘fairvaluethroughprofitorloss’(IAS39).2Categorisedasderivativesthataredesignatedandeffectiveashedginginstrumentscarriedatfairvalue(IAS39).3Lifeinsurancepoliciesusedbyoverseascompaniestomeetthecostofunfundedpost-employmentbenefitobligationsincludedinnote23.


5 Gain on remeasurement of joint venture interest on acquisition of controlTheGroupacquiredtheremaining50%equityinterestinSofraYemekÜretimVeHizmetA.S.(‘SOFRA’)inTurkeyfromourjointventurepartnerduringtheyear.UnderInternationalFinancialReportingStandard3,‘BusinessCombinations’(revised2008)(‘IFRS3(2008)’),theinterestpreviouslyheldbytheGrouphasbeenremeasuredtoitsfairvalueattheacquisitiondate.Thishasresultedinagainof£16millionarisingontherevaluationofourexistinginterestwhichhasbeenrecordedonaseparatelineintheincomestatement.

IFRS3(2008)requiresthattheinterestshouldbetreatedonthesamebasisaswouldberequirediftheacquirerhaddisposeddirectlyofthepreviouslyheldinterestandthenreacquireditatfairvalue.Priortotheacquisition,theinterestinSOFRAwasproportionallyconsolidatedasexplainedinsectionDoftheGroup’saccountingpolicies.TheGrouphasshownthedisposalofpreviouslyheldinterestandre-acquisitionwithinnote26tothefinancialstatements.

6 Tax

Recognised in the income statement: Income tax expense on continuing operations

Before UK re-

organisation2011

£m

UK re-organisation

2011£m

Total2011

£m

Total2010

£m

Current taxCurrentyear 272 (3) 269 229Adjustmentinrespectofprioryears (47) – (47) (14)Currenttaxexpense/(credit) 225 (3) 222 215

Deferred tax Currentyear 28 (6) 22 37Impactofchangesinstatutorytaxrates 4 – 4 3Adjustmentinrespectofprioryears 16 – 16 (9)Deferredtaxexpense/(credit) 48 (6) 42 31

Total income taxIncometaxexpense/(credit)oncontinuingoperations 273 (9) 264 246

TheincometaxexpensefortheyearisbasedontheeffectiveUnitedKingdomstatutoryrateofcorporationtaxfortheperiodof27%(2010:28%).Overseastaxiscalculatedattheratesprevailingintherespectivejurisdictions.TheimpactofthechangesinstatutoryratesrelatesprincipallytothereductionoftheUKcorporationtaxratefrom28%to26%from1April2011and25%from1April2012.Thesechangeshaveresultedinadeferredtaxchargearisingfromthereductioninthebalancesheetcarryingvalueofdeferredtaxassetstoreflecttheanticipatedrateoftaxatwhichthoseassetsareexpectedtoreverse.

Reconciliation of the income tax expense on continuing operations

Before UK re-

organisation2011

£m

UK re-organisation

2011£m

Total2011

£m

Total2010

£m

Profitbeforetaxfromcontinuingoperations 1,013 (55) 958 913

NotionalincometaxexpenseattheeffectiveUKstatutoryrateof27%(2010:28%)onprofitbeforetax 274 (15) 259 256

Effectofdifferenttaxratesofsubsidiariesoperatinginotherjurisdictions 58 – 58 50Impactofchangesinstatutorytaxrates 4 – 4 3Permanentdifferences (28) 6 (22) (17)Impactofshare-basedpayments 3 – 3 –Taxonprofitofassociates (1) – (1) (1)Lossesandothertemporarydifferencesnotpreviouslyrecognised (11) – (11) (24)Unrelievedcurrentyeartaxlosses 5 – 5 2Prioryearitems (31) – (31) (23)

Incometaxexpenseoncontinuingoperations 273 (9) 264 246


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6 Tax continuedTax (charged)/credited to other comprehensive income

2011 £m

2010£m

Currentanddeferredtax(charges)/creditsonactuarialandothermovementsonpost-employmentbenefits (5) 18Currentanddeferredtax(charges)onforeignexchangemovements (3) (6)

Tax(charge)/creditonitemsrecognisedinothercomprehensiveincome (8) 12

Tax credited to equity2011

£m2010

£m

Currentanddeferredtaxcreditsinrespectofshare-basedpayments 3 17

Taxcreditonitemsrecognisedinequity 3 17

Movement in net deferred tax asset/(liability)

Taxdepreciation

£mIntangibles

£m

Pensionsandpost-

employmentbenefits

£mTaxlosses

£m

Self-fundedinsurance

provisions£m

Netshort-termtemporary

differences£m

Total£m

At1October2009 35 (91) 125 5 51 164 289(Charge)/credittoincome (7) (16) 5 8 3 (24) (31)(Charge)/credittoequity/othercomprehensiveincome – (2) 18 (1) – 7 22Transferfrom/(to)currenttax – – – – – – –Businessacquisitions (1) (5) – – – 3 (3)Businessdisposals – – – – – – –Othermovements 1 (3) 1 – – 1 –Exchangeadjustment – (2) 1 – 1 4 4

At30September2010 28 (119) 150 12 55 155 281

At1October2010 28 (119) 150 12 55 155 281(Charge)/credittoincome (18) (20) 4 5 (1) (14) (44)(Charge)/credittoequity/othercomprehensiveincome (1) (1) (15) – – (3) (20)Transferfrom/(to)currenttax – – – – – – –Businessacquisitions – (17) 1 – – – (16)Businessdisposals – – – – – – –Othermovements – (4) 3 1 – 1 1Exchangeadjustment – – 2 – 1 – 3

At30September2011 9 (161) 145 18 55 139 205

Netshort-termtemporarydifferencesrelateprincipallytoprovisionsandotherliabilitiesofoverseassubsidiaries.

Afternettingoffbalanceswithincountries,thefollowingarethedeferredtaxassetsandliabilitiesrecognisedintheconsolidatedbalancesheet:

Net deferred tax balance2011 £m

2010£m

Deferredtaxassets 240 296Deferredtaxliabilities (35) (15)

Netdeferredtaxasset/(liability) 205 281

Unrecogniseddeferredtaxassetsinrespectoftaxlossesandothertemporarydifferencesamountto£37million(2010:£94million).Ofthetotal,taxlossesof£16millionwillexpireatvariousdatesbetween2011and2021.Thesedeferredtaxassetshavenotbeenrecognisedasthetimingofrecoveryisuncertain.

Asaresultofchangestotaxlegislation,overseasdividendsreceivedonorafter1July2009arelargelyexemptfromUKtaxbutmaybesubjecttoforeignwithholdingtaxes.Theunremittedearningsofthoseoverseassubsidiariesaffectedbysuchtaxesis£289million(2010:£128million).NodeferredtaxliabilityisrecognisedonthesetemporarydifferencesastheGroupisabletocontrolthetimingofreversalanditisprobablethatthiswillnottakeplaceintheforeseeablefuture.


7 Discontinued operationsYear ended 30 September 2011

Theprofitfortheyearfromdiscontinuedoperationsof£40millionaroseonthereleaseofprovisionsnowdeemedsurplus(includingincometaxprovisions)anda£2millionVATrefundrelatingtopriorperioddisposals.

Year ended 30 September 2010

Theprofitfortheyearfromdiscontinuedoperationsof£13millionaroseonthereleaseofprovisionsnowdeemedsurplusrelatingtopriorperioddisposalsanda£1millionlossfromtradingactivitiesofdiscontinuedoperations.

Financial performance of discontinued operations2011 £m

2010£m

Trading activities of discontinued operationsExternalrevenue – –Operatingrefund/(costs) 2 (1)

Profit/(loss)beforetax 2 (1)Incometax(expense)/credit – –

Profit/(loss)aftertax 2 (1)

Disposal of net assets and other adjustments relating to discontinued operationsProfitondisposalofnetassetsofdiscontinuedoperations – –Releaseofsurplusprovisionsandaccrualsrelatedtodiscontinuedoperations2 5 16

Profitbeforetax 5 16Incometaxcredit/(expense)(seebelow) 33 (2)Totalprofitaftertax 38 14

Profit for the year from discontinued operationsProfit/(loss)fortheyearfromdiscontinuedoperations 40 13

1Thetradingactivityintheyearsended30September2010and30September2011relatestothefinalrun-offactivityinbusinessesearmarkedforclosure.2Releasedsurplusprovisionsof£5millionintheyearended30September2011(2010:£16million).

Income tax from discontinued operations2011 £m

2010£m

Income tax on disposal of net assets and other adjustments relating to discontinued operationsCurrenttax 35 –Deferredtax (2) (2)

Incometaxcredit/(expense)ondisposalofnetassetsofdiscontinuedoperations 33 (2)

Net assets disposed and disposal proceeds2011 £m

2010£m

Increase/(decrease)inretainedliabilities1,2 – (23)Profit/(loss)ondisposalbeforetax – 16

Consideration,netofcosts – (7)Considerationdeferredtofutureperiods – (2)Cashdisposedof – –

Cashinflow/(outflow)fromcurrentyeardisposals – (9)

Deferredconsiderationandotherpaymentsrelatingtopreviousdisposals – –

Cashinflow/(outflow)fromdisposals – (9)

1Thetradingactivityintheyearsended30September2010and30September2011relatestothefinalrun-offactivityinbusinessesearmarkedforclosure.2Includestheutilisationofdisposalprovisionsof£nilintheyearended30September2011(2010:£23million).


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8 Earnings per shareThecalculationofearningspershareisbasedonearningsaftertaxandtheweightedaveragenumberofsharesinissueduringtheyear.Theadjustedearningspersharefigureshavebeencalculatedbasedonearningsexcludingtheeffectofdiscontinuedoperations,theUKre-organisation,theamortisationofintangibleassetsarisingonacquisition,acquisitiontransactioncosts,adjustmenttocontingentconsiderationonacquisition,share-basedpaymentsexpense–non-controllinginterestcalloption,hedgeaccountingineffectiveness,andthechangeinthefairvalueofinvestmentsandnon-controllinginterestputoptions,gainonremeasurementofjointventureinterestonacquisitionofcontrolandthetaxattributabletotheseamounts.Theseitemsareexcludedinordertoshowtheunderlyingtradingperformanceofthe Group.

Attributable profit

2011Attributable

profit£m

2010Attributable

profit£m

ProfitfortheyearattributabletoequityshareholdersoftheCompany 728 675Less:Profitfortheyearfromdiscontinuedoperations (40) (13)

Attributableprofitfortheyearfromcontinuingoperations 688 662Addback:Amortisationofintangibleassetsarisingonacquisition(netoftax) 8 5Addback:Acquisitiontransactioncosts(netoftax) 8 4Less:Adjustmenttocontingentconsiderationonacquisition(netoftax) (1) –Addback:Share-basedpaymentsexpense–non-controllinginterestcalloption(netoftax) – 2Addback:Loss/(profit)fromhedgeaccountingineffectiveness(netoftax) 4 (3)Less:Changeinthefairvalueofinvestmentsandnon-controllinginterestputoptions(netoftax) (2) (1)Addback:UKre-organisation(netoftax) 46 –Less:Gainonremeasurementofjointventureinterestonacquisitionofcontrol(netoftax) (13) –

Underlyingattributableprofitfortheyearfromcontinuingoperations 738 669

Average number of shares (millions of ordinary shares of 10p each)

2011Ordinaryshares of10p each

millions

2010Ordinarysharesof10peach

millions

Averagenumberofsharesforbasicearningspershare 1,892 1,873Dilutiveshareoptions 13 15

Averagenumberofsharesfordilutedearningspershare 1,905 1,888

2011Earnings

per sharepence

2010Earnings

persharepence

Basic earnings per share (pence)Fromcontinuinganddiscontinuedoperations 38.5 36.0Fromdiscontinuedoperations (2.1) (0.7)

Fromcontinuingoperations 36.4 35.3Amortisationofintangibleassetsarisingonacquisition(netoftax) 0.4 0.3Acquisitiontransactioncosts(netoftax) 0.4 0.2Adjustmenttocontingentconsiderationonacquisition(netoftax) – –Share-basedpaymentsexpense–non-controllinginterestcalloption(netoftax) – 0.1Hedgeaccountingineffectiveness(netoftax) 0.2 (0.2)Changeinthefairvalueofinvestmentsandnon-controllinginterestputoptions(netoftax) (0.1) –UKre-organisation(netoftax) 2.4 –Gainonremeasurementofjointventureinterestonacquisitionofcontrol(netoftax) (0.7) –Fromunderlyingcontinuingoperations 39.0 35.7

Diluted earnings per share (pence)Fromcontinuinganddiscontinuedoperations 38.2 35.8Fromdiscontinuedoperations (2.1) (0.7)

Fromcontinuingoperations 36.1 35.1Amortisationofintangibleassetsarisingonacquisition(netoftax) 0.4 0.3Acquisitiontransactioncosts(netoftax) 0.4 0.2Adjustmenttocontingentconsiderationonacquisition(netoftax) – –Share-basedpaymentsexpense–non-controllinginterestcalloption(netoftax) – 0.1Hedgeaccountingineffectiveness(netoftax) 0.2 (0.2)Changeinthefairvalueofinvestmentsandnon-controllinginterestputoptions(netoftax) (0.1) (0.1)UKre-organisation(netoftax) 2.4 –Gainonremeasurementofjointventureinterestonacquisitionofcontrol(netoftax) (0.7) –

Fromunderlyingcontinuingoperations 38.7 35.4



9 DividendsAfinaldividendinrespectof2011of12.8pencepershare,£243millioninaggregate1,hasbeenproposed,givingatotaldividendinrespectof2011of19.3pencepershare(2010:17.5pencepershare).TheproposedfinaldividendissubjecttoapprovalbyshareholdersattheAnnualGeneralMeetingon2February2012andhasnotbeenincludedasaliabilityinthesefinancialstatements.

2011 2010

Dividends on ordinary shares of 10p each

Dividends per share

pence £m

Dividendspershare

pence £m

Amounts recognised as distributions to equity shareholders during the year:Finaldividendfortheprioryear 12.5p 236 8.8p 164Interimdividendforthecurrentyear 6.5p 124 5.0p 94

Totaldividends 19.0p 360 13.8p 258

1Basedonthenumberofsharesinissueat30September2011(1,898millionshares).

10 Goodwill DuringtheyeartheGroupmadeanumberofacquisitions.Seenote26formoredetails.

Goodwill £m

CostAt1October2009 3,687Additions 217Businessdisposals–otheractivities –Currencyadjustment 36At30September2010 3,940

At1October2010 3,940Additions 234Businessdisposals–otheractivities (17)Currencyadjustment 15At30September2011 4,172

ImpairmentAt1October2009 107Impairmentchargerecognisedintheyear –At30September2010 107

At1October2010 107Impairmentchargerecognisedintheyear 5At30September2011 112

Net book valueAt30September2010 3,833

At30September2011 4,060


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10 Goodwill continuedGoodwillacquiredinabusinesscombinationisallocatedatacquisitiontoeachcash-generatingunit(‘CGU’)thatisexpectedtobenefitfromthatbusinesscombination.Asummaryofgoodwillallocationbybusinesssegmentisshownbelow.

Goodwill by business segment2011

£m2010

£m

USA 1,248 1,191RestofNorthAmerica 152 131

TotalNorthAmerica 1,400 1,322ContinentalEurope 395 272UK&Ireland 1,783 1,792RestoftheWorld 482 447

Total 4,060 3,833

TheGrouptestsgoodwillannuallyforimpairment,ormorefrequentlyifthereareindicationsthatgoodwillmightbeimpaired.TherecoverableamountofaCGUisdeterminedfromvalueinusecalculations.Thekeyassumptionsforthesecalculationsarelong-termgrowthratesandpre-taxdiscountratesandusecashflowforecastsderivedfromthemostrecentfinancialbudgetsandforecastsapprovedbymanagementcoveringafive-yearperiod.Cashflowsbeyondthefive-yearperiodareextrapolatedusingestimatedgrowthratesbasedonlocalexpectedeconomicconditionsanddonotexceedthelong-termaveragegrowthrateforthatcountry.Thepre-taxdiscountratesarebasedontheGroup’sweightedaveragecostofcapitaladjustedforspecificrisksrelatingtothecountryinwhichtheCGUoperates.

2011 2010

Growth and discount rates

Residual growth

rates

Pre-tax discount

rates

Residualgrowth

rates

Pre-taxdiscount

rates

USA 2.5% 9.3% 2.5% 10.2%RestofNorthAmerica 2.5% 8.5% 2.5% 9.4%ContinentalEurope 2.5-5.3% 6.6-13.4% 2.5-6.0% 7.7-15.9%UK&Ireland 3.4% 9.4% 3.0% 10.3%RestoftheWorld 0.8-5.9% 8.0-14.5% 2.5-6.5% 8.1-16.4%

Giventhecurrenteconomicclimate,asensitivityanalysishasbeenperformedinassessingrecoverableamountsofgoodwill.Thishasbeenbasedonchangesinkeyassumptionsconsideredtobereasonablypossiblebymanagement.FortheUK,towhichgoodwillof£1,778millionisallocated,anincreaseinthediscountrateof0.7%oradecreaseinthelong-termgrowthrateof0.8%wouldeliminatetheheadroomofapproximately£280millionundereachscenario.TherearenootherCGUsthataresensitivetoreasonablypossiblechangesinkeyassumptions.



11 Other intangible assetsContractand

otherintangibles

Other intangible assets

Computersoftware

£m

Arisingonacquisition

£mOther

£mTotal

£m

CostAt1October2009 215 102 544 861Additions 19 – 103 122Disposals (3) – (33) (36)Businessacquisitions 1 21 4 26Reclassified 7 – 26 33Currencyadjustment 1 4 6 11At30September2010 240 127 650 1,017

At1October2010 240 127 650 1,017Additions 19 – 107 126Disposals (24) (19) (57) (100)Businessacquisitions 4 168 – 172Reclassified 4 – (4) –Currencyadjustment 1 (5) 4 –At30September2011 244 271 700 1,215

AmortisationAt1October2009 126 9 233 368Chargefortheyear 25 7 65 97Disposals (2) – (31) (33)Businessacquisitions – – – –Reclassified 3 – 8 11Currencyadjustment – – 4 4At30September2010 152 16 279 447

At1October2010 152 16 279 447Chargefortheyear 31 12 78 121Disposals (19) – (49) (68)Businessacquisitions – – – –Reclassified – – (5) (5)Currencyadjustment 1 (1) 1 1At30September2011 165 27 304 496

Net book valueAt30September2010 88 111 371 570

At30September2011 79 244 396 719

Contract-relatedintangibleassets,otherthanthosearisingonacquisition,resultfrompaymentsmadebytheGroupinrespectofclientcontractsandgenerallyarisewhereitiseconomicallymoreefficientforaclienttopurchaseassetsusedintheperformanceofthecontractandtheGroupfundthesepurchases.


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12 Property, plant and equipment

Property, plant and equipment

Landandbuildings

£m

Plantandmachinery

£m

Fixturesand

fittings£m

Total£m

CostAt1October2009 274 743 486 1,503Additions1 25 124 63 212Disposals (10) (58) (31) (99)Businessacquisitions 6 13 2 21Reclassified (40) 47 (46) (39)Currencyadjustment 6 2 2 10At30September2010 261 871 476 1,608

At1October2010 261 871 476 1,608Additions1 26 143 77 246Disposals (8) (64) (56) (128)Businessacquisitions 6 15 6 27Reclassified – (12) 9 (3)Currencyadjustment 5 (3) (2) –At30September2011 290 950 510 1,750

DepreciationAt1October2009 162 487 324 973Chargefortheyear 13 84 51 148Disposals (9) (48) (26) (83)Reclassified (27) 37 (27) (17)Currencyadjustment 4 1 1 6At30September2010 143 561 323 1,027

At1October2010 143 561 323 1,027Chargefortheyear 17 96 54 167Disposals (6) (53) (46) (105)Reclassified – (1) 4 3Currencyadjustment 4 (1) – 3At30September2011 158 602 335 1,095

Net book valueAt30September2010 118 310 153 581

At30September2011 132 348 175 655

1Includesleasedassetsof£2million(2010:£3million).

ThenetbookamountoftheGroup’sproperty,plantandequipmentincludesassetsheldunderfinanceleasesasfollows:

Property, plant and equipment held under finance leases

Landandbuildings

£m

Plantandmachinery

£m

Fixturesand

fittings£m

Total£m

At30September2010 9 20 2 31

At30September2011 8 15 2 25



13 Interests in associates Countryofincorporation

2011% ownership

2010% ownership

TwickenhamExperienceLtd England&Wales 40% 40%OvalEventsLimited England&Wales 25% 25%AEGFacilities,LLC USA 49% –ThompsonHospitalityServicesLLC USA 49% 49%

Interests in associates2011

£m2010

£m

Net book valueAt1October 32 32Additions 47 –Shareofprofitslesslosses(netoftax) 6 6Dividendsreceived (7) (6)Currencyandotheradjustments 1 –

At30September 79 32

TheGroup’sshareofrevenuesandprofitsisincludedbelow:

Associates2011

£m2010

£m

Share of revenue and profitsRevenue 40 28Expenses/taxation1 (34) (22)

Profitaftertaxfortheyear 6 6

Share of net assetsGoodwill 24 23Other 55 9

Netassets 79 32

Share of contingent liabilitiesContingentliabilities (6) –

1Expensesincludetherelevantportionofincometaxrecordedbyassociates.

14 Other investments2011

£m2010

£m

Net book valueAt1October 37 32Additions 2 3Disposals – –Businessacquisitions 1 1Currencyandotheradjustments 1 1

At30September 41 37

Comprised ofInvestmentinAuBonPain1,3 8 7Otherinvestments1,3 9 9Lifeinsurancepolicies1,2,3 24 21

Total 41 37

1Categorisedas‘availableforsale’financialassets(IAS39). 2Lifeinsurancepoliciesusedbyoverseascompaniestomeetthecostofunfundedpost-employmentbenefitobligationsassetoutinnote23.3Asperthefairvaluehierarchiesexplainedinnote20,theinvestmentinAuBonPainisLevel3,otherinvestmentsareLevel1andthelifeinsurancepoliciesareLevel2.


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15 Joint venturesPrincipal joint ventures Countryofincorporation

2011% ownership

2010% ownership

QuadrantCateringLtd England&Wales 49% 49%SofraYemekÜretimVeHizmetA.S.1 Turkey – 50%ADNH-CompassMiddleEastLLC UnitedArabEmirates 50% 50%ExpressSupportServicesLimitada Angola 50% 50%

1DuringtheyeartheGroupacquiredtheremaining50.01%ofSofraYemekÜretimVeHizmetA.S.

NoneoftheseinvestmentsishelddirectlybytheUltimateParentCompany.Alljointventuresprovidefoodserviceand/orsupportservicesintheirrespectivecountriesofincorporationandmaketheiraccountsupto30September.

Theshareoftherevenue,profits,assetsandliabilitiesofthejointventuresincludedintheconsolidatedfinancialstatementsisasfollows:

Joint ventures2011

£m2010

£m

Share of revenue and profitsRevenue 292 291Expenses (266) (264)

Profitaftertaxfortheyear 26 27

Share of net assetsNon-currentassets 6 18Currentassets 87 103Non-currentliabilities (6) (15)Currentliabilities (53) (72)

Netassets 34 34

Share of contingent liabilitiesContingentliabilities 23 22

1TheremainingshareofSofraYemekÜretimVeHizmetA.S.wasacquiredduringtheyear.Lastyear’scomparativeshavenotbeenrestated.

16 Trade and other receivables 2011 2010

Trade and other receivablesCurrent

£m

Non-current

£m Total

£mCurrent

£m

Non-current

£mTotal

£m

Net book valueAt1October 1,830 72 1,902 1,680 64 1,744Netmovement 212 6 218 141 6 147Currencyadjustment (12) (1) (13) 9 2 11

At30September 2,030 77 2,107 1,830 72 1,902

Comprised ofTradereceivables 1,807 5 1,812 1,643 5 1,648Less:Provisionforimpairmentoftradereceivables (74) (1) (75) (78) (1) (79)

Nettradereceivables1 1,733 4 1,737 1,565 4 1,569

Otherreceivables 75 61 136 70 41 111Less:Provisionforimpairmentofotherreceivables (8) – (8) (8) – (8)

Netotherreceivables 67 61 128 62 41 103

Accruedincome 132 – 132 109 – 109Prepayments 98 12 110 90 27 117Amountsowedbyassociates1 – – – 4 – 4

Tradeandotherreceivables 2,030 77 2,107 1,830 72 1,902

1Categorisedas‘loansandreceivables’financialassets(IAS39).



16 Trade and other receivables continuedTrade receivablesThebookvalueoftradeandotherreceivablesapproximatestotheirfairvalueduetotheshort-termnatureofthemajorityofthereceivables.

Creditsalesareonlymadeaftercreditapprovalprocedureshavebeencompletedsatisfactorily.Thepolicyformakingprovisionsforbadanddoubtfuldebtsvariesfromcountrytocountryasdifferentcountriesandmarketshavedifferentpaymentpractices,butvariousfactorsareconsidered,includinghowoverduethedebtis,thetypeofreceivableanditspasthistory,andcurrentmarketandtradingconditions.Fullprovisionismadefordebtsthatarenotconsideredtoberecoverable.

ThereislimitedconcentrationofcreditriskwithrespecttotradereceivablesduetothediverseandunrelatednatureoftheGroup’sclientbase.Accordingly,theDirectorsbelievethatthereisnofurthercreditprovisionrequiredinexcessoftheprovisionfortheimpairmentofreceivables.ThebookvalueoftradeandotherreceivablesrepresentstheGroup’smaximumexposuretocreditrisk.

Tradereceivabledaysforthecontinuingbusinessat30September2011were48days(2010:48days).

Theageingofgrosstradereceivablesandoftheprovisionforimpairmentisasfollows:

2011

Trade receivables

Not yetdue£m

0-3 months

overdue£m

3-6months

overdue£m

6-12months

overdue£m

Over 12months

overdue£m

Total £m

Grosstradereceivables 1,387 312 52 23 38 1,812Less:Provisionforimpairmentoftradereceivables (2) (7) (34) (12) (20) (75)

Nettradereceivables 1,385 305 18 11 18 1,737

2010

Trade receivables

Notyetdue£m

0-3monthsoverdue

£m

3-6monthsoverdue

£m

6-12monthsoverdue

£m

Over12monthsoverdue

£mTotal

£m

Grosstradereceivables 1,291 282 35 18 22 1,648Less:Provisionforimpairmentoftradereceivables (8) (15) (26) (13) (17) (79)

Nettradereceivables 1,283 267 9 5 5 1,569

1Theageingoftheprovisionforimpairmentoftradereceivablesfor2010hasbeenrestatedfollowingananalysisofallgovernmentageddebt.

Movementsintheprovisionforimpairmentoftradeandotherreceivablesareasfollows:

2011 2010

Provision for impairment of trade and other receivablesTrade

£mOther

£mTotal

£mTrade

£mOther

£mTotal

£m

At1October 79 8 87 66 8 74Chargedtoincomestatement 18 1 19 27 – 27Creditedtoincomestatement (7) – (7) (3) – (3)Utilised (14) – (14) (11) – (11)Reclassified (1) (1) (2) – – –Currencyadjustment – – – – – –

At30September 75 8 83 79 8 87

At30September2011,tradereceivablesof£352million(2010:£286million)werepastduebutnotimpaired.TheGrouphasmadeaprovisionbasedonanumberoffactors,includingpasthistoryofthedebtor,andallamountsnotprovidedforareconsideredtoberecoverable.


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17 Inventories Inventories

2011 £m

2010£m

Net book valueAt1October 238 230Netmovement 32 5Currencyadjustment – 3

At30September 270 238

18 Cash and cash equivalents

Cash and cash equivalents2011

£m 2010

£m

Cashatbankandinhand 224 193Short-termbankdeposits 886 450

Cashandcashequivalents1 1,110 643

1Categorisedas‘loansandreceivables’financialassets(IAS39).

Cash and cash equivalents by currency2011

£m2010

£m

Sterling 846 462USDollar 64 25Euro 54 43JapaneseYen 10 6Other 136 107

Cashandcashequivalents 1,110 643

TheGroup’spolicytomanagethecreditriskassociatedwithcashandcashequivalentsissetoutinnote20.Thebookvalueofcashandcashequivalentsrepresentsthemaximumcreditexposure.

19 Short-term and long-term borrowings 2011 2010

Short-term and long-term borrowingsCurrent

£m Non-current

£m Total

£mCurrent

£mNon-current

£mTotal

£m

Bankoverdrafts 45 – 45 39 – 39Bankloans 29 54 83 21 11 32Loannotes 294 889 1,183 77 521 598Bonds 334 280 614 – 637 637

Borrowings(excludingfinanceleases) 702 1,223 1,925 137 1,169 1,306Financeleases 9 24 33 11 31 42

Borrowings(includingfinanceleases)1 711 1,247 1,958 148 1,200 1,348

1Categorisedas‘otherfinancialliabilities’(IAS39).

Bankoverdraftsprincipallyariseasaresultofunclearedtransactions.Interestonbankoverdraftsisattherelevantmoneymarketrates.

Allamountsdueunderbonds,loannotesandbankfacilitiesareshownnetofunamortisedissuecosts.



19 Short-term and long-term borrowings continuedTheGrouphasfixedterm,fixedinterestprivateplacementstotallingUS$1,732million(£1,112million)atinterestratesbetween3.31%and6.81%.Thecarryingvalueoftheseloannotesis£1,146million.ItalsohasaSterlingdenominatedprivateplacementof£35millionwithacarryingvalueof£37millionataninterestrateof7.55%.

Loan notes Nominalvalue Redeemable Interest

US$privateplacement $450m May2012 6.81%US$privateplacement $15m Nov2013 5.67%US$privateplacement $105m Oct2013 6.45%US$privateplacement $162m Oct2015 6.72%Sterlingprivateplacement £35m Oct2016 7.55%US$privateplacement $250m Oct2018 3.31%US$privateplacement $398m Oct2021 3.98%US$privateplacement $352m Oct2023 4.12%

TheGroupalsohasSterlingdenominatedEurobondstotalling£575millionatinterestratesof6.375%and7.0%.Thecarryingvalueofthesebondsis£614million.ThebondredeemableinDecember2014isrecordedatitsfairvaluetotheGrouponacquisition.

Bonds Nominalvalue Redeemable Interest

SterlingEurobond £325m May2012 6.375%SterlingEurobond £250m Dec2014 7.0%

Thematurityprofileofborrowings(excludingfinanceleases)isasfollows:

Maturity profile of borrowings (excluding finance leases)2011 £m

2010£m

Within1year,orondemand 702 137Between1and2years 4 650Between2and3years 81 2Between3and4years 281 81Between4and5years 157 289Inmorethan5years 700 147

Borrowings(excludingfinanceleases) 1,925 1,306

ThefairvalueoftheGroup’sborrowingsiscalculatedbydiscountingfuturecashflowstonetpresentvaluesatcurrentmarketratesforsimilarfinancialinstruments.Thetablebelowshowsthefairvalueofborrowingsexcludingaccruedinterest:

2011 2010

Carrying value and fair value of borrowings (excluding finance leases)

Carryingvalue

£m

Fairvalue

£m

Carryingvalue

£m

Fairvalue

£m

Bankoverdrafts 45 45 39 39

Bankloans 83 83 32 32

Loannotes 1,183 1,182 598 641

£325mEurobondMay2012 334 337 350 347£250mEurobondDec2014 280 284 287 290

Bonds 614 621 637 637

Borrowings(excludingfinanceleases) 1,925 1,931 1,306 1,349


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19 Short-term and long-term borrowings continued2011 2010

Gross and present value of finance lease liabilitiesGross

£m

Present value

£mGross

£m

Presentvalue

£m

Finance lease payments falling due:Within1year 10 9 12 11In2to5years 15 15 23 22Inmorethan5years 10 9 9 9

35 33 44 42Less:Futurefinancecharges (2) – (2) –

Grossandpresentvalueoffinanceleaseliabilities 33 33 42 42

2011 2010

Borrowings by currencyBorrowings

£m

Finance leases

£mTotal

£mBorrowings

£m

Financeleases

£mTotal

£m

Sterling 696 – 696 687 – 687USDollar 1,184 9 1,193 568 14 582Euro 14 18 32 17 21 38JapaneseYen 1 – 1 7 – 7Other 30 6 36 27 7 34

Total 1,925 33 1,958 1,306 42 1,348

TheGrouphadthefollowingundrawncommittedfacilitiesavailableat30September,inrespectofwhichallconditionsprecedenthadthenbeenmet:

Undrawn committed facilities2011

£m2010£m

Expiringbetween1and5years 700 696

20 Derivative financial instrumentsCapital risk managementTheGroupmanagesitscapitalstructuretoensurethatitwillbeabletocontinueasagoingconcern.ThecapitalstructureoftheGroupconsistsofcashandcashequivalentsasdisclosedinnote18;debt,whichincludestheborrowingsdisclosedinnote19;andequityattributabletoequityshareholdersoftheParent,comprisingissuedsharecapital,reservesandretainedearningsasdisclosedintheconsolidatedstatementofchangesinequity.

Financial managementTheGroupcontinuestomanageitsinterestrateandforeigncurrencyexposureinaccordancewiththepoliciessetoutbelow.TheGroup’sfinancialinstrumentscompriseofcash,borrowings,receivablesandpayablesthatareusedtofinancetheGroup’soperations.TheGroupalsousesderivatives,principallyinterestrateswaps,forwardcurrencycontractsandcrosscurrencyswaps,tomanageinterestrateandcurrencyrisksarisingfromtheGroup’soperations.TheGroupdoesnottradeinfinancialinstruments.TheGroup’streasurypoliciesaredesignedtomitigatetheimpactoffluctuationsininterestratesandexchangeratesandtomanagetheGroup’sfinancialrisks.TheBoardapprovesanychangestothepolicies.

Liquidity riskTheGroupfinancesitsborrowingsfromanumberofsourcesincludingthebank,thepublicandtheprivateplacementmarkets.TheGrouphasdevelopedlong-termrelationshipswithanumberoffinancialcounterpartieswiththebalancesheetstrengthandcreditqualitytoprovidecreditfacilitiesasrequired.TheGroupseekstoavoidaconcentrationofdebtmaturitiesinanyoneperiodtospreaditsrefinancingrisk.



20 Derivative financial instruments continued

Foreign currency riskTheGroup’spolicyistomatchasfaraspossibleitsprincipalprojectedcashflowsbycurrencytoactualoreffectiveborrowingsinthesamecurrency.Ascurrencycashflowsaregenerated,theyareusedtoserviceandrepaydebtinthesamecurrency.Wherenecessary,toimplementthispolicy,forwardcurrencycontractsandcrosscurrencyswapsaretakenoutwhich,whenappliedtotheactualcurrencyliabilities,convertthesetotherequiredcurrency.

TheborrowingsineachcurrencycangiverisetoforeignexchangedifferencesontranslationintoSterling.Wheretheborrowingsareeitherlessthan,orequateto,thenetinvestmentinoverseasoperations,theseexchangeratemovementsaretreatedasmovementsonreservesandrecordedintheconsolidatedstatementofcomprehensiveincomeratherthanintheincomestatement.

Non-Sterlingearningsstreamsaretranslatedattheaveragerateofexchangefortheyear.Fluctuationsinexchangerateshavegivenandwillcontinuetogiverisetotranslationdifferences.TheGroupisonlypartiallyprotectedfromtheimpactofsuchdifferencesthroughthematchingofcashflowstocurrencyborrowings.

TheGrouphasminimalexposuretotheforeigncurrencyriskoftradereceivablesandpayablesasoperationswithinindividualcountrieshavelittlecross-borderactivitywhichmightgiverisetotranslationrisksontrade-relatedbalances.

ThemaincurrenciestowhichtheGroup’sreportedSterlingfinancialpositionisexposedaretheUSDollar,theEuroandtheJapaneseYen.Assetoutabove,theGroupseekstohedgeitsexposuretocurrenciesbymatchingdebtincurrencyagainstthecashflowsgeneratedbytheGroup’sforeignoperationsinsuchcurrencies.

Theeffectonprofitaftertaxandequityofa10%strengtheningofSterlingagainstthesecurrenciesontheGroup’sfinancialstatementsisshownbelow.A10%weakeningwouldresultinanequalandoppositeimpactontheprofitorlossandequityoftheGroup.Thistableshowstheimpactonthefinancialinstrumentsinplaceon30Septemberandhasbeenpreparedonthebasisthatthe10%changeinexchangeratesoccurredonthefirstdayofthefinancialyearandappliedconsistentlythroughouttheyear.

2011 2010

Financial instruments: Impact of Sterling strengthening by 10%

Against US Dollar

£m

Against Euro £m

Against Japanese

Yen £m

AgainstUSDollar

£m

AgainstEuro£m

AgainstJapanese

Yen£m

Increase/(decrease)inprofitfortheyear(aftertax) 1 – – 1 – –Increase/(decrease)intotalequity 55 18 6 40 12 5

Interest rate riskAssetoutabove,theGrouphaseffectiveborrowingsinanumberofcurrenciesanditspolicyistoensurethat,intheshort-term,itisnotmateriallyexposedtofluctuationsininterestratesinitsprincipalcurrencies.TheGroupimplementsthispolicyeitherbyborrowingfixedratedebtorbyusinginterestrateswapssothattheinterestratesonatleast80%oftheGroup’sprojecteddebtarefixedforoneyear,reducingto60%fixedforthesecondyearand40%fixedforthethirdyear.

Thesensitivityanalysisshownonpage96hasbeendeterminedbasedonthederivativeandnon-derivativefinancialinstrumentstheGrouphadinplaceattheyearenddateonly.

Theeffectofa1%increaseininterestratesprevailingatthebalancesheetdateontheGroup’scashandcashequivalentsanddebtsubjecttovariableratesofinterestatthebalancesheetdatewouldbealossof£1million(2010:lossof£1million)overthecourseofayear.Asimilar1%decreaseininterestrateswouldresultinanequalandoppositeeffectoverthecourseofayear.


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20 Derivative financial instruments continued2011

Interest rate sensitivity analysisSterling

£m US Dollar

£m Euro £m

JapaneseYen £m

Other £m

Total £m

Increaseininterestrate +1% +1% +1% +1% +1% n/aFloatingrateexposure–cash/(debt) 115 (108) (71) (53) 44 (73)Increase/(decrease)inprofitfortheyear(aftertax) 1 (1) (1) – – (1)

2010

Interest rate sensitivity analysisSterling

£mUSDollar

£mEuro£m

JapaneseYen£m

Other£m

Total£m

Increaseininterestrate +1% +1% +1% +1% +1% n/aFloatingrateexposure–cash/(debt) 7 (69) (104) (13) (2) (181)Increase/(decrease)inprofitfortheyear(aftertax) – – (1) – – (1)

ThesechangesaretheresultoftheexposuretointerestratesfromtheGroup’sfloatingratecashandcashequivalentsanddebt.Thesensitivitygainsandlossesgivenabovemayvarybecausecashflowsvarythroughouttheyearandinterestrateandcurrencyhedgingmaybeimplementedaftertheyearenddateinordertocomplywiththetreasurypoliciesoutlinedabove.

Credit riskTheGroup’spolicyistominimiseitsexposuretocreditriskfromthefailureofanysinglefinancialcounterpartybyspreadingitsriskacrossaportfoliooffinancialcounterpartiesandmanagingtheaggregateexposuretoeachagainstcertainpre-agreedlimits.Exposuretocounterpartycreditriskarisingfromdeposits,derivativeandforwardcurrencycontractsandcrosscurrencyswapsisconcentratedattheGroupcentrewherepossible.Financialcounterpartylimitsarederivedfromthelongandshort-termcreditratings,andthebalancesheetstrengthofthefinancialcounterparty.Allfinancialcounterpartiesarerequiredtohaveaminimumshort-termcreditratingfromMoodysofP-1orequivalentfromanotherrecognised agency.

TheGroup’spolicytomanagethecreditriskassociatedwithtradeandotherreceivablesissetoutinnote16.

Hedging activitiesThefollowingsectiondescribesthederivativefinancialinstrumentstheGroupusestoapplytheinterestrateandforeigncurrencyhedgingstrategiesdescribedabove.

Fair value hedgesTheGroupusesinterestrateswapstohedgethefairvalueoffixedrateborrowings.Theseinstrumentsswapthefixedinterestpayableontheborrowingsintofloatinginterestratesandhedgethefairvalueoftheborrowingsagainstchangesininterestrates.TheseinterestrateswapsallqualifyforfairvaluehedgeaccountingasdefinedbyIAS39.

Cash flow hedgesTheGroupusesinterestrateswapstohedgethecashflowsfromfloatingrateborrowings.Theseinstrumentsswapfloatinginterestpayableontheseborrowingsintofixedinterestratesandhedgeagainstcashflowchangescausedbychanginginterestrates.Thecashflowsandincomestatementimpacthedgedinthismannerwilloccurbetweenoneandthreeyearsofthebalancesheetdate.

TheseinterestrateswapsdonotqualifyforcashflowhedgeaccountingasdefinedbyIAS39becausetheGroupcreatessyntheticfloatingrateforeigncurrencyborrowings(seenetinvestmenthedgesbelow)throughtheuseofforwardcurrencycontractsandcrosscurrencyswapswhichIAS39prohibitsfrombeingdesignatedasahedgeditem.

TheseinterestrateswapsareaneffectiveeconomichedgeagainsttheexposureoftheGroup’sfloatingrateborrowingstointerestraterisk.

Net investment hedgesTheGroupusesforeigncurrencydenominateddebt,forwardcurrencycontractsandcrosscurrencyswapstopartiallyhedgeagainstthechangeintheSterlingvalueofitsforeigncurrencydenominatednetassetsduetomovementsinforeignexchangerates.Thefairvalueofdebtinanetinvestmenthedgewas£911million(2010:£885million).



20 Derivative financial instruments continuedDerivatives not in a hedging relationshipTheGrouphasanumberofderivativefinancialinstrumentsthatdonotmeetthecriteriaforhedgeaccounting.Theseincludesomeinterestrateswapsandsomeforwardcurrencycontracts.

Fair value measurementTheGroupusesthefollowinghierarchyfordeterminingthefairvalueoffinancialinstrumentsbyvaluationtechnique:

• Level1:quoted(unadjusted)pricesinactivemarketsforidenticalassetsorliabilities;• Level2:othertechniquesforwhichallinputswhichhavesignificanteffectontherecordedfairvalueareobservable,eitherdirectlyor

indirectly;and• Level3:techniqueswhichuseinputswhichhavesignificanteffectontherecordedfairvaluethatarenotbasedonobservablemarketdata.

Allderivativefinancialinstrumentsareshownatfairvalueinthebalancesheet.ThefairvalueshavebeendeterminedbyreferencetoLevel2techniquesinthehierarchydescribedabove.Thefairvaluesofderivativefinancialinstrumentsrepresentthemaximumcreditexposure.

2011 2010

Derivative financial instruments

Current assets

£m

Non-current assets

£m

Current liabilities

£m

Non-current liabilities

£m

Currentassets

£m

Non-currentassets

£m

Currentliabilities

£m

Non-currentliabilities

£m

Interest rate swaps:Fairvaluehedges1 19 62 – – 9 80 – –Notinahedgingrelationship2 – – (2) (2) – – (1) (2)

Other derivatives:Forwardcurrencycontractsand

crosscurrencyswaps 10 – (1) (1) 1 – (4) –Others – 2 – – – 1 – –

Total 29 64 (3) (3) 10 81 (5) (2)

1Derivativesthataredesignatedandeffectiveashedginginstrumentscarriedatfairvalue(IAS39).2Derivativescarriedat‘fairvaluethroughprofitorloss’(IAS39).

2011 2010

Notional amount of derivative financial instruments by currency

Fair value swaps

£m

Cash flow swaps

£m

Fairvalueswaps

£m

Cashflowswaps

£m

Sterling 545 – 695 –USDollar 642 109 254 105Euro – 138 – 113JapaneseYen – 70 7 103Other – 77 – 68

Total 1,187 394 956 389

2011 2010

Effective currency denomination of borrowings after the effect of derivatives

Gross borrowings

£m

Forward currency

contracts1 £m

Effective currency of borrowings

£m

Grossborrowings

£m

Forwardcurrencycontracts1

£m

Effectivecurrencyofborrowings

£m

Sterling 696 139 835 687 (156) 531USDollar 1,193 (506) 687 582 (103) 479Euro 32 193 225 38 130 168JapaneseYen 1 65 66 7 50 57Other 36 101 137 34 82 116

Total 1,958 (8) 1,950 1,348 3 1,351

1Includescrosscurrencyswaps.


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Gross debt maturity analysis

Less than 1 year

£m

Between 1 and 2 years

£m


£m


£m


£m

Over 5 years

£mTotal

£m

Fixed interest£325mEurobond2012 325 – – – – – 325£250mEurobond2014 – – – 250 – – 250USprivateplacements 289 – 77 – 104 675 1,145Bankloans – – – – – – –

Totalfixedinterest 614 – 77 250 104 675 1,720Cashflowswaps(fixedleg) 201 193 – – – – 394Fairvalueswaps(fixedleg) (453) – (67) (200) (61) (406) (1,187)

Fixedinterest(asset)/liability 362 193 10 50 43 269 927

Floating interestBankloans 29 4 – 1 47 2 83Overdrafts 45 – – – – – 45

Totalfloatinginterest 74 4 – 1 47 2 128Cashflowswaps(floatingleg) (201) (193) – – – – (394)Fairvalueswaps(floatingleg) 453 – 67 200 61 406 1,187

Floatinginterest(asset)/liability 326 (189) 67 201 108 408 921

OtherFinanceleaseobligations 9 7 3 3 2 9 33Fairvalueadjustmentstoborrowings1 12 – 4 30 6 23 75Swapmonetisation1 2 – – – – – 2

Other(asset)/liability 23 7 7 33 8 32 110

Grossdebtexcludingderivatives 711 11 84 284 159 709 1,958

Derivative financial instrumentsDerivativefinancialinstruments1 (17) – (5) (29) (8) (20) (79)Forwardcurrencycontractsandcrosscurrencyswaps2 (9) – – – 1 – (8)

Grossdebt 685 11 79 255 152 689 1,871

1Non-cashitem(changesinthevalueofthisnon-cashitemarereportedviatheothernon-cashmovementscaptioninnote29). 2Non-cashitem(changesinthevalueofthisnon-cashitemarereportedviatheforeignexchangecaptioninnote29).

2011

Principal and interest maturity analysis

Less than 1 year

£m


£m


£m


£m


£m

Over 5 years

£mTotal

£m

Grossdebt 685 11 79 255 152 689 1,871Less:Overdrafts (45) – – – – – (45)Less:Feesandpremiumscapitalisedonissue 1 – – – 3 2 6Less:Othernon-cashitems 12 – 1 (1) 1 (3) 10

Repaymentofprincipal 653 11 80 254 156 688 1,842Interestcashflowsondebtandderivatives(settlednet) 110 61 57 54 29 124 435Settlementofforwardcurrencycontractsandcross

currencyswaps–payableleg 69 – – – 51 – 120Settlementofforwardcurrencycontractsandcross

currencyswaps–receivableleg (68) – – – (50) – (118)

Repaymentofprincipalandinterest 764 72 137 308 186 812 2,279




Gross debt maturity analysis

Lessthan1year

£m

Between1and2years

£m

Between2and3years

£m

Between3and4years

£m

Between4and5years

£m

Over5years

£mTotal

£m

Fixed interest£325mEurobond2012 – 325 – – – – 325£250mEurobond2014 – – – – 250 – 250USprivateplacements 77 285 – 76 – 138 576Bankloans 7 – – – – – 7

Totalfixedinterest 84 610 – 76 250 138 1,158Cashflowswaps(fixedleg) 192 197 – – – – 389Fairvalueswaps(fixedleg) (157) (452) – (67) (200) (80) (956)

Fixedinterest(asset)/liability 119 355 – 9 50 58 591

Floating interest Bankloans 14 5 2 – 2 2 25Overdrafts 39 – – – – – 39

Totalfloatinginterest 53 5 2 – 2 2 64Cashflowswaps(floatingleg) (192) (197) – – – – (389)Fairvalueswaps(floatingleg) 157 452 – 67 200 80 956

Floatinginterest(asset)/liability 18 260 2 67 202 82 631

OtherFinanceleaseobligations 11 8 6 4 4 9 42Fairvalueadjustmentstoborrowings1 – 30 – 5 37 7 79Swapmonetisation1 – 5 – – – – 5

Other(asset)/liability 11 43 6 9 41 16 126

Grossdebtexcludingderivatives 148 658 8 85 293 156 1,348

Derivative financial instrumentsDerivativefinancialinstruments1 (7) (36) – (7) (27) (10) (87)Forwardcurrencycontractsandcrosscurrencyswaps2 3 – – – – – 3

Grossdebt 144 622 8 78 266 146 1,264

1Non-cashitem(changesinthevalueofthisnon-cashitemarereportedviatheothernon-cashmovementscaptioninnote29). 2Non-cashitem(changesinthevalueofthisnon-cashitemarereportedviatheforeignexchangecaptioninnote29).

2010

Principal and interest maturity analysis

Lessthan1year

£m

Between1and2years

£m

Between2and3years

£m

Between3and4years

£m

Between4and5years

£m

Over5years

£mTotal

£m

Grossdebt 144 622 8 78 266 146 1,264Less:Overdrafts (39) – – – – – (39)Less:Feesandpremiumscapitalisedonissue – – – – – – –Less:Othernon-cashitems 4 1 – 2 (10) 3 –

Repaymentofprincipal 109 623 8 80 256 149 1,225Interestcashflowsondebtandderivatives(settlednet) 85 80 33 31 28 6 263Settlementofforwardcurrencycontractsandcross

currencyswaps–payableleg 454 – – – – – 454Settlementofforwardcurrencycontractsandcross

currencyswaps–receivableleg (450) – – – – – (450)

Repaymentofprincipalandinterest 198 703 41 111 284 155 1,492


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21 Trade and other payables 2011 2010

Trade and other payablesCurrent

£m Non-current

£m Total

£mCurrent

£mNon-current

£mTotal

£m

Net book valueAt1October 2,683 34 2,717 2,378 29 2,407Netmovement 216 5 221 288 4 292Currencyadjustment 1 – 1 17 1 18

At30September 2,900 39 2,939 2,683 34 2,717

Comprised ofTradepayables1 1,292 3 1,295 1,107 5 1,112Socialsecurityandothertaxes 279 – 279 265 – 265Otherpayables 158 19 177 156 17 173Deferredconsiderationonacquisitions1 23 10 33 17 10 27Liabilityonputoptionsheldbynon-controllingequitypartners2 – – – – 1 1Accruals3 942 7 949 942 1 943Deferredincome 206 – 206 196 – 196

Tradeandotherpayables 2,900 39 2,939 2,683 34 2,717

1Categorisedas‘otherfinancialliabilities’(IAS39).2Categorisedas‘fairvaluethroughprofitorloss’(IAS39).3Ofthisbalance£334million(2010:£299million)iscategorisedas‘otherfinancialliabilities’(IAS39).

TheDirectorsconsiderthatthecarryingamountoftradeandotherpayablesapproximatestotheirfairvalue.Thecurrenttradeandotherpayablesarepayableondemand.

Tradepayabledaysforthecontinuingbusinessat30September2011were69days(2010:63days).

22 Provisions

ProvisionsInsurance

£m

Provisionsinrespectof

discontinuedanddisposed

businesses£m

Onerouscontracts

£m

Legalandotherclaims

£m

Environmentalandother

£mTotal£m

At1October2009 163 89 49 127 37 465Reclassified1 – – 1 4 3 8Expenditureintheyear (6) (6) (7) (19) (30) (68)Chargedtoincomestatement 17 – 11 21 12 61Creditedtoincomestatement – (17) (12) (10) (5) (44)Fairvalueadjustmentsarisingonacquisitions – – 1 (1) – –Businessacquisitions 1 – – 4 2 7Unwindingofdiscountonprovisions – – – – – –Currencyadjustment 2 – 1 3 (3) 3

At30September2010 177 66 44 129 16 432

At1October2010 177 66 44 129 16 432Reclassified1 – – (6) 8 (2) – Expenditureintheyear (4) (7) (7) (6) (13) (37)Chargedtoincomestatement 27 – 11 20 14 72Creditedtoincomestatement – (5) (3) (17) (3) (28)Fairvalueadjustmentsarisingonacquisitions(note26) – – – (1) – (1)Businessacquisitions – – 1 – 1 2Unwindingofdiscountonprovisions – – 1 (1) – – Currencyadjustment 1 – – (2) – (1)

At30September2011 201 54 41 130 13 439

1Includingitemsreclassifiedfromaccruedliabilitiesandotherbalancesheetcaptions.



22 Provisions continuedProvisions

2011£m

2010£m

Current 138 130Non-current 301 302

Totalprovisions 439 432

Theprovisionforinsurancerelatestothecostsofself-fundedinsuranceschemesandisessentiallylong-terminnature.

Provisionsinrespectofdiscontinuedanddisposedofbusinessesrelatetoestimatedamountspayableinconnectionwithonerouscontractsandclaimsarisingfromdisposals.Thefinalamountpayableremainsuncertainas,atthedateofapprovalofthesefinancialstatements,thereremainsafurtherperiodduringwhichclaimsmaybereceived.Thetimingofanysettlementwilldependuponthenatureandextentofclaimsreceived.Surplusprovisionsof£5million(2010:£16million)werecreditedtothediscontinuedoperationssectionoftheincomestatementintheyear.

Provisionsforonerouscontractsrepresenttheliabilitiesinrespectofshort-termandlong-termleasesonunoccupiedpropertiesandothercontractslastingunderfiveyears.

Provisionsforlegalandotherclaimsrelateprincipallytoprovisionsfortheestimatedcostoflitigationandothersundryclaims.Thetimingofthesettlementoftheseclaimsisuncertain.

EnvironmentalprovisionsareinrespectofpotentialliabilitiesrelatingtotheGroup’sresponsibilityformaintainingitsoperatingsitesinaccordancewithstatutoryrequirementsandtheGroup’saimtohavealowimpactontheenvironment.Theseprovisionsareexpectedtobeutilisedasoperatingsitesaredisposedoforasenvironmentalmattersareresolved.Theotherprovisionsincludeprovisionsforrestructuring.

ProvisionsarediscountedtopresentvaluewheretheeffectismaterialusingtheGroup’sweightedaveragecostofcapital.

23 Post-employment benefit obligationsPension schemes operatedTheGroupoperatesanumberofpensionarrangementsthroughouttheworldwhichhavebeendevelopedinaccordancewithstatutoryrequirementsandlocalcustomsandpractices.Themajorityofschemesareself-administeredandtheschemes’assetsareheldindependentlyoftheGroup’sassets.Pensioncostsareassessedinaccordancewiththeadviceofindependent,professionallyqualifiedactuaries.TheGroupmakesemployercontributionstothevariousschemesinexistencewithintherangeof3%to35%ofpensionablesalaries.

Thecontributionspayablefordefinedcontributionschemesof£58million(2010:£54million)havebeenfullyexpensedagainstprofitsinthecurrentyear.

UK schemesWithintheUKtherearenowtwomainarrangementsfollowingmergerofthetwodefinedbenefitsarrangements:theCompassGroupPensionPlan(‘thePlan’)andtheCompassPensionScheme(the‘Scheme’),whichtookeffectfrom5April2011.ThecombinedarrangementcontinuestobeknownasthePlan.TheothercontinuingmainarrangementistheCompassRetirementIncomeSavingsPlan(‘CRISP’).

CRISPwaslaunchedon1February2003.ThishasbeenthemainvehicleforpensionprovisionfornewjoinersintheUKsincethatdatebutexistingmembersofthePlanandtheSchemehadcontinuedtoaccruebenefitsunderthosearrangementsupuntil5April2010.CRISPisacontracted-inmoneypurchasearrangementwherebytheGroupwillmatchemployeecontributionsupto6%ofpay(minimum3%).WithinCRISPanewdefinedcontributionsectionwasestablishedfromApril2006knownastheCompassHigherIncomePlan(‘CHIP’).SenioremployeeswhocontributetoCRISPwillreceiveanadditionalemployer-onlycontributionintoCHIP.TheamountofcontributionandeligibilityforCHIParedecidedannuallyattheCompany’sdiscretion.ThepaymenttowardsCHIPmaybetakeninpart,orinwhole,asacashsupplementinsteadofapensioncontribution.

ThePlanisadefinedbenefitarrangement.Ithasbeenclosedtonewentrantssince2003otherthanfortransfersunderpublicsectorcontractswheretheGroupisobligedtoprovidefinalsalarybenefitstotransferringemployees.SuchtransfereesenterintotheGADsectionsofthePlan(‘GADmembers’).

On5April2010,thePlanandSchemeclosedtofutureaccrualforallexistingmembers,otherthanthosewithinthespecialsectionsofthePlanandSchemeforGADmembers.TheaffectedmemberswereofferedmembershipofCRISPfrom6April2010.


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23 Post-employment benefit obligations continuedThePlanisoperatedonapre-fundedbasis.Thefundingpolicyistocontributesuchvariableamounts,ontheadviceoftheactuary,asachievesa100%fundinglevelonaprojectedsalarybasis.Theactuarialassessmentscoveringexpenseandcontributionsarecarriedoutbyindependentqualifiedactuaries.AformalactuarialvaluationofthePlaniscarriedouteverythreeyears.ThemostrecentvaluationsofthePlanandtheSchemewereasat5April2010.Thefinalresultsrevealedaworseninginthefundingpositionssincethepreviousvaluations,althoughtheeffectsofpoorinvestmentreturnsduringtheinterveningperiodwerelessenedbythecautiousinvestmentstrategythathasbeensetfortheseschemes.

UnderthefundingscheduleagreedwiththePlanandSchemeTrustees,theGroupaimedtoeliminatethe5April2010deficitovertheeightyearperiodto30September2018.OnmergerofthePlanandtheSchemeanexceptionaladvancefundingpaymentof£50millionwasmadebytheGrouptothePlan.ArevisedfundingschedulewasagreedwiththePlanTrusteeswherebythepreviouslyagreedcombinedannualdeficitrecoverypaymentswillremainunchangeduntil30September2013.Thetargetremainstofullyeliminatethe5April2010deficitby30September2018.Thenexttriennialvaluationisduetobecompletedasat5April2013.ThePlanisre-appraisedannuallybyindependentactuariesinaccordancewithIAS19‘EmployeeBenefits’requirements.

CRISPhasaCorporateTrustee.TheChairman,TonyAllen,isindependent.TheothersixTrusteeDirectorsareUK-basedemployeesoftheGroup,threeofwhomhavebeennominatedbyCRISPmembers.ThePlanhasaCorporateTrustee.TheChairman,PeterMorriss,isindependent.ThereareafurthersixTrusteeDirectorswhoareUK-basedemployeesorformeremployeesoftheGroup,threeofwhomhavebeennominatedbyPlanmembers.

Overseas schemesIntheUSA,themainplanisadefinedbenefitplan.Thefundingpolicy,inaccordancewithgovernmentguidelines,istocontributesuchvariableamounts,ontheadviceoftheactuary,asachievesa100%fundinglevelonaprojectedsalarybasis.TheGrouphasmadeanexceptionaladvancefundingpaymentof£10milliontothisplanduringtheyear.InCanada,NorwayandSwitzerlandtheGroupalsoparticipatesinfundeddefinedbenefitarrangements.

Inothercountries,GroupemployeesparticipateprimarilyinstatearrangementstowhichtheGroupmakestheappropriatecontributions.

Otherthanwhererequiredbylocalregulationorstatute,thedefinedbenefitschemesareclosedtonewentrants.Fortheseschemesthecurrentservicecostwillincreaseundertheprojectedunitcreditmethodasthemembersoftheschemesapproachretirement.

Inaddition,theGroupcontributestoanumberofmulti-employerunionsponsoredpensionplans,primarilyintheUSA.Theseplansareaccountedforasdefinedcontributionplans,astheinformationprovidedbytheplanadministratorsisinsufficientforthemtobeaccountedforasdefinedbenefitplans.TheGroupmadetotalcontributionsof£8millionintheyear(2010:£7million)tothesearrangements.

Disclosuresshowingtheassetsandliabilitiesoftheschemesaresetoutbelow.Thesehavebeencalculatedonthefollowingassumptions:

UKschemes USAschemes Otherschemes

2011 2010 2009 2011 2010 2009 2011 2010 2009

Rateofincreaseinsalaries1 4.0% 4.1% 3.3/4.3% 3.0% 4.0% 4.0% 2.5% 2.6% 2.6%Rateofincreaseforpensions

inpayment1 3.0% 2.4/3.1% 2.3/3.3% 2.3% 2.5% 2.2% 0.7% 1.2% 1.3%Rateofincreasefor

deferredpensions1 3.0% 3.1% 3.3% 0.0% 0.0% 0.0% 0.5% 1.0% 1.1%Discountrate 5.1% 5.0% 5.4% 4.4% 4.9% 5.5% 3.7% 3.8% 5.0%Inflationassumption 3.0% 3.1% 3.3% 2.3% 2.5% 2.2% 2.1% 2.3% 2.2%

1TherateofincreasefortheUKschemesvariesaccordingtothebenefitstructure.



23 Post-employment benefit obligations continuedThemortalitytablesusedintheactuarialvaluationimplylifeexpectancyatage65inyearsfortypicalmembersasfollows:

UKschemes USAschemes

Life expectancy at 65

Malenon-pensioner

years

Malepensioner

years

Femalenon-pensioner

years

Femalepensioner

yearsMaleyears

Femaleyears

Asat30September2011 22.3 20.7 25.1 23.5 19.0 20.9Asat30September2010 22.1 20.6 24.9 23.4 18.4 20.6

Theexpectedratesofreturnonindividualcategoriesofplanassetsaredeterminedaftertakingadvicefromexternalexpertsandusingavailablemarketdata,forexample,byreferencetorelevantequityandbondindicespublishedbystockexchanges.Theoverallrateofreturniscalculatedbyweightingtheindividualratesinaccordancewiththeanticipatedbalanceintherespectiveinvestmentportfolioofeachplan.

2011

UK schemes USA schemes Other schemes

Fair value of plan assetsExpected

return £mExpected

return £mExpected

return £mTotal

£m

Equityinstruments 7.0% 434 7.8% 84 6.9% 25 543

Debtinstruments 3.4% 939 6.3% 108 3.0% 24 1,071Other 6.0% 72 0.0% – 3.9% 87 159

Totalplanassets 4.6% 1,445 7.0% 192 4.3% 136 1,773

2010



return £mExpected

return £mExpected

return £mTotal

£m

Equityinstruments 7.2% 398 7.6% 113 8.4% 21 532Debtinstruments 3.9% 881 4.3% 52 3.3% 29 962Other 6.6% 69 3.0% 9 4.4% 67 145


2009



return £mExpected

return £mExpected

return £mTotal

£m

Equityinstruments 7.6% 389 10.1% 101 8.7% 23 513Debtinstruments 4.3% 807 5.5% 47 4.4% 50 904Other 7.0% 67 3.5% 8 4.5% 33 108


2011 2010

Fair value of plan assets UK £m

USA £m

Other £m

Total £m

UK£m

USA£m

Other£m

Total£m

At1October 1,348 174 117 1,639 1,263 156 106 1,525Currencyadjustment – 3 3 6 – 2 5 7Expectedreturnonplanassets 68 11 6 85 68 13 6 87Actuarialgain/(loss) (10) (11) (3) (24) 47 (2) 1 46Employeecontributions 1 11 3 15 2 12 3 17Employercontributions 86 20 17 123 19 8 16 43Benefitspaid (48) (16) (14) (78) (51) (15) (14) (80)Disposalsandplansettlements – – (3) (3) – – (6) (6)Acquisitions – – 10 10 – – – –

At30September 1,445 192 136 1,773 1,348 174 117 1,639


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23 Post-employment benefit obligations continued2011 2010

Present value of defined benefit obligations

UK £m

USA £m

Other £m

Total £m

UK£m

USA£m

Other£m

Total£m

At1October 1,506 295 228 2,029 1,405 259 197 1,861Currencyadjustment – 4 4 8 – 2 6 8Currentservicecost 2 7 12 21 6 6 10 22Pastservicecost – – – – – – – –Curtailmentcredit – – – – – – – –Amountchargedtoplanliabilities 74 16 9 99 75 17 10 102Actuarial(gain)/loss (36) 2 (7) (41) 69 14 21 104Employeecontributions 1 11 3 15 2 12 3 17Benefitspaid (48) (16) (14) (78) (51) (15) (14) (80)Disposalsandplansettlements – – (3) (3) – – (6) (6)Acquisitions – – 16 16 – – 1 1

At30September 1,499 319 248 2,066 1,506 295 228 2,029

2011 2010Present value of defined benefit obligations

UK £m

USA £m

Other £m

Total £m

UK£m

USA£m

Other£m

Total£m

Fundedobligations 1,466 237 181 1,884 1,473 218 164 1,855Unfundedobligations 33 82 67 182 33 77 64 174

Totalobligations 1,499 319 248 2,066 1,506 295 228 2,029

Post-employment benefit obligationsrecognised in the balance sheet

2011 £m

2010£m

2009£m

2008£m

2007£m

Presentvalueofdefinedbenefitobligations 2,066 2,029 1,861 1,552 1,512Fairvalueofplanassets (1,773) (1,639) (1,525) (1,419) (1,442)

Totaldeficitofdefinedbenefitpensionplansperabove 293 390 336 133 70Surplusnotrecognised – – 1 – 92Pastservicecostnotrecognised1 (1) (1) (2) (2) –

Post-employmentbenefitobligationsperthebalancesheet 292 389 335 131 162

1ToberecognisedovertheremainingservicelifeinaccordancewithIAS19.

CertainGroupcompanieshavetakenoutlifeinsurancepolicieswhichwillbeusedtomeetunfundedpensionobligations.Thecurrentvalueofthesepolicies,£24million(2010:£21million),maynotbeoffsetagainstpensionobligationsunderIAS19andisreportedwithinnote14.

2011 2010Total pension costs/(credits)recognised in the income statement

UK £m

USA £m

Other £m

Total £m

UK£m

USA£m

Other£m

Total£m

Currentservicecost 2 7 12 21 6 6 10 22Pastservicecost – – – – – – – –Charged/(credited)tooperatingexpenses 2 7 12 21 6 6 10 22

Amountchargedtopensionliability 74 16 9 99 75 17 10 102Expectedreturnonplanassets (68) (11) (6) (85) (68) (13) (6) (87)Charged/(credited)tofinancecosts 6 5 3 14 7 4 4 15

Totalpensioncosts/(credits) 8 12 15 35 13 10 14 37



23 Post-employment benefit obligations continuedThehistoryofexperienceadjustmentsisasfollows:

Experience adjustments2011

£m2010£m

2009£m

2008£m

2007£m

Experienceadjustmentsonplanliabilities–gain/(loss) 13 19 (3) 5 (15)Experienceadjustmentsonplanassets–(loss)/gain (24) 49 (7) (189) 22

Theactuarial(gains)/lossesreportedintheconsolidatedstatementofcomprehensiveincomecanbereconciledasfollows:

Actuarial adjustments2011

£m 2010

£m

Actuarial(gains)/lossesonfairvalueofplanassets 24 (46)Actuarial(gains)/lossesondefinedbenefitobligations (41) 104

Actuarial(gains)/losses (17) 58Increase/(decrease)insurplusnotrecognised – (1)

Actuarial(gains)/lossespertheconsolidatedstatementofcomprehensiveincome (17) 57

TheGroupmadetotalcontributionstodefinedbenefitschemesof£123millionintheyear(2010:£43million),includingexceptionaladvancepaymentsof£60million(2010:£nil)andexpectstomakeregularongoingcontributionstotheseschemesof£79millionin2012.

Theexpectedreturnonplanassetsisbasedonmarketexpectationsatthebeginningoftheperiod.Theactualreturnonassetswasagainof£61million(2010:gainof£133million).

Thecumulativeactuariallossrecognisedintheconsolidatedstatementofcomprehensiveincomewas£387million(2010:£404million).Anactuarialgainof£17million(2010:actuariallossof£57million)wasrecognisedduringtheyear.

MeasurementoftheGroup’sdefinedbenefitretirementobligationsisparticularlysensitivetochangesincertainkeyassumptions,includingthediscountrateandlifeexpectancy.Anincreaseordecreaseof0.5%intheUKdiscountratewouldresultina£138milliondecreaseor£146millionincreaseintheUKdefinedbenefitobligations,respectively.AnincreaseordecreaseofoneyearinthelifeexpectancyofallUKmembersfromage65,wouldresultina£43millionincreaseor£42milliondecreaseintheUKdefinedbenefitobligations,respectively.

24 Called up share capital Duringtheyear4,415,950optionsweregrantedunderTheCompassGroupShareOptionPlan2010.AlloptionsweregrantedovertheCompany’sordinarysharesandthegrantpricewasequivalenttothemarketvalueoftheCompany’ssharesatthedateofgrant.NooptionsweregrantedunderanyoftheCompany’sothershareoptionplans.

Inaddition,rightstoacquire127,500ordinarysharesweregrantedduringtheyearwhicharesubjecttorestrictions.

2011 2010

Authorised and allotted share capital Number of shares £m Numberofshares £m

Authorised:Ordinarysharesof10peach 3,000,010,000 300 3,000,010,000 300

Allotted and fully paid:Ordinarysharesof10peach 1,897,584,193 190 1,886,343,012 189

2011 2010

Allotted share capital Number of shares Numberofshares

Ordinarysharesof10peachallottedasat1October 1,886,343,012 1,853,813,959Ordinarysharesallottedduringtheyearonexercise

ofshare options 8,677,203 30,487,113Ordinarysharesallottedduringtheyearonrelease

ofLong-TermIncentivePlanawards 2,563,978 2,041,940Repurchaseofordinarysharecapital – –

Ordinarysharesof10peachallottedasat30September 1,897,584,193 1,886,343,012


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24 Called up share capital continuedAt30September2011,employeesheldoptionsoveratotalof27,504,180ordinarysharesundertheGroup’sExecutiveandManagementShareOptionPlansandtheUKSharesavePlanasfollows:

Executive and Management Share Option Plans Exercisable Numberofshares

Optionpricepershare

pence

Date of grant:23May2002 23May2005–22May2012 1,699,200 422.0030September2002 30September2005–29September2012 264,195 292.504December2002 4December2005–3December2012 263,850 313.7528May2003 28May2006–27May2013 1,504,600 320.003December2003 3December2006–2December2013 24,000 356.003December2003 3December2006–2December2013 637,600 356.003August2004 3August2007–2August2014 125,000 316.253August2004 3August2007–2August2014 1,816,940 316.251December2004 1December2007–30November2014 100,000 229.251December2004 1December2007–30November2014 2,551,850 229.2514December2005 14December2008–13December2015 1,175,400 210.0012June2006 12June2009–11June2016 10,000 234.5030March2007 30March2010–29March2017 1,491,769 335.7528September2007 28September2010–27September2017 70,034 310.7528March2008 28March2011–27March2018 2,366,800 321.5030September2008 30September2011–29September2018 169,013 331.2531March2009 31March2012–30March2019 4,637,561 319.0030September2009 30September2012–29September2019 179,397 372.4013May2010 13May2013–12May2020 3,838,260 557.5025November2010 25November2014–24November2020 103,799 566.0019May2011 19May2014–18May2021 4,286,728 575.00

27,315,996

UK Sharesave Plan Exercisable Numberofshares

Optionpricepershare

pence

Date of grant:1July2004 1September2011–28February2012 2,636 266.801July2005 1September2012–28February2013 185,548 179.20

188,184

1Theoptionsvestoverathree,fiveandseven-yearperiod.Therangeofexercisabledatesreflectstheoptionsoutstandingatthebalancesheetdate.

Inaddition,ordinarysharesarealsoawardedundertheCompassGroupLongTermIncentivePlan2010(‘2010LTIP’)andtheCompassGroupLong-TermIncentivePlan(‘2000LTIP’):

Long-Term Incentive Plans Maturitydate NumberofsharesPerformance

conditions

Date of award:28November2008 1October2011 1,834,184 50%TSR/50%GFCF1December2009 1October2012 1,606,550 50%TSR/50%GFCF13May2010 1October2012 264,912 50%TSR/50%GFCF25November2010 1October2013 1,360,106 50%TSR/50%GFCF

5,065,752

1Theperformanceandvestingconditionsaredescribedinmoredetailinnote25.



24 Called up share capital continuedInaddition,ordinaryshareshavebeenawardedtoemployeeswhicharesubjecttorestrictionsandwillonlyvestshouldsetperformancetargetsbeachieved.

Restricted shares Vestingdate NumberofsharesPerformance

conditions

Date of award:28March2011 28March2012 20,000 Service28March2011 28March2013 20,000 Service28March2011 1December2014 67,500 Serviceandperformance

107,500

25 Share-based paymentsShare optionsFulldetailsofTheCompassGroupShareOptionPlan2010(‘CSOP2010’),theCompassGroupShareOptionPlan(‘CSOP2000’),theCompassGroupManagementShareOptionPlan(‘ManagementPlan’)(collectivelythe‘ExecutiveandManagementShareOptionPlans’)andtheUKSharesavePlanaresetoutintheDirectors’RemunerationReportonpages53to60.

Thefollowingtablesillustratethenumberandweightedaverageexercisepricesof,andmovementsin,shareoptionsduringtheyear:

2011 2010

Executive and Management Share Option Plans

Number of share

options

Weighted average exercise

price pence

Numberofshare

options

Weightedaverageexercise

pricepence

Outstandingat1October 32,250,313 356.02 59,669,846 325.03Granted 4,415,950 574.76 4,102,900 557.50Exercised (8,361,093) 359.23 (29,486,748) 322.38Expired (98,200) 430.00 – –Lapsed (890,974) 403.73 (2,035,685) 340.88

Outstandingat30September 27,315,996 388.58 32,250,313 356.02

Exercisableat30September 14,270,251 308.68 18,645,559 329.48

Thebalanceintheprioryearincludesoptionsover2,588,750sharesthatweregrantedonorbefore7November2002andhadvestedby1 October2004.TheseoptionshadnotbeensubsequentlymodifiedandthereforedidnotneedtobeaccountedforinaccordancewithInternationalFinancialReportingStandard2‘Share-basedpayment’.

2011 2010

UK Sharesave Plan

Number of share

options


price pence

Numberofshare

options


pricepence

Outstandingat1October 356,375 188.14 1,348,873 191.22Exercised (125,871) 195.46 (916,724) 187.63Lapsed (42,320) 200.69 (75,774) 249.16

Outstandingat30September 188,184 180.43 356,375 188.14

Exercisableat30September 2,636 266.80 95,179 182.46


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25 Share-based payments continued2011 2010

International Sharesave Plan

Number of share

options


price pence

Numberofshare

options


pricepence

Outstandingat1October 290,590 179.20 603,048 217.82Exercised (190,239) 179.20 (83,611) 254.60Lapsed (100,351) 179.20 (228,847) 253.43

Outstandingat30September – – 290,590 179.20

Exercisableat30September – – 290,590 179.20

OptionsgrantedundertheInternationalSharesavePlanrepresentedappreciationrightsoverthenumberofsharesshown.Whenexercised,theholdersreceivedanumberofsharescalculatedbyreferencetotheincreaseinthemarketpriceatthetimeofexerciseovertheoptionprice(asshowninthetableabove).Anyremainingshareappreciationrightsareshowninthetableaboveaslapsed.

Information relating to all option schemesTheweightedaveragesharepriceatthedateofexerciseforshareoptionsexercisedduringtheyearwas573.44pence(2010:487.67pence).

Theoptionsoutstandingattheendoftheyearhaveaweightedaverageremainingcontractuallifeof5.9years(2010:5.5years)forexecutiveandmanagementoptionsand1.4years(2010:1.2years)foremployeeschemes.

Intheyear,optionsweregrantedon25November2010and19May2011underthetermsoftheCSOP2010.Theestimatedfairvalueofoptionsgrantedonthesedateswas134.75penceand151.88pencerespectively.In2010,optionsweregrantedon13May2010.Theestimatedfairvalueoftheseoptionswas159.60pence.

Fairvaluesfortheexecutiveandmanagementschemeswerecalculatedusingabinomialdistributionoptionpricingmodelsothatproperallowanceismadeforthepresenceofperformanceconditionsandthepossibilityofearlyexercise.Inaddition,aMonteCarlosimulationmodelwasusedtoestimatetheprobabilityofperformanceconditionsbeingmet.Fairvaluesforoptionsgrantedunderemployeesavings-relatedschemesarecalculatedusingtheBlack-Scholesoptionpricingmodel.Theinputstotheoptionpricingmodelsarereassessedforeachgrant.

TheexpectedvolatilityiscalculatedwithreferencetoweeklymovementsintheCompasssharepriceoverthethreeyearspriortothegrantdate.

ThefollowingassumptionswereusedincalculatingthefairvalueofoptionsgrantedunderCSOP2010:

Assumptions – options 2011 2010

Expectedvolatility 35.0% 37.0%Riskfreeinterestrate 2.5% 2.8%Dividendyield 3.3% 2.5%Expectedlife 6.0 years 6.0yearsWeightedaveragesharepriceatdateofgrant 584.49p 559.00pWeightedaverageoptionexerciseprice 574.76p 557.50p

VestingofoptionsawardedfromOctober2005onwardsdependsontheachievementoftheGroupFreeCashFlow(‘GFCF’)target.Foroptionsgrantedafter30September2006,25%oftheawardswillvestifthethresholdGFCFtargetismetand100%oftheawardswillvestifthemaximumGFCFtargetismet.Awardsvestonastraight-linebasisforGFCFbetweenthesetwopoints.

Target

Threshold MaximumExecutive and Management Share Option Plans Performanceperiod

GFCF£m %ofaward

GFCF£m %ofaward

Granted on:31March2009and30September2009 1October2008–30September2011 1,419 25% 1,490 100%13May2010 1October2009–30September2012 1,822 25% 1,913 100%25November2010and19May2011 1October2010–30September2013 2,181 25% 2,290 100%

PerformancetargetsapplyingtoearliergrantsundertheExecutiveandManagementShareOptionPlanshavebeenmetinfull.NoperformancetargetsapplytotheUKorInternationalSharesavePlans.



25 Share-based payments continuedLong-Term Incentive PlansFulldetailsofthe2010LTIPandthe2000LTIPcanbefoundintheDirectors’RemunerationReportonpages53to60.

Thefollowingtableshowsthemovementinshareawardsduringtheyear:

Long-Term Incentive Plans

2011 Number

of shares

2010Number

ofshares

Outstandingat1October 6,269,624 6,440,102Awarded 1,360,106 1,871,462Released (2,563,978) (2,041,940)Lapsed – –

Outstandingat30September 5,065,752 6,269,624

Exercisableat30September – –

Vestingof50%ofLTIPawardsmadefrom1October2005onwardsisdependentontheGroup’stotalshareholderreturn(‘TSR’)performancerelativetoacomparatorgroupofcompaniesincludedwithintheFTSE100Index.Thecomparatorgroupusedfortheawardfortheyearcommencing1October2006comprisedallcompanieswithintheFTSE100Index,whereas,forsubsequentyears,onlynon-financialcompanieshavebeenincluded.Thisperformanceconditionistreatedasamarket-basedconditionforvaluationpurposesandanassessmentofthevestingprobabilityisbuiltintothegrantdatefairvaluecalculations.ThisassessmentwascalculatedusingaMonteCarlosimulationoptionpricingmodel.

Theremaining50%ofLTIPawardsmadefrom1October2005onwardsdependsontheachievementoftheGFCFtarget.25%ofthatpartoftheawardwillvestifthethresholdGFCFtargetismetand100%ofthatpartoftheawardwillvestifthemaximumGFCFtargetismet.Awardsvestonastraight-linebasisbetweenthesetwopoints.

Target

Threshold Maximum

Long-Term Incentive Plans PerformanceperiodGFCF

£m %ofawardGFCF

£m %ofaward

Awarded year commencing:1October2008 1October2008–30September2011 1,419 25% 1,490 100%1October2009 1October2009–30September2012 1,822 25% 1,913 100%1October2010 1October2010–30September2013 2,181 25% 2,290 100%

ThefairvalueofawardssubjecttoGFCFperformancetargetswascalculatedusingtheBlack-Scholesoptionpricingmodel,thevestingprobabilitybeingassessedbasedonasimulationmodeloftheGFCFforecast.TheGFCFperformancetargetsrelatingtoLTIPawardsmadeintheyearscommencing1October2006and1October2007weremetinfullandthemaximumnumberofsharesavailablewerereleasedtotheparticipants.

Theelementofawardsmadeintheyearscommencing1October2006and1October2007dependentuponTSRperformancetargetsalsovestedinfullandthemaximumnumberofsharesavailablewerereleasedtoparticipantsastheCompany’sTSRperformancewaswithinthetopquartileofthecomparatorgroup.TheweightedaveragesharepriceatthedateofreleaseforLTIPawardsreleasedduring2011was568.02pence(2010:433.79pence).

TheLTIPawardsoutstandingattheendoftheyearhaveaweightedaverageremainingcontractuallifeof1.1years(2010:1.1years).

Foryearended30September2011,LTIPawardsweremadeon25November2010forwhichtheestimatedfairvaluewas358.32pence.Foryearended30September2010,LTIPawardsweremadeon1December2009and13May2010forwhichtheestimatedfairvalueswere278.68penceand358.63pencerespectively.Theawardsmadeon13May2010and25November2010wereunderthetermsof2010LTIPwhereastheawardmadeon1December2009wasunderthetermsofthepreviousplan.


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25 Share-based payments continuedTheinputstotheoptionpricingmodelarereassessedforeachaward.ThefollowingassumptionswereusedincalculatingthefairvalueofLTIPawardsmadeduringtheyear:

Assumptions – Long-Term Incentive Plans 2011 2010

Expectedvolatility 35.9% 36.0%Riskfreeinterestrate 1.0% 1.6%Dividendyield 3.2% 2.9%Expectedlife 2.8 years 2.8yearsWeightedaveragesharepriceatdateofgrant 548.00p 456.84p

Restricted sharesThefollowingtableshowsthemovementinrestrictedshareawardsduringtheyear:

Restricted shares

2011Number

of shares

2010Number

ofshares

Outstandingat1October – –Awarded 127,500 –Lapsed (20,000) –

Outstandingat30September 107,500 –

Exercisableat30September – –

ThefairvalueofrestrictedsharesawardedintheyearwascalculatedusingtheBlack-Scholesoptionpricingmodel,usingthefollowing assumptions:

Assumptions – options 2011 2010

Expectedvolatility 35.1% –Riskfreeinterestrate 1.0% –Dividendyield 3.2% –Expectedlife 2.7 years –Weightedaveragesharepriceatdateofgrant 555.00p –

Long-Term Bonus PlanCertainexecutivesparticipatingintheLong-TermBonusPlaninprioryearsreceivedanawardofdeferredCompassGroupPLCshares.TheawardofbonussharesissubjecttoperformanceconditionsandmatchingsharesmaybereleasedbytheCompanyfollowingthecompletionofafurtherperiodofservice.ThetermsofthePlanrequirethatthesesharesarepurchasedinthemarket,ratherthanbeingissuedbytheCompany.ThesharesarepurchasedanddistributedbytheESOPandLTIPT.

Thefollowingtableillustratesthemovementinthenumberofawardsduringtheyear:

Long-Term Bonus Plan

2011 Number

of shares

2010Number

ofshares

Outstandingat1October 543,451 871,486Released (106,469) (316,811)Forfeited (32,963) (11,224)

Outstandingat30September 404,019 543,451

ThefairvalueofbonussharesawardediscalculatedusingtheBlack-Scholesoptionpricingmodel;however,nonewawardsweremadeineither2011or2010.

Theweightedaveragesharepriceatthedateofexerciseforsharebonusawardsreleasedduring2011was569.20pence(2010:476.89pence).Thesharebonusawardshaveallvested,althoughcertainexecutiveshaveelectedtodefertakingtheirentitlementsforafurtherperiodofupto6.3years(2010:7.3years),theweightedaveragedeferralperiodbeing3.3years(2010:3.8years).

Income statement expense and carrying value TheGrouprecognisedanexpenseof£10million(2010:£9million)forcontinuingoperationsinrespectofequity-settledshare-basedpayment transactions.



26 Business combinationsOn8March2011,theGroupacquiredCoffeeDistributingCorp(‘CDC’)throughitssubsidiaryCanteenVendingServices,IncandBWHLSHoldings,Inc(‘HLS’)throughitssubsidiaryCrothallServicesGroup,Incfortheaggregateconsiderationof£59million.Buildingonourexistingpresenceinthissectorandnowprovidinguswithwidergeographiccoverage,CDCisthelargestofficecoffeeandrefreshmentservicecompanyintheNewYork,NewJerseyandConnecticutareas.BasedinIllinois,HLSprovidessupportservicestotheHealthcaresectorthroughoutthecentralUnitedStates.

On1April2011,CompassGroupacquiredPPP-InfrastructureManagementLimited(‘PPP-IML’)fromSemperianPPPInvestmentPartnersforacashconsiderationof£11million.TheacquisitionstrengthenstheGroup’sexistingsupportservicesofferintheimportantsectorsofHealthcare,EducationandDefence.

On29April2011,CompassGroupacquiredEliorNederlandBV(‘EliorNederland’)foratotalconsiderationof€66million(£58million).EliorNederlandisanestablishedfoodservicesbusiness,basedinAmsterdam,andoperatesintheBusiness&Industry,EducationandHealthcaresectors.

On13July2011,CompassGroupacquiredtheremaining50.01%additionalsharesofSofraYemekÜretimVeHizmetA.S.foracashconsiderationof$145million(£91million).Thetreatmentisexplainedinnote5.100%oftheacquiredassetsareshowninthetablebelow,asisthedisposalofthefairvalueofjointventureinterestpreviouslyheld.

Inadditiontotheacquisitionssetoutabove,theGrouphasalsocompletedanumberofsmallerinfillacquisitionsinseveralcountriesforthetotalconsiderationof£207million.

Acquisitions Adjustments1 Total

Bookvalue

£m

Fairvalue

£m

Fairvalue

£m

Fairvalue

£m

Net assets acquired

Contract-relatedandotherintangiblesarisingonacquisition 64 163 9 172Property,plantandequipment 27 27 – 27Inventories 18 18 – 18Tradeandotherreceivables 84 80 – 80Cashandcashequivalents 18 18 – 18Otherassets 48 48 – 48Tradeandotherpayables (79) (82) – (82)Deferredtaxliabilities 1 (15) (4) (19)Otherliabilities (27) (23) 2 (21)

Fairvalueofnetassetsacquired 154 234 7 241Goodwillarisingonacquisition 241 (7) 234

Totalconsideration 475 – 475

Satisfied by

Cashconsideration 417 – 417Deferredconsideration 23 – 23Fairvalueofjointventureinterestpreviouslyowned 35 – 35

475 – 475

Cash flow

Cashconsideration 417 – 417Cashacquired (18) – (18)Acquisitionstransactioncosts 9 – 9

Netcashoutflowarisingonacquisition 408 – 408Deferredconsiderationandotherpaymentsrelatingtopreviousacquisitions 18Totalcashoutflowarisingfromthepurchaseofsubsidiarycompaniesandinvestmentsinassociatedundertakings 426

1AdjustmentstoprovisionalamountsinrespectofprioryearacquisitionsinaccordancewithInternationalFinancialReportingStandard3‘BusinessCombinations2003’.2Deferredconsiderationisanestimateatthedateofacquisitionoftheamountofadditionalconsiderationthatwillbepayableinthefuture.Theactualamountpaid

canvaryfromtheestimatedependingonthetermsofthetransactionand,forexample,theactualperformanceoftheacquiredbusiness.


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26 Business combinations continuedAdjustmentsmadetothefairvalueofassetsacquiredincludethevalueofintangibleassets,provisionsandotheradjustmentsrecognisedonacquisitioninaccordancewithInternationalFinancialReportingStandard3‘BusinessCombinations’(revised2008).Theadjustmentsmadeinrespectofacquisitionsintheyearto30September2011areprovisionalandwillbefinalisedwithin12monthsoftheacquisitiondate.

ThegoodwillarisingontheacquisitionofthebusinessesrepresentsthepremiumtheGrouppaidtoacquirecompanieswhichcomplementtheexistingbusinessandcreatesignificantopportunitiesforcross-sellingandothersynergies.Ofthegoodwillarising,anamountof£35 millionisexpectedtobedeductiblefortaxpurposes.

Acquisitiontransactioncostsexpensedintheyearto30September2011were£9million(2010:£5million).

Intheperiodfromacquisitionto30September2011theacquisitionscontributedrevenueof£186millionandoperatingprofitof£2milliontotheGroup’sresults.

Iftheacquisitionshadoccurredon1October2010,itisestimatedthatGrouprevenuefortheperiodwouldhavebeen£16,195millionandtotalGroupoperatingprofit(includingassociates)wouldhavebeen£1,032million.

27 Reconciliation of operating profit to cash generated by operations

Reconciliation of operating profit to cash generated by continuing operations2011

£m2010

£m

Operatingprofitfromcontinuingoperations 1,010 983Addback:UKre-organisation 55 –

OperatingprofitfromcontinuingoperationsbeforeUKre-organisation 1,065 983

Adjustments for:

Acquisitiontransactioncosts 9 5Amortisationofintangibleassets(excludingUKre-organisation) 94 90Amortisationofintangibleassetsarisingonacquisition 12 7Depreciationofproperty,plantandequipment(excludingUKre-organisation) 160 148(Gain)/lossondisposalofproperty,plantandequipment/intangibleassets 1 –Impairmentofotherinvestments – 1Impairmentofgoodwill(excludingUKre-organisation) 2 –Increase/(decrease)inprovisions 8 (25)Increase/(decrease)inpost-employmentbenefitobligations (42) (19)Share-basedpaymentsexpense–non-controllinginterestcalloption – 2Share-basedpayments–chargedtoprofits 10 9Share-basedpayments–settledincashorexistingshares1 – 1

Operatingcashflowsbeforemovementinworkingcapital 1,319 1,202

(Increase)/decreaseininventories (16) –(Increase)/decreaseinreceivables (157) (87)Increase/(decrease)inpayables 152 215

Cashgeneratedbycontinuingoperations 1,298 1,330

1Itwasoriginallyanticipatedthesepaymentswouldbesatisfiedbytheissueofnewshares.



28 Cash flow from discontinued operations

Cash flow from discontinued operations2011

£m2010

£m

Net cash from/(used in) operating activities of discontinued operationsCashutilisedfromdiscontinuedoperations (6) 3Taxpaid – –

Netcashfrom/(usedin)operatingactivitiesofdiscontinuedoperations (6) 3

Net cash from/(used in) investing activities by discontinued operationsPurchaseofproperty,plantandequipment – –Proceedsfromsaleofproperty,plantandequipment – –

Netcashfrom/(usedin)investingactivitiesbydiscontinuedoperations – –

Net cash from/(used in) financing activities by discontinued operationsDividendspaidtonon-controllinginterests – –

Netcashfrom/(usedin)financingactivitiesbydiscontinuedoperations – –

29 Reconciliation of net cash flow to movement in net debtThistableispresentedasadditionalinformationtoshowmovementinnetdebt,definedasoverdrafts,bankandotherborrowings,financeleasesandderivativefinancialinstruments,netofcashandcashequivalents.

Grossdebt

Net debt

Cashandcash

equivalents£m

Bankoverdrafts

£m

Bankandother

borrowings£m

Totaloverdrafts

andborrowings

£m

Financeleases

£m

Derivativefinancial

instruments£m

Totalgrossdebt

£m

Netdebt

£m

At1October2009 588 (71) (1,476) (1,547) (53) 69 (1,531) (943)Netincrease/(decrease)incashand

cashequivalents 51 – – – – – – 51Cashoutflowfromrepaymentofbonds – – 200 200 – – 200 200Cash(inflow)/outflowfromother

changesingrossdebt – 34 54 88 – 18 106 106Cash(inflow)/outflowfromrepaymentof

obligationsunderfinanceleases – – – – 15 – 15 15(Increase)/decreaseinnetdebtasa

resultofnewfinanceleasestakenout – – – – (3) – (3) (3)Currencytranslationgains/(losses) 4 (2) (5) (7) – (8) (15) (11)Acquisitionsanddisposals

(excluding cash) – – (40) (40) (1) – (41) (41)Othernon-cashmovements – – – – – 5 5 5At30September2010 643 (39) (1,267) (1,306) (42) 84 (1,264) (621)

At1October2010 643 (39) (1,267) (1,306) (42) 84 (1,264) (621)Netincrease/(decrease)incashand

cashequivalents 467 – – – – – – 467Cashoutflowfromrepaymentofbonds – – 83 83 – – 83 83Cash(inflow)/outflowfromother

changesingrossdebt – (6) (683) (689) – (4) (693) (693)Cashflowfromrepaymentofobligations

underfinanceleases – – – – 12 – 12 12(Increase)/decreaseinnetdebtasa

resultofnewfinanceleasestakenout – – – – (2) – (2) (2)Currencytranslationgains/(losses) – – (14) (14) – 16 2 2Acquisitionsanddisposals

(excluding cash) – – (8) (8) (1) – (9) (9)Othernon-cashmovements – – 9 9 – (9) – –

At30September2011 1,110 (45) (1,880) (1,925) (33) 87 (1,871) (761)


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29 Reconciliation of net cash flow to movement in net debt continuedOthernon-cashmovementsarecomprisedasfollows:

Other non-cash movements in net debt2011

£m2010

£m

Accrualforissuancefees 2 –Amortisationofthefairvalueadjustmentinrespectofthe£250millionSterlingEurobondredeemablein2014 4 4Swapmonetisationcredit 2 4Unrealisednetgains/(losses)onbankandotherborrowingsinadesignatedfairvaluehedge 1 (8)

Bankandotherborrowings 9 –

Changesinthevalueofderivativefinancialinstruments (9) 5

Othernon-cashmovements – 5

30 Contingent liabilities Performance bonds, guarantees and indemnities1

2011£m

2010£m

Performancebonds,guaranteesandindemnities(includingthoseofassociatedundertakings)1 371 354

1Excludesbonds,guaranteesandindemnitiesinrespectofself-insuranceliabilities,post-employmentobligationsandborrowings(includingfinanceandoperatingleases)recordedonthebalancesheetordisclosedinnote32.

Performance bonds, guarantees and indemnitiesTheCompanyandcertainsubsidiaryundertakingshave,inthenormalcourseofbusiness,givenguaranteesandenteredintocounter-indemnitiesinrespectofsuchguaranteesrelatingtotheGroup’sowncontractsand/ortheGroup’sshareofcertaincontractualobligationsofjointventuresandassociates.WheretheGroupentersintosucharrangements,itdoessoinordertoprovideassurancetothebeneficiarythatitwillfulfilitsexistingcontractualobligations.TheissueofsuchguaranteesandindemnitiesdoesnotthereforeincreasetheGroup’soverallexposureandthedisclosureofsuchperformancebonds,guaranteesandindemnitiesisgivenforinformationpurposesonly.

Eurest Support Services On21October2005,theCompanyannouncedthatithadinstructedFreshfieldsBruckhausDeringertoconductaninvestigationintotherelationshipsbetweenEurestSupportServices(‘ESS’)(amemberoftheGroup),IHCServicesInc.(‘IHC’)andtheUnitedNations(‘UN’).Ernst&YoungassistedFreshfieldsBruckhausDeringerinthisinvestigation.On1February2006,itwasannouncedthattheinvestigationhadconcluded.

TheinvestigationestablishedseriousirregularitiesinconnectionwithcontractsawardedtoESSbytheUN.TheworkundertakenbyFreshfieldsBruckhausDeringerandErnst&YounggavenoreasontobelievethattheseissuesextendedbeyondafewindividualswithinESStootherpartsofESSorthewiderCompassGroupofcompanies.

TheGroupsettledalloutstandingcivillitigationagainstitinrelationtothismatterinOctober2006,butlitigationcontinuesbetweencompetitorsofESS,IHCandotherpartiesinvolvedinUNprocurement.

IHC’srelationshipwiththeUNandESSwaspartofawiderinvestigationintoUNprocurementactivitybeingconductedbytheUnitedStatesAttorney’sOfficefortheSouthernDistrictofNewYork,andwithwhichtheGroupco-operatedfully.ThecurrentstatusofthatinvestigationisuncertainandamatterfortheUSauthorities.ThoseinvestigatorscouldhavehadaccesstosourcesunavailabletotheGroup,FreshfieldsBruckhausDeringerorErnst&Young,andfurtherinformationmayyetemergewhichisinconsistentwith,oradditionalto,thefindingsoftheFreshfieldsBruckhausDeringerinvestigation,whichcouldhaveanadverseimpactontheGroup.TheGrouphashowevernotbeencontactedby,orreceivedfurtherrequestsforinformationfrom,theUnitedStatesAttorney’sOfficefortheSouthernDistrictofNewYorkinconnectionwiththesematterssinceJanuary2006.TheGrouphasco-operatedfullywiththeUNthroughout.

Other litigation TheGroupisalsoinvolvedinvariousotherlegalproceedingsincidentaltothenatureofitsbusinessandmaintainsinsurancecovertoreducefinancialriskassociatedwithclaimsrelatedtotheseproceedings.Whereappropriate,provisionsaremadetocoveranypotentialuninsuredlosses.

OutcomeAlthoughitisnotpossibletopredicttheoutcomeoftheseproceedings,oranyclaimagainsttheGrouprelatedthereto,intheopinionoftheDirectors,anyuninsuredlossesresultingfromtheultimateresolutionofthesematterswillnothaveamaterialeffectonthefinancialpositionoftheGroup.



31 Capital commitments Capital commitments

2011£m

2010£m

Contractedforbutnotprovidedfor 106 70

Themajorityofcapitalcommitmentsareforintangibleassets.

32 Operating lease and concessions commitmentsTheGroupleasesofficesandotherpremisesundernon-cancellableoperatingleases.Theleaseshavevaryingterms,purchaseoptions,escalationclausesandrenewalrights.TheGrouphassomeleasesthatincluderevenue-relatedrentalpaymentsthatarecontingentonfuturelevelsofrevenue.

Futureminimumrentalspayableundernon-cancellableoperatingleasesandconcessionsagreementsareasfollows:

2011 2010

Operating leasesOther

occupancyrentals

£m

OperatingleasesOther

occupancyrentals

£mOperating lease and concessions commitments

Land and buildings

£m

Other assets

£m

Landandbuildings

£m

Otherassets

£m

Fallingduewithin1year 51 50 59 50 52 43Fallingduebetween2and5years 121 68 60 118 90 53Fallingdueinmorethan5years 82 7 36 62 7 36

Total 254 125 155 230 149 132

33 Related party transactionsThefollowingtransactionswerecarriedoutwithrelatedpartiesofCompassGroupPLC:

SubsidiariesTransactionsbetweentheUltimateParentCompanyanditssubsidiaries,andbetweensubsidiaries,havebeeneliminatedonconsolidation.

Joint venturesTherewerenosignificanttransactionsbetweenjointventuresorjointventurepartnersandtherestoftheGroupduringtheyear.

AssociatesThebalanceswithassociatedundertakingsareshowninnote16.Therewerenosignificanttransactionswithassociatedundertakingsduringtheyear.

Key management personnelTheremunerationofDirectorsandkeymanagementpersonnelissetoutinnote3.DuringtheyeartherewerenoothermaterialtransactionsorbalancesbetweentheGroupanditskeymanagementpersonnelormembersoftheirclosefamily.

34 Post balance sheet eventsOn3August2011CompassGrouphadagreedtoacquiretheentireissuedsharecapitalofObasanGıdaÍnsaatSanayiveTicaretAnonimSirketi(‘Obasan’),subjecttoobtainingclearancefromtheboardofthecompetitionauthorityoftheRepublicofTurkey.Thenecessaryclearancehasbeenreceivedandtheacquisitioncompletedon3October2011.Fortheyearended31December2010,itgeneratedrevenuesof89.7millionTurkishLira(£34.8million).

On21October2011,CompassGroupacquiredIntegratedCleaningManagementLimited(‘ICM’)fromPaulRaffertyandCoralBrodie.Forthe yearended31March2011,ICMhadrevenuesof£61.0million.ICMisoneoftheUK’slargestindependentspecialistprovidersofcorecleaningandrelatedservices.ICMoperatesacrosstheUK,withaparticularfocusonthecorporateoffice,hospitality,leisure,hotelandretail sectors.


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35 Exchange ratesExchange rates 2011 2010

Average exchange rate for yearAustralianDollar 1.57 1.74BrazilianReal 2.65 2.77CanadianDollar 1.59 1.64Euro 1.15 1.15JapaneseYen 129.63 139.19NorwegianKrone 9.05 9.34SouthAfricanRand 11.17 11.64SwedishKrona 10.40 11.28SwissFranc 1.45 1.63UAEDirham 5.90 5.73USDollar 1.61 1.56

Closing exchange rate as at 30 SeptemberAustralianDollar 1.60 1.63BrazilianReal 2.89 2.67CanadianDollar 1.62 1.62Euro 1.16 1.15JapaneseYen 120.08 131.64NorwegianKrone 9.15 9.23SouthAfricanRand 12.52 10.99SwedishKrona 10.70 10.61SwissFranc 1.42 1.54UAEDirham 5.72 5.79USDollar 1.56 1.58

1Averageratesareusedtotranslatetheincomestatementandcashflow.Closingratesareusedtotranslatethebalancesheet.Onlythemostsignificantcurrenciesare shown.



36 Details of principal subsidiary companiesAllcompanieslistedbelowarewhollyownedbytheGroup,exceptwhereotherwiseindicated.Allinterestsareintheordinarysharecapital.Allcompaniesoperateprincipallyintheircountryofincorporation.AfulllistoftheGroup’soperatingsubsidiaryundertakingswillbeannexedtothenextannualreturn.

Principal subsidiariesCountryofincorporation Principalactivities

North AmericaCompassGroupCanadaLtd Canada FoodserviceandsupportservicesBonAppétitManagementCo USA FoodserviceCompassGroupUSAInvestments,Inc USA HoldingcompanyCompassGroupUSA,Inc USA FoodserviceandsupportservicesCrothallServicesGroup USA SupportservicestothehealthcaremarketFlikInternationalCorp USA FinediningfacilitiesFoodbuyLLC USA PurchasingservicesinNorthAmericaLevyRestaurantsLP USA FinediningandfoodserviceatsportsandentertainmentfacilitiesMorrisonManagementSpecialists,Inc USA FoodservicetothehealthcareandseniorlivingmarketRestaurantAssociatesCorp USA FinediningfacilitiesWolfgangPuckCatering&Events,LLC(90%) USA Finediningfacilities

Continental EuropeCompassGroupFranceHoldingsSAS France HoldingcompanyCompassGroupFrance France FoodserviceandsupportservicesCompassGroupDeutschlandGmbH Germany HoldingcompanyMedirestGmbH&CoOHG Germany FoodservicetothehealthcareandseniorlivingmarketEurestDeutschlandGmbH Germany FoodservicetobusinessandindustryEurestServicesGmbH Germany SupportservicestobusinessandindustryEurestSports&FoodGmbH Germany FoodservicetothesportsandleisuremarketCompassGroupItaliaS.P.A Italy Foodservice,supportservicesandprepaidmealvouchersCompassGroupInternationalBV Netherlands HoldingcompanyCompassGroupNederlandBV Netherlands FoodserviceandsupportservicesCompassGroupNederlandHoldingBV Netherlands HoldingcompanyEurestServicesBV Netherlands FoodserviceandsupportservicesCompassGroupHoldingsSpain,S.L. Spain HoldingcompanyEurestColectividadesS.L. Spain FoodserviceandsupportservicesCompassGroup(Schweiz)AG Switzerland FoodserviceandsupportservicesRestoramaAG Switzerland FoodserviceSofraYemekÜretimVeHizmetA.S. Turkey Foodserviceandsupportservices

United Kingdom & IrelandCompassContractServices(UK)Ltd England&Wales FoodserviceandsupportservicesCompassGroupHoldingsPLC England&Wales HoldingcompanyandcorporateactivitiesCompassGroup,UK&IrelandLtd England&Wales HoldingcompanyCompassGroupProcurementLtd England&Wales PurchasingservicesthroughouttheworldCompassPurchasingLtd England&Wales PurchasingservicesintheUKandIrelandCompassServicesUKLtd England&Wales FoodserviceandsupportservicesHospitalityHoldingsLtd1 England&Wales IntermediateholdingcompanyLetheby&ChristopherLtd England&Wales FoodservicefortheUKsportsandeventsmarketScolarestLtd England&Wales FoodservicefortheUKeducationmarketVSGGroupLtd England&Wales Securityandsupportservices

Rest of the WorldCompassGroup(Australia)PtyLtd Australia FoodserviceandsupportservicesGRSA Brazil FoodserviceandsupportservicesSeiyoFood–CompassGroup,Inc Japan FoodserviceandsupportservicesCompassGroupSouthernAfrica(Pty)Ltd(97.5%) SouthAfrica Foodserviceandsupportservices

1HelddirectlybytheParentCompany.


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Parent Company financial statements


Directors’ responsibilitiesTheAnnualReportandAccountscomplieswiththeDisclosureand TransparencyRules(‘DTR’)oftheUnitedKingdom’sFinancialServicesAuthorityinrespectoftherequirementtoproduceanannualfinancialreport.

TheAnnualReportandAccountsistheresponsibilityof,andhasbeenapprovedby,theDirectors.

Weconfirmthattothebestofourknowledge:

• theaccountsoftheCompanyhavebeenpreparedinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice;and

• thefinancialstatementsgiveatrueandfairviewoftheassets,liabilitiesandfinancialpositionoftheCompany.

OnbehalfoftheBoard

Mark J White GeneralCounselandCompanySecretary23November2011

TheDirectorsarerequiredbylawtoprepareseparatefinancialstatementsfortheCompanyinaccordancewiththe CompaniesAct2006.TheDirectorshavechosentopreparethesefinancialstatementsfortheCompanyinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice.

CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyearwhichgiveatrueandfairviewofthestateofaffairsoftheCompanyasattheendofthefinancialyearandoftheprofitorlossoftheCompanyfor thatperiod.Inpreparingthosefinancialstatements,theDirectorsarerequiredto:

• selectsuitableaccountingpoliciesandthenapplythemconsistently;

• makejudgmentsandestimatesthatarereasonableand prudent;

• statewhetherapplicableaccountingstandardshavebeenfollowed,subjecttoanymaterialdeparturesdisclosedandexplainedinthefinancialstatements;and

• preparethefinancialstatementsonthegoingconcernbasis,unlessitisinappropriatetopresumethattheCompanywillcontinueinbusiness.

TheDirectorsareresponsibleforkeepingadequateaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtoenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct2006andArticle4oftheIASRegulation.TheyarealsoresponsibleforsafeguardingtheassetsoftheCompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.

LegislationintheUnitedKingdomgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.


Independent auditor’s report to the members of Compass Group PLC

IntroductionWehaveauditedtheParentCompanyfinancialstatementsofCompassGroupPLCfortheyearended30September2011whichcomprisetheParentCompanybalancesheet,theaccountingpoliciesandtherelatednotes1to9.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice).

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithChapter3ofPart16oftheCompaniesAct2006.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective responsibilities of directors and auditorAsexplainedmorefullyintheDirectors’ResponsibilitiesStatement,thedirectorsareresponsibleforthepreparationoftheParentCompanyfinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview.OurresponsibilityistoauditandexpressanopinionontheParentCompanyfinancialstatementsinaccordancewithapplicablelawandInternationalStandardsonAuditing(UKandIreland).ThosestandardsrequireustocomplywiththeAuditingPracticesBoard’sEthicalStandardsforAuditors.

Scope of the audit of the financial statementsAnauditinvolvesobtainingevidenceabouttheamountsanddisclosuresinthefinancialstatementssufficienttogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorerror.Thisincludesanassessmentof:whethertheaccountingpoliciesareappropriatetotheParentCompany’scircumstancesandhavebeenconsistentlyappliedandadequatelydisclosed;thereasonablenessofsignificantaccountingestimatesmadebythedirectors;andtheoverallpresentationofthefinancialstatements.Inaddition,wereadallthefinancialandnon-financialinformationintheAnnualReporttoidentifymaterialinconsistencieswiththeauditedfinancialstatements.Ifwebecomeawareofanyapparentmaterialmisstatementsorinconsistenciesweconsidertheimplicationsforourreport.

Opinion on financial statementsInouropiniontheParentCompanyfinancialstatements:• giveatrueandfairviewofthestateoftheCompany’saffairsas

at30September2011;• havebeenproperlypreparedinaccordancewithUnitedKingdom

GenerallyAcceptedAccountingPractice;and• havebeenpreparedinaccordancewiththerequirementsofthe

CompaniesAct2006.

Opinion on other matters prescribed by the Companies Act 2006Inouropinion:• theinformationgivenintheDirectors’Reportforthefinancialyear

forwhichthefinancialstatementsarepreparedisconsistentwiththeParentCompanyfinancialstatements.

Matters on which we are required to report by exceptionWehavenothingtoreportinrespectofthefollowingmatterswheretheCompaniesAct2006requiresustoreporttoyouif,inouropinion:• adequateaccountingrecordshavenotbeenkeptbytheParent

Company,orreturnsadequateforouraudithavenotbeenreceivedfrombranchesnotvisitedbyus;or

• theParentCompanyfinancialstatementsarenotinagreementwiththeaccountingrecordsandreturns;or

• certaindisclosuresofdirectors’remunerationspecifiedbylawarenotmade;or

• wehavenotreceivedalltheinformationandexplanationswerequireforouraudit.

Other mattersWehavereportedseparatelyontheGroupfinancialstatementsofCompassGroupPLCfortheyearended30September2011.

Ian Waller (Senior Statutory Auditor)

forandonbehalfofDeloitteLLPCharteredAccountantsandStatutoryAuditorLondon,UnitedKingdom23November2011


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Parent Company balance sheetasat30September2011

Compass Group PLC Notes2011

£m2010

£m

Fixed assetsInvestments 2 961 958

Current assetsDebtors:Amountsfallingduewithinoneyear 3 7,334 6,149Debtors:Amountsfallingdueaftermorethanoneyear 3 64 81Cashatbankandinhand 875 433

Currentassets 8,273 6,663

Creditors: Amounts falling due within one yearCreditors:Amountsfallingduewithinoneyear 4 (6,067) (5,129)

Net current assetsNetcurrentassets 2,206 1,534

Total assets less current liabilitiesTotalassetslesscurrentliabilities 3,167 2,492

Creditors: Amounts falling due after more than one yearCreditors:Amountsfallingdueaftermorethanoneyear 4 (1,208) (1,146)

Net assetsNet assets 1,959 1,346

Capital and reservesSharecapital 7,8 190 189Sharepremiumaccount 8 353 317Capitalredemptionreserve 8 44 44Share-basedpaymentreserve 8 149 145Profitandlossreserve 8 1,223 651

Total equity 1,959 1,346

ApprovedbytheBoardofDirectorson23November2011andsignedontheirbehalfby

Richard J Cousins,DirectorAndrew D Martin,Director


Parent Company accounting policiesfortheyearended30September2011

IntroductionThesignificantaccountingpoliciesadoptedinthepreparationoftheseparatefinancialstatementsoftheCompanyaresetoutbelow:

A Accounting convention and basis of preparationThesefinancialstatementshavebeenpreparedinaccordancewithapplicableUKGenerallyAcceptedAccountingPractice(UKGAAP)andtheCompaniesAct2006usingthehistoricalcostconventionmodifiedfortherevaluationofcertainfinancialinstruments.

B ExemptionsTheCompany’sfinancialstatementsareincludedintheCompassGroupPLCconsolidatedfinancialstatementsfortheyearended30September2011.Aspermittedbysection408oftheCompaniesAct2006,theCompanyhasnotpresenteditsownprofitandlossaccount.TheCompanyhasalsotakenadvantageoftheexemptionfrompresentingacashflowstatementunderthetermsofFRS1‘CashFlowStatements’.TheCompanyisalsoexemptunderthetermsofFRS8‘RelatedPartyDisclosures’fromdisclosingtransactionswithothermembersofCompassGroup.

TheCompassGroupPLCconsolidatedfinancialstatementsfortheyearended30September2011containfinancialinstrumentdisclosureswhichcomplywithFRS29‘FinancialInstruments:Disclosures’.Consequently,theCompanyhastakenadvantageoftheexemptioninFRS29nottopresentseparatefinancialinstrumentdisclosuresfortheCompany.

C Change in accounting policiesTheCompanyhasnotappliedanyaccountingstandardsforthefirsttimeintheyearended30September2011.

D Investments in subsidiary undertakingsInvestmentsarestatedatcostlessprovisionforanyimpairment.IntheopinionoftheDirectorsthevalueofsuchinvestmentsisnotlessthanthatshownatthebalancesheetdate.

E Foreign currencyAssetsandliabilitiesinforeigncurrenciesaretranslatedintoSterlingattheratesofexchangerulingattheyearend.Gainsandlossesarisingonretranslationareincludedintheprofitandlossaccountfortheyear.

F BorrowingsBorrowingsarerecognisedinitiallyatfairvalue,netoftransactioncostsincurred.Borrowingsaresubsequentlystatedatamortisedcostunlesstheyarepartofafairvaluehedgeaccountingrelationship.Borrowingsthatarepartofafairvaluehedgeaccountingrelationshiparemeasuredatamortisedcostplusorminusthefairvalueattributabletotheriskbeinghedged.

G Derivatives and other financial instrumentsTheCompanyusesderivativefinancialinstrumentstomanageitsexposuretofluctuationsinforeignexchangeratesandinterestrates.Derivativeinstrumentsutilisedincludeinterestrateswaps,crosscurrencyswapsandforwardcurrencycontracts.TheCompanyandGrouppolicyisdisclosedintheaccountingpoliciestotheconsolidatedfinancialstatements.

H DividendsDividendsarerecognisedintheCompany’sfinancialstatementsin theyearinwhichtheyareapprovedingeneralmeetingbytheCompany’sshareholders.Interimdividendsarerecognisedwhen paid.

I Deferred taxDeferredtaxisprovidedattheanticipatedratesontimingdifferencesarisingfromtheinclusionofitemsofincomeandexpenditureintaxcomputationsinperiodsdifferentfromthoseinwhichtheyareincludedinthefinancialstatements.Deferredtaxassetsarerecognisedtotheextentthatitisregardedasmorelikelythannotthattheywillberecovered.

J Share-based paymentsTheGroupissuesequity-settledandcash-settledshare-basedpaymentstocertainemployees.Equity-settledshare-basedpaymentsaremeasuredatfairvalue(excludingtheeffectofnonmarket-basedvestingconditions)atthedateofgrant.Thefairvaluedeterminedatthegrantdateoftheequity-settledshare-basedpaymentsisexpensedonastraight-linebasisoverthevestingperiod,basedontheGroup’sestimateofthesharesthatwilleventuallyvestandadjustedfortheeffectofnonmarket-basedvestingconditions.

FairvalueismeasuredusingeitherthebinomialdistributionorBlack-Scholespricingmodelsasismostappropriateforeachscheme.Theexpectedlifeusedinthemodelshasbeenadjusted,basedonmanagement’sbestestimate,fortheeffectsofexerciserestrictionsandbehaviouralconsiderations.

Forcash-settledshare-basedpayments,aliabilityequaltotheportionofthegoodsorservicesreceivedisrecognisedatthecurrentfairvaluedeterminedateachbalancesheetdate.

TheissueofshareincentivesbytheCompanytoemployeesofitssubsidiariesrepresentsadditionalcapitalcontributions.AnadditiontotheCompany’sinvestmentinGroupundertakingsisreportedwithacorrespondingincreaseinshareholders’funds.Fordetailsofthechargeseenote25totheconsolidatedfinancialstatements.


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Notes to the Parent Company financial statementsfortheyearended30September2011

1 Profit and loss account disclosuresTheCompanyprofitonordinaryactivitiesaftertaxwas£932million(2010:£184million).

ThefeefortheauditoftheCompany’sannualfinancialstatementswas£0.4million(2010:£0.4million).

TheCompanyhadnodirectemployeesinthecourseoftheyear(2010:none).

2 Investments in subsidiary undertakingsInvestments in subsidiary undertakings

2011£m

2010£m

CostAt1October 959 960Additions – 1Share-basedpaymentstoemployeesofsubsidiaries 10 9Rechargedtosubsidiariesduringtheyear (6) (10)Settlementofshare-basedpaymentsbysubsidiaries (1) (1)

At30September 962 959

ProvisionsAt1October 1 –Additions – 1

At30September 1 1

Net book valueAt30September 961 958

Theprincipalsubsidiaryundertakingsarelistedinnote36totheconsolidatedfinancialstatements.

3 Debtors 2011 2010

Debtors

Falling duewithin1 year

£m

Falling dueafter more

than 1 year£m

Total£m

Fallingduewithin1year

£m

Fallingdueaftermore

than1year£m

Total£m

Amountsowedbysubsidiaryundertakings 7,306 – 7,306 6,139 – 6,139Derivativefinancialinstruments(note6) 28 63 91 10 80 90Deferredtaxation – 1 1 – 1 1

Total 7,334 64 7,398 6,149 81 6,230


4 Creditors 2011 2010

Creditors

Falling duewithin1 year

£m

Falling dueafter more

than 1 year£m

Total£m

Fallingduewithin1year

£m

Fallingdueaftermore

than1year£m

Total£m

Bankoverdrafts 224 – 224 222 – 222Bankloans – – – 7 – 7

Bankoverdraftsandloans(note5) 224 – 224 229 – 229

Loannotes 293 889 1,182 77 521 598Bankloans – 47 47 – – –Bonds 335 269 604 – 623 623

Loannotesandbonds(note5) 628 1,205 1,833 77 1,144 1,221

Derivativefinancialinstruments(note6) 3 3 6 5 2 7Accrualsanddeferredincome 46 – 46 50 – 50Currenttaxliabilities 4 – 4 – – –Amountsowedtosubsidiaryundertakings 5,162 – 5,162 4,768 – 4,768

Total 6,067 1,208 7,275 5,129 1,146 6,275

TheCompanyhasfixedterm,fixedinterestprivateplacementstotallingUS$1,732million(£1,112million)atinterestratesbetween3.31%and6.81%.Thecarryingvalueoftheseloannotesis£1,146million.TheCompanyalsohasaSterlingdenominatedprivateplacementof£35millionwithacarryingvalueof£37millionataninterestrateof7.55%.

Loan notes Nominalvalue Redeemable Interest

US$privateplacement $450m May2012 6.81%US$privateplacement $15m Nov2013 5.67%US$privateplacement $105m Oct2013 6.45%US$privateplacement $162m Oct2015 6.72%Sterlingprivateplacement £35m Oct2016 7.55%US$privateplacement $250m Oct2018 3.31%US$privateplacement $398m Oct2021 3.98%US$privateplacement $352m Oct2023 4.12%

TheCompanyalsohasSterlingdenominatedEurobondstotalling£575millionatinterestratesof6.375%and7.0%.Thecarryingvalueofthesebondsis£604million.

Bonds Nominalvalue Redeemable Interest

SterlingEurobond £325m May2012 6.375%SterlingEurobond £250m Dec2014 7.0%


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Notes to the Parent Company financial statementsfortheyearended30September2011

5 Maturity of financial liabilities, other creditors and derivative financial instrumentsThematurityoffinancialliabilities,othercreditorsandderivativefinancialinstrumentsasat30Septemberisasfollows:

2011 2010

Maturity

Bankoverdraftsand loans

(note 4)£m

Loan notesand bonds

(note 4)£m

Other1

(note 6)£m

Total £m

Bankoverdraftsandloans

(note4)£m

Loannotesandbonds

(note4)£m

Other1

(note6)£m

Total£m

Between1and2years – – 2 2 – 646 (35) 611Between2and5years – 460 (42) 418 – 353 (33) 320Inmorethan5years 47 698 (20) 725 – 145 (10) 135

Inmorethan1year 47 1,158 (60) 1,145 – 1,144 (78) 1,066Within1year,orondemand 224 628 (25) 827 229 77 (5) 301

Total 271 1,786 (85) 1,972 229 1,221 (83) 1,367

1Otherincludesthedebtorandcreditoramountsassociatedwithderivativefinancialinstruments(note6).

Bank loans2011

£m2010

£m

Amountsrepayablebyinstalmentsfallingduebetween1and5years – –Amountsrepayablebyinstalmentsfallingduewithin1year – 7

Amountsrepayablebyinstalmentsfallingduewithin5years – 7Feesandpremiumscapitalisedonissue – –

Bankloans – 7

6 Derivative financial instruments2011 2010

Derivative financial instruments

Financialassets(note 3)

£m

Financialliabilities

(note 4)£m

Financialassets(note3)

£m

Financialliabilities

(note4)£m

Interest rate swapsFairvaluehedges 81 – 89 –Notinahedgingrelationship – (3) – (3)

OtherForwardcurrencycontractsandcrosscurrencyswaps 10 (3) 1 (4)

Derivativefinancialinstruments 91 (6) 90 (7)

7 Share capitalDetailsofthesharecapital,shareoptionschemesandshare-basedpaymentsofCompassGroupPLCareshowninnotes24and25totheconsolidatedfinancialstatements.


8 Capital and reserves

Capital and reserves

Sharecapital

£m

Sharepremiumaccount

£m

Capitalredemption

reserve£m

Share-basedpayment

reserve£m

Profitandlossreserve

£mTotal£m

At1October2009 185 215 44 146 725 1,315Issueofshares 4 93 – – – 97Repurchaseofordinarysharecapital – – – – – –Fairvalueofshare-basedpayments – – – 9 – 9Settledinnewshares – 9 – (9) – –Settledincashorexistingshares1 – – – (1) – (1)DividendspaidtoCompassshareholders – – – – (258) (258)Profitforthefinancialyear – – – – 184 184At30September2010 189 317 44 145 651 1,346

At1October2010 189 317 44 145 651 1,346Issueofshares 1 30 – – – 31Repurchaseofordinarysharecapital – – – – – –Fairvalueofshare-basedpayments – – – 10 – 10Settledinnewshares – 6 – (6) – –Settledincashorexistingshares1 – – – – – –DividendspaidtoCompassshareholders – – – – (360) (360)Profitforthefinancialyear – – – – 932 932

At30September2011 190 353 44 149 1,223 1,959

1Purchasedinthemarket.

9 Contingent liabilitiesContingent liabilities

2011£m

2010£m

Guaranteesandindemnities(includingsubsidiaryundertakings’overdrafts) 364 331

DetailsregardingcertaincontingentliabilitieswhichinvolvetheCompanyaresetoutinnote30totheconsolidatedfinancialstatements.


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Shareholder information

General shareholder information

Registrars and transfer office AllmattersrelatingtotheadministrationofshareholdingsintheCompanyshouldbedirectedtoCapitaRegistrars,TheRegistry,34BeckenhamRoad,Beckenham,KentBR34TU;telephonewithintheUK:Freephone08002802545andfromoverseas:+442077630041;email:[email protected].

ShareholderscanregisteronlinetoviewtheirCompassGroup PLCshareholdingdetailsusingtheSharePortal,aserviceofferedbyCapitaRegistrarsatwww.capitashareportal.com.ShareholdersregisteringfortheSharePortalwillrequiretheirinvestorcodewhichisshownonsharecertificates.Theserviceenablesshareholdersto:

• checktheirshareholdingsinCompassGroupPLC24hoursaday;• gaineasyaccesstoarangeofshareholderinformationincluding

indicativevaluationandpaymentinstructiondetails;and• usetheInternettoappointaproxytoattendgeneralmeetings

ofCompassGroupPLC.

Published informationIfyouwouldliketoreceiveahardcopyofthisReportoracopyinanalternativeformatsuchaslargeprint,BrailleoranaudioversiononCD,pleasecontacttheGroupCompanySecretariatattheCompany’sregisteredoffice.Acopycanalsobedownloadedfromourwebsiteatwww.compass-group.com/annualreport11.

Electronic communicationsTheCompany’sAnnualReportandallothershareholdercommunicationscanbefoundonourwebsiteatwww.compass-group.com.TheCompanycan,atshareholders’request,sendshareholdersanemailnotificationeachtimeanewshareholderreportorothershareholdercommunicationisplacedonitswebsite.Thisenablesshareholderstoreadand/ordownloadtheinformationattheirleisure.Therearenoparticularsoftwarerequirementstoviewthesedocuments,otherthanthosedescribedandavailableonourwebsiteatwww.compass-group.com.

Theprovisionofafacilitytocommunicatewithshareholderselectronicallydoesnotdiscriminatebetweenregisteredshareholdersofthesameclass.Thefacilityisavailabletoallregisteredshareholdersonequaltermsandparticipationismadeassimpleaspossible.Pleasenotethatitistheshareholder’sresponsibilitytonotifyourRegistrars(throughwww.capitashareportal.comorbypost)ofanychangetotheiremailaddress.Beforeelectingforelectroniccommunication,shareholdersshouldensurethattheyhavetheappropriatecomputercapabilities.TheCompanytakesallreasonableprecautionstoensurenovirusesarepresentinanycommunicationitsendsout,butcannotacceptanyresponsibilityforlossordamagearisingfromtheopeningoruseofanyemailorattachmentsfromtheCompanyandrecommendsthatshareholderssubjectallmessagestoviruscheckingprocedurespriortouse.PleasenotethatanyelectroniccommunicationsentbyashareholdertotheCompanyortheRegistrarscontainingacomputerviruswillnotbeaccepted.

TheCompany’sobligationissatisfiedwhenittransmitsanelectronicmessage.Itcannotbeheldresponsibleforafailureintransmissionbeyonditscontrol.IntheeventthattheCompanybecomesawarethatanelectronictransmissionisnotsuccessful,apapernotificationwillbesenttotheshareholderattheirregisteredaddress.Shareholderswishingtocontinuetoreceiveshareholderinformationinthetraditionalpaperformatshouldconfirmthisviawww.capitashareportal.comorwritetoCapitaRegistrars.

Cash dividendsTheCompanynormallypaysadividendtwiceeachyear.WeencourageUKresidentordinaryshareholderstoelecttohavetheirdividendspaiddirectlyintotheirbankorbuildingsocietyaccount.Thisisamoresecuremethodofpaymentandavoidsdelaysorthechequesbeinglost.OrdinaryshareholdersresidentoutsidetheUKcanalsohaveanydividendsinexcessof£10paidintotheirbankaccountdirectlyviaCapitaRegistrars’globalpaymentsservice.Detailsandtermsandconditionsmaybeviewedatwww.capitaregistrars.com/international.

Dividend Reinvestment Plan (‘DRIP’)ADRIPserviceisprovidedbyCapitaIRGTrusteesLimited.TheDRIPallowseligibleshareholderstousethewholeoftheircashdividendtobuyadditionalsharesintheCompany,therebyincreasingtheirshareholding.Additionalinformation,includingdetailsofhowtosignup,canbeobtainedfromtheCompany’swebsiteatwww.compass-group.comandfromCapitaIRGTrusteesLimited,telephonewithintheUK:Freephone08002802545andfromoverseas:+442077630041;email:[email protected].

The latest date for receipt of new applications to participate in respect of the 2011 final dividend is 2 February 2012.

Share price informationThecurrentpriceoftheCompany’ssharesisavailableontheCompany’swebsiteatwww.compass-group.com.Thisissuppliedwitha15minutedelaytorealtime.

TheCompany’ssharepriceisalsoavailableinanumberofnationalnewspapers,e.g.FinancialTimes,andfromthevoiceactivatedFTCitylineservice,telephonewithintheUK:09058171690.Callswillbechargedat75penceperminuteatalltimesfromaBTlandline.Averagecalldurationwillbeoneminuteforonestockquote.Thecostfromothernetworksandmobilephonesmaybehigher.

Share dealingTheCompany’ssharescanbetradedthroughmostbanks,buildingsocieties,stockbrokersor‘shareshops’.Inaddition,theCompany’sRegistrars,CapitaRegistrars,offeronlineandtelephonedealingservicestobuyorsellCompassGroupPLCshares.Theserviceisonlyavailabletopersonalshareholdersaged18orover,residentintheUK,EEA,ChannelIslandsortheIsleofMan.Fulldetailscanbeobtainedfromwww.capitadeal.comorbytelephoningwithintheUK:Freephone08002802545.


ShareGiftShareGift,thecharitysharedonationscheme,isafreeserviceforshareholderswishingtogivesharestocharitablecauses.Itisparticularlyusefulforthoseshareholderswhomaywishtodisposeofasmallquantityofshareswherethemarketvaluemakesituneconomictosellonacommissionbasis.FurtherinformationcanbeobtainedfromShareGift’swebsiteatwww.sharegift.org,telephonewithintheUK:02079303737andfromoverseas:+442079303737,orfromtheRegistrars.

American Depositary Receipts (‘ADRs’)BNYMellonmaintainstheCompany’sAmericanDepositaryReceiptregister.IfyouhaveanyenquiriesaboutyourholdingofCompassAmericanDepositaryshares,youshouldcontactBNYMellon,ShareownerServices,POBox358516,Pittsburgh,PA15252-8516,USA.FurtherinformationcanbefoundontheCompany’swebsiteatwww.compass-group.com.

Warning about unsolicited investment contacts Manycompanieshavebecomeawarethattheirshareholdershavereceivedunsolicitedtelephonecallsorcorrespondenceconcerninginvestmentmatters.Thesearetypicallyfromoverseasbased‘brokers’whotargetUKshareholdersofferingtosellthemwhatoftenturnouttobeworthlessorhighrisksharesinUSorUKinvestments.Theseoperationsarecommonlyknownas‘boilerrooms’.These‘brokers’canbeverypersistentandextremelypersuasive.

TheFinancialServicesAuthority(‘FSA’)estimatesthecostof‘boilerroom’fraudintheUKtobe£200millionperyear.TheFSAreceivesaround3,500callsayearfrompeoplewhohavebeencontactedby‘boilerrooms’.Around1,000ofthesearevictimsof‘boilerrooms’andtheyloseabout£20,000each.Thisproducesalossof£20millionthattheFSAhearsabout,butitisestimatedthatonly10%ofvictimsreportthecrime.

MoredetailedinformationonthisorsimilaractivitycanbefoundontheFSAwebsiteatwww.moneymadeclear.fsa.gov.ukandontheCompany’swebsiteatwww.compass-group.com.

Unsolicited mail TheCompanyislegallyobligedtomakeitsRegisterofMembersavailable,subjecttoaproperpurposetest,tothepublic.Asaconsequenceofthis,someshareholdersmightreceiveunsolicitedmail.UKshareholderswishingtolimittheamountofsuchmailshouldrefertotheMailingPreferenceServicewebsiteatwww.mpsonline.org.uk.

Identity theft – protecting an investmentCriminalsmaystealshareholders’personalinformation,puttingaholdingatrisk.AdviceonprotectingashareholdingisavailableontheCompany’swebsiteatwww.compass-group.com.

Financial calendarAnnual General Meeting:2February2012

Results announcements:Halfyear–May*Fullyear–November*

Dividend payments:Interim–August*Final–February*

*Expected

Board of DirectorsDirectors’biographiescanbefoundonpage42ofthisReport.

Key Committee membershipMembershipoftheprincipalCommitteesoftheBoardcanbefoundonpages47to49ofthisReport.


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Notice of meeting

Notice is hereby given that the eleventh Annual General Meeting of Compass Group PLC (‘the Company’) will be held in the Churchill Auditorium at the Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE on Thursday, 2 February 2012 at 12 noon in order to transact the following business:

Toconsiderand,ifthoughtfit,topassthefollowingResolutions,ofwhichResolutions17to19willbeproposedasspecialresolutionsandallotherResolutionswillbeproposedasordinaryresolutions.

1. ToreceiveandadopttheDirectors’AnnualReportandAccountsandtheAuditors’Reportthereonforthefinancialyearended30 September2011.

2. ToreceiveandadopttheDirectors’RemunerationReportcontainedwithintheAnnualReportandAccountsforthefinancialyearended30September2011.

3. Todeclareafinaldividendof12.8penceperordinaryshareinrespectofthefinancialyearended30September2011.

4. Tore-electSirRoyGardnerasaDirectoroftheCompany.

5. Tore-electRichardCousinsasaDirectoroftheCompany.

6. Tore-electGaryGreenasaDirectoroftheCompany.

7. Tore-electAndrewMartinasaDirectoroftheCompany.

8. ToelectJohnBasonasaDirectoroftheCompany.

9. Tore-electSirJamesCrosbyasaDirectoroftheCompany.

10.Tore-electSusanMurrayasaDirectoroftheCompany.

11.Tore-electDonRobertasaDirectoroftheCompany.

12.Tore-electSirIanRobinsonasaDirectoroftheCompany.

13.Tore-appointDeloitteLLPastheCompany’sAuditorsuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.

14.ToauthorisetheDirectorstoagreetheAuditors’remuneration.

15. ToauthorisetheCompanyandanycompanywhichis,orbecomes,asubsidiaryoftheCompanyduringtheperiodtowhichthisResolutionrelatesto:

15.1makedonationstopoliticalpartiesorindependentelectioncandidates;

15.2makedonationstopoliticalorganisationsotherthanpoliticalparties;and

15.3incurpoliticalexpenditure,

duringtheperiodcommencingonthedateofthisResolutionandendingonthedateoftheCompany’snextAnnualGeneralMeeting,providedthatanysuchdonationsandexpendituremadebytheCompany,orbyanysuchsubsidiary,shallnotexceed£125,000percompanyand,togetherwiththosemadebyanysuchsubsidiaryandtheCompany,shallnotexceedinaggregate £125,000.

AnytermsusedinthisResolutionwhicharedefinedinPart14oftheCompaniesAct2006shallbearthesamemeaningforthepurposesofthisResolution15.

This document is important and requires your immediate attention.Ifyouareinanydoubtastotheactionyoushouldtake,youshouldimmediatelyconsultyourstockbroker,bankmanager,solicitor,accountantorotherindependentfinancialadvisorauthorisedundertheFinancialServicesandMarketsAct2000.IfyouhavesoldorotherwisetransferredallyoursharesinCompassGroupPLC,pleasesendthisNoticeandtheaccompanyingdocumentstothepurchaserortransferee,ortothestockbroker,bankorotheragentthroughwhomthesaleortransferwaseffectedfortransmissiontothepurchaserortransferee.


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16.TorenewthepowerconferredontheDirectorsbyArticle12oftheCompany’sArticlesofAssociationforaperiodexpiringattheendofthenextAnnualGeneralMeetingoftheCompanyafterthedateonwhichthisResolutionispassedor,ifearlier,1 May2013;forthatperiodthesection551amountshallbe£63,254,650and,inaddition,thesection551amountshallbeincreasedby£63,254,650,providedthattheDirectors’powerinrespectofsuchlatteramountshallonlybeusedinconnectionwitharightsissue:

16.1 toholdersofordinarysharesinproportion(asnearlyasmaybepracticable)totheirexistingholdings;and

16.2 toholdersofotherequitysecuritiesasrequiredbytherightsofthosesecuritiesorastheBoardotherwiseconsidersnecessary,

andthattheDirectorsmayimposeanylimitsorrestrictionsandmakeanyarrangementswhichtheyconsidernecessarytodealwithfractionalentitlements,legalorpracticalproblemsunderthelawsof,ortherequirementsof,anyrelevantregulatorybodyorstockexchange,anyterritory,oranymatterwhatsoever.

Special Resolutions17. Torenew,subjecttothepassingofResolution16above,

thepowerconferredontheDirectorsbyArticle13oftheCompany’sArticlesofAssociation,suchauthoritytoapplyuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthedateonwhichthisResolutionispassedor,ifearlier,1 May2013andforthatperiodthesection561amountis£9,488,200.

18.TogenerallyandunconditionallyauthorisetheCompany,pursuanttoandinaccordancewithsection701oftheCompaniesAct2006,tomakemarketpurchases(withinthemeaningofsection693(4)ofthatAct)ofordinarysharesof10 penceeachinthecapitaloftheCompanysubjecttothefollowingconditions:

18.1 themaximumaggregatenumberofordinarysharesherebyauthorisedtobepurchasedis189,764,000;

18.2 theminimumprice(exclusiveofexpenses)whichmaybepaidforeachordinaryshareis10pence;

18.3 themaximumprice(exclusiveofexpenses)whichmaybepaidforeachordinaryshareis,inrespectofasharecontractedtobepurchasedonanyday,anamountequalto105%oftheaverageofthemiddlemarketquotationsforanordinaryshareasderivedfromtheLondonStockExchangeDailyOfficialListforthefivebusinessdaysimmediatelyprecedingthedayonwhichthepurchaseis made;and

18.4 thisauthorityshallexpire,unlesspreviouslyrenewed,variedorrevokedbytheCompany,attheconclusionofthenextAnnualGeneralMeetingoftheCompanyor1 August2013,whicheveristheearlier(exceptinrelationtothepurchaseofordinaryshares,thecontractforwhichwasconcludedpriortotheexpiryofthisauthorityandwhichwillormaybeexecutedwhollyorpartlyaftertheexpiryofthisauthority).

19. ToauthorisetheDirectorstocallageneralmeetingoftheCompany,otherthananAnnualGeneralMeeting,onnotlessthan14cleardays’notice,providedthatthisauthorityshallexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompanyafterthedateofthepassingofthisResolution.

Voting on all Resolutions will be by way of a poll.

ByOrderoftheBoardMark J WhiteGeneralCounselandCompanySecretary22December2011

RegisteredOffice:CompassHouseGuildfordStreetChertseySurreyKT169BQ

RegisteredinEnglandandWalesNo.4083914


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Explanatory notes to the ResolutionsResolution 1 – Annual Report and AccountsTheDirectorsarerequiredtopresenttotheAnnualGeneralMeeting(‘AGM’)(‘theMeeting’)theauditedaccountsandtheDirectors’andAuditors’Reportsforthefinancialyearended30September2011.

Resolution 2 – Directors’ Remuneration ReportInaccordancewithsection439oftheCompaniesAct2006(‘theCA2006’),shareholdersarerequestedtoapprovetheDirectors’RemunerationReport.ThisResolutionisadvisoryanddoesnotaffecttheactualremunerationpaidtoanyindividualDirector.ItservestoprovideshareholderfeedbacktotheRemunerationCommittee.

TheDirectors’RemunerationReportissetoutonpages53to60oftheAnnualReportandAccountsfor2011(‘AnnualReport2011’)andincludestheCompany’spolicyonDirectors’remunerationforthenextfinancialyearandfortheyearssubsequenttothat,detailsoftheDirectors’emolumentsfortheyear,andtheTotalShareholderReturn(‘TSR’)oftheCompanyandthatoftheFTSE100Indexsince1 October2006.

Resolution 3 – Final DividendThefinaldividendfortheyearended30September2011willbepaidon27February2012toshareholdersontheregisteratthecloseofbusinesson27January2012,subjecttoapprovalbyshareholders.

Resolutions 4 to 12 – Election and Re-election of DirectorsBiographicaldetailsofalltheDirectorsstandingforelectionandre-electionappearonpage42oftheAnnualReport2011.

UndertheCompany’sArticlesofAssociation,onethirdoftheDirectorsarerequiredtoretirebyrotationeachyearand,inaddition,noDirectormayserveformorethanthreeyearswithoutbeingre-electedbyshareholders.However,inaccordancewiththeUKCorporateGovernanceCode(‘theCode’),alltheDirectorswillsubmitthemselvesforannualre-electionbyshareholders.TheChairmanissatisfiedthattheperformanceofeachoftheDirectorscontinuestobeeffectiveandtodemonstratecommitmenttotherole.

Resolutions 13 and 14 – AuditorsAuditorsareappointedateverygeneralmeetingatwhichaccountsarepresentedtoshareholders.ThecurrentappointmentofDeloitteLLPastheCompany’sAuditorswillendattheconclusionoftheAGMandithasadvisedofitswillingnesstostandforre-appointment.Itisnormalpracticeforacompany’sdirectorstobeauthorisedtoagreehowmuchtheAuditorsshouldbepaidandResolution 14grantsthisauthoritytotheDirectors.

Resolution 15 – Donations to Political PartiesItisnotGrouppolicytomakedonationstopoliticalparties.However,itispossiblethatcertainroutineactivitiesundertakenbytheCompanyanditssubsidiariesmightunintentionallyfallwithinthewidedefinitionofmattersconstitutingpoliticaldonationsandexpenditureintheCA2006.AnyexpenditurethatisregulatedundertheCA2006mustfirstbeapprovedbyshareholdersandwillbedisclosedinnextyear’sAnnualReport.ThisResolution,ifpassed,willrenewtheDirectors’authorityuntiltheAGMtobeheldin2013(whentheDirectorsintendtorenewthisauthority)tomakedonationsandincurexpenditurewhichmightotherwisebecaughtbythetermsoftheCA2006,uptoanaggregateamountof£125,000fortheCompanyandforsubsidiarycompanies.

Resolution 16 – Directors’ Authority to Allot Shares ThepurposeofResolution16istorenewtheDirectors’powertoallotshares.Resolution16.1seekstogranttheDirectorsauthoritytoallot,pursuanttoArticle12oftheCompany’sArticlesofAssociationandsection551oftheCA2006,relevantsecuritieswithamaximumnominalamountof£63,254,650.Thisrepresents632,546,500ordinarysharesof10 penceeachinthecapitaloftheCompany,whichisapproximatelyonethirdoftheCompany’sissuedordinarysharecapitalasat23November2011(beingthelastpracticabledatepriortothepublicationofthisNotice).TheCompanydoesnotcurrentlyholdanysharesastreasuryshares.Theauthoritywould,unlesspreviouslyrenewed,revokedorvariedbyshareholders,remaininforceuptotheconclusionoftheAGMoftheCompanytobeheldin2013,or1May2013,whicheverisearlier.

InaccordancewiththeAssociationofBritishInsurersAllotmentGuidelines(‘theGuidelines’),Resolution16.2seekstogranttheDirectorsauthoritytoallotapproximatelyafurtheronethirdoftheCompany’sissuedordinarysharecapitalinconnectionwitharightsissueinfavourofordinaryshareholderswithanominalvalueofupto£63,254,650(representing632,546,500ordinarysharesof10penceeach).SuchadditionalauthoritywillbevalidforaperiodofoneyearoruntiltheconclusionofthenextAGM,whicheveristhesooner.

IftheCompanyusesanyoftheadditionalonethirdauthoritypermittedbytheGuidelines,theCompanywillensurethatallDirectorsstandforre-election.TheCompany’scurrentpracticeisthatallDirectorssubmitthemselvesforre-electioneachyearinaccordancewiththeCode,notwithstandingtheprovisionssetoutintheGuidelines.

ThetotalauthorisationsoughtbyResolution16isequaltoapproximatelytwothirdsoftheissuedordinarysharecapitaloftheCompany(excludingtreasuryshares)asat23November2011,beingthelastpracticabledatepriortopublicationofthisNotice.

Resolutions 1 to 16 will be proposed as ordinary resolutions and require that more than half of the votes cast must be in favour of a resolution for it to be passed.

Notice of meeting


Resolution 17 – Disapplication of Pre-emption RightsIftheCompanyissuesnewshares,orsellstreasuryshares,forcash(otherthaninconnectionwithanemployeesharescheme),itmustfirstofferthemtoexistingshareholdersinproportiontotheirexistingholdings.Inaccordancewithinvestorguidelines,approvalissoughtbytheDirectorstoissuealimitednumberofordinarysharesforcashwithoutofferingthemtoexistingshareholders.

Resolution17seekstorenewtheDirectors’authoritytoissueequitysecuritiesoftheCompanyforcashwithoutapplicationofpre-emptionrightspursuanttoArticle13oftheCompany’sArticlesofAssociationandsection561oftheCA2006.Otherthaninconnectionwitharights,scripdividend,orothersimilarissue,theauthoritycontainedinthisResolutionwouldbelimitedtoamaximumnominalamountof£9,488,200.Thisrepresents94,882,000ordinarysharesof10 penceeachinthecapitaloftheCompany,whichisapproximately5%oftheCompany’sissuedordinarysharecapitalasat23November2011(beingthelastpracticabledatepriortothepublicationofthisNotice).Theauthoritywould,unlesspreviouslyrenewed,revokedorvariedbyshareholders,expireattheconclusionoftheAGMoftheCompanytobeheldin2013oron1May2013ifearlier.

Saveforissuesofsharesinrespectofvariousemployeeshareschemesandanysharedividendalternatives,theDirectorshavenocurrentplanstoutiliseeitheroftheauthoritiessoughtbyResolutions16and17althoughtheyconsidertheirrenewalappropriateinordertoretainmaximumflexibilitytotakeadvantageofbusinessopportunitiesastheyarise.Inaddition,andinlinewithbestpractice,theCompanyhasnotissuedmorethan7.5%ofitsissuedsharecapitalonanon-proratabasisoverthelastthreeyearsandtheBoardconfirmsitsintentiontofollowbestpracticesetoutinthePre-emptionGroup’sStatementofPrincipleswhichprovidesthatusageofthisauthorityinexcessof7.5%oftheCompany’sissuedsharecapitalinarollingthree-yearperiodwouldnottakeplacewithoutpriorconsultationwithshareholders.

Resolution 18 – Purchase of own SharesThisResolutionauthorisestheDirectorstomakelimitedon-marketpurchasesoftheCompany’sordinaryshares.Thepowerislimitedtoamaximumof189,764,000shares(justunder10%oftheissuedordinarysharecapitalasat23November2011,beingthelastpracticabledatepriortothepublicationofthisNotice)anddetailstheminimumandmaximumpricesthatcanbepaid,exclusiveofexpenses.TheauthorityconferredbythisResolutionwillexpireattheconclusionoftheCompany’snextAGMor18monthsfromthepassingofthisResolution,whicheveristheearlier.

TheCompanies(AcquisitionofOwnShares)(TreasuryShares)Regulations2003cameintoforceon1December2003.TheseregulationsallowsharesrepurchasedbytheCompanytobeheldastreasuryshares.Treasurysharesmaybecancelled,soldforcashorusedforthepurposeofemployeeshareschemes.TheauthoritytobesoughtbythisResolutionisintendedtoapplyequallytosharestobeheldbytheCompanyastreasuryshares.Nodividendswillbepaidonshareswhichareheldastreasurysharesandnovotingrightswillbeattachedtothem.Sharesheldastreasuryshareswillbetreatedasifcancelled.

TheCompanyannouncedon23November2011itsintentiontocommencea£500millionsharerepurchaseprogramme,tobeexecutedbytheendof2012.

Beyondthisprogramme,theDirectorshavenopresentintentionofexercisingtheauthoritytopurchasetheCompany’sordinarysharesbuttheyconsideritdesirabletoprovidemaximumflexibilityinthemanagementoftheCompany’scapitalresources.TheDirectorswouldonlypurchasesharesif,intheiropinion,theexpectedeffectwouldbetoresultinanincreaseinearningspershareandwouldbenefitshareholdersgenerally.

Asat23November2011(beingthelastpracticabledatepriortothepublicationofthisNotice),therewereoptionsoutstandingoverapproximately27,200,000ordinarysharesinthecapitaloftheCompanywhichrepresent1.4%oftheCompany’sissuedordinarysharecapital(excludingtreasuryshares)atthatdate.IftheauthoritytopurchasetheCompany’sordinaryshareswasexercisedinfull,theseoptionswouldrepresent1.6%oftheCompany’sissuedordinarysharecapital(excludingtreasuryshares).

Resolution 19 – Notice of Meetings other than Annual General MeetingsTheCompany’sArticlesofAssociationallowtheDirectorstocallgeneralmeetingsotherthanAnnualGeneralMeetingson14cleardays’notice.However,theCompanies(Shareholders’Rights)Regulations2009(‘theRegulations’)requirethatallgeneralmeetingsbeheldon21days’notice,unlessshareholdersagreetoashorternoticeperiod,andtheCompanyhasmettherequirementsforelectronicvotingundertheRegulations.ThisResolutionseekstorenewtheauthoritygrantedbyshareholdersatlastyear’sAGMwhichpreservedtheCompany’sabilitytocallgeneralmeetings,otherthanAGMs,on14cleardays’notice,suchauthoritytobeeffectiveuntiltheCompany’snextAGM,whenasimilarresolutionwillbeproposed.TheDirectorsconfirmthattheshorternoticeperiodwouldnotbeusedasamatterofroutine,butonlywhereflexibilityismeritedbythebusinessofthemeetinganditisthoughttobetotheadvantageofshareholdersasawhole.Anelectronicvotingfacilitywillbemadeavailabletoallshareholdersforanymeetingheldonsuch notice.

Resolutions 17 to 19 will be proposed as special resolutions and require that at least three-quarters of the votes cast must be in favour of a resolution for it to be passed.

RecommendationTheDirectorsconsiderthateachoftheResolutionsisinthebestinterestsoftheCompanyandtheshareholdersasawholeand,accordingly,recommendthatallshareholdersvoteinfavourofallResolutions,astheDirectorsintendtodoinrespectoftheirown holdings.


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Important informationProxies (i) Ashareholderentitledtoattendandvoteatthe2012AGMmay

appointaproxyorproxies(whoneednotbeashareholderoftheCompany)toexercisealloranyofhisorherrightstoattend,speakandvoteattheAGM.Wheremorethanoneproxyisappointed,eachproxymustbeappointedfordifferentshares.

Proxiesmayonlybeappointedby:

• completingandreturningtheFormofProxyenclosedwiththisNoticetoPXS,34BeckenhamRoad,Beckenham,KentBR34TU;

• goingtowww.capitashareportal.comandfollowingtheinstructionsforelectronicsubmissionprovidedthere;or

• byhavinganappropriateCRESTmessagetransmitted,ifyouareauseroftheCRESTsystem(includingCRESTpersonalmembers).PleaserefertotheCRESTmanualontheEuroclearwebsite(www.euroclear.com/CREST)forfurtherinformation.

ReturnoftheFormofProxywillnotpreventashareholderfromattendingtheMeetingandvotinginperson.However,ifyoudoattendtheMeeting,anyproxyappointmentwillbetreatedas revoked.

TheelectronicaddressesprovidedinthisNoticeareprovidedsolelyforthepurposeofenablingshareholderstoregistertheappointmentofaproxyorproxiesfortheMeetingortosubmittheirvotingdirectionselectronically.YoumaynotuseanyelectronicaddressprovidedintheNoticeofthisMeetingtocommunicatewiththeCompanyforanypurposesotherthanthoseexpresslystated.

(ii) TobeeffectivetheFormofProxymustbecompletedinaccordancewiththeinstructionsandreceivedbytheRegistrarsoftheCompanyby12noononTuesday,31January2012.

ToappointaproxyortogiveaninstructiontoapreviouslyappointedproxyviatheCRESTsystem,theCRESTmessagemustbereceivedbytheissuer’sagent(IDRA10)by12noononTuesday,31January2012.Pleasenote,however,thatproxymessagescannotbesentthroughCRESTonweekends,bankholidaysorafter8.00p.m.onanyotherday.Forthepurposeofthisdeadline,thetimeofreceiptwillbetakentobethetime(asdeterminedbythetimestampappliedtothemessagebytheCRESTApplicationsHost)fromwhichtheissuer’sagentisabletoretrievethemessage.CRESTpersonalmembersorotherCRESTsponsoredmembersandthoseCRESTmembersthathaveappointedvotingserviceprovider(s)shouldcontacttheirCRESTsponsororvotingserviceprovider(s)forassistancewithappointingproxiesviaCREST.

ForfurtherinformationonCRESTprocedures,limitationsandsystemtimings,pleaserefertotheCRESTmanual.WemaytreatasinvalidaproxyappointmentsentbyCRESTinthecircumstancessetoutinRegulation35(5)(a)oftheUncertificatedSecuritiesRegulations2001,asamended.

(iii) PursuanttoRegulation41oftheUncertificatedSecuritiesRegulations2001andsection360B(2)oftheCA2006,theCompanyspecifiesthatonlythoseshareholdersregisteredintheRegisterofMembersoftheCompanyasat6.00p.m.onTuesday,31 January2012,orintheeventthattheMeetingisadjourned,intheRegisterofMembers48hoursbeforethetimeofanyadjournedmeeting,shallbeentitledtoattendorvoteattheMeetinginrespectofthenumberofsharesregisteredintheirnameattherelevanttime.ChangestoentriesontheRegisterofMembersafter6.00p.m.on31January2012or,intheeventthattheMeetingisadjourned,lessthan48hoursbeforethetimeofanyadjournedmeeting,shallbedisregardedindeterminingtherightsofanypersontoattendorvoteattheMeeting.

Nominated PersonsAnypersontowhomacopyofthisNoticeissentwhoisapersonnominatedundersection146oftheCA2006toenjoyinformationrights(‘NominatedPerson’)may,underanagreementbetweenhimorherandtheshareholderbywhomheorshewasnominated,havearighttobeappointed(ortohavesomeoneelseappointed)asaproxyfortheAGM.IfaNominatedPersonhasnosuchproxyappointmentrightordoesnotwishtoexerciseit,heorshemay,underanysuchagreement,havearighttogiveinstructionstotheshareholderastotheexerciseofvotingrights.

Thestatementoftherightsofshareholdersinrelationtotheappointmentofproxiesinnote(i)abovedoesnotapplytoNominatedPersons.TherightsdescribedinthatnotecanonlybeexercisedbyshareholdersoftheCompany.

AGM businessUndersection338AoftheCA2006,shareholdersmayrequesttheCompanytoincludeinthebusinesstobedealtwithatAnnualGeneralMeetingsanymatter(otherthanaproposedResolution)whichmaybeproperlyincludedinthebusiness,providedthatitisnotdefamatory,frivolousorvexatious.TheCompanywillincludesuchmatterifsufficientrequestshavebeenreceivedinaccordancewithsection338A(3)oftheCA2006which,broadly,requiresaminimumof100shareholdersholdinganaverageof1,000ordinaryshareseachorshareholdersholdingatleast5%oftheCompany’sissuedsharecapitaltomaketherequest,andsubmittedinthemannerdetailedinsection338AoftheCA2006.

Right to ask questionsUndersection319AoftheCA2006,shareholdershavetherighttoaskquestionsattheAGMrelatingtothebusinessoftheMeetingandforthesetobeanswered,unlesssuchanswerwouldinterfereundulywiththebusinessoftheMeeting,involvethedisclosureofconfidentialinformation,iftheanswerhasalreadybeenpublishedontheCompany’swebsiteorifitisnotintheinterestsoftheCompanyorthegoodorderoftheMeetingthatthequestionbeanswered.

Notice of meeting


Website publication of audit concernsUndersection527oftheCA2006,shareholdershavearighttorequestpublicationofanyconcernsthattheyproposetoraiseattheAGMrelatingtotheauditoftheCompany’saccounts(includingtheAuditors’Reportandtheconductoftheaudit)thataretobesubmittedtotheMeetingoranycircumstancesconnectedtotheCompany’sAuditorswhoceasedtoholdofficesincethelastAGM.TheCompanywillpublishthestatementifsufficientrequestshavebeenreceivedinaccordancewithsection527(2)oftheCA2006which,broadly,requiresaminimumof100shareholdersholdinganaverageof1,000ordinaryshareseachorshareholdersholdingatleast5%oftheCompany’sissuedordinarysharecapitaltomaketherequest.TheCompanymaynotrequirethemembersrequestinganysuchwebsitepublicationtopayitsexpensesincomplyingwithsuchrequest.Whereastatementispublished,theCompanywillforwardthestatementtotheCompany’sAuditorsnotlaterthanthetimewhenitmakesthestatementavailableonthewebsite.ThebusinesswhichmaybedealtwithattheAGMincludesanystatementthattheCompanyhasbeenrequiredundersection527oftheCA2006topublishonitswebsite.

Documents available for inspectionCopiesoftheserviceagreementsoftheExecutiveDirectors,thelettersofappointmentoftheNon-ExecutiveDirectors,theDirectors’deedsofindemnityandtheRegisterofDirectors’InterestswillbeavailableforinspectionduringnormalbusinesshoursfromthedateofdispatchofthisNoticeuntilthedateoftheAGM(Saturdays,Sundaysandpublicholidaysexcepted)attheregisteredofficeoftheCompanyandwillalsobemadeavailableattheMeetingforaperiodof15minutespriortoandduringthecontinuanceoftheMeeting.

Total voting rightsAsat23November2011(beingthelastpracticabledatepriortothepublicationofthisNotice)theCompany’sissuedsharecapitalcomprised1,897,640,073ordinaryshares.TheholdersofordinarysharesareentitledtoattendandvoteatgeneralmeetingsoftheCompany.Onavotebyshowofhands,everyordinaryshareholderwhoispresenthasonevoteandeveryproxypresentwhohasbeendulyappointedbyashareholderentitledtovotehasonevote.Onavotebypolleveryordinaryshareholderwhoispresentinpersonorbyproxyhasonevoteforeveryordinaryshareheld.ItisproposedthatallvotesontheResolutionsattheAGMwillbetakenbywayofapoll.

ThetotalvotingrightsintheCompanyasat23November2011were1,897,640,073.

Information available on websiteThefollowinginformationisavailableontheCompany’swebsiteatwww.compass-group.com:

(i) ThematterssetoutinthisNoticeofMeeting;(ii) Thetotalvotingrightsandnumberofsharesofeachclass

inrespectofwhichshareholdersareentitledtoexercisevotingrightsattheAGM;

(iii)Shareholders’rightstoincludebusinesstobedealtwithattheAGM;and

(iv) Shareholders’statements,resolutionsandmattersofbusinessreceivedbytheCompanyafter22December2011.

Time of the AGMThedoorsofTheQueenElizabethIIConferenceCentrewillbeopenat10.30a.m.andtheAGMwillstartpromptlyat12noon.

IfyouareplanningtoattendtheAGM,TheQueenElizabethIIConferenceCentreislocatedintheCityofWestminster.Pleaseseethemapbelow.

Attending the AGMIfyouarecomingtotheAGM,pleasebringyourattendancecardwithyou.Itauthenticatesyourrighttoattend,speakandvoteattheAGMandwillspeedyouradmission.YoumayalsofinditusefultobringthisNoticeofAGMandtheAnnualReport2011sothatyoucanrefertothemattheAGM.AlljointshareholdersmayattendandspeakattheAGM.However,onlythefirstshareholderlistedontheRegisterofMembersisentitledtovote.AtthediscretionoftheCompany,andsubjecttosufficientseatingcapacity,ashareholdermayenterwithoneguest,providedthattheshareholderandtheirguestregistertoentertheAGMatthesametime.

QuestionsAllshareholdersortheirproxieswillhavetheopportunitytoaskquestionsattheAGM.WheninvitedbytheChairman,ifyouwishtoaskaquestion,pleasewaitforaCompanyrepresentativetobringyouamicrophone.Itwouldbehelpfulifyoucouldstateyournamebeforeyouaskyourquestion.AquestionmaynotbeansweredattheMeetingifitisnotconsideredtobeintheinterestsoftheCompanyorthegoodorderoftheMeetingorifitwouldinvolvethedisclosureofsensitiveinformation.TheChairmanmayalsonominatearepresentativetoansweraspecificquestionaftertheMeetingorreferthequestiontotheCompany’swebsite.

Queen Elizabeth IIConference Centre

Main entrance

Houses ofParliament

St. Margaret’s

WestminsterAbbey

St. James’s Park

Westminster

Victoria Street

To Victoria Station

Broad Sanctuary

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Queen Anne’s Gate. Lewisham Street

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Old Pye Street

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St. James’s Park

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Birdcage Walk Great George Street Westminster Bridge

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Voting at the AGMTheCompanyproposesthatallResolutionstobeproposedattheAGMwillbeputtothevoteonapoll.ThiswillresultinamoreaccuratereflectionoftheviewsofalloftheCompany’sshareholdersbyensuringthateveryvoteisrecognised,includingthevotesofshareholderswhoareunabletoattendtheMeetingbutwhohaveappointedaproxyfortheMeeting.Onapoll,eachshareholderhasonevoteforeachshareheld.

AftereachResolutionisputtotheMeeting,youwillbeaskedtocastyourvote.Allofthevotesoftheshareholderspresentwillbecounted,andaddedtothosereceivedbyproxy,andtheprovisionalfinalvoteswillbedisplayedonascreenatthefrontoftheMeeting.

Thevotingresults,whichwillincludeallvotescastforandagainsteachResolutionattheMeeting,andallproxieslodgedpriortotheMeeting,willbeannouncedattheMeetingandpublishedontheCompany’swebsiteassoonaspracticableaftertheMeeting.TheCompanywillalsodisclosethenumberofvoteswithheld.

Ifyouhavealreadyvotedbyproxy,youwillstillbeabletovoteattheMeetingandyourvoteonthedaywillreplaceyourpreviouslylodgedproxyvote.

Not attending the AGMWhoeveryouappointasaproxycanvoteorabstainfromvotingasheorshedecidesonanyotherbusiness,whichmayvalidlycomebeforetheAGM.ThisincludesproxiesappointedusingtheCRESTservice.DetailsofhowtocompletetheappointmentofaproxyeitherelectronicallyoronpaperaregiveninthenotestothisNotice.

Venue arrangementsForsecurityreasons,allhandbaggagemaybesubjecttoexamination.Pleasenotethatlaptopcomputers,recordingequipment,camerasandsimilarsuchequipmentmaynotbebroughtintotheAGM.Briefcases,umbrellasandotherbulkyitemsshouldbedepositedinthecloakroom,situatedonthegroundfloor.

SmokingisnotpermittedinsideTheQueenElizabeth IIConference Centre.

PleaseensurethatallelectronicequipmentisswitchedoffthroughouttheAGM.

TeaandcoffeewillbeavailablebeforetheMeetingandlightrefreshmentswillbeservedafterwards.

ThefollowingfacilitieswillbeavailableatTheQueenElizabeth IIConferenceCentre:

• soundamplification/hearingloop;• wheelchairaccess;and• signlanguageinterpreters.

AnyoneaccompanyingashareholderinneedofassistancewillbeadmittedtotheAGM.IfanyshareholderwithadisabilityhasanyquestionregardingattendanceattheAGM,pleasecontacttheGroupCompanySecretariatatCompassGroupPLC,CompassHouse,GuildfordStreet,Chertsey,SurreyKT169BQby19January2012.

SecuritySecuritystaffwillbeondutytoassistshareholders.TheCompanywillnotpermitbehaviourthatmayinterferewithanotherperson’ssecurity,safetyorthegoodorderoftheAGM.

Shareholder enquiriesCapitaRegistrarsmaintaintheCompany’sshareregister.IfyouhaveanyenquiriesabouttheAGMoraboutyourshareholding,youshouldcontactCapitaRegistrars,TheRegistry,34BeckenhamRoad,Beckenham,KentBR34TU.

American Depositary Receipt enquiriesBNYMellonmaintainstheCompany’sAmericanDepositaryReceiptregister.IfyouhaveanyenquiriesaboutyourholdingofCompassAmericanDepositaryshares,youshouldcontactBNYMellon,ShareownerServices,POBox358516,Pittsburgh,PA15252-8516,USA.

Data protection statementYourpersonaldataincludesalldataprovidedbyyou,oronyourbehalf,whichrelatestoyouasashareholder,includingyournameandcontactdetails,thevotesyoucastandyourReferenceNumber(attributedtoyoubytheCompany).TheCompanydeterminesthepurposesforwhichandthemannerinwhichyourpersonaldataistobeprocessed.TheCompanyandanythirdpartytowhichitdisclosesthedata(includingtheCompany’sRegistrars)mayprocessyourpersonaldataforthepurposesofcompilingandupdatingtheCompany’srecords,fulfillingitslegalobligationsandprocessingtheshareholderrightsyouexercise.

Published informationIfyouwouldliketoreceivethisNoticeand/oracopyoftheAnnualReport2011inanappropriatealternativeformat,suchaslargeprint,BrailleoranaudioversiononCD,pleasecontacttheGroupCompanySecretariatatCompassGroupPLC,CompassHouse,GuildfordStreet,Chertsey,SurreyKT169BQ.

Notice of meeting


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Index to the consolidated financial statementsNote Page

Directors’responsibilities 61 Independentauditor’sreport 62 Consolidatedincomestatement 63 Analysisofoperatingprofit 63 Consolidatedstatementofcomprehensiveincome 64 Consolidatedstatementofchangesinequity 65 Consolidatedbalancesheet 67 Consolidatedcashflowstatement 68 Reconciliationoffreecashflowfromcontinuingoperations 68 Accountingpolicies 691 Segmentalreporting 742 Operatingcosts 783 Employees 794 Financingincome,costsandrelated(gains)/losses 805 Gainonremeasurementofjointventureinterest

onacquisitionofcontrol 816 Tax 817 Discontinuedoperations 838 Earningspershare 849 Dividends 8510 Goodwill 8511 Otherintangibleassets 8712 Property,plantandequipment 8813 Interestsinassociates 8914 Otherinvestments 8915 Jointventures 9016 Tradeandotherreceivables 9017 Inventories 9218 Cashandcashequivalents 9219 Short-termandlong-termborrowings 9220 Derivativefinancialinstruments 9421 Tradeandotherpayables 10022 Provisions 10023 Post-employmentbenefitobligations 10124 Calledupsharecapital 10525 Share-basedpayments 10726 Businesscombinations 11127 Reconciliationofoperatingprofit tocashgeneratedbyoperations 11228 Cashflowfromdiscontinuedoperations 11329 Reconciliationofnetcashflowto movementinnetdebt 11330 Contingentliabilities 11431 Capitalcommitments 11532 Operatingleaseandconcessionscommitments 11533 Relatedpartytransactions 11534 Postbalancesheetevents 11535 Exchangerates 11636 Detailsofprincipalsubsidiarycompanies 117

Index to the Parent Company financial statementsNote Page

Directors’responsibilities 118 Independentauditor’sreport 119 ParentCompanybalancesheet 120 ParentCompanyaccountingpolicies 1211 Profitandlossaccountdisclosures 1222 Investmentsinsubsidiaryundertakings 1223 Debtors 1224 Creditors 1235 Maturityoffinancialliabilities,othercreditors andderivativefinancialinstruments 1246 Derivativefinancialinstruments 1247 Sharecapital 1248 Capitalandreserves 1259 Contingentliabilities 125


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Forward-looking statementsCertaininformationincludedinthisAnnualReportandAccountsisforward-lookingandinvolvesrisks,assumptionsanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthoseexpressedorimpliedbyforward-lookingstatements.

Forward-lookingstatementscoverallmatterswhicharenothistoricalfactsandinclude,withoutlimitation,projectionsrelatingtoresultsofoperationsandfinancialconditionsandtheCompany’splansandobjectivesforfutureoperations,including,withoutlimitation,discussionsofexpectedfuturerevenues,financingplans,expectedexpendituresanddivestments,risksassociatedwithchangesineconomicconditions,thestrengthofthefoodserviceandsupportservicesmarketsinthejurisdictionsinwhichtheGroupoperates,fluctuationsinfoodandotherproductcostsandpricesandchangesinexchangeandinterestrates.Forward-lookingstatementscanbeidentifiedbytheuseofforward-lookingterminology,includingtermssuchas‘believes’,‘estimates’,‘anticipates’,‘expects’,‘forecasts’,‘intends’,‘plans’,‘projects’,‘goal’,‘target’,‘aim’,‘may’,‘will’,‘would’,‘could’or‘should’or,ineachcase,theirnegativeorothervariationsorcomparableterminology.Forward-lookingstatementsinthisAnnualReportandAccountsarenotguaranteesoffutureperformance.Allforward-lookingstatementsinthisAnnualReportandAccountsarebaseduponinformationknowntotheCompanyonthedateofthisAnnualReportandAccounts.Accordingly,noassurancecanbegiventhatanyparticularexpectationwillbemetandreadersarecautionednottoplaceunduerelianceonforward-lookingstatements,whichspeakonlyattheirrespectivedates.

Additionally,forward-lookingstatementsregardingpasttrendsoractivitiesshouldnotbetakenasarepresentationthatsuchtrendsoractivitieswillcontinueinthefuture.Otherthaninaccordancewithitslegalorregulatoryobligations(includingundertheUKListingRulesandtheDisclosureandTransparencyRulesoftheFinancialServicesAuthority),theCompanyundertakesnoobligationtopubliclyupdateorreviseanyforward-lookingstatement,whetherasaresultofnewinformation,futureeventsorotherwise.

NothinginthisAnnualReportandAccountsshallexcludeanyliabilityunderapplicablelawsthatcannotbeexcludedinaccordancewithsuchlaws.


Our business

45,000 We operate in over 45,000 client locations

470,000 We have more than 470,000 great people delivering great service every day

4bn We serve more than 4 billion meals a year

50 We operate in around 50 countries

This Report is printed on a combination of Revive 100 White Silk and Revive 100 Premium White Uncoated. Revive 100 White Silk is produced using 100% recycled waste, the pulp is bleached using a Totally Chlorine Free (TCF) process. Revive 100 Premium White Uncoated is produced using 100% de-inked post-consumer waste, the pulp is bleached using an Elemental Chlorine Free (ECF) process. Both materials are Forest Stewardship Council® (FSC) certified and are produced at mills that hold the ISO 14001 environmental management standard. Printed in the UK by Pureprint Group using vegetable inks and their and printing technology. Pureprint Group is ISO 9001:2000, ISO 14001, EMAS and FSC certified.

Com

pass Group PL

C A

nnual Report 2011

SustainablegrowthAnnual Report 2011

Compass Group PLCCompass HouseGuildford StreetChertseySurrey KT16 9BQUnited Kingdom

Registered in England and Wales No. 4083914

Tel +44 1932 573 000Fax +44 1932 569 956

Find this Report online atwww.compass-group.com/annualreport11