ANNUAL REPORT 2019

Strategic report
2 2019 performance at a glance
4 Our business at a glance
6 Our market position
7 Our sectors
8 Chairman’s statement
12 Our business model and strategy
14 How we create value
16 Our stakeholders
18 Chief Executive’s review
22 Executive Committee
26 Key performance indicators
28 Regional review
28 North America
30 Europe
32 Rest of World
34 Business review
41 Risk management
42 Principal risks
46 People report
54 Corporate Responsibility report

Corporate governance
64 Governance and Directors’ report
66 Chairman’s letter
68 Board of Directors
72 Corporate Governance
82 Audit Committee report
90 Corporate Responsibility Committee report
94 Nomination Committee report
98 Directors’ Remuneration report
122 Other statutory disclosures

Financial statements
130 Directors’ responsibilities
131 Independent auditor’s report
138 Consolidated financial statements
144 Group accounting policies
154 Notes to the consolidated financial statements
225 Parent Company financial statements
227 Parent Company accounting policies
229 Notes to the Parent Company financial statements

Shareholder information
232 Shareholder information
235 Notice of Annual General Meeting

Glossary
246 Glossary of terms

Visit our website for related information

www.compass-group.com
Our 2019 Sustainability Report will be
available online in early 2020
 At Compass we are passionate about food.
This passion drives us to ensure we are at
the forefront of our industry.
Our global scale allows us to identify market
trends and to innovate accordingly – ensuring
we provide great quality food services to
millions of people around the world.
Through our Performance, People and Purpose
strategy we are focused on delivering value
to all our stakeholders.
 2019 PERFORMANCE AT A GLANCE

Consistent performance
UNDERLYING UNDERLYING UNDERLYING
REVENUE OPERATING PROFIT OPERATING MARGIN

£25,152m £1,882m 7.4%

1,882
25,152

1,744
1,705
23,147

7.4
7.4

7.4
22,852

7.2

7.2
30000 2000 8

1,445
19,871

1,296
17,843

7
25000
1500 6
20000
5
15000 1000 4
3
10000
500 2
5000
1
0 0 0
2015 2016 2017 20181 2019 2015 2016 2017 20181 2019 2015 2016 2017 20181 2019

UNDERLYING BASIC DIVIDEND

EARNINGS PER SHARE PER SHARE

85.2p 40.0p
85.2

40.0
37.7
77.9
72.3

85.20 40
33.5
31.7
29.4
61.1

35
53.7

68.16
30

51.12 25
20
34.08 15
10
17.04
5
0.00 0
2015 2016 2017 20181 2019 2015 2016 2017 2018 2019

Throughout the Strategic Report, and consistent with prior years, underlying and other alternative performance measures are used to describe the Group’s
performance. These are not recognised under IFRS or other generally accepted accounting principles (GAAP). The Executive Committee of the Group manages
and assesses the performance of the business on these measures and believes they are more representative of ongoing trading, facilitate meaningful year on
year comparisons and hence provide more useful information to shareholders. Underlying and other alternative performance measures are defined in the
glossary of terms on pages 246 and 247. A summary of the adjustments from statutory to underlying results is shown in note 34 on page 208 and further detailed
in the consolidated income statement (page 138), reconciliation of free cash flow (page 143), note 2 segmental reporting (pages 161 to 164) and note 35
organic revenue and organic profit (page 210).

1. Restated upon adoption of IFRS 15.

2  Compass Group PLC Annual Report 2019

 Strategic Report
STATUTORY STATUTORY STATUTORY BASIC
REVENUE OPERATING PROFIT EARNINGS PER SHARE

£24,878m £1,601m 70.0p

24,878
22,872
22,568

1,693
19,605

71.3

71.3
1,665

70.0
1,601
24878 2000 80
17,590

1,409

60.4
70
1,261

52.3
1500 60
50
1000 40
30
500 20
10
0 0 0
2015 2016 2017 20181 2019 2015 2016 2017 20181 2019 2015 2016 2017 20181 2019

GLOBAL LOST TIME INCIDENT GLOBAL FOOD SAFETY GREENHOUSE GAS

FREQUENCY RATE INCIDENT RATE INTENSITY RATIO2

-38% -35% 9.1

(since 2015) (since 2015)
9.1

5 0.40 10
0.35
4 8
6.7

6.7

6.3

0.30
6.0

3 0.25 6
0.20
2 0.15 4

0.10
1 2
0.05
0 0.00 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

2. The scope and methodology of our reporting has changed this year; therefore data is not comparable on a like for like basis.
For more information about our disclosure on global GHG emissions for the financial year ended 30 September 2019, see page 60.

Compass Group PLC Annual Report 2019  3

OUR BUSINESS AT A GLANCE

We are the industry leader

with a strategic focus on food
Food service is our core competence. Our scale and focus on execution mean that we can provide our
clients and consumers with the best value in terms of quality
We are the industry leader and create value and cost as well as the most exciting and innovative solutions.
for our clients and consumers by providing
them with a range of dining solutions that are We have a global footprint and manage the business in
three geographic regions. This gives us balanced exposure
innovative, healthy and sustainable. to developed markets in North America and Europe as well as
emerging markets with exciting long term growth prospects.

4  Compass Group PLC Annual Report 2019

 Strategic Report
45 55,000 600,000 5.5 billion
Number of countries Number of client Number of colleagues Number of meals
we operate in locations we work in served per year

NORTH AMERICA
Underlying revenue

£15,694m 62.4%
(2018 : £13,718m)
1
of Group total

EUROPE
Underlying revenue

£5,854m 23.3%
(20181: £5,762m) of Group total

REST OF WORLD
Underlying revenue

£3,604m 14.3%
(20181: £3,667m) of Group total

1. Restated upon adoption of IFRS 15.

Compass Group PLC Annual Report 2019  5

OUR MARKET POSITION

Significant structural
growth opportunity remains
We estimate that the addressable global food services market is
currently worth in excess of £200 billion. We are the leading global
food provider with around a 10% market share by sales. Approximately
75% of the market is serviced by regional players or in-house
providers, which means there is a significant structural growth
opportunity for us.

Large
players

GLOBAL FOOD SERVICES MARKET C. £200BN Compass

Self
Group
operated
Numbers relating to market size and penetration rates are based on
management estimates and a range of external data.
The
str u

Regional
ctu

players
r al
gr

th
ow

op
po
rtu
n it
y

The market for food services continues to offer significant growth experiences and outcomes. At the same time, our hospital retail
potential as we deliver a strong proposition across our core proposition makes life more comfortable for visitors.
sectors and regions.
Sports & Leisure is a highly outsourced sector in which we
Compass provides outsourced food services around the world benefit from our strong reputation across key markets.
in a market worth over £200 billion. The five sectors in which we
operate continue to offer substantial opportunities for growth. The Defence, Offshore & Remote sector offers opportunities to
build lasting strategic relationships with large local and
Food service remains at the core of the Compass offer. international operators. Creating strong client relationships
Business & Industry accounts for around 40% of this value, allows us to respond better to the complex needs of supporting
and this important sector continues to offer attractive growth their people. In addition to nutrition and physical wellbeing, our
opportunities. In more developed markets, where outsourcing solutions focus on the social, emotional and environmental
rates are routinely in excess of 60%, our combination of scale, needs of people working away from home.
efficiencies and best‑in‑class service delivery supports
continued revenue growth. In emerging markets, outsourcing Supplementing our core food offer with targeted support
rates are still only around 10%, providing a significant services is attractive in certain markets and sectors, such as
opportunity for future growth. Healthcare & Seniors and Defence, Offshore & Remote. In these
sectors, we are recognised for fulfilling the needs of clients who
The Healthcare & Seniors and Education sectors also continue require services with uncompromising quality.
to grow, with less than half of the addressable global market
currently outsourced. In Education, our expertise in nutrition In the markets and regions in which Compass operates, we
means we are able to provide delicious food which supports continue to build our business and reputation by focusing on our
learning at every stage of the education journey. In Healthcare, key strategic pillars of Performance, People and Purpose.
we work directly with healthcare providers to improve patient

6  Compass Group PLC Annual Report 2019

OUR SECTORS

Specialist sector knowledge

Strategic Report
is key to meeting clients’ needs
The global food services market is large and disparate. That is why we
structure our business to match the sectors in which our clients operate so
that we get a deep understanding of their challenges. In this way, we can
create innovative, bespoke offers that meet their specific requirements and,
in doing so, truly differentiate ourselves.

DEFENCE, OFFSHORE & REMOTE BUSINESS & INDUSTRY

Through our established health and safety culture, We help our clients drive productivity and
we are a market leader in providing food and some engagement in the workplace by providing
support services to major companies in the oil, nutritious, well balanced food during the working
gas, mining and construction industries. For our day. We work with clients to build their employee
defence sector clients we support their operations propositions to attract and retain the best people.
outside areas of conflict.

7%
13%
SPORTS & LEISURE 39%
Operating at some of the world’s % of Group
most prestigious sporting and leisure underlying

18%
venues, exhibition centres, visitor
attractions and major events, we revenue
have an enviable reputation for
providing outstanding hospitality and
true service excellence.

23%
HEALTHCARE & SENIORS
We are specialists in helping hospitals in
the public and private sectors on their
journey of managing efficiency and
enhancing quality across a range of food
EDUCATION and some support services. We have an
increasing presence in the growing
From kindergarten to college, we provide
senior living sector.
fun, nutritious dining solutions that help
support academic achievement at the
highest levels. We educate young people
on how to have a happy, safe and healthy
lifestyle whilst contributing to a
sustainable world.

Compass Group PLC Annual Report 2019  7

CHAIRMAN’S STATEMENT

Continued strong performance

STRATEGY
The Group has a clear and successful strategy which is focused
on our core competence – food. We continue to drive our
financial performance by delivering great food to clients and
consumers combined with a rigorous focus on execution. Our
strategy places Performance, People and Purpose as our main
priorities as we continue to seek to create long term value for all
our stakeholders by improving the quality and sustainability of
our business.

Our 2019 performance reaffirms the Board’s confidence in our

strategy and business model which are central to our long term
success (see pages 12 to 15).

CORPORATE RESPONSIBILITY
We have a strong commitment to corporate responsibility
and continue to build on this strength by working more
proactively with our clients and consumers. For example, on this
year’s Stop Food Waste Day, thousands of our people in 38
countries engaged with our customers to raise awareness of
ways to minimise food waste.

Our people are critical to our ability to achieve our goals in a

Paul Walsh responsible and sustainable manner. We recognise that they
Chairman are key to delivering excellent food service and we are focused
on developing career paths and providing flexibility for those
A YEAR OF STRONG ORGANIC GROWTH who want to work in different roles across different sectors or
In 2019, Compass has continued to create value and delivered countries. We have exceptional leaders and are proud of
strong organic revenue growth of 6.4%, ahead of our target what we have achieved to date in our gender diversity.
range of 4-6%. This was driven by a strong performance in North Although there is more to do, as at the year end we had
America and an acceleration in growth in Rest of World. Europe 36% female representation on the Compass Group Board
growth was good, although the first half performance was diluted and 38% on the Executive Committee.
by the more challenging macro environment in the second half.
We maintained our strong Group margin at 7.4%. Details of See pages 48 to 63 and www.compass-group.com for more
our operational and financial performance can be found on about our People and Corporate Responsibility activities.
pages 2 to 40.
GOVERNANCE AND THE BOARD
I would like to take this opportunity to thank our colleagues Companies today are judged by their integrity and
throughout Compass for their continued hard work and trustworthiness as much as by their financial performance. One
commitment over the last year. Once again, we owe our success of my key responsibilities as Chairman is to set the tone for
to them. It is their passion for food and excellent customer Compass and ensure good governance (see pages 64 to 127). In
service that drive the business forward. this I have been extremely well supported by the members of the
Board. With their diverse backgrounds, they bring balance and a
SHAREHOLDER RETURNS wealth of skills and experience to our organisation that
As a result of our strong performance, the Board is complements the talents of our executive team. As part of our
recommending a 5.9% increase in the final dividend for the year ongoing review of Board membership, we ensure that an
to 26.9 pence per share (2018: 25.4 pence per share). This appropriate number of independent non-executive directors is
results in a total dividend for the year of 40.0 pence per share maintained through orderly succession without compromising
(2018: 37.7 pence per share), an increase of 6.1%. The final the effectiveness of the Board and its committees.
dividend will be paid on 24 February 2020 to shareholders on
the register on 17 January 2020. In April 2019, Karen Witts was appointed to the Compass Board
as Group Chief Financial Officer. Karen, who joined us from
Kingfisher PLC, has financial and operational expertise that is
highly complementary to our team and brings with her a wealth
of experience in retail and technology.

8  Compass Group PLC Annual Report 2019

 Strategic Report
I would like to thank all Board members for their valuable
contributions as we continue to maintain oversight of the POSITION IN FTSE 100 INDEX AS AT
strategic, operational and compliance risks across the Group, 30 SEPTEMBER 2019
define our path to success and uphold the high standards
expected of us. 16
SUMMARY AND OUTLOOK (2018: 20)
Compass has had another strong year. Organic revenue growth
was 6.4%, ahead of our target range, thanks to excellent growth
in North America and an improving performance in Rest of COMPASS SHARE PRICE PERFORMANCE
World. There was good growth in our European business with VS FTSE 100 OVER LAST 3 YEARS (%)
strong performances in UK Defence and Sports & Leisure
Last 12 months 22.7%

24.1%
offsetting weak volumes in Business & Industry. The Group
margin during 2019 was maintained despite this more -1.4%
challenging trading environment in Europe.
Last 24 months 32.2%
We are making good strategic progress through disciplined focus
on our Performance, People and Purpose priorities and have
31.7% 0.5%

continued to reshape our portfolio. Disposal proceeds have been Last 36 months 34.6%
reinvested in bolt-on acquisitions to further strengthen our food
service offer and subsector approach, and in June we 27.2% 7.4%

announced the proposed acquisition of Fazer Food Services, a

Compass FTSE 100
leading food service business in the Nordics, which is a strong
strategic fit with Compass.

Despite this good performance, we are not immune to the macro

COMPASS SHARE PRICE PERFORMANCE
environment. Deteriorating business and consumer confidence
VS FTSE 100 INDEX (£)
in Europe has impacted our Business & Industry volumes, new
business activity and margin. Given these trends, we are taking 2018 2019

prompt action in Europe and certain Rest of World markets to 22

adjust our cost base. As well as offsetting short term margin

pressures, by taking this action from a position of strength, we 20

will be better placed to capitalise on future growth opportunities.

18
Our expectations for the Group in 2020 are positive although we
remain cautious on the macro environment in Europe. The
pipeline of new contracts in North America is strong and Rest of 16

World is growing well, although we are seeing some hesitation in

decision making in Europe. Thanks to the Group’s geographic 14
and sectoral diversity, we are nevertheless confident of Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

continued progress. As such, we expect organic growth to be

around the mid-point of our 4-6% range whilst maintaining our Compass FTSE 100 (rebased)
strong margin1 as we mitigate the expected volume pressures
through our cost actions.

In the longer term, we remain excited about the significant

structural growth opportunities globally, the potential for
further revenue and profit growth, combined with further
returns to shareholders.

Paul Walsh
Chairman

26 November 2019

1. Pre IFRS 16 ‘Leases’. IFRS 16 will be adopted by the Group on 1 October 2019.

Compass Group PLC Annual Report 2019  9

10  Compass Group PLC Annual Report 2019
INNOVATION
IN OUR FOOD OFFER​

Food service is a dynamic business that must

continually evolve to keep pace with shifting
behaviours, tastes and needs. Consumer
habits are changing fast; we stay tuned in via
our trends and insights platform and we are
focused on delivering the best experience for
our clients and consumers through
technology, the use of artificial intelligence
and innovative food offers.

One of the key trends currently shaping our

industry is plant-based diets. Inspired by
improving their health as well as doing
something positive for the planet, consumers
are increasingly embracing plant-based
meals. Our culinary teams develop delicious
and nutritious dishes that will appeal to both
meat eaters and vegetarians, without
compromising flavour or texture. Oat protein
is an alternative protein source we are using
across our recipe portfolio. Its versatility,
taste and texture allows us to develop new
flexitarian and vegan dishes influenced by
on trend cuisines whilst offering a sustainable
choice for our consumers.

Compass Group PLC Annual Report 2019  11

OUR BUSINESS MODEL AND STRATEGY

A differentiated approach
A BUSINESS MODEL FOR GROWTH

We drive growth by focusing on our clients. We sectorise and

sub‑sectorise our business to better understand the client’s
needs which allows us to create bespoke and innovative
E RE
TIV GR VE
solutions. We supplement our organic growth by making small
TI AGE and medium sized acquisitions that add innovation, capability
O
NT
AD MPE

NU H and sector or market expertise in our existing markets.

W
VA

E
CO

We focus on operational execution and generate efficiencies by

utilising our scale as a market leader, optimising our supply

Our people chain and diligently managing our food and labour costs through
our Management and Performance (MAP) framework.

and culture Strong cash generation enables us to reinvest in the customer

proposition and capitalise on the significant growth opportunities
CAS RE
AN

in the market.
S
CIE
H IN
D
GE

CI E

Our organic revenue growth, the scale it creates and our focus
EN

VE ER A
AL

SC I
N

on cost and efficiencies give us a clear competitive advantage.

ST TIO FF
ME N DE
We can provide our clients and consumers with the best value in
NT AN terms of quality and cost and this, combined with sectorisation,
helps drive long term sustainable organic revenue growth.

Our people lie at the heart of our business. Our aim is to nurture
an engaged and highly capable workforce to win new business,
manage our units efficiently and effectively, and deliver the
healthiest, most innovative food solutions in a way that provides
an exceptional experience to our clients and consumers.

A STRATEGY FOR COMPETITIVE ADVANTAGE

FOCUS PRIORITISE
ON FOOD ORGANIC GROWTH
BEST-IN-CLASS
EXECUTION, QUALITY
AND INNOVATION
TARGETED
SELECT BOLT-ON
APPROACH TO
ACQUISITIONS
SUPPORT SERVICES

Our priorities To drive growth And deliver for clients

Food is our focus and our core Our preference is to grow organically We are committed to providing
competence. We take a pragmatic given that it yields the highest the best quality and value to
and targeted approach to other returns and leverages the significant our clients with best-in-class
support services, developing structural growth opportunity in the execution. We have increased
strategies on a country by global food services market. our focus on innovation in our
country basis. core food business to bring
However, we also seek to invest in more variety and excitement
The desire for focus means we are small to medium sized acquisitions, to our offer as well as to
also willing to exit countries which do but only if they are attractive targets improve our operations.
not fit our long term aspirations. that have the right cultural fit and
further strengthen our portfolio.

12  Compass Group PLC Annual Report 2019

 Strategic Report
Clare Hunt
Group Director of Strategy and M&A

WHAT AREAS OF THE BUSINESS DO YOU

FOCUS ON?
We focus on how we can optimise our business
model to be more efficient and drive growth.
In particular, we look at how we can implement
a more systematic approach to the ‘3 little Ps’
of pricing, purchasing and productivity across
the Group.

WHAT OTHER OPPORTUNITIES DO YOU SEE?

There’s so much going on in the food industry – it’s
fascinating. For example, we’re looking a lot at
online delivery at the moment, as well as working
with some really innovative suppliers on ingredients
and food preparation.

WHERE DOES M&A FIT?

We’re always on the lookout for acquisitions that
can bring us great management teams and new
capabilities. That could be presence in a new
sub-sector, for example, or something that
enhances our current offer.

Compass Group PLC Annual Report 2019  13

HOW WE CREATE VALUE

Long term stakeholder value

Our strategy is to focus on food, and pricing and customer experience (MAPs 1&2), purchasing
(MAP 3) and productivity (MAPs 4&5) initiatives.
our model for creating value remains
unchanged. Its longevity is down to Our People pillar is focused on ensuring we have a dedicated
its simplicity and proven success. and motivated workforce. Our 600,000 colleagues around the
world are at the heart of our business and we believe the way we
Food is our focus and our core competence. We believe we can organise, engage and develop them is a critical competitive
capture the longer term opportunities across the industry whilst advantage (see pages 46 to 51 for more detail).
delivering value to all our stakeholders. We do this by focusing
on our three key strategic pillars. Finally, we believe that leading with purpose is the way to fulfil the
true potential of the organisation. Under our Purpose pillar we
The Performance pillar is focused on ensuring best-in-class support initiatives across the Group which improve the health and
execution across the entire Group. Our Management and wellbeing of our people and consumers, are beneficial for the
Performance (MAP) framework remains the foundation of environment and are better for the communities with whom we
Compass’ performance. We are now codifying and sharing best engage (see pages 52 to 63 for more detail).
practices across all our countries – with particular focus on

PEOPLE PERFORMANCE PURPOSE

Delivering better quality, more sustainable long term growth

We use the Management and Performance (MAP) framework across the business.

MAP 1: Client sales and marketing MAP 4: In unit costs

MAP 1 is about winning new business and retaining our In unit costs are made up predominantly of labour. We focus
existing clients. We invest in sales and retention and are on getting the right people in the right place at the right time.
increasingly sectorising and sub-sectorising the business By using labour scheduling techniques and improving
around the world to allow us to get closer to our customers. productivity, we are able to deliver the optimum level of
service in the most efficient way.
MAP 2: Consumer sales and marketing
Like for like revenue consists of both volume and price. We MAP 5: Above unit overheads
are focused on attracting and satisfying our customer base Having reduced the percentage of above unit overheads
with strong consumer propositions. considerably since MAP was first introduced in 2006 by
creating a simpler organisational model with fewer layers of
MAP 3: Cost of food management and less bureaucracy, we now strive to leverage
Food makes up around one third of our costs. In addition to those gains by maintaining overheads low whilst we continue
the benefits of our scale in food procurement, we are able to to grow revenue.
manage food costs through careful menu planning and by
rationalising the number of products we buy and the
suppliers we buy them from.

14  Compass Group PLC Annual Report 2019

WHO WE CREATE VALUE FOR
We have a wide range of stakeholders that includes clients, consumers, colleagues, suppliers and shareholders as well as the

Strategic Report
communities in which we operate. We seek to create value for all our stakeholders and aim to engage with them and take into
account their feedback to ensure (where possible) that we all benefit from Compass’ success.

CLIENTS & CONSUMERS OUR PEOPLE

We have a diverse range of clients and an even wider range of We are a people-powered business. Our 600,000 colleagues
consumers in terms of the employees, students, patients and are fundamental to delivering high quality food and service and
sports fans that come to our restaurants and cafés at our to maintaining our reputation.
client sites.
Through our People initiatives we are seeking to provide our
Across this extraordinarily diverse base, we are conscious of the colleagues with an inclusive and stimulating work environment
need to offer all of our clients and consumers ‘value’ in price, – one where they can develop and progress, have a good
quality and experience. We also work closely with them to work-life balance and realise job satisfaction.
promote and drive a nutritional health and wellness agenda that
suits the needs of their specific organisation and paves the way During 2019, we launched our set of three Compass
for healthier, more balanced lifestyles. Commitments – Respect, Growth, Teamwork – which define
what our people can expect when they work for us.
INVESTORS
We create long term value for our investors by focusing on our We also launched a global development programme for unit
core food business and delivering sustainable profit growth and managers, Leadership in Action, which focuses on creating
strong cash generation. positive working environments in units and helping managers
lead their teams more effectively.
Having invested to support the long term growth prospects of the
business (through capital expenditure up to 3.5% of sales and See our People report on pages 46 to 51 for more information
bolt-on M&A which achieve our returns criteria), we reward our about these initiatives.
shareholders with an ordinary dividend that grows in line with
constant currency earnings. In addition, we seek to maintain net
debt/EBITDA around 1.5x1 over time, and consequently return
any surplus capital to shareholders via share buybacks or
special dividends.

Our Purpose pillar and the initiatives we pursue are focused on ENVIRONMENT
two cornerstones: safety as care and a renewed commitment We are championing initiatives that help the environment. In
to sustainability. 2017, Compass founded Stop Food Waste Day – an annual
global awareness programme which in 2019 reached 89 million
CONSUMERS & COLLEAGUES on social media and an estimated 10 million people through
Caring for each other allows us to strengthen our performance food waste engagement activities. We are considering other new
in occupational and food safety. This caring attitude, coupled initiatives around packaging and plastics that are better for the
with internal and external initiatives to tackle issues such as environment and are seeking to persuade our consumers to
mental health awareness, increasingly deliver value to both our adopt more sustainable behaviours, including plant-forward
colleagues and our consumers. We also have an opportunity to meals which are not only good from a nutritional perspective but
support these stakeholders in achieving healthier, more are better for the environment.
balanced lifestyles. The depth of expertise in the business allows
us to educate our consumers about health and wellness and, COMMUNITIES
through healthy menu offerings, encourage them to make better Our success depends on the support and inclusion of the vibrant
nutritional choices. local communities which surround us. We look to give back by
getting involved with community projects and initiatives that
SUPPLIERS benefit the local area.
Our supply chain integrity requirements ensure we are
supporting suppliers who share our values. We collaborate with See our CR report on pages 52 to 63 for more information about
our partners throughout the entire supply chain to deliver our Purpose initiatives.
sustainable, scalable and secure solutions for food and its
production. We source our food and non-food products in a
sustainable manner.
1. Pre IFRS 16 ‘Leases’. IFRS 16 will be adopted by the Group on 1 October 2019. The Group expects between £950 million–£1,050 million of additional debt
on its balance sheet on adoption.
Compass Group PLC Annual Report 2019  15
OUR STAKEHOLDERS

Engaging with our stakeholders

As a geographically and culturally diverse The success of our strategy is reliant on the support and
commitment of all our stakeholders. Having stakeholders who
business with around 600,000 colleagues in believe in our brand and share our values is therefore very
45 countries, we have a global and diverse important to us. We believe that together we are stronger, and
community of stakeholders, each with that by working together we can achieve our common goal. That
their own interests in and expectations of is why we are committed to maintaining strong, positive
relationships with our stakeholders, built on a foundation of
the Company. mutual respect, trust and understanding.

More detail about how we engage with our stakeholders can be

found throughout the Report.

​ ​

​ ​ ​ ​
​ Our people Our communities Our clients Our consumers ​
Colleagues who work in The people who live in the local The businesses and The people to whom we serve ​
Description

our business.​ communities around our sites organisations for which we food and drink and provide
and operations.​ provide services around support services. ​
the world.

• engagement and teamwork • fair employment and equal • working within defined • delicious, safe and ​
• providing opportunities for opportunities sectors, creating bespoke, healthy food
development and growth • local causes and issues innovative solutions to match • staying ahead of changing
Areas of focus​

• creating a respectful specific market and client consumer lifestyles and

environment​ requirements habits which impact how
• health and wellbeing • health, wellbeing and focused people want to eat and drink
sustainable CR initiatives • making sure that our food and
• technology and analytical beverage offer is sustainable
innovation to support and good for the planet ​
consumer solutions​
Our people are at the heart of To build trust by operating By understanding what is We exist to serve people with ​
our business and key to our responsibly and sustainably, and important to our clients, we nutritious food and drink, which
Why we engage

ongoing success.​We want our addressing issues that are ensure that our solutions are helps them learn better, work
people to thrive in a fair and material to our communities. tailored to support their better and recover better. We
inclusive work environment. To provide training opportunities individual business objectives.​ want our consumers to thrive
and support to local people and we create the environments
currently not in education, to help them do that, at all
training or employment.​ life stages.​
There are many ways we We operate many local We aim to have open and We believe that engagement is a ​
engage, including engagement employment programmes to transparent relationships which constant conversation with our
surveys, town hall meetings, recruit and develop local people are based on honesty and consumers, listening carefully to
Speak Up reports, internal social to work in our sites. We partner respect. We build relationships how we can improve our service
How we engage

media channels and with local charities and at all levels of our client and find new ways to delight. We
consultative bodies.​ organisations to raise awareness organisations, sharing market use a variety of methods
and funds to help local causes. trends and insight, developing including formal surveys, social
strategic and operational plans, listening, comment cards,
against which we regularly workshops and observation. We
report. We hold independent combine analytical tools and
client surveys which measure common sense to get to
satisfaction levels.​ actionable insights into our
consumers’ preferences. ​

16  Compass Group PLC Annual Report 2019

 WHAT MAKES COMPASS DIFFERENT IN THE EYES OF CLIENTS?
We are unique in the marketplace in terms of our focus on food and multi

Strategic Report
sector operations. We are fortunate to serve a wide range of clients in our
Business & Industry, Healthcare & Seniors, Education, Sports & Leisure and
Defence, Offshore & Remote sectors. This means that we get valuable
insight into consumer needs at multiple different life stages, seeing first
hand what food habits each generation will take into the workplace. This
helps us partner with our clients to build future-proof solutions. It also means
we can translate insights and best practice between sectors, for example
taking learnings from our work on mental health with Offshore clients and
applying these to our Business & Industry clients who are increasingly
focused on health and wellbeing in the workplace.

WHAT EMERGING TRENDS DO YOU SEE AMONGST YOUR

INTERNATIONAL CLIENTS?
Sapna Sood A key trend for our clients is the focus on enhancing the employee
Group Director International Clients & experience, delivering value to their employees and guests on a daily basis
Market Development with growing emphasis on supporting their health and wellbeing. The other
key focus is the use of technology to enhance the daily consumer journey
and support operational excellence.

​ ​

​ ​
​ Our suppliers Our shareholders NGOs Governments & regulators
Our trusted partners who source, Individuals or institutions that own Non-governmental organisations Regional and national government
produce and deliver products shares in Compass Group PLC. (NGOs) which support us with bodies and agencies who
and services. knowledge and expertise on key implement and enforce applicable
social, environmental and laws across our industry.​
economic issues.

• food safety and authenticity • financial performance • human rights • consumer health and public
• workplace health and safety and strategy • climate change health policies
• supply chain integrity • competitive positioning • animal welfare • food safety
• human rights​ • outlook • social issues • workplace health and safety
• ethical business practice • human rights and
• sound governance climate change​
and leadership • compliance with laws
and regulations

To develop mutually beneficial As owners of the business we rely To develop meaningful and To communicate our views to
and lasting partnerships aimed at on the support of our robust action plans on the key those who have the responsibility
addressing shared challenges in shareholders, and their opinions social, environmental and for implementing policy, laws
responsible and sustainable are extremely important to us. The economic issues that we can and regulations relevant to
sourcing, and to communicate our views of our major shareholders positively impact. our business.​
supply chain standards, are reported to, and discussed by,
expectations and commitments.​ the Compass Group Board on a
regular basis.
Through a series of We have ongoing dialogue with Through a series of Through a series of industry
communications, interactions our investors through one-to-one communications, interactions and consultations, forums and
and formal reviews. In some of and group meetings, webcasts, regular meetings, industry forums conferences.​
our larger markets we also host conference calls and at our AGM. and conferences.
regular multi-stakeholder The Group Investor Relations and
supplier conferences.​ Corporate Affairs Director has day
to day responsibility for investor
relations and the Group CEO and
Group CFO dedicate significant
time to engaging with our major
shareholders. During 2019 we
also conducted an investor survey.

Compass Group PLC Annual Report 2019  17

CHIEF EXECUTIVE’S REVIEW

Optimising our performance

On a statutory basis, operating profit decreased by 5.4% as the
impact of cost action charges offset higher profits and benefits
of foreign exchange.

As a result of the business’ continued strong earnings growth

and cash flow generation, we propose an annual dividend of
40.0 pence per share, up 6.1% on the prior year.

Taking appropriate cost actions

We are seeing good performances across most of the Group,
however we are not immune to macroeconomic challenges.
Although our European business is in good shape, delivering
organic revenue growth of 4.1%, as previously indicated we have
been seeing pressures in the region, particularly in some of our
largest markets. These pressures have been increasing during
the year, impacting volumes in our Business & Industry sector,
and consequently are having a significant impact on our
European margin. Consumer confidence continues to decline
and a number of key clients, notably in manufacturing,
automotive and financial services, have reduced their
headcount in recent months.

Given this trading backdrop, we are taking prompt action to

Dominic Blakemore ensure we have the right sized labour model for the future. This
Group Chief Executive Officer will protect the profitability of the business and further
strengthen our strong operational position, enabling us to
2019 RESULTS continue to capitalise on the attractive growth opportunities we
I am pleased to report that Compass had another strong year. see in Europe. Although the vast majority of these actions are
My priority continues to be to drive the business forward and focused on Europe, they have also been extended to a limited
deliver the financial performance and value creation that our number of countries in Rest of World.
stakeholders have come to expect from Compass.
These cost actions will result in a total non-underlying charge for
Revenue for the Group grew by 6.4% on an organic basis, as we the Group of around £300 million, of which £190 million has
continue to expand within the £200 billion global food services been incurred in FY19, with the remainder expected to be
market. New business wins were 7.9% driven by strong MAP 1 incurred in FY20. Approximately £160 million of the total charge
(client sales and marketing) performance in all regions. Our is cash, with £29 million having been spent in FY19. This mostly
retention rate was maintained at 94.8% as a result of our relates to removing some MAP 4 (in unit labour) and some MAP
ongoing focus and investment in service and quality. Like for like 5 (overhead) costs, and has around a two year payback. The
revenue grew by 3.7% reflecting sensible price increases and FY19 charge also includes a one-off non-cash charge of
strong volume growth in Sports & Leisure, partially offset by £120 million in respect of a change in the expected profitability
weak Business & Industry volumes in Europe. On a statutory of some of those contracts that have been affected by the recent
basis, revenue increased by 8.8%, including the positive impact deterioration in business and consumer confidence and that are
from foreign currency translation. now considered to be structurally loss making and where asset
impairments have been taken. The run-rate for annual savings
Underlying operating profit increased by 4.7% (£84 million) on a resulting from the cost actions is expected to be c. £90 million
constant currency basis. Operating profit margin remained at as we exit this year and have already been factored into the
7.4% despite the more challenging trading environment in 2020 guidance.
Europe. We continue to work hard to drive efficiencies across the
business to offset cost pressures including the higher GROUP STRATEGY
mobilisation costs from increased new business wins. We have Our refreshed strategy, announced 18 months ago, ensures that
maintained our focus on MAP 3 (cost of food) with ongoing we further improve the long term quality and sustainability of our
initiatives such as supplier and product rationalisation, improved financial results.
menu planning and food waste reduction programmes.
We remain focused on food, our core competency. The global
Optimising MAP 4 (labour and in unit costs) and MAP 5 (above food services market is estimated to be more than £200 billion.
unit overheads) with initiatives around better labour scheduling, We see a large and exciting structural growth opportunity, with
workforce management, work design, training and retention only about 50% of the market currently outsourced, of which
have become ever more important, particularly in markets such approximately one third is in the hands of small and regional
as Europe and the USA where labour inflation persists. players. We have a good track record in winning first time
outsourcing contracts.

18  Compass Group PLC Annual Report 2019

 Strategic Report
The large and disparate nature of the food services market Under the refreshed strategy we are codifying best practices and
makes it challenging to offer clients a one size fits all solution. developing tools and templates to help us execute with more
Therefore, we segment the market into various sectors and intensity and consistency across the Group. Our areas of focus
subsectors using our portfolio of B2B brands. This allows us to are pricing, purchasing and productivity. We have begun with
get close to our clients, understand their needs and create our larger markets and are rolling out initiatives depending on
different and exciting offers that meet their requirements and the maturity of their functions. We will continue to use MAP to
differentiate us from the competition. ensure we have a disciplined focus on execution.

We are the largest player in the global market. As we continue to These initiatives are often supported through technology and
grow and increase our scale, we further extend our competitive digital capability – both in terms of driving efficiencies and
advantage and our position as the most efficient provider. This optimising performance and also in developing products and
allows us to offer our clients and consumers the most exciting services which improve the consumer experience. Our digital
and innovative solutions, as well as the best value. The ability to strategy is implemented locally in the most cost effective and
innovate is important to ensure we meet our clients’ and relevant way for each market. We are making investment into
consumers’ rapidly evolving tastes and needs, and our systems and processes that will ultimately unlock more
decentralised structure means we are well placed to pilot efficiencies and leverage scale across the business in the
concepts in local markets before expanding across the Group long term.
where appropriate.
PEOPLE
By stepping up the intensity with which we manage the People are our biggest source of competitive advantage. They
business and with a disciplined focus on Performance, are the key to delivering excellent food service to our clients and
People and Purpose as our main strategic priorities, we are consumers together with strong financial results. We are in the
well placed to continue to create sustainable long term value process of further enhancing our employee proposition to ensure
for all of our stakeholders. we have an engaged, high performing, and fulfilled workforce
that truly reflects the diversity of the societies we live in and the
PERFORMANCE communities we serve.
Portfolio
To continue to drive our performance we are actively managing Our objective is to create an exceptional people business that is
our portfolio of businesses. Targeted and disciplined bolt-on inclusive, engaged and committed to developing our people and
acquisitions are an effective way to strengthen our capabilities, providing them with the safest and fairest environment in which
broaden our offering and increase our scale. M&A has also to work. We are launching initiatives and improving our
proven to be an extraordinary source of talent. During 2019 we processes to ensure we can:
invested £478 million, principally in North America. There
remains a good pipeline of bolt-on opportunities across • attract and develop the best leaders
the Group. • recruit, retain and develop the highest quality unit managers
in the industry
We have continued to make progress on our disposal • have the best and most inclusive work places in the world with
programme and during the year completed several disposals a fully engaged workforce, and
that bring cumulative revenues now disposed or exited to c. 3%
• have a diverse workforce that mirrors the communities in
of Group revenue at an average margin of c. 4%. As previously
which we operate
indicated, the overall programme of up to £1.2 billion revenues
is expected to be margin neutral. The programme will complete For example, in May we launched our unit manager
during 2020. development programme and to date around 2,000 unit
managers have participated in the tailored offsite programme.
MAP culture We also launched the Compass Commitments of Respect,
For over 10 years, we have used our Management and
Growth and Teamwork – what people can expect when they
Performance (MAP) framework to drive performance across
are part of our business. In October, we conducted a global
the business. It is a simple framework that we all use to help us
engagement survey to help us to identify areas where we
focus on a common set of business drivers, whether it is winning
need to take action to ensure people are experiencing
new business in the right sectors with the right terms (MAP 1),
our Commitments.
increasing our consumer participation and spend (MAP 2),
reducing our food costs (MAP 3), our labour costs (MAP 4) or
our overheads (MAP 5).

Compass Group PLC Annual Report 2019  19

CHIEF EXECUTIVE’S REVIEW (CONTINUED)

PURPOSE We are making good strategic progress through disciplined focus

Our purpose is first and foremost a social purpose, the on our Performance, People and Purpose priorities and have
foundation of which is a safety culture built around caring for our continued to reshape our portfolio. Disposal proceeds have been
people and our consumers – delivering personal and food reinvested in bolt-on acquisitions to further strengthen our food
safety. We are integrating our sustainability strategy into the service offer and subsector approach, and in June we
business focused on: announced the proposed acquisition of Fazer Food Services, a
leading food service business in the Nordics, which is a strong
• increasing the role of health and wellbeing in our strategic fit with Compass.
value proposition
• taking targeted actions where we can make the greatest Despite this good performance, we are not immune to the macro
environmental difference, and environment. Deteriorating business and consumer confidence
• driving positive outcomes beyond our business to make the in Europe has impacted our Business & Industry volumes, new
world a better place, such as our continued work with our business activity and margin. Given these trends, we are taking
suppliers to source products responsibly and our commitment prompt action in Europe and certain Rest of World markets to
to enrich local communities adjust our cost base. As well as offsetting short term margin
pressures, by taking this action from a position of strength, we
We already have a strong commitment to corporate will be better placed to capitalise on future growth opportunities.
responsibility. We are now building on this existing strength
and working more proactively with our clients and consumers Our expectations for the Group in 2020 are positive although
in those areas. For example, this year’s Stop Food Waste Day, we remain cautious on the macro environment in Europe. The
which Compass USA founded in 2017, extended across pipeline of new contracts in North America is strong and Rest of
38 countries with awareness about the campaign reaching World is growing well, although we are seeing some hesitation in
89 million people on social media. decision making in Europe. Thanks to the Group’s geographic
and sectoral diversity, we are nevertheless confident of
CASH, BALANCE SHEET AND RETURNS continued progress. As such, we expect organic growth to be
TO SHAREHOLDERS around the mid-point of our 4-6% range whilst maintaining our
Excellent cash flow generation, a strong balance sheet and strong margin1 as we mitigate the expected volume pressures
returns to shareholders continue to be an integral part of our through our cost actions.
business model. Our priorities for how we use our cash remain
unchanged. We will continue to: (i) invest in the business to In the longer term, we remain excited about the significant
support organic growth where we see opportunities with good structural growth opportunities globally, the potential for
returns; (ii) grow the dividend in line with underlying constant further revenue and profit growth, combined with further
currency earnings per share; (iii) pursue M&A opportunities; returns to shareholders.
our preference is for small to medium sized bolt-on acquisitions,
where we look for returns greater than the cost of capital by
the end of year two; (iv) maintain strong investment grade
credit ratings by returning any surplus cash to shareholders
to target net debt to EBITDA of around 1.5x1.

SUMMARY AND OUTLOOK

Compass has had another strong year. Organic revenue growth Dominic Blakemore
was 6.4%, ahead of our target range, thanks to excellent growth Group Chief Executive Officer
in North America and an improving performance in Rest of
World. There was good growth in our European business with 26 November 2019
strong performances in UK Defence and Sports & Leisure
offsetting weak volumes in Business & Industry. The Group
margin during 2019 was maintained despite this more
challenging trading environment in Europe.

1. Pre IFRS 16 ‘Leases’. IFRS 16 will be adopted by the Group on 1 October 2019. The Group expects between £950 million–£1,050 million of additional debt
on its balance sheet on adoption.

20  Compass Group PLC Annual Report 2019

 Strategic Report

Compass Group PLC Annual Report 2019  21

EXECUTIVE COMMITTEE

Delivering the Group’s strategy​

The Board has delegated day to day operational decisions to the Executive Committee which is the key management committee for
the Group. The Executive Committee meets regularly, and develops the Group’s strategy, and reviews capital expenditure and
investment budgets.

1 2 3

4 5 6

1 Dominic Blakemore, Group Chief Executive Officer

2 Karen Witts, Group Chief Financial Officer
3 Gary Green, Group Chief Operating Officer, North America
4 Clare Hunt, Group Director of Strategy and M&A
5 Federico Tonetti, Group Safety and Sustainability Director
6 Venkie Shantaram, Regional Managing Director, Continental Europe

22  Compass Group PLC Annual Report 2019

 Strategic Report
The Executive Committee is responsible for implementing Group policy, monitoring health and safety, financial,
operational and quality of service performance, purchasing and supply chain issues, succession planning and
governance matters.

7 8 9

10 11 12

7 Mark van Dyck, Regional Managing Director, Asia Pacific

8 Sandra Moura, Group Investor Relations & Corporate Affairs Director
9 Robin Mills, Managing Director, UK and Ireland
10 Sapna Sood, Group Director International Clients & Market Development
11 James Meaney, Regional Managing Director, Latin America
12 Alison Yapp, Group General Counsel and Company Secretary

Compass Group PLC Annual Report 2019  23

EXECUTIVE COMMITTEE (CONTINUED)
DOMINIC BLAKEMORE GARY GREEN
Group Chief Executive Officer Group Chief Operating Officer, North America
Joined the Board and Executive Committee in February 2012. Dominic Joined the Board and Executive Committee in January 2007. Appointed
previously held the roles of Group Finance Director and Group Chief Group Chief Operating Officer, North America in April 2012.
Operating Officer, Europe. In October 2017, Dominic was appointed Key skills and competencies
Deputy Group CEO. He assumed the role of Group CEO in January 2018. Gary brings strong business and operational leadership as well as
Key skills and competencies business development and wide ranging sales experience. Gary is a
Dominic has extensive financial management experience in a number of chartered accountant and in 2001 received an honorary doctorate from
international businesses together with general operational management Johnson & Wales University in the USA.
experience. Dominic is a chartered accountant. Previous experience
Previous experience Gary joined the Group in 1986 in a senior finance role in the UK and
Dominic was formerly non-executive director of Shire plc and Chief became a UK director in 1992. He relocated to the USA in 1994 as Chief
Financial Officer of Iglo Foods Group Limited. Before joining Iglo Dominic Finance Officer of the Group’s North American business and in 1999
was European Finance & Strategy Director at Cadbury Plc having became Chief Executive Officer, North America.
previously held senior finance roles at that company. Prior to his role at
Cadbury Plc, he was a director at PricewaterhouseCoopers LLP.

KAREN WITTS JAMES MEANEY

Group Chief Financial Officer Regional Managing Director, Latin America
Joined the Board and Executive Committee as Group Chief Financial Joined the Group and Executive Committee in November 2017.
Officer in April 2019. Key skills and competencies
Key skills and competencies Highly experienced in business development and leadership,
Karen is an experienced Chief Financial Officer with a strong background James holds a Bachelor’s Degree in economics from Notre Dame
in finance and management across a variety of sectors in global University, an MBA from Harvard and completed INSEAD’s advanced
organisations. Karen is a chartered accountant. management course.
Previous experience Previous experience
Karen joined Compass from Kingfisher PLC where she was Group Chief James has spent the last 20+ years based in Brazil and led a number of
Financial Officer and a member of the board of directors for over six communications and service based organisations in the region, most
years. Prior to working at Kingfisher, Karen held senior finance positions recently as Interim CEO at Aceco TI.
at Vodafone Group PLC and BT PLC and was a former non-executive
director of Wolseley plc. Karen’s early career included finance roles at
Mars, Paribas, Grand Metropolitan and Ernst & Whinney.

ROBIN MILLS VENKIE SHANTARAM

Managing Director, UK & Ireland Regional Managing Director, Continental Europe
Appointed to the Executive Committee in November 2015, having joined Appointed to the Executive Committee in January 2018, having joined
the Group in 2008. Appointed Managing Director, UK & Ireland in Compass in July 2017.
November 2019. Key skills and competencies
Key skills and competencies A skilled business leader and innovator, Venkie has an MBA
Respected innovator with significant experience in people management from INSEAD.
and business operations.
Previous experience
Previous experience
Venkie was a partner with McKinsey & Company, focusing on global
Robin joined Compass as HR Director for UK & Ireland before becoming energy clients, later holding Regional Managing Director positions for
Managing Director of the education business in the UK, Chartwells and Aggreko plc in Europe and Asia. He was previously Regional Managing
then Group Chief People Officer. Robin stood down as Group Chief Director for Compass Central Asia, Middle East, Africa, Turkey &
People Officer on 25 November 2019 and was appointed Managing Southeast Asia Offshore & Remote.
Director, UK & Ireland on the same day. Robin’s career in human
resources includes roles at Scottish and Newcastle Breweries,
Diageo plc and Woolworth’s (part of the Kingfisher PLC).

24  Compass Group PLC Annual Report 2019

MARK VAN DYCK CLARE HUNT
Regional Managing Director, Asia Pacific Group Director of Strategy and M&A

Strategic Report
Appointed to the Executive Committee in April 2016, having joined the Appointed to the Executive Committee in December 2018, having joined
Group in February 2013. the Group in July 2011.
Key skills and competencies Key skills and competencies
Mark is highly experienced in international business leadership. He holds Through her varied career, Clare has developed a range of skills across
a Bachelor of Arts (Honours) in Business Administration and is a strategy, corporate finance and communications. She attended the
graduate of the Australian Institute of Company Directors. Corporate Affairs Academy at Said Business School, University of Oxford
Previous experience and has a BA in Modern History from The University of Bristol.
Mark held senior leadership roles for over 22 years in companies Previous experience
including LG Electronics, The Coca-Cola Company, Waterford Before joining Compass, Clare was Co-Head of the Industrials practice at
Wedgwood, Cinzano, Allied Lyons and Gillette. The majority of his career Finsbury, the strategic communications agency, and previously worked
has been spent in the service and consumer sectors with particular focus in corporate finance with J.P. Morgan Cazenove. Within Compass Clare
on the Asia Pacific region. held the role of Director of Communications before being promoted to
Group Director of Strategy and M&A in January 2017.

SANDRA MOURA SAPNA SOOD

Group Investor Relations & Corporate Affairs Director Group Director of International Clients & Market
Appointed to the Executive Committee in February 2017, having joined Development
the Group in October 2014. Appointed to the Executive Committee in October 2018, having joined
Key skills and competencies the Group in September 2018.
Highly experienced in investor relations and business finance. Sandra Key skills and competencies
holds an MBA from the University of Chicago Booth School of Business Sapna has in-depth experience of global business development, with a
and a BA in Economics from Brown University. focus on international clients. She has an MBA from IMD Business
Previous experience School and a Bachelor of Engineering in Chemical Engineering from the
Prior to joining Compass, Sandra’s career in investor relations and University of Sydney.
financial analysis spanned the International Finance Corporation in Previous experience
Washington DC, and UK FTSE 100 companies Rexam plc and Diageo plc. Sapna held various senior positions in operations and supply chain in
Australia, the USA, Singapore, Germany and China with BOC, following
which she joined Lafarge SA as Senior Vice President of HSE, France.
Prior to joining Compass, Sapna served as Country CEO for
LafargeHolcim, Philippines.

FEDERICO TONETTI ALISON YAPP

Group Safety & Sustainability Director Group General Counsel and Company Secretary
Appointed to the Executive Committee in December 2018, having joined Joined the Group in August 2018. Appointed Group General
the Group in May 2018. Counsel and Company Secretary and joined the Executive Committee
Key skills and competencies in October 2018.
Leader and innovator in the field of business sustainability. Federico Key skills and competencies
holds a Masters Degree in Economics from Bocconi University (Milan) Alison is a solicitor with more than 25 years’ international experience in
and post-graduate International MBA from IE Business School (Madrid). FTSE and NYSE listed companies across the services, industrial and
engineering sectors. She has significant experience in strategic M&A,
Previous experience
crisis and change management and holds an LLB (Hons) from The
Federico has 20 years’ experience in general management, global University of Bristol.
functional roles and sales and marketing positions for a variety of
Previous experience
multi‑national manufacturing organisations across eight different
countries. Federico also spent four years at Bain & Company in Alison was formerly Chief General Counsel and Company Secretary of
Strategy Consulting. Amec Foster Wheeler plc, Company Secretary and General Legal Counsel
of Hays plc and Company Secretary and Group Legal Advisor of Charter
plc. Prior to joining Charter, Alison held a number of senior legal roles at
Johnson Matthey plc.

Compass Group PLC Annual Report 2019  25

KEY PERFORMANCE INDICATORS

Measuring progress
We track our performance against a mix of financial and
non‑financial measures, which we believe best reflect our
strategic priorities of growth, efficiency and shareholder returns
underpinned by safe and responsible working practices.

KPI METRICS
Our strategic priorities are driven by our STRATEGIC FINANCIAL
goal to deliver shareholder value and we Organic revenue growth Underlying operating margin
use a number of financial KPIs to Organic revenue growth compares the Underlying operating margin divides
measure our progress. Growing the underlying revenue delivered from the underlying operating profit before
business and driving ongoing efficiencies continuing operations in the current share of profit after tax of associates
are integral to our strategy. The year with that from the prior year, by the underlying revenue.
importance of safety in everything we do adjusting for the impact of acquisitions,
is demonstrated by three non-financial sale and closure of businesses and Why we measure
performance indicators that we use exchange rate movements. The operating profit margin is an
across our business. important measure of the efficiency of
Why we measure our operations in delivering great food
The Group KPIs should be read in Our organic revenue performance and support services to our clients
conjunction with the Strategy and embodies our success in growing and and consumers.
Risk sections. retaining our customer base, as well
as our ability to drive volumes in
See pages 12 to 15 and our existing business and maintain
41 to 45 respectively. appropriate pricing levels in light
of input cost inflation.

6.4% 7.4%
6.4

7.4
7.4

7.4
5.8

7.2

7.2

6.4 8
5.5
5.0

7
4.0

6
5
4
3
2
1
0.0 0
2015 2016 2017 2018 2019 2015 2016 2017 20181 2019

1. Restated upon adoption of IFRS 15.

Throughout the Strategic Report, and consistent with prior years, underlying and other alternative performance measures are used to describe the Group’s
performance. These are not recognised under IFRS or other generally accepted accounting principles (GAAP). The Executive Committee of the Group manages
and assesses the performance of the business on these measures and believes they are more representative of ongoing trading, facilitate meaningful year on
year comparisons and hence provide more useful information to shareholders. Underlying and other alternative performance measures are defined in the
glossary of terms on pages 246 and 247. A summary of the adjustments from statutory to underlying results is shown in note 34 on page 208 and further detailed
in the consolidated income statement (page 138), reconciliation of free cash flow (page 143), note 2 segmental reporting (pages 161 to 164) and note 35
organic revenue and organic profit (page 210).

26  Compass Group PLC Annual Report 2019

 FINANCIAL
Return on capital employed (ROCE) Underlying basic earnings per share Underlying free cash flow

Strategic Report
ROCE divides the net operating profit Underlying basic earnings per share Measures cash generated by continuing
after tax (NOPAT) by the 12 month divides the underlying attributable profit operations, after working capital, capital
average capital employed. NOPAT is by the weighted average number of expenditure, interest and tax but before
calculated as underlying operating profit shares in issue during the year. acquisitions, disposals, dividends
from continuing operations less operating and share buybacks.
profit of non-controlling interests before Why we measure
tax, net of income tax at the underlying Earnings per share measures the Why we measure
rate of the year. performance of the Group in delivering Measures the success of the Group in
value to shareholders. turning profit into cash through the
Why we measure careful management of working capital
ROCE demonstrates how we have and capital expenditure. Maintaining a
delivered against the various investments high level of cash generation supports our
we make in the business, be it operational progressive dividend policy.
expenditure, capital expenditure or
bolt-on acquisitions.

19.5% 85.2p £1,247m

1,247
85.2

1.141
77.9
72.3

25 85.20
20.3

20.2

1247.0
19.5
19.4
19.1

974
61.1

908
53.7

20 68.16 997.6

722
15 51.12 748.2

10 34.08 498.8

5 17.04 249.4

0 0.00 0.0
2015 2016 2017 20181 2019 2015 2016 2017 20181 2019 2015 2016 2017 2018 2019

1. Restated upon adoption of IFRS 15.

NON-FINANCIAL
Health and safety Food safety Environment
Global Lost Time Incident Global Food Safety Incident Rate GHG intensity ratio
Frequency Rate Cases of substantiated food safety GHG intensity ratio relating to the top 25
Cases where one of our colleagues is incidents, including food borne illnesses. countries, which represent 96% of Group
away from work for one or more shifts as a revenue. The scope and methodology of
result of a work related injury or illness. Why we measure our reporting has changed this year,
The Food Safety Incident Rate is a helpful therefore the data is not comparable on a
Why we measure measure of our ability to provide food that like for like basis. See page 60 for
A reduction in lost time incidents is an is safe and of the right quality to our more details.
important measure of the effectiveness of consumers globally.
our safety culture. It also lowers rates of Why we measure
absenteeism and costs associated with Since 2008, we have been measuring
work related injuries and illnesses. our carbon emissions to reduce our
impact on the environment and increase
operational efficiency.

-38% -35% 9.1

(since 2015) (since 2015)
9.1

5.0 0.400 10
0.375
4.4 8
6.7

6.7

6.3

0.350
6.0

3.8 0.325 6
0.300
3.2 0.275 4

0.250
2.6 2
0.225
2.0 0.200 0
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Compass Group PLC Annual Report 2019  27

REGIONAL REVIEW

North America
Our North American business, which now accounts for over 60% the Atrium Health and Lexington Health Network, as well as
of Group revenue, delivered an excellent performance, with significant additional business with Tenet Healthcare.
organic revenue growth of 7.7%. Growth was driven by good
levels of new business and a strong retention rate across all Our Education sector reported strong net new business
sectors. As in previous years, around 40% of new business was including contract wins with New York University, Butler
from first time outsourcing, underlining the strong structural University and the Florence County Schools District.
growth opportunities within our largest market. Like for like
Our Sports & Leisure sector delivered a good organic
revenue growth benefited from pricing and positive trading
performance with an excellent retention rate and like for like
volumes from our Sports & Leisure sector.
volume growth. Contract wins include Allegiant Stadium, home
Strong growth in our Business & Industry sector was driven by to the Las Vegas Raiders, and the Lexington Convention Center.
continued good net new business and some like for like growth.
Underlying operating profit of £1,290 million increased by
New contract wins include the Canadian Imperial Bank of
9.0% (£106 million) on a constant currency basis. Ongoing
Commerce, American Airlines headquarters and Humana Inc.
efficiency initiatives resulted in modest underlying margin
Solid organic revenue growth in our Healthcare & Seniors sector progression for the year.
reflected good levels of new business. New contract wins include

UNDERLYING ORGANIC UNDERLYING UNDERLYING CONTRIBUTION

REVENUE REVENUE GROWTH OPERATING PROFIT OPERATING MARGIN TO GROUP REVENUE

£15,694m +7.7% £1,290m 8.2% 62.4%

(20181: £13,718m) (2018: +7.8%) (20181: £1,123m) (20181: 8.2%) (20181: 59.3%)

FINANCIAL SUMMARY
​ Underlying ​ Change

​ 2019 2018
1
​ Reported rates Constant currency Organic

Revenue £15,694m £13,718m ​ 14.4% 8.5% 7.7%

Operating profit £1,290m £1,123m ​ 14.9% 9.0% 7.9%
Operating margin 8.2% 8.2% ​ –
Region as a % of Group revenue 62.4% 59.3% ​

UNDERLYING Business & Industry – 32%

REVENUE BY
SECTOR Healthcare & Seniors – 28%

Education – 22%

Sports & Leisure – 16%

Defence, Offshore & Remote – 2%

1. Restated upon adoption of IFRS 15.

28  Compass Group PLC Annual Report 2019

 Strategic Report
Gary Green
Group Chief Operating Officer,
North America

We have a passion for great food and creating inspiring dining choices for all our
customers throughout our companies in North America. Innovation is a key driver
across our business and is in everything we do, whether it’s technology, culinary or
initiatives in sustainability and supply chain management. We don’t stand still and
that’s the way we keep ahead of the competition.

We recognise that every client has unique food demands and that it will vary
significantly across the different sectors in which we operate. We provide them with
warm hospitality and excellent service, together with a wide variety of choice. Our
scale as the leading player in the market enables us to offer this at the lowest cost.

Compass Group PLC Annual Report 2019  29

REGIONAL REVIEW (CONTINUED)

Europe
Organic revenue growth in Europe was 4.1% for the full year, Underlying operating profit declined on a constant currency
although growth slowed in the second half. This included strong basis by £26 million or 6.6%. The region delivered a good level of
growth from new business, notably the UK Defence contracts in organic revenue growth overall, supported by a strong
the first half and Puy du Fou in France in the fourth quarter, in performance in Sports & Leisure, where increased revenues
addition to strong trading in the Sports & Leisure sector. This tend to have a lower drop through to profit. Our focus on
was partially offset by lower volumes in Business & Industry efficiencies, pricing and portfolio management has only partially
across key markets where we have seen reduced participation offset the weakness in Business & Industry volumes (which
and lower consumer spend. declined significantly in the fourth quarter), cost inflation, and
the higher mobilisation costs (associated with the strong
Our new contract wins during the period include Landsec in the growth). In aggregate, the underlying operating margin declined
UK, Cercle National des Armées in Paris and Hôpitaux Robert by 60 basis points to 6.3%.
Schuman in Luxembourg. Contract extensions include Chelsea
Football Club in the UK.

UNDERLYING ORGANIC UNDERLYING UNDERLYING CONTRIBUTION

REVENUE REVENUE GROWTH OPERATING PROFIT OPERATING MARGIN TO GROUP REVENUE

£5,854m +4.1% £368m 6.3% 23.3%

(20181: £5,762m) (2018: +2.1%) (20181: £395m) (20181: 6.9%) (20181: 24.9%)

FINANCIAL SUMMARY
​ Underlying ​ Change

​ 2019 20181
​ Reported rates Constant currency Organic

Revenue £5,854m £5,762m ​ 1.6% 1.6% 4.1%

Operating profit £368m £395m ​ (6.8)% (6.6)% (8.0)%
Operating margin 6.3% 6.9% ​ (60)bps
Region as a % of Group revenue 23.3% 24.9% ​

UNDERLYING Business & Industry – 53%

REVENUE BY
SECTOR Healthcare & Seniors – 16%

Education – 13%

Sports & Leisure – 10%

Defence, Offshore & Remote – 8%

1. Restated upon adoption of IFRS 15.

30  Compass Group PLC Annual Report 2019

 Strategic Report
Venkie Shantaram Robin Mills
Regional Managing Director, Managing Director,
Continental Europe UK & Ireland

Despite macro headwinds in Europe, I believe that there The UK is the Group’s second largest market, after the
are good opportunities to step up our performance in USA, and has had a good year in terms of growth, having
Continental Europe. The region has one of the most particularly benefited from increased volumes in our
experienced leadership teams in Compass Group, with excellent Sports & Leisure business. This included an
around 100,000 colleagues covering 21 countries. extension of our contract at Wimbledon, and operations at
Tottenham Hotspurs’ new stadium and Twickenham’s
As a team, we will be focusing equally on driving growth, redeveloped East Stand.
improving operating performance, and putting the best
people in place in leadership roles and in client units. I am Although Business & Industry has been more challenging
confident that we can deliver strong and sustainable results. due to recent macro and political uncertainty, this is a
key area of focus for us going forward. Based on our
market leading position, talented people and clear strategy
of delivering tasty and healthy food for our clients,
we have a strong platform for future success.

Compass Group PLC Annual Report 2019  31

REGIONAL REVIEW (CONTINUED)

Rest of World
Organic revenue in our Rest of World region grew by 4.3%, As expected, our Offshore & Remote business returned to
including a strong performance in Turkey, India, Spanish growth in the second half of the year as we lapped the large
speaking LATAM and our Offshore & Remote business outside Australian construction project that moved to production
Australia, notably Kazakhstan. towards the end of 2018. Across the region we have continued
to win and retain contracts.
The Business & Industry and Education sectors of the region
continue to perform well and experienced good growth. New Underlying operating profit improved by 5.9% (£16 million)
business wins include Bloomberg in Hong Kong, Mercedes Benz on a constant currency basis, with the underlying operating
in Brazil and Bursa City Hospital in Turkey. We continue to retain margin improving in part due to portfolio management and
contracts including Victoria Zoos in Australia, Mondelez in implementation of pricing, purchasing and productivity
Argentina and Amazon in India. initiatives. We remain focused on best practice sharing and
driving efficiencies across the business.

UNDERLYING ORGANIC UNDERLYING UNDERLYING CONTRIBUTION

REVENUE REVENUE GROWTH OPERATING PROFIT OPERATING MARGIN TO GROUP REVENUE

£3,604m +4.3% £285m 7.9% 14.3%

(20181: £3,667m) (2018: +2.9%) (20181: £276m) (20181:7.5%) (20181:15.8%)

FINANCIAL SUMMARY
​ Underlying ​ Change

​ 2019 20181
​ Reported rates Constant currency Organic

Revenue £3,604m £3,667m ​ (1.7)% 0.8% 4.3%

Operating profit £285m £276m ​ 3.3% 5.9% 7.4%
Operating margin 7.9% 7.5% ​ 40bps​
Region as a % of Group revenue 14.3% 15.8% ​

UNDERLYING Business & Industry – 42%

REVENUE BY
SECTOR Healthcare & Seniors – 14%

Education – 7%

Sports & Leisure – 8%

Defence, Offshore & Remote – 29%

1. Restated upon adoption of IFRS 15.

32  Compass Group PLC Annual Report 2019

 Strategic Report
Mark van Dyck James Meaney
Regional Managing Director, Regional Managing Director,
Asia Pacific Latin America

Asia Pacific is a hugely exciting market for us, as it includes We have made good progress advancing our strategic
the more developed markets of countries like Australia and priorities of Performance, People and Purpose and are
Japan, where we have a very strong presence, and the high starting to see the benefits of this focus in our region.
growth economies of the emerging markets such as India For example, in Argentina we delivered strong growth and a
and China. good profit margin despite the challenging macroeconomic
environment. In Chile, where our mining sector is particularly
As these economies mature and the demand for outsourced strong, we are encouraged by significant wins in this sector.
quality food service propositions increases, we’re extremely
well placed to capitalise on the huge growth opportunities With regard to People, we welcomed eight new members to our
available in these markets based on our depth of expertise leadership team and put 700 of our unit managers through
and market positioning. leadership training. We have made important advances in our
Purpose agenda with all safety KPIs improving, largely due to a
commitment to preventative safety walks, and we partnered
with clients and local suppliers in Colombia and Brazil for
award-winning sustainable local sourcing programmes.

Compass Group PLC Annual Report 2019  33

BUSINESS REVIEW

Strong organic revenue growth

2019 has been another strong year

with organic revenue growth of 6.4%,
underlying margin of 7.4% and an increase
in free cash flow of 9.3%.
Karen Witts
Group Chief Financial Officer

FINANCIAL SUMMARY
Increase/
​ 2019 20181 (decrease)
Revenue ​ ​ ​
Underlying at constant currency 25,152​ 23,795 5.7%
Underlying at reported rates 25,152​ 23,147 8.7%
Statutory 24,878​ 22,872 8.8%
Organic growth 6.4% 5.5% ​
Total operating profit ​ ​ ​
Underlying at constant currency 1,882​ 1,798 4.7%
Underlying at reported rates 1,882​ 1,744 7.9%
Statutory 1,601​ 1,693 (5.4)%
Operating margin ​ ​ ​
Underlying at reported rates 7.4% 7.4% –
Profit before tax ​ ​ ​
Underlying at constant currency 1,772​ 1,681 5.4%
Underlying at reported rates 1,772​ 1,630 8.7%
Statutory 1,469​ 1,523 (3.5)%
Basic earnings per share ​ ​ ​
Underlying at constant currency 85.2p 80.4p 6.0%
Underlying at reported rates 85.2p 77.9p 9.4%
Statutory 70.0p 71.3p (1.8)%
Free cash flow ​ ​ ​
Underlying at reported rates 1,247​ 1,141 9.3%
Full year dividend per ordinary share 40.0p 37.7p 6.1%

1. Prior year comparatives have been restated upon adoption of IFRS 15.

Definitions of underlying measures of performance can be found in the glossary on pages 246 and 247.

34  Compass Group PLC Annual Report 2019

 Strategic Report
SEGMENTAL PERFORMANCE
Underlying revenue1 ​ Underlying revenue growth2
​ 2019 2018 3
Reported Constant
​ £m £m ​ rates currency Organic

North America 15,694​ 13,718 ​ 14.4% 8.5% 7.7%

Europe 5,854​ 5,762 ​ 1.6% 1.6% 4.1%
Rest of World 3,604​ 3,667 ​ (1.7)% 0.8% 4.3%
Total 25,152​ 23,147 ​ 8.7% 5.7% 6.4%

Underlying operating profit1 ​ Underlying operating margin1

​ 2019 20183 2019 20183
​ £m £m ​ £m £m

North America 1,290​ 1,123 ​ 8.2% 8.2%

Europe 368​ 395 ​ 6.3% 6.9%
Rest of World 285​ 276 ​ 7.9% 7.5%
Unallocated overheads (80) (70) ​ ​ ​
Total before associates 1,863​ 1,724 ​ 7.4% 7.4%
Associates 19​ 20 ​ ​ ​
Total 1,882​ 1,744 ​ ​ ​

STATUTORY AND UNDERLYING RESULTS

2019 ​ 20183
​ Statutory Adjustments Underlying Statutory Adjustments Underlying
​ £m £m £m ​ £m £m £m
Revenue 24,878​ 274 25,152​ ​ 22,872 275 23,147

Operating profit 1,601 281​ 1,882​ ​ 1,693 51 1,744

Net loss on sale and closure of businesses (7) 7​ – ​ (58) 58 –
Net finance costs (125) 15 (110) ​ (112) (2) (114)
Profit before tax 1,469 303​ 1,772​ ​ 1,523 107 1,630
Tax (351) (62) (413) ​ (385) (3) (388)
Profit after tax 1,118​ 241​ 1,359​ ​ 1,138 104 1,242
Non-controlling interest (8) – (8) ​ (8) – (8)
Attributable profit 1,110​ 241​ 1,351​ ​ 1,130 104 1,234
Average number of shares (millions) 1,586​ – 1,586​ ​ 1,584 – 1,584
Basic earnings per share (pence) 70.0p 15.2p 85.2p ​ 71.3p 6.6p 77.9p
EBITDA ​ ​ 2,459​ ​ ​ ​ 2,265
Gross capex ​ ​ 853​ ​ ​ ​ 813
Free cash flow ​ ​ 1,247​ ​ ​ ​ 1,141

1. Definitions of underlying measures of performance can be found in the glossary on pages 246 and 247.
2. Reconciliation between the different growth rates is provided in note 35.
3. Prior year comparatives have been restated upon adoption of IFRS 15.

Further details of the adjustments can be found in the consolidated income statement, note 2 segmental reporting and note 34
statutory and underlying results.

Compass Group PLC Annual Report 2019  35

BUSINESS REVIEW (CONTINUED)
ADOPTION OF NEW ACCOUNTING STANDARDS As at the balance sheet date, the Group has further classified
The Group has applied the new accounting standards IFRS 15 certain businesses as held for sale as these disposals are highly
‘Revenue from contracts with customers’ and IFRS 9 ‘Financial probable and expected to be completed within 12 months.
instruments’ in the current year. Comparatives for 2018 have
been restated to reflect the impact of IFRS 15, resulting in a net Finance costs
increase in operating profit and decrease in revenue of less than Net finance costs increased to £125 million (2018: £112 million),
1%. The adoption of IFRS 9 has not had a material impact and mainly due to the change in fair value of certain derivatives.
the Group has adjusted opening retained earnings to reflect an
Tax charge
additional provision for impairment of trade receivables using
Profit before tax was £1,469 million (20181: £1,523 million)
the expected credit loss model.
giving rise to an income tax expense of £351 million (20181:
The Group will adopt IFRS 16 ‘Leases’ from 1 October 2019. The £385 million), equivalent to an effective tax rate of 23.9%
Group’s estimate of the financial impact of these changes on the (20181: 25.3%).
consolidated balance sheet is the recognition of an additional
Earnings per share
lease liability between £950 million and £1,050 million. Under
Basic earnings per share were 70.0 pence (20181: 71.3 pence),
our chosen transition option, the results for the 2019 financial
a decrease of 1.8% as the impact of the cost action programme
year will not be restated. The net impact of IFRS 16 on the
offset higher profits and foreign exchange benefits.
consolidated income statement is expected to be immaterial.
UNDERLYING RESULTS
STATUTORY RESULTS
We track our performance against underlying and other
Revenue
alternative performance measures, which we believe best
On a statutory basis, revenue was £24,878 million (20181:
reflect our strategic priorities of growth, efficiency and
£22,872 million), representing growth of 8.8%, mainly driven by
shareholder returns.
organic growth and partially by foreign exchange benefits.
A summary of adjustments from statutory results to underlying
Operating profit
results is shown in note 34 on pages 208 and 209 and further
Operating profit was £1,601 million (2018 : £1,693 million),
1
detailed in the consolidated income statement (page 138),
a decrease of 5.4% over the prior year as the impact of the
reconciliation of free cash flow (page 143), note 2 segmental
cost action programme offset higher profits and foreign
reporting (pages 161 to 164) and note 35 organic revenue and
exchange benefits.
organic profit (page 210).
Statutory operating profit includes non-underlying items of £281
Revenue
million (2018: £51 million). The most significant non-underlying
On an organic basis, revenue increased by 6.4%. New business
items are explained further below; for a full list refer to note 34.
wins were 7.9%, driven by strong performance across the
Deteriorating business and consumer confidence in Europe has regions. Our retention rate was 94.8% as a result of our ongoing
impacted our Business & Industry volumes, new business focus and investment in service and quality. Like for like revenue
activity and margin. Given these trends, we are taking prompt growth was 3.7%, reflecting sensible price increases and strong
action in Europe and certain Rest of World markets to adjust our volume growth in Sports & Leisure, partially offset by weak
cost base. As a result, the Group’s income statement includes a Business & Industry volumes in Europe.
cost action programme charge of £190 million. Included within
Operating profit
this amount, there is a one-off non-cash charge of £120 million
Underlying operating profit was £1,882 million (20181: £1,744
in respect of a change in the expected profitability of some of
million), an increase of 7.9%. If we restate 2018’s profit at the
those contracts that have been affected by the recent
2019 average exchange rates, it would increase by £54 million
deterioration in business and consumer confidence and that
to £1,798 million. On a constant currency basis, underlying
are now considered to be structurally loss making and where
operating profit has therefore increased by £84 million, or 4.7%.
asset impairments have been taken. Of the £190 million
non-underlying charges, £29 million has been paid in the year Operating margin
to 30 September 2019. With very strong revenue growth the operating profit margin
remained unchanged from the prior year at 7.4% as we continue
Net loss on sale and closure of businesses
to work hard to drive efficiencies across the business through our
As a result of the strategic review of the business, the Group is
MAP framework.
in the process of selling or exiting its operations in a number of
countries, sectors or businesses in order to simplify its portfolio. Finance costs
The Group has successfully completed the sale of several The underlying net finance cost was £110 million (2018: £114
businesses, including its operations in South Africa, Vision million). For 2020, we expect an underlying net finance cost of
Security Group in the UK, Sports & Leisure in Japan and part of around £110 million.
its US laundries business. As a result, the Group has recognised
a net gain of £50 million on the sale and closure of businesses
(2018: £3 million loss), including price adjustments to disposals
completed in prior years. This gain was offset by £57 million exit
costs and asset write downs relating to committed or completed
business exits (2018: £55 million).

1. Prior year comparatives have been restated upon adoption of IFRS 15.

36  Compass Group PLC Annual Report 2019

Tax charge The final dividend of 26.9 pence will be paid gross and
On an underlying basis, the tax charge was £413 million (20181: a Dividend Reinvestment Plan (DRIP) will be available.

Strategic Report
£388 million), equivalent to an effective tax rate of 23.3% The last date for receipt of elections for the DRIP will be
(20181: 23.8%). The rate reduction primarily reflects the full 3 February 2020.
year impact of the reduction in the US federal tax rate
introduced by the Tax Cuts and Jobs Act, whilst the prior year Share buyback programme
comparative only includes nine months of benefit. The tax The Group did not buy any shares during the period under the
environment continues to be very uncertain, with more share buyback programme (2018: £nil). The directors’ authority
challenging tax authority positions and investigations globally. to purchase the Company’s shares in the market was renewed
Our current expectations are that the 2020 effective tax rate will by the shareholders at the Company’s Annual General Meeting
increase to around 24%. held on 7 February 2019.

Earnings per share Share price

On a constant currency basis, the underlying basic earnings per The market price of the Group’s ordinary shares at the close of
share increased by 6.0% to 85.2 pence (20181: 80.4 pence). the financial year was 2,093.00 pence per share (2018:
1,706.00 pence per share).
SHAREHOLDER RETURNS
Dividends UNDERLYING FREE CASH FLOW
Our dividend policy is to grow the dividend in line with growth in Underlying free cash flow totalled £1,247 million (2018:
underlying constant currency earnings per share. £1,141 million), an increase of 9.3%, which includes the benefit
of approximately 3.8% from currency translation. Underlying
In determining the level of dividend in any year in accordance free cash flow conversion was 66% (20181: 65%).
with the policy, the Board also considers a number of other
factors that influence the proposed dividend, which include but Gross capital expenditure of £853 million (2018: £813 million)
are not limited to: is equivalent to 3.4% (20181: 3.5%) of underlying revenues.
We continue to deliver strong returns on our capital expenditure
• the level of available distributable reserves in the across all regions. In 2020, we expect capital expenditure to be
Parent Company up to 3.5% of revenue.
• future cash commitments and investment needs to sustain
The working capital inflow, excluding provisions and pensions,
the long term growth prospects of the business
was £59 million (20181: £126 million inflow).This inflow was
• potential strategic opportunities
better than expected due to favourable timing.
• the level of dividend cover
The outflow related to post employment benefit obligations
Further surpluses, after considering the matters set out above, net of service costs was £15 million (2018: £8 million).
are distributed to shareholders over time by way of special Following the completion of the triennial valuation of the
dividend payments, share repurchases or a combination of both. Compass Group Pension Plan (UK), which continues to have
a funding surplus, we expect a total outflow for the Group
Compass Group PLC, the Parent Company of the Group, is a
of around £20 million in 2020.
non-trading investment holding company which derives its
distributable reserves from dividends paid by subsidiary The net interest outflow was £107 million (2018: £95 million).
companies. The level of distributable reserves in the Parent
Company is reviewed annually and the Group aims to maintain The underlying cash tax rate was 19% (20181: 20%).
distributable reserves that provide adequate cover for dividend
payments. The distributable reserves of the Parent Company ACQUISITIONS
include the balance on the profit and loss account reserve, The total cash spent on acquisitions in the year, net of cash
which at 30 September 2019 amounted to £1,252 million. acquired, was £478 million (2018: £452 million), comprising
£449 million of bolt-on acquisitions and investments in
The Group is currently in a strong position to continue to fund its associates, £33 million of contingent consideration relating to
dividend, which continues to be well covered by cash generated prior years’ acquisitions, offset by £4 million of cash acquired
by the business. Details of the Group’s going concern net of acquisition transaction costs.
assessment can be found on page 40.
The Group made several bolt-on acquisitions during the year,
The ability of the Board to maintain its future dividend policy will including the purchase of Client Rewards for an initial
be influenced by a number of the principal risks identified on consideration of £164 million ($209 million). Client Rewards is
pages 41 to 45 that could adversely impact the performance of an Iowa based company, that provides procurement and supply
the Group, although we believe we have the ability to mitigate chain management services.
those risks as outlined on pages 42 to 45.

It is proposed that a final dividend of 26.9 pence per share be

paid on 24 February 2020 to shareholders on the register on 17
January 2020. This will result in a total dividend for the year of
40.0 pence per share (2018: 37.7 pence per share), a year on
year increase of 6.1%. The dividend is covered 2.1 times on an
underlying earnings basis and 2.0 times on a cash basis.

Compass Group PLC Annual Report 2019  37

BUSINESS REVIEW (CONTINUED)
DISPOSALS Return on capital employed
As a result of the strategic review of the business, the Group is in Return on capital employed was 19.5% (20181: 20.2%) based on
the process of selling or exiting its operations in a number of net underlying operating profit after tax at the underlying
countries, sectors or businesses in order to simplify its portfolio. effective tax rate of 23.3% (20181: 23.8%). This decrease reflects
The Group has successfully completed the sale of several the short term impact of the recent acquisition activity of the
businesses, including its operations in South Africa, Vision Group. The average capital employed was £7,380 million
Security Group in the UK, Sports & Leisure in Japan and part of (20181: £6,539 million).
its US laundries business. As at the balance sheet date, the
Group has further classified certain businesses as held for sale, Post employment benefit obligations
as these disposals are highly probable and are expected to be The Group has continued to review and monitor its pension
completed within 12 months. The Group received £101 million obligations throughout the period, working closely with the
(2018: £39 million) in respect of disposal proceeds net of trustees and members of all schemes around the Group to
exit costs. ensure proper and prudent assumptions are used and adequate
provisions and contributions are made.
FINANCIAL POSITION
Net debt During the year we completed the triennial actuarial valuation for
The ratio of net debt to market capitalisation of £33,273 million the Compass Group Pension Plan (UK). This valuation showed a
as at 30 September 2019 was 9.8% (2018: 12.5%). Net debt net surplus of £142 million on the scheme’s funding basis. As a
decreased slightly to £3,272 million (2018: £3,383 million). The result, there is no requirement to agree a recovery plan with
ratio of net debt to EBITDA was 1.3x. This is lower than our the trustees.
target as we are waiting for EU competition clearance for the
The Lloyds Banking Group’s High Court hearing on Guaranteed
proposed acquisition of Fazer Food Services. Our leverage policy
Minimum Pension (GMP) equalisation was published on
is to maintain strong investment grade credit ratings, returning
26 October 2018. As a result, and based on actuarial advice,
any surplus cash to shareholders to target net debt to EBITDA of
the Group has recognised £12 million of pre-tax past service
around 1.5x2.
costs in the consolidated income statement. This non-cash
The Group generated £1,247 million of underlying free cash flow charge has been excluded from the Group’s underlying
(2018: £1,141 million), including investing £806 million in net operating profit.
capital expenditure, and spent £377 million on acquisitions net
The Compass Group Pension Plan (UK) surplus of £448 million
of disposal proceeds. £403 million was paid in respect of the
(2018: £346 million) and the £259 million (2018: £224 million)
final dividend for the financial year 2018 and £208 million was
deficit in the rest of the Group’s defined benefit pension schemes
paid for the interim 2019 dividend.
reflect the results of the triennial valuation of the UK plan and the
The remaining £148 million movement in net debt related actuarial gains and losses that have occurred since the prior year
predominantly to foreign currency translation and other IAS 19 actuarial valuation.
non-cash movements.
The total pensions charge for defined benefit contribution
schemes in the year was £126 million (2018: £110 million) and
£33 million (2018: £24 million) for defined benefit schemes.

1. Prior year comparatives have been restated upon adoption of IFRS 15.
2. Pre IFRS 16 ‘Leases’. IFRS 16 will be adopted by the Group on 1 October 2019. The Group expects between £950 million–£1,050 million of additional debt
on its balance sheet on adoption.

FINANCING – MATURITY PROFILE OF PRINCIPAL BORROWINGS

AS AT 30 SEPTEMBER 2019 (£m)

2020 162
2021

2022 323
2023 442
2024 664 286
2025 250 324
2026 250
2027 243
2028 442
2029 300
0 200 400 600 800 1000

US$ Private Placement € Bond £ Bond

1. Based on nominal value of borrowings in place as at 30 September 2019, converted at foreign exchange rates on the balance sheet date and maturing
in the financial year ending 30 September.
2. The average life of the Group’s principal borrowings is 5.4 years (2018: 5.4 years).

38  Compass Group PLC Annual Report 2019

FINANCIAL MANAGEMENT Interest rate risk
The Group manages its liquidity, foreign currency exposure and As set out above, the Group has effective borrowings in a

Strategic Report
interest rate in accordance with the policies set out below. number of currencies and its policy is to ensure that, in the short
term, it is not materially exposed to fluctuations in interest rates
The Group’s financial instruments comprise cash, borrowings, in its principal currencies. The Group implements this policy
receivables and payables that are used to finance the Group’s either by borrowing fixed rate debt or by using interest rate
operations. The Group also uses derivatives, principally interest swaps so that the interest rates on at least 80% of the Group’s
rate swaps, forward currency contracts and cross currency projected debt are fixed for one year. For the second and third
swaps, to manage interest rate and currency risks arising from year, interest rates are fixed within ranges of 30%–70% and
the Group’s operations. The Group does not trade in financial 0%–40% respectively.
instruments. The Group’s treasury policies are designed to
mitigate the impact of fluctuations in interest rates and GROUP TAX POLICY
exchange rates and to manage the Group’s financial risks. The As a Group, we are committed to creating long term
Board approves any changes to the policies. shareholder value through the responsible, sustainable and
efficient delivery of our key business objectives. This will enable
Liquidity risk us to grow the business and make significant investments in the
The Group finances its operations through cash generated by Group and its operations.
the business and borrowings from a number of sources including
the bank, the public and the private placement markets. The We therefore adopt an approach to tax that supports this
Group has developed long term relationships with a number of strategy and also balances the various interests of our
financial counterparties with the balance sheet strength and stakeholders including shareholders, governments, employees
credit quality to provide credit facilities as required. The Group and the communities in which we operate. Our aim is to pursue
seeks to avoid a concentration of debt maturities in any one a principled and sustainable tax strategy that has strong
period to spread its refinancing risk. commercial merit and is aligned with our business strategy.
We believe this will enhance shareholder value whilst protecting
In August 2019 the Group completed the refinancing of its Compass’ reputation.
Syndicated Revolving Credit Facility (SRCF). The new £2 billion
SRCF matures in August 2024 and replaces the £1 billion SRCF In doing so, we act in compliance with the relevant local and
and £690 million bilateral loans due to mature in June 2021 and international laws and disclosure requirements, and we conduct
December 2020 respectively. The new SRCF contains no an open and transparent relationship with the relevant tax
financial covenants. authorities that fully complies with the Group’s Code of Business
Conduct and Code of Ethics.
The maturity profile of the Group’s principal borrowings at
30 September 2019 shows that the average period to maturity In an increasingly complex international corporate tax
is 5.4 years (2018: 5.4 years). The Group’s undrawn committed environment, a degree of tax risk and uncertainty is, however,
bank facilities at 30 September 2019 were £2,000 million inevitable. Tax risk can arise from differences in interpretation
(2018: £1,690 million). of regulations, but most significantly where governments apply
diverging standards in assessing intragroup cross border
Foreign currency risk transactions. This is the situation for many multinational
The Group’s policy is to balance its principal projected cash organisations. We manage and control these risks in a proactive
flows by currency to actual or effective borrowings in the same manner and, in doing so, exercise our judgement and seek
currency. As currency cash flows are generated, they are used to appropriate advice from relevant professional firms. Tax risks
service and repay debt in the same currency. Where necessary, are assessed as part of the Group’s formal governance process
to implement this policy, forward currency contracts and cross and are reviewed by the Board and the Audit Committee on a
currency swaps are taken out which, when applied to the actual regular basis.
currency borrowings, convert these to the required currency.
RISKS AND UNCERTAINTIES
The borrowings in each currency can give rise to foreign The Board takes a proactive approach to risk management with
exchange differences on translation into sterling. Where the the aim of protecting its employees and customers and
borrowings are either less than, or equate to, the net investment safeguarding the interests of the Group, its shareholders,
in overseas operations, these exchange rate movements are employees, clients, consumers and all other stakeholders.
treated as movements on reserves and recorded in the
consolidated statement of comprehensive income rather than The principal risks and uncertainties that face the business and
in the consolidated income statement. the activities the Group undertakes to mitigate these are set out
on pages 41 to 45.
Non-sterling earnings streams are translated at the average
rate of exchange for the year. Fluctuations in exchange rates RELATED PARTY TRANSACTIONS
have given, and will continue to give, rise to translation Details of transactions with related parties are set out in
differences. The Group is only partially protected from the note 31 of the consolidated financial statements. These
impact of such differences through the matching of cash flows transactions have not had, and are not expected to have,
to currency borrowings. a material effect on the financial performance or position
of the Group.

Compass Group PLC Annual Report 2019  39

BUSINESS REVIEW (CONTINUED)

GOING CONCERN In making this statement, the Board carried out a robust
The Group’s business activities, together with the factors likely assessment of the principal risks facing the Group, including
to affect its future development, performance and position are those that would threaten its business model, future
set out in the Business Review, as is the financial position of the performance, solvency or liquidity. The Board considers
Group, its cash flows, liquidity position, and borrowing facilities. annually and on a rolling basis a three year, bottom up strategic
plan. The output of this plan is used to perform central debt and
The Group has considerable financial resources together with headroom profile analysis, which includes a review of sensitivity
longer term contracts with a number of clients and suppliers to ‘business as usual’ risks, such as profit growth and working
across different geographic areas and industries. As a capital variances and severe but plausible events. It also
consequence, the directors believe that the Group is well placed considers the ability of the Group to raise finance and deploy
to manage its business risks successfully. capital. The results take into account the availability and likely
effectiveness of the mitigating actions that could be taken to
After making enquiries, the directors have a reasonable
avoid or reduce the impact or occurrence of the identified
expectation that the Group has adequate resources to
underlying risks.
continue in operational existence for the 12 months from the
date of approval of the Annual Report. For this reason, they While the review has considered all the principal risks identified
continue to adopt the going concern basis in preparing the by the Group, the following were focused on for enhanced stress
financial statements. testing: health and safety, economic and political environment,
and clients and consumers. The geographical and sector
VIABILITY STATEMENT
diversification of the Group’s operations helps minimise the risk
In accordance with provision C.2.2 of the UK Corporate
of serious business interruption or catastrophic damage to our
Governance Code 2016, the directors have assessed the viability
reputation. Furthermore, our business model is structured so
of the Group over a three year period, taking into account the
that the Group is not reliant on one particular group of clients or
Group’s current position and the potential impact of the
sector. Our largest client constitutes only 2% of Group revenue
principal risks documented on pages 42 to 45 of the Annual
and our top 10 clients account for less than 8.5% of Group
Report. Based on this assessment, the directors confirm that
revenue. We are, as part of our strategy, always focussed on
they have a reasonable expectation that the Company will be
productivity and purchasing initiatives which help us to manage
able to continue in operation and meet its liabilities as they fall
our cost base. In more adverse conditions, we can if necessary
due over the period to 30 September 2022.
take further radical action to reduce labour cost.
The directors have determined that a three year period to
While this review does not consider all of the risks that the Group
30 September 2022 is an appropriate period over which to
may face, the directors consider that this stress testing based
provide its viability statement. This is the period reviewed by the
assessment of the Group’s prospects is reasonable in the
Board in our strategic planning process and is also aligned to our
circumstances of the inherent uncertainty involved.
typical contract length (three to five years). We believe that this
presents the Board and readers of the Annual Report with a
reasonable degree of confidence over this longer term outlook.

Karen Witts
Group Chief Financial Officer

26 November 2019

The Strategic Report, as set out on pages 1 to 63, has been

approved by the Board.

On behalf of the Board

Alison Yapp
Group General Counsel and Company Secretary

26 November 2019

40  Compass Group PLC Annual Report 2019

RISK MANAGEMENT

Identifying and managing risk

Strategic Report
The Board continues to take a proactive approach to There is still significant uncertainty about the potential
recognising, assessing and mitigating risk with the aim of withdrawal from the EU, the timeframe, the outcome of
protecting its employees and consumers and safeguarding the negotiations about future arrangements between the UK and the
interests of the Company and its shareholders. EU, and the period for which existing EU laws for member states
continue to apply to the UK. The Board views the potential
Risk management is an essential element of business impact of Brexit as an integral part of its principal risks rather
governance and, as set out in the Corporate Governance section, than as a stand-alone risk.
the Group has policies and procedures in place to ensure that
risks are properly identified, evaluated and managed at the We have identified a potential impact on our food supply chain in
appropriate level within the business. the UK relating to Brexit through potential increased import
costs from weaker sterling, compounded by potential new
The identification of risks and opportunities, the development import duties and tariffs, and on our labour force in the way of
of action plans to manage the risks and maximise the staff shortages and salary cost pressures.
opportunities, and the continual monitoring of progress against
agreed key performance indicators (KPIs) are integral parts of In addition, whilst significant changes to produce standards and
the business process and core activities throughout the Group. legislative requirements more generally are not anticipated in
the short term, they could impact the Group if introduced in
RISK GOVERNANCE FRAMEWORK future. We are taking actions to assess and mitigate against any
The Group runs a formal risk management process, as part of impact of Brexit, including engaging with key suppliers and
which the Group’s Principal Risks (highlighted on pages 42 to wholesalers to identify Brexit readiness, stock levels, labour
45) are assessed and prioritised, with the Board having overall strategies and remediation plans.
responsibility for risk management.
Where possible, we seek to absorb price increases through
Risks are reviewed by country and regional leadership teams on operational efficiencies, and cost indexation in our contracts
an ongoing basis and are assessed to identify and document also gives us the contractual right to review pricing with
corresponding mitigating actions. Risk updates form an integral our clients.
part of periodic management reviews and are also reviewed by
other members of the Group’s senior leadership and the Group’s We are experiencing a challenging macroeconomic environment
Risk and Governance Committees. Additional reviews are in some of our regions and as a result, we are taking prompt
performed by Group Internal Audit. This bottom up and top action to ensure that we have the right sized labour model for
down approach provides awareness and agreement on key risks the future.
facing the Group.
The Group faces a number of operational risks on an ongoing
The Board reviews a Major Risk Assessment report, including basis such as litigation and financial (including liquidity and
principal risks and areas of emerging risks, which is formally credit) risk and some wider risks, for example, environmental
reviewed twice a year. and reputational. Additionally, there are risks (such as those
relating to the eurozone economy, pensions, and acquisitions
OUR PRINCIPAL RISKS and investments) which vary in importance depending on
The tables on pages 42 to 45 set out the principal risks and changing conditions.
uncertainties facing the business at the date of this Report and
any changes to the status of the risks since 2018. These have In accordance with the provisions of the UK Corporate
been subject to robust assessment and review. They do not Governance Code 2016, the Board has taken into consideration
comprise all of the risks that the Group may face and are not the principal risks in the context of determining whether to adopt
listed in any order of priority. Additional risks and uncertainties the going concern basis of accounting and when assessing the
not presently known to management or deemed to be less prospects of the Company for the purpose of preparing the
material at the date of this Report, may also have an adverse viability statement. The going concern and viability statements
effect on the Group. can be found on page 40 of the Strategic Report.

As a global business operating in countries and regions with All risks disclosed in previous years can be found in the annual
diverse economic and political conditions, the Group’s reports available on our website www.compass-group.com. We
operations and earnings may be adversely affected by political recognise that these risks remain important to the business and
or economic instability, including instability caused by the they are kept under review. However, we have focused the
implementation of the UK’s decision to exit the European Union disclosures on pages 42 to 45 on those risks that are currently
(EU) (Brexit). considered to be more significant to the Group.

Compass Group PLC Annual Report 2019  41

PRINCIPAL RISKS

Risk and Trend Description Mitigation

HEALTH AND SAFETY

Health and Compass feeds millions of consumers and All management meetings throughout the Group feature a
Safety employs hundreds of thousands of people health and safety update as one of their first substantive
around the world every day. For that reason, agenda items.
2019 setting the highest standards for food hygiene
2018 and safety is paramount. Health and safety improvement KPIs are included in the
annual bonus plans for each of the business’ management
Health and safety breaches could cause teams. The Group has policies, procedures and standards in
serious business interruption and could result place to ensure compliance with legal obligations and
in criminal and civil prosecution, increased industry standards.
costs and potential damage to our reputation.
The safety and quality of our global supply chain are assured
through compliance against a robust set of standards which
are regularly reviewed, audited and upgraded as necessary to
improve supply chain visibility and product integrity.

A substantial refresh of the Group’s global safety standards

and Supply Chain Integrity standards is ongoing and new
Allergen Management Plans based on good practice are
expected to be launched in 2020.

PEOPLE
Recruitment Failure to attract and recruit people with the The Group aims to mitigate this risk by efficient, time critical
right skills at all levels could limit the success resource management, mobilisation of existing, experienced
2019 of the Group. employees within the organisation, improved use of
2018 technology such as apps and social media, and by offering
The Group faces resourcing challenges in training and development programmes.
some of its businesses due to a lack of
industry experience amongst candidates and
appropriately qualified people, and the
seasonal nature of some of our business.

The risk in this area has increased due to the

continued economic and political conditions
where a combination of high employment
and a shortage in the resource pool has made
the labour market more competitive.

Retention Retaining and motivating the best people with The Group has established training, development,
and the right skills, at all levels of the organisation, performance management and reward programmes to help
Motivation is key to the long term success of the Group. retain, develop and motivate our best people.

2019 The Group has a number of well established initiatives which

2018 help us to monitor the level of engagement and to respond to
our people’s needs.

KEY
Purpose
People
Performance
  Increased risk
  Static risk

42  Compass Group PLC Annual Report 2019

 Strategic Report
Risk and Trend Description Mitigation

CLIENTS AND CONSUMERS

Sales and Our business relies on securing and retaining a We have strategies which strengthen our long term
Retention diverse range of clients. relationships with our clients and consumers based on
quality, value and innovation.
2019 The potential loss of material client contracts in an
2018 increasingly competitive market is a risk to Our business model is structured so that we are not
the business. reliant on one particular sector or group of clients.

We are using technology to support the delivery of

efficiencies and to contribute to growth through, for
example, cashierless and cashless payment systems
and the use of artificial intelligence. This benefits our
clients and consumers and positively impacts retention
and new business wins.

Bidding Each year, the Group bids for a large number A rigorous tender review process is in place, which
of opportunities. includes a critical assessment of contracts to identify
2019 potential risks (including social and ethical) and
2018 rewards, prior to approval at an appropriate level in
the organisation.

Service The Group’s operating companies contract with Processes are in place to ensure that the services
Delivery and a large number of clients. Failure to comply with delivered to clients are of an appropriate standard and
Contractual the terms of these contracts, including proper comply with the required contract terms and conditions.
Compliance delivery of services, could lead to the loss of
business and/or claims.
2019
2018

Competition We operate in a highly competitive marketplace. We aim to minimise this and to respond to new market
and The levels of concentration and outsource and consumer food services trends by continuing to
Disruption penetration vary by country and by sector. Some promote our differentiated propositions and by focusing
markets are relatively concentrated with two or on our strengths, such as flexibility in our cost base,
2019 three key players. Others are highly fragmented and quality, value of service and innovation.
2018 offer significant opportunities for consolidation and
penetration of the self-operated market. We are using our knowledge and experience and
continue to invest in technology which will help us to
Aggressive pricing from our competitors could counter any potential risk and to capitalise on the
cause a reduction in our revenues and margins. opportunities created.

The emergence of new industry participants

using disruptive technology could adversely
affect our business.

Compass Group PLC Annual Report 2019  43

PRINCIPAL RISKS (CONTINUED)

Risk and Trend Description Mitigation

ECONOMIC AND POLITICAL ENVIRONMENT

Economy Some sectors of our business could be susceptible We are, as part of our strategy, always focused on
to adverse changes in economic conditions and productivity and purchasing initiatives which help us to
2019 employment levels. manage our cost base.
2018
Continued worsening of economic conditions In more adverse conditions, we can, if necessary, take
has increased the risk to the business in some further radical action to reduce labour costs.
jurisdictions, notably in Europe.

Cost Inflation Our objective is always to deliver the right level of As part of our MAP framework and by sharing best
service in the most efficient way. An increase in the practice across the Group, we seek to manage inflation
2019 cost of labour, for example, minimum wages in the by continuing to drive greater efficiencies through menu
2018 USA and UK, or food, especially in countries such management, supplier rationalisation, labour scheduling
as Brazil, could constitute a risk to our ability to and productivity, and with the increased use of
do this. technology. Cost indexation in our contracts also gives
us the contractual right to review pricing with our clients.
Increases in inflation continue to intensify cost
pressures in some locations.

Political We are a global business operating in countries and The Group remains vigilant to future changes presented
Stability regions with diverse economic and political by emerging markets or fledgling administrations and we
conditions. Our operations and earnings may be try to anticipate and contribute to important changes in
2019 adversely affected by political or economic public policy.
2018 instability caused, for example, by the UK’s decision
to leave the EU. We are taking actions to assess and mitigate against any
impact of Brexit, including engaging with key suppliers
We have identified a potential impact on our food and wholesalers to identify Brexit readiness, stock levels,
supply chain in the UK relating to Brexit through labour strategies and remediation plans.
potential increased import costs from weaker
sterling, compounded by potential new import Where possible, we seek to absorb price increases
duties and tariffs, and on our labour force in the way through operational efficiencies, and cost indexation in
of staff shortages and salary cost pressures. our contracts also gives us the contractual right to review
pricing with our clients.
Political instability around the world remains a risk
as a result of geopolitical tensions. We are also working on our recruitment and retention
strategies to mitigate any impact on our labour supply.

44  Compass Group PLC Annual Report 2019

 Strategic Report
Risk and Trend Description Mitigation

COMPLIANCE AND FRAUD

Compliance Ineffective compliance management with The Group’s zero tolerance based Codes of Business Conduct
and Fraud increasingly complex laws and regulations, or and Ethics continue to govern all aspects of our relationships
evidence of fraud, bribery and corruption with our stakeholders. All alleged breaches of the Codes,
2019 could have an adverse effect on the Group’s including any allegations of fraud, are investigated.
2018 reputation. It could also result in an adverse
impact on the Group's performance, and a The Group undertakes a robust risk management assessment
reduction in the Company's share price and/or that helps properly identify major risks and ensures the
a loss of business. internal control framework remains effective through regular
monitoring, testing and review. Emerging regulatory and
A failure to manage these risks could compliance risks are included in this process to enable
adversely impact the Group's performance if visibility and planning to address them.
significant financial penalties are levied or a
criminal action or other litigation is brought A strong culture of integrity is promoted through our Ethics
against the Company or its directors. and Compliance programme and our Speak Up helpline. All
alleged breaches of our Codes, including any allegations of
fraud, are investigated and dealt with appropriately.

Regulation and compliance risk is also considered as part of

our annual business planning process.

International The international corporate tax environment As a Group, we seek to plan and manage our tax affairs
Tax remains complex and an increase in audit efficiently in the jurisdictions in which we operate. In doing so,
activity from tax authorities means that the we act in compliance with relevant laws and
2019 potential for tax uncertainties and disputes disclosure requirements.
2018 remains high. We note in particular the policy
efforts being led by the EU and the OECD We manage and control these risks in a proactive manner and
which may have a material impact on the in doing so exercise our judgement and seek appropriate
taxation of all international businesses. advice from reputable professional firms. Tax risks are
assessed as part of the Group’s formal governance process
and are reviewed by the Board and the Audit Committee on a
regular basis.

Information The digital world creates increasing risk for We continually assess our cyber risk and manage the maturity
Systems and global businesses including, but not limited to, of our enterprise infrastructure, platforms and security
Technology technology failures, loss of confidential data controls to ensure we can effectively defend against any
and damage to brand reputation through, for current or future cyber attacks.
2019 example, the increased and instantaneous
2018 use of social media. We also have in place appropriate crisis management
procedures to handle issues in the event of our defences
Disruption caused by the failure of key being breached. This is supported by using industry
software applications, security controls or standard tooling, experienced professionals and partners
underlying infrastructure could delay day and regular compliance monitoring to evaluate and mitigate
to day operations and management potential impacts.
decision making.
The Group relies on a variety of IT platforms to manage and
The use of sophisticated phishing and deliver services and communicate with our clients,
malware attacks on businesses has risen over consumers, suppliers and employees. Our decentralised
the last year with an increase in the number model and infrastructure helps to mitigate propagation of
of companies suffering operational disruption attacks across the Group's technology estate.
and loss of data.
We continue to be focused on the need to maximise the
effectiveness of our information systems and technology as a
business enabler and have increased our investment in
technology and people to strengthen our platforms and
enhance our cyber security defences to mitigate the risk of
technology failure and data loss.

Compass Group PLC Annual Report 2019  45

46  Compass Group PLC Annual Report 2019
OPPORTUNITIES TO DEVELOP​

Our people feel proud to work for Compass

and want to do the best job they can. They
know their contribution will be recognised
and they will get opportunities to learn and
grow through apprenticeships, on the job
training, culinary sessions and leadership
development programmes.

We have undertaken many initiatives in

our markets to gain valuable insights into
employee engagement and satisfaction.
As a result, we have shared our commitment
to help our people and offer even more
opportunities for them to develop and
progress their careers with us.​

Compass Group PLC Annual Report 2019  47

PEOPLE REPORT

Strengthening our people commitment

At Compass, our people are

fundamental to the continued success
of our business, and our desire to
support and encourage them through
global initiatives and investment is
greater than ever.
Robin Mills
Group Chief People Officer (to 25 November 2019)

During the last year we placed increasing focus and resources DEVELOPING OUR UNIT MANAGERS
on those parts of our People agenda which we believe create the To provide the best service for our customers, we need to help our
culture and leadership which gives us our competitive edge. unit managers develop their own skills and grow the skills of their
teams. This year, we launched our global unit manager
Our areas of focus remain recruiting and developing the very development programme, Leadership in Action, which focuses on
best leaders, having the most talented unit managers in our creating positive working environments in units and helping
sector, and building engaging and inclusive environments in managers lead their teams even more effectively.
which every member of our team can be their best by being
themselves at work. This is a global programme which is being delivered in every
country in the Group. Since its launch in May 2019, around
We have continued to improve the quality of leadership in the 2,000 unit managers have participated in the two day face to face
business by raising the standards of assessment and onboarding training programme in their home country and local language.
of new entrants and promotees to our global leadership team. By the end of next year, we anticipate that approximately
This ensures that only individuals of the highest calibre join our 10,000 unit managers will have attended the course, which
most senior leadership population. represents around a quarter of the unit managers in Compass.
We remain committed to developing our teams and supporting This programme makes a major contribution to the development
their career progression through the business. We continue of one of our key populations and further underpins our focus on
to enhance the diversity balance of our most senior teams, people at all levels.
and have increased year on year the proportion of roles being
filled by women.

48  Compass Group PLC Annual Report 2019

 Strategic Report
THE COMPASS COMMITMENTS GLOBAL ENGAGEMENT SURVEY
As the competition for talent increases, particularly for the real We recognise that if we really want to make the Commitments a
heroes of our business, our front line teams, chefs and back of daily reality everywhere, we need to know where to focus and
house colleagues, the experience our people have when working which parts of the business require more support. To provide us
for us is vital. We wanted to make a commitment to every person with this insight we launched our first global engagement survey
in the business so that they understand what they can expect for three years.
when working for Compass – a base line that guarantees them a
positive experience. The survey is designed to track our people’s experience
against the Commitments. Their responses enable us to create
Last year, we spent time understanding what was important to an action planning framework which will help us to deliver on
our people and what helped them to feel engaged and to give of the Commitments and ensure all our colleagues have a
their best. We compiled over 1,000 hours of conversation with positive experience.
our colleagues, their leaders and even family members speaking
about the experiences which helped them to feel engaged and The results will be shared with all colleagues, and our managers
committed to Compass and those experiences which challenged will receive anonymised reports for their teams right down to
them. We brought together the common themes and messages unit level.
in order to create an engagement framework that would reflect
Survey statistics
what our people need and value.

This resulted in the launch of our three Compass Commitments:

Respect – we treat each other fairly and with respect 41 258,258

Growth – we have the opportunity to develop and progress Number Global
of languages participation
Teamwork – we work as part of a positive and caring team

We have launched the Commitments in each country,

translated into local languages, supported by local initiatives to
bring them alive. To embed them in the business, the heart of
the Leadership in Action programme is focused on enabling and
empowering the attendees to create plans to bring these
sentiments to life in their own units.
4.1 84%
Global engagement People who agreed
index score that the Company
embraces diversity
and inclusion

Compass Group PLC Annual Report 2019  49

PEOPLE REPORT (CONTINUED)

DIVERSITY AND INCLUSION

Our work on diversity and inclusion goes from strength to PEOPLE
strength. Our Group CEO, Dominic Blakemore, has set the tone Our UK business has teamed up with Mumsnet,
from the top by incorporating diversity and inclusion as key the UK’s largest network for parents, to launch a
priorities within our People agenda. Our diversity and inclusion groundbreaking ‘Leadership Accelerator Programme’
strategy is set around a framework of three pillars: People, for maternity returners, focused on advancing women
Culture and Community. These focus on our approach to into leadership positions.
managing our people, the inclusive culture we seek to create
which enables all our people to thrive, and how we can leverage CULTURE
diversity and inclusion for wider impact in our communities. In a number of our markets, such as Australia, Japan
and the USA, we are proud of the employee action
We have an ambition to achieve an improved diversity balance at councils on diversity and inclusion (DIACs). These are
senior leadership levels. In terms of gender balance, our groups of colleagues working together to advance our
progress continues to track positively as our statistics on gender inclusion agenda.
balance set out below demonstrate.
COMMUNITY
Improving the balance of our leadership requires close attention We are passionate about our work in local communities. In
to succession planning so we can build a balanced pipeline of Australia, we have partnered with local employment
talent for the future. Since the introduction of a policy which service providers to actively recruit people who identify as
requires a more equal weighting of participants in our having a disability to support their development into
development curriculum, we have further increased the number careers in hospitality.
of potential female leaders participating in programmes such as
SPOTlights, our global programme for emerging talent.
We have been recognised for the progress we have made in
In March 2019, we signed the Women in Hospitality, Travel and
diversity and inclusion this year. We became global diversity
Leisure 2020 charter and we are delighted to become a lead
champions for Stonewall as we work to create an LGBT-inclusive
supporter of this initiative.
workplace. And we are delighted that our business in the USA
COMPASS GROUP BOARD: FEMALE has been recognised in the Forbes 2019 list of Best Employers
for Diversity.
2017 18%
2018 27%
2019 36%

EXECUTIVE COMMITTEE: FEMALE

2017 11%
2018 25%
2019 38%
Under our Culture pillar, we have continued to focus on creating
GLOBAL LEADERSHIP TEAM: FEMALE an inclusive and welcoming environment for all. We began our
rollout of an unconscious bias training workshop, starting with
2017 28% the Executive Committee and cascading the session through a
2018 30% number of country leadership teams. During 2020, we will
2019 31% continue to roll out this training across the business. The
importance of inclusion is also a core component of our
SENIOR MANAGEMENT : FEMALE 2
Leadership in Action programme so we ensure a consistent
message is heard across our business.
2017 24%
2018 26% Incorporating a set of inclusion related questions into the
2019 27% engagement survey gives us the data to track our progress
towards an ever more inclusive workplace. By combining core
1. The percentages disclosed for 2019 are stated as at 30 September 2019. biographical details and answers to key questions related to
2. Senior management is defined as our global leadership team and inclusion, we will be able to identify locations where colleagues
statutory directors of corporate entities whose financial information is
consolidated in the Group’s accounts in this Annual Report. See page require more support to create more inclusive environments as
125 for more details. well as those with great practices to share.

There is still much more to do, but as we continue to embed

our strategy, we are confident that we are heading in the
right direction.

​
50  Compass Group PLC Annual Report 2019
 Strategic Report
OUR VALUES GUIDE OUR ACTIONS
AND BEHAVIOURS

OPENNESS, TRUST AND INTEGRITY

We set the highest ethical and
professional standards at all times. We
want all our relationships to be based on
honesty, respect, fairness and a
commitment to open dialogue and
transparency.

PASSION FOR QUALITY

We are passionate about delivering
Ireena Vittal superior food and service and take pride
Non-Executive Director in achieving this. We look to replicate
Designated NED for workforce engagement success, learn from mistakes and develop
the ideas, innovation and practices that
HOW DO THE VIEWS OF THE WORKFORCE will help us improve and lead our market.
HELP THE BOARD?
Our people are essential to the continued success of our WIN THROUGH TEAMWORK
business and we want them to have the opportunity to We encourage individual ownership, but
develop their careers and grow with us. Their day to day work as a team. We value the expertise,
experience and understanding of the needs of our clients individuality and contribution of all
and consumers mean they are uniquely placed to help us colleagues, working in support of each
identify opportunities and issues. Knowing how our other and readily sharing good practice in
workforce feels about key topics helps the Board remain pursuit of shared goals.
connected to what’s important to them and to understand
RESPONSIBILITY
how we can best support their personal growth.
We take responsibility for our actions,
WHY IS IT IMPORTANT FOR WORKERS individually and as a Group. Every day,
TO HAVE A VOICE? everywhere we look to make a positive
Contributing to decisions is important for an individual’s contribution to the health and wellbeing
wellbeing and motivation, especially if it can mean of our customers, the communities we
improving their experience at work. Having a voice also work in and the world we live in.
gives people the opportunity to make sure we know what
CAN-DO SAFELY
matters most to them, use their skills and develop their
We take a positive and commercially
experience to support job satisfaction. Everyone is a part
aware ‘can-do’ approach to the
of the business and it makes sense that everyone can
opportunities and challenges we face; we
contribute their views.
always put safety first in everything we do.
HOW WILL YOU HELP RAISE THE VOICE
OF EMPLOYEES IN COMPASS?
By making sure we engage with our people and ask them
to give us feedback on the areas we know are key to our LOOKING AHEAD
strategy. Knowing how our people feel and what they think Our organisational model remains unchanged. We keep roles
about what we are doing will help us determine what clear and focus authority and accountability as close to the front
adjustments we should consider making. We will do this in line as possible, enabling and empowering our people to take
a structured way and in consideration of what our people responsibility for their own outcomes.
care about most.
We use some simple and common systems and a strong
HOW DOES YOUR EXPERIENCE HELP YOU focus on values to help people to do the right things.
IN THIS NEW ROLE?
We continue to believe that our people and our culture
I have worked across many industry sectors and with
provide our competitive edge, and that we must continue
global workforces and have been involved in solving a
to invest and focus our energy on our colleagues, their
cross section of business and societal challenges. I’m
leadership, skills and levels of engagement. By doing so,
delighted to be able to bring this experience to develop
we will continue to create workplaces that people are attracted
the engagement agenda at Compass.
to join and love to be part of.

Compass Group PLC Annual Report 2019  51

52  Compass Group PLC Annual Report 2019
SOURCING RESPONSIBLY

Serving safe and nutritious meals for our

clients and consumers requires a robust
supply chain of trusted partners to source,
produce and deliver ingredients and products
against the exacting standards we set.

Our Global Supply Chain Integrity Standards

provide us with a robust framework which
drives consistency in the procurement of safe,
legal and authentic food. In 2019, we
simplified the standards to make them more
user-friendly for our procurement teams.

We are working towards increasing the

transparency of our supply chain, to identify
potential risks and opportunities and thereby
create more positive impacts for people,
animals and the planet we share.

Compass Group PLC Annual Report 2019  53

CORPORATE RESPONSIBILITY

Our approach to corporate

responsibility and sustainability

Last year, we launched our new sustainability

strategy focusing around three key pillars:
Health and wellbeing, Environmental game
changers and Better for the world.
Federico Tonetti
Group Safety and Sustainability Director

During 2019, we have worked closely with our clients, STAKEHOLDER ENGAGEMENT
consumers and partners to deliver healthy, nutritious food, As a responsible business, we regularly engage with our
reduce food waste, raise awareness of healthy eating, advocate stakeholders. We ensure that we stay up-to-date on issues that
more responsible sourcing and much more. matter most to our different stakeholder groups, to us as a
business, and to our industry. Our stakeholder groups include
Compass Group supports the United Nations’ Sustainable our clients, consumers, colleagues, suppliers and shareholders,
Development Goals (UNSDGs) and our sustainability strategy is as well as the communities in which we operate. We also engage
aligned with several of the goals. See pages 62 and 63 for further with a number of not-for-profit organisations with expertise in
details on our commitment to the UNSDGs. different segments of the food supply chain.
We report to a number of sustainability indices including We respect feedback from all our stakeholder groups and take
the Dow Jones Sustainability Indices and the Carbon their views into consideration in our decision-making processes.
Disclosure Project.
For more information about our engagement with our
stakeholders, please see pages 16 and 17.

Visit our website at www.compass-group.com for more information about our approach to CR and sustainability
Our 2019 Sustainability Report will be available online in early 2020

54  Compass Group PLC Annual Report 2019

 Strategic Report
MATERIALITY ANALYSIS As a result of this process, we identified our most important
In 2019, we undertook a materiality assessment to establish issues, as shown in the materiality matrix below.
which sustainability issues matter most to our stakeholders and
the business. Through this assessment, we considered the The top seven priority issues identified are:
importance of all environmental and social topics that could
• the safety of the food we serve and of our people
impact our business, directly or indirectly, and affect our ability
to create value over the short, medium and long term. We also • the communities in which we operate, charities we work with
assessed material issues based on their relevance to our and partnerships we form
strategic plans and objectives. Assessing their importance and • food waste
impact provides a guide to strategically managing the risks and • single-use plastics
opportunities they represent. • the treatment and wellbeing of our people
• talent attraction and development
We engaged third party experts to support our assessment,
• nutrition and healthy lifestyle
analysing internal and external information and gathering
thousands of data points. The data used was wide ranging Some issues like food waste, safety and talent attraction
and included: were universally recognised as being of the highest importance.
Other topics, like single-use plastics and promoting fruit
• a review of key client and supplier sustainability strategies
and vegetable consumption, were more important in some
• study of relevant NGO and academic reports markets than others. You will find more information in the
• analysis of various relevant responsible business benchmarks following pages and in our 2019 Sustainability Report,
• engaging with hundreds of our colleagues, including at www.compass-group.com.
senior leadership
• reviewing our existing policies, programmes and practices

Higher Local
Communities
impact Food & People
Safety
Single-Use
Food Waste
Medium Plastics
impact Energy
Use
Employee
Sourcing Health Talent Attraction/
Importance to stakeholder

Responsibly Development

Lower Healthy
Diversity and
impact Supply Chain
Inclusion Lifestyle
Integrity Human
Rights
Climate Nutrition
Adaptation
Mental
Health
Water

Packaging Plant
forward

Biodiversity

Importance to Compass Group

People Health and Wellbeing Better for the World

Safety Environment

Compass Group PLC Annual Report 2019  55

CORPORATE RESPONSIBILITY (CONTINUED)

Our sustainability strategy

Knowing where our business can have the biggest impact and • Environmental Game Changers – reducing food waste and
taking account of what matters most to our stakeholders, single-use plastics, and promoting plant-forward meals
alongside industry trends, is important to us. Last year, we • Better for the World – sourcing responsibly, enriching local
formulated our sustainability strategy. In 2019, we reviewed and communities and collaborating for big change
confirmed this using our materiality analysis.
None of this work would be possible without our people and
We centre our strategy on three key pillars: prioritising safety. That is why Safety and People come first,
underpinning the foundations of our strategy.
• Health and Wellbeing – helping people to make better
nutrition choices, follow healthier lifestyles and support For our People report, see pages 46 to 51.
good mental health

SUSTAINABILITY PRIORITIES

HEALTH AND WELLBEING ENVIRONMENTAL GAME CHANGERS BETTER FOR THE WORLD
Nutrition, health and happiness Targeted action where we can make Driving positive impact far
at the heart of our value proposition an enhanced impact beyond our business

Better nutrition choices Food waste Sourcing responsibly

Mental health Single-use plastics Enriching local communities

Healthy lifestyle Plant-forward meals Collaborating for big change

SAFETY CULTURE
Turning safety from compliance
to caring for each other

Safety leadership Sharing learning Simplification

56  Compass Group PLC Annual Report 2019

 Strategic Report
SAFETY CULTURE Food safety
Having a culture where safety is Over the last year, we have further developed and simplified
our processes, making it easier for our procurement and front
treated as a value is fundamental to our line teams to understand the standards we expect them to
success. Our people serve millions of meet. In 2020, we will be launching a newly updated and more
consumers every day, and we work hard to user-friendly version of our Global Supply Chain Integrity
keep everyone safe Standards, as well as launching our first Global Allergen
Management Plan, which will detail minimum standards for all
We believe that caring for ourselves and each other is what will our countries to adopt from farm to fork, to reduce the risk of
drive us to further improve our global performance in both consumer allergic reactions.
personal and food safety.
By embracing partnerships and technology solutions, we have
We take the utmost care to reduce the risk of incidents and continued to invest in both simplifying and improving our
injuries in the working environment, and to make sure that we operational food safety management systems around the world.
maintain the highest standards of food hygiene and safety. For example, through our Primary Authority partnership
arrangement in the UK with Luton Borough Council
Personal safety Environmental Health Department, we have redesigned our food
Over the last year, we have moved further towards a safety management and upgraded the key policies and
collaborative model, creating a stronger safety culture. We procedures that underpin it. In Canada, we have partnered with
wanted to remind our people of the reasons why it is important Food Allergy Canada (a non-profit consumer advocate) to ensure
to stay safe: that their family, friends, colleagues and community our allergen management programme continues to embrace
rely on them. industry leading practices. Our Canadian business has also
introduced several new technology based systems including
Our new See, Care, Share programme encourages automated monitoring and alarms for cold chain management,
interdependence (as defined by the Bradley curve), meaning our electronic HACCP monitoring, improved associate education
people are genuinely invested in keeping themselves and others programmes, product recall effectiveness tracking, internal
safe. We also encouraged our leaders to share the lessons self-audits, incident investigations and crisis management.
learned from any safety incidents. Using real examples, our
leaders can help to make a human connection and remind
people of just how important safety is. Our people are taking GLOBAL FOOD SAFETY GLOBAL FOOD SAFETY
greater personal accountability for worker safety and food safety INCIDENT RATE INCIDENTS

-35% -18%
practices, not because someone else is telling them to but
because they care about each other.

Sadly, during the year there were two fatalities in the Group, an (since 2015) (since 2015)
incident in our South African business and a road traffic
accident in our USA business. In each instance, a full
1,788
1,749

investigation was conducted and the outcome reported to the

1,684

1,473

directors and senior executives.

1,439

GLOBAL LOST TIME

INCIDENT FREQUENCY GLOBAL LOST
RATE TIME INCIDENTS

-38% -33%
(since 2015) (since 2015) 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Sharing learning
Our health and safety experts all around the world are often
4,167
4,100

dealing with similar issues. During the year we held two safety
3,528

summits for our leaders to come together to collaborate and

2,973

2,766

support each other. Key priorities for our safety agenda were
discussed and the strategic direction set alongside the creation
of a library of resources.

We also leverage technology to make our knowledge

management more effective across the Group.
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019

Compass Group PLC Annual Report 2019  57

CORPORATE RESPONSIBILITY (CONTINUED)

HEALTH AND WELLBEING In the Netherlands, our 360 Lifestyle digital platform provides
Helping our consumers eat and live advice from experts in the fields of nutrition, lifestyle, mind and
sport. This helps people to understand the nutritional values of
well is key to our social purpose the products in our restaurants, as well as how to prepare
With our scale and scope we can help consumers make healthy meals at home, and live healthier lives.
healthier choices. We have a large team of nutritionists and
We also help our clients to introduce healthy living programmes
dieticians who continually work with clients and consumers
into their operations. For example, in January 2019, at a large
across various geographies to ensure we serve healthy options
insurance company client in North America, Eurest launched
and encourage healthier lifestyles.
its first certified Wellness Center for Excellence. The team
Better nutrition choices promote wellness programmes and new, healthy food options
Our teams work hard to improve the culinary offer by responding each month.
to consumer feedback as well as running pilots, ad hoc research
Mental health
and teaching kitchens on nutrition. For example, we conducted
We believe that protecting the mental health of employees
a study in a school in the UK to improve take up of healthy
should be a priority for all responsible businesses. Our goal is to
options through messaging and investigated the use of choice
provide supportive and understanding work environments for
architecture or ‘nudges’ of behaviour to encourage students to
our people, helping them to identify and address stress, anxiety
make the healthier choice. Raising awareness of healthy eating
and depression.
resulted in a 25% increase in the uptake of oily fish.
In 2019, we launched four pilots (three in the UK and one in
In India, our Stealth Health programme has replaced over
Australia) with Medibio, the first data driven, biometric, mental
70 customers’ favourites with healthier – yet still delicious –
health monitoring and management programme in the world.
alternatives (for example using complex carbohydrates instead
The results so far have been encouraging in helping our people
of white rice). In Germany, we introduced a new range of no
manage their mental health proactively and we are planning
sugar and no sweetener desserts, using natural ingredients like
more pilots during 2020.
fresh fruit, Greek yoghurt and vegan alternatives, and
superfoods like chia, quinoa and goji berries. Similarly, in In the UK, we sponsor a mental health awareness magazine
Denmark we introduced small, plated portions in our called MindSet, which is available in print and online, offering
unrestricted buffets, which in some cases led to a 50% decrease advice, signposting and support covering a range of mental
in quantities consumed. health issues.

Healthy lifestyle
In 2019, we introduced further initiatives to promote
healthy lifestyles.
Compass Australia won the Mines and Metals Association Mental
For example, in the UK, our Nourished Life website
Health Award 2019 for its continuing efforts in mental health,
(www.nourishedlife.co.uk) and related social media channels
such as its awareness and listening campaign #gotyourback.
offer tips for healthier living, including better sleep, recipes,
and an ‘ask our experts’ column. This website won Footprint
Media’s Health & Vitality Honours Award for Communication
and Engagement.

In Canada, we launched Just Now, a mental health programme

designed to raise awareness and help break the stigma of talking
about mental illness. The initiative includes mental health first
aid training, comprising a toolkit of resources, and a support
programme for our people and their families who may be
impacted. In addition, our Thinking Ahead, Giving Back
programme in Canada provides 10,000 hours of community
support, helping students to deal with mental health issues,
depression and bullying.

58  Compass Group PLC Annual Report 2019

 Strategic Report
ENVIRONMENTAL GAME CHANGERS using the hashtag #stopfoodwasteday, reached an audience of
As a leading food service business, 89 million in 100 countries. Media coverage reached a potential
audience of a further 140 million.
we focus on where we can have the
biggest positive impact on the global food Food recovery and repurpose
system and the environment We engage with food redistribution groups, including online
communities and via apps as well as local charities, to help our
Food waste sites donate surplus food. In the UK, for example, our
According to the United Nations, each year, an estimated distribution centres have been donating surplus food that is
one third of all food produced ends up going to waste. That is within date and fit for consumption to FareShare since 2014.
equivalent to 1.3 billion tonnes, worth around $1 trillion. We fully In the USA, we work with Chefs to End Hunger, donating surplus
support UNSDG 12.3 to reduce food waste by 50% by 2030. food across a number of sites to those in need. Furthermore,
across some of our European countries we use technology
We work with a number of food waste measurement and driven solutions such as the app Too Good to Go, to sell surplus
reduction systems around the world to raise awareness, change food that would otherwise be thrown away directly to consumers
behaviour and monitor our ability to reduce food waste. We have at a discount.
a three-pronged approach to reducing food waste:
Our brands take steps to recover and avoid food waste.
• reducing the amount of unsold/uneaten food For example, in Argentina, our Outtakes convenience stores and
• inspiring consumers to waste less (through Stop Food coffee carts offer consumers free coffee grounds for use in
Waste Day) their gardens.
• diverting food waste from landfill, for example through
repurposing or donating surplus food to people in need Single-use plastics
Effective packaging is crucial for our industry. It enables us to
We are cutting waste in our restaurants by improving the store food safely, keep it fresh and reduce food waste. However,
efficiency of how we order food, making use of every bit of an we recognise that the prevalence of single-use plastics is a
ingredient in the kitchen and repurposing unused food into new huge, global issue and one which our stakeholders care very
dishes. We challenge our teams to plan, forecast and purchase deeply about. This is why we are taking steps to reduce its use
effectively to prevent wastage. in our operations.

In Norway, we undertook a study to analyse hospitality waste, We are working directly with our clients, procurement
the results of which have been used across the Nordics to teams and suppliers to help reduce our use of disposable
further reduce food waste. In Germany, we are working with plastic items. This is helping to ensure that fewer single-use
United Against Waste to assess and analyse sites’ food waste to plastics are being used, replacing them with reusable or
reduce it on a site by site basis. Across a number of our biodegradable alternatives.
countries, including the UK, Netherlands and China, we use
Winnow technology to measure, monitor and reduce food waste In some sites, we distribute reusable containers such as
across large sites. In Turkey, we have found that by giving coffee mugs and lunch boxes, thus reducing plastic cups
consumers the ability to choose portion sizes we have been able and boxes from sites. In Brazil, for example, giving our people
to cut food waste by between 6% and 20% at some restaurants. their own mug led to a 60% reduction in disposable cup use;
similarly, Compass Turkey replaced 95% of non-recyclable
Stop Food Waste Day cardboard cups with reusable glassware in only seven months.
In 2017, in the USA we sought to raise awareness of the food
waste crisis by creating a day of action, Stop Food Waste Day. It The UK & Ireland business is a key partner of the charity The
has now become an annual global event. Waste and Resources Action Programme and, together with
multinational businesses, governments and charities, has
committed to the UK Plastics Pact to reduce plastics use in the
UK. Commitments include eliminating unnecessary single-use
packaging, increasing recycling and improving reusability
of packaging.

In October 2019, the UK Business won the Best Waste

The aim is to inspire our people and consumers to reduce waste Prevention Project Award (Food) at Footprint’s waste2zero
in both professional and home kitchens by raising awareness Awards for our work raising awareness of how to tackle single-
and providing straight-forward solutions. In 2019, millions of use plastics.
zero-food-waste meals were served on the day throughout
Compass cafés in hospitals, schools, arenas, corporations,
museums, and senior living communities in 38 countries. Live
cooking demonstrations and interactive educational campaigns
inspired millions more to join in. Our social media campaign,

Compass Group PLC Annual Report 2019  59

CORPORATE RESPONSIBILITY (CONTINUED)
Plant-forward meals One such tool used in our US business is Carbon Foodprint,
Eating less meat is good for our bodies and the planet. Over the helping our units reduce their carbon emissions, water use and
last year we have responded to the growing consumer demand wastage. The tool works through smart analysis and
for flexitarian and vegan lifestyles with many plant-based options recommending switches such as swapping in ingredients with
in our restaurants. lower carbon footprints and changing taps from high flow to low
flow, to save water. In some of our restaurants in the Nordics,
In January 2019, the scientific journal The Lancet we calculate the carbon footprint of each meal and provide
published a report in conjunction with the EAT that information to our consumers to help them make
Forum about a recommended diet for a informed choices.
sustainable planet.
2019 was the first year of collecting sustainability data in a newly
With analysis and recommendations on how to eat for a launched system from countries which constitute 96% of the
sustainable planet which aligns with our plant-forward focus, Group’s revenue. This data gives us greater visibility on our
Compass has partnered with the EAT Forum to promote the sustainability performance, including carbon emissions; we will
sustainable planet diet across our business. Many of our chefs be communicating our targets and actions in due course. Over
and kitchens provide a multitude of plant-forward meals, and 2019, we expanded significantly the number and type of sites
have witnessed increasing consumer satisfaction and high reporting greenhouse gas emissions to more closely reflect our
uptake of plant-based options. operations. This means our emissions from 2018 and 2019 are
not on a like-for-like basis. The majority of our Scope 1 emissions
In Canada, we have announced an exclusive national
are from vehicles within our operating fleets. The change in our
partnership with a popular vegan restaurant chain, Copper
Scope 1 and 2 greenhouse gas emissions from 2018 to 2019 can
Branch. We plan to open up to 50 Copper Branch locations
be explained by:
across the country over the next 10 years.
• a significant increase in the number of sites reporting to now
We are helping clients to incorporate plant-forward meals into
include all head and regional offices as well as new site types
their menus. Argentina joined the ‘Veg Revolution’ for example,
of warehouses, central processing kitchens and laundries within
and a new menu has been added once a week at the majority of
the reporting countries. These sites were previously out of scope
our client sites. In Portugal, our award-winning Choose Beans
and typically have higher carbon emissions than offices, the only
campaign in Eurest restaurants led to a 27% increase in legumes
site type previously reported
consumption in only one year.
• an increase in the number of countries reporting on their
Climate change and environmental impact emissions from 20 to 25
In addition to seeking to lower greenhouse gas emissions by
reducing food waste and encouraging people to eat plant-based
GREENHOUSE GAS
meals, in February 2019, we committed to setting a Science
INTENSITY RATIO
Based Target to reduce the carbon footprint of our direct
9.1

operations, in line with the 2015 Paris Agreement to limit global 10

warming to 1.5 degrees. Building on work done in previous

8
6.7

6.7

years, we will be setting these targets across the Group over

6.3
6.0

the coming year. 6

As well as monitoring energy usage in our offices and working 4

closely with clients to improve energy efficiency at their sites, 2

we implement environmental management systems to reduce
our impact on the environment, including water conservation. 0
2015 2016 2017 2018 2019

Compass Group’s disclosure in accordance with the Companies Act 2006 (Strategic and Directors’ Reports) Regulations 2013
is stated in the table below and is incorporated in the Directors’ Report by reference on pages 78 and 125:
Global GHG emissions for the period 2018-2019 2017-2018
1 October 2018 to 30 September 2019 Unit Current reporting year* Previous year
Combustion of fuel & operation of facilities (Scope 1) Tonnes (t) CO2e 174,627​ 129,516
Electricity, heat, steam and cooling purchased for own
use (Scope 2 – location based) tCO2e 45,875​ 8,095
Total Scope 1+2 tCO2e 220,502​ 137,611
Emissions intensity per £M revenue tCO2e/£M 9.1​ 6.3

** In 2019, we increased the scope and changed the data collection and estimation methodology of reporting.
This year, we conducted a thorough review of our Scope 1 and 2 carbon footprint following our commitment to set best-in-
class Science Based carbon reduction targets aligned to the Science Based Target initiative criteria. This has led us to expand
our reporting boundary of greenhouse gas emissions to more closely reflect our operations. Our GHG emissions calculations
are based on the GHG Protocol Corporate Accounting and Reporting Standard (revised edition). Applying an operational
control approach, we have identified relevant activity data for Scope 1 and 2 emissions and have used the location based
Scope 2 calculation method. The majority of our Scope 1 emissions are from vehicles within our operating fleets. Our Scope 1
and 2 emissions have been verified by an independent carbon consultant.

60  Compass Group PLC Annual Report 2019

 BETTER FOR THE WORLD Enriching local communities
We leverage our scale and scope to Our business success would not be possible without the support

Strategic Report
we receive from our local communities across the world. We
make a positive contribution on a want to continue giving back to these communities. We do this
global level, working with thousands of local by partnering with market-based charities and getting involved
communities and suppliers, and hundreds of with projects and initiatives that benefit the local area.
partners around the world For example, in Australia we work with indigenous owned and
Our priority is to ensure we partner with known suppliers who operated businesses, and have been actively increasing the
meet our high standards of food quality, animal welfare, number of these suppliers and the amount we purchase from
sustainability and ethical trade. Our global supply chain integrity them; in 2018, we increased spend by 30%. In Canada, we
requirements ensure that we work only with suppliers who share launched our Buy Local programme in 650 education campuses
our values. Our Code of Business Conduct, available on our and schools across the country. The programme offers quality-
website, outlines what we expect of all of our partners. assured, fresh, locally sourced food from community-based,
local vendors.
Animal welfare
All of our operations around the world are aiming to source Compass Colombia has been promoting prosperity in post-
100% cage-free shell eggs and liquid egg products by 2025. In conflict zones by partnering with charities including Prodeco and
our US business over the last year, 40% of our total egg Vital Corporation to work closely with local producers. Buying
purchase (both shell and liquid) was certified cage free. more locally and through cooperatives allows the farms to
produce on demand rather than with seasonality, reducing food
We have been assessed by the Business Benchmark on Farm waste and enabling access to collaborative tools to improve their
Animal Welfare (BBFAW) since its inception in 2012. In 2019, operations, as well as helping enhance the local economy.
we are pleased to have maintained our Tier 3 ranking.
In Denmark, our cafeterias have been cooking hot meals
for homeless people. We partner with the Disability Employment
Service in Australia to offer jobs to those less able bodied.
Working with a large financial services client we launched a
Redemption Roasters unit in the UK, to help rehabilitate
ex-offenders.
In 2019, we signed up to the 2026 European Chicken
Commitment of higher welfare standards for 100% of the For several years, Eurest in Norway have collaborated with
chicken meat we source for Europe, following a similar The Norwegian Labour and Welfare Administration to hire
commitment by our US business in 2016. people who have been left out of the labour market. Through a
trainee programme, the candidates get to test and develop their
Deforestation skills in several different professions to find the right job match
We know that sourcing particular foods can impact on for their future.
deforestation and desertification of the planet. We are
committed to preventing this and actively seek to reduce our Collaborating for big change
sourcing of products such as soy or beef that contribute to this, As the biggest player in our industry, we have the expertise to
such as those from the Amazon biome. We are active members help shape positive change on food focused issues. And, as a
of the Roundtable on Sustainable Palm Oil and the Round Table global business, we recognise the vital importance of working
on Responsible Soy. together with our clients, suppliers and other stakeholders to
find solutions to these challenges.

We have been active for a number of years in helping to raise

animal welfare standards. With the Global Coalition for Animal
Welfare (GCAW), of which we are a founding member, we are
meeting consumer demand for better care for animals. With
Compassion in World Farming, we are playing a role in protecting
Our goal is for palm oil used to prepare food in our kitchens to be and improving farm animal welfare standards across the globe.
100% certified sustainable from physical sources by 2022.
We are also signing up to innovative partnerships like the Ellen
Marine conservation MacArthur Foundation’s Food Initiative. Launched in June 2019,
We want to play our part in improving the health of the this aims to ignite a global shift towards a regenerative food
oceans and are increasingly buying more responsibly sourced system based on the principles of a circular economy. Starting
fish. Our commitment is to buy 50% certified sustainable with the flagship cities of New York, London and São Paulo, we
seafood by 2020. For 17 years, our business in the USA has will be piloting circular principles in select locations and working
partnered with Monterey Bay Aquarium on Seafood Watch to with suppliers to help move towards a more circular food system.
increase our serving of sustainable seafood. In the last financial
year, 42% of seafood purchased within our top 25 countries As a core partner of the EAT Forum which is helping to transition
was certified from sustainable sources. In Sweden, all our to a sustainable food system, we are launching pilots to assess,
restaurants are certified to Marine Stewardship analyse and improve the carbon footprint of the dishes served to
Council standards. consumers in some of our sites.

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CORPORATE RESPONSIBILITY (CONTINUED)

​​Sustainable Development Goal & Indicator Our Contribution​

​ 2.1 End hunger and ensure access to safe, Every year, we spend around £6 billion on food. Where we have surplus
​ nutritious and sufficient food food, we can play a role in helping the wider community to tackle food
insecurity through donation programmes. Through initiatives like Farm to
2.4 Ensure sustainable food production and Fork in the USA, and Buy Social Corporate in the UK, we promote local
resilient agriculture sourcing and positive agricultural practices.

​ 3.4 Reduce premature mortality through By pursuing our passion for wellbeing and nutrition, through projects
​ prevention and treatment and promote around healthy eating and mental health such as teaching kitchens,
mental health and wellbeing awareness raising and mental health first-aid training, we are committed to
helping and supporting our consumers and colleagues to adopt and enjoy a
balanced lifestyle.

​ 5.5 Ensure women’s full and effective Women are a driving force in our business. We aim to empower all our
​ participation and equal opportunities for female colleagues, promote women-led suppliers and run many women’s
leadership at all levels of decision making development and training schemes. We are a lead supporter of WiH2020, a
cross-industry initiative dedicated to increasing women’s representation in
leadership positions across the hospitality, travel and leisure sectors.

​ 8.5 Achieve full and productive employment Our people are fundamental to our great service and reputation. Around the
​ and decent work for all women and men, world we are working with local communities to offer fair and safe
including for young people and persons employment and great career opportunities. We run diversity and inclusion
with disabilities, and equal pay for work of action councils and many programmes to promote work for all. We work
equal value with our operations and suppliers to address human rights and modern
slavery risks and conduct audits and provide training.
8.7 Take active measures to eradicate
forced labour, end modern slavery and
human trafficking and end child labour in all
its forms

8.8 Protect labour rights and promote

safe and secure working environments for
all workers

62  Compass Group PLC Annual Report 2019

 Strategic Report
​​Sustainable Development Goal & Indicator Our Contribution​

​ 12.3 Halve per capita global food waste We are committed to halving food waste by 2030 and are actively reducing
​ by 2030 waste through measurement and targeted actions across all regions.

12.5 Reduce waste generation through Through environmental management systems at client sites, as well as
prevention, reduction, recycling and reuse education and toolkits, we encourage environmental stewardship and
waste reduction through prevention, recycling and reuse. In 2019, we
12.6 Adopt sustainable practices and launched a comprehensive sustainability reporting system gathering
integrate sustainability information thousands of data points across our business to measure and report on our
into reporting sustainability efforts.

​ 13.3 Improve capacity on climate change In 2019, we committed to setting Science Based Targets to do our part in
​ mitigation, adaptation and impact reduction limiting global warming to 1.5 degrees.

Through reducing food waste and increasing plant-based diets we are

helping reduce our indirect (Scope 3) greenhouse gas emissions to help
limit global warming and address climate change.

​ 14.1 Prevent and reduce marine pollution We are committed to reducing single-use plastics across our business
​ which can end up in waterways. We have taken great strides in this area,
14.C Enhance the conservation already removing millions of plastic straws, cutlery and more.
and sustainable use of oceans and
their resources We continue to promote sustainable and responsibly sourced seafood and
have a growing number of restaurants certified sustainable by the Marine
Stewardship Council. Our policy is not to serve fish from the Marine
Conservation Society ‘fish to avoid’ list.

​ 15.1 Ensure the sustainable use of terrestrial We are working across our global supply chain to ensure we source our food
​ and inland freshwater ecosystems and non-food products in a sustainable manner with the least possible
impact on the environment.
15.2 Promote the implementation of
sustainable management of all types of Through our membership of the Round Table on Responsible Soy and the
forests, halt deforestation Roundtable on Sustainable Palm Oil and increasing our purchase of
certified sustainable palm oil, we aim to halt deforestation and promote
responsible environmental practices throughout our supply chain.

​ 17.16 Enhance the global partnership for As a global business, we recognise the importance of working in partnership
​ sustainable development, complemented by with our clients, suppliers, NGOs and other stakeholders to improve the
multi stakeholder partnerships that mobilise positive contribution that we can make to help address some of the biggest
and share knowledge, expertise, technology issues that we face in the 21st century. In 2019, we signed a global
and financial resources, to support the partnership with the EAT Forum and we are working with the Ellen
achievement of the goals MacArthur Foundation to help promote sustainable diets and a circular
economy for food.

Compass Group PLC Annual Report 2019  63

TBU

64  Compass Group PLC Annual Report 2019

Governance and
Directors’ Report
66 Chairman’s letter
68 Board of Directors
72 Corporate Governance
82 Audit Committee report
90 Corporate Responsibility Committee report
94 Nomination Committee report
98 Directors’ Remuneration report
122 Other statutory disclosures

Compass Group PLC Annual Report 2019  65

CHAIRMAN’S LETTER

Maintaining high standards of

corporate governance
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present Compass
Group PLC’s Corporate Governance Report for the financial
year ended 30 September 2019.

THE YEAR IN REVIEW

It has been a year of wide ranging change for UK corporate
governance. There is a renewed focus on corporate culture
which is evidenced by the breadth and complexity of reporting
requirements. The purpose of companies and their place in
society is being redefined with a clear mandate for boards to be
more transparent about how companies conduct their business,
interact with their stakeholders and take their views into
Paul Walsh consideration when formulating strategy.
Chairman Governance review
During the year, a governance review working group, headed by
MAIN RESPONSIBILITIES the Group General Counsel and Company Secretary, was
The Board manages the business of the Company and established. The purpose of this multi-disciplinary team was to
sets the Group’s values and standards. It ensures that the consider the regulatory and other governance changes being
Company acts ethically and that its obligations to its introduced, including those set out in the 2018 UK Corporate
stakeholders are understood and met. Governance Code (the 2018 Code) which will apply to Compass
from the financial year ending 30 September 2020, and to make
The Board has a formal schedule of matters reserved for recommendations to the Board for adoption, in order to ensure
its decision. For more details see page 74. However, the that the Company is compliant at the appropriate time.
Board’s primary role remains to provide entrepreneurial
leadership and to review the overall strategic development As part of this exercise, brief details of which can be found on
of the Group. It has delegated day to day operational page 79, we refreshed the schedule of matters reserved for the
decisions to the Executive Committee, that is supported Board and the terms of reference of the principal committees.
by country and regional management teams which are In doing so, we consulted with internal and external
responsible for achieving agreed targets, maintaining stakeholders, taking care to ensure the documents were
budgetary controls and implementing policies and aligned with the 2018 Code and the directors’ duties under
controls at country and business unit level. Section 172 of the Companies Act 2006 (CA 2006).

MEMBERSHIP AND ATTENDANCE As a Board, we are responsible for setting the ‘tone from the top’
Member Eligible Meetings and for championing a healthy, responsible corporate culture
Member since to attend1 attended which promotes the long term sustainable success of the
Paul Walsh Jan 2014 6​ 6​ Company for the benefit of all of our stakeholders.
Carol Arrowsmith Jun 2014 6​ 6​
John Bason Jun 2011 6​ 6 Culture and values
Our corporate culture defines who we are, what we stand for and
Dominic Blakemore Feb 2012​ 6 6
how we do business. Compass’ history and its culture have been
Stefan Bomhard May 2016 6 6
founded on the principle that strong governance makes sound
John Bryant Sep 2018 6 6 business sense. Our good reputation has been built on our
Gary Green Jan 2007 6 6 resolve to maintain the highest ethical and professional
Anne-Francoise Nesmes Jul 2018 6 6 standards at all times, underpinned by a well-defined and
Nelson Silva Jul 2015 6 6​ effective system of governance.
Johnny Thomson2 Dec 2015 1 1
As a services business, our people are our greatest asset and we
Ireena Vittal Jul 2015 6 6
recognise and understand the value of recruiting and developing
Karen Witts3 Apr 2019 3 3
the best people. By living our values, our people differentiate us
from our competitors, helping us to attract new business and
1. The maximum number of meetings that a member was eligible
to attend. retain our existing clients. It is therefore important that all of our
2. Stepped down from the Board and its committees on people understand the importance of our values and the role
31 December 2018.
3. Appointed to the Board and its committees on 8 April 2019. they play in our distinctive, delivery focused culture.

66  Compass Group PLC Annual Report 2019

Throughout the year, we continued to invest time and resources by Karen Witts who joined the Company as Group Chief Financial
communicating with our people, designing programmes to Officer (Group CFO) on 8 April 2019. During the intervening
educate and encourage the highest standards of conduct. This period, Palmer Brown, a seasoned executive in the Group’s
reflects our vision to be a world class provider of food services, North American business, acted on an interim basis, but was not
renowned for our great people, great service and great results. appointed to the Board. On behalf of my colleagues, I would like
These efforts are underpinned by our Codes of Business to thank Palmer for his support and to welcome Karen in her new
Conduct and Ethics. role at Compass.

Governance
Stakeholder engagement Succession Planning and diversity
We remain committed to building on our existing legacy of strong Succession planning continues to be an area of focus for the
governance in support of our corporate performance and social Board and the Nomination Committee and we are pleased with
purpose so that we continue to benefit from the confidence and the progress of the Group’s diversity and inclusion agenda. We
support of our shareholders. recognise that the Board sets the tone for diversity across the
Group and that it is important that we should have a diverse
We have a global and diverse community of stakeholders that leadership to support good decision making. The appointment of
includes clients, consumers, employees, suppliers and Karen Witts during the year increased female representation on
shareholders as well as the communities in which we operate. the Board to 36%. The Board supports the targets set by the
We respect the views of all our stakeholders and seek to engage Hampton-Alexander Review with regard to gender diversity.
with them and take their feedback into account, incorporating it These will continue to be considered in the succession planning
where we can, to help inform our decision making processes. process and we are confident that initiatives taking place across
More details of how we engage with our stakeholders can be Compass to help identify the leaders of the future will lead to
found on pages 16 and 17 and page 80. greater diversity within our senior management. We have
continued to strengthen our approach to talent management
During the year, we actively sought to engage with a number
and succession planning at a senior level, more details of which
of our shareholders who had voted against the re-election of
can be found in the People Report on pages 46 to 51. This is a
Ireena Vittal at the Company’s AGM on 7 February 2019. The
subject which continues to command the Board’s full attention
dialogue was initiated to better understand voting decisions
and it is reflected in the appointments that were made to
around perceived overboarding in respect of Mrs Vittal’s other
the Executive Committee during the course of the year.
non-executive directorships.
Biographies of the Executive Committee members can be
The Board carefully considered their views; however we strongly found on pages 24 and 25.
believe that Mrs Vittal has been, and continues to be, an
We will continue to assess Board and senior executive
effective independent non-executive director for Compass
succession planning to ensure we maintain an appropriate
Group PLC, who brings a breadth of knowledge, skills, cultural
combination of skills, experience and knowledge to deliver our
and personal experiences combined with a unique perspective,
strategy, and to ensure that plans are in place for orderly
which is beneficial in boardroom debates. We believe that
succession to the Board and senior management positions.
Ireena’s other mandates on four Indian boards are significantly
less onerous than those of UK companies on the basis that they THE YEAR AHEAD
hold fewer meetings in each case and the majority of meeting We are committed to doing things in the right way and will
sets are concluded within a single day. We are satisfied with her continue to strengthen our governance processes over the
attendance and believe that she devotes appropriate time to her coming year to ensure that we are aligned with best practice and
role at Compass, bringing valuable insights to our debates and the 2018 Code and that our approach to disclosure remains
contributing to Board diversity. understandable and transparent.

As a measure of our confidence in Mrs Vittal, she has been We look forward to meeting with you at our upcoming AGM,
chosen to perform the role of designated Non-Executive Director which will be held at Twickenham Stadium at 10.30am on
for workforce engagement to help us better understand the Thursday 6 February 2020.
views of our workforce. Ireena will undertake the role for
a period of two years from 1 October 2019 and, at the end of
that term, will be succeeded by one of her non-executive
colleagues. More details of this initiative can be found on
page 51.

Board changes Paul Walsh

There were a number of changes made to the composition of the Chairman
Board during the year. On 31 December 2018, Johnny Thomson
stepped down as a director of the Company. He was succeeded 26 November 2019

Compass Group PLC Annual Report 2019  67

BOARD OF DIRECTORS

Strong, effective and experienced leadership

As at 30 September 2019, and as at the date of this Report, the Board of Directors was made up of 11 members,
comprising the non-executive Chairman, three executive directors and seven non-executive directors. The roles of Chairman
and Group Chief Executive Officer (Group CEO) are separate and clearly defined, with the division of responsibilities set out in writing
and agreed by the Board.

1 2

4 5 6

1 Paul Walsh, Chairman

2 Dominic Blakemore, Group Chief Executive Officer
3 Anne-Francoise Nesmes, Non-Executive Director
4 Stefan Bomhard, Non-Executive Director
5 John Bason, Senior Independent Director
6 Ireena Vittal, Non-Executive Director, and designated NED for workforce engagement

68  Compass Group PLC Annual Report 2019

All of the non-executive directors are considered by the Board (and by the definition contained in the UK Corporate Code 2016) to be
independent of management and free of any relationship which could materially interfere with the exercise of their independent
judgement. The Company’s policy relating to the terms of appointment and the remuneration of both executive and non-executive
directors is detailed in the Directors’ Remuneration Report, which is on pages 98 to 121.

Governance
7 8

11

9 10 12

7 Karen Witts, Group Chief Financial Officer

8 Gary Green, Group Chief Operating Officer, North America
9 Nelson Silva, Non-Executive Director
10 Carol Arrowsmith, Non-Executive Director
11 John Bryant, Non-Executive Director
12 Alison Yapp, Group General Counsel and Company Secretary

Compass Group PLC Annual Report 2019  69

BOARD OF DIRECTORS (CONTINUED)
PAUL WALSH DOMINIC BLAKEMORE
Chairman Group Chief Executive Officer
C N C E G
Joined as a non-executive director in January 2014. Appointed Chairman Joined the Board in February 2012. Dominic previously held the roles
in February 2014. of Group Finance Director and Group Chief Operating Officer, Europe.
Key skills and competencies In October 2017, Dominic was appointed Deputy Group CEO.
Paul has significant experience in marketing, M&A and retail operations He assumed the role of Group CEO in January 2018.
as well as substantial corporate leadership experience. Key skills and competencies
Current external appointments Dominic has extensive financial management experience in a number of
Non-executive director of McDonald’s Corporation and FedEx international businesses together with general operational management
Corporation and a director of Bespoke Capital Acquisition Corp. (a experience. Dominic is a chartered accountant.
special purpose acquisition company). Advisor to TPG Capital LLP (TPG) Current external appointments
affiliates and, at times, a nominee director of various companies, as Dominic will join the board of London Stock Exchange Group (LSEG) as a
required by TPG. Chairman of Chime Communications Limited non-executive director with effect from 1 January 2020 and will become
(a private company). the chairman of the audit committee of LSEG following the conclusion of
Previous experience LSEG's 2020 AGM. Dominic is also a member of the Council of University
Paul was formerly Chairman of Avanti Communications Group plc and College London.
Ontex Group N.V., Chief Executive of Diageo plc, Chief Executive Officer Previous experience
of the Pillsbury Company, director of GrandMet, non-executive director of Dominic was formerly non-executive director of Shire plc and Chief
RM2 International S.A., HSBC Holdings plc, Simpsons Malt Limited, Financial Officer of Iglo Foods Group Limited. Before joining Iglo Dominic
Unilever PLC, Centrica plc and United Spirits Limited, nominee director was European Finance & Strategy Director at Cadbury Plc having
of Pace Holdings Corp, Business Ambassador on the UK Government’s previously held senior finance roles at that company. Prior to his role at
Business Advisory Group and Chairman and a Council Member of the Cadbury Plc, Dominic was a director at PricewaterhouseCoopers LLP.
Scotch Whisky Association.

GARY GREEN KAREN WITTS

Group Chief Operating Officer, North America Group Chief Financial Officer
E G C D E G
Joined the Board in January 2007. Appointed Group Chief Operating Joined the Board as Group Chief Financial Officer in April 2019.
Officer, North America in April 2012. Key skills and competencies
Key skills and competencies Karen is an experienced Chief Financial Officer with a strong background
Gary brings strong business and operational leadership as well as in finance and management across a variety of sectors in global
business development and wide ranging sales experience. Gary is a organisations. Karen is a chartered accountant.
chartered accountant and in 2001 received an honorary doctorate from Current external appointments
Johnson & Wales University in the USA. Non-executive director and chairman of the audit committee of
Current external appointments Imperial Brands plc.
None. Previous experience
Previous experience Karen joined Compass from Kingfisher PLC where she was Group Chief
Gary joined the Group in 1986 in a senior finance role in the UK and Financial Officer and a member of the board of directors for over six
became a UK director in 1992. He relocated to the USA in 1994 as Chief years. Prior to working at Kingfisher, Karen held senior finance positions
Finance Officer of the Group’s North American business and in 1999 at Vodafone Group PLC and BT PLC and was a former non-executive
became Chief Executive Officer, North America. director of Wolseley plc. Karen’s early career included finance roles at
Mars, Paribas, Grand Metropolitan and Ernst & Whinney.

JOHN BASON CAROL ARROWSMITH

Senior Independent Director Non-Executive Director
A C N R A C N R
Appointed to the Board in June 2011. Appointed SID in June 2018. Appointed to the Board in June 2014.
Key skills and competencies Key skills and competencies
John brings significant financial and international experience to the Carol brings extensive advisory experience, especially of advising boards
Board, gained from his long career with major global businesses. John is on executive remuneration across a range of sectors. Carol is a Fellow of
a chartered accountant. the Chartered Institute of Personnel and Development.
Current external appointments Current external appointments
Finance Director of Associated British Foods plc and Chairman of the Member of the Advisory Group for Spencer Stuart, non-executive director
charity FareShare. of Vivo Energy PLC, director and trustee of Northern Ballet Limited and
Previous experience director of Arrowsmith Advisory Limited.
John was previously Finance Director of Bunzl plc and a former trustee of Previous experience
Voluntary Service Overseas. Carol is a former partner and advisor of Deloitte LLP and was Vice
Chairman of their UK business and former director of the Remuneration
Consultants Group and non-executive director of TMF Group Limited.

Board committee membership ​ ​ ​ ​

​ A Audit Committee p. 82 G General Business Committee p. 73 ​ Chairman
​ C Corporate Responsibility Committee p. 90 N Nomination Committee p. 94 ​ Secretary
​ D Disclosure Committee p. 73 R Remuneration Committee p. 98 Designated NED for workforce
​ E Executive Committee p. 22 ​ engagement
​ ​ ​

70  Compass Group PLC Annual Report 2019

STEFAN BOMHARD JOHN BRYANT
Non-Executive Director Non-Executive Director
A C N R A C N R
Appointed to the Board in May 2016. Appointed to the Board in September 2018.
Key skills and competencies Key skills and competencies
Stefan brings extensive experience of working in international John brings over 30 years’ experience to the Board with a particular
environments, particularly relating to the operation, sales and marketing focus on finance, operations, M&A, strategy and portfolio transformation.
of well-known consumer food and drink brands. Current external appointments
Current external appointments Non-executive director of Ball Corporation and Macy’s Inc.
Chief Executive Officer of Inchcape plc. Previous experience
Previous experience John was the former Executive Chairman and CEO of global consumer
Stefan was previously Regional President, Europe, Geneva at Bacardi goods company Kellogg. Prior to joining Kellogg in 1998, John held
Martini for five years and held a number of worldwide senior positions at strategic and operational roles in several companies, worldwide.
Cadbury Plc, Unilever PLC, Diageo plc, Burger King and Procter
& Gamble.

Governance
ANNE-FRANCOISE NESMES NELSON SILVA
Non-Executive Director Non-Executive Director
A C N R A C N R
Appointed to the Board in July 2018. Appointed to the Board in July 2015.
Key skills and competencies Key skills and competencies
Anne-Francoise has a wealth of experience in finance and Nelson has considerable executive management experience in a variety
accounting gained in international organisations with a strong focus of senior leadership roles within major international companies, with a
on strategy, M&A and governance. Anne-Francoise is a chartered particular focus on Brazil.
management accountant. Current external appointments
Current external appointments Non-executive director of Cosan Limited and an advisor to Appian Capital
Chief Financial Officer, Merlin Entertainments plc and a director of Merlin Advisory LLP and HSB Solomon Associates LLP.
Entertainments plc's subsidiary companies: Sea Life Trust Limited, Previous experience
Merlin Entertainments Share Plan Nominee Limited, Merlin’s Magic Nelson was formerly an executive director of Petróleo Brasileiro S.A. and
Wand Trustees Limited and Sea Life Trustees Limited. President of the Aluminium business unit at BHP Billiton, based in the
Previous experience UK. Prior to joining BHP Billiton, Nelson held a number of senior
Prior to joining Merlin, Anne-Francoise was the Chief Financial Officer of positions at Vale, including Sales and Marketing Director based in
Dechra Pharmaceuticals PLC and also held a number of senior finance Belgium, Japan and Brazil. Nelson was also Managing Director of
roles during her 16 year tenure at GlaxoSmithKline. Embraer for Europe and Africa, based in France, and Chief Executive
Officer of All Logistica in Argentina.
Nelson previously held the position of Senior Vice President of BG
Group plc responsible for Brazil, Bolivia and Uruguay. He is a former
board member of the Brazilian Institute of Oil and Gas, the Brazilian
Association of Petroleum Companies and of the Social and
Development Council of Brazil’s Presidency. Nelson was formerly a
senior consultant to BHP Billiton Brazil and a board member of the
Brazilian Symphonic Orchestra.

IREENA VITTAL ALISON YAPP

Non-Executive Director Group General Counsel and Company Secretary
A C N R A C D E G N R
Appointed to the Board in July 2015. Designated NED for workforce Joined the Group in August 2018. Appointed Group General Counsel and
engagement, effective October 2019 for a period of two years. Company Secretary in October 2018.
Key skills and competencies Key skills and competencies
Ireena brings strong advisory, business and operational experience Alison is a solicitor with more than 25 years’ international experience in
across a variety of retail businesses, with a particular focus on India. FTSE and NYSE listed companies across the services, industrial and
Current external appointments engineering sectors. She has significant experience in strategic M&A,
Non-executive director of Godrej Consumer Products Limited, WIPRO crisis and change management.
Limited, Titan Company Limited and Housing Development Finance Current external appointments
Corporation Limited. None.
Previous experience Previous experience
Ireena was formerly a non-executive director of The Indian Hotels Alison was formerly Chief General Counsel and Company Secretary of
Company Limited, Cipla Limited, Tata Global Beverages Limited, Tata Amec Foster Wheeler plc, Company Secretary and General Legal Counsel
Industries, Zomato Media Private Limited, GlaxoSmithKline Consumer of Hays plc and Company Secretary and Group Legal Advisor of Charter
Healthcare and Axis Bank Limited, Head of Marketing and Sales at plc. Prior to joining Charter, Alison held a number of senior legal roles at
Hutchinson Max Telecom and partner at McKinsey and Company. Johnson Matthey plc.

Compass Group PLC Annual Report 2019  71

Corporate governance
BOARD COMPOSITION, DIVERSITY AND ACTIVITIES1

BOARD TENURE DIRECTOR BALANCE HAMPTON-ALEXANDER 2020

TARGET: % FEMALE

36%
9% 9% 33%
27%
18% Compass
45%
Hampton-Alexander 2020 target

28% 64%
> 5 years Non-Executive Chairman
3-5 years Non-Executive
1-3 years Executive
< 1 year

BOARD SKILLS NATIONALITIES BY PROPORTION OF TIME SPENT

AND EXPERIENCE REPORTING REGION ON KEY AREAS

6
18% 18% 12% 11%
11
6%
7
7% 16%
7
11
11 64% 29% 19%
Health, safety and sustainability North America
Business and operational review
International/specialist region Europe
knowledge experience Strategy
Rest of World
Sector experience Financial review including tax, treasury
Financial and accounting expertise Sector/Regional Business Reviews
Strategy/M&A M&A and Cap Ex
Corporate/operational leadership Risk
Governance and IR

HOW THE BOARD GOVERNS THE COMPANY Counsel and Company Secretary and can also be found at
The Board leads the Group’s governance structure. It is www.compass-group.com. Terms of reference are reviewed
responsible for setting the strategic targets for the Group, annually by their respective committees and updated when
monitoring progress made, approving proposed actions and necessary to reflect changes in legislation or best practice.
for ensuring that the appropriate internal controls are in place The matters reserved for the Board and the terms of reference
and that they are operating effectively. The Board is assisted of the principal committees were thoroughly reviewed
by four principal committees (Audit, Corporate Responsibility, and updated in the year under review and can be found
Nomination and Remuneration), each of which is responsible at www.compass-group.com.
for reviewing and dealing with matters within its own terms
of reference. Directors who are not members of individual Board committees
may be invited to attend one or more meetings of those
The minutes of all Committee meetings are circulated at committees during the year.
scheduled Board meetings.
The Chairman of each of the principal committees attends the
The Company also has a number of executive management AGM to respond to any shareholder questions that might be
committees (Disclosure, Executive and General Business). raised on committee activities. The Group General Counsel and
These have been established in order to consider various Company Secretary acts as Secretary to all Board Committees.
matters for recommendation to the Board and its principal
committees or to deal with day to day matters within the Our governance structure is supported by the Group’s
authority granted by the Board. The formal terms of reference standards, policies and internal controls, which are described
for the principal committees, approved by the Board and in more detail over the following pages.
complying with the Code, are available from the Group General

1. Information as at 30 September 2019.

72  Compass Group PLC Annual Report 2019

GOVERNANCE STRUCTURE

SHAREHOLDERS the final dividend, appointment/reappointment OPERATIONAL

We have a geographically diverse shareholder of directors and the reappointment of the auditor. GOVERNANCE
base of 39,494, comprising 4,146 institutional The operational
investors and 35,348 private investors (as at INVESTOR RELATIONS governance of the
30 September 2019). We have an active Investor Relations engagement Company is the
programme. During the year, the Company held responsibility of
AGM around 335 meetings with investors through a the Group CEO.
The Company’s Annual General Meeting provides combination of one to one meetings, group
an ideal opportunity for the Board to meet with meetings and telephone calls, around 71 of which The various
investors. At the 2020 AGM, shareholders will were attended by the Group CEO and Group CFO. operational
vote on 23 resolutions dealing with key The Chairman, SID and Remuneration Committee governance

Governance
governance matters, including payment of Chairman also held meetings with investors. structures in place
are maintained
and overseen by
the Executive
Committee, which
THE BOARD Company’s long and short term plans. The Group is led by the Group
The Board is responsible for the performance and CEO acts as a direct liaison between the Board CEO and
long term success of the Company, including and management. comprises
health and safety, leadership, strategy, values, the executive
standards, controls and risk management. SENIOR INDEPENDENT DIRECTOR directors, regional
The role of SID is to provide a sounding board for managing
CHAIRMAN the Chairman and to serve as an intermediary for directors and
The Chairman is responsible for the leadership of other directors and shareholders where necessary. other members
the Board and for ensuring there is effective of senior
debate and challenge. COMPANY SECRETARY
management,
The Company Secretary is responsible for
whose biographies
GROUP CHIEF EXECUTIVE OFFICER ensuring good information flow to the Board
are on pages 24
The Group CEO’s role entails being ultimately and its committees and between senior
and 25.
responsible for day to day operational management and the non-executive directors;
management decisions and for implementing the and for advising the Board, through the Chairman,
on governance matters.

BOARD COMMITTEES
Corporate
Audit Responsibility Nomination Remuneration Executive
Committee Committee Committee Committee Committee
Responsible for the Advises the Board on Ensures the Board has Determines the reward Day to day
Group’s financial broad CR policy taking the necessary balance strategy for executive operational
reporting and into account the of skills, experience and directors and senior management and
effectiveness of the overall strategic plan diversity to oversee the managers to ensure implementation
internal and external and other factors. delivery of strategy. reward is aligned to of strategy.
audit functions. shareholders’ interests.
See page 82 See page 90 See page 94 See page 98 See page 22

Disclosure Committee ​ General Business Committee

Oversees the disclosure of market sensitive information and ​ Conducts the Company’s business within clearly defined
other public announcements (as necessary). limits delegated by the Board and subject to the matters
reserved for the Board.
The Disclosure Committee comprises the Group CFO, the
Group General Counsel and Company Secretary, Group The General Business Committee comprises all of the
Financial Controller, Group Internal Audit Director, Group executive directors and meets as required. A quorum for a
Director of Strategy and M&A and Group Investor Relations meeting is two.
and Corporate Affairs Director. The Committee meets as and
Only members of the Committee have the right to attend
when required. A quorum for a meeting is two, one of which
meetings, although other individuals may be invited to
must be either the Group CFO or Group General Counsel and
attend as and when appropriate.
Company Secretary. Only members of the Committee have
the right to attend meetings, although other individuals may
be invited to attend as and when appropriate.

Compass Group PLC Annual Report 2019  73

BOARD ACTIVITIES DURING THE YEAR
INSIGHT INTO THE BOARDROOM
The following is a summary of the key matters considered by the Board throughout the year:

November (UK) February (UK) March (USA)

• HSE performance • HSE performance and safety share video • HSE performance
• Group CEO’s review – Living with allergens • Group CEO’s review
• M&A and strategy update • Group CEO’s review • Education sector update
• capital expenditure • M&A and strategy update • capital expenditure and contracts
and contracts • capital expenditure and contracts • financial performance
• financial performance • financial performance • North America business review
• draft final results • AGM including: Performance, People and
announcement • trading update Purpose update
• final dividend parameters • Healthcare & Seniors sector update • meetings with local management
• draft Annual Report • Treasury approvals and approval of including attending Envision Summit
and Accounts Treasury Management Committee terms • Group strategy review including:
• succession planning update of reference Performance, People and Purpose
• DOR sector update • review of Nomination Committee update (which included an initiative by
• changes to composition of membership – Group CEO stepping the Group’s Australian business to
Executive Committee down from Committee promote mental health support:
• approved formation of • Chairman/Group CEO/NEDs private #gotyourback)
Treasury Management meeting (including Group CEO • review of International Clients and
Committee and approval evaluation) Market Development and M&A strategies
of Group Treasury policies • review of IT/cyber risk strategy
• Chairman/Group CEO/NEDs • stakeholder engagement update
private meeting • Chairman/Group CEO/NEDs
private meeting
May (UK) July (Japan) September (UK)
• HSE performance • HSE performance • HSE performance
• Group CEO’s review • Group CEO’s review • Group CEO’s review
• M&A and strategy update • M&A and strategy update • M&A and strategy update
• capital expenditure • capital expenditure and contracts • capital expenditure and contracts
and contracts • financial performance • financial performance
• financial performance • draft Q3 trading update • 2019-2020 budget and three year plan
• draft interim results • conflicts of interest • annual litigation update
announcement • APAC business review • Investor Relations update
• interim dividend parameters • Japanese and Indian business reviews • biannual major risk assessment
• UK&I business review • CAMEAT & DOR business reviews • review findings of external
• appointment of committee to • shareholder engagement Board evaluation
deal with interim results matters • stakeholder engagement including • approve matters reserved for the Board,
• Treasury/insurance update appointment of designated NED for Committee terms of reference and role
• Tax update workforce engagement descriptions (Chairman, Group CEO
• biannual major risk assessment • town hall for Japanese operations and SID)
• succession planning hosted by the Chairman, Group CEO,
• Chairman/Group CEO/NEDs Regional MD, APAC, and MD, Japan
private meeting • Chairman/Group CEO/NEDs
private meeting

BOARD EFFECTIVENESS AND TRAINING

The Board meets regularly during the year as well as on an ad The Board has a formal schedule of matters reserved for its
hoc basis, as required by business needs. The Board met six decision as follows:
times during the year and attendance is shown in the table on
page 66. • purpose, strategy and management
• values, culture and stakeholders
If a director is unable to attend a Board or committee meeting, • Board membership and other appointments
the Chairman of the Board and/or committee Chairman are
• financial and other reporting and controls
informed and the absent director is encouraged to communicate
• audit, risk and internal controls
comments and opinions on the matters to be considered. Each
director also attends the AGM to answer shareholder questions. • contracts and capital structure
• communication
Board activities are structured to help the Board achieve its • remuneration
goals and to provide support and advice to the executive • delegation of authority
management team on the delivery of Group strategy within a
• corporate governance and other matters
robust governance framework.

74  Compass Group PLC Annual Report 2019

Throughout the year, the Board received presentations from incurred as a result of their office. The indemnity would not
colleagues across the Group and regularly reviewed the provide any coverage where a director is proved to have acted
periodic financial results, market consensus, competitor fraudulently or dishonestly. The Company has also arranged
updates, merger and acquisition opportunities, capital appropriate insurance cover in respect of legal action against its
expenditure and other matters. directors and officers.

Meetings between the Chairman and non-executive directors, In accordance with best practice, the Chairman addresses the
both with and without the presence of the Group CEO, are developmental needs of the Board as a whole, with a view to
scheduled in the Board’s annual programme. During the year, further developing its effectiveness as a team and ensures that
the non-executive directors met regularly without the presence each director refreshes and updates his or her individual skills,
of the executives, typically around each Board meeting. These knowledge and expertise. A formal, comprehensive and tailored
meetings were encouraged by the Chairman and provide the induction is given to all directors following their appointment,
non‑executive directors with a forum in which to share including access to external training courses, visits to key
experiences and to discuss wider business topics, fostering locations within the Group and meetings with members of the

Governance
debate in Board and committee meetings and strengthening Executive Committee and other senior executives. The induction
working relationships. also covers a review of the Group’s governance policies,
structures and business, including details of the risks and
In addition to routine financial and operating reports operating issues facing the Group. Details of Karen Witts’
and updates (including health and safety), the Board spends induction can be found on page 96.
time debating and formulating Group strategy and reviewing
its performance. Ensuring that Compass retains its disciplined approach to long
term growth, its focus on food as its core competence, and its
Each year, the Board aims to hold two meetings overseas. By delivery of value for all of its stakeholders is dependent on the
visiting operations, the directors are able to meet with a diverse successful implementation of the strategy set by the Board.
group of colleagues on a more informal basis which greatly While the Group’s strategy is continuously discussed and refined
assists in the succession planning process. These visits provide throughout the year, the Board takes time out of its regular
an opportunity to assess local management performance and schedule every year to debate and reflect on broader strategic
potential, to gain further insight into how the business works on issues. This is supported by strategy updates at every Board
a day to day basis and to speak first hand to local management meeting. The Board held a strategy day in the USA in March
and listen to their views. The format of visits often comprises a when it discussed the Group’s strategy at length. More
macroeconomic overview of the country, its social and political information about the Group’s strategy can be found on
systems, challenges and opportunities, a review of the pages 1 to 63.
competitive landscape, and a detailed review of the relevant
sectors in which the business operates, its people, as well as the Succession planning is a key area of focus for the Board and it
three year plan. The Board also uses these opportunities to hold undertook a detailed succession planning review twice in the
town halls with employees, undertake visits to Company and year with the Group Chief People Officer.
client sites and to meet with high potential employees and
country and regional management teams. The Company’s articles of association provide that one third of
the directors retire by rotation each year and that each director
This year, the overseas Board meetings were held in the USA will seek re-election at the AGM every three years. All directors
and Japan. The Board received presentations on the North submit themselves for annual re-election by shareholders. New
American and APAC regions from local management. During the directors may be appointed by the Board but are subject to
visit to Japan, the Board also received detailed reviews of the election by shareholders at the first opportunity after their
Japanese and Indian operations and the Chairman hosted a appointment. The articles of association limit the number of
town hall event for local employees with the Group CEO, directors to not less than two and not more than 20, save where
Regional MD, APAC, and MD, Japan. The Board also attended a shareholders decide otherwise. Non-executive directors are
number of evening receptions and dinners in both the USA and normally appointed for an initial term of three years, which is
Japan to enable the directors to meet with senior management reviewed and may be extended by two further three year terms.
and high potential employees in a more relaxed, informal setting. It is Board policy that non-executive director appointments
should last for no more than nine years.
The Board has established a procedure for directors, if deemed
necessary, to take independent professional advice at the
Company’s expense in the furtherance of their duties. Every
director also has access to the Group General Counsel and
Company Secretary, who helps to ensure that Board procedures
are followed, and that good corporate governance and
compliance are implemented throughout the Group. Together
with the Group CEO and the Group General Counsel and
Company Secretary, the Chairman ensures that the Board is
kept properly informed and is consulted on all issues reserved
for it. Board papers and other information are distributed in a
timely fashion to allow directors to be properly briefed in
advance of meetings. In accordance with the Company’s articles
of association, directors have been granted an indemnity by the
Company to the extent permitted by law in respect of liabilities

Compass Group PLC Annual Report 2019  75

​
BOARD ACTIVITIES DURING THE YEAR (CONTINUED)
BOARD EVALUATION The agreed actions from the internal evaluation included
The Chairman is responsible, with assistance from the providing support for the Group CEO as he transitioned into the
Nomination Committee, for ensuring that the Company has an role as well as the appointment and induction of two new
effective Board with an appropriate range of skills, expertise and non-executive directors, who were expected to join the Company
experience. Every year, a performance evaluation of the Board in 2018. These matters were progressed with the appointments
and its committees is carried out to ensure that they continue to of Anne-Francoise Nesmes and John Bryant.
be effective, that each of the directors demonstrates
commitment to his or her respective roles and has sufficient External review process
time to meet his or her commitment to the Company. In May 2019, an independent formal external evaluation was
conducted in line with the mandated triennial external
The Board evaluation is used to provide a full and frank appraisal requirement set out in the Code. The selection process for the
of the contribution of each individual director and the external provider was led by the Chairman and the Group
effectiveness of the Board and its committees. General Counsel and Company Secretary. The credentials of
three providers were assessed including their experience and
Internal review: progress made during the year independence. All were considered to be independent and
In 2018, the performance and effectiveness of the Board and its experienced in board evaluation. Particular emphasis was
committees was assessed by way of an internal evaluation. As a placed on the ability of the chosen firm to assist the Board on an
result of the assessment, it was concluded that the performance ongoing basis over the longer term. This was to ensure year on
of each director continued to be effective and that both the year performance could be measured and learnings captured,
Board and its committees continued to provide effective taking into account strategic and regulatory context, culture and
leadership and exert the required levels of governance and the Board’s cycle. The firm chosen to perform the evaluation
control, which aligned with observations made by the Chairman, was Lintstock Limited (Lintstock). Lintstock is independent of
committee chairmen and other non-executive directors as part and has no other links with the Company or its directors in
of the evaluation process and throughout the year. connection with the brief.

FINDINGS OF BOARD EVALUATION

Board ​ Stakeholder ​ Board ​ Management and ​ Board

composition oversight dynamics focus of meetings support
The composition of ​ The Board's ​ The dynamic between ​ The management ​ The quality of Board
the Board was highly understanding of the the non-executives of meetings was papers received a
rated. No pressing Company's and senior rated highly. high rating. It was
gaps were identified stakeholders was management was concluded that a
It was agreed that
in the skillset of the rated positively. The considered to be more succinct
the duration of some
Board. importance of constructive with an approach in some
committee meetings
selecting the open and inclusive areas would assist
A number of should be lengthened
mechanisms by which dialogue with the understanding of the
suggestions were in conjunction with
the Board would Group CEO. information
made regarding a more disciplined
engage with presented.
desirable attributes in Non-executives approach to agenda
employees was
future potential provided effective management to The circulation of
considered to be key,
candidates, including support and challenge ensure efficient use analyst and broker
taking into account
technology and whilst fostering a of time. reports was valued.
the number of
sector/market and supportive
employees and their The induction,
ESG expertise. atmosphere for senior
dispersion training, advice and
managers below
Maintaining sufficient internationally. Company Secretariat
Board level who
experience of the UK support provided to
Devoting time at attended Board
PLC environment was the Board received a
Board meetings to the meetings.
also considered to be high rating.
topic of culture as a
important, including
business driver was
familiarity with
also identified as an
corporate governance
area of focus.
demands and
reporting
requirements.

76  Compass Group PLC Annual Report 2019

Scope, timing and nature of review In May and June 2019, Lintstock ran detailed interviews with
The Chairman and the Group General Counsel and Company Board members (except Karen Witts who had only recently
Secretary agreed the timing, scope and nature of the review joined the Company) and the Group General Counsel and
including key themes for exploration and approach that would Company Secretary. All Board members were interviewed to a
be adopted to ensure that the evaluation process was clear agenda, unique to Compass, taking into account the
challenging and comprehensive. The following key themes interviewees' observations contained in the survey results.
were agreed: During each session, the three members of the evaluation team
were assigned a specific task to ensure that any responses by
• Board composition, dynamics and support participants meriting further attention could be fully addressed.
• stakeholder oversight
• strategic oversight Between May and July 2019, Lintstock collated and analysed
responses with a view to summarising their findings for
• Board committees
presentation to the Board for discussion at its meeting in
• management and focus of meetings
September 2019.

Governance
• risk management and internal control
• succession planning and people management Findings of review
• priorities going forward Reports on the performance of the Board, the Chairman and its
committees were compiled by the Lintstock evaluation team
Initial information gathering took place in April 2019 following based on information and views supplied by those interviewed
which participants, including Palmer Brown, who acted as and all recommendations made by Lintstock were based on best
interim Group CFO in the period leading up to Karen Witts’ practice. Lintstock’s conclusions were initially shared with the
appointment, completed online Board and committee surveys Chairman and Group General Counsel and Company Secretary.
that had been tailored as appropriate. Based on agreed themes, The reports were circulated to participants in mid-August so as
the surveys were designed to be objective, thought provoking to give participants time to digest the contents of the reports in
and to encourage candid responses. The information acquired advance of the September Board meeting when Lintstock
from the completed surveys was used by the evaluation team at reviewed its findings with the Board.
Lintstock to structure their approach in advance of one on one
interviews with members of the Board and the Group General
Counsel and Company Secretary.

Strategic Risk management Succession planning

oversight and internal control and people management Priorities
The March strategy session Health and safety is included The structure of the Group at • continued
held in the USA was at the start of every agenda senior levels was rated implementation and
considered to represent of the Corporate highly. The careful balance development of the
continued improvement on Responsibility Committee, between central oversight Group strategy
similar such sessions held in recognising its importance. and local accountability was • succession planning and
the past with an open noted with the need to talent acquisition and
dialogue and communication. The Board’s focus on risk carefully prioritise development
was considered to be investment in central • continued oversight of
The KPIs provided to inform
appropriate. It was functions, based on risk
the Board’s analysis of
suggested that the focus on supporting the businesses. • furthering the Corporate
business performance
CR risk should be broadened Responsibility strategy
received high ratings, as did The effectiveness of the
and in this regard the • supporting senior
the understanding of the process of selecting and
Corporate Responsibility management
Group’s performance appointing the new Group
Committee’s remit has been
relative to its main CFO was commented on
enhanced and its terms of The areas for attention
competitors, and the favourably.
reference revised to increase identified in this year’s
awareness of the markets in
focus in the areas of health The Board’s oversight of review and how they have
which the Group operates.
and safety (including food succession of the Board been addressed will be
Key strategic issues for the safety), sustainability, people and Executive Committee reported in the 2020
Group were identified as: i) (including workforce received a high rating as Annual Report and
accelerating growth outside engagement and employee well as the transition of the Accounts.
the USA; ii) technology and voice), ethics and new Group CEO into role.
disruption; iii) maintaining compliance. The processes for
sustainable growth; iv) managing and developing
succession planning and The opportunity for further talent had improved and
acquisition and development enhancement of the there was an increased
of talent; and v) responding organisation’s approach emphasis on people.
to developing trends and to risk and risk appetite Employee engagement and
expectations. was noted.​ culture were identified as
continued areas of focus.​

The content of Lintstock’s report and the conclusion of the Board discussion were recorded by the Group General Counsel and
Company Secretary in the minutes of the September meeting.

Compass Group PLC Annual Report 2019  77

BOARD ACTIVITIES DURING THE YEAR (CONTINUED)

CONFLICTS OF INTEREST
As part of their ongoing development, the executive directors Throughout the Governance and Directors' Report, we
may seek one external non-executive role on a non-competitor have set out how we have applied the main principles and
board, for which they may retain the remuneration in respect of complied with the relevant provisions of the Code.
the appointment. In order to avoid any conflict of interest, all
appointments are subject to Board approval and the Board UK CORPORATE GOVERNANCE CODE
monitors the extent of directors’ other interests and the time COMPLIANCE
commitment required to fulfil those interests to ensure that its Responsibility for good governance lies with the Board.
effectiveness is not compromised.
The Board is accountable to shareholders and is
Each director has a duty under the Companies Act 2006 committed to the highest standards of corporate
(CA 2006) to avoid a situation in which he or she has or can have governance as set out in the UK Corporate Governance
a direct or indirect interest that conflicts or possibly may conflict Code 2016 (the Code). The Code can be found on
with the interests of the Company. This duty is in addition to the the Financial Reporting Council (FRC) website at 
obligation that he or she owes to the Company to disclose to the www.frc.org.uk.
Board an interest in any transaction or arrangement under
This Corporate Governance Report, together with the
consideration by the Company. The Company’s articles of
Directors’ Remuneration Report set out on pages 98
association authorise the directors to approve such situations
to 121, describes how the Board has applied the main
and to include other provisions to allow conflicts of interest to
principles of good governance and complied with the
be dealt with. The Board follows an established procedure when
relevant provisions as set out in the Code for the year
deciding whether to authorise an actual or potential conflict of
under review.
interest. Only independent directors (i.e. those who have no
interest in the matter under consideration) will be able to make The Directors’ Report also contains information required
the relevant decision and, in making the decision, the directors to be disclosed under the UK Listing Authority’s (UKLA)
must act in good faith and in a way they consider will be most Rules and under the Disclosure Guidance and
likely to promote the Company’s success. Furthermore, the Transparency Rules (DTR). To the extent necessary,
directors may, if appropriate, impose limits or conditions when certain information is incorporated into this Report
granting authorisation. Any authorities are reviewed at least by reference.
every 15 months.
COMPLIANCE STATEMENT
The Board considered and authorised each director’s reported It is the Board’s view that for the year ended
actual and potential conflicts of interest at its July 2019 Board 30 September 2019 the Company has been fully
meeting and considers any changes on an ad hoc basis compliant with all of the principles and provisions set out
throughout the year.
 in the Code.

The Company’s auditor, KPMG LLP, is required to review

whether the above statement reflects the Company’s
compliance with the provisions of the Code specified for
its review by the UKLA Rules and to report if it does not
reflect such compliance. No such report has been made.

The directors present their Annual Report and the audited

consolidated financial statements of the Company and its
subsidiaries for the year ended 30 September 2019.

This Corporate Governance Report on pages 64 to 121

and the Other Statutory Disclosures on pages 122 to 127
together with the Directors’ Responsibilities statement on
page 130 and the Strategic Report on pages 1 to 63 which
have been incorporated into this Report by reference,
make up the Directors’ Report.

78  Compass Group PLC Annual Report 2019

2018 UK CORPORATE GOVERNANCE CODE

Moving towards the new code

Workforce and
Culture and values Remuneration stakeholder engagement

A board should establish the Remuneration policies and In order for a company to meet
company’s purpose, values practices should be designed to its responsibilities to
and strategy, and satisfy itself support strategy and promote shareholders and stakeholders,
that these and its culture are long term sustainable success. the board should ensure
aligned. All directors must Executive remuneration should effective engagement with,

Governance
act with integrity, lead by be aligned to company purpose and encourage participation
example and promote the and values, and be clearly linked from, these parties.
desired culture. to the successful delivery of the
company’s long term strategy. To succeed in the long term,
This year, there was a renewed companies need to build and
focus on ethics and compliance A formal and transparent sustain relationships with a wide
Alison Yapp to further embed a culture of procedure for developing policy range of stakeholders and, in
Group General Counsel integrity and to empower on executive remuneration and particular, employees. These
and Company Secretary employees to continue to speak determining director and senior relationships work well if they
up and raise concerns. We management remuneration are based on trust and respect
appointed a Group Head of should be established. No and are mutually beneficial.
Compass will Ethics and Compliance as we director should be involved in
report against the continue to improve our key deciding their own remuneration We know how important our
2018 UK Corporate policies and procedures in outcome. employees are to our
Governance Code (the this area. continued success and we
2018 Code) from the Our remuneration policies and welcome the emphasis that the
financial year ending Various initiatives are taking practices are designed to 2018 Code places on promoting
place across the Group to support our strategy and effective engagement with
30 September 2020.
reinforce the values and promote long term sustainable stakeholders and, in particular,
Over the past year, we behaviours that support the success. Executive workforce engagement and
have been reviewing our Group’s strategy, some of which remuneration is aligned to employee voice.
governance framework are set out below. Company purpose and values
and is clearly linked to the Details of some of the actions
and reflecting on how • we launched our set of three taken during the year are set
successful delivery of the
we engage with our key Compass commitments – out below.
Company’s long term strategy.
stakeholders in Respect, Growth and
preparation for the Teamwork – that define what Details of some of the actions • elected a designated NED for
change in emphasis our people can expect when taken during the year are set workforce engagement who,
brought about by the they work for us out below. together with the Group Chief
2018 Code. People Officer and the Group
• we are reviewing our Ethics
• the terms of reference of the Engagement Director, will
and Compliance programme
Remuneration Committee ensure that the voice of our
which is aligned to our culture
were refreshed to align with workforce is clearly heard at
and values and informed by
the provisions of the 2018 Board level
best practice. The
Code and other sources of • conducted a global
programme will focus efforts
best practice and regulation engagement survey to enable
on culture and ethics to
strengthen controls. It will • the Committee received a us to track people’s
incorporate regulatory and detailed update on the wider experience against our
stakeholder requirements to workforce policies and Commitments
manage our risks practices in place in the • initiatives are underway to
appropriately business for review, in improve existing processes
preparation for requirements which are in place for
• an ethical leadership
of the 2018 Code engaging with other
programme is being
developed in conjunction stakeholder groups
with the People function
• preparations are underway to
launch a refreshed Code of
Business Conduct and
awareness campaign in 2020,
including the creation of an
ethics champion network,
briefings, webinars and an
engagement pack

Compass Group PLC Annual Report 2019  79

CORPORATE GOVERNANCE REPORT

Stakeholder oversight​
The Chairman ensures that the Board maintains an appropriate throughout the year, with a particular intensity leading up to,
dialogue with shareholders. The Group CEO, Group CFO and the during and after shareholder meetings. Although the non-
Group Investor Relations and Corporate Affairs Director regularly executive directors are not formally required to meet the
meet with institutional investors to discuss strategic issues and shareholders of the Company, their attendance at presentations
to make presentations on the Company’s results. Non-executive of the interim and annual results is encouraged. All of our
directors develop an understanding of the views of major shareholders are invited to attend our AGM, which provides a
shareholders through regular updates from the Group Investor forum in which they can put questions to the Board and the
Relations and Corporate Affairs Director. The Group General committee chairmen. It also provides shareholders with an
Counsel and Company Secretary also acts as an important focal opportunity to meet with directors and other senior executives
point for communications on corporate governance matters on a more informal basis at the meeting.

OUR STAKEHOLDERS ​ HOW THE BOARD IS KEPT INFORMED

Our people The Board receives regular People strategy updates from the Group Chief People Officer, including
​ details of our employee engagement survey results, updates on diversity and inclusion
and cultural awareness initiatives, measurement and performance, and our succession planning and
talent development initiatives.
Our The Board is kept informed of initiatives taking place within the communities in which Compass
​ communities operates principally through the activities of the CR Committee, which receives regular reports on
CR progress across the Group from the Group Safety and Sustainability Director.
Our clients The Group Director International Clients & Market Development keeps the Board informed of new
​ and evolving trends and the aspirations and requirements of our international client base. She is
supported in providing a comprehensive overview of the international client landscape by regional
client and market development teams and executive management at country and Group level.
Our consumers The Board receives updates on sector trends from our sector heads including opportunities,
​ challenges and developments in consumer food services trends including innovation of product and
experience and consumer interest in brand responsibility and sustainability.
Our suppliers The Board is kept informed on supply chain initiatives through the CR Committee, which receives
​ reports from the Group Safety and Sustainability Director and from the Group Head of Ethics and
Compliance, including our work to prevent modern slavery and human trafficking in our business
and supply chain.
Our Annual Report and Accounts: this provides an opportunity to communicate to our shareholders and
shareholders other stakeholders the Group’s financial performance, its strategy, risks and opportunities with
content that is fair, balanced and understandable and is accessible to a wide range of audiences.
Investor Relations: more details of our AGM and Investor Relations programme can be found on
pages 73 and 81.
Website: the Company's website provides an excellent means of communicating with and receiving
communications from shareholders, potential investors and the wider stakeholder community.
It contains an archive of information on the Company’s history, leadership, governance, policies,
financial results, dividend history and up to date share price information.
NGOs The Board is kept informed of Group collaborations with non-governmental organisations which
​ support us with knowledge and expertise on key social, environmental and economic issues through
the CR Committee which receives reports on key areas of focus such as human rights, climate
change and animal welfare from the Group Safety and Sustainability Director.
Governments The Group General Counsel and Company Secretary, Group Head of Tax and other subject matter
​ and regulators experts regularly update the Board on matters affecting the Group as a result of actions being taken
by regional and national government bodies and agencies which implement and enforce laws
and regulations.

80  Compass Group PLC Annual Report 2019

CONSIDERING STAKEHOLDERS IN DECISION-MAKING
When making its decisions, the Board considers the impact on stakeholders. Examples include:​
Digital innovation ​ Investing in our people ​ Reducing waste
Technology is changing the way in As a Group, we are proud of our gender As a Group, we are championing
which consumers engage with diversity. As at 30 September 2019, initiatives that help the environment.
products and services. As a business, women represented 36% of our Board In 2017, Compass founded Stop Food
Compass is taking a more proactive members, 38% of our Executive Waste Day – a global awareness
approach to identifying and investing in Committee members, and 31% of our programme which in 2019 reached
technology, in particular to enhance global leadership team. However, there 89 million people on social media and
the consumer experience. One is still more to do and we are focusing more than 10 million people through
example is cashierless and cashless on a number of initiatives to further food waste engagement activities. We
payment options which are in use promote diversity and inclusion as part continue to explore the most effective

Governance
across the Group. This technology of our People strategy. Our unit and practical ways to measure waste
provides a better consumer experience managers are absolutely critical to the through various food waste
by improving speed of service and also success of our business. They set the management systems. In the UK,
by driving efficiencies and reducing the tone for the unit, hire people, buy food, technology is being trialled which
risks from cash handling. Some are responsible for health and safety will allow the business to more
countries are taking the lead in and deal with daily operational issues. accurately record and reduce waste. We
developing next generation tools. For We want to make our unit managers’ are also considering other new initiatives
example, our French business has lives easier by reducing their around packaging and plastics that are
started using Smart Checkout. This administrative burden so that they better for the environment and are
award winning concept uses camera can focus more attention on our clients, seeking to persuade our consumers to
based technology and artificial our consumers and our employees. adopt more sustainable behaviours.
intelligence to recognise the precise Following the successful completion Good progress is being made, but there
dishes on the tray, map them to the of pilots in our two largest markets, is more to do. Investing in the business
Electronic Point of Sale System and a development programme is being for the future is important. It helps the
price them for the consumer. Smart rolled out to all of our unit managers Company to build on its competitive
Checkout also has the potential to globally – around 40,000 people in advantage and to capitalise on our
increase consumer sales by promoting 45 countries. structural growth opportunities with the
complementary products such as aim of delivering better quality,
beverages or desserts, tailored to the sustainable long term growth.
individual consumer’s buying habits.

PROMOTING THE SUCCESS OF THE COMPANY

The Company’s success is the driving factor behind all decisions
made by the Board. Decision making processes are structured
to enable directors to evaluate the merit of proposed business
activities and the likely consequences of its decisions over the
short, medium and long term. The Board carefully considers the Kate Postans
impact of the business on the communities and environments Interim Group
in which the Group operates. Due consideration is paid Investor Relations
to Compass’ stakeholders, including but not limited to and Corporate
our customers, suppliers, business partners, employees Affairs Director
and shareholders.
HOW WOULD YOU DESCRIBE THE IR FUNCTION?
In all of its activities, and those of the Group, the Board requires The IR function is very 'client' focused and during 2019,
that our employees and partners conduct business to the we met with over 400 buy-side institutions. The team is
highest ethical and professional standards. The CR Committee quick to respond to any investor interest and they devote a
oversees Compass’ commitment to make a positive contribution lot of time to producing high quality collateral to effectively
to the health and wellbeing of our consumers, the communities sell our investment case.
where we work and the world in which we live.
HOW DOES COMPASS SEEK FEEDBACK FROM
ITS INVESTORS?
In addition to having a very open dialogue with investors
at meetings, in July we conducted an investor survey.
This provided detailed feedback from shareholders,
non-shareholders and some of the sell-side population
from around the world. Our Chairman, our SID and
Remuneration Committee Chairman also engage with
major shareholders.

Compass Group PLC Annual Report 2019  81

Audit Committee Report
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present the
Audit Committee’s Report for the financial year ended
30 September 2019.

THE YEAR IN REVIEW

The Audit Committee (the Committee) works to a structured
agenda linked to events in the Group’s financial reporting
calendar. Throughout the year, the Committee continued to
support the Board, playing a key role in overseeing the integrity
of the Company’s financial statements and the robustness of the
Group’s systems of internal control and financial and regulatory
risk management.
John Bason
Chairman of the Audit Committee As in previous years, the Committee’s primary focus was on
the integrity of the Group’s financial reporting activities. In
MAIN RESPONSIBILITIES considering the financial statements for 2019, the Committee
• monitors the integrity of the Company’s and Group’s concentrated on accounting and disclosures related to the
published financial statements and related disclosures process of selling or exiting operations in a number of countries
and sectors, the Group’s cost action programme, the quality of
• monitors any formal announcements relating to the
profits, supplier rebates and discounts, post employment benefit
Group’s financial reporting issues and key accounting
obligations, the carrying value of assets, goodwill recognition
and audit judgements made in connection with
and the Group’s tax position. The Committee concluded that
the preparation of the Company’s and Group’s
executive management had adopted an appropriate approach in
financial statements
all significant areas.
• reviews the Company’s arrangements for its workforce/
stakeholders to raise concerns in confidence about During the year, the Committee was updated on the Group’s IT
possible improprieties in financial reporting or other strategy including an overview of the IT controls framework and
matters and ensures that they are investigated infrastructure and the ability to quickly detect and defend
• reviews the adequacy and effectiveness of the risk against cyber attack. The Committee also spent time reviewing
management and internal control systems, including the the disclosures made by management in respect of the new
going concern and viability statements, and provides accounting standards IFRS 15 ‘Revenue from contracts with
assurance to the Board customers’ and IFRS 9 ‘Financial instruments’, both of which
• monitors and reviews the role, mandate and were implemented at the start of the financial year under review,
effectiveness of the Group’s internal audit function and IFRS 16 ‘Leases’ which will be adopted by the Group on
• manages the appointment, independence, effectiveness 1 October 2019. Time was dedicated to considering
and remuneration of the Group’s external auditor, management’s response to the UK’s withdrawal from the EU,
including compliance with the non-audit services policy the continued uncertainty about the full impact and timeframes
• advises the Board on how it has discharged its of a withdrawal and the impact of the risk for the Group as a
responsibilities and considers whether the Annual Report whole. The Committee is satisfied that the statements made by
and Accounts, taken as a whole, is fair, balanced and executive management on pages 41 and 44 of the Risk
understandable, and provides assurance to the Board Management and Principal Risks sections of this Annual Report
are appropriate based on what is currently known to
MEMBERSHIP AND ATTENDANCE management as at the date of this Report.
Member Eligible to Meetings
Member since attend1 attended During the year, the Committee reviewed its terms of reference
John Bason Jun 2011 3 3 to ensure that they continue to be fit for purpose. The review was
Carol Arrowsmith Jun 2014 3 3 undertaken, with guidance from the Group General Counsel and
Stefan Bomhard May 2016 3 3 Company Secretary, in the context of changes to regulations and
John Bryant Sep 2018 3 3 the UK Corporate Governance Code 2018 (the 2018 Code),
which the Company will report against from the financial year
Anne-Francoise Nesmes2 Jul 2018 3 2
ended 30 September 2020. Consideration was also given to the
Nelson Silva Jul 2015 3 3
Financial Reporting Council’s (FRC) guidance for audit
Ireena Vittal Jul 2015 3 3 committees and other sources of best practice.
1. The maximum number of meetings that a member was eligible
to attend.
2. Ms Nesmes was unable to attend the November meeting due to an
unavoidable prior commitment and provided her feedback on the
papers in advance.

82  Compass Group PLC Annual Report 2019

The new terms of reference were adopted by the Committee at • allocating more time to meetings to reflect the increasing
its meeting on 18 September 2019 and approved by the Board responsibilities of the Committee
on the same day. • greater use of the external auditor to keep the Committee
up to date on key topics in light of the continuously changing
A copy of the terms of reference can be found on the Company’s regulatory environment
website www.compass-group.com.
• undertaking deep dives into specific risk topics in order to
Committee evaluation further develop the non-executive directors’ understanding of
the controls and risk mitigation plans that are in place

Governance
Each year, the Audit Committee critically reviews its own
performance and considers where improvements can be made
As a result, appropriate arrangements have been made
and in so doing it considers, amongst other things, those matters
within the Committee schedule for the coming year and I look
discussed by the Audit Committee, such as:
forward to reporting on our progress in next year’s Audit
• composition, structure and activities Committee Report.
• how well the Committee oversees the financial THE YEAR AHEAD
reporting process In the coming year, the Committee will continue to work together
• its review of the work of the internal audit function and the with the Board and the other committees to monitor and review
external auditor the effectiveness of the Group’s financial reporting and risk
• the effectiveness of the process for raising concerns management and internal control framework. In addition, we
• its monitoring of the management of risk will continue to focus on the resilience of our cyber security and
• how well it understands and evaluates the effectiveness and IT controls and on ensuring that all new accounting standards,
conclusions of internal control and the adequacy of the relevant legislation and guidance, including the provisions of the
related disclosures 2018 Code, are being met.
• whether the Committee’s terms of reference are appropriate
for the particular circumstances of the Company and comply
with prevailing legislation and best practice
• whether the number and length of time of Committee John Bason
meetings are sufficient to meet the role and responsibilities of Chairman of the Audit Committee
the Committee and coincide with key dates within the
financial reporting and audit cycle 26 November 2019
• identification of additional training needs for
Committee members

This is underpinned by the annual performance evaluation of the

Board and its committees, referred to on pages 76 and 77.

This year’s external Board and Committee evaluation was

conducted by Lintstock.

Overall, the performance of the Audit Committee was rated

highly, with an appropriately balanced and engaged
membership. In its findings, Lintstock identified a number of
areas to assist the Committee in support of its continuous
improvement, including:

Compass Group PLC Annual Report 2019  83

AUDIT COMMITTEE REPORT (CONTINUED)

RISK APPETITE, PRINCIPAL OPERATIONAL RISKS AND The purpose of the review was to determine in the context of the
RISK ASSURANCE macro environment and Group strategy:
The Board’s attitude to and appetite for risk are communicated
to the Group’s businesses through the strategy planning i. if the principal risks and uncertainties disclosed in the
process. In determining its risk appetite, the Board recognises 2018 Annual Report and Accounts applied to the current
that a prudent and robust approach to risk mitigation must be financial year
carefully balanced with a degree of flexibility so that the ii. whether there had been any year on year variance in the
entrepreneurial spirit which has greatly contributed to the status of each risk
success of the Company is not inhibited. The Committee and the iii. what should be removed or added
Board remain satisfied that the Company’s internal risk control
framework continues to provide the necessary element of As set out in the Principal Risks section on pages 41 to 45, last
flexibility without compromising the integrity of risk management year’s risks continue to be pertinent, albeit our perception of
and internal control systems. how these risks have, as appropriate, remained static, increased
or diminished, may have changed.
We continue to develop and grow our business but, of course, in
some of the territories where we operate, the concept of FAIR, BALANCED AND UNDERSTANDABLE
corporate governance is still underdeveloped. In these regions in The UK Corporate Governance Code 2016 (the Code) provides
particular, it is important to have a clear, well-established that, through its financial reporting, the Board should provide a
system of risk management and internal control to ensure that fair, balanced and understandable assessment of the
growth is underpinned by solid business practice. In this regard, Company’s prospects. At the Board’s request, the Committee
we have further strengthened our Regional Governance has reviewed the 2019 Annual Report and Accounts to
Committees (RGCs) with the aim of further embedding the determine whether it considered that the document, taken as a
Group’s risk management culture within the business. whole, meets this standard and provides the information
necessary for shareholders to assess the Company’s position
The Group Risk Management Committee (RMC), comprising a and performance, business model and strategy. The Committee
multi-disciplinary team of key individuals, assists the Audit has concluded that this requirement has been met.
Committee with its work. The Chairman of the RMC Committee
is the Group CFO and the membership comprises the Group Throughout the Annual Report and Accounts, we track our
General Counsel and Company Secretary, the Director of Group performance against a mix of financial and non-financial KPIs,
Internal Audit, the Group Financial Controller, the Group Investor which the Board and executive management consider best
Relations and Corporate Affairs Director, the Group Chief People reflect our strategic priorities. The Committee has considered
Officer and the Group Director of Strategy and M&A. The RMC, these KPIs and is satisfied that the information that has been
in conjunction with the efforts of its colleagues in the Group’s selected by the Board and the executive management will help
RGCs, further embeds the Group’s risk management culture to convey an understanding of the culture of the business and
within the business. It also provides an additional layer of the drivers which contribute to its ongoing success and will be of
oversight to help underpin the assurances given by the Audit interest to stakeholders.
Committee to the Board in connection with the appropriateness
of the Group’s financial reporting, the effectiveness of the
internal and external audit functions, the management of the
Group’s systems of internal control and business risks, and
related compliance activities.

The Committee had oversight of a robust annual review and

assessment of the principal risks and uncertainties of the
Group. The review was conducted internally by a multi-
disciplinary team.

84  Compass Group PLC Annual Report 2019

ACTIVITY DURING THE YEAR • the material areas to which the Committee dedicated the
The key matters reviewed and evaluated by the Committee most time:
during the year are set out below: –– considering the nature and quantum of the purchasing income
earned by the Group during the financial year. It also assessed
Financial reporting and significant accounting issues the extent to which the amounts recognised required
• the appropriateness of the interim and annual financial estimation and reviewed the recoverability of amounts accrued
statements (including the announcements thereof to the at the year end with reference to aged analyses and
London Stock Exchange) with both management and the subsequent cash receipts. Nothing arose during the course of

Governance
external auditor, including: this review to indicate that anything but limited judgement was
–– at the Board’s request, whether the Annual Report and required, or that purchasing income had not been accounted
Accounts, taken as a whole, is fair, balanced and for in accordance with the Group’s accounting policies
understandable and provides the information necessary –– the level of provisioning for liabilities (including tax) where
for shareholders to assess the Company’s position and management, accounting and legal judgements are important.
performance, business model and strategy The Committee discussed with management the key
–– the clarity of disclosures and compliance with financial judgements made, in particular, the policy efforts being led by
reporting standards and relevant financial and governance the EU and OECD which may have a material impact on the
reporting requirements and guidelines, including the taxation of all international businesses, including relevant legal
European Securities and Markets Authority Guidelines advice. The external auditor also reported on all material
on Alternative Performance Measures provisions to the Committee
–– discussing the critical accounting policies and use of • the adoption in the year of IFRS 15 ‘Revenue from contracts
assumptions and estimates, as noted in section B of with customers’ and IFRS 9 ‘Financial instruments’ and the
the accounting policies on page 146 of this Annual Report, appropriateness of disclosures included in the Annual Report
and concluding that the estimates, judgements and and Accounts
assumptions used were reasonable based on the information • preparation for the adoption of IFRS 16 ‘Leases’ in the financial
available and had been used appropriately in applying the year ending 30 September 2020 and the disclosures included
Company’s accounting policies. This included, for example, in the Annual Report and Accounts
the consideration of any goodwill impairment assessments
• the going concern and viability statements
and how these were addressed
• non-financial information

In addition to its key role in the financial reporting process, the Committee considered the following at its meetings:

2018 2019 ​
November May September
• full year results • KPMG External Audit Plan • year end matters
–– summary of 2018 Preliminary Results 2018-2019 –– accounting issues and financial
–– certificates of assurance • 2019 interim results review reporting update
–– year end accounting and • key accounting and reporting –– tax update
control matters matters and tax update –– KPMG early issues report
–– tax update • feedback from country interim • Internal Audit
–– draft press release certificates of assurance –– activity report (including key financial
–– draft Annual Report and • going concern controls update) (May-July 2019)
Accounts (including the report of • KPMG report on interim –– approval of 2019–2020 Internal
the Audit Committee) results review Audit Plan
–– fair, balanced and understandable • Internal Audit activity report • Regional Governance Committees update
annual report reading guide • GDPR update • 2019 Annual Report and Accounts
• going concern and viability statements • Regional Governance –– draft Audit Committee Report,
• KPMG report to the Audit Committee Committees update Principal Risks and Internal
on the 2017-2018 audit and key issues • use of auditor for Controls report
• Internal Audit update non-audit services • Digital & Technology Solutions update
• Regional Governance • private discussion with auditor • GDPR update
Committees update • terms of reference annual review
• use of auditor for non-audit services • use of auditor for non-audit services
• private discussion with auditor • private discussion with auditor

Compass Group PLC Annual Report 2019  85

AUDIT COMMITTEE REPORT (CONTINUED)

GOVERNANCE The Committee’s agenda is linked to events in the Company’s

The Audit Committee comprises John Bason, Chairman, and financial calendar. Members of the Audit Committee may
all of the non-executive directors in office at the date of this require reports on matters of interest in addition to the regular
Report. Members of the Committee are appointed by the items. The Audit Committee met three times during the year,
Board following recommendation by the Nomination with an appropriate interval between each of the meetings to
Committee. The Committee’s membership is reviewed and ensure that work arising from Committee meetings could be
assessed in the context of the range of skills, knowledge and carried out and reported back to the Board, as appropriate.
experience required by the Code, by the Board and as part of the Attendance is shown in the table on page 82.
annual evaluation process.
In addition to Committee members, the Chairman, the Group
The Chairman of the Committee reports to the Board on CEO, Group CFO, Group Financial Controller and the Group
the activities of the Committee and keeps in touch with key Internal Audit Director, together with senior representatives of
individuals involved with the Company’s governance, including the external auditor, also attended meetings by invitation during
the Group CEO, Group CFO, the Group General Counsel and the year. The Audit Committee reserves time for discussions
Company Secretary, the Group Internal Audit Director and the without invitees and executive management being present at the
external Senior Statutory Auditor, and attends the AGM to end of each meeting. Other members of senior management are
respond to any shareholder questions that might be raised invited to present such reports as are required for the Committee
concerning the Committee’s activities. The remuneration of the to discharge its duties.
members of the Audit Committee and the Company’s policy with
regard to the remuneration of the non-executive directors are set EXTERNAL AUDITOR
out on page 109. An external audit tender and appointment process was
concluded in 2014. The Committee considers that the Company
Members of the Committee are required to have broad financial has complied with the legal requirements relating to the
and commercial experience which is needed by the Committee frequency and governance of tenders for the appointment of the
to undertake its duties effectively. Each member brings an external auditor and the setting of a policy on the provision of
appropriate balance of senior level financial and commercial non-audit services.
experience in multinational and/or complex organisations,
combined with a sound understanding of the Company’s In line with applicable legislation and best practice, at the end of
business, and is therefore considered by the Board to be a five year tenure, Mr Anthony Sykes ceased to be the Senior
competent in the Company’s sector. The expertise and Statutory Auditor on completion of the external audit of the
experience of the members of the Committee are summarised Company’s financial statements for the year ended 30
on pages 70 and 71. The Board considers that each member of September 2018. He was succeeded by Mr Paul Korolkiewicz.
the Committee is independent within the definition set out in the
To ensure objectivity, key members of the external audit team
Code and is capable of assessing the work of management and
rotate off the Company’s audit. To safeguard the independence
the assurances provided by the internal audit function and the
of the Company’s external auditor and the integrity of the audit
external auditor. The Audit Committee’s Chairman is the
process, the recruitment of senior employees from the
Finance Director of Associated British Foods plc and is
Company’s auditor is not permitted for a period of at least two
therefore considered by the Board to have significant, recent
years after they cease to be involved in the provision of services
and relevant financial experience and to be competent in
to the Company.
auditing and accounting.
The Committee currently intends to tender its audit in
All members of the Audit Committee are given an appropriate
2023‑2024 with a view to the chosen firm being appointed
induction. Topics covered include the role and remit of the
in 2024.
Committee and an overview of the business, its financial
dynamics and its risks. Where appropriate, meetings are held
with key individuals in the Group. Members are expected to have
an understanding of the principles of, and recent developments
in, financial reporting, including the applicable accounting
standards and statements of recommended practice,
key aspects of the Company’s policies, financing, internal
control mechanisms, and matters that require the use of
judgement in the presentation of accounts and key figures as
well as the role of internal and external auditors. Ongoing
training is undertaken as required.

The Committee meets at least three times a year. A quorum

for a meeting is two.

86  Compass Group PLC Annual Report 2019

EXTERNAL AUDIT During the year, the Committee reviewed KPMG’s fees for its
The Audit Committee is responsible for the development, services performed to 30 September 2019, its effectiveness and
implementation and monitoring of the Company’s policy on whether the agreed audit plan had been fulfilled and the reasons
external audit. The Committee reserves oversight responsibility for any variation from the plan. The review included a formal
for monitoring the auditor’s independence, objectivity and evaluation process involving the use of questionnaires
compliance with ethical, professional and regulatory completed by finance teams around the Group.
requirements. The Audit Committee is responsible for the
retendering selection process and recommends the The Audit Committee also considered the robustness of the

Governance
appointment, reappointment and removal of the Company’s 2019 audit, the degree to which KPMG was able to assess key
external auditor, and considers the risks associated with its accounting and audit judgements and the content of the audit
withdrawal from the market in its risk evaluation and planning. committee report issued by the external auditor. On the basis of
the Committee’s evaluation and taking into account the views of
The Audit Committee also reviews and sets the terms, areas of other key internal stakeholders, the Committee concluded that
responsibility and scope of the audit as set out in the external both the audit and the audit process were effective.
auditor’s engagement letter; the overall work plan for the
forthcoming year, together with the associated fee proposal and The total fees paid to KPMG in the year ended 30 September
cost effectiveness of the audit; the external auditor’s 2019 were £6.5 million, of which £0.4 million related to
independence; any major issues which arise during the course non-audit work (2018: £7.0 million of which £0.7 million related
of the audit and their resolution; key accounting and audit to non-audit work). Further disclosure of the non-audit fees paid
judgements; the level of errors identified during the audit; the during the year can be found in note 3 on page 165.
recommendations made to management by the auditor and
REAPPOINTMENT OF AUDITOR
management’s response; and the auditor’s overall performance.
There are no contractual restrictions on the Company’s choice
During the year, the Committee also considered the findings of of external auditor and, in making its recommendation to
the FRC’s Audit Quality Review on KPMG and, in particular, how shareholders on the reappointment of KPMG, the Committee
KPMG were addressing the points raised. took into account, amongst other matters, the tenure, objectivity
and independence of KPMG and its continuing effectiveness
The Company operates a policy on non-audit fees which it and cost as well as the availability of firms within the wider
reviews annually and discloses the ratio of audit to non-audit audit market.
fees paid in each financial year.
The Committee also considered the report on KPMG, as a firm,
The Committee monitors the extent of non-audit work which the of the Audit Quality Review team of the FRC.
external auditor can perform, to ensure that the provision of
those non-audit services that can be undertaken by the external KPMG has expressed its willingness to continue as auditor of the
auditor falls within the agreed policy and does not impair its Company. Separate resolutions proposing KPMG’s
objectivity or independence. In line with the Group’s policy on reappointment and the determination of its remuneration by the
non-audit services, the external auditor is, in general, excluded Audit Committee will be proposed at the 2020 AGM.
from providing the Company with general consultancy and all
DISCLOSURE OF RELEVANT AUDIT INFORMATION
other non-audit services, unless there is no other competent and
The directors confirm that, so far as they are each aware, there
available provider. Engagements for non-audit services that are
is no relevant audit information of which KPMG is unaware and
not prohibited are subject to formal approval by the Audit
each director has taken all the steps that ought to have been
Committee based on the level of fees involved. Non-audit
taken as a director to be aware of any relevant audit information
services that are pre-approved are either: routine in nature (i.e.
and to establish that KPMG is aware of that information.
the half year limited review) with a fee that is not significant in
the context of the audit; or are audit related services.

Within the constraints of applicable UK rules, the external

auditor could undertake certain non-audit work. The provision of
non-audit services within such constraints and the agreed policy
is assessed on a case by case basis so that the best placed
advisor is retained. In accordance with the Group’s policies, the
Group CFO approves individual non-audit services with fees up
to £50,000 and non-audit services with combined fees up to
£100,000. Audit Committee approval is sought for non-audit
services over and above these limits. There were no services for
the Audit Committee to approve during the year. As set out in
note 3 on page 165, fees paid for non-audit services were below
the threshold requiring approval by the Audit Committee related
to non-statutory audit and review work.

Compass Group PLC Annual Report 2019  87

AUDIT COMMITTEE REPORT (CONTINUED)

OUR STANDARDS INTERNAL CONTROL

The Company remains committed to the highest standards of The Committee also reviews the integrity of any material
business conduct and expects all of its employees to act financial statements made by the Company. It monitors and
accordingly. The Group’s Speak Up policy (an extension of the conducts a robust review of the effectiveness of the Group’s
Code of Ethics incorporated within the Group’s Code of Business internal control systems, accounting policies and practices and
Conduct (CBC) which is available in 40 languages) sets out compliance controls (including key financial controls) as well as
arrangements for the receipt, in confidence, of complaints on the Company’s statements on internal control before they are
accounting, risk issues, internal controls, auditing issues and agreed by the Board for each year’s Annual Report and
related matters which would, as appropriate, be reported to the Accounts. The Board retains overall responsibility for internal
Audit Committee. Speak Up is a standard review item on all control and the identification and management of business risk
internal audit work programmes. The Corporate Responsibility and is assisted in this regard by a top down and bottom up
Committee retains overall responsibility for the Group’s CBC process of risk identification and management which is the
programme, the training of employees and the way in which subject of regular interim review by the RGCs and the RMC.
management obtain assurance in this area, including the annual
self-certification process which saw more than 3,014 key The key features of the Group’s internal control and risk
employees of influence confirm their continued compliance with management systems that ensure the accuracy and reliability of
the CBC and the Code of Ethics in the year ended 30 September financial reporting include clearly defined lines of accountability
2019. The CBC and Code of Ethics are available on the and delegation of authority, policies and procedures that cover
Company’s website www.compass-group.com. financial planning and reporting, preparing consolidated
accounts, capital expenditure, project governance and
The Audit Committee also receives updates on any allegations of information security and the Group’s CBC. The internal audit
bribery and fraud in the business at every meeting, with function is involved in the assessment of the quality of risk
individual updates being given to the Audit Committee, as management and internal control and helps to promote and
needed, in more serious cases of alleged bribery, fraud or further develop effective risk management within the business.
related activities. The Group’s theft and anti-fraud policies are a Certain internal audit assignments (such as those requiring
subset of the CBC, which does not tolerate any activity involving specialist expertise) continue to be outsourced by the Group
fraud, dishonesty or deception. These policies, for which the Internal Audit Director as appropriate. The Audit Committee
Audit Committee retains overall responsibility, set out how reviews internal audit reports and considers the effectiveness of
allegations of fraud or bribery are dealt with, such as by the local the function.
People function or finance team, and the frequency of local
reporting that feeds into the regular updates, which are In a group where local management have considerable
presented to the Audit Committee. Reporting of these matters to autonomy to run and develop their businesses, a well designed
the Audit Committee is managed and overseen by the internal system of internal control is necessary to safeguard
audit function. The Speak Up policy operates when a complaint shareholders’ investments and the Company’s assets. The
is received through the whistleblowing channel and that policy directors acknowledge that they have overall responsibility for
redirects the fraud or bribery allegation for investigation at the risk management, the Group’s systems of internal control, for
most appropriate level of the organisation which may, for reviewing the effectiveness of those controls and for ensuring
example, be by a member of the local People function or, on that an appropriate culture has been embedded throughout the
occasion, the Audit Committee itself. organisation. In accordance with the guidance set out in the
FRC’s Guidance on Risk Management, Internal Control and
INTERNAL AUDIT Related Financial Business Reporting 2014, and in the Code
The Audit Committee reviews the effectiveness of the Group’s itself, an ongoing process has been established for identifying,
internal audit function and its relationship with the external managing and evaluating the risks faced by the Group. This
auditor, including internal audit resources, plans and process has been in place for the full financial year and up to the
performance as well as the degree to which the function is free date on which the financial statements were approved.
of management restrictions. Throughout the year, the Audit
Committee reviewed the internal audit function’s plans and its
achievements against those plans. The Audit Committee
considered the results of the audits undertaken by the internal
audit function and the adequacy of management’s response
to matters raised, including the time taken to resolve any
such matters.

88  Compass Group PLC Annual Report 2019

The systems are designed to manage rather than eliminate CONTROL PROCEDURES
the risk of failure to achieve the Group’s strategic objectives, The Board reviews its strategic plans and objectives on an
safeguard the Group’s assets against material loss, fairly report annual basis and approves Group budgets and strategies in light
the Group’s performance and position, and to ensure of these. Control is exercised at Group, regional and business
compliance with relevant legislation, regulation and best level through the Group’s MAP framework (as well as through
practice including that related to social, environmental and the RGCs), monthly monitoring of performance by comparison
ethical matters. The systems provide reasonable, but not with budgets, forecasts and cash targets, and by regular visits to
absolute, assurance against material misstatement or loss. Group businesses by the Group CEO, Group CFO, Group General

Governance
Such systems are reviewed by the Board to deal with Counsel and Company Secretary, Group Chief People Officer,
changing circumstances. Group Director of Strategy and M&A and the Group Director
International Clients & Market Development.
A summary of the key financial risks inherent in the Group’s
business is given on pages 41 to 45. Risk assessment and This is underpinned by a formal major risk assessment process,
evaluation are an integral part of the annual planning cycle. which is an integral part of the annual business cycle and is also
Each business documents the strategic objectives and the a robust process adopted to support the viability statement.
effectiveness of the Group’s systems of internal control. As part Each of the Group’s businesses is required to identify and
of the review, each significant business and function has been document major risks facing their business and appropriate
required to identify and document each substantial risk, mitigating activities and controls, and to monitor and report to
together with the mitigating actions implemented to manage, management on the effectiveness of these controls on a
monitor and report to management on the effectiveness of these biannual basis. These reports, together with reports on internal
controls. Senior managers are also required to sign biannual control and departures, if any, from established Group
confirmations of compliance with key procedures and to report procedures prepared by both the internal and external auditors,
any breakdowns in, or exceptions to, these procedures. are reviewed by the Group CFO and the Audit Committee.
Summarised results are presented to senior management Group companies also submit biannual risk and internal
(including to the RGCs) and to the Board. control assurance letters to the Group CFO on internal control
and risk management issues, with comments on the control
These processes have been in place throughout the financial environment within their operations. The Group CFO
year ended 30 September 2019 and have continued to the date summarises these submissions for the Audit Committee, and
of this Report. Taken together, these processes and the reports the Chairman of the Audit Committee reports to the Board on
they generate, which are considered by the Audit Committee, any matters that have arisen from the Committee’s review of the
constitute a robust assessment of key risks and the internal way in which risk management and internal control processes
controls that exist, and are designed to mitigate these risks. have been applied.
The Board has reviewed the effectiveness of the Group’s system
of internal control for the year under review and a summary of The Board has formal procedures in place for the approval of
the principal control structures and processes in place across client contracts, capital investment and acquisition projects,
the Group is set out in this Report. with clearly designated levels of authority, supported by post
investment review processes for selected acquisitions, client
CONTROL ENVIRONMENT contracts and major capital expenditure. The Board considers
Whilst the Board has overall responsibility for the Group’s social, environmental and ethical matters in relation to the
system of internal control and for reviewing its effectiveness, it Group’s business and assesses these when reviewing the risks
has delegated responsibility for the operation of the internal faced by the Group; further information regarding environmental
control and risk management programme to the Executive and ethical matters is available on pages 52 to 63. The Board is
Committee. The detailed review of internal control has been conscious of the effect such matters may have on the short and
delegated to the Audit Committee. The management of each long term value of the Company.
business is responsible for internal control and risk management
within its own business and for ensuring compliance with the The external auditor of the Company and the Group Internal
Group’s policies and procedures. Each business has appointed a Audit Director attend Audit Committee meetings and receive its
risk champion whose primary role in such capacity is to ensure papers. Committee members meet regularly with the external
compliance by local management with the Group’s risk auditor and with the Group Internal Audit Director, without the
management and internal control programme. The internal presence of executive management.
auditors and external independent auditor have reviewed
the overall approach adopted by the Group towards its There were no changes to the Company’s internal control over
risk management activities so as to reinforce these financial reporting that occurred during the year ended
internal control requirements. 30 September 2019 that have affected materially, or are
reasonably likely to affect materially, the Company’s internal
control over financial reporting.

Compass Group PLC Annual Report 2019  89

Corporate Responsibility Committee Report
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present the Corporate
Responsibility Committee’s (the CR Committee) Report for the
financial year ended 30 September 2019.

THE YEAR IN REVIEW

Corporate responsibility is a key area of focus for both the
Company and its stakeholders. As the Company increases its
focus on the impact of its operations, the oversight, remit and
responsibilities of the CR Committee increase proportionately.
During the year, we conducted an extensive review of the role
and responsibilities of the Committee. This exercise was
undertaken as part of a wider governance review in the context
Nelson Silva
of changes to regulations and best practice, including the UK
Chairman of the Corporate Responsibility Committee
Corporate Governance Code 2018 (the 2018 Code), as more
fully described on page 79, and enables the Committee to
​​​MAIN RESPONSIBILITIES support the delivery of the Company’s evolving CR strategy. The
• reviewing and monitoring the implementation and CR Committee’s terms of reference have been substantially
effectiveness of the Group’s Safety and Sustainability and refreshed in the year as a result of this review. The updated
People strategies, policies and practices terms of reference can be viewed on our website
• receiving updates on non-financial related reports from www.compass-group.com.
the whistleblowing helpline Speak Up
• reviewing/recommending for approval the Company’s In light of the CR Committee's evolving responsibilities, we have
annual Modern Slavery Act statement increased the frequency of Committee meetings and, going
• monitoring the implementation of the Group’s forward, a minimum of three meetings of the CR Committee will
governance, ethics and compliance strategy and policies be held each year.
and alignment to our culture, purpose and values
In May 2019, the Company undertook an external evaluation of
• overseeing implementation of the Group’s ethics and the Board and its committees. As part of this review, the
compliance programme/controls for prevention of performance of the CR Committee was assessed and the
unethical business practices and misconduct outcome can be found on page 93.
• overseeing appropriate and effective engagement with
the Company’s stakeholders including employees In the pages which follow, we provide an insight into the
• approving the content of the CR Report and the CR Committee’s activities during the year.
Committee’s Report for the Annual Report and Accounts

MEMBERSHIP AND ATTENDANCE

Member Eligible to Meetings
Member since attend1 attended Nelson Silva
Nelson Silva Jul 2015 3 3 Chairman of the Corporate Responsibility Committee
Carol Arrowsmith Jun 2014 3 3
John Bason Jun 2011 3 3 26 November 2019
Dominic Blakemore Jan 2018 3 3
Stefan Bomhard May 2016 3 3
John Bryant Sep 2018 3 3
Robin Mills2 Nov 2015 3 3
Anne-Francoise Nesmes3 Jul 2018 3 2
Johnny Thomson4 Dec 2015 1 1
Ireena Vittal Jul 2015 3 3
Paul Walsh Jan 2014 3 3
Karen Witts5​ Apr 2019 2 2​
Alison Yapp6​ Oct 2018​ 3​ 3​

1. The maximum number of meetings that a member was eligible to attend.

2. Ceased to be a member of the Committee on 25 November 2019.
3. Ms Nesmes was unable to attend the November meeting due to an
unavoidable prior commitment and provided her feedback on the
papers in advance.
4. Ceased to be a director on 31 December 2018.
5. Appointed to the Committee on 8 April 2019.
6. Ceased to be a member of the Committee on 1 October 2019.

90  Compass Group PLC Annual Report 2019

CR STRATEGY AND KPIs In the course of its work to review and monitor the
In 2019, the Company delivered on its corporate implementation and effectiveness of the Group’s Safety and
responsibility (CR) initiatives against its three sustainability Sustainability and People strategies, policies and practices, the
strategy pillars which are underpinned by our People strategy Committee received updates from a number of senior executives
and the Company’s safety culture: including the Group Safety and Sustainability Director. The
updates included details of work and initiatives taking place
• Health and Wellbeing throughout the Group, aligned to the Company’s sustainability
• Environmental Game Changers strategy pillars, aimed at improving health, safety and

Governance
• Better for the World sustainability performance in support of the Company’s Social
Purpose, a number of examples of which are set in the CR report
HEALTH, SAFETY AND SUSTAINABILITY on pages 52 to 63.
The safety of employees, clients and consumers remains a top
priority for Compass and our safety culture continues to be The Company seeks to ensure that its CR strategy remains
strengthened throughout the business. In this regard, the CR aligned to the Company’s values and goals and more details of
Committee supports the Group’s ambition of zero harm and performance during the year can be found in our CR report on
creating a culture of interdependence where caring for each pages 52 to 63. The Committee will review the KPIs for the
other is second nature. The health and safety and food safety coming year to ensure that they continue to be aligned to the
performance is considered by the CR Committee at each Company’s social purpose and demonstrate our commitment to
meeting against agreed KPIs. Both our global lost time incident continuous improvement.
rate and our global food safety incident rate have improved since
2015 by 38% and 35% respectively. Whilst these results suggest ETHICS AND COMPLIANCE
progress in the right direction, we recognise that there is no During the year, the Board continued to focus on continuous
room for complacency. improvements in the Group’s ethics and compliance
programmes and, in support of this aim, the Company appointed
At the start of each meeting, the CR Committee considers a a Group Head of Ethics and Compliance who reports to the
safety moment. This helps the Committee to develop a deeper Group General Counsel and Company Secretary. The Group
understanding of the health and safety risks facing the business Head of Ethics and Compliance attends each meeting of the CR
and to consider how the lessons learned from specific incidents Committee by invitation to provide updates on ethics
can be applied to help prevent similar incidents from recurring. and governance matters.
Safety walks have also been introduced as a leading indicator for
all leaders above unit manager. This encourages conversations The Group Head of Ethics and Compliance is reviewing the
about safety within our businesses and helps to support a strong ethics and compliance framework with relevant stakeholders to
safety culture. ensure that our practices, policies and procedures are up to
date and reflect best practice. He is also taking a leading role in
Sadly, during the year there were two fatalities in the Group, an ensuring compliance with the various data privacy controls that
incident in our South African business and a road traffic are in place across the Group.
accident in our USA business. In each instance, a full
investigation was conducted and the outcome reported to the HUMAN RIGHTS AND MODERN SLAVERY
directors and senior executives. Support was provided by our The Company will publish its fourth Modern Slavery Act (MSA)
local operations to the families of the deceased. In the USA, the statement in December. This year’s statement, which was
road traffic accident investigation was conducted by the police. reviewed by the Committee on behalf of the Board, has been
In South Africa an investigation was conducted by our local refreshed to create a more insightful document with a
business, in conjunction with the client on whose site the perspective of the challenges and opportunities a group the
accident took place. Mr Blakemore and Ms Witts’ entitlements scale of Compass faces when assessing the human rights and
to bonus relating to the achievement of LTIFR related targets modern slavery risks across its businesses and supply chain. A
were reduced to zero to recognise that the Group had suffered a copy of this document can be found on our website
fatality in South Africa during the year which occurred whilst the www.compass-group.com. In the coming year, the Company
employee had been at work, albeit that management were not will proceed with a comprehensive human rights impact
considered to be culpable. This recognises the seriousness with assessment. The project will be supported by a Human Rights
which the Company takes HSE outcomes. Working Group which is sponsored by the Group Chief People
Officer. The assessment will be conducted across the Group’s
During the year, the Committee received an update on the businesses and global supply chain in conjunction with
Group’s Global Safety Standards, including the Group’s Allergen independent consultants. This assessment will give the
Management Plan which focuses, amongst other things, on Company a much clearer and transparent understanding of
improving labelling, food preparation, training and human rights and related risks in our supply chain and with third
communication to help safeguard our consumers. Consideration parties. This work will support a review of the Company’s third
was also given to further improving our supply chain standards party due diligence process as part of an update to our policies
and practices. and procedures to ensure it remains effective.

Compass Group PLC Annual Report 2019  91

CORPORATE RESPONSIBILITY COMMITTEE REPORT (CONTINUED)

Activity during the year

The key matters considered and discussed by the Committee during the year are set out below:

2018 ​ 2019​ ​ ​
November ​ May ​ September
• safety moment ​ • safety moment ​ • safety moment
• health and safety performance • health and safety performance • terms of reference review
• CR strategy and KPIs for inclusion in and sustainability update • health and safety performance and
the 2018 Annual Report • governance update sustainability update
• Modern Slavery Act statement • ethics and compliance update • social purpose strategy update
• CR – social purpose • annual review of Charitable • human rights impact assessment
• review final draft content for inclusion Donations Policy • ethics and compliance update
in the 2018 Annual Report CR Report/ • governance and regulatory update
CR Committee Report
• governance and regulatory update

Below are examples of some of the governance and regulatory GOVERNANCE

matters considered by the Committee during the course of The CR Committee comprises Nelson Silva, Chairman, and all
the year: of the non-executive directors in office at the date of this Report.
Other members include Paul Walsh, Chairman of the Board;
• the provisions of the 2018 Code and The Companies Dominic Blakemore, Group CEO and Karen Witts, Group CFO.
(Miscellaneous Reporting) Regulations 2018
• reporting requirements such as the obligation to produce a Only members of the CR Committee have the right to attend CR
statement in accordance with Section 172 of the Companies Committee meetings. Other individuals, such as the Group
Act 2006 (CA 2006) Safety and Sustainability Director, Group Head of Ethics and
• the Company’s arrangements for workforce engagement Compliance, Group Engagement Director and external advisors,
and the methodology to be used for providing feedback to may be invited to attend for all or part of any meeting, as and
the Board when appropriate.
• proposed reform of the UK audit framework including
A quorum for a meeting is two. The CR Committee met three
proposed changes to the UK audit market and how it is
times during the year. Attendance is set out in the table on
structured and regulated
page 90.
• the Streamlined Energy and Carbon Reporting
Regulations 2018 The objective of the CR Committee is to assist the Board and the
• the Wates Corporate Governance Principles for Large Private Company in fulfilling its corporate responsibility in line with the
Companies 2018 Company’s strategy, policies and practices.

The Committee will continue to keep the Board informed about The CR Committee receives reports from the Global Safety and
the developments in governance and regulatory matters and to Sustainability Director, Group General Counsel and Company
ensure that the Company is compliant with regulatory and best Secretary, Group Head of Ethics and Compliance, Group Chief
practice guidelines, including the 2018 Code, which the People Officer and other senior managers to ensure that
Company will report against from the financial year ending progress is being made towards meeting the Group’s specific
30 September 2020. CR KPIs and our ongoing CR commitments.

92  Compass Group PLC Annual Report 2019

The CR Committee Chairman reports the outcome of its PERFORMANCE
meetings to the Board. The CR Committee’s performance was assessed as part of the
independent external evaluation of the Board and its
The CR Committee’s remit includes monitoring and ensuring committees undertaken by Lintstock during the year.
executive management and the Board are appropriately
prepared for changes in the legislative, regulatory and best The CR Committee’s performance and composition were rated
practice landscape and in this regard, is supported by the Group positively, as was the effectiveness of the Chairman. Its
General Counsel and Company Secretary. During the year, the monitoring of corporate governance developments relating

Governance
CR Committee thoroughly reviewed its terms of reference to to the Group also received high ratings. The corporate
align them more closely to the Company's strategy, including responsibility KPIs were positively rated and it was noted that
its Performance, People and Purpose strategic initiatives, the these were in the process of being developed to align with the
provisions of the 2018 Code and best practice. Going forward, Company’s strategy.
the CR Committee will also oversee compliance with the 2018
Code requirements in relation to stakeholder engagement In order to reflect the broader scope of matters falling within
from 1 October 2019, including workforce engagement and the CR Committee’s remit, it was agreed that the number of
employee voice. meetings would increase from two to a minimum of three each
year and that the duration of the meetings should also be
The CR Committee is authorised to seek information from any increased. It was noted that the terms of reference of the CR
employee of the Group to enable it to perform its duties, and if Committee had been revised in the year to ensure alignment
necessary, at the expense of the Company, can obtain legal with the Company’s strategy and to reflect the provisions of
or other independent professional advice on matters covered the 2018 Code, regulations and best practice.
by its terms of reference. The terms of reference of the CR
Committee are reviewed annually to ensure that they continue Other priorities identified for improvement in the CR
to be fit for purpose. Committee’s performance in the coming year included
enhanced focus on food safety and sustainability.
The CR Committee Chairman attends the AGM to meet
with shareholders and to answer any questions on the An update on progress will be provided in the 2020 Annual
Committee’s activities. Report and Accounts.

Compass Group PLC Annual Report 2019  93

Nomination Committee Report
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present the
Nomination Committee’s (the Committee) Report for the
financial year ended 30 September 2019.

YEAR IN REVIEW
Succession planning continues to be the primary focus of the
Committee’s work.

During the year, the Committee considered the appointment of

Karen Witts as Group Chief Financial Officer (Group CFO), the
reappointment of Stefan Bomhard and the extension of my own
tenure for a further three years. I am very happy to report that in
Paul Walsh each case, the Committee’s recommendations were
Chairman of the Nomination Committee subsequently endorsed by the Board. I have gained much in
terms of challenge and development during my two terms as
MAIN RESPONSIBILITIES Chairman at Compass and I look forward to working with the
• reviews the structure, size and composition of the Board and executive management in steering the Company to
Board and its committees, making recommendations continued success over the coming years.
to the Board regarding any changes considered
A key component of work for the Committee this year was the
necessary in the identification/nomination of new
annual review of the Committee’s terms of reference in the
directors, the reappointment of existing directors and
context of the UK Corporate Governance Code 2018 (the 2018
Committee appointments
Code). The new terms of reference have been updated to reflect
• ensures there continues to be an appropriate balance of the 2018 Code and have been in use since 1 October 2019. The
skills, knowledge, experience and diversity Committee will report against the 2018 Code in next year’s
• reviews the senior leadership needs of the Group to Annual Report.
enable the Group to compete effectively in
the marketplace The Committee assessed the time commitment needed from
• advises the Board on succession planning for executive non-executive directors and from me in my capacity as
director appointments Chairman of the Board, to ensure that each individual has
• oversees a formal and rigorous annual evaluation of the sufficient time to devote to their duties, together with any
performance of the Board, its committees and training and development needs. To enable Karen Witts to
individual directors embrace her new role as Group CFO as speedily as possible, the
Committee ensured that an appropriate induction programme
• oversees the Company’s policy, objectives and strategy
was prepared for her and details can be found on page 96.
on diversity and inclusion
• the Committee also has standing items that it Over the next 12 months, with support from my colleagues, we
considers regularly, e.g. the annual review of its own will continue to focus on the need to refresh the membership of
terms of reference the Board and its committees to help the Company achieve its
strategic objectives.
MEMBERSHIP AND ATTENDANCE
Member Eligible to Meetings
Member since attend1 attended
Paul Walsh Jan 2014 2​ 2
Carol Arrowsmith Jun 2014 2 2
Paul Walsh
John Bason Jun 2011 2 2 Chairman of the Nomination Committee
Dominic Blakemore2 Jan 2018 –​ –​
Stefan Bomhard May 2016 2 2 26 November 2019
John Bryant Sep 2018 2 2
Anne-Francoise Nesmes Jul 2018 2 2
Nelson Silva Jul 2015 2 2
Ireena Vittal Jul 2015 2 2

1. The maximum number of meetings that a member was eligible

to attend.
2. Stepped down from the Committee on 1 February 2019.

94  Compass Group PLC Annual Report 2019

GOVERNANCE • considers candidates from different genders and a wide range
The Nomination Committee’s key objective is to review and of backgrounds such as ethnicity, race, religion
monitor the Board’s composition and to ensure that the Board and education
comprises individuals with the right blend of skills, knowledge • considers candidates on merit and against objective
and experience to maintain a high degree of effectiveness in criteria, ensuring that appointees have enough time to
discharging its responsibilities. The Committee meets at least devote to the position, considering other potentially
twice a year. A quorum for a meeting is three, the majority of significant commitments
which must be independent non-executive directors.
INDUCTION OF GROUP CFO
The Chairman must not chair the meeting when it is dealing with Karen Witts has been in role since 8 April 2019 and is bringing a
the appointment of his or her successor. A meeting to reappoint fresh perspective to the Board and its committees. As set out on
the Chairman will be chaired by an independent non-executive page 75, when a new Board member joins Compass they receive
director. The outcome of Committee meetings is reported by the a formal, comprehensive and tailored induction designed to suit
Committee Chairman to the Board. their individual needs and their role. The induction programme

Governance
includes activities and meetings with key personnel, technical
Only members of the Committee have the right to attend briefings and site visits. This is an effective way of introducing
Committee meetings. Other individuals, such as the Group them to the Group’s culture and of ensuring that they have the
CEO, the Group Chief People Officer and external advisors may information and support they need to understand the business
be invited to attend all or part of any meeting, as and and to enable them to be productive in their role.
when appropriate.
REAPPOINTMENT OF DIRECTORS
The Committee is authorised to seek information from any The Board’s policy is to ensure that the Board is made up of
employee of the Group to enable it to perform its duties and, if members with a range of skills and qualities to meet its primary
necessary, at the expense of the Company, can obtain legal or responsibility for promoting the success of the Company in a way
other independent professional advice on matters covered by its that ensures that the interests of shareholders and other
terms of reference. stakeholders are promoted and protected. The Board is
conscious of the length of tenure of non-executives when
The Committee Chairman attends the AGM to meet
formulating its succession planning process. Non-executive
with shareholders and answer questions on the
directors and the Chairman are generally appointed for a period
Committee’s activities.
of three years, which may be renewed for a further two terms.
TERMS OF REFERENCE Reappointment is not automatic at the end of each three year
The terms of reference of the Committee are reviewed annually term. The Nomination Committee considers the selection and
to ensure that they continue to be fit for purpose. reappointment of directors carefully before making a
recommendation to the Board.
A cross-functional working group was established in the year
under the stewardship of the Group General Counsel and Stefan Bomhard completed his first three year term in May
Company Secretary to consider and implement the changes 2019. In making its recommendation for his reappointment,
required under the 2018 Code. As a result, the Committee’s the Committee considered the composition of the Board and the
terms of reference have been substantially updated and the skills, experience and expertise of its membership to ensure that
Committee will report against the 2018 Code in next year’s it had the variety of perspectives and skills needed to help the
Annual Report. The terms of reference are available on the Company achieve its strategic aims. Stefan’s performance and
Company’s website www.compass-group.com. ability to contribute effectively to Board discussion and to
challenge the performance of management were considered.
BOARD APPOINTMENT PROCESS The Committee is satisfied that Stefan continues to be able to
The process for making new appointments to the Board is led by devote enough time to his duties at Compass, taking into
the Chairman. The Nomination Committee has procedures for account his position as CEO of Inchcape plc.
appointing a non-executive or an executive director which are
set out in its terms of reference. For example, when appointing In February 2020, the Chairman’s second term in office will
a chairman, this includes an assessment of the time come to an end. John Bason chaired that part of the relevant
commitment expected, recognising the need for availability in Nomination Committee meeting which considered the
the event of crises. Chairman’s reappointment.

Prior to making an appointment, the Nomination Committee In recommending his reappointment, the Committee considered
evaluates the balance of skills, knowledge, independence, the Chairman’s relationship and communications with Board
experience and diversity on the Board and, in consideration of members, his management of Board meetings and his ability,
this, prepares a description of the role and capabilities required, taking into account the responsibilities of his other mandates,
with a view to ensuring that the best placed individual for the role to devote sufficient time to Compass recognising the need for
is recommended to the Board for appointment. The Board availability in the event of crises.
promotes an environment which is supportive of all individuals
The Committee concluded that the Chairman’s contribution to
from diverse backgrounds and thus, in identifying suitable
Board leadership and Stefan’s contribution to Board and
candidates, the Nomination Committee normally:
committee discussion and debate remained both desirable and
• uses open advertising or the services of external advisors to valuable to the Company, resulting in the extension of both of
facilitate the search their tenures for a further term of three years.

Compass Group PLC Annual Report 2019  95

NOMINATION COMMITTEE REPORT (CONTINUED)
GROUP CFO INDUCTION
A comprehensive induction programme was arranged for Karen Witts to help her settle into her new role. This included meetings
with senior management and operational and functional teams around the Group and was structured to help Karen gain an insight
into how the business works on a day to day basis and to understand its strategic priorities, culture, values and people.

Since joining, Karen has attended business and budget reviews in the Asia Pacific, Continental Europe, Latin America, North
America and UK & Ireland regions. Site visits were arranged which included key locations in the Group. These visits gave Karen
an opportunity to meet with local management teams and other colleagues and to speak with them first hand and to listen to
their views.

Karen participated in the annual investor roadshow which was held in New York following the release of our half year results and
spent time meeting with investors. She has also had one to one meetings with her Board colleagues and has met with sector heads,
senior management and members of the Company’s governance and control functions.

Details of some of the activities undertaken by Karen are set out below:

Area Provided by Subjects covered and discussed

Global Business Senior Management • APAC, Continental Europe, North America and UK & Ireland
Sector Heads business reviews
• APAC, Continental Europe, Latin America, North America and UK & Ireland
business budget reviews
• half year results roadshow
• various site visits, including the US operations based in Charlotte, USA
Governance Group General Counsel • review of the governance framework and landscape
legal and and Company Secretary • Board and committee matters
compliance • overview of the Group’s legal and compliance framework
and material litigation
Health, Group Safety and • execution of safety and sustainability strategies, priorities and initiatives and
safety and Sustainability Director their alignment to the Performance, People and Purpose strategy
sustainability
Strategic Group CEO • overview of the Group’s businesses and business model, three year business
plan and Group Director of Strategy plan and strategic aims
business model and M&A • review of the Group’s M&A strategy
Finance Group Financial Controller • financial control framework and governance processes
• internal and external reporting of the Company’s results
Tax Head of Group Tax • review of the Group’s tax strategy and profile, principal uncertain tax
positions and areas requiring the exercise of judgement
• tax governance procedures and control framework
People Group Chief People Officer • review of the Group’s People strategy including succession planning,
diversity and inclusion and engagement initiatives
Group Reward Group Reward & Diversity • Group remuneration philosophy, executive remuneration and annual cycle
Director • long term incentive plan
International Group Director International • overview of International Clients portfolio and pipeline
Clients and Clients & Market • growth and innovation strategy and digital structure for Rest of World
Market Development • sales and retention excellence programmes
Development
Investor Interim Group Investor • Compass’ investment case, key areas of investor focus and
Relations Relations and Corporate IR annual programme
Affairs Director
Treasury Group Treasurer • overview of the Group’s treasury operations, governance, funding,
credit ratings, liquidity management, foreign exchange and interest rate
risk management
IT Group Chief Information • overview of the digital and technology function including in-depth reviews
Officer on strategy, operating model, initiatives and cyber security
Internal Audit Group Internal Audit • review of Group Internal Audit plan, internal control framework,
Director key financial controls, Speak Up programme and the biannual major
risk assessment process

96  Compass Group PLC Annual Report 2019

 Activity during the year
The key matters considered and discussed by the Committee during the year are set out below:

2018 ​ 2019 ​ ​
October ​ March ​ September
• considered appointment of Karen Witts ​ • considered renewal of Stefan ​ • annual review of terms of reference
as Group CFO Bomhard’s tenure for a further • considered renewal of Paul Walsh’s
three year term tenure for a further three year term
• reviewed time required from
the Chairman, SID and
non‑executive directors

Governance
• considered training requirements
for the directors as part of the
annual performance evaluation

TIME COMMITMENT AND TRAINING HAMPTON-ALEXANDER 2020 TARGET: % FEMALE

In line with its terms of reference, the Committee performs an
36%
annual review of the time required from the Chairman, SID and
non-executive directors to perform their duties. As part of this 33%
process, the Committee reflects on a director’s attendance at Compass
scheduled meetings and their availability at other times during Hampton-Alexander 2020 target
the year. In the year under review, directors were available, often
at short notice outside regular working hours, to discuss matters PERFORMANCE
that required a prompt decision, for example the approval of The Committee is required to conduct a review of its own
various acquisitions and disposals and contract approvals that performance, constitution and terms of reference to ensure that
did not fit with scheduled meetings. it is operating at maximum effectiveness and to recommend any
changes it considers necessary to the Board for its approval.
In consultation with the Chairman, the Committee also During the year, an external evaluation of the Board and its
considered the training that had been received by directors in Committees took place and the outcome of this review can be
the year, including technical updates from the Group General found on pages 76 and 77.
Counsel and Company Secretary and other in-house or external
subject experts and advisors, and future training needs that had In the context of the external evaluation by Lintstock, the
been identified to help promote a deeper understanding of the performance of the Nomination Committee was very highly rated
business, technical, statutory or regulatory developments. and seen to benefit from an appropriate blend of expertise.
The ongoing support of the Group Chief People Officer, who
DIVERSITY takes an active role in the appointment process of new Board
As a people business, our strength comes from an inclusive and members, was also considered to be of particular importance.
welcoming environment, where we recognise that the
experiences and perspectives which make us unique come The process by which Board appointments were made was rated
together in our shared values and vision. We strongly believe that highly and was seen to have improved. The proactive approach
the more our people reflect the diversity of our clients and of the Chairman in keeping the Board up to date on progress
consumers, the better equipped we are to service their needs. At during the recruitment process was considered to be
Board level, our approach to the appointment of new directors constructive and inclusive.
and senior executives reflects our drive to develop people and
value diversity, to ensure the optimal balance of experience and It was agreed that, in the coming year, the Committee would
backgrounds on our Board and committees. maintain its focus on management succession plans, including
the pipeline of new non-executive directors. Further priorities
When recruiting new directors, we instruct the external identified to assist the Nomination Committee to further improve
recruitment consultants to ensure that a balance of male and its performance included:
female candidates is put forward for consideration by the
Nomination Committee. Following Karen Witts’ appointment to • providing ongoing support to the new Group CFO
the Board in April 2019, female representation on our Board at • following up on the agreed development plans for potential
36% now exceeds the Hampton-Alexander target of 33% female succession candidates
representation at Board level by 2020. This positive trend is also • keeping abreast of fast-paced, disruptive changes affecting
reflected in the membership of the Executive Committee where the Group’s stakeholders, including wider society
the percentage of female members increased in the year • agreeing the Committee’s annual cycle of work to ensure that
to 38%. the Committee has sufficient time for meetings in light of its
workload and increasing governance requirements

An update on progress will be provided in next year’s

Annual Report.

Compass Group PLC Annual Report 2019  97

Directors’ Remuneration Report
DEAR SHAREHOLDER
On behalf of the Board, I am pleased to present the
Remuneration Committee’s Report for the financial year ended
30 September 2019 which is split into:

i. this Annual Statement with an ‘at a glance’ summary of the

remuneration decisions made during the year
ii. the summary of activities during the year
iii. the 2018-2021 Remuneration Policy (the Policy) (the
Policy Period)
iv. the Annual Remuneration Report on the implementation of
the Policy in the year ended 30 September 2019 and
Carol Arrowsmith proposed implementation for the next financial year
Chairman of the Remuneration Committee
CONTEXT FOR EXECUTIVE REMUNERATION
The last year has seen Compass perform well. The business
MAIN RESPONSIBILITIES achieved strong growth in organic revenue and operating profit
In line with the authority delegated by the Board, the through excellent performance in North America and
Remuneration Committee (the Committee) sets the improvements in Rest of World. Although Europe’s revenue
Company’s Remuneration Policy and is responsible for increased, its operating profit declined, reflecting a more
determining remuneration terms and conditions of uncertain macro environment. We have maintained a strong
employment for the Chairman of the Board and members of Group margin by focusing on productivity and pricing to offset
the Executive Committee, which comprises the executive inflation. Across the Group, we continue to focus on delivering
directors and other senior executives. efficiencies through our management and performance (MAP)
framework. The Group has continued to strengthen and simplify
The Committee: the portfolio and invested in bolt-on acquisitions and made
several disposals of non-core businesses. The business has
• ensures that the members of the Executive Committee also made good progress with its focus on Performance,
are appropriately incentivised to enhance the Group’s People and Purpose. Increasingly, these initiatives have been
performance and rewarded for their contribution to the supported through technology and digital solutions designed
success of the business by designing, monitoring and to drive efficiencies, optimise performance and improve
assessing incentive arrangements, including setting consumer experience.
stretching targets and assessing performance and
outcomes against them REWARDING PERFORMANCE
• reviews the remuneration arrangements for other senior The incentive outcomes for 2018-2019 were in line with our
executives within the Group, having regard to the wider approved Policy. Following strong overall performance, we
remuneration philosophy of the organisation when determined the outcomes of the annual bonus for Group and
developing policy and considering executives’ packages, North American performance as 78.3% and 98.3% respectively.
monitoring the relationship between them and those of The Committee believes the bonus outcomes appropriately
the wider workforce reflect the overall performance in 2018-2019 and more details
• maintains an active dialogue with shareholders, ensuring are set out in the Annual Remuneration Report on pages 113
their views and those of their advisors are sought and and 114.
considered when setting executive remuneration
For the Long Term Incentive Plan (LTIP) which vested in 2019,
MEMBERSHIP AND ATTENDANCE the TSR element vested in full because Compass ranked 16th
Member Eligible to Meetings against other FTSE 100 companies (excluding the financial
Member since attend1 attended
services sector) over the performance period. The targets we set
Carol Arrowsmith Jun 2014 5 5 based on growth in ROCE and cumulative AFCF were demanding
John Bason Jun 2011 5 5 and were also met in full. The Committee considers this result to
Stefan Bomhard May 2016 5 5 be an appropriate outcome given the performance. This has led
John Bryant Sep 2018 5 5 to an overall outcome for the LTIP of 100% of the maximum
Anne-Francoise Nesmes2 Jul 2018 5 4 opportunity. Further details are set out in the Remuneration
Nelson Silva Jul 2015 5 5 Report on page 116.
Ireena Vittal Jul 2015 5 5

1. The maximum number of meetings that a member was eligible

to attend.
2. Ms Nesmes was unable to attend the November meeting due to an
unavoidable prior commitment but provided her feedback on the
papers in advance.

98  Compass Group PLC Annual Report 2019

Salary adjustments for executive directors are aligned with During 2020, the Committee will be undertaking a full review
increases paid to employees within their region. Accordingly, of its Policy ahead of a vote at the 2021 AGM and will take
Dominic Blakemore, Gary Green and Karen Witts will receive account of these governance developments as well as the
salary increases of 2.6%, 3.1% and 2.1% respectively, which will wider executive remuneration landscape. We are aware of
take effect from 1 January 2020. changing expectations and the drive for equalisation of terms
across the wider workforce over the next Policy Period. Further
DIRECTOR CHANGES consideration will also be given to aligning management
Johnny Thomson stepped down from the Board on incentives to the Group’s strategic focus on Performance,

Governance
31 December 2018. His leaving terms were within the People and Purpose. These matters will be given careful thought
approved Policy, consisting of remuneration until the end of during the Policy review process. Engagement with our key
his employment. Payments in lieu of notice were subject to investors during our last Policy review in 2017 was constructive
mitigation and were reduced accordingly. All LTIP awards and helpful. We look forward to engaging with them on the
which would have vested following his departure were forfeit. Policy again in the coming year.
The shares from Mr Thomson’s 2015-2016 LTIP award which
vested in November 2018 remain subject to a two year post vest COMMITTEE EVALUATION
holding period. Mr Thomson was not eligible for an annual The findings of this year’s external evaluation of the performance
bonus payment in respect of 2018-2019. These terms are of the Remuneration Committee can be found on page 101.
set out in more detail on page 119 and are in line with those
previously announced. OTHER MATTERS
At our 2019 AGM, shareholders supported the resolution
Karen Witts was appointed to the role of Group CFO in October seeking approval to pay the full fee to each non-executive
2018 and commenced employment on 8 April 2019. Details of director in respect of each non-executive role they perform for
her terms set out on page 119 are in line with the announcement the Company without regard to the annual cap of £125,000 as
made on 11 October 2018 and on page 91 of the 2018 set out in the Policy. The Board has reviewed this element of
Annual Report and Accounts. how we operate our Policy following changes to the Companies
(Directors’ Remuneration Policy and Directors’ Remuneration
CORPORATE GOVERNANCE DEVELOPMENTS Report) Regulations 2019 which apply to companies reporting
The Committee has reviewed the legislative and best practice on financial years starting on or after 10 June 2019. As a result
developments in respect of director remuneration and of the review, the Board concluded it would be more appropriate
welcomes change to raise the bar in this area. The introduction to set the cap on directors’ fees by reference to the aggregate
of the UK Corporate Governance Code 2018 (the 2018 Code) cap in the Company’s articles of association of £2.25 million
which seeks to broaden the role of the Committee, as well as to which was approved by shareholders at the Company’s AGM in
introduce additional measures concerning director pay, has February 2017. This allows the Company to allocate
been carefully considered by the Committee during the year. In appropriately compensated duties to individual directors as
July, the Committee received a detailed update on the wider required whilst retaining current limits on the total non‑executive
workforce policies and practices. This supplements other director fees payable. Although this is not a matter for the
regular updates; for example, at the time decisions are taken in Remuneration Committee, as the non-executive director fees
respect of salary review for executive directors and the Executive must be included in the Remuneration Report, it is pertinent to
Committee, the Remuneration Committee is updated on our draw shareholder attention to the proposal.
global salary review budgets and trends.
More details of the proposed resolution can be found in the
Over the course of the year, preparations have been 2019 Notice of Meeting on pages 235 and 238.
undertaken to ensure that the Committee is well placed to fully
comply with the 2018 Code, as well as with the Shareholders’ CONCLUSION
Rights Directive II, both of which will be effective for Compass The voting outcome at the 2019 AGM in respect of the Annual
from the financial year ending 30 September 2020. The Remuneration Report for the year ended 30 September 2018
Company will report against the new regulations in next year’s together with the results of voting on the Policy at the 2018 AGM
Directors’ Remuneration Report. are set out on page 121.

The Committee also reviewed its terms of reference to ensure I look forward to welcoming you and receiving your support at
that they continue to be fit for purpose and in line with best the upcoming AGM.
practice. The review was undertaken with guidance from the
Group General Counsel and Company Secretary.

The new terms of reference were adopted by the Committee at

its meeting on 18 September 2019 and approved by the Board
on the same day. A copy of the terms of reference can be found Carol Arrowsmith
on the Company’s website www.compass-group.com. Chairman of the Remuneration Committee

26 November 2019

Compass Group PLC Annual Report 2019  99

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

At a glance
REMUNERATION IN 2018-2019
MEASURING PERFORMANCE
Bonus LTIP
Measuring performance Strategic KPI Weighting1 Weighting1

Growing and retaining our customer Organic Revenue Growth (ORG) 25% –
base and driving volumes
Delivering profit from our operations Profit Before Interest & Tax (PBIT) 55% –
Turning profit into cash Adjusted Free Cash Flow (AFCF)  15% 33.3%
Delivery against investments Return on Capital Employed (ROCE) – 33.3%
Effectiveness of our safety culture Lost Time Incident Frequency Rate (LTIFR) 2.5% –
Providing safe food and of the right quality Food Safety Incident Rate (FSIR) 2.5% –
Delivering returns for shareholders Total Shareholder Return (TSR) – 33.3%

1. Based on Group performance measures and LTIP based on the Plan vesting in year.

REMUNERATION OUTCOMES AS AT 30 SEPTEMBER 2019

Dominic Gary Karen
Element Blakemore Green Witts

Base salary at 30 September 2019 £975,000 US$1,442,000 £660,000

Pension (% of base salary) 20% 35% 20%
Benefits £34,000 US$76,000 £7,000
Annual bonus (% of max) 78.3% 98.3% 78.3%
LTIP (% of max) 100% 100% n/a

ANNUAL BONUS OUTCOME LTIP OUTCOME

The maximum annual bonus opportunity is 200% of base salary An award of 200% of base salary granted to Dominic Blakemore
for the Group CEO and 150% of base salary for other executive and Gary Green vested in respect of the three year performance
directors. One third of the bonus is deferred into shares for period ended on 30 September 2019. The results below
executive directors who have not achieved the pro-rata share represent the Group’s results and are applicable to both
ownership guideline, with all other payouts in cash. All cash executive directors. Karen Witts did not have any awards under
bonus and Deferred Bonus Shares are subject to malus and the LTIP vesting in 2019.
clawback. Performance measures and weightings are set out in
AFCF
more detail on page 114.
ROCE
The results below represent the Group’s results for 2018-2019. TSR
Gary Green’s bonus outcome relates to regional performance as Threshold Target Max
shown on page 114.
Group results • performance measured over the period 1 October 2016 to
30 September 2019
PBIT • payout of 100% of maximum performance
AFCF • two year holding period applies to vested shares
ORG • subject to malus and clawback
HSE*
Threshold Target Max
** Health Safety and Environment (HSE) is the combined outcome of the
LTIFR and FSIR.

• Group payout at 78.3% of maximum bonus

• North America payout at 98.3% of maximum bonus
• subject to malus and clawback

Share ownership guidelines

The share ownership guidelines for executive directors are 300% of base salary for the Group CEO and 250% of base salary
for other executive directors which is to be achieved over a five year period. Details of current share ownership vs the guidelines
are on page 120.

100  Compass Group PLC Annual Report 2019

Committee summary
GOVERNANCE COMMITTEE PERFORMANCE
The Committee consists entirely of independent non-executive This year’s external Board and Committee evaluation was
directors, as defined in the UK Corporate Governance Code conducted by independent board effectiveness advisors
2016 (the Code). Lintstock. Overall the performance of the Remuneration
Committee was rated highly.
The membership comprises Carol Arrowsmith, Chairman, and all
other non-executive directors in office at the date of this As part of the review, participants were asked to consider the
Directors’ Remuneration Report (DRR). Biographical details of alignment of the Policy with the Company’s strategy. A number

Governance
the current members of the Committee are set out on pages 70 of suggestions were made relating to the development of
and 71. Members of the Committee are appointed by the Board management incentives and the Committee agreed that these
following recommendation by the Nomination Committee. should be considered in the coming year in the context of the
next Policy review. To further enhance the effectiveness of the
Meetings attendance Committee, the priorities identified going forward were:
The Committee must meet at least twice a year. A quorum for a
meeting is two. • continuing to work with the executive team to evaluate
remuneration against the Company’s strategy and the
Only members of the Committee have the right to attend evolving external environment
Committee meetings. The Group General Counsel and Company • continuing to receive external input on key trends and
Secretary acts as Secretary to the Committee. The Group Chief developments in remuneration
People Officer and the Group Reward & Diversity Director attend
• maintaining an ongoing dialogue with investors and proxy
Committee meetings by invitation to advise the Committee on
advisory firms
Group policies and practice. Details of advisors to the Committee
• devoting more time to understanding compensation for the
can be found on page 121.
wider workforce beyond executive management
The Committee is authorised to seek information from any
As a result of these findings, appropriate arrangements have
employee of the Group to enable it to perform its duties and, if
been made within the Committee’s schedule for the coming year
necessary, at the expense of the Company, can obtain legal or
and an update on progress will be provided in next year’s report.
other independent professional advice on matters covered by its
terms of reference.

The terms of reference of the Committee are reviewed annually

to ensure that they continue to be fit for purpose. A copy of the
Committee’s terms of reference can be found on the Company
website www.compass-group.com.

The Chairman of the Remuneration Committee attends the AGM

to respond to any shareholder questions that might be raised on
the Committee’s activities.

Compass Group PLC Annual Report 2019  101

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Committee summary (continued)

Activity during the year

The key activities of the Committee during the year ended 30 September 2019 are set out below. In addition, the Committee
also reviews performance in relation to the Group wide share plans, approves any discretionary matters applied for individuals
below executive director level and considers other governance matters on a regular basis.

2018 ​ 2019
November ​ March ​ July
• reviewed salaries for the ​ • received an overview of total • received an update on wider
Executive Committee effective remuneration for the global employee remuneration and
1 January 2019 leadership team employment practice
• determined 2017‑2018 • approved the Karen Witts • received an update on corporate
performance outcomes for the LTIP Restricted Share Award Plan governance from advisors
and bonus plans
May September
• approved draft DRR for 2017‑2018
• approved grant of LTIP and • reviewed updated terms of
• set targets under the LTIP and
Restricted Share awards for reference for the Committee
other incentive plans below
Ms Witts • reviewed the Chairman’s fee
Executive Committee for
2018‑2019 • reviewed LTIP awards for the global • considered the draft DRR for
leadership team 2018‑2019
• set targets for 2018‑2019
bonus plans • received an update on external
remuneration trends from advisors

STRUCTURE AND CONTENT OF THE DIRECTORS’ • how the Policy approved by shareholders at the 2018 AGM
REMUNERATION REPORT (DRR) was implemented in the year ended 30 September 2019
This DRR has been prepared on behalf of the Board by the (the Annual Remuneration Report), the proposed approval of
Committee in accordance with the requirements of the an amendment to the operation of the Policy to replace the
Companies Act (CA 2006) and the Large and Medium-sized annual cap of £125,000 on the total fees payable to each
Companies and Groups (Accounts and Reports) (Amendment) non-executive director of the Company with the aggregate cap
Regulations 2013 (the 2013 Regulations). The policy on directors’ fees specified in the Company’s articles of
on remuneration of directors (the Policy) is set out on pages association and how the Policy will be implemented in the
103 to 109. The next two sections of the DRR cover the next financial year
following matters:

• the Company’s Remuneration Policy effective from

8 February 2018 and for three years thereafter, including
Auditable disclosures are the:
each of the components of directors’ remuneration (the
Policy Report) including: • executive directors’ single total figure of remuneration
–– how decisions on directors’ remuneration will be made and (page 112)
the philosophy and strategy behind those decisions • long term incentive awards (page 115)
–– the structure of remuneration packages for existing, • extant equity incentive awards held by executive
departing and new directors directors (page 118)
–– the impact of key performance measures on the potential • director changes during the year (page 119)
value of remuneration • non-executive directors’ remuneration (page 120)
–– key contractual terms of existing and new directors • directors’ interests (page 120)

102  Compass Group PLC Annual Report 2019

Remuneration Policy
This DRR sets out our Remuneration Policy. We consulted with Remuneration links corporate and individual performance with
shareholders extensively during 2017 when the Policy was being an appropriate balance between short and long term elements,
formulated for shareholders’ approval. This Policy applied with and fixed and variable components. The Policy is designed to
effect from 8 February 2018 when it was approved by incentivise executives to meet the Company’s key objectives. A
shareholders at the Company’s Annual General Meeting and, significant portion of total remuneration is performance related,
save in respect of the proposed amendment to the operation of based on a mixture of internal targets linked to the Company’s
the Policy to replace the £125,000 individual annual fee cap for key business drivers which can be measured, understood and
each non-executive director, will, in all other respects, continue accepted by both executives and shareholders.

Governance
to apply until 2021.
The Committee considers that the targets set for the different
For unvested share awards only, made prior to components of performance related remuneration are both
8 February 2018, the provisions of the Remuneration Policy appropriate and sufficiently demanding in the context of the
approved by shareholders in 2015 will continue to apply until all business environment and the challenges which the Group faces
long term incentive awards granted under that Policy have as well as complying with the provisions of the Code.
vested or lapsed.
The Committee has the discretion to amend certain aspects of
The Committee reviewed the Company’s remuneration the Policy in exceptional circumstances when considered to be
philosophy and structure to ensure that remuneration supports in the best interests of shareholders. Should such discretion be
the Company’s strategic objectives, is in line with best practice used, this will be explained and reported in the DRR for the
and can fairly reward individuals for the contribution that they following year.
make to the business. In doing this, we have regard to the size
and complexity of the Group’s operations and the need to
motivate and attract employees of the highest calibre.

Our Policy is designed to maintain stability in the executive team

and to ensure appropriate positioning against our comparator
groups. We believe our approach to be balanced and that it will
stand the test of time.

The Committee considers general pay and employment

conditions of all employees within the Group and is sensitive to
these, to prevailing market and economic conditions and to
governance trends when assessing the level of salaries and
remuneration packages of executive directors and other
members of the Executive Committee.

Compass Group PLC Annual Report 2019  103

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Remuneration Policy (continued)

COMPONENT PARTS OF THE REMUNERATION PACKAGE

The key components of executive directors’ remuneration for the Policy Period are summarised below:

Component and
link to strategy Operation of component Maximum opportunity Performance measures

BASE Base salaries are reviewed Whilst there is no prescribed None.

annually with any increases formulaic maximum, any increases
SALARY
normally taking effect on will take into account prevailing
Reflects the
1 January of each year. market and economic conditions as
individual’s role,
Salaries are appropriately well as increases for the wider
experience and
benchmarked and reflect the workforce.
contribution.
role, job size and responsibility Increases may be above this when
Set at levels to as well as the performance and an executive director progresses in
attract and retain effectiveness of the individual. the role; gains substantially in
individuals of the
experience; there is a significant
calibre required
increase in the scale of the role; or
to lead the
was appointed on a salary below
business.
the market median. These will be
appropriately explained in the
relevant year’s annual report.

BENEFITS Benefits include, but are not The cost of providing these benefits None.
limited to, healthcare can vary in accordance with market
AND
insurance for executive conditions, which will, therefore,
PENSION directors and their determine the maximum value.
To provide a dependants, limited financial
competitive level For the Company’s pension cash
advice, life assurance and allowance (or pension contribution
of benefits. car benefit. as appropriate), from 8 February
These are offered to executive 2018 the annual maximum will be
directors as part of a 20% of base salary for new UK
competitive remuneration appointees and 35% phasing down
package. to 20% of base salary for current UK
Executive directors are invited based executive directors. The
to participate in the Company’s reduction will take place over a
defined contribution pension three year period commencing in
scheme or to take a cash January 2019. Dominic Blakemore
allowance in lieu of voluntarily elected to adopt the 20%
pension entitlement. rate of contribution from 1 January
2018. The annual maximum cash
allowance for Gary Green remains
at 35% of base salary.

ANNUAL The annual bonus is earned by The target award for the Group CEO Performance is measured over the financial year. Performance
the achievement of one year is 100% of base salary, with a measures are determined by the Committee each year and
BONUS
performance targets set by the further maximum of 100% for may vary to ensure that they promote the Company’s business
Incentivise and
Committee at the start of each enhanced performance. No bonus strategy and shareholder value.
reward the
financial year and is delivered is payable for below threshold The performance measures and their percentage weightings
achievement of
in cash or a combination of performance but increases on a may vary, depending upon a director’s area of responsibility.
stretching one
cash and Deferred Bonus straight line basis to target payout
year key Performance measures may include, but are not limited to,
Shares. and from target to maximum.
performance profit, revenue, margin and cash flow. Strategic KPIs may also
targets set by the The Committee retains the The target award for other be chosen. However, the overall metrics would always be
Committee at the discretion to adjust the bonus executive directors is 75% of base substantially weighted to financial measures.
start of each outcomes to ensure that they salary, with a further maximum of
reflect underlying 75% of base salary available for Annual bonus targets are set with reference to internal
financial year.
business performance. enhanced performance. No bonus budgets and analyst consensus forecasts, with maximum
is payable for below threshold payout requiring performance well ahead of budget.
The annual bonus is subject to
malus and/or clawback in the performance but increases on a A bonus underpin may be operated so that the bonus outcome
event of discovery of a material straight line basis to target payout is reduced if underpin performance is not met.
misstatement in the accounts and from target to maximum. Bonus will be deferred when share ownership guidelines have
or in the assessment of a not been met, usually with a minimum level of deferral of one
relevant performance third of the bonus earned and typically deferred for a period of
condition or where the action three years.
or conduct of a participant Dividend equivalents may be accrued on Deferred
amounts to fraud or serious Bonus Shares.
misconduct or has a
Details of the specific measures and targets applying to each
detrimental impact on the
element of the bonus for the year being reported on are shown
reputation of the Group.
in the Annual Remuneration Report on page 114.

104  Compass Group PLC Annual Report 2019

Component and
link to strategy Operation of component Maximum opportunity Performance measures

LONG TERM INCENTIVE An annual conditional award of Awards may be made at the Performance is measured over three
ordinary shares which may be following levels of salary: financial years.
PLAN (LTIP)
earned after a single three year • Group Chief Executive: 300% Performance measures are AFCF,
Incentivise and reward executive
performance period, based on the • Other executive directors: 250%

Governance
directors for the delivery of longer ROCE and TSR, with each applying
achievement of stretching 40%, 40% and 20% respectively.
term financial performance and In exceptional circumstances, such
performance conditions. Executive
shareholder value. as the appointment of a new Relative TSR is measured relative to
directors normally hold vested LTIP
Share-based to provide alignment shares (net of any shares sold to executive director, this could be the companies comprising the TSR
with shareholder interests. meet tax and social security increased to 400% of base salary. comparator group at the start of the
liabilities) for a period of two years Any use of this exceptional limit period.
Return on capital employed would be appropriately explained.
post vesting. LTIP targets are set with reference to
(ROCE) For performance measures, other internal budgets and analysts’
ROCE supports the strategic focus Calculations of the achievement of
the targets are independently than TSR, 0% of the award vests for consensus forecasts, with maximum
on growth and margin through
performed and are approved by the below threshold performance, payment requiring performance well
ensuring that cash is reinvested to
Committee. To ensure continued increasing to 50% vesting on a ahead of budget.
generate strong returns with capital
alignment between executive straight line basis for achievement of Details of the targets for LTIP awards
discipline.
directors’ and shareholders’ on target performance, increasing to vesting and granted are set out as
Adjusted free cash flow interests, the Committee also maximum vesting on a straight line required in the Annual
(AFCF) reviews the underlying financial basis for achievement of maximum Remuneration Report on page 116.
The generation of cash is performance of the Group and performance.
For awards made prior to 8 February
fundamental to the ongoing success retains its discretion to adjust vesting The element of an award based on 2018, the awards were based on
of the Group and the use of AFCF as if it considers that performance is relative TSR will vest in full for top AFCF over the three year
an LTIP performance measure unsatisfactory. quartile performance achievement performance period, growth in ROCE
directly aligns to this. and 25% of that element of the and the Company’s TSR over the
Dividend equivalents may be
award will vest if performance is at
Relative total shareholder accrued on the shares earned from
the median. Awards will vest on a
performance period relative to the
LTIP awards. companies comprising the TSR
return (TSR) straight line basis between median
Malus and clawback rules operate in comparator group at the start of the
The third performance measure of and top quartile performance
respect of the LTIP. The Committee relevant period. Each measure
TSR provides direct alignment achievement. No shares will be
may decide at any time before an being equivalent to one third of
between the interests of executive released for this element of an award
award vests, or for a period of three the total award.
directors and shareholders. if the Company’s TSR performance
years after an award vests, that any is below the median.
participant will be subject to malus
and/or clawback in the event of
discovery of a material misstatement
in the accounts or in the assessment
of a relevant performance condition,
or where the action or conduct of a
participant amounts to fraud or
serious misconduct or has a
detrimental impact on the reputation
of the Group.
Awards are delivered in shares.
However, the rules contain excepted
provisions to deliver value in cash
if necessary (for example, due to
securities laws), subject to the
discretion of the Committee,
determined at any time up to
their release.
In the event of a change of
control, any unvested awards
will vest immediately, subject to
satisfaction of performance
conditions and reduction on a
time apportioned basis.

NOTES TO THE REMUNERATION POLICY TABLE

The Committee may make minor amendments to the Policy (for example for tax, exchange control, regulatory or administrative purposes) without obtaining
shareholder approval.
The Remuneration Policy for executive directors differs from that of other members of the Executive Committee solely in respect of quantum of the various
components and remuneration. Executive directors have a greater proportion of their total remuneration package at risk than other employees; however, the
structure and principles of incentives are broadly consistent. The wider employee population of the Group will receive remuneration that is considered to be
appropriate in relation to their geographic location, level of responsibility and performance.

Compass Group PLC Annual Report 2019  105

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Remuneration Policy (continued)

CLOSED INCENTIVE PLANS SHARE OWNERSHIP GUIDELINES

The LTIP described in the table on page 105 (known as The In order that their interests are linked with those of shareholders,
Compass Group PLC Long Term Incentive Plan 2018) is the directors are expected to build up and maintain a personal
primary form of equity incentive for executive directors. At the shareholding in the Company.
date of this DRR, there are outstanding awards over 233,799
shares which have been made to executive directors under the As a result of the Remuneration Policy review, and to bring the
previous long term incentive plan, The Compass Group PLC share ownership guidelines (the guidelines) into line with
Long Term Incentive Plan 2010. prevailing best practice, and as part of a rebalanced overall
remuneration package, with effect from 8 February 2018, the
DILUTION LIMITS requirement for the Group CEO was increased to a personal
All of the Company’s equity based incentive plans incorporate shareholding of 300% of base salary and 250% for all other
the current Investment Association Share Capital Management executive directors. No changes were made to the level of
Guidelines (IA Guidelines) on headroom which provide that shareholding required for non-executive directors which remains
overall dilution under all plans should not exceed 10% over a 10 as a personal shareholding equal to the value of their base fee.
year period in relation to the Company’s issued share capital (or
reissue of treasury shares), with a further limitation of 5% in any The guideline shareholding may be achieved by executive
10 year period for executive plans. directors retaining shares received as a result of participating in
the Company’s share plans. The guidelines specifically exclude
The Committee monitors the position regularly and prior to the the need to make a personal investment should awards not vest.
making of any award, ensures that the Company remains within Non-executive directors are generally expected to purchase
these limits. Any awards which are required to be satisfied by shares equating to a minimum value of one third of their net of
market purchased shares are excluded from such calculations. tax fee each year until the guideline is met. The required level of
On 30 September 2019, the Company held 3,329,634 treasury executive shareholding is expected to be achieved within a five
shares. During the financial year ended 30 September 2019, year period, commencing from the date of appointment or date
242,307 shares were purchased in the market by the trustees of of change of LTIP opportunity, whichever is the later.
The Compass Group PLC All Share Schemes Trust. 2,341,811
treasury shares and 54,852 market purchased shares were used Directors’ shareholdings are reviewed annually by the
in the year to satisfy the Company’s obligations under the Committee to ensure that directors are on course to achieve
Group’s employee equity incentive schemes. As at 30 their guideline shareholding within the period required.
September 2019, the Company’s headroom position, which However, if it becomes apparent to the Committee that the
remains within the current IA Guidelines, was as shown in the guidelines are unlikely to be met within the timeframe, then the
charts below: Committee will discuss with the director a plan to ensure that
they are met over an acceptable timeframe. The grant of future
LTIP awards to an executive director will be conditional upon
reaching the appropriate threshold in the required timeframe.
Where executive directors have not achieved the minimum
guideline effective for the period, one third of their cash bonus
will be deferred into shares for three years.

Details of the interests of directors in shares and equity

incentives are set out on page 120, together with the extent to
which each of the directors has complied with the current
guidelines as at 30 September 2019.

Headroom as at 30 September 2019

10% IN 10 YEARS 5% IN 10 YEARS

1.05%
1.05%
0.91%

8.04% 3.04%
0.91%
Headroom Headroom
Discretionary options Discretionary options
LTIP LTIP

106  Compass Group PLC Annual Report 2019

ILLUSTRATIONS OF APPLICATION OF THE REMUNERATION POLICY
The graphs below show an estimate of the remuneration that could be received by executive directors in office at 1 October 2019
under the Policy set out in this DRR for 2019‑2020. Each bar gives an indication of the minimum amount of remuneration payable,
remuneration payable at target and at maximum performance to each director under the Policy.

Each of the bars is broken down to show how the total under each scenario is made up of fixed elements of remuneration, the annual
bonus and the LTIP.

Governance
Dominic Blakemore Gary Green1
ILLUSTRATION OF PACKAGE ILLUSTRATION OF PACKAGE

Minimum 100% £1.2m Minimum 100% £1.6m

Target 33% 26% 41% £3.7m Target 40% 22% 38% £3.9m
Maximum 20% 32% 48% £6.1m Maximum 26% 28% 46% £6.1m
0 £1m £2m £3m £4m £5m £6m £7m 0 £1m £2m £3m £4m £5m £6m £7m

Karen Witts
ILLUSTRATION OF PACKAGE

Minimum 100% £0.8m Fixed Pay

Target 37% 23% 40% £2.2m Annual Bonus

Maximum 23% 29% 48% £3.4m
LTIP
0 £1m £2m £3m £4m

The scenarios in the above graphs are defined as follows:

FIXED ELEMENTS OF REMUNERATION

Fixed pay includes annual base salary, pension and benefits:

• annual base salary as at 1 October 2019

• value of benefits as noted in the single figure table on page 112
• pension cash allowance as at 1 October 2019

​ ​ Minimum performance Target performance Maximum performance

ANNUAL BONUS ​ 0% 50% 100%
(payout as a % of maximum opportunity)
LONG TERM INCENTIVE PLAN ​ 0% 52.5%2 100%
(vesting as a % of maximum opportunity)

1. Gary Green is paid in US dollars. For reporting purposes, this pay is converted into sterling at an exchange rate of US$1.2762/£1 as used elsewhere in the
Annual Report.
2. Based on AFCF and ROCE performance measures vesting at 50% of maximum and the TSR measure paying out at 62.5% of maximum (midway between
threshold and maximum payout).

No share price growth or dividend accrual has been incorporated in the values relating to the LTIP.

Compass Group PLC Annual Report 2019  107

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Remuneration Policy (continued)

APPROACH TO RECRUITMENT REMUNERATION EXECUTIVE DIRECTORS’ SERVICE AGREEMENTS

The Committee will apply the same Remuneration Policy during It is the Company’s policy that executive directors have rolling
the Policy Period as that which applies to existing executive service contracts.
directors when considering the recruitment of a new executive
director in respect of most elements of remuneration, that is: The current executive directors’ service contracts contain the
base salary, pension and benefits, and short and long term key terms shown in the table below:
incentives. New UK executive directors will, however, be provided
Service contract key terms by provision
with a pension cash allowance (or contribution) of 20% of base Provision Detailed terms
salary, in line with the level of pension provided to Compass UK
REMUNERATION • base salary, pension and benefits
management. It is envisaged that the maximum level of variable
• car benefit
remuneration which may be granted to a new executive director
• family private health insurance
would be within plan rules and identical to the Policy maximum
• life assurance
opportunity for existing executive directors and the Group CEO.
• financial planning advice
However, in exceptional circumstances such as the recruitment
• 25 days’ paid annual leave
of a new executive director, a maximum LTIP award of up to
• participation in the annual bonus
400% of base salary may be awarded. Additionally, to support the
plan, subject to plan rules
successful building up of a shareholding in compliance with the
• participation in the LTIP, subject to
share ownership guidelines, executives will also be required to
plan rules
have one third of their annual bonus deferred into shares when
CHANGE OF • no special contractual provisions
the share ownership guideline is not achieved. The required level
CONTROL apply in the event of a change
of shareholding is expected to be achieved within a five year
of control
period in accordance with our share ownership guidelines.
NOTICE PERIOD • 12 months’ notice from the Company
Other arrangements may be established specifically to facilitate • 6 months’ notice from the director
recruitment of a particular individual, albeit that any such (12 months from Mr Blakemore)
arrangement would be made within the context of minimising the TERMINATION Payment in lieu of notice equal to:
cost to the Company. The policy for the recruitment of executive PAYMENT • 12 months’ base salary
directors during the Policy Period includes the facility to provide a • pension supplement
level of compensation for forfeiture of bonus entitlements and/or • 10% of base salary in respect
unvested long term incentive awards from an existing employer, if of benefits
any, and the additional provision of benefits in kind, pensions and All of the above would be paid in
other allowances, such as relocation, education and tax monthly instalments, subject to an
equalisation, as may be required in order to achieve a successful obligation on the part of the director to
recruitment. Any arrangement established specifically to mitigate his/her loss such that
facilitate the recruitment of a particular individual would be payments will either reduce, or cease
intended to be of comparable form, timing, commercial value completely, in the event that the
and capped as appropriate. The quantum, form and structure of director gains new employment/
any buyout arrangement will be determined by the Committee remuneration
taking into account the terms of the previous arrangement being RESTRICTIVE • during employment and for
forfeited. The buyout may be structured as an award of cash or COVENANTS 12 months after leaving
shares. However, the Committee will normally have a preference
for replacement awards to be made in the form of shares, The historic policy on the payment of bonus on termination,
deliverable no earlier than the previous awards. Where an which was in place prior to June 2008, was the provision of a
executive director is appointed from either within the Company or payment, at par or target, of bonus in respect of the notice
following corporate activity/reorganisation, the normal policy period, where the Company exercised its right to make a
would be to honour any legacy incentive arrangements to run off payment in lieu of notice. Mr Green’s service contract is based
in line with the original terms and conditions. on this historic policy. When introducing the revised policy in
June 2008 and after careful consideration, the Committee
The policy on the recruitment of new non-executive directors
concluded that it was not in shareholders’ interests to migrate
during the Policy Period would be to apply the same
such contracts onto the amended policy. Service contracts for
remuneration elements as for the existing non-executive
Messrs Blakemore and Thomson and Ms Witts fully comply with
directors. It is not intended that variable pay, cash supplements,
the policy in effect from June 2008. All executive directors’
day rates or benefits in kind be offered, although in exceptional
service contracts impose a clear obligation to mitigate such
circumstances such remuneration may be required in currently
payment should a departing executive director take on new
unforeseen circumstances.
employment or receive alternative remuneration.
The Committee will include in annual reports details of the
Mr Green’s service contract was entered into before 27 June
implementation of the Policy as utilised during the Policy Period
2012 and has not been modified or renewed on or after that
in respect of any such recruitment to the Board.

108  Compass Group PLC Annual Report 2019

date. Consequently, remuneration payments or payments NON-EXECUTIVE DIRECTORS’ REMUNERATION
for loss of office that are required to be made under The fees for the non-executive directors are reviewed and
Mr Green’s contract are not required to be consistent with determined by the Board each year to reflect appropriate market
the current Policy. conditions and may be increased if considered appropriate. The
fees for the year under review comprised a base fee of £86,000
Whilst unvested awards will normally lapse, the Committee may per annum, which includes membership of the Audit, Corporate
in its absolute discretion allow for awards to continue until the Responsibility, Nomination and Remuneration Committees.
normal vesting date and be satisfied or to be accelerated (for From 1 October 2019, following a market review, the base fee
example on death), subject to achievement of the attendant was increased to £88,000.
performance conditions. In such circumstances, awards vesting
will normally be prorated on a time apportioned basis, unless the Subject to a cap on the maximum amount of fees payable to any
Committee determines otherwise. Any such discretion in respect non-executive director of £125,000 per annum, an additional fee
of leavers would only be applied by the Committee to ‘good of £30,000 per annum was payable where a non-executive
leavers’ where it considers that continued participation is director acted as Chairman of the Audit, Remuneration or

Governance
justified, for example, by reference to performance prior to the Corporate Responsibility Committee and an additional fee of
date of leaving. The malus and clawback provisions would £30,000 per annum was also payable to the director nominated
continue to apply in the event that any such discretion as Senior Independent Director (SID). These fees remain
was exercised. unchanged for the coming year. Non-executive directors are
not eligible for pension scheme membership, bonus, incentive
Service contracts outline the components of remuneration paid arrangements or other benefits, save reimbursement of
to the individual but do not prescribe how remuneration levels travel costs.
may be adjusted from year to year.
As more fully described in the Notice of Meeting on pages 235
The senior executives who are members of the Executive and 238, at our 2019 AGM, we received shareholder approval to
Committee, and who are referred to in note 4 to the pay the full fee to each non-executive director in respect of each
consolidated financial statements on page 166, have similar non-executive role they perform for the Company without regard
service contracts. to the annual cap of £125,000 as set out in the Policy. We have
reviewed this element of how we operate our Policy and, as a
The executive directors in office at the date of this DRR have
result of that review, we concluded that it would be more
served on the Board for the periods shown below and have
appropriate to set the cap on directors’ fees by reference to the
service agreements dated as follows:
aggregate cap in the Company’s articles of association approved
Length of Board by shareholders in 2017. No other changes are proposed to the
service as at Company’s overall approach to the payment of fees to non-
Executive director Date of contract 30 Sep 2019
executive directors, as set out in the shareholder approved Policy.
Dominic Blakemore 12 Dec 2011 7 years,
7 Nov 20171 7 months Non-executive directors have letters of engagement setting out
Gary Green 29 Dec 2006 12 years, their duties and the time commitment expected. They are
27 Nov 20072 9 months appointed for an initial period of three years, after which the
Karen Witts 10 Oct 20183 5 months appointment is renewable at three year intervals by mutual
consent. In accordance with the Code, all directors offer
1. Appointment was formally revised from 1 October 2017. themselves for annual re-election by shareholders. Details of the
2. Appointment was formally revised from 1 November 2007.
3. Ms Witts was appointed to the Board as Group CFO with effect from appointments of non-executive directors (in office at the date of
8 April 2019. this DRR) which are terminable without compensation are set out
in the table below, together with the dates on which their
CHAIRMAN
appointments have been formally revised:
The fee for the Chairman is reviewed annually by the Committee
with any increase taking effect on 1 October. The Chairman is Total length
not eligible for pension scheme membership, bonus or incentive Original of service
Non-executive date of Letter of as at
arrangements. Costs in relation to business and commuting director appointment engagement 30 Sep 2019
travel will be reimbursed. The Chairman’s appointment is
Carol Arrowsmith 1 Jun 2014 14 May 2014 5 years,
terminable without compensation on six months’ notice from
8 Mar 2017* 4 months
either side. Following a market review and consideration by the
John Bason 21 Jun 2011 10 May 2011 8 years,
Committee, from 1 October 2019 the Chairman’s fee was
8 May 2014* 3 months
increased from £560,000 to £575,000 per annum.
8 Mar 2017*
The Chairman has a letter of engagement dated 19 June 2013 Stefan Bomhard 5 May 2016 5 May 2016 3 years,
in respect of his original appointment as a non-executive 13 Mar 2019* 4 months
director for a period of three years from 1 January 2014. John Bryant 1 Sep 2018 17 May 2018 1 year,
Mr Walsh became Chairman at the conclusion of the Company’s 1 month
AGM on 6 February 2014. Mr Walsh will complete his second Anne-Francoise 1 Jul 2018 17 May 2018 1 year,
three year term as Chairman on 6 February 2020. At the Nesmes 3 months
recommendation of the Nomination Committee, his term was Nelson Silva 16 Jul 2015 16 Jul 2015 4 years,
extended on 18 September 2019 for a further three year term 8 Mar 2018* 2 months
until February 2023. Ireena Vittal 16 Jul 2015 16 Jul 2015 4 years,
8 Mar 2018* 2 months

** Date on which appointment was formally revised.

Compass Group PLC Annual Report 2019  109

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report

REMUNERATION IN DETAIL FOR THE YEAR ENDED 30 SEPTEMBER 2019
Total Shareholder Return (TSR)
The performance graph below shows the Company’s TSR performance against the performance of the FTSE 100 over the 10 year
period to 30 September 2019. The FTSE 100 Index has been chosen as a broad equity market index of which the Company has been
a constituent member throughout the period.

TOTAL SHAREHOLDER RETURN INDICES

COMPASS VS FTSE 100

700

600

500

400

300

200
Compass
FTSE 100 100

(rebased) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(September)

PAY FOR PERFORMANCE

The Committee believes that the Policy and the supporting reward structure provide a clear alignment with the strategic objectives
and performance of the Company. To maintain this relationship, the Committee regularly reviews the business priorities and the
environment in which the Company operates. The table below shows the Group CEO’s total remuneration over the last 10 years and
the achieved annual variable and long term incentive pay awards as a percentage of the plan maxima. The values disclosed for the
years ended 30 September 2018 and 2019 relate to Mr Blakemore and in earlier years to Mr Cousins.

​ 2010 2011 2012 2013 2014 2015 2016 2017 20181 20192
Single total figure 5,614 4,410 4,867 5,532 6,298 5,325 5,822 5,617 4,5683 4,659
of remuneration
£000
Annual variable element: 96.0 75.0 71.8 84.5 87.3 88.7 85.8 68.9 95.9 78.3
award payout against
maximum opportunity
%
LTIP vesting rates 100 100 100 98.0 100 79.0 84.5 74.5 95.0 100
against maximum
opportunity
%

1. Mr Blakemore was Deputy Group CEO from 1 October 2017 to 31 December 2017 and Group CEO from 1 January 2018 to 30 September 2018.
2. Includes indicative LTIP vesting of £1.951 million calculated by reference to the average market price of Compass Group PLC shares over the three months
from 1 July 2019 to 30 September 2019 of £20.21.
3. LTIP indicative vesting amount of £1.853 million was disclosed in the 2018 Annual Report and Accounts. Actual amount was £1.898 million.

110  Compass Group PLC Annual Report 2019

PERCENTAGE CHANGE IN REMUNERATION OF RELATIVE IMPORTANCE OF SPEND ON PAY
GROUP CHIEF EXECUTIVE OFFICER The following table sets out the amounts paid in share buybacks,
For the year ended 30 September 2019, the Group CEO dividends and total employee costs for the years ended
received 10.8% more in salary, 5.6% less in bonus and the same 30 September 2018 and 2019.
level of taxable benefits than the equivalent amounts for the year
2019 20181 Change
ended 30 September 2018. This is as a result of the 2018-2019 Dispersals £’000 £’000 %
year being the first full year Mr Blakemore was in the role of Share buybacks2 – – –​
Group CEO.

Governance
Dividends paid3 611 548 11.4
For the year ended 30 September 2019, all full-time equivalent Total employee costs4 11,370 10,556 7.7
employees based in the UK received 3.5% more in salary, 5.8%
1. Prior year comparatives have been restated upon adoption of IFRS 15.
less in bonus and 4.9% less in taxable benefits compared to the 2. At the AGM on 7 February 2019, shareholders approved resolution 21 to
equivalent amounts for the year ended 30 September 2018. The give the directors authority to make limited on market purchases of up to
UK employee workforce was chosen as the most suitable 10% of the Company’s ordinary shares. No shares were repurchased
during the financial year ended 30 September 2019. However, the
comparator group as the individual undertaking the Group CEO directors consider it desirable for such general authority to be available to
role has been based in the UK during each relevant year and pay maintain an efficient capital structure whilst at the same time retaining the
changes across the Group vary widely depending on local flexibility to fund any bolt-on acquisitions.
3. The total dividend paid during the year ended 30 September 2018 was
market conditions. The nature of the Group CEO’s global role £548 million. The total share capital in issue on 30 September 2018
and responsibilities makes meaningful comparisons with any was 1,589 million ordinary shares of 111⁄20 pence. At the date of this
report there were 1,589,736,625 ordinary shares of 111⁄20 pence in issue
group of employees difficult and due caution should be of which 3,301,961 were held in Treasury for the purpose of satisfying
exercised in this regard. the Company’s obligations under employee equity incentive schemes.
Shares held in treasury are not eligible to participate in dividends and do
The CEO pay ratio will be published in next year’s report in not carry any voting rights. The total dividend paid during the year ended
30 September 2019 was £611 million and the share capital in issue
line with the timing of the regulatory requirement to do so. on 30 September 2019 was 1,589 million ordinary shares of 111⁄20 pence
This timing aligns to the next Policy review and the year in each. The total dividend per ordinary share for the year ended
30 September 2019 increased by 6.1%.
which we will report on regulatory-driven changes on broader
4. Total employee costs include wages and salaries, social security costs,
considerations of the wider workforce employment. share-based payments and pension costs for all employees, including
directors. The average number of employees, including directors and
part-time employees in operations during 2019, was 596,452
(2018: 595,841).

Compass Group PLC Annual Report 2019  111

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report (continued)

DIRECTORS’ SINGLE TOTAL FIGURE OF REMUNERATION

The table below sets out in a single figure the total amount of remuneration, including each element, received by each of the
executive directors in office for the year ended 30 September 2019.
Dominic ​ Gary ​ Karen ​ Johnny
Blakemore Green Witts Thomson
2019 2018 2019 2018 2019 2018 2019 2018
​ £000 £000 ​ £000 £000 ​ £000 £000 ​ £000 £000
Fixed pay ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Base salary1,2,3,4,10 956 863 ​ 1,121​ 1,027 ​ 318​ – ​ 164​ 649
Taxable benefits2,3,4,5,10 34​ 34 ​ 59​ 55 ​ 7​ – ​ 19​ 32
Pension2,3,4,6,10 191​ 201 ​ 392​ 360 ​ 64​ – ​ 58​ 227
Total fixed pay 1,181 1,098 ​ 1,572​ 1,442 ​ 389​ – ​ 241​ 908
Performance related pay ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Bonus2,3,4,7,10 1,527 1,617 ​ 1,665 1,552 ​ 374 – ​ –​ 947
LTIP: Performance Shares2,3,7,8,10 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Value delivered through corporate performance 1,301​ 1,203 ​ 1,849​ 1,506 ​ –​ – ​ –​ 1,081
Value delivered through share price growth 650 650 ​ 925 815 ​ –​ – ​ –​ 584
LTIP: Restricted Shares9 – – ​ – – ​ 394 – ​ –​ –
Total long term incentives 1,951 1,853 ​ 2,774​ 2,321 ​ 394​ – ​ –​ 1,665
Single total figure of remuneration 4,659 4,568 ​ 6,011 5,315 ​ 1,157 – ​ 241​ 3,520

1. Dominic Blakemore’s base salary was increased from £750,000 to £900,000 with effect from 1 January 2018 following his appointment as Group CEO on
1 January 2018, and subsequently increased from £900,000 to £975,000 on 1 January 2019.
2. Gary Green’s base salary of US$1,442,000 and his other emoluments are shown in sterling at an exchange rate of US$1.2762/£1 (2018: US$1.3479/£1).
In US$ terms Mr Green’s base salary was paid at the annual rate of US$1,399,590 from 1 January 2018 and $1,442,000 from 1 January 2019, being an
increase of 3%.
3. Johnny Thomson ceased to be a director on 31 December 2018. As set out in his Section 430(2B) Companies Act 2006 Statement published on the
Company’s website, in line with the current Policy, Mr Thomson received his current base salary of £658,000, 35% pension cash allowance and benefits to
this date. For the period from 1 January 2019 to 24 February 2019 he received a payment in lieu of notice (comprising salary, pension allowance and 10%
of his base salary in lieu of benefits) subject to an obligation to mitigate. From 25 February 2019 to 30 June 2019, a reduced payment was paid following
Mr Thomson mitigating his remuneration. The amounts shown in relation to 2019 in respect of salary and benefits are amounts paid during the year,
pro-rated by reference to the period during which he was an executive director of the Company. All of Mr Thomson’s extant LTIP awards lapsed when he
ceased to be a director on 31 December 2018. Mr Thomson was not eligible for an annual bonus payment in respect of 2018‑2019.
4. Karen Witts commenced employment as Group CFO on 8 April 2019. On joining, Ms Witts received an annual remuneration package which included a base
salary of £660,000, bonus opportunity of up to 150% of base salary, prorated from her joining date for the first financial year and standard contractual
benefits including pension payments (cash allowance or contribution) equal to 20% of base salary. Ms Witts’ compensation is in line with the arrangements
announced on 11 October 2018.
5. Taxable benefits comprise healthcare insurance, limited financial advice, life assurance and car benefit.
6. In accordance with the Policy, a pension cash allowance of 35% of base salary was paid in monthly instalments in lieu of pension participation for
Messrs Green and Thomson. From 1 October 2017 to 31 December 2017, Mr Blakemore received a pension cash allowance of 35%. Mr Blakemore
voluntarily elected to adopt the 20% rate of contribution from 1 January 2018 following his promotion to Group CEO.
7. Details of the performance measures and weighting as well as the achieved results for the bonus and LTIP components are shown on pages 114 to 116.
8. The amount shown for the award vesting in 2019 is the indicative value based on the average market price of Compass Group PLC shares over the three
month period from 1 July 2019 to 30 September 2019 (£20.21) of LTIP awards that have become receivable as a result of the achievement of performance
conditions relating to the three year performance period to 30 September 2019. The amount shown for the comparative figure in 2018 is the indicative value
based on the average market price of Compass Group PLC shares over the three month period from 1 July to 30 September 2018 (£16.46). On 21 November
2018, Messrs Blakemore, Green and Thomson sold 52,612, 63,035 and 47,009 shares to settle tax and social security obligations for which they received
£887,222, £1,062,990 and £792,736 respectively, based on a sale price of £16.86 on that date. Theoretically, if they had sold all of their vested awards,
they would have received in aggregate £5,981,009, approximately £142,000 more than the indicative value reported in the comparative table in last
year’s report.
9. Ms Witts was granted an award over 62,973 shares under the Karen Witts Restricted Share Award Plan on 16 May 2019 in recognition of awards forfeited at
her previous employer. 15,181 shares subject only to employment and 5,622 shares subject to financial underpins relating to net debt to underlying EBITDA
ratio and the ordinary dividend being at least in line with constant currency underlying basic earnings per share, vested on 1 July 2019. On the same day,
Ms Witts sold 9,808 shares for £18.94 per share to cover resultant tax and social security obligations. The remaining shares are not subject to a further
holding period, but will count towards her achievement of the share ownership guideline. The balance of the Award will vest, subject to continued
employment and financial underpins, in two further tranches on 1 July 2020 and 1 July 2021.
10. Richard Cousins was Group CEO until 31 December 2017. Total remuneration for 2018-2019 was nil (2018: £4,269 million)

112  Compass Group PLC Annual Report 2019

BASE SALARY
The annual rate of base salaries of the executive directors in office for the year ended 30 September 2019 was:
Director Base salary Effective date Increase Reason
Dominic Blakemore1 £975,000 1 January 2019 8.3% Progression in role, gain in experience
Gary Green $1,442,000 1 January 2019 3% Relevant peer/market & performance
Karen Witts2 £660,000 8 April 2019 – –​
Johnny Thomson3 £658,000 1 January 2018 – –​

Governance
1. Dominic Blakemore’s salary was reviewed in line with the commitment made in 2017 and 2018 to make increases to reflect experience and progression in
the role to bring his salary in line with that of his FTSE peers and reflects performance in the year. With effect from 1 January 2019, his salary was increased
to £975,000 with adjustments thereafter to be consistent with the range applicable to the wider workforce.
2. Karen Witts’ salary on commencement of employment was £660,000.
3. Johnny Thomson’s salary was reviewed in January 2018. No further salary review occurred following this date.

The proposed annual rate of base salaries of the executive directors in office from 1 January 2020 will be:
​Director Base salary Effective date Increase Reason
Dominic Blakemore £1,000,000 1 January 2020 2.6% Relevant peer/market & performance
Gary Green $1,486,000 1 January 2020 3.1% Relevant peer/market & performance
Karen Witts £674,000 1 January 2020 2.1% Relevant peer/market & performance

Each director received a salary increase in line with those applied to the wider workforce in their respective geographies.

PENSIONS
At 30 September 2019, there were no executive directors actively participating in any Compass Group defined benefit pension
arrangements and none of the executive directors were accruing additional entitlement to benefit under any arrangements that
existed prior to their appointment as executive directors.

For the year under review a pension cash allowance equal to 20% of base salary for Mr Blakemore and Ms Witts and 35% of the base
salary for Messrs Green and Thomson was paid monthly in lieu of pension for the period of employment.

TOTAL DIRECTOR REMUNERATION

Fees and benefits received by the Chairman and non-executive directors are shown on page 120. The aggregate total amount of
remuneration received by all directors in office during the year ended 30 September 2019 is shown below:
2019 2018
​ £000 £000
Executive directors 12,068 17,672
Chairman and non-executive directors1 1,333 1,1882
Total 13,401 18,860

1. Includes fees and taxable travel expenses.

2. 2018 figure restated to include non-executive director taxable travel expenses.

ANNUAL BONUS PLANS

2018‑2019 BONUS
The financial targets for the bonus for the year ended 30 September 2019, and the extent to which they were achieved, are set out
on page 114. Group and regional targets are disclosed on a retrospective basis. The achievement of targets is calculated on a
straight line basis between Minimum and Target (par) and between Target (par) and Maximum, and by reference to budgeted
exchange rates.

As was the case for previous years, the measurement of the achievement of the AFCF and PBIT results is based on the underlying
outcome achieved in the financial year, with gains/losses attributable to currency movements, charges and the impacts of
restructuring and/or acquisitions/disposals usually being excluded.

Compass Group PLC Annual Report 2019  113

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report (continued)

2018‑2019 PERFORMANCE MEASURES AND TARGETS

Dominic Blakemore and Karen Witts
Financial measures1 % Weighting Minimum Par (target) Maximum Achieved
PBIT 2,4
55 £1,774.2m £1,810.4m £1,846.6m £1,821.4m
AFCF3 15 £953.5m £983.0m £1,012.5m £1,204.0m
ORG5 25 3.6% 4.6% 5.6% 6.5%

Group HSE Improvement ​ ​ Target Achieved Achieved

Lost Time Incident Frequency Rate 2.5 ​ 2.99 2.91 No9​
Food Safety Incident Rate 2.5 ​ 0.22 0.22 Yes

Gary Green
Financial measures1 % Weighting Minimum Par (target) Maximum Achieved
PBIT2,4 5 £1,774.2m £1,810.4m £1,846.6m £1,821.4m
RPBIT6 55 5.3% 6.3% 7.3% 7.9%
MAWC7 15 $(505.3)m $(525.3)m $(535.3)m $(556.2)m
RORG8 25 5.0% 6.0% 7.0% 7.7%

North America HSE Improvement

HSE for the North American business is measured through North American underlying PBIT.

2018‑2019 OUTCOMES
Dominic Blakemore Gary Green Karen Witts
% of performance % of performance % of performance
Measure target achieved target achieved target achieved
PBIT/RPBIT2,4,6 35.8/55 2,4 58.3/60 2,4,6 35.8/55 2,4
AFCF3 15/15 – 15/15
MAWC7 – 15/15 –
ORG/RORG5,8 25/25 5 25/25 8 25/25 5
HSE 2.5/5 – 2.5/5
Total 78.3/100 98.3/100 78.3/100

1. Financial targets for 2018‑2019 bonus purposes are all set and measured at 2019 foreign exchange budget rates, not actuals.
2. PBIT is underlying Profit Before Interest and Tax (Group).
3. AFCF is Adjusted Free Cash Flow (Group).
4. Messrs Blakemore and Green’s and Ms Witts’ entitlements to any bonus related to the achievement of PBIT were adjusted, in accordance with the
established framework, to exclude all unbudgeted M&A spend together with routine restructuring costs.
5. ORG is Organic Revenue Growth (Group).
6. RPBIT is underlying Profit Before Interest and Tax growth improvement for the North America region.
7. MAWC is Average Working Capital Balance for the North America region for Mr Green. The 2018‑2019 target for Mr Green for MAWC is based on an
improvement in the value of MAWC over the designated period.
8. RORG is Organic Revenue Growth for the North America region
9. Whilst the LTIFR target was achieved, Mr Blakemore’s and Ms Witts’ entitlements to bonus relating to the achievement of the LTIFR target were reduced to
zero to recognise that the Group had suffered a fatality in South Africa during the year which occurred whilst the employee had been at work, albeit that
management were not considered to be culpable. This recognises the seriousness with which the Company takes HSE outcomes.

2018‑2019 PAYOUTS
The outcome of the annual bonus for the year ended 30 September 2019 was due to the continued strong underlying financial
performance aligned with the delivery of the Group’s long term strategy. The table below shows the resulting payout to each
executive director for the year:
​2018‑2019 bonus payment as
% of base salary as at 30 Sep 2019 Value of bonus
Dominic Blakemore 156.6% £1,526,951
Gary Green 147.4% US$2,125,256
Karen Witts 56.6% £373,805​

No discretion was applied by the Committee in respect of the directors’ bonuses for the year under review. The bonus for Messrs
Blakemore and Green will be paid in cash as they have each met their share ownership guideline. The bonus for Ms Witts has been
prorated for the period of employment in the financial year from 8 April 2019 to 30 September 2019. A third of the bonus will be
deferred in shares for a period of three years in order to support the build up towards Ms Witts’ share ownership guideline. Dividend
equivalents may be accrued on Deferred Bonus Shares in line with the Policy.

114  Compass Group PLC Annual Report 2019

2019‑2020 BONUS PERFORMANCE MEASURES
The annual bonus performance measures for executive directors for the year ending 30 September 2020 are unchanged. They are:
Measure Dominic Blakemore Gary Green Karen Witts
PBIT/RPBIT1,2 55%1 60%2 55%1
AFCF3 15%3 – 15%3
MAWC4 – 15%4 –
ORG/RORG5,6 25%5 25%6 25%5

Governance
HSE7 5% –7 5%
Total8 100% 100% 100%

1. Underlying PBIT (Group).

2. Underlying PBIT split between Group PBIT and PBIT for Region of responsibility for Mr Green: 5% Group/55% Regional.
3. AFCF is Adjusted Free Cash Flow (Group).
4. MAWC for Region of responsibility. The 2019‑2020 target for Mr Green for MAWC is based on an improvement in the value of MAWC over the
designated period.
5. Organic Revenue Growth (Group).
6. Organic Revenue Growth for Region of responsibility.
7. HSE for the North American business is measured through underlying RPBIT.
8. Bonus payments may be reduced if the Remuneration Committee is not satisfied with the underlying financial performance of the Group.

The Committee has set the targets for the annual bonus plan for the year ending 30 September 2020 but has chosen not to disclose
the details in this DRR, as it is the opinion of the Committee that it may be seriously prejudicial to the interests of the Company to do
so. However, the specific targets and the extent to which the targets have been met (both at Group and Regional levels) will be
disclosed in next year’s DRR.

LONG TERM INCENTIVE AWARDS

During the year ended 30 September 2019, executive directors received a conditional award of shares which may vest after a three
year performance period which will end on 30 September 2021, based on the achievement of stretching performance conditions.
The maximum levels achievable under these awards are set out in the table below:
LTIP award Face value of award
Director (as a % of base salary) £000
Dominic Blakemore 300% 2,700 1
Gary Green 250% 2,724 1,2
Karen Witts 250% 1,650 3
​Total ​ 7,074

1. Face value of award as at the date of grant on 21 November 2018 is based on the closing market price of £16.73 per share on 20 November 2018.
2. Face value of award is converted to sterling at an exchange rate of US$1.2762/£1.
3. Face value of award as at the date of grant on 16 May 2019 is based on the closing market price of £17.78 per share on 15 May 2019. The Award relates to
the annual LTIP grant. Ms Witts also received awards in respect of forfeiture of incentives from her previous employer. These awards are set out in detail on
page 118.

Executive directors are required to hold vested awards for a period of two years following vesting so as to further strengthen the long
term alignment of executives’ remuneration packages with shareholders’ interests and, if required, to facilitate the implementation
of provisions related to clawback.

The table below sets out the performance measures for the awards under the Policy in operation during the financial year
under review:
Definition of measure
ROCE The definition aims to measure the underlying economic performance of the Company. ROCE is calculated at the end of the
three year performance period as net underlying operating profit after tax (NOPAT) divided by 12 month average capital employed
(see page 246 for full definitions).
Adjusted FCF The definition aims to measure the cash generation of the Company and is calculated as the three year cumulative
underlying FCF (see page 246 for full definition) adjusted for constant currency.
TSR Performance is compared to that of constituent members of the FTSE 100 (excluding the financial services sector). TSR is the
aggregate of share price growth and dividends paid (assuming reinvestment of those dividends in the Company’s shares during the
three year performance period).

In setting the performance targets, the Committee considers internal budgets and the Group’s strategic plan, market expectations
and general economic conditions. The table on page 116 shows the targets against which performance has been measured to
determine the vesting of the grant of awards for the year ended 30 September 2019 and forms part of the Policy detailed in the
Policy Report on pages 62 to 68 of the 2016 Annual Report and Accounts.

Compass Group PLC Annual Report 2019  115

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report (continued)

2016‑2017 award targets (for awards with a performance period ended 30 September 2019)
ROCE target
Level of performance Threshold Maximum Achieved
Vesting % of component 0% 100% 100%
As at date of award 18.1% 19.1% –​
Reconciled at the end of the performance period1 18.18% 19.15% 19.73%

AFCF target
Level of performance Threshold Maximum Achieved
Vesting % of each component 0% 100% 100%
AFCF £2,609m £2,883m £3,156m

TSR target Below Upper

Level of performance Median Median Quartile Achieved
Vesting % of each component 0% 25% 100% 100%

1. ROCE targets are updated at the end of the performance period to reflect actual acquisition spend and constant currency.

2016‑2017 award performance

The Committee applied the established framework to deal with items that were unforeseen at the time the targets were set in
2016‑2017 and which were in the long term interests of shareholders. Both the ROCE and AFCF measures were adjusted to exclude
a one-off capital investment in the North American business.

Each of the performance measures were met in full at the end of the three year performance period, such that the LTIP awards made
during the 2016‑2017 financial year vested at 100% of the maximum. Shares will be delivered to individuals following the release of
the preliminary results for the year ended 30 September 2019.
Performance conditions Value of
TSR % ROCE % AFCF % Number of Number of shares
vested vested vested shares shares on vesting2
Director on maturity1 on maturity on maturity awarded vested £000
Dominic Blakemore 100% 100% 100% 96,528 96,528 1,951
Gary Green 100% 100% 100% 137,271 137,271​ 2,774​
1. TSR ranking was 16th in its comparator group.
2. The indicative value of the shares on vesting has been calculated by reference to the average market price of Compass Group PLC shares over the three
months from 1 July 2019 to 30 September 2019 of £20.21 per share.

2019‑2020 AWARD
The table below shows the targets against which performance will be measured to determine the vesting of the grant of awards to
be made in the year ending 30 September 2020 and forms part of the Policy detailed in the Policy Report on pages 103 to 109. In
order to minimise future adjustments, the Committee sets ROCE targets based on predicted spend on bolt-on acquisitions, however,
in line with our standard approach, targets will be updated at the end of the performance period to reflect actual spend. In setting
AFCF targets, the Committee took into consideration anticipated payroll timing and taxation phasing during the three year
performance period. The targets have been set on an IFRS 15 basis and will be restated for IFRS 16 in the 2020 Directors’
Remuneration Report.

ROCE and AFCF targets

Vesting %
of each
Level of performance component ROCE AFCF
Threshold 0% 17.39% £2,776m
Par (target) 50% 17.87% £2,922m
Maximum 100% 18.34% £3,068m

TSR target
Vesting %
of each
Level of performance component
Below Median 0%
Median 25%
Upper Quartile 100%

116  Compass Group PLC Annual Report 2019

The vesting of the shares under each performance condition is independent. Therefore, the total vesting amount is based on the
relevant percentage achievement for each performance measure. Awards vest on a straight line basis between Threshold and Par
and between Par and Maximum. If performance under the AFCF and ROCE component does not exceed the Threshold level, vesting
for that component will be nil. At the end of the performance period, the Committee will review the underlying financial performance
of the Company and retains its discretion to adjust vesting if it considers that financial performance is unsatisfactory.

The Committee considers the measures and targets set in respect of 2019‑2020 to be appropriate and challenging. Calculations of
the achievement of the targets will be independently performed and approved by the Committee. The Committee retains discretion

Governance
to adjust for performance and the nature of any such adjustments will be disclosed in the DRR, together with details of the achieved
ROCE, AFCF and TSR performance, as determined by the above definitions, at the end of the performance period.

LONG TERM INCENTIVE PLAN HISTORIC AWARD VESTING

The table below sets out the percentage of each LTIP award made to executive directors within the last five years which has vested:
Maturity Performance ROCE % vested AFCF % vested TSR % vested
Year of award date conditions on maturity on maturity on maturity
2016‑2017 1 Oct 2019 ROCE/AFCF/TSR 100% 100% 100%
2015‑2016 1 Oct 2018 ROCE/AFCF/TSR 84.9% 100% 100%
2014‑2015 1 Oct 2017 ROCE/AFCF/TSR 23.5% 100% 100%
2013‑2014 1 Oct 2016 ROCE/AFCF/TSR 60.7% 92.7% 100%
2012‑2013 1 Oct 2015 ROCE/AFCF/TSR 74% 78% 85%

SHARE AWARDS FOR FORFEITURE

During the year ended 30 September 2019, in line with the recruitment Policy approved by shareholders and the disclosure made in
the 2018 Directors’ Remuneration Report, Karen Witts received awards to compensate her for the forfeiture of incentive
compensation from her previous employment. These awards were valued, based on all information available to the Committee at the
time of appointment. The majority of these awards are subject to Compass’ performance. The face values of the awards and relevant
performance conditions are set out below:
Performance Face value of award
​ conditions/underpin £000
Compass Group PLC LTIP 20181 Y 500
Karen Witts Restricted Share Award Plan2 N 270
Karen Witts Restricted Share Award Plan3 Y 850

1. Face value of award as at the date of grant on 16 May 2019 is based on the closing market price of £17.78 per share on 15 May 2019. The award is subject
to Compass’ performance over the three year period ending 30 September 2021 as assessed by the Remuneration Committee against ROCE, AFCF and
relative TSR performance targets as applied.
2. Face value of award as at the date of grant on 16 May 2019 is based on the closing market price of £17.78 per share on 15 May 2019. The award of 15,181
shares vested on 1 July 2019.
3. Face value of award as at the date of grant on 16 May 2019 is based on the closing market price of £17.78 pence per share on 15 May 2019. The award is
subject to two financial underpins relating to net debt to underlying EBITDA ratio and the ordinary dividend being at least in line with constant currency
underlying basic earnings per share. The award is to vest in three tranches. The first tranche of 5,622 shares vested on 1 July 2019. A maximum of 20,804
shares are due to vest in July 2020 and 21,366 shares are due to vest in July 2021, each being subject to the two financial underpins.

Compass Group PLC Annual Report 2019  117

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report (continued)

EXTANT EQUITY INCENTIVE AWARDS HELD BY EXECUTIVE DIRECTORS

Details of all existing equity incentive awards as at the date of this DRR, including the awards conditionally made under the long term
incentive plans to the executive directors at any time during the year ended 30 September 2019, are shown in the table below. None
of the executive directors hold any extant award under any previously operated share option scheme:

LTIP
As at Awarded during Released during Lapsed during As at Market price
30 Sep 2018: the year: the year: the year: 30 Sep 2019: at date
number of number of number of number of number of of award: Date of Maturity
Director shares shares shares shares shares £ award date
Dominic 118,518 – 112,550 5,968 – 10.80 25 Nov 2015 1 Oct 2018
Blakemore 96,528 – – – 96,528 13.26 23 Nov 2016 1 Oct 2019
178,390 – – – 178,390 15.13 9 Feb 2018 1 Oct 2020
– 161,385 – – 161,385 16.73 21 Nov 2018 1 Oct 2021
Total 393,436 161,385 112,550 5,968 436,303 ​ ​ ​
Gary 148,479 – 141,002 7,477 – 10.80 25 Nov 2015 1 Oct 2018
Green 137,271 – – – 137,271 13.26 23 Nov 2016 1 Oct 2019
165,125 – – – 165,125 15.13 9 Feb 2018 1 Oct 2020
– 162,810 – – 162,810 16.73 21 Nov 2018 1 Oct 2021
Total 450,875 162,810 141,002 7,477 465,206 ​ ​ ​
Karen – 120,880 – – 120,880 17.78 16 May 2019 1 Oct 2021
Witts
Total – 120,880 – – 120,880 ​ ​ ​
Johnny 106,482 – 101,120 5,362 – 10.80 25 Nov 2015 1 Oct 2018
Thomson 86,724 – – 86,724 – 13.26 23 Nov 2016 1 Oct 2019
108,685 – – 108,685 – 15.13 9 Feb 2018 1 Oct 2020
Total 301,891 – 101,120 200,771 – ​ ​ ​

Restricted Share Award (RSA)

As at Awarded during Released during Lapsed during As at Market price
30 Sep 2018: the year: the year: the year: 30 Sep 2019: at date
number of number of number of number of number of of award: Date of Maturity
Director shares shares shares shares shares £ award date
Karen Witts – 20,803 20,803 – – 17.78 16 May 2019 1 Jul 2019
​ – 20,804 – – 20,804 17.78​ 16 May 2019 1 Jul 2020
​ – 21,366 – – 21,366 17.78​ 16 May 2019 1 Jul 2021
Total – 62,973 20,803 – 42,170 ​ ​ ​

NOTES TO TABLES
1. Each award granted is based on a three year performance period. Under the 2010 LTIP, awards are based one third on a ROCE target, one third on AFCF and
one third on the Company’s TSR relative to the FTSE 100, excluding the financial services sector. Awards granted under the 2018 LTIP are based 40% on a
ROCE target, 40% on an AFCF target and 20% on the Company’s TSR relative to the FTSE 100, excluding the financial services sector.
2. The performance period of the award granted on 25 November 2015 came to an end on 30 September 2018. This award vested in part at 95% of the
maximum award. The shares disclosed as lapsed during the year represent the proration of the original award.
3. Awards granted on 9 February 2018, 21 November 2018 and 16 May 2019 were made under the LTIP 2018. All other awards were granted under the
LTIP 2010.
4. On 21 November 2018, Messrs Blakemore, Green and Thomson sold 52,612, 63,065 and 47,009 shares respectively of LTIP awards that had become
receivable as a result of the achievement of performance conditions relating to the three year performance period to 30 September 2018 to settle resultant
tax and social security obligations. All of the vested LTIP awards were subject to a two year post vest holding period. Theoretically, if the directors had sold all
of their vested LTIP awards, they would have received in aggregate £5,981,009 based on a sale price of £16.86 on 21 November 2018. The closing share
price on the day preceding the release of their awards was £16.73 per share.
5. The performance period of the award granted on 23 November 2016 came to an end on 30 September 2019. The award vested in full.
6. All LTIP awards were granted for nil consideration.
7. Of the 120,880 LTIP awards granted to Ms Witts, 28,110 were in respect of the agreed buy-out arrangement for awards forfeited in her former employment.
8. Awards granted to Mr Thomson on 23 November 2016 and 9 February 2018 lapsed on 31 December 2018 when he ceased to be a director of the Company.
9. Ms Witts was granted an award over 62,973 shares under the Karen Witts Restricted Share Award Plan on 16 May 2019 in recognition of Awards forfeited at
her previous employer. 15,181 shares were subject only to employment and 5,622 shares are subject to financial underpins relating to net debt to underlying
EBITDA ratio and the ordinary dividend being at least in line with constant currency underlying basic earnings per share, vested on 1 July 2019. On the same
day, Ms Witts sold 9,808 shares for £18.94 per share to cover resultant tax and social security obligations. The balance of shares is not subject to a further
holding period, but will count towards her achievement of the share ownership guideline. The balance of the Award will vest, subject to continued
employment and financial underpins, in two further tranches on 1 July 2020 and 1 July 2021.
10. The highest mid-market price of the Company’s ordinary shares during the year ended 30 September 2019 was £21.38 per share and the lowest was £14.83
per share. The year end price was £20.93 per share.
11. The market price at the date of each award is shown to two decimal places.
​

118  Compass Group PLC Annual Report 2019

DIRECTOR CHANGES DURING THE YEAR
Karen Witts
As announced on 11 October 2018, Ms Witts’ annual remuneration package, which is in line with the Company’s shareholder
approved Policy, includes the following:

• base salary of £660,000

• bonus opportunity of up to 150% of base salary, prorated from her joining date for the first financial year of her appointment. One
third of the bonus earned to be deferred for three years if the pro-rated share ownership guidelines have not been met

Governance
• an award of 250% of base salary under the LTIP 2018. This will vest based on performance over a three year performance period
as assessed by the Remuneration Committee, against ROCE, AFCF and relative TSR targets. The award will also be subject to a
two year post vest holding period
• standard contractual benefits including pension payments (cash allowance or contribution) equal to 20% of base salary

The Company also agreed the following buyout arrangements to compensate for the forfeiture of incentive compensation from
Ms Witts’ former employment, based on all known information at the time. The recruitment Policy approved by shareholders sets out
how to determine the buyout of outstanding incentives from a previous employer, namely, that awards should minimise the cost to
Compass and, where possible, should deliver any compensation in the form of Compass shares, delivered no earlier than the original
awards. In line with that policy, the buyout of current share-based incentives is a blend of restricted shares and performance shares
to replicate the form of awards forfeit. The timing of the payouts will be no earlier than the awards forfeited, and all awards will be
made in Compass shares with forward looking performance conditions applying where appropriate:

• an award of performance shares worth £500,000 which will vest subject to Compass’ performance over the three year period
ending 30 September 2021 as assessed by the Remuneration Committee, against ROCE, AFCF and relative TSR performance
targets as applied under the LTIP 2018
• an award of restricted shares with a value at the date of grant of £1,120,000 to vest in three approximately equal tranches over the
three financial years ending 30 September 2019‑2021. The majority of the award is also subject to two financial underpins relating
to Compass’ performance, which are (i) the maintenance of net debt: underlying EBITDA (adjusted for M&A activity and changes
to accounting standards) and (ii) dividend at least in line with constant currency basic earnings per share

All net shares vesting must be retained until the Company’s share ownership guidelines for executive directors have been met.

At the time of appointment Ms Witts was expected to receive compensation, to be delivered in Compass shares, for the loss of any
2018‑2019 annual bonus equal in value to the actual bonus that would have been paid by her former employer. This award was not
granted as her 2018‑2019 annual bonus from her former employer was not forfeit.

PAYMENTS TO PAST DIRECTORS

As announced on 4 July 2018 and 11 October 2018, Johnny Thomson stepped down from the Board on 31 December 2018. In line
with the current Policy, Mr Thomson received his current base salary, 35% pension cash allowance and benefits to this date, details
of which are included in the single figure table on page 112. For the period from 1 January 2019 to 24 February 2019, he received a
payment in lieu of notice (comprising salary, pension allowance and 10% of his base salary in lieu of benefits) subject to an obligation
to mitigate. From 25 February 2019 to 30 June 2019 a reduced payment was made following Mr Thomson mitigating his
remuneration. The total remuneration for the period 1 January 2019 to 30 June 2019 paid to Mr Thomson was £207,593. All of
Mr Thomson’s extant LTIP awards lapsed when he ceased to be a director on 31 December 2018. Mr Thomson was not eligible to
receive an annual bonus payment in respect of 2018‑2019.

PAYMENTS FOR LOSS OF OFFICE

There were no loss of office payments made to former directors during the year.

EXTERNAL NON-EXECUTIVE DIRECTOR APPOINTMENTS

Executive directors may take up one non-executive directorship outside the Group subject to the Board’s approval, provided that
such appointment is not likely to lead to a conflict of interest. It is recognised that non-executive duties can broaden experience
and knowledge which can benefit the Company. Ms Witts received fees of £54,500 in respect of her directorship at Imperial Brands
plc. At the date of this DRR, Dominic Blakemore and Gary Green do not hold any paid external appointments.​

Compass Group PLC Annual Report 2019  119

DIRECTORS’ REMUNERATION REPORT (CONTINUED)

Annual Remuneration Report (continued)

NON-EXECUTIVE DIRECTORS’ REMUNERATION

Details of amounts received by Paul Walsh during the year ended 30 September 2019 are shown below:

Fees Benefits1 Total 2019 Total 2018

Chairman £000 £000 £000 £000
Paul Walsh 560 2 562 541
1. Benefits for the year ended 30 September 2019 comprise the provision of costs in relation to commuting travel.

Details of the amounts received by each of the non-executive directors in office for the year ended 30 September 2019 are set out below:
Fees Benefits1 Total 2019 Total 20182
Non-executive director £000 £000 £000 £000
Carol Arrowsmith 116​ 10​ 126​ 125​
John Bason3 139​ –​ 139​ 119​
Stefan Bomhard 86​ 1​ 87​ 85​
John Bryant4 86​ 18​ 104​ 7​
Anne-Francoise Nesmes5 86​ – 86​ 21​
Nelson Silva 116​ 16​ 132​ 119​
Ireena Vittal 86​ 11​ 97​ 97​

1. Travel costs relating to attending Board meetings held in the UK are treated as a taxable benefit and have been included in the table above.
2. 2018 figures restated to include travel expenses.
3. With effect from 8 February 2019, Mr Bason was paid the full fee payable for each non-executive role performed.
4. Appointed to the Board and its committees on 1 September 2018.
5. Appointed to the Board and its committees on 1 July 2018.

SHARE OWNERSHIP GUIDELINES AND DIRECTORS’ INTERESTS IN SHARES

In order that their interests are aligned with those of shareholders, directors are expected to build up and maintain a personal
shareholding in the Company as set out in the share ownership guidelines as described on page 106.

The Committee reviewed and noted that the guidelines were satisfied by all directors in office during the year. The interests of the
directors in office during the year ended 30 September 2019 in shares (including the interests of Persons Closely Associated) and
share incentives are shown in the table below:
Beneficial ​ Conditional ​ ​
LTIP/RSA LTIP/RSA
Shares held as Shares held holdings as holdings Compliance with
at 30 Sep 2019 as at 30 Sep at 30 Sep 2019 as at 30 Sep Shareholding share ownership
Director or date of leaving 2018 ​ or date of leaving 2018 required1
guidelines
Carol Arrowsmith 10,333 10,121 ​ n/a n/a 100% P
John Bason 14,288 11,976 ​ n/a n/a 100% P
Dominic Blakemore 197,462 137,524 ​ 436,303 393,436 300% P
Stefan Bomhard 5,865 5,865 ​ n/a n/a 100% P
John Bryant2 6,025 – ​ n/a n/a 100% P
Gary Green 191,382 255,595 ​ 465,206 450,875 250% P
Anne-Francoise Nesmes3 2,122 – ​ n/a n/a 100% P
Nelson Silva 7,884 7,884 ​ n/a n/a 100% P
Johnny Thomson4 209,521 155,410 ​ – 301,891 250% P
Ireena Vittal 5,350 5,241 ​ n/a n/a 100% P
Paul Walsh 35,395 35,395 ​ n/a n/a 100% P
Karen Witts5 10,995 – ​ 163,050 n/a 250% See note 5​

1. As a percentage of base salary or fee.

2. Appointed to the Board and its committees on 1 September 2018.
3. Appointed to the Board and its committees on 1 July 2018.
4. Stepped down from the Board and its committees on 31 December 2018. The figure disclosed is Mr Thomson’s holding at that date. Outstanding LTIP
awards lapsed on 31 December 2018.
5. Appointed to the Board and its committees on 8 April 2019. Under the current guidelines executive directors are required to achieve the % shareholding
shown in the table above, within a five year period in accordance with the Company’s share ownership guidelines. Compliance is assessed on a pro rata basis
for Ms Witts who is in her first year of build-up. In line with the guidelines, a proportion of Ms Witts’ 2018–2019 bonus will be deferred in shares for a period of
three years to support the build up of her shareholding.

There were no changes in directors’ interests between 30 September 2019 and 26 November 2019.

120  Compass Group PLC Annual Report 2019

REMUNERATION OF OTHER SENIOR EXECUTIVES AND MANAGEMENT
A number of senior executives and the executive directors comprise the Executive Committee. These key management roles
influence the ability of the Group to meet its strategic targets. The Remuneration Committee sets the remuneration for these
individuals and has regard to the remuneration level and structure of the wider business. Total remuneration including base salary
and other short term benefits, bonus and the expected value of long term incentives is summarised in note 4 to the consolidated
financial statements on page 166.

REMUNERATION ADVICE

Governance
The Chairman and the Group CEO, together with the Group Chief People Officer and the Group Reward & Diversity Director are
normally invited to attend each Committee meeting and provide advice and guidance to the Committee (other than in respect of
their own remuneration) for which they are not paid a fee in addition to their remuneration from the Company under their service
contracts. Details of the members of the Committee who served during the year ended 30 September 2019 are set out on
pages 70 and 71.

WillisTowersWatson (WTW) was appointed by the Company in 2017. During the year, WTW advised the Committee on remuneration
related matters in respect of the executive directors and non-executive directors including detailed external information and
research on market data and trends and advice in relation to the appointment of Ms Witts for which it received total fees (based on
hours spent) of £30,150 (2018: £29,100). WTW provided services to the Company globally which comprised remuneration
benchmarking, insurance brokerage and other consultancy advice.

Alithos Limited (Alithos) was appointed by the Company in 2002. During the year, Alithos provided information for the testing of the
TSR performance conditions for the Company’s LTIP awards, for which it received fixed fees of £24,000 (2018: £24,000). It also
provided the TSR performance graph for the DRR, for which it received a fixed fee of £500 (2018: £500). Alithos did not provide any
other advice or services to the Company during the year.

The Committee is satisfied that the advice it received during the year was objective and independent, based on the experience of its
members generally, including Carol Arrowsmith, Chairman of the Committee, who was formerly a remuneration consultant with
Deloitte LLP.

SHAREHOLDER VOTE AT 2018 AND 2019 ANNUAL GENERAL MEETINGS

The tables below show the voting outcomes at the AGMs held on 8 February 2018 for the Remuneration Policy which applies until
2021 and the 2016-2017 Remuneration Report, and on 7 February 2019 for the 2017‑2018 Annual Remuneration Report:

2018
Number of votes
‘For’ & % of Number of votes % of Total number of Number of votes
​ ‘Discretionary’ votes cast ‘Against’ votes cast votes cast ‘Withheld’1
Remuneration Policy2 1,153,741,571 95.90 49,370,003 4.10 1,203,111,574 10,721,950
Annual Remuneration Report3 1,161,167,059 96.58 41,072,852 3.42 1,202,239,911 11,593,421

2019
Number of votes
‘For’ & % of Number of votes % of Total number of Number of votes
​ ‘Discretionary’ votes cast ‘Against’ votes cast votes cast ‘Withheld’1
Annual Remuneration Report3 1,225,182,253 98.01 24,889,504 1.99 1,250,071,757 15,061,643

1. A vote withheld is not a vote in law.

2. Binding vote. Policy to apply until 2021.
3. Advisory vote.

The Committee welcomed the endorsement of the DRR by shareholders and took steps, wherever practicable, to understand
shareholders’ concerns when withholding their support.

At the 2020 AGM, shareholders will be invited to vote on the Annual Remuneration Report for 2018‑2019 (advisory vote) and on the
approval for the Company to pay each of its non-executive directors the full fee payable for each role they perform for the Company
by reference to the aggregate cap on directors’ fees specified in the Company’s articles of association.

On behalf of the Board

Carol Arrowsmith
Chairman of the Remuneration Committee

26 November 2019 Compass Group PLC Annual Report 2019  121

Other Statutory Disclosures
This Directors’ Report forms part of the management report as Payment of the recommended final dividend for the year ended
required under DTR 4. The Company has chosen, in accordance 30 September 2019, if approved at the 2020 AGM, will be made
with Section 414 C(11) of the CA 2006, and as noted in this on 24 February 2020 to shareholders registered at the close of
Directors’ Report, to include certain matters in its Strategic business on 17 January 2020. The shares will be quoted
Report that would otherwise be required to be disclosed in this ex‑dividend from 16 January 2020.
Directors’ Report. The Strategic Report can be found on pages
1 to 63 and includes an indication of future likely developments During the year, the trustee of the employee benefit trust, the
in the Company, details of important events and the Company’s Compass Group PLC All Share Schemes Trust (ASST) (formerly
business model and strategy. The Corporate Governance Report known as the Compass Group PLC Long Term Incentive Plan
on pages 64 to 121, the Other Statutory Disclosures on pages Trust), which operates in connection with the Company’s share
122 to 127 and the Directors’ Responsibilities Statement on page plans, waived its right to receive dividends on any shares held by
130 are incorporated into the Directors’ Report by reference. it. Details of the ASST can be found on page 124 of this Report.
The value of dividends waived during the year ended
Specifically, the following disclosures have been included 30 September 2019 in relation to the ASST was £6,351
elsewhere within the Annual Report and are incorporated into (2018: £5,389).
this Directors’ Report by reference:
At the date of this Report, there were 3,301,961 111⁄20 pence
Disclosure Page ordinary shares held in treasury for the purpose of satisfying the
Financial risk management 39 Company’s obligations under the Company’s employee equity
Future developments in the business 2 incentive schemes. Shares held in treasury are not entitled to
Statement of directors’ responsibilities including 130 receive dividends. Therefore, £1,378,421 (2018: £2,152,339)
disclosure of information to the auditor worth of dividends were not paid during the financial year in
Disclosure of greenhouse gas (GHG) emissions 60 relation to treasury shares.
Shareholder information 232
SHARE CAPITAL
Viability statement 40 General
Going concern statement 40 At the date of this Report, 1,589,736,625 ordinary shares of
11 1⁄20 pence each (of which 3,301,961 are held in treasury)
DIRECTORS have been issued, are fully paid up and are quoted on the
Details of the directors in office at the date of this Report are listed London Stock Exchange. The total voting rights attaching to the
on pages 68 to 71. In accordance with the Code, each director will issued ordinary share capital (excluding treasury shares) at the
retire and submit himself or herself for election or re-election at date of this Report is 1,586,434,664. In addition, the Company
the 2020 AGM. As announced on 11 October 2018, Karen Witts sponsors a Level I American Depositary Receipts programme
joined the Board as Group CFO on 8 April 2019. with BNY Mellon, under which the Company’s shares are traded
on the over the counter market in the form of American
RESULTS AND DIVIDENDS Depositary Shares.
In the year ended 30 September 2019, the Group delivered an
underlying profit before tax of £1,772 million (2018: £1,630 During the year ended 30 September 2019, 431,955 options
million), an increase of 8.7%; and a statutory profit before tax of were exercised and 1,964,708 awards released pursuant to the
£1,469 million (2018: £1,523 million), a decrease of 3.5%1. Company’s share option schemes and long term incentive plans.
All options exercised and awards released were satisfied, as
A summary of the dividends on ordinary shares for the financial appropriate, by the reissue of 2,341,811 treasury shares and the
year ended 30 September 2019 compared to the prior year is release of 54,852 shares from the ASST. A further 27,673
shown below: treasury shares have been reissued and 5,076 shares released
Year ​ Dividend Pence per share2 by the Trust respectively since the end of the financial year to
2019 ​ Final (recommended) 26.9 the date of this Report to satisfy awards under these schemes.
2019 ​ Interim 13.1 There are no restrictions on the transfer of ordinary shares in the
2019 ​ Total 40.0 capital of the Company other than those restrictions which may
2018 ​ Final 25.4 from time to time be imposed by law, for example, insider
2018 ​ Interim 12.3 trading law. With respect to EU Market Abuse Regulation,
2018 ​ Total 37.7 certain employees are required to seek the approval of the
Company to deal in its shares.
1. Prior year comparatives have been restated upon adoption of IFRS 15.
2. Dividends are paid gross. A dividend reinvestment plan (DRIP) is available The Company is not aware of any agreements between
to shareholders resident in the UK, EEA, Channel Islands and Isle of Man.
Details can be found on page 232. The latest date for receipt of elections
shareholders that may result in restrictions on the transfer of
for the DRIP is 3 February 2020. securities and/or voting rights.
The 2019 interim dividend of 13.1 pence per existing ordinary The Company’s articles of association may only be amended by
share (2018: 12.3 pence) was paid to shareholders on special resolution at a general meeting of shareholders.
29 July 2019.

122  Compass Group PLC Annual Report 2019

The Company is not aware of any significant agreements to ISSUE OF SHARES
which it is party that take effect, alter or terminate upon a At the 2020 AGM, the directors will ask shareholders to renew
change of control of the Company following a takeover. the authority last granted to them at the 2019 AGM to allot
equity shares representing approximately one third of the issued
More detailed information relating to the rights and obligations ordinary shares calculated at the latest practicable date prior to
attaching to the Company’s ordinary shares, in addition to those the publication of the Notice of AGM (the section 551 authority)
conferred by law, are set out in the Company’s articles of and, in accordance with the Investment Association Share
association, which are available on the Company’s website Capital Management Guidelines, the directors propose to extend

Governance
www.compass-group.com. this by a further one third of the Company’s issued ordinary
share capital, provided that such amount shall only be used in
REPURCHASE OF SHARES
connection with a rights issue. If approved, the authority will
No shares were repurchased during the financial year ended
expire no later than 15 months from the date on which the
30 September 2019. No shares have been repurchased in the
resolution is passed, or at the conclusion of the Company’s 2021
period from 1 October 2019 to the date of this Report.
AGM, whichever is the sooner.
As at the date of this Report, there are 1,589,736,625 ordinary
The limited power granted to the directors at the 2019 AGM to
shares of 111⁄20 pence in issue. Of these, 3,301,961 are held in
allot equity shares for cash, other than pro rata to existing
treasury for the purpose of satisfying the Company’s obligations
shareholders, expires no later than 6 May 2020. Subject to the
under employee equity incentive schemes. Shares held in
terms of the section 551 authority, this authority is in line with
treasury are not eligible to participate in dividends and do not
the Statement of Principles on Pre-emption Rights issued by the
carry any voting rights.
Pre-Emption Group and supported by the Investment
Returns to shareholders continue to be an integral part of our Association and the Pensions and Lifetime Savings Association
business model and the Group’s cash flow generation remains (the Principles). If granted, this authority will give the directors
excellent. Our priorities for how we use our cash are to: (i) invest the ability (until the 2021 AGM) to issue ordinary shares for
in the business to support organic growth where we see cash, other than pro rata to existing shareholders, in connection
opportunities with good returns; (ii) grow the dividend in line with with a rights issue or up to a limit of 5% of the issued ordinary
underlying constant currency earnings per share; (iii) pursue share capital (whether or not in connection with an acquisition
M&A opportunities; our preference is for small to medium sized or specified capital investment) calculated at the latest
bolt-on acquisitions, where we look for returns greater than our practicable date prior to the publication of the Notice of AGM. In
cost of capital by the end of year two; and (iv) maintain strong accordance with the Principles, the directors propose to extend
investment grade credit ratings returning any surplus cash to this by an additional 5% of the Company’s issued ordinary share
shareholders to target net debt to EBITDA of around 1.5x1. capital calculated at the latest practicable date prior to the
publication of the Notice of AGM, provided that the additional
At the 2020 AGM, a special resolution will be proposed to renew authority would only be used for the purpose of an acquisition or
the directors’ limited authority (last granted at the 2019 AGM) to a specified capital investment which is announced
repurchase ordinary shares in the market. Retaining the ability contemporaneously with the issue or which has taken place in
to repurchase shares gives the Board the flexibility of electing to the preceding six month period and is disclosed in the
repurchase shares where this is the most effective method of announcement of the issue. In line with recommended best
returning cash to shareholders, or to fund bolt-on acquisitions. practice, the Company has split the disapplication of pre-
The directors consider it desirable for this general authorisation emption rights authority into two separate resolutions. The first
to be renewed in order to assist in maintaining the most efficient resolution seeks authorisation for 5% of the issued ordinary
capital structure for the business. share capital to be issued on an unrestricted basis, whilst the
second resolution seeks authority for an additional 5% of the
The authority sets the minimum and maximum prices which may issued ordinary share capital to be used for an acquisition or a
be paid and it will be limited to a maximum of 10% of the specified capital investment.
Company’s issued ordinary share capital calculated at the latest
practicable date prior to the publication of the Notice of AGM. Also, in line with best practice, the Company has not issued
Any purchases of ordinary shares will be by means of market more than 7.5% of its issued ordinary share capital on a
purchases through the London Stock Exchange and any shares non-prorated basis over the last three years. The directors have
purchased may be cancelled or placed into treasury in no present intention to issue ordinary shares, other than
accordance with Section 724 of the CA 2006. pursuant to the Company’s employee equity incentive share
schemes, and this authority will maintain the Company’s
1. Pre IFRS 16 ‘Leases’. IFRS 16 will be adopted by the Group on 1 October
2019. The Group expects between £950-£1,050 million of additional debt flexibility in relation to future share issues, including any issues
on its balance sheet on adoption. to finance business opportunities, should appropriate
circumstances arise.

Compass Group PLC Annual Report 2019  123

OTHER STATUTORY DISCLOSURES (CONTINUED)

Details of purchases and releases by the ASST, and the reissue Company’s internal websites, on matters affecting them as
of treasury shares during the year, together with details of employees and on the issues affecting their performance. Group
options granted over unissued capital, are set out in the businesses in the European Economic Area (EEA) are
consolidated financial statements on pages 197 and 198. represented on Compass Group’s European Works Council
(EWC), which provides a forum for exchanging information and
SUBSTANTIAL SHAREHOLDINGS engaging in consultation on the Group’s performance and plans,
The following major shareholdings have been notified to the and relevant transnational issues affecting those countries in
Company as at 30 September 2019 and up to the date of the EEA. Employees from across the Group’s EEA business have
this Report. been elected to employee representative roles on the EWC.
% of Compass
% of issued Group PLC’s Eligible employees in the UK are invited to join the Company’s
​ capital1 voting rights1 defined contribution pension arrangement, Compass Retirement
Blackrock, Inc. 9.99 9.99 Income Savings Plan (CRISP). CRISP has a corporate trustee
Invesco Limited 4.95 4.95 and the Chairman, Nigel Palmer, is a former employee of
Massachusetts Financial 9.96 9.96 the Group. The other six trustee directors are UK based
Services Company employees of the Group, three of whom have been nominated
by CRISP members.
1. Notified in accordance with DTR5.1.2. Since the notification date, the
shareholders’ interests in the Company may have changed. Those UK employees who transfer from the public sector under
TUPE have, typically up until 31 March 2015, been eligible to
The number of shares held by the directors as at
join the Compass Group Pension Plan (the Plan), a defined
30 September 2019 can be found on page 120 in the
benefit pension arrangement which has otherwise been closed
Directors’ Remuneration Report.
to new entrants since 2003. However, under the Government’s
EMPLOYEE SHARE TRUSTS revised guidance for ‘Fair Deal for staff pensions’, the
The Compass Group Employee Share Trust (ESOP) was expectation is and therefore the approach has been that the
established on 13 January 1992 in connection with the Group participate in the relevant public-sector pension scheme
Company’s share option plans. The Compass Group Long and close the Plan to future entrants. The Plan also has a
Term Incentive Plan Trust was established on 5 April 2001 corporate trustee. Philip Whittome is the independent Chairman.
in connection with the Company’s long term incentive plans, There are a further six trustee directors, five of whom are either
and in 2019, was adapted to allow it to source shares UK based employees or former employees of the Group (three of
for all of the Company’s share schemes and was renamed the whom have been nominated by Plan members), and the sixth is
Compass Group PLC All Shares Schemes Trust (ASST). an independent trustee director.

Details of employee equity incentive schemes are set out The Company is subject to the Pension Automatic Enrolment
in the Directors’ Remuneration Report on pages 98 to 121. Regulations for its workforce in the UK. All new UK employees
As at 30 September 2019, the trustees of the ESOP and ASST who meet the statutory eligibility criteria, and who do not join
held nil (2018: nil) and 187,455 (2018: nil) ordinary shares of CRISP, are automatically enrolled into the National Employment
the Company respectively. Savings Trust (NEST). Responsibility for the Group’s ongoing
compliance with the pension automatic enrolment regulations
The Compass Group Executive Option Share Trust and and for ensuring that the administration and investment of funds
The Compass Group Executive Share Trust were established relating to automatic enrolment remain appropriate lies with the
on 15 and 22 February 2010 respectively in relation to the Group’s Pension Automatic Enrolment Governance Committee.
operation of equity incentive schemes in Australia. No ordinary
shares were held by these trusts as at 30 September 2019 Permanent employees outside the UK are usually offered
(2018: nil). membership of local pension arrangements if and where
they exist and where it is appropriate to have Company
AWARDS UNDER EMPLOYEE SHARE SCHEMES sponsored arrangements.
Details of awards made during the year and held by executive
directors as at 30 September 2019 are set out in the Directors’ Employees are offered a range of benefits, such as private
Remuneration Report on pages 98 to 121. medical cover, depending on the local environment. Priority is
given to the training of employees and the development of their
Details of employee equity incentive schemes and grants made skills. Employment of people with disabilities is considered on
during the year ended 30 September 2019, and extant awards merit with regard only to the ability of any applicant to carry out
held by employees are disclosed in the consolidated financial the role. Arrangements to enable people with disabilities to carry
statements on pages 197 to 199. out the duties required will be made if it is reasonable to do so.
An employee becoming disabled would, where appropriate,
EMPLOYEE POLICIES AND INVOLVEMENT be offered retraining.
The Group places particular importance on the involvement of
its employees, keeping them regularly informed through informal
bulletins and other in-house publications, meetings and the

124  Compass Group PLC Annual Report 2019

The Group continues to operate on a decentralised basis. This corporate entities whose financial information is consolidated in
provides the maximum encouragement for the development of the Group’s accounts in this Annual Report. As at 30 September
entrepreneurial flair, balanced by a rigorous control framework 2019 there were 11 directors, seven of whom were male and
exercised by a small head office team. Local management four were female. Prior to any appointment to the Board, the
teams are responsible for maintaining high standards of health Nomination Committee gives due regard to diversity and gender
and safety and for ensuring that there is appropriate employee with a view to recommending the appointment of the most
involvement in decision making. suitable candidate for the role.

Governance
NON-FINANCIAL REPORTING DIRECTIVE We seek to create a positive, open working environment
The EU Non-Financial Reporting Directive (the Directive) which wherever we operate. Our employee policies are set locally to
was implemented into English law as the Companies, comply with local law within an overall Group framework and we
Partnerships and Groups (Accounts and Non-Financial monitor our employee satisfaction and engagement through a
Reporting) Regulations 2016 requires companies to disclose number of key performance indicators.
non-financial information necessary to provide investors and
other stakeholders with a better understanding of a company’s We also consider the concerns of wider communities where we
development, performance, position and impact of its activity. operate, including national and local interests, utilising our
The Audit Committee, which advises the Board on such matters, relevant expertise to help contribute to the wellbeing of
has concluded that the Company is compliant with the Directive communities which are appropriate to our business objectives.
and has included the necessary disclosures in this Report. Furthermore, the Group supports the rights of all people as set
out in the UN Universal Declaration of Human Rights (UN
Throughout this Annual Report the directors have disclosed a Declaration) and considers carefully before doing any business
mix of financial and non-financial KPIs which they believe best in countries that do not adhere to the UN Declaration.
reflect the Group’s strategic priorities; and which will help to
convey an understanding of the culture of the business and the GREENHOUSE GAS EMISSIONS REPORTING
drivers which contribute to the ongoing success of the Company. The Company is required to state the annual quantity of
Please see the non-financial information statement on page 127 emissions in tonnes of carbon dioxide equivalent from activities
which sets out where stakeholders can find information relating for which the Group is responsible, including the combustion
to non-financial matters. of fuel and the operation of any facility. Details of our emissions
during the year ended 30 September 2019 are set out within
EMPLOYEE DIVERSITY AND HUMAN RIGHTS the Corporate Responsibility section of the Strategic Report on
Our Code of Ethics was developed in consultation with the EWC page 60 and form part of the Directors’ Report disclosures and
and the Institute of Business Ethics and sets out clear standards are incorporated by reference. Further details of the actions
of behaviour that we expect all of our people to demonstrate and which the Group is taking to reduce emissions can also be found
adhere to. The Code of Ethics, which is part of our CBC, at www.compass-group.com. This Annual Report and Accounts
underpins our social, ethical and environmental commitments is certified carbon neutral by sponsoring a cause to offset
and sends a clear message to our stakeholders of our against the emissions arising from the production, printing and
commitment to responsible business practice. The 10 principles delivery of this Report. This year, the Company has participated
of the United Nations (UN) Global Compact, to which we are a in a project in Brazil which aims to prevent deforestation and
signatory, underpin our own Code of Ethics. This UN initiative protect one of the world’s most biodiverse habitats.
encourages companies to make human rights, labour standards,
environmental responsibility and anti-corruption part of their DONATIONS AND POLITICAL EXPENDITURE
business agenda. Our annual Communication on Progress can Charitable objectives support the Company’s CR strategy and
be viewed at www.unglobalcompact.org. have primarily focused on improving the environment,
education, health and wellbeing, community engagement and
Our people are instrumental in our success; we respect and responsible business practice. Donations have included
value the individuality and diversity that every employee brings employee involvement through fundraising and financial
to the Group. We base our relationship with our employees on support.
respect for the dignity of the individual and fair treatment for all.
In December, the Company will publish its fourth statement in Group charitable donations £m
accordance with the requirements of the Modern Slavery Act 2019 11.5
2015 and a copy of the statement will be available on the 2018 11.0
Company's website www.compass-group.com.
Since 2004, shareholders have passed an annual resolution, on
As at 30 September 2019, there were 596,452 (2018: 595,841) a precautionary basis, to approve donations to EU political
people employed by the Group (average number of employees organisations and to incur EU political expenditure (as such
including directors and part-time employees) of whom 351,860 terms were defined under the then relevant legislation) not
were female (2018: 337,962) and 244,592 were male exceeding a monetary limit approved by shareholders. The
(2018: 257,879). 620 were senior managers, 450 male, 170 Board has consistently confirmed that it operates a policy of not
female (2018: 537 male, 191 female), which includes members giving any cash contribution to any political party in the ordinary
of our global leadership team and statutory directors of meaning of those words and that it has no intention of changing
that policy.
Compass Group PLC Annual Report 2019  125
OTHER STATUTORY DISCLOSURES (CONTINUED)

No material amount of corporate funds or paid employee time chairmen of the Audit, Corporate Responsibility, Nomination
has been utilised during the year for political activities and, in and Remuneration Committees available to answer questions.
accordance with the Company’s CBC, employees must not The results of proxy voting for and against each resolution, as
engage in any form of lobbying or have contact with political well as abstentions, are announced to the London Stock
representatives, government employees or public interest Exchange and are published on the Company’s website as soon
groups unless they are doing so legitimately and adhering to as practicable after the meeting. Further shareholder
internal control processes. Further information regarding the information is available on pages 232 to 234.
CBC can be found on page 88 of this Annual Report and on the
Company’s website www.compass-group.com. CREST
The Company’s ordinary shares and sterling Eurobonds are in
The directors propose to renew the authority granted at the CREST, the settlement system for stocks and shares.
2019 AGM for the Group to make political donations and incur
political expenditure (as such terms are defined in sections 362 DISCLOSURES REQUIRED UNDER
to 365 of the CA 2006) until the Company’s next AGM, which UK LISTING RULE 9.8.4
they might otherwise be prohibited from making or incurring There are no disclosures required to be made under UK Listing
under the terms of the CA 2006 and which would not amount to Rule 9.8.4 which have not already been disclosed elsewhere in
‘donations’ in the ordinary sense of the word. It is proposed to this Report. Details of long term incentive plans can be found in
maintain the limit of such authority at £100,000. the Directors’ Remuneration Report on pages 98 to 121 and
details of dividends waived by shareholders can be found on
COMMUNICATING WITH SHAREHOLDERS page 122.
The Company places considerable importance on
communication with its shareholders, including its private SHAREHOLDER SERVICES
shareholders. The Group CEO and the Group CFO are closely Details of services provided to shareholders can be found in the
involved in investor relations and a senior executive has day to Shareholder Information section on pages 232 to 234 and on the
day responsibility for such matters. The views of the Company’s Company’s website.
major shareholders are reported to the Board by the Group CEO
AGM
and the Group CFO as well as by the Chairman (who remains
The Notice of Meeting setting out the resolutions to be proposed
in contact with our largest shareholders) and are discussed at
at the 2020 AGM, together with explanatory notes, is set out on
its meetings.
pages 235 to 245 of this Annual Report and is also available on
There is regular dialogue with institutional shareholders, and the Company’s website www.compass-group.com. The directors
private shareholders at the AGM. Contact with institutional consider that each of the resolutions is in the best interests of
shareholders (and with financial analysts, brokers and the the Company and the shareholders as a whole and recommend
media) is controlled by written guidelines in the Company’s that shareholders vote in favour of all of the resolutions.
Corporate Communications Code and Market Soundings Policy,
On behalf of the Board
in compliance with EU Market Abuse Regulation requirements
to ensure the continued protection of share price sensitive
information that has not already been made generally available
to the Company’s shareholders. Contact is also maintained, ​
when appropriate, with shareholders to discuss overall
Alison Yapp
remuneration plans and policies.
Group General Counsel and Company Secretary
The primary method of communicating with shareholders
26 November 2019
is by electronic means, helping to make the Company more
environmentally friendly by reducing waste and pollution Compass Group PLC
associated with the production and posting of its Annual Report. Registered in England and Wales, No. 4083914
The Annual Report is available to all shareholders and can be
accessed via the Company’s website www.compass-group.com.
The Group’s annual and interim results are also published on the
Company’s website, together with all other announcements and
documents issued to the market, such as statements, interviews
and presentations by the Group CEO and Group CFO.

The Notice of Annual General Meeting is circulated to all

shareholders at least 20 working days prior to such meeting and
it is Company policy not to combine resolutions to be proposed
at general meetings. All shareholders are invited to the
Company’s AGM at which they have the opportunity to put
questions to the Board and it is standard practice to have the

126  Compass Group PLC Annual Report 2019

NON-FINANCIAL INFORMATION STATEMENT
The table below sets out where stakeholders can find information in our Strategic Report that relates to non-financial matters
detailed under section 414CB of the Companies Act 2006.
Where to read more in this report about our impact,
Reporting requirement Some of our relevant policies1 including the principal risks relating to these matters Page
Environmental matters Sustainability Strategy Corporate Responsibility 52–63
Environmental Policy Commitment to United Nations’ Sustainable Development Goals 62–63

Governance
Statement GHG Emissions 60
Employees Code of Business Conduct Who we create value for – People 15
Workplace Health & SafetyChief Executive’s review – People 19
Policy Statement People Report – A renewed commitment 46–51
Principal Risks – Health and Safety, People 42
Safety culture 57
Human rights Code of Business Conduct Our Standards 88
Code of Ethics Slavery and Human Trafficking 91
Modern Slavery Act Employee diversity and Human rights 125
Transparency Statement
Human Rights Policy
Statement
Social matters Social Purpose Who we create value for – Purpose 15
Chief Executive’s review – Purpose 20
Corporate Responsibility 52–63
Anti-bribery and Code of Business Conduct Our values guide our actions and behaviours 51
corruption Code of Ethics Principal Risks – Compliance and Fraud 45
Group Speak Up Policy Our Standards 88
Sourcing Responsibly Supply Chain Integrity Standards 53
Business model ​ Our Business Model 12
Non-financial KPIs ​ Global Lost Time Incident Frequency Rate 3,27,57
Global Food Safety Incident Rate 3,27,57
Greenhouse gas intensity ratio 3,27,60
Women in global leadership team 50
Principal risks ​ Identifying and Managing Risk 41–45

1. The Company’s policies, statements and codes are available on the Company’s website www.compass-group.com.

Compass Group PLC Annual Report 2019  127

128  Compass Group PLC Annual Report 2019
Consolidated
Financial Statements
130 Directors’ responsibilities
131 Independent auditor’s report
138 Consolidated financial statements
144 Group accounting policies
154 Notes to the consolidated financial statements
225 Parent Company financial statements
227 Parent Company accounting policies
229 Notes to the Parent Company financial statements

Compass Group PLC Annual Report 2019  129

DIRECTORS’ RESPONSIBILITIES

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE
The Annual Report and Accounts complies with the FINANCIAL STATEMENTS
Disclosure Guidance and Transparency Rules of the The directors are responsible for preparing the Annual Report
United Kingdom’s Financial Conduct Authority and the UK and the Group and Parent Company financial statements in
Corporate Governance Code in respect of the accordance with applicable law and regulations.
requirements to produce an annual financial report.
Company law requires the directors to prepare Group and Parent
The Annual Report and Accounts is the responsibility of, Company financial statements for each financial year. Under
and has been approved by, the directors. that law they are required to prepare the Group financial
statements in accordance with IFRS as adopted by the EU and
We confirm that to the best of our knowledge: applicable law and have elected to prepare the Parent Company
financial statements in accordance with FRS 101 Reduced
• the Annual Report and Accounts, taken as a whole, is
Disclosure Framework.
fair, balanced and understandable and provides the
information necessary for shareholders to assess the Under company law the directors must not approve the financial
Group’s position and performance, business model statements unless they are satisfied that they give a true and fair
and strategy view of the state of affairs of the Group and Parent Company and
• the financial statements, prepared in accordance with of their profit or loss for that period. In preparing each of the
the applicable set of accounting standards, give a true Group and Parent Company financial statements, the directors
and fair view of the assets, liabilities, financial position are required to:
and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole • select suitable accounting policies and then apply
• the Annual Report and Accounts includes a fair review them consistently
of the development and performance of the business • make judgements and estimates that are reasonable,
and the position of the Company and the undertakings relevant, reliable and prudent
included in the consolidation taken as a whole, together • for the Group financial statements, state whether they have
with a description of the principal risks and been prepared in accordance with IFRS as adopted by the EU
uncertainties that they face • for the Parent Company financial statements, state whether
applicable UK Accounting Standards have been followed,
The directors have permitted the auditor to undertake subject to any material departures disclosed and explained in
whatever inspections it considers to be appropriate for the the Parent Company financial statements
purpose of enabling the auditor to give its audit opinion.
• assess the Group and Parent Company’s ability to continue as
On behalf of the Board a going concern, disclosing, as applicable, matters related to
going concern
• use the going concern basis of accounting unless they either
intend to liquidate the Group or the Parent Company or to
cease operations, or have no realistic alternative but to do so
Alison Yapp
Group General Counsel and Company Secretary The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
26 November 2019 Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with
the Companies Act 2006. They have a general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.

Under applicable law and regulations, the directors are also

responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that comply with that law and those regulations.

The directors are responsible for the maintenance and integrity

of the corporate and financial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.

130  Compass Group PLC Annual Report 2019

INDEPENDENT AUDITOR’S REPORT

Independent auditor’s report to the members

of Compass Group PLC
1.  OUR OPINION IS UNMODIFIED Overview
We have audited the financial statements of Compass Group
PLC (‘the Company’) for the year ended 30 September 2019 Materiality: £74 million (2018: £74 million)
which comprise the Consolidated Income Statement, the Group financial 5.0% (2018: 4.9%) of Group profit
Consolidated Statement of Comprehensive Income, the statements as a before tax
Consolidated Statement of Changes in Equity, the whole
Consolidated Balance Sheet, the Consolidated Cash Flow Coverage 91% (2018: 97%) of Group profit
Statement, the Parent Company Balance Sheet and the Parent before tax

Consolidated Financial Statements

Company Statement of Changes in Equity, and the related notes, Key audit matters vs 2018
including the accounting policies in notes A to T of the Group
financial statements and A to J of the Parent Company Event New: The impact of uncertainties
financial statements. driven due to the UK exiting the European
Union on our audit
In our opinion: Recurring risks Uncertain direct tax provisions
• the financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at Supplier rebates & discounts
30 September 2019 and of the Group’s profit for the year Recoverability of the parent
then ended; Company’s investment in and
• the Group financial statements have been properly prepared amounts owed by Group undertakings
in accordance with International Financial Reporting
Standards as adopted by the European Union; 2.  KEY AUDIT MATTERS: INCLUDING OUR ASSESSMENT
• the Parent Company financial statements have been properly OF RISKS OF MATERIAL MISSTATEMENT
prepared in accordance with UK accounting standards, Key audit matters are those matters that, in our professional
including FRS 101 Reduced Disclosure Framework; and judgement, were of most significance in the audit of the financial
• the financial statements have been prepared in accordance statements and include the most significant assessed risks of
with the requirements of the Companies Act 2006 and, as material misstatement (whether or not due to fraud) identified
regards the Group financial statements, Article 4 of the by us, including those which had the greatest effect on: the
IAS Regulation. overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team.
Basis for opinion
We conducted our audit in accordance with International We summarise below the key audit matters, in arriving at our
Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our audit opinion above, together with our key audit procedures to
responsibilities are described below. We believe that the audit address those matters and, as required for public interest
evidence we have obtained is a sufficient and appropriate basis entities, our results from those procedures. These matters were
for our opinion. Our audit opinion is consistent with our report to addressed, and our results are based on procedures
the Audit Committee. undertaken, in the context of, and solely for the purpose of, our
audit of the financial statements as a whole, and in forming our
We were first appointed as auditor by the Directors on opinion thereon, and consequently are incidental to that opinion,
14 March 2014. and we do not provide a separate opinion on these matters.

The period of total uninterrupted engagement is for the six

financial years ended 30 September 2019. We have fulfilled our
ethical responsibilities under, and we remain independent of the
Group in accordance with, UK ethical requirements including
the FRC Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that standard
were provided.

Compass Group PLC Annual Report 2019  131

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

The risk Our response

The impact of Unprecedented levels of We developed a standardised firm-wide approach to

uncertainties due to uncertainty: the consideration of the uncertainties arising from
the UK exiting the All audits assess and challenge the Brexit in planning and performing our audits. Our
European Union on reasonableness of estimates and procedures included:
our audit related disclosures and the • Our Brexit knowledge: We considered the Directors’
Refer to page 41 appropriateness of the going concern assessment of Brexit-related sources of risk for the Group’s
(Principal Risks), basis of preparation of the financial business and financial resources compared with our own
page 40 (Viability statements. All of these depend on understanding of the risks. We considered the Directors’
Statement), page 82 assessments of the future economic plans to take action to mitigate the risks.
(Audit Committee environment and the Group’s future • Sensitivity analysis: When addressing forecasts used in the
Report) and page prospects and performance. goodwill impairment testing for the UK and other areas that
172 (Financial In addition, we are required to depend on forecasts, we compared the Directors’ analysis to
Disclosures). consider the other information our assessment of the full range of reasonably possible
presented in the Annual Report scenarios resulting from Brexit uncertainty and, where
including the principal risks forecast cash flows are required to be discounted,
disclosure and the viability statement considered adjustments to discount rates for the level
and to consider the Directors’ of remaining uncertainty.
statement that the Annual Report • Assessing transparency: As well as assessing individual
and financial statements taken as a disclosures as part of our procedures we considered all of the
whole is fair, balanced and Brexit related disclosures together, including those in the
understandable and provides the strategic report, comparing the overall picture against our
information necessary for understanding of the risks.
shareholders to assess the Group’s
position and performance, business Our results
model and strategy. We found the resulting estimates and related disclosures, and
Brexit is one of the most significant disclosures in relation to going concern, to be acceptable.
economic events for the UK and at However, no audit should be expected to predict the
the date of this report its effects are unknowable factors or all possible future implications for a
subject to unprecedented levels of company and this is particularly the case in relation to Brexit.
uncertainty of outcomes, with the full
range of possible effects unknown.
Uncertain direct tax Subjective estimate: Our procedures included:
provisions The Group operates across a large • Control design: Evaluating the design of the controls that the
Refer to page 85 number of jurisdictions and is subject Group has in place to identify and quantify its uncertain
(Audit Committee to periodic challenges by local tax direct tax exposures;
Report), pages 146 authorities on a range of tax matters • Our taxation expertise: With the assistance of our tax
and 149 (Accounting during the normal course of specialists, we analysed and challenged the assumptions
Policies) and pages business, including transfer pricing. used to determine provisions using our knowledge and
168 and 169 and As a result of the complexities of tax experience of the application of international and local
page 205 (Financial rules on transfer pricing and other tax legislation by the relevant authorities and courts, and
Disclosures). legislation the provisioning for assessing whether the approach applied by the Group is
uncertain direct tax positions is supported by custom and practice;
judgemental and requires the • With the help of our tax specialists we considered whether
Directors to make estimates in the judgements applied to each significant provision
relation to these uncertainties. including the maximum potential exposure and the likelihood
The Directors’ estimation includes of a payment being required were appropriate;
assessing the likelihood of potentially
• Test of detail: Examining the calculations prepared by the
material exposures as a result of
Directors and agreeing key assumptions used to
changes in local tax regulations and
underlying data;
evaluating ongoing inspections by
• Inspecting correspondence with relevant tax authorities and
local tax authorities and international
assessing third party tax advice received to evaluate the
bodies, which could materially
conclusions drawn in the advice where relevant to the
impact the amounts recorded in the
significant exposures faced by the Group and how these have
Group financial statements. In 2019
been used by the Directors in their assessment of the
this included evaluating the impact
likelihood of any outflow and estimate of the provision; and
of the European Commission’s
state aid investigation into the • Assessing transparency: Assessing the adequacy of the
UK CFC legislation. Group’s disclosures in respect of tax and uncertain direct
tax positions.
Our results
We found the carrying value of the tax provision to
be acceptable.

132  Compass Group PLC Annual Report 2019

 The risk Our response

Supplier rebates Rebates and discounts Our procedures included:

and discounts processing error: • Control design: Evaluating the design of the controls that the
Refer to page 85 The Group has a variety of Group has in place over the accounting for supplier rebates
(Audit Committee agreements with suppliers and discounts;
Report) and whereby rebates and discounts • Accounting application: Inspecting underlying contractual terms
page 149 are earned based on the quantity and supplier correspondence for a selection of arrangements in
(Accounting of goods bought. place and considering whether the accounting policy had been
Policies). The majority of the rebates and applied appropriately to the terms of the rebate and/or discount;
discounts due to the Group are • Test of details: Performing detailed testing on a sample basis of
reflected in the net price charged the largest rebates and discounts recognised in the period, with
by its suppliers or are based on particular attention to the period in which the rebate was
fixed percentages linked to the recognised and rebates and discounts accrued at the year-end;
quantity of goods bought. There and
is little estimation or judgement
• In addition we selected a sample of amounts invoiced as at the
involved in determining the
balance sheet date and agreed the underlying calculation to
timing and amount to be
contractual terms and supplier correspondence.
recognised. However, due to the
large number of agreements in Our results
place across numerous The results of our testing were satisfactory and we found
jurisdictions within the Group, the amount of supplier rebates and discounts recognised to

Consolidated Financial Statements

the complexity of transaction be acceptable.
processing as well as supplier
rebate periods frequently not
being coterminous with the year
end date, we consider that there
is a risk of error.
Recoverability of Low risk, high value: Our procedures included:
the parent The carrying amount of the • Test of details: Comparing a sample of the investment and
Company’s Company’s investments in intercompany receivables’ carrying value to the net assets of the
investment in and subsidiaries held at cost less relevant subsidiary included within the Group consolidation, to
amounts owed by impairment and intercompany identify whether the net asset value, being an approximation of
Group undertakings receivables represent 98% the minimum recoverable amount, was in excess of their
Investments (2018: 94%) of the Company’s carrying amount;
£1,061 million total assets. • Assessing subsidiary net assets: For the relevant subsidiaries
(2018: £1,035 We do not consider the valuation (investment holding companies), we compared the net assets of
million) of these investments and the relevant subsidiary to the final net assets in the prior year
Intercompany recovery of intercompany audited financial statements. Based on the knowledge acquired
receivables receivables to be at a high risk of during the audit of the consolidated Group, including reporting
£9,514 million significant misstatement, or to be received from component auditors for the underlying trading
(2018: £10,035 subject to a significant level of operations, we considered whether there were any events
million) judgement. However, due to their indicating that the net assets would be materially different from
materiality in the context of the the prior year position;
Company financial statements as • Test of details: Where the net assets of the relevant subsidiary
a whole, this is considered to be were insufficient to support the carrying value we considered the
the area which had the greatest performance of the underlying investments held by the relevant
effect on our overall audit subsidiary in order to assess whether there was an indication of
strategy and allocation of impairment;
resources in planning and
• Our sector experience: In addition, for certain investments and
completing our Company audit.
receivables, we evaluated the assumptions used in the applicable
impairment model, in particular those relating to forecast profit
growth, using our knowledge and historic experience of the
profitability of the underlying trading Group; and
• Benchmarking assumptions: We compared the assumptions in
the applicable impairment model for the investment to externally
derived data in relation to projected economic growth and
discount rates.
Our results
We found the carrying amounts of investments and intercompany
receivables to be acceptable.

Compass Group PLC Annual Report 2019  133

INDEPENDENT AUDITOR’S REPORT (CONTINUED)
GROUP PROFIT BEFORE TAX GROUP MATERIALITY 3.  OUR APPLICATION OF MATERIALITY AND AN
£1.5 billion £74 million OVERVIEW OF THE SCOPE OF OUR AUDIT
(2018: £1.5 billion) (2018: £74 million) Materiality for the Group financial statements as a whole was
set at £74 million (2018: £74 million), determined with
£74 million reference to a benchmark of Group profit before tax of
Whole financial statements
materiality (2018: £74 million) £1.5 billion (2018: £1.5 billion), of which it represents 5.0%
(2018: 4.9%).

Materiality for the Parent Company financial statements as a

whole was set at £59 million (2018: £52.3 million), determined
with reference to a benchmark of Company total assets, of which
£59 million
Range of materiality it represents 0.5% (2018: 0.4%).
at 16 components
(£2 million to £59 million)
(2018: £1 million to £59 million)
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £3.7 million
Group profit before tax (2018: £3.7 million), in addition to other identified
Group materiality £3.7 million misstatements that warranted reporting on qualitative grounds.
Misstatements reported
to the Audit Committee
(2018: £3.7 million) Of the Group’s 52 (2018: 54) reporting components, we
subjected 16 (2018: 28) to full scope audits for Group purposes.
GROUP REVENUE
The components within the scope of our work accounted for the
percentages illustrated opposite.
10%
The remaining 10% (2018: 4%) of total Group revenue, 9%
Full scope for Group audit
purposes 2019 (2018: 3%) of Group profit before tax and 7% (2018: 3%) of total
4% Group assets is represented by 36 reporting components
Full scope for Group audit
purposes 2018
(2018: 26 components), none of which individually represented
Residual components
more than 1% of any of total Group revenue, Group profit before
96% tax or total Group assets. For these residual components, we
performed analysis at an aggregated Group level to re-examine
our assessment that there were no significant risks of material
90% misstatement within these.

The Group team instructed component auditors as to the

GROUP PROFIT BEFORE TAX significant areas to be covered, including the relevant risks
detailed above and the information to be reported back.

9% The Group team approved the component materialities,

Full scope for Group audit
which ranged from £2 million to £59 million (2018: £1 million
purposes 2019 to £59 million), having regard to the mix of size and risk profile
3%
Full scope for Group audit of the Group across the components. The work on 13 of the 16
purposes 2018
Residual components
components (2018: 25 of the 28 components) was performed
by component auditors and the rest, including the audit of the
97% Parent Company, was performed by the Group team.

The Group team visited 10 (2018: 8) component locations in

91% Brazil, Chile, Canada, France, Germany, Japan, Portugal,
Turkey, United Kingdom and United States (2018: in Canada,
China, France, Japan, Turkey, Spain, United Kingdom and the
GROUP TOTAL ASSETS United States) to assess the audit risk and strategy and direct
the audit work of component auditors.
7%
Video and telephone conference meetings were also held with
Full scope for Group audit these component auditors and all others that were not physically
purposes 2019
3% visited. At these visits and meetings, the findings reported to the
Full scope for Group audit
purposes 2018 Group team were discussed in more detail, and any further work
Residual components required by the Group team was then performed by the
component auditor.
97%

93%

134  Compass Group PLC Annual Report 2019

4.  WE HAVE NOTHING TO REPORT ON GOING CONCERN 5.  WE HAVE NOTHING TO REPORT ON THE OTHER
The Directors have prepared the financial statements on the INFORMATION IN THE ANNUAL REPORT
going concern basis as they do not intend to liquidate the The Directors are responsible for the other information
Company or the Group or to cease their operations, and as they presented in the Annual Report together with the financial
have concluded that the Company’s and the Group’s financial statements. Our opinion on the financial statements does not
position means that this is realistic. They have also concluded cover the other information and, accordingly, we do not express
that there are no material uncertainties that could have cast an audit opinion or, except as explicitly stated below, any form of
significant doubt over their ability to continue as a going concern assurance conclusion thereon.
for at least a year from the date of approval of the financial
statements (‘the going concern period’). Our responsibility is to read the other information and, in doing
so, consider whether, based on our financial statements audit
Our responsibility is to conclude on the appropriateness of work, the information therein is materially misstated or
the Directors’ conclusions and, had there been a material inconsistent with the financial statements or our audit
uncertainty related to going concern, to make reference to knowledge. Based solely on that work we have not identified
that in this audit report. However, as we cannot predict all material misstatements in the other information.
future events or conditions and as subsequent events may
result in outcomes that are inconsistent with judgements that Strategic report and directors’ report
were reasonable at the time they were made, the absence of Based solely on our work on the other information:
reference to a material uncertainty in this auditor’s report is
• we have not identified material misstatements in the strategic
not a guarantee that the Group and the Company will continue
report and the Directors’ report;
in operation.
• in our opinion the information given in those reports for the

Consolidated Financial Statements

In our evaluation of the Directors’ conclusions, we considered financial year is consistent with the financial statements; and
the inherent risks to the Group’s and Company’s business model • in our opinion those reports have been prepared in
and analysed how those risks might affect the Group’s and accordance with the Companies Act 2006.
Company’s financial resources or ability to continue operations
over the going concern period. The risks that we considered Directors’ remuneration report
most likely to adversely affect the Group’s and Company’s In our opinion the part of the Directors’ Remuneration Report to
available financial resources over this period were: be audited has been properly prepared in accordance with the
Companies Act 2006.
• Cost inflation pressures leading to loss of revenue and profits;
• Inability to retain and/or secure new contracts may lead to loss Disclosures of principal risks and longer-term viability
of market share to competition; and Based on the knowledge we acquired during our financial
statements audit, we have nothing material to add or draw
• The impact of political uncertainties, for example the impact
attention to in relation to:
of Brexit on the UK business, leading to a loss of confidence
and reduced spending on food services. • the Directors’ confirmation within the viability statement on
page 40 that they have carried out a robust assessment of the
As these were risks that could potentially cast significant doubt
principal risks facing the Group, including those that would
on the Group’s and the Company’s ability to continue as a going
threaten its business model, future performance, solvency
concern, we considered sensitivities over the level of available
and liquidity;
financial resources indicated by the Group’s financial forecasts
taking account of reasonably possible (but not unrealistic) • the Principal Risks disclosures describing these risks and
adverse effects that could arise from these risks individually and explaining how they are being managed and mitigated; and
collectively and evaluated the achievability of the actions the • the Directors’ explanation in the viability statement of how
Directors consider they would take to improve the position they have assessed the prospects of the Group, over what
should the risks materialise. We also considered less predictable period they have done so and why they considered that period
but realistic second order impacts, such as the impact of Brexit to be appropriate, and their statement as to whether they
and the erosion of customer or supplier confidence, which could have a reasonable expectation that the Group will be able to
result in a rapid reduction of available financial resources. continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
Based on this work, we are required to report to you if: disclosures drawing attention to any necessary qualifications
or assumptions.
• we have anything material to add or draw attention to in
relation to the Directors’ statement in Note A to the financial Under the Listing Rules we are required to review the viability
statements on the use of the going concern basis of statement. We have nothing to report in this respect.
accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use of that Our work is limited to assessing these matters in the context of
basis for a period of at least twelve months from the date of only the knowledge acquired during our financial statements
approval of the financial statements; or audit. As we cannot predict all future events or conditions and
• the related statement under the Listing Rules set out on as subsequent events may result in outcomes that are
page 40 is materially inconsistent with our audit knowledge. inconsistent with judgements that were reasonable at the time
they were made, the absence of anything to report on these
We have nothing to report in these respects, and we did not statements is not a guarantee as to the Group’s and Company’s
identify going concern as a key audit matter. longer-term viability.

Compass Group PLC Annual Report 2019  135

INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Corporate governance disclosures 7.  RESPECTIVE RESPONSIBILITIES
We are required to report to you if: Directors’ responsibilities
As explained more fully in their statement set out on page 130,
• we have identified material inconsistencies between the the Directors are responsible for: the preparation of the financial
knowledge we acquired during our financial statements audit statements including being satisfied that they give a true and fair
and the Directors’ statement that they consider that the view; assessing the Group and parent Company’s ability to
Annual Report and financial statements taken as a whole is continue as a going concern, disclosing, as applicable, matters
fair, balanced and understandable and provides the related to going concern; and using the going concern basis of
information necessary for shareholders to assess the Group’s accounting unless they either intend to liquidate the Group or
position and performance, business model and strategy; or the parent Company or to cease operations, or have no realistic
• the section of the Annual Report describing the work of the alternative but to do so. In addition the Directors are responsible
Audit Committee does not appropriately address matters for such internal control as they determine is necessary to
communicated by us to the Audit Committee. enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the Auditor’s responsibilities
eleven provisions of the UK Corporate Governance Code Our objectives are to obtain reasonable assurance about
specified by the Listing Rules for our review. whether the financial statements as a whole are free from
material misstatement, whether due to fraud or other
We have nothing to report in these respects. irregularities (see below), or error, and to issue our opinion in an
auditor’s report. Reasonable assurance is a high level of
6.  WE HAVE NOTHING TO REPORT ON THE OTHER
assurance, but does not guarantee that an audit conducted in
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
accordance with ISAs (UK) will always detect a material
BY EXCEPTION
misstatement when it exists. Misstatements can arise from
Under the Companies Act 2006, we are required to report to you
fraud, other irregularities or error and are considered material if,
if, in our opinion:
individually or in aggregate, they could reasonably be expected
• adequate accounting records have not been kept by the to influence the economic decisions of users taken on the basis
parent Company, or returns adequate for our audit have not of the financial statements.
been received from branches not visited by us; or
A fuller description of our responsibilities is provided on the
• the parent Company financial statements and the part of the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or Irregularities – ability to detect
• certain disclosures of Directors’ remuneration specified by law We identified areas of laws and regulations that could reasonably
are not made; or be expected to have a material effect on the financial statements
• we have not received all the information and explanations we from our general commercial and sector experience, and
require for our audit. through discussion with the Directors and other management
(as required by auditing standards), and from inspection of the
We have nothing to report in these respects. Group’s regulatory and legal correspondence and discussed
with the directors and other management the policies and
procedures regarding compliance with laws and regulations. We
communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the
Group to component audit teams of relevant laws and
regulations identified at Group level.

136  Compass Group PLC Annual Report 2019

The potential effect of these laws and regulations on the 8.  THE PURPOSE OF OUR AUDIT WORK AND TO WHOM
financial statements varies considerably. WE OWE OUR RESPONSIBILITIES
This report is made solely to the Company’s members, as a
Firstly, the Group is subject to laws and regulations that directly body, in accordance with Chapter 3 of Part 16 of the Companies
affect the financial statements including financial reporting Act 2006. Our audit work has been undertaken so that we might
legislation (including related companies legislation), state to the Company’s members those matters we are required
distributable profits legislation and taxation legislation and we to state to them in an auditor’s report and for no other purpose.
assessed the extent of compliance with these laws and To the fullest extent permitted by law, we do not accept or
regulations as part of our procedures on the related financial assume responsibility to anyone other than the Company and
statement items. the Company’s members, as a body, for our audit work, for this
report, or for the opinions we have formed.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely to Paul Korolkiewicz (Senior Statutory Auditor)
have such an effect: health and safety, anti-bribery and for and on behalf of KPMG LLP, Statutory Auditor
employment law. Auditing standards limit the required audit Chartered Accountants
procedures to identify non-compliance with these laws and
regulations to enquiry of the Directors and other management 15 Canada Square, London E14 5GL
and inspection of regulatory and legal correspondence, if any.
Through these procedures, we became aware of actual or 26 November 2019

Consolidated Financial Statements

suspected non-compliance and considered the effect as part of
our procedures on the related financial statement items. The
identified actual or suspected non-compliance was not
sufficiently significant to our audit to result in our response being
identified as a key audit matter.

Owing to the inherent limitations of an audit, there is an

unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-
compliance with laws and regulations (irregularities) is from the
events and transactions reflected in the financial statements,
the less likely the inherently limited procedures required by
auditing standards would identify it. In addition, as with any
audit, there remained a higher risk of non-detection of
irregularities, as these may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
controls. We are not responsible for preventing non-compliance
and cannot be expected to detect non-compliance with all laws
and regulations.

Compass Group PLC Annual Report 2019  137

CONSOLIDATED INCOME STATEMENT
For the year ended 30 September 2019

2018
2019 (restated1)
Notes £m £m
Combined sales of Group and share of equity accounted joint ventures 2, 35 25,152 23,147
Less: share of sales of equity accounted joint ventures 13 (274) (275)
Revenue 24,878 22,872
Operating costs 3 (23,308) (21,229)
Operating profit before joint ventures and associates 1,570 1,643
Share of profit after tax of joint ventures and associates 2, 13 31 50
Operating profit 2 1,601 1,693
Underlying operating profit2 2, 35 1,882 1,744
Acquisition related costs 3 (54) (49)
One-off pension charge 22 (12) –
Cost action programme charge 3 (190) –
Share of profit of joint ventures and associates held for sale 13 (25) –
Tax on share of profit of joint ventures – (2)
Net loss on sale and closure of businesses 25 (7) (58)
Finance income 5 12 6
Finance costs 5 (122) (120)
Other financing items (loss)/gain 5 (15) 2
Profit before tax 6 1,469 1,523
Income tax expense 6 (351) (385)
Profit for the year 1,118 1,138

ATTRIBUTABLE TO
Equity shareholders of the Company 7 1,110 1,130
Non-controlling interests 8 8
Profit for the year 1,118 1,138
BASIC EARNINGS PER SHARE (PENCE) 7 70.0p 71.3p
DILUTED EARNINGS PER SHARE (PENCE) 7 69.9p 71.3p
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.
2. Underlying operating profit excludes acquisition related costs, one-off pension charge and cost action programme charge, but includes share of profit after
tax of associates and operating profit before tax of joint ventures, including those classified as held for sale. The reconciliation between statutory and
underlying results is provided in note 34.

138  Compass Group PLC Annual Report 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2019

2018
2019 (restated1)
Notes £m £m
Profit for the year 1,118 1,138
Other comprehensive income
Items that are not reclassified subsequently to the income statement
Remeasurement of post employment benefit obligations – (loss)/gain 22 (357) 68
Return on plan assets, excluding interest income – gain 22 425 21
Tax charge on items relating to the components of other comprehensive income 6 (10) (29)
58 60
Items that are or may be reclassified subsequently to the income statement
Currency translation differences 131 (76)
Reclassification adjustment for movements in foreign exchange on sale of businesses 6 –
Tax on items relating to the components of other comprehensive income 6 (2) (1)
135 (77)
Total other comprehensive gain/(loss) for the year 193 (17)

Consolidated Financial Statements

Total comprehensive income for the year 1,311 1,121

ATTRIBUTABLE TO
Equity shareholders of the Company 1,303 1,113
Non-controlling interests 8 8
Total comprehensive income for the year 1,311 1,121
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Compass Group PLC Annual Report 2019  139

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2019

Attributable to equity shareholders of the Company

Share Capital Non-
Share premium redemption Own Other Retained controlling
capital account reserve shares reserves earnings interests Total
​ Notes £m £m £m £m £m £m £m £m
At 30 September 2018, as reported ​ 176 182 295 – 4,208 (2,246) 25 2,640
Impact of change in accounting standards –
IFRS 15 1​ – – – – – 27 – 27
At 30 September 2018, restated1 ​ 176 182 295 – 4,208 (2,219) 25 2,667
Impact of change in accounting standards –
IFRS 9 1 – – – – – (15) – (15)
At 1 October 2018, restated1 ​ 176 182 295 – 4,208 (2,234) 25 2,652
Profit for the year ​ – – – – – 1,110 8 1,118
Other comprehensive income ​ ​ ​ ​ ​ ​ ​
Currency translation differences ​ – – – – 131 – – 131
Remeasurement of post employment benefit
obligations – loss 22 – – – – – (357) – (357)
Return on plan assets, excluding interest
income – gain 22 – – – – – 425 – 425
Tax on items relating to the components of other
comprehensive income 6​ – – – – (2) (10) – (12)
Reclassification adjustment for movements in
foreign exchange on sale of businesses ​ – – – – 6 – – 6
Total other comprehensive income ​ – – – – 135 58 – 193
Total comprehensive income for the year ​ – – – – 135 1,168 8 1,311
Fair value of share-based payments 24​ – – – – 27 – – 27
Changes to non-controlling interests due to
acquisitions and disposals ​ – – – – – – (1) (1)
Tax on items taken directly to equity 6​ – – – – – 4 – 4
Change in the fair value of non-controlling
interest put options ​ – – – – (8) – – (8)
Purchase of own shares to satisfy employee
share-based payments ​ – – – (4) – – – (4)
Other changes ​ – – – – – (3) – (3)
​ ​ 176 182 295 (4) 4,362 (1,065) 32 3,978
Dividends paid to shareholders 8​ – – – – – (611) – (611)
Dividends paid to non-controlling interests ​ – – – – – – (5) (5)
At 30 September 2019 ​ 176 182 295 (4) 4,362 (1,676) 27 3,362

1. The Group has adopted IFRS 15 ‘Revenue from contracts with customers’ and IFRS 9 ‘Financial instruments’ effective for the year ended 30 September 2019.
IFRS 15 has been applied retrospectively and comparatives for the prior year have been restated, whilst IFRS 9 has been applied prospectively from
1 October 2018 by adjusting the opening balance sheet at that date. Additional information about the transitional impact of these standards is included in note 1.

Adjustment
for non-
controlling
Share-based interest put
payment Merger Revaluation Translation options Total other
reserve reserve reserve reserve reserve reserves
OTHER RESERVES Notes £m £m £m £m £m £m
At 1 October 2018 232 4,170 7 (130) (71) 4,208
Other comprehensive income ​ ​ ​ ​ ​ ​
Currency translation differences – – – 131 – 131
Reclassification adjustment for movements in
foreign exchange on sale of businesses – – – 6 – 6
Tax on items relating to the components of other
comprehensive income 6 – – – (2) – (2)
Total other comprehensive income – – – 135 – 135
Fair value of share-based payments 24 27 – – – – 27
Change in the fair value of non-controlling
interest put options – – – – (8) (8)
At 30 September 2019 259 4,170 7 5 (79) 4,362

Own shares held by the Group represent 187,455 ordinary shares in Compass Group PLC (2018: nil ordinary shares) and are held by the Compass Group All
Share Schemes Trust (ASST). These shares are listed on a recognised stock exchange and their market value at 30 September 2019 was £3.9 million (2018:
£nil). The nominal value held at 30 September 2019 was £20,714 (2018: £nil).
ASST is a discretionary trust for the benefit of employees and the shares held are used to satisfy some of the Group’s liabilities to employees for long term
incentive plans.
The merger reserve arose in 2000 following the demerger from Granada Compass plc.

140  Compass Group PLC Annual Report 2019

 Attributable to equity shareholders of the Company
Share Capital Non-
​ Share premium redemption Own Other Retained controlling
capital account reserve shares reserves earnings interests Total
Notes £m £m £m £m £m £m £m £m
At 1 October 2017, as reported ​ 176 182 295 – 4,320 (2,875) 22 2,120
Impact of change in accounting standards –
IFRS 15 1 – – – – – 22 – 22
At 1 October 2017, restated1 ​ 176 182 295 – 4,320 (2,853) 22 2,142
Profit for the year1 ​ – – – – – 1,130 8 1,138
Other comprehensive income ​ ​ ​ ​ ​ ​
Currency translation differences ​ – – – – (76) – – (76)
Remeasurement of post employment benefit
obligations – gain 22 – – – – – 68 – 68
Return on plan assets, excluding interest
income – gain 22 – – – – – 21 – 21
Tax on items relating to the components of other
comprehensive income 6​ – – – – (1) (29) – (30)

Consolidated Financial Statements

Total other comprehensive (loss)/income ​ – – – – (77) 60 – (17)
Total comprehensive (loss)/income
for the year1 ​ – – – – (77) 1,190 8 1,121
Fair value of share-based payments 24​ – – – – 21 – – 21
Changes to non-controlling interests due to
acquisitions and disposals ​ – – – – – (5) 4 (1)
Tax on items taken directly to equity 6​ – – – – – 1 – 1
Change in the fair value of non-controlling
interest put options ​ – – – – (56) – – (56)
Other changes ​ – – – – – (4) – (4)
​ ​ 176 182 295 – 4,208 (1,671) 34 3,224
Dividends paid to shareholders 8​ – – – – – (548) – (548)
Dividends paid to non-controlling interests ​ – – – – – – (9) (9)
At 30 September 20181 ​ 176 182 295 – 4,208 (2,219) 25 2,667

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Adjustment
for non-
controlling
Share‑based interest put
payment Merger Revaluation Translation options Total other
reserve reserve reserve reserve reserve reserves
OTHER RESERVES Notes​ £m £m £m £m £m £m
At 1 October 2017 ​ 211 4,170 7 (53) (15) 4,320
Other comprehensive income ​ ​ ​ ​ ​ ​ ​
Currency translation differences ​ – – – (76) – (76)
Tax on items relating to the components of other
comprehensive income 6​ – – – (1) – (1)
Total other comprehensive loss ​ – – – (77) – (77)
Fair value of share-based payments 24​ 21 – – – – 21
Change in fair value of non-controlling
interest put options ​ – – – – (56) (56)
At 30 September 2018 ​ 232 4,170 7 (130) (71) 4,208

Compass Group PLC Annual Report 2019  141

CONSOLIDATED BALANCE SHEET
At 30 September 2019

30 September
2018 1 October 2017
2019 (restated1) (restated1)
​ Notes £m £m £m
NON-CURRENT ASSETS ​ ​ ​ ​
Goodwill 9 4,576 4,270 3,994
Other intangible assets 10 1,426 1,105 836
Contract fulfilment assets and contract costs 11 976 838 738
Property, plant and equipment 12 1,052 1,006 1,000
Interests in joint ventures and associates 13 226 263 220
Other investments 14 96 73 63
Post employment benefit assets 22 448 346 259
Trade and other receivables 15 96 105 104
Deferred tax assets 6 76 45 132
Derivative financial instruments2 19 207 83 139
Non-current assets 2​ 9,179 8,134 7,485
CURRENT ASSETS ​ ​ ​ ​
Inventories 16 404 353 353
Trade and other receivables 15 3,051 2,852 2,696
Tax recoverable ​ 88 69 86
Cash and cash equivalents2 17 398 969 387
Derivative financial instruments2 19 – 34 4
​ ​ 3,941 4,277 3,526
Assets held for sale 2, 25 190 236 –
Current assets ​ 4,131 4,513 3,526
Total assets 2 13,310 12,647 11,011
CURRENT LIABILITIES ​ ​ ​ ​
Short term borrowings2 18 (186) (813) (20)
Derivative financial instruments2 19 (6) (12) (6)
Provisions 21 (223) (167) (132)
Current tax liabilities ​ (247) (227) (227)
Trade and other payables 20 (4,718) (4,317) (3,892)
​ ​ (5,380) (5,536) (4,277)
Liabilities directly associated with assets held for sale 2, 25 (30) (72) –
Current liabilities ​ (5,410) (5,608) (4,277)
NON-CURRENT LIABILITIES ​ ​ ​ ​
Long term borrowings2 18 (3,679) (3,611) (3,939)
Derivative financial instruments2 19 (6) (33) (11)
Post employment benefit obligations 22 (259) (224) (231)
Provisions 21 (266) (227) (266)
Deferred tax liabilities 6 (114) (57) (58)
Trade and other payables 20 (214) (220) (87)
Non-current liabilities ​ (4,538) (4,372) (4,592)
Total liabilities 2 (9,948) (9,980) (8,869)
Net assets 2 3,362 2,667 2,142
EQUITY ​ ​ ​ ​
Share capital 23 176 176 176
Share premium account ​ 182 182 182
Capital redemption reserve ​ 295 295 295
Own shares ​ (4) – –
Other reserves ​ 4,362 4,208 4,320
Retained earnings ​ (1,676) (2,219) (2,853)
Total equity shareholders' funds ​ 3,335 2,642 2,120
Non-controlling interests ​ 27 25 22
Total equity ​ 3,362 2,667 2,142

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.
2. Component of net debt.

Approved by the Board of Directors on 26 November 2019 and signed on its behalf by

Dominic Blakemore, Director

Karen Witts, Director

142  Compass Group PLC Annual Report 2019

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September 2019

2018
2019 (restated1)
​ Notes £m £m
CASH FLOW FROM OPERATING ACTIVITIES​ ​ ​ ​
Cash generated from operations 26 2,396 2,270
Interest paid ​ (116) (101)
Tax received ​ 26 26
Tax paid 6 (354) (349)
Net cash from operating activities ​ 1,952 1,846
CASH FLOW FROM INVESTING ACTIVITIES ​ ​ ​
Purchase of subsidiary companies2 25 (451) (420)
Purchase of additional interest in joint ventures and associates 13 (27) (32)
Proceeds from sale of subsidiary companies, joint ventures and associates net of exit costs2 ​ 101 39
Purchase of intangible assets ​ (185) (164)
Purchase of contract fulfilment assets 11 (286) (261)
Purchase of property, plant and equipment 12 (352) (359)
Proceeds from sale of property, plant and equipment/intangible assets/contract fulfilment assets ​ 47 54
Purchase of other investments 14 (13) (8)
Proceeds from sale of other investments 14 3 1

Consolidated Financial Statements

Dividends received from joint ventures and associates3 13 48 35
Interest received ​ 9 6
Net cash from investing activities ​ (1,106) (1,109)
CASH FLOW FROM FINANCING ACTIVITIES ​ ​ ​
Purchase of own shares to satisfy employee share-based payments4 ​ (4) –
Receipts from issue of treasury shares to satisfy employee share scheme awards exercised ​ – 1
Purchase of non-controlling interests ​ – (5)
Increase in borrowings 27 1,830​ 1,506
Repayment of borrowings 27 (2,631) (1,074)
Repayment of obligations under finance leases 27 (4) (6)
Equity dividends paid 8 (611) (548)
Dividends paid to non-controlling interests ​ (5) (9)
Net cash from financing activities ​ (1,425) (135)
CASH AND CASH EQUIVALENTS ​ ​ ​
Net (decrease)/increase in cash and cash equivalents 27 (579) 602
Cash and cash equivalents at beginning of the year 17, 27 969 387
Currency translation gains on cash and cash equivalents 27 9 2
Total cash and cash equivalents ​ 399 991
Cash reclassified as held for sale 25, 27 (1) (22)
Cash and cash equivalents at end of the year 17, 27 398 969

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. There is no
net cash impact as a result of the adoption of IFRS 15. Additional information about the impact of IFRS 15 is included in note 1.
2. Net of cash acquired or disposed and payments received or made under warranties and indemnities.
3. Includes dividends received from joint ventures and associates classified as held for sale.
4. Including stamp duty and brokers’ commission.

RECONCILIATION OF FREE CASH FLOW

2018
2019 (restated1)
£m £m
Net cash from operating activities 1,952 1,846
Purchase of intangible assets (185) (164)
Purchase of contract fulfilment assets (286) (261)
Purchase of property, plant and equipment (352) (359)
Proceeds from sale of property, plant and equipment/intangible assets/contract fulfilment assets 47 54
Purchase of other investments (13) (8)
Proceeds from sale of other investments 3 1
Dividends received from joint ventures and associates 48 35
Interest received 9 6
Dividends paid to non-controlling interests (5) (9)
Free cash flow 1,218 1,141
Add back: Cash related to cost action programme in the year 29 –
Underlying free cash flow 1,247 1,141

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. There is no
net cash impact as a result of the adoption of IFRS 15. Additional information about the impact of IFRS 15 is included in note 1.

Compass Group PLC Annual Report 2019  143

GROUP ACCOUNTING POLICIES
For the year ended 30 September 2019

INTRODUCTION • Expedient not to disclose the amount of the transaction price

The significant accounting policies adopted in the preparation of allocated to the remaining performance obligations and an
the Group’s financial statements are set out below: explanation of when the Group expects to recognise that
amount as revenue for the comparative reporting periods
A  ACCOUNTING CONVENTION AND BASIS OF presented before 1 October 2018
PREPARATION • Expedients in relation to the use of hindsight in contracts with
The financial statements have been prepared in accordance variable consideration and contracts that were completed
with International Financial Reporting Standards (IFRS) and and/or modified before the beginning of the comparative
International Financial Reporting Interpretations Committee periods presented
(IFRIC) interpretations as adopted by the European Union that
are effective for the year ended 30 September 2019. They have The adjustment to opening retained earnings at 1 October 2017
been prepared under the historical cost convention as modified arising from the changes to revenue recognition amounted to
by the revaluation of certain financial instruments. 1% of total equity. Further details of the change in the Group’s
accounting policy in respect of revenue recognition and an
The financial statements have been prepared on a going explanation of the impact on the Group's prior period financial
concern basis. The Group’s business activities, together with the statements are set out in note 1.
factors likely to affect its future development, performance and
position are set out in the Strategic Report on pages 1 to 63. The IFRS 9 'Financial instruments'
financial position of the Group, its cash flows, liquidity position The Group has adopted IFRS 9 'Financial instruments' on
and borrowing facilities are discussed in the Business Review on 1 October 2018. The adoption of IFRS 9 has not had a material
pages 34 to 40. The Group has considerable financial resources impact and the Group has adjusted opening retained earnings to
together with longer term contracts with a number of clients and reflect additional provision for impairment of trade receivables
suppliers across different geographic areas and industries. As a using the expected credit loss model. Further details of the
consequence, the directors believe that the Group is well placed change in the Group's accounting policy in respect of the
to manage its business risks successfully. classification and measurement of financial instruments and an
explanation of the impact on the Group's financial statements
In the current financial year, the Group has adopted: are set out in note 1.
• IFRS 15 ‘Revenue from contracts with customers’ and ACCOUNTING STANDARDS, AMENDMENTS AND
subsequent amendments 'Clarifications to IFRS 15' INTERPRETATIONS TO EXISTING STANDARDS THAT ARE
• IFRS 9 ‘Financial instruments’ NOT YET EFFECTIVE
• Amendments to IFRS 2 ‘Classification and measurement of The following accounting standards, interpretations and
share-based payment transactions’ amendments that are applicable to the Group and effective in
• Annual improvements to IFRS standards 2014–2016 cycle future years have been issued by the IASB and endorsed by the
– Amendments to IFRS 1 and IAS 28 European Union:
• IFRIC 22 ‘Foreign currency transactions and advance
• IFRS 16 ‘Leases’
consideration’
• IFRIC 23 ‘Uncertainty over income tax treatments’
The Group has updated its accounting policies to reflect the • Amendments to IFRS 9 ‘Prepayment features with negative
impact of IFRS 15 and IFRS 9 as described below. There is no compensation’
significant impact on the Group's consolidated results or • Amendments to IAS 28 ‘Long term interests in associates and
balance sheet as a result of adopting other new IFRS standards. joint ventures’
• Amendments to IAS 19 ‘Plan amendment, curtailment or
IFRS 15 'Revenue from contracts with customers'
settlement’
The Group has adopted IFRS 15 ‘Revenue from contracts with
customers’ and subsequent amendments ‘Clarifications to IFRS • Annual improvements to IFRS standards 2015–2017 cycle
15’ on 1 October 2018. IFRS 15 sets out the requirements for • Amendments to references to the conceptual framework in
recognising revenue and costs from contracts with customers IFRS standards
and includes additional disclosure requirements. The standard • Amendments to IFRS 3 ‘Definition of a business’
establishes a five-step model that applies to revenue arising • Amendments to IAS 1 and IAS 8 ‘Definition of material’
from contracts with customers. Revenue is recognised at an
amount that reflects the consideration to which an entity The Group has not yet adopted these pronouncements and does
expects to be entitled in exchange for goods and services and at not currently believe that the adoption of these standards,
a point when the performance obligations associated with these amendments or interpretations would have a material effect on
goods and services have been satisfied. the consolidated results or financial position of the Group unless
stated otherwise.
The Group has applied the standard on a fully retrospective
basis, restating prior period and year end comparatives and
electing to use the following expedients:

144  Compass Group PLC Annual Report 2019

IFRS 16 ‘Leases’ replaces IAS 17 'Leases', IFRIC 4 'Determining The Group intends to apply the following transition practical
whether an arrangement contains a lease' and related expedients allowed under IFRS 16:
interpretations. The standard is effective for accounting periods
beginning on or after 1 January 2019 and will be adopted by the • the right of use assets will be measured at an amount equal to
Group on 1 October 2019. the lease liability at adoption. Existing lease prepayments will
also be added to the value of the right of use assets on
IFRS 16 changes lease accounting for lessees and will impact adoption and existing lease provisions and accruals will be
the Group’s financial statements as follows: deducted
• reliance will be placed on existing onerous lease assessments
• lease agreements will give rise to the recognition of an asset under IAS 37 to impair right of use assets recognised on
representing the right to use the leased item and a liability for adoption instead of performing a new impairment assessment
future lease payments. The liability recorded for future lease for those assets on adoption
payments will be for amounts payable for the ‘reasonably
• leases with a lease term end date within one year of the date
certain’ period of the lease, which may include future lease
of initial application will not be recognised on the balance
periods for which the Group has options to extend the
sheet
minimum lease term. Liabilities will be discounted at the
• no reassessment will be performed as to whether existing
incremental borrowing rate for each lease based on factors
contracts are, or contain, a lease at the date of initial
such as the lessee legal entity, lease term and currency.

Consolidated Financial Statements

application
Under IAS 17, future operating lease payments are generally
not recorded on the balance sheet but disclosed as
As an accounting policy choice, the Group will not recognise
commitments on an undiscounted basis, see note 30
leases for low value assets, which the Group considers to be
• lease costs will be recognised in the form of depreciation of those with an initial fair value less than approximately £5,000, or
the right to use the asset and interest on the lease liability. leases with a term of 12 months or less on the balance sheet.
Interest charges will typically be higher in the early stages of a
lease and will reduce over the term. Under IAS 17, operating The Group has finalised its IFRS 16 accounting policies,
lease rentals have been expensed on a straight-line basis over determined the appropriate discount rates to apply to lease
the lease term within operating expenses (see note 3) payments, selected and implemented an IT system to collate
• net cash inflows from operating activities and payments and report lease data and established procedures and controls
classified within cash flow from financing activities will both for accounting and reporting under IFRS 16.
increase, as payments made at both lease inception and
subsequently will be characterised as repayments of lease The Group’s current estimate of the impact of these changes
liabilities and interest. There is no net cash impact as a result on the consolidated balance sheet on adoption is the recognition
of the adoption of IFRS 16 of an additional lease liability at 1 October 2019 of between
£950 million and £1,050 million. The additional lease liability will
Lessee accounting for finance leases will be similar under not equal the operating lease commitment disclosed in note 30
IFRS 16 to existing IAS 17 accounting. Lessor accounting under primarily because: a) lease terms determined under IFRS 16
IFRS 16 is also similar to existing IAS 17 accounting and is may be longer than under IAS 17; b) lease liabilities will be
expected to be materially the same for the Group. discounted under IFRS 16; and c) low value and short term
leases will not be included in the Group's lease liability.
The main judgement in applying IFRS 16 relates to the
determination of the lease term and whether optional periods The right of use asset recognised at 1 October 2019 is expected
should be included. Lease terms under IFRS 16 may exceed the to be slightly lower than the lease liability, as the value of existing
minimum lease period and include optional lease periods where lease prepayments added to the balance is expected to be lower
it is reasonably certain that an extension option will be exercised than the value of accruals and provisions for onerous leases that
or that a termination option will not be exercised by the Group. are deducted. Overall, these adjustments are not expected to
Lease terms are assessed based on the Group's business plans have a material impact on Group retained earnings.
and historical experience.
The net impact on the consolidated income statement for the
The Group will adopt IFRS 16 on a modified retrospective basis year to 30 September 2020 is expected to be immaterial. The
with the initial cumulative impact of applying the standard as an final impact of adopting IFRS 16 will depend on factors that may
adjustment to retained earnings on the date of adoption with no occur during the year including new leases entered into,
restatement of comparative information. changes or reassessments of the Group’s existing lease portfolio
and changes to exchange rates or discount rates.

Compass Group PLC Annual Report 2019  145

GROUP ACCOUNTING POLICIES (CONTINUED)
For the year ended 30 September 2019

These impacts are based on the assessments undertaken to GOODWILL

date. The exact financial impacts of the accounting changes of The Group tests annually whether goodwill has suffered any
adopting IFRS 16 at 1 October 2019 may be revised. The Group impairment in accordance with the accounting policy set out in
will issue further details on the impact of adopting IFRS 16 as section M on page 150. The recoverable amounts of cash-
part of the condensed financial statements for the six months generating units (CGU) have been determined based on value in
ending 31 March 2020. use calculations. These calculations require the use of estimates
and assumptions consistent with the most up to date budgets
B  CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS and plans that have been formally approved by management.
AND JUDGEMENTS IN APPLYING ACCOUNTING The key assumptions used for the value in use calculations are
POLICIES set out in note 9.
The preparation of the consolidated financial statements
requires management to make judgements, estimates and POST EMPLOYMENT BENEFITS
assumptions that affect the application of policies and reported The Group’s defined benefit pension schemes and similar
amounts of assets and liabilities, income and expenses. These arrangements are assessed annually in accordance with IAS 19.
estimates, judgements and assumptions are based on historical The present value of the defined benefit liabilities is based on
experience and other factors that are believed to be reasonable assumptions determined with independent actuarial advice. The
under the circumstances. Actual results may differ from these size of the net surplus/deficit is sensitive to the market value of
estimates. The Group's accounting policies do not include any the assets held by the schemes and to actuarial assumptions,
critical judgements. The policies which require the most use of which include price inflation, pension and salary increases, the
management estimation are set out below, however none of discount rate used in assessing actuarial liabilities, mortality and
these estimates are expected to have a material adjustment in other demographic assumptions and the levels of contributions.
the next financial year: Further details and sensitivities are included in note 22.

TAXES C  BASIS OF CONSOLIDATION

The Group has operations in around 45 countries that are The consolidated financial statements consist of the financial
subject to direct and indirect taxes. The tax position is often not statements of the Company, entities controlled by the Company
agreed with tax authorities until sometime after the relevant (its subsidiaries) and the Group’s share of interests in joint
period end and, if subject to a tax audit, may be open for an arrangements and associates made up to 30 September
extended period. In these circumstances, the recognition of tax each year.
liabilities and assets requires management estimation to reflect
a variety of factors; these include the status of any ongoing tax D  SUBSIDIARIES, ASSOCIATES AND JOINT
audits, historical experience, interpretations of tax law and the ARRANGEMENTS
likelihood of settlement. SUBSIDIARIES
Subsidiaries are entities over which the Company has control.
The changing regulatory environment affecting all multi- Control exists when the Company has power over an entity,
nationals increases the estimation uncertainty associated exposure to variable returns from its involvement with an entity
with calculating the Group’s tax position. This is as a result and the ability to use its power over the entity to affect its
of amendments to tax law at the national level, increased returns. The existence and effect of potential voting rights that
co operation between tax authorities and greater cross are currently exercisable or convertible are also considered
border transparency. when assessing control.

The Group estimates and recognises additional tax liabilities as ASSOCIATES

appropriate based on management’s interpretation of country Associates are undertakings that are not subsidiaries or joint
specific tax law, external advice and the likelihood of settlement. arrangements over which the Group has significant influence
Where the final tax outcome of these matters is different from and can participate in financial and operating policy decisions.
the amounts that were initially recorded, such differences will Investments in associated undertakings are accounted for using
impact the results in the year in which such determination is the equity method. The consolidated income statement includes
made. Further details of this are provided in note 6 and note 28. the Group’s share of the profit after tax of the associated
undertakings. Investments in associates include goodwill
In addition, calculation and recognition of temporary differences identified on acquisition and are carried in the Group balance
giving rise to deferred tax assets requires estimates and sheet at cost plus post-acquisition changes in the Group’s share
judgements to be made on the extent to which future taxable of the net assets of the associate, less any impairment in value.​
profits are available against which these temporary differences
can be utilised.

146  Compass Group PLC Annual Report 2019

JOINT ARRANGEMENTS F  FOREIGN CURRENCY
Joint arrangements are entities in which the Group holds an The consolidated financial statements are prepared in sterling,
interest on a long term basis and which are jointly controlled by which is the functional and reporting currency of the Company.
the Group and other entities under a contractual agreement.
The Group accounts for its own share of assets, liabilities, In preparing the financial statements of individual companies
revenues and expenses measured according to the terms of the within the Group, transactions in currencies other than the
agreements covering the joint operations. Joint ventures are companies’ functional currency are recorded at the rates of
accounted for using the equity method. exchange on the dates of the transaction. At each balance sheet
date, monetary assets and liabilities that are denominated in
ADJUSTMENTS foreign currencies are retranslated at the rates on the balance
Where necessary, adjustments are made to the financial sheet date. Gains and losses arising on retranslation are
statements of subsidiaries to bring the accounting policies used included in the consolidated income statement for the year,
in line with those used by the Group. except for where they arise on items taken directly to other
comprehensive income, in which case they are also recognised
ACQUISITIONS AND DISPOSALS in the consolidated statement of comprehensive income.
The results of subsidiaries, associates or joint arrangements
acquired or disposed of during the year are included in the In order to hedge its exposure to certain foreign exchange risks
consolidated income statement from the effective date of the Group enters into forward currency contracts (see section Q

Consolidated Financial Statements

acquisition or up to the effective date of disposal, as appropriate. for the Group’s accounting policies in respect of derivative
financial instruments).
INTRA-GROUP TRANSACTIONS
All intra-group transactions, balances, income and expenses are On consolidation, the assets and liabilities of the Group’s
eliminated on consolidation. Where a Group subsidiary transacts overseas operations (expressed in their functional currencies,
with a joint operation of the Group, profits or losses are being the currency of the primary economic environment in
eliminated to the extent of the Group’s interest in the relevant which each entity operates) are translated at the exchange rates
joint operation. on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period.
E ACQUISITIONS Exchange differences arising, if any, are classified as equity and
The acquisition of subsidiaries is accounted for using the transferred to the Group’s translation reserve. Such translation
purchase method. The cost of acquisition is measured at the differences are recognised as income or expense in the period in
aggregate of the fair values, at the date of exchange, of which the operation is disposed of.
assets given, liabilities incurred or assumed and equity
instruments issued. Goodwill and fair value adjustments arising on the acquisition of
a foreign entity are treated as assets and liabilities of the foreign
Identifiable assets acquired and liabilities and contingent entity and translated at the closing rate.
liabilities assumed are recognised at the fair values at the
acquisition date, except for non-current assets (or disposal G  REVENUE AND CONTRACT COSTS
groups) that are classified as held for sale which are recognised Revenue represents income derived from contracts for the
and measured at fair value less costs to sell. provision of food and support services by the Group to
customers in exchange for consideration in the normal course of
The cost of the acquisition in excess of the Group’s interest in business. The Group’s revenue is comprised of revenues under
the net fair value of the identifiable net assets acquired is its contracts with clients. Clients engage the Group to provide
recorded as goodwill. If the cost of the acquisition is less than food and support services at their locations. Depending on the
the fair value of the net assets of the subsidiary acquired, the type of client and service, we are paid either by our client and/or
difference is recognised directly in the consolidated income directly by the consumers to whom we have been provided
statement. access by our client, such as the client’s employees, visitors,
pupils, patients and spectators.
Where not all the equity of a subsidiary is acquired, the non-
controlling interest is recognised at the non-controlling interest’s PERFORMANCE OBLIGATIONS
proportionate share of the net assets of the subsidiary. Put The Company recognises revenue when its performance
options over non-controlling interests are recognised as a obligations are satisfied. Performance obligations are satisfied
financial liability measured at fair value which is re-evaluated at as control of the goods and services is transferred to the client
each year end with a corresponding entry in other reserves. and/or consumers. In certain cases, clients engage us to provide
food and support services in a single multi service contract. We
recognise revenue for each separate performance obligation in
respect of food and support services as these are provided.
There is little judgement involved in determining if a
performance obligation has been satisfied.

Compass Group PLC Annual Report 2019  147

GROUP ACCOUNTING POLICIES (CONTINUED)
For the year ended 30 September 2019

At contract inception, the contract is assessed to identify each retail café concession, the performance obligation is satisfied
promise to transfer either a distinct good or service or a series of at a point in time, namely when the products are sold to
distinct goods or services that are substantially the same and the consumer.
have the same pattern of transfer to the customer. Goods and
services are distinct and accounted for as separate performance The nature, amount, timing and uncertainty of revenue and cash
obligations in the contract if the customer can benefit from them flows for performance obligations within a contract that are
either on their own or together with other resources that are satisfied over time and at a point in time are considered to be
readily available to the customer and they are separately similar and they are affected by the same economic factors.
identifiable in the contract. Performance obligations are usually
COSTS TO OBTAIN A CONTRACT
clearly identified within contracts and revenue is recognised for
Costs incurred during the bidding period, prior to a contract
each separate performance obligation. Generally, where the
being awarded, are expensed to the income statement. Costs
Group has the obligation to its clients to make available the
incurred in securing the contract after preferred bidder status
provision of food service for a predetermined period, its
has been obtained are generally expensed as incurred, unless
performance obligation represents a series of services delivered
they fulfil the conditions for capitalisation as an asset.
over time. There are also contracts under which the Group sells
products directly to consumers and these performance The incremental costs to obtain a contract with a customer,
obligations represent a transfer of a good at a point in time. such as commissions to the salesforce, are capitalised if it is
expected that those costs will be recoverable. Costs to obtain a
TRANSACTION PRICE
contract that would have been incurred regardless of whether
The transaction price is the amount of consideration to which
the contract was obtained are recognised as an expense in the
the Group expects to be entitled in exchange for transferring the
period. Only commissions directly attributable to an individual
promised goods and services to the customer, excluding value
contract award are capitalised, while commissions payable due
added tax and similar sales taxes. For example, the transaction
to multiple contract wins or due to a portfolio of client contracts
price may be based on a price per meal, which may vary with
are expensed as incurred as they cannot be directly attributable
volume, or could be based on costs incurred plus an agreed
to an identified contract.
management fee.
COSTS TO FULFIL A CONTRACT
The Group makes a variety of ongoing payments to clients,
Costs incurred in the fulfilment of the Group’s obligations to the
mainly commissions, concession rentals and reimbursement of
client under the contract are recognised in the consolidated
utility costs. These are assessed for treatment as consideration
balance sheet and include contributions towards service assets,
paid to customers and where they are not in exchange for a
such as kitchen and restaurant fit out costs and equipment,
distinct good or service they are recognised as a reduction of the
which are capitalised as contract fulfilment assets. Contract
transaction price. In addition, the Group may make a cash
fulfilment costs covered within the scope of another accounting
payment to a client typically at the start of a contract which is
standard, such as property, plant and equipment and intangible
not an investment in service assets and does not generate or
assets, are not capitalised as contract fulfilment assets but are
enhance the Group’s resources. Such payments are reported as
treated according to other standards. ​
prepayments and, as they are considered not to be in exchange
for a distinct good or service, they are charged to the income UTILISATION, DERECOGNITION AND IMPAIRMENT OF
statement as a deduction to revenue recognised over the CONTRACT FULFILMENT ASSETS AND CAPITALISED
contract term rather than as an operating cost. COSTS TO OBTAIN A CONTRACT
Contract fulfilment assets are amortised on a straight line basis
TIMING OF REVENUE RECOGNITION
over the shorter of the life of the client contract and the useful
Revenue is recognised as performance obligations are satisfied
economic life of the assets. The amortisation charge is included
as control of the goods and services is transferred to the
within operating costs. Costs incurred to obtain a contract are
customer. For each performance obligation within a contract,
unwound over the life of the client contract as an expense.
the Group determines whether it is satisfied over time or at a
point in time. Capitalised costs are derecognised either when disposed of or
when no further economic benefits are expected to flow from
The Group has determined that most of its performance
their use or disposal.
obligations are satisfied over time as the client simultaneously
receives and consumes the benefits provided by the Group as Whenever impairment indicators exist, the Group determines
the food service and/or support service are rendered at the client the recoverability of the contract fulfilment assets and
site. In these circumstances, revenue is recognised at the capitalised costs to obtain a contract by comparing their
amount which the Group has the right to invoice, where that carrying amount to the remaining amount of consideration that
amount corresponds directly with the value to the customer of the Group expects to receive less the costs that relate to
the Group’s performance completed to date. Where the Group providing services under the relevant contract.
is contracted to sell directly to consumers, for example in a

148  Compass Group PLC Annual Report 2019

H  REBATES AND OTHER AMOUNTS RECEIVED FROM Deferred tax is provided using the balance sheet liability
SUPPLIERS method, providing for temporary differences between the
Rebates and other amounts received from suppliers include carrying amounts of assets and liabilities for financial reporting
agreed discounts from suppliers’ list prices, value and volume purposes and the amounts used for tax purposes. Deferred tax
related rebates. liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
Income from value and volume related rebates is recognised that it is probable that taxable profits will be available against
based on actual purchases in the period as a proportion of total which deductible temporary differences can be utilised. Such
purchases made or forecast to be made over the rebate period. assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
Rebates received in respect of plant and equipment are
the initial recognition (other than in a business combination) of
deducted from the costs capitalised and are recognised in the
other assets and liabilities in a transaction that affects neither
consolidated income statement in line with depreciation.
the taxable profit nor the accounting profit.
Agreed discounts relating to inventories are credited to
Deferred tax liabilities are recognised for taxable temporary
the income statement within cost of sales as the goods
differences arising on investments in subsidiaries and
are consumed.
associates, and interest in joint arrangements, except where the
Group is able to control the reversal of the temporary difference

Consolidated Financial Statements

Rebates relating to items purchased, but still held at the
balance sheet date, are deducted from the carrying value of and it is probable that the temporary difference will not reverse
these items so that the cost of inventories is recorded net of in the foreseeable future.
applicable rebates.
The carrying amount of deferred tax assets is reviewed at each
I  BORROWING COSTS balance sheet date and reduced to the extent that it is no longer
Borrowing costs which are directly attributable to the probable that sufficient taxable profits will be available to allow
acquisition, construction or production of a qualifying asset are all or part of the asset to be recovered.
capitalised as part of the cost of that asset.
Deferred tax is calculated at the enacted or substantively
J  OPERATING PROFIT enacted tax rates that are expected to apply in the period when
Operating profit is stated after the share of profit after tax of joint the liability is settled or the asset realised.
ventures and associates, and before finance costs.
Deferred tax assets and liabilities are offset against each other
K  EXCEPTIONAL ITEMS when they relate to income taxes levied by the same tax
Exceptional items are disclosed and described separately in the jurisdiction and the Group intends to settle its current tax assets
consolidated financial statements where it is necessary to do so and liabilities on a net basis.
to provide further understanding of the financial performance of
M  INTANGIBLE ASSETS
the Group. They are material items of income or expense that
GOODWILL
have been shown separately due to the significance of their
Goodwill arising on consolidation represents the excess of the
nature or amount.
cost of acquisition over the fair value of the Group’s share of the
L TAX identifiable assets and liabilities of the acquired subsidiary,
Income tax expense comprises current and deferred tax. Tax is associate or joint arrangement at the date of acquisition.
recognised in the consolidated income statement except where Goodwill is tested annually for impairment and is carried at cost
it relates to items taken directly to the consolidated statement of less any accumulated impairment losses.
comprehensive income or equity, in which case it is recognised
Goodwill is allocated to CGUs for the purpose of impairment
in the consolidated statement of comprehensive income or
testing. A CGU is identified at the lowest aggregation of assets
equity as appropriate.
that generate largely independent cash inflows, and that which
Current tax is the expected tax payable on the taxable income is looked at by management for monitoring and managing the
for the period, using tax rates that have been enacted or business and relates to the total business for a country. If the
substantively enacted in respect of that period by the balance recoverable amount of the CGU is less than the carrying amount,
sheet date. Tax benefits are recognised if it is probable that an impairment loss is allocated first to reduce the carrying
these will be accepted by the relevant tax authorities. amount of any goodwill allocated to the unit and then to the
Subsequently, they are reviewed each year to assess whether other assets of the unit pro rata on the basis of the carrying
provisions against full recognition of the benefits are necessary. amount of each asset in the unit. Any impairment is
immediately recognised in the consolidated income statement
and an impairment loss recognised for goodwill is not
subsequently reversed.

Compass Group PLC Annual Report 2019  149

GROUP ACCOUNTING POLICIES (CONTINUED)
For the year ended 30 September 2019

On disposal, the attributable amount of goodwill is included in O  ASSETS HELD FOR SALE
the determination of the gain or loss on disposal. Non-current assets and disposal groups are classified as held for
sale if the carrying amount will be recovered through a sale
Goodwill arising on acquisitions before the date of transition to transaction rather than through continuing use. This condition is
IFRS has been retained at the previous UK GAAP amounts regarded as met only when the sale is highly probable,
subject to being tested for impairment at that date. Goodwill management is committed to a sale plan, the asset is available
written off to reserves under UK GAAP prior to 1998 has not for immediate sale in its present condition and the sale is
been reinstated and is not included in determining any expected to be completed within one year from the date of
subsequent gain or loss on disposal. classification. Goodwill is allocated to the held for sale business
on a relative fair value basis where this business forms part of a
OTHER INTANGIBLE ASSETS
larger CGU. Investments in joint ventures and associates that
Intangible assets acquired separately are capitalised at cost or,
have been classified as held for sale are no longer accounted for
if acquired as part of a business combination, are capitalised at
using the equity method. These assets are measured at the
fair value as at the date of the acquisition. Group investment in
lower of carrying value and fair value less costs to sell.
rights to generate significant consumer revenue under client
contracts is recognised at cost as other intangible assets. P INVENTORIES
Amortisation is charged on a straight line basis over the Inventories are valued at the lower of cost and net realisable
expected useful lives of the assets. Internally generated value. Cost is calculated using either the weighted average price
intangible assets are not capitalised. Intangible assets are or the first in, first out method as appropriate to the
reviewed for impairment annually. circumstances. Net realisable value is the estimated selling
price in the ordinary course of business, less applicable variable
The following rates applied for the Group:
selling expenses.
• client contract related intangible assets: the life
Q  FINANCIAL INSTRUMENTS
of the contract
Financial assets and financial liabilities are recognised on the
• computer software: 20% to 33% per annum Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument. Financial assets and
The typical life of contract related intangibles is 2 to 20 years.
liabilities, including derivative financial instruments,
Client contracts related intangible assets arising on acquisition denominated in foreign currencies are translated into sterling at
of a business are recognised at fair value and amortised over period end exchange rates. Financial assets are classified as
the life of the contract, including the renewal period where either fair value through profit and loss, fair value through other
appropriate. Underlying operating profit and underlying comprehensive income, or amortised cost. Classification and
earnings per share exclude the amortisation of contract related subsequent remeasurement depends on the Group’s business
intangible assets arising on acquisition of a business as it is not model for managing the financial asset and its cash flow
considered to be relevant to the underlying trading performance characteristics. Assets that are held for collection of contractual
of the Group. cash flows, where those cash flows represent solely payments of
principal and interest, are measured at amortised cost.
N  PROPERTY, PLANT AND EQUIPMENT
All tangible fixed assets are reviewed for impairment when there INVESTMENTS
are indications that the carrying value may not be recoverable. Other investments comprising debt and equity instruments are
Freehold land is not depreciated. All other property, plant and recognised at fair value plus direct transaction costs.
equipment assets are carried at cost less accumulated
Debt instruments are classified at fair value through other
depreciation and any recognised impairment in value.
comprehensive income. Gains and losses arising from changes
Depreciation is provided on a straight line basis over the in fair value are recognised directly in other comprehensive
anticipated useful lives of the assets. income, except for impairment gains or losses, interest income
and foreign exchange gains and losses, which are recognised in
The following rates applied for the Group: the income statement. When the debt instrument is
derecognised, cumulative amounts in other comprehensive
• freehold buildings and long term leasehold property: income are reclassified to the income statement.
2% per annum
• short term leasehold property: the life of the lease Equity investments have been irrevocably designated at fair
• plant and machinery: 8% to 33% per annum value through other comprehensive income. Gains and losses
• fixtures and fittings: 8% to 33% per annum arising from changes in fair value are recognised directly in
other comprehensive income, and are not subsequently
When assets are sold, the difference between sales proceeds reclassified to the Group income statement, including
and the carrying amount of the assets is dealt with in the on derecognition.
consolidated income statement.

150  Compass Group PLC Annual Report 2019

Impairment losses are not recognised separately from other Fair value hedges. In relation to fair value hedges which meet
changes in fair value. Dividends are recognised in the Group the conditions for hedge accounting, any gain or loss from
income statement when the Group’s right to receive payment remeasuring the hedging instrument at fair value is recognised
is established. immediately in the consolidated income statement. Any gain or
loss on the hedged item attributable to the hedged risk is
Other investments that are not equity investments, whose cash adjusted against the carrying amount of the hedged item and
flows are not solely principal and interest or are not held in order recognised in the consolidated income statement. Where the
to collect contractual cash flows, are classified and measured at adjustment is to an unrecognised firm commitment, an asset or
fair value through profit and loss. Investments are included in liability is recognised on the balance sheet. When the hedged
non-current assets unless management intends to dispose of the transaction occurs, that asset or liability is recognised in the
investment within 12 months of the balance sheet date. initial measurement of the acquisition cost and carrying amount
of the asset or liability. Where the adjustment is to the carrying
CASH AND CASH EQUIVALENTS
amount of a hedged interest bearing financial instrument, the
Cash and cash equivalents comprise cash at bank and in hand
adjustment is amortised to the net profit and loss such that it is
and short term deposits with an original maturity of three months
fully amortised by maturity.
or less.
When fair value hedge accounting is discontinued, any
BORROWINGS
adjustment to the carrying amount of the hedged item for the

Consolidated Financial Statements

Borrowings are recognised initially at the proceeds received, net
designated risk for interest bearing financial instruments is
of direct issue costs. Borrowings are subsequently stated at
amortised to profit or loss, with amortisation commencing no
amortised cost; any difference between the proceeds (net of
later than when the hedged item ceases to be adjusted.
direct issue costs) and the redemption value is recognised in the
consolidated income statement over the period of the Cash flow hedges. The Group’s policy is to convert a proportion
borrowings using the effective interest method, unless included of its floating rate debt to fixed rates, using floating to fixed
in a fair value hedge. interest rate swaps. The Group may designate these as cash flow
hedges of interest rate risk whenever the hedge accounting
EQUITY INSTRUMENTS
conditions are met. There are no hedging relationships currently
Equity instruments issued by the Company are recorded at the
designated as cash flow hedges.
proceeds received, net of direct issue costs.
Net investment hedges. The Group uses foreign currency
DERIVATIVE FINANCIAL INSTRUMENTS
denominated debt, forward currency contracts and cross
AND HEDGE ACCOUNTING
currency swaps to partially hedge against the change in the
The Group uses derivative financial instruments such as forward
sterling value of its foreign currency denominated net assets due
currency contracts and interest rate swaps to hedge the risks
to movements in foreign exchange rates. The Group designates
associated with changes in foreign exchange rates and interest
these as a hedge of its net investments in foreign operations and
rates. Such derivative financial instruments are initially
recognises the gains or losses on the retranslation of the
measured at fair value on the contract date, and are remeasured
borrowings in other comprehensive income. If the Group uses
to fair value at subsequent reporting dates.
derivatives as the hedging instrument, the effective portion of
The use of financial derivatives is governed by the Group’s the hedge is recognised in other comprehensive income, with
policies approved by the Board of Directors that provide written any ineffective portion being recognised immediately in the
principles on the use of financial derivatives consistent with the income statement. Exchange differences arising from a
Group’s risk management strategy. The Group does not use monetary item receivable from or payable to a Group foreign
derivative financial instruments for speculative purposes. operation, the settlement of which is neither planned nor likely in
the foreseeable future, are considered to form part of a net
The fair value of forward currency contracts is calculated by investment in a foreign operation and are recognised directly in
reference to current forward exchange rates for contracts equity in the translation reserve.
with similar maturity profiles. The fair value of interest rate
swaps is determined by reference to market values for Gains and losses accumulated in other comprehensive income
similar instruments. are recycled through the consolidated income statement on
disposal of the foreign operation.
For the purpose of hedge accounting, hedges are classified as
either fair value hedges when they hedge the exposure to For derivative financial instruments that do not qualify for
changes in the fair value of a recognised asset or liability or an hedge accounting, any gains or losses arising from changes
unrecognised firm commitment; or cash flow hedges where they in fair value are taken directly to the consolidated income
hedge the exposure to variability in cash flows that is either statement in the period.
attributable to a particular risk associated with a recognised
asset or liability or a forecasted transaction; or net investment
hedges where they hedge the exposure to foreign currency
arising from a net investment in foreign operations.

Compass Group PLC Annual Report 2019  151

GROUP ACCOUNTING POLICIES (CONTINUED)
For the year ended 30 September 2019

Hedge accounting is discontinued when the hedging instrument For defined contribution plans, the Group pays contributions to
expires or is sold, terminated or exercised, or no longer qualifies separately administered pension plans. The Group has no
for hedge accounting. At that point in time, any cumulative gain further payment obligations once the contributions have been
or loss on the hedging instrument recognised in equity is kept in paid. The contributions payable by the Group in respect of
equity until the forecasted transaction occurs. If a hedged defined contribution plans are charged to the consolidated
transaction is no longer expected to occur, the net cumulative income statement when they are due. Payments made to state
gain or loss recognised in equity is transferred to the managed schemes are treated as payments to defined
consolidated income statement in the period. contribution schemes where the Group’s obligations under the
schemes are equivalent to those arising in a defined contribution
R LEASES pension scheme.
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of For defined benefit plans, the calculation of the defined benefit
ownership to the lessee. All other leases are classified as obligation is performed at least once a year by a qualified
operating leases. actuary using the projected unit credit method. The
consolidated balance sheet reflects a net asset or net liability for
Assets held under finance leases are recognised as assets of the each defined benefit pension plan. The liability recognised is the
Group at their fair value or, if lower, at the present value of the present value of the defined benefit obligation discounted using
minimum lease payments, each determined at the inception of the yields on high quality corporate bonds less the fair value of
the lease. The corresponding liability to the lessor is included in plan assets (at bid price), if any. If the fair value of the plan
the balance sheet as a finance lease obligation. Lease payments assets exceeds the defined benefit obligation, a pension surplus
are apportioned between finance charges and reduction of the is only recognised if the Group considers that it has an
lease obligation so as to achieve a constant rate of interest on unconditional right to a refund.
the remaining balance of the liability. Finance charges are
charged directly to the consolidated income statement. For the UK defined benefit plan, the Group considers that it has
an unconditional right to a refund of a surplus, assuming the
Payments made under operating leases are charged to income gradual settlement of the plan liabilities over time until all
on a straight line basis over the period of the lease. Any members have left the plan. The trustees cannot unconditionally
incentives to enter into an operating lease are also spread on a wind up the plan or use the surplus to enhance member benefits
straight line basis over the lease term. without employer consent. The Group’s judgement is that these
trustee rights do not prevent the Group from recognising an
S PROVISIONS
unconditional right to a refund and therefore a surplus.
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the Net interest income (if a plan is in surplus) or interest expense (if
Group will be required to settle that obligation. Provisions are a plan is in deficit) is calculated using yields on high quality
measured at the directors’ best estimate of the cost of settling corporate bonds and recognised in the consolidated income
these liabilities and are discounted to present value where the statement. A current service cost is also recognised which
effect is material. represents the expected present value of the defined benefit
pension entitlement earned by members in the period.
T  EMPLOYEE BENEFITS
PENSION OBLIGATIONS Remeasurements, which include gains and losses as a result of
The Group operates two types of pension plans: changes in actuarial assumptions, the effect of the limit on the
plan surplus (if any) and returns on plan assets (other than
• Defined contribution plans where the Group makes
amounts included in net interest) are recognised in the
contributions to a member’s pension plan but has no further
consolidated statement of comprehensive income in the period
payment obligations once the contributions have been paid
in which they occur. Remeasurements are not reclassified to
• Defined benefit plans which provide pension payments upon profit or loss in subsequent periods.
retirement to members as defined by the plan rules

152  Compass Group PLC Annual Report 2019

OTHER POST EMPLOYMENT OBLIGATIONS
Some Group companies provide other post employment
benefits. The expected costs of these benefits are accrued over
the period of employment using a similar basis to that used for
defined benefit pension schemes. Actuarial gains and losses are
recognised immediately in the consolidated statement of
comprehensive income.

SHARE-BASED PAYMENTS
The Group issues equity-settled share-based payments to
certain employees. In accordance with the requirements of
IFRS 2 ‘Share-based payments’, the Group has applied IFRS 2 to
all equity-settled share options granted after 7 November 2002
that had vested before 1 January 2005.

Equity-settled share-based payments are measured at fair value

(excluding the effect of non-market based vesting conditions) at
the date of grant. The fair value determined at the grant date of

Consolidated Financial Statements

the equity-settled share-based payments is expensed on a
straight line basis over the vesting period, based on the Group’s
estimate of the shares that will eventually vest and adjusted for
the effect of non-market based vesting conditions.

Fair value is measured using either the binomial distribution or

Black-Scholes pricing models as is most appropriate for each
scheme. The expected life used in the models has been
adjusted, based on management’s best estimate, for the effects
of exercise restrictions and behavioural considerations.

HOLIDAY PAY
Paid holidays and similar entitlements are regarded as an
employee benefit and are charged to the consolidated income
statement as the benefits are earned. An accrual is made at the
balance sheet date to reflect the fair value of holidays earned
but not taken.

Compass Group PLC Annual Report 2019  153

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2019

1  CHANGES IN ACCOUNTING POLICIES

IFRS 15 ‘Revenue from contracts with customers’ – impact of the adoption
The impact of the adoption of IFRS 15 ‘Revenue from contracts with customers’ on the Group’s consolidated financial statements is
included below. IFRS 15 has been adopted retrospectively and prior year comparatives have been restated. The following tables
show the impact of these changes on each of the Group’s primary statement line items affected. Where practical, line items which
are not impacted by the restatement have been aggregated within the relevant sub-totals. The impact of the new standard is also
explained in more detail within the footnotes that follow the tables.

CONSOLIDATED INCOME STATEMENT (EXTRACT)

Year ended
30 September Year ended
2018 30 September
As previously 2018
reported IFRS 15 Restated
​ Notes £m £m £m
Combined sales of Group and share of equity accounted joint ventures (i), (iv) 23,239 (92) 23,147
Less: share of sales of equity accounted joint ventures ​ (275) – (275)
Revenue (i), (iv) 22,964 (92) 22,872
Operating costs (i), (ii), (iv) (21,324) 95 (21,229)
Operating profit before joint ventures and associates ​ 1,640 3 1,643
Share of profit after tax of joint ventures and associates ​ 50 – 50
Operating profit ​ 1,690 3 1,693
Underlying operating profit ​ 1,741 3 1,744
Net loss on sale and closure of businesses ​ (58) – (58)
Finance costs and other financing items ​ (112) – (112)
Profit before tax ​ 1,520 3 1,523
Income tax expense (ii) (387) 2 (385)
Profit for the year ​ 1,133 5 1,138
​ ​ ​ ​ ​
ATTRIBUTABLE TO ​ ​ ​ ​
Equity shareholders of the Company ​ 1,125 5 1,130
Non-controlling interests ​ 8 – 8
Profit for the year ​ 1,133 5 1,138
BASIC EARNINGS PER SHARE (PENCE) ​ 71.0p 0.3p 71.3p
DILUTED EARNINGS PER SHARE (PENCE) ​ 71.0p 0.3p 71.3p

​CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EXTRACT)

Year ended
30 September Year ended
2018 30 September
As previously 2018
reported IFRS 15 Restated
£m £m £m
Profit for the year ​ 1,133 5 1,138
Total other comprehensive loss for the year ​ (17) – (17)
Total comprehensive income for the year ​ 1,116 5 1,121
​ ​ ​ ​ ​
ATTRIBUTABLE TO ​ ​ ​ ​
Equity shareholders of the Company ​ 1,108 5 1,113
Non-controlling interests ​ 8 – 8
Total comprehensive income for the year ​ 1,116 5 1,121

154  Compass Group PLC Annual Report 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)
CONSOLIDATED BALANCE SHEET (EXTRACT)
1 October 30 September
2017 1 October 2018 30 September
As previously 2017 As previously 2018
reported IFRS 15 Restated reported IFRS 15 Restated
​ Notes £m £m £m £m £m £m
NON-CURRENT ASSETS ​ ​ ​ ​ ​ ​ ​
Other intangible assets (iii), (iv) 1,537 (701) 836 1,903 (798) 1,105
Contract fulfilment assets and
contract costs (ii), (iii) – 738 738 – 838 838
Other non-current assets ​ 5,911 – 5,911 6,191 – 6,191
Non-current assets ​ 7,448 37 7,485 8,094 40 8,134
CURRENT ASSETS ​ ​ ​ ​ ​ ​ ​
Trade and other receivables (iv) 2,701 (5) 2,696 2,857 (5) 2,852
Other current assets ​ 830 – 830 1,661 – 1,661
Current assets ​ 3,531 (5) 3,526 4,518 (5) 4,513

Consolidated Financial Statements

Total assets ​ 10,979 32 11,011 12,612 35 12,647
​ ​ ​ ​ ​ ​ ​ ​
NON-CURRENT LIABILITIES ​ ​ ​ ​ ​ ​ ​
Deferred tax liabilities (ii) (48) (10) (58) (49) (8) (57)
Other non-current liabilities ​ (4,534) – (4,534) (4,315) – (4,315)
Non-current liabilities ​ (4,582) (10) (4,592) (4,364) (8) (4,372)
CURRENT LIABILITIES ​ ​ ​ ​ ​ ​ ​
Current liabilities ​ (4,277) – (4,277) (5,608) – (5,608)
Total liabilities ​ (8,859) (10) (8,869) (9,972) (8) (9,980)
Net assets ​ 2,120 22 2,142 2,640 27 2,667
​ ​ ​ ​ ​ ​ ​ ​
EQUITY ​ ​ ​ ​ ​ ​ ​
Retained earnings ​ (2,875) 22 (2,853) (2,246) 27 (2,219)
Other reserves ​ 4,995 – 4,995 4,886 – 4,886
Total equity ​ 2,120 22 2,142 2,640 27 2,667

Compass Group PLC Annual Report 2019  155

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)

CONSOLIDATED CASH FLOW STATEMENT AND CASH GENERATED FROM OPERATIONS (EXTRACT)
30 September
2018 30 September
As previously 2018
reported IFRS 15 Restated
​ Notes £m £m £m
Operating profit before joint ventures and associates (ii) 1,640 3 1,643
Amortisation of intangible assets (iii) 233 (164) 69
Amortisation of contract fulfilment assets (iii) – 164 164
Amortisation of contract prepayments (iv) – 21 21
Unwind of costs to obtain contracts (ii) – 13 13
Investment in contract prepayments (iv) – (27) (27)
Increase in costs to obtain contracts (ii) – (16) (16)
Operating cash flows from movement in working capital (iv) 147 (21) 126
Other cash generated from operations ​ 277 – 277
Cash generated from operations ​ 2,297 (27) 2,270
Other cash flows from operating activities ​ (424) – (424)
Net cash from operating activities ​ 1,873 (27) 1,846
Purchase of intangible assets (iii) (425) 261 (164)
Purchase of contract fulfilment assets (iii) – (261) (261)
Purchase of property, plant and equipment (iv) (386) 27 (359)
Other cash flows from investing activities ​ (325) – (325)
Net cash from investing activities ​ (1,136) 27 (1,109)
Net cash from financing activities ​ (135) – (135)
Net increase in cash and cash equivalents ​ 602 – 602

CONSOLIDATED FREE CASH FLOW (EXTRACT)

30 September
2018 30 September
As previously 2018
reported IFRS 15 Restated
​ Notes £m £m £m
Net cash from operating activities (iv) 1,873 (27) 1,846
Purchase of intangible assets (iii) (425) 261 (164)
Purchase of contract fulfilment assets (iii) – (261) (261)
Purchase of property, plant and equipment (iv) (386) 27 (359)
Other ​ 79 – 79
Free cash flow ​ 1,141 – 1,141

156  Compass Group PLC Annual Report 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)
ADJUSTMENTS TO THE CONSOLIDATED INCOME STATEMENT
As a result of the adoption of IFRS 15 ‘Revenue from contracts with customers’ from 1 October 2018, the following adjustments were
made to restate the amounts recognised in the consolidated income statement and balance sheet of previous periods:
Adjustments for the year ended
30 September 2018
Capitalisation
Consideration of costs to
payable to obtain a Contract Year ended
customer contract prepayments 30 September
​ (i) (ii) (iv) 2018
​ £m £m £m £m
Revenue ​ (71) – (21) (92)
Operating costs ​ 71 3 21 95
Operating profit ​ – 3 – 3
Income tax expense ​ – 2 – 2
Profit for the year ​ – 5 – 5

Consolidated Financial Statements

ADJUSTMENTS TO THE CONSOLIDATED BALANCE SHEET
Adjustments to the balance sheet at Adjustments to the balance sheet at
1 October 2017 30 September 2018
Capitalisation Capitalisation
of costs to Contract of costs to Contract
obtain a fulfilment Contract obtain a fulfilment Contract
contract assets prepayments 1 October contract assets prepayments 30 September
(ii) (iii) (iv) 2017 (ii) (iii) (iv) 2018
​ £m £m £m £m £m £m £m £m
Other intangible assets – (706) 5 (701) – (803) 5 (798)
Contract fulfilment assets
and contract costs​ 32 706 – 738 35 803 – 838
Trade and other receivables
– current – – (5) (5) – – (5) (5)
Deferred tax liabilities (10) – – (10) (8) – – (8)
Net assets 22 – – 22 27 – – 27
​

Compass Group PLC Annual Report 2019  157

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)

(i) Consideration payable to a customer
The Group makes a variety of payments to clients, mainly commissions, concession rentals and reimbursement of utility costs.
The adjustments under IFRS 15 for consideration payable to a customer primarily relate to reclassifications of some of these
payments from operating costs to a deduction from revenue. The Group has conducted a detailed assessment of payments to
clients to establish where these are not in exchange for a distinct good or service and therefore should be reported as a deduction
from revenue.

This change results in a reduction to revenue and no change to operating profit. The consolidated income statement for the year
ended 30 September 2018 was restated to recognise a reduction in revenue of £71 million. This amount was previously reported as
operating costs.

(ii) Capitalisation of costs to obtain a contract

Prior to adoption of IFRS 15, the Group’s policy was to expense commissions paid to the salesforce on winning or retaining client
contracts as incurred. Under IFRS 15, there is a requirement to recognise as an asset the incremental costs of obtaining a contract
with a customer if the Group expects to recover them. These costs are then unwound over the life of the contract to which they relate
on a straight line basis. Only commissions directly attributable to individual contract award are capitalised, while commissions
payable due to multiple contract wins or due to a portfolio of client contracts will continue to be expensed as incurred as they cannot
be directly attributable to an identified contract.

From a balance sheet perspective, this change has resulted in an adjustment of £32 million at the opening balance sheet date as at
1 October 2017 to recognise the net book value of the costs to obtain a contract. The opening balance sheet as at 1 October 2017
has also been adjusted to recognise the associated deferred tax impact of £10 million. The consolidated balance sheet as at
30 September 2018 was also restated to recognise the additional net book value of the costs to obtain a contract of £3 million.

The consolidated income statement for the year ended 30 September 2018 was restated to recognise a net decrease in operating
costs of £3 million due to the de-recognition of commissions paid to the salesforce now capitalised net of the charge recorded for the
year in relation to these assets (£16 million and £13 million respectively for the year ended 30 September 2018).

The consolidated income statement for the year ended 30 September 2018 was also restated to recognise a reduction in the
deferred tax liability of £2 million, giving a rise to an income statement deferred tax credit of the same amount.

(iii) Contract fulfilment assets

The Group has historically classified certain client investments as contract intangible assets as a result of having to rely on, or
analogise to, requirements that were not developed specifically for contracts with customers. As a result of the implementation of
IFRS 15, all client investments previously classified as intangible assets that relate to contributions towards assets that the Group
uses in the performance of its obligations in its contracts with clients have now been reclassified within contract fulfilment assets and
contract costs. This new classification better represents the underlying nature of these assets as they are used in the fulfilment of the
Group’s performance obligations to its clients and improves the revenue generated from our client contracts. These investments
represent contributions towards service assets such as catering equipment rather than unrestricted payments, which are treated as
contract prepayments.

As a result, a balance sheet reclassification from intangible assets to contract fulfilment assets of £706 million was made at the
opening balance sheet date as at 1 October 2017. The consolidated balance sheet as at 30 September 2018 was also restated to
recognise the additional reclassification to contract fulfilment assets in the period of £97 million, which includes an increase in the
net book value of contract fulfilment assets of £76 million net of the impact of a foreign currency translation gain of £21 million.

(iv) Contract prepayments

The Group may give signing-on bonuses and cash payments to its clients which the client can use at its own discretion. Prior to
IFRS 15, such payments were considered contract prepayments and reported as other receivables, which then were charged to
operating costs over the period in which the Group was expected to benefit from those contracts.

Under IFRS 15, these payments are assessed for treatment as ‘consideration payable to a customer’ and where they are not in
exchange for a distinct good or service, they continue to be recorded as a contract prepayment, however they are charged to the
consolidated income statement as a deduction to revenue recognised over the contract term rather than an operating cost. As a
result, the consolidated income statement for the year ended 30 September 2018 was restated to recognise a reduction in revenue
of £21 million.

158  Compass Group PLC Annual Report 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)
The Group has conducted a detailed review of its contract prepayments resulting in a net reclassification of £5 million of
payments to clients from contract prepayments to intangible assets at the opening balance sheet date as at 1 October 2017 and
as at 30 September 2018.

In the consolidated cash flow statement, these client prepayments are reclassified from investing activities to cash flow
from operations.

(v) Other adjustments and disclosure requirements

The Group has assessed whether other adjustments were required as a result of the transition to IFRS 15 and concluded that the
standard did not have a significant impact on the timing and recognition of revenue.

The Group is a food service and support services provider and generates revenue by providing these services. Revenue is recognised
when the service is performed or when the goods (i.e. food, drinks or meals) are sold. Revenue recognised often corresponds to the
amount invoiced or to be invoiced for services delivered in the year, with the associated cost of delivery recognised as incurred.
There are no significant judgements associated with this approach.

The Group disaggregates revenue recognised from contracts with customers into categories that depict how the nature, amount,

Consolidated Financial Statements

timing and uncertainty of revenue and cash flows are affected by economic factors. The Group also discloses information to show the
relationship between the disclosure of disaggregated revenue and revenue information discloses for each reportable segment. Refer
to note 2 for the disclosure on disaggregated revenue.

IFRS 9 Financial instruments – impact of the adoption

The Group has adopted IFRS 9 ‘Financial instruments’ on 1 October 2018. The amendments to IFRS 9 mainly relate to the
classification and measurement of financial instruments. The accounting policies for financial instruments following the adoption of
IFRS 9 are consistent with the Group’s pre-existing policy under IAS 39 ‘Financial instruments: recognition and measurement’, with
the key impacts set out below:

Classification of financial instruments

IFRS 9 largely retains the existing requirements in IAS 39 ‘Financial instruments: recognition and measurement’ for the classification
and measurement of financial liabilities; however, it eliminates the previous IAS 39 categories for financial assets held to maturity,
loans and receivables and available for sale. As a result, other investment amounts previously classified as available for sale and
recognised at fair value are now classified as fair value through profit and loss (FVPL) or as fair value through other comprehensive
income (FVOCI). The carrying values of these assets approximated to fair value and therefore there is no impact from this
reclassification.

Impairment of financial assets

With respect to provisions for impairment of trade receivables, IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected
credit loss’ model. From 1 October 2018, the Group measures provisions for impairment of trade receivables at an amount equal to
lifetime expected credit losses. In determining credit risk, the Group considers reasonable and supportable information that is
relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on
the Group’s historical experience, and forward looking information. The Group considers the model and the assumptions used in
calculating these expected credit losses as sources of estimation uncertainty.

As a result, the carrying values of trade receivables and contract assets are now reduced by the estimated future credit losses at the
date of initial recognition and going forward where previously credit losses were not recognised on such assets until there was an
indicator of impairment, such as a payment default. The application of IFRS 9 at 1 October 2018 results in a £15 million adjustment
to retained earnings reflective of an additional provision for impairment of trade receivables of £19 million net of a deferred tax asset
of £4 million.

Hedging
The Group elected to continue to apply the hedge accounting guidance in IAS 39.

On the date of initial application, 1 October 2018, the Group assessed which business models apply to the financial assets and
financial liabilities held by the Group and has classified its financial instruments into the appropriate IFRS 9 categories.

Compass Group PLC Annual Report 2019  159

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

1  CHANGES IN ACCOUNTING POLICIES (CONTINUED)

The main effects resulting from this reclassification are detailed in the table below with the impact on the carrying amounts relating
solely to the recognition of loss allowances:
Original classification New classification
Notes and measurement under IAS 39 and measurement under IFRS 9
FINANCIAL ASSETS
Other investments – equity
investments 14 Available for sale – fair value FVOCI
Other investments – debt instruments 14 Available for sale – fair value FVOCI
Other investments – corporate owned
life insurance policies 14 Available for sale – fair value FVPL
Trade receivables 15 Loans and receivables – amortised cost Financial assets – amortised cost
Cash and cash equivalents 17 Loans and receivables – amortised cost Financial assets – amortised cost
Derivative financial instruments used Derivatives in a hedge relationship –
for hedging 19 fair value Hedging instrument – fair value
Other derivative financial instruments 19 Held for trading – fair value FVPL
FINANCIAL LIABILITIES
Derivative financial instruments used Derivatives in a hedge relationship –
for hedging 19 fair value Hedging instrument – fair value
Other derivative financial instruments 19 Held for trading – fair value FVPL
Trade payables 20 Other liabilities – amortised cost Other financial liabilities – amortised cost
Bank loans and overdrafts 18 Other liabilities – amortised cost Other financial liabilities – amortised cost
Loan notes1 18 Other liabilities – amortised cost Other financial liabilities – amortised cost
Finance lease liabilities 18 Other liabilities – amortised cost Other financial liabilities – amortised cost
Bonds1 18 Other liabilities – amortised cost Other financial liabilities – amortised cost

1. Where a financial instrument is the hedged item in a fair value hedge, the amortised cost is adjusted due to changes in the hedged risk with the change being
recorded in the consolidated income statement.

160  Compass Group PLC Annual Report 2019

2  SEGMENTAL REPORTING
The management of the Group’s operations, excluding Central activities, is organised within three segments: North America, Europe
and our Rest of World markets. The following table presents Group revenues disaggregated by geographical segment and sector:
Geographical segments
North America Europe Rest of World Total
REVENUE1 £m £m £m £m
YEAR ENDED 30 SEPTEMBER 2019
Business & Industry 5,077 3,077 1,517 9,671
Education 3,495 776 253 4,524
Healthcare & Seniors 4,422 923 501 5,846
Sports & Leisure 2,454 588 284 3,326
Defence, Offshore & Remote 246 490 1,049 1,785
Combined sales of Group and share of equity accounted joint ventures2,3,4 15,694 5,854 3,604 25,152
YEAR ENDED 30 SEPTEMBER 20185
Business & Industry 4,251 3,254 1,542 9,047
Education 3,092 778 241 4,111

Consolidated Financial Statements

Healthcare & Seniors 3,997 904 528 5,429
Sports & Leisure 2,160 426 287 2,873
Defence, Offshore & Remote 218 400 1,069 1,687
Combined sales of Group and share of equity accounted joint ventures2,3 13,718 5,762 3,667 23,147

1. There is no inter-segmental trading.

2. This is the underlying revenue measure considered by the chief operating decision maker.
3. Underlying revenue from external customers arising in the UK, the Group’s country of domicile, was £2,143 million (2018: £2,179 million). Underlying
revenue from external customers arising in the US region was £14,747 million (2018: £12,875 million). Underlying revenue from external customers arising
in all foreign countries from which the Group derives revenue was £23,009 million (2018: £20,968 million).
4. Includes revenue of £154 million of joint ventures classified as held for sale.
5. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Compass Group PLC Annual Report 2019  161

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

2  SEGMENTAL REPORTING (CONTINUED)

Geographical segments Central
North America Europe Rest of World activities Total
OPERATING PROFIT £m £m £m £m £m
YEAR ENDED 30 SEPTEMBER 2019 ​ ​ ​ ​ ​
Underlying operating profit before joint ventures
and associates 1,289 368 249 (80) 1,826
Add: Share of profit before tax of joint ventures1 1 – 36 – 37
Regional underlying operating profit2 1,290 368 285 (80) 1,863
Add: Share of profit of associates1 10 8 1 – 19
Group underlying operating profit2 1,300 376 286 (80) 1,882
Less: Acquisition related costs (32) (16) (3) (3) (54)
Less: One-off pension charge – (12) – – (12)
Less: Cost action programme charge – (141) (45) (4) (190)
Less: Share of profit of joint ventures and associates held
for sale – – (25) – (25)
Total operating profit 1,268 207 213 (87) 1,601
Net loss on sale and closure of businesses ​ ​ ​ ​ (7)
Finance income ​ ​ ​ ​ 12
Finance costs ​ ​ ​ ​ (122)
Other financing items ​ ​ ​ ​ (15)
Profit before tax ​ ​ ​ ​ 1,469
Income tax expense ​ ​ ​ ​ (351)
Profit for the year ​ ​ ​ ​ 1,118

Geographical segments Central

North America Europe Rest of World activities Total
OPERATING PROFIT £m £m £m £m £m
YEAR ENDED 30 SEPTEMBER 20183 ​ ​ ​ ​ ​
Underlying operating profit before joint ventures
and associates 1,121 395 246 (70) 1,692
Add: Share of profit before tax of joint ventures 2 – 30 – 32
Regional underlying operating profit2 1,123 395 276 (70) 1,724
Add: Share of profit of associates 14 6 – – 20
Group underlying operating profit2 1,137 401 276 (70) 1,744
Less: Acquisition related costs (36) (9) (4) – (49)
Less: Tax on share of profit of joint ventures – – (2) – (2)
Total operating profit 1,101 392 270 (70) 1,693
Net loss on sale and closure of businesses ​ ​ ​ ​ (58)
Finance income ​ ​ ​ ​ 6
Finance costs ​ ​ ​ ​ (120)
Other financing items ​ ​ ​ ​ 2
Profit before tax ​ ​ ​ ​ 1,523
Income tax expense ​ ​ ​ ​ (385)
Profit for the year ​ ​ ​ ​ 1,138

1. Includes share of profit of joint ventures and associates classified as held for sale.
2. Underlying operating profit is the profit measure considered by the chief operating decision maker.
3. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

From 1 October 2019 the Group’s geographical segments of Europe and Rest of World will be reclassified to reflect a change in the
way those segments are managed by the chief operating decision maker: Turkey will form part of the Europe segment. Revenue of
£306 million and regional underlying profit of £21 million will be reclassified from Rest of World to Europe for the year ended
30 September 2019.

162  Compass Group PLC Annual Report 2019

2  SEGMENTAL REPORTING (CONTINUED)
Geographical segments ​ Unallocated
North Rest of Central Current and
America Europe World activities deferred tax Net debt Total
BALANCE SHEET £m £m £m £m £m £m £m
AT 30 SEPTEMBER 2019 ​ ​ ​ ​ ​ ​ ​
Total assets 7,192 3,494 1,295 560​ 164 605 13,310
Total liabilities (3,282) (1,478) (740) (210) (361) (3,877) (9,948)
Net assets/(liabilities) 3,910 2,016 555​ 350​ (197) (3,272) 3,362
Total assets include: ​ ​ ​ ​ ​ ​ ​
Interests in joint ventures and associates 126 99 1 – – – 226
Non-current assets1 5,253 2,496 647 500 76 207 9,179
AT 30 SEPTEMBER 20182 ​ ​ ​ ​ ​ ​ ​
Total assets 6,131 3,535 1,387 394 114 1,086 12,647
Total liabilities (2,936) (1,398) (678) (215) (284) (4,469) (9,980)
Net assets/(liabilities) 3,195 2,137 709 179 (170) (3,383) 2,667
Total assets include: ​ ​ ​ ​ ​ ​ ​

Consolidated Financial Statements

Interests in associates and joint ventures 93 99 71 – – – 263
Non-current assets1 4,372 2,518 747 369 45 83 8,134

1. Non-current assets located in the UK, the Group’s country of domicile, were £1,767 million (2018: £1,793 million). Non-current assets located in the USA
were £4,889 million (2018: £4,095 million). Non-current assets located in all foreign countries in which the Group holds assets were £7,412 million (2018:
£6,341 million).
2. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Compass Group PLC Annual Report 2019  163

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

2  SEGMENTAL REPORTING (CONTINUED)

Geographical segments
North Rest of Central
America Europe World activities Total
OTHER SEGMENTAL INFORMATION £m £m £m £m £m
YEAR ENDED 30 SEPTEMBER 2019
Additions to other intangible assets 102 38 11 29 180
Additions to contract fulfilment assets 279 5 2 – 286
Additions to property, plant and equipment1 210 85 55 2 352
Amortisation of other intangible assets2 105 32 12 1 150
Amortisation of contract fulfilment assets 177 6 1 – 184
Depreciation of property, plant and equipment 140 93 48 1 282
Assets held for sale 86 14 90 – 190
Liabilities directly associated with assets held for sale (12) (8) (10) – (30)
Total other non-cash expenses3 12 5 4 6 27

YEAR ENDED 30 SEPTEMBER 20184

Additions to other intangible assets 119 18 13 14 164
Additions to contract fulfilment assets 257 2 2 – 261
Additions to property, plant and equipment1 182 100 83 – 365
Amortisation of other intangible assets2 75 25 13 – 113
Amortisation of contract fulfilment assets 156 7 1 – 164
Depreciation of property, plant and equipment 125 94 47 1 267
Assets held for sale 111 43 82 – 236
Liabilities directly associated with assets held for sale (17) (30) (25) – (72)
Total other non-cash expenses3 10 3 4 4 21

1. Includes leased assets of £1 million (2018: £3 million).

2. Including the amortisation of intangibles arising on acquisition.
3. Other non-cash expenses are mainly comprised of share-based payments.
4. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

164  Compass Group PLC Annual Report 2019

3  OPERATING COSTS
2018
2019 (restated1)
OPERATING COSTS Notes £m £m
Cost of food and materials ​ ​ ​
Cost of inventories consumed ​ 7,091 6,542
Labour costs ​ ​ ​
Employee remuneration 4​ 11,370 10,556
Overheads ​ ​ ​
Commissions and fees paid to clients ​ 1,020 899
Depreciation – owned property, plant and equipment 12 280 265
Depreciation – leased property, plant and equipment 12 2 2
Amortisation – owned intangible assets 10 88 69
Amortisation – contract fulfilment assets 11 184 164
Cost action programme charge ​ 190 –
Property lease rentals ​ 91 100
Other occupancy rentals – minimum guaranteed rent ​ 71 85

Consolidated Financial Statements

Other occupancy rentals – rent in excess of minimum guaranteed rent ​ 12 10
Other asset rentals ​ 98 87
Audit and non-audit services (see below) ​ 6 7
Other expenses ​ 2,751 2,394
Operating costs before costs relating to acquisitions ​ 23,254 21,180
Amortisation – intangible assets arising on acquisition ​ 62 44
Acquisition transaction costs ​ 8 4
Adjustment to contingent consideration on acquisition ​ (16) 1
Total ​ 23,308 21,229

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

The Group’s consolidated income statement includes a cost action programme charge of £190 million, of which £29 million has
been paid in the year to 30 September 2019.

Included within the total cost action programme charge is a non‑cash charge of £120 million in respect of losses on onerous
contracts and impairment of non-current assets. Provisions are described further in note 21.

The onerous contract provisions are estimated at the lower of any termination penalties or directly attributable unavoidable
losses (including minimum lease payments) over the remaining non-cancellable contract term after impairment of any contract
related assets.

The programme will continue into 2020 with a further expected cost of approximately £110 million.
2019 2018
AUDIT AND NON-AUDIT SERVICES £m £m
AUDIT SERVICES ​ ​
Fees payable for the audit of the Company and consolidated financial statements 0.9 0.9
Fees payable for the audit of the Company’s subsidiaries and joint ventures 5.2 5.4
Total audit fees 6.1 6.3
NON-AUDIT SERVICES ​ ​
Audit related assurance 0.4 0.6
Other tax advisory – 0.1
Total non-audit fees 0.4 0.7
TOTAL AUDIT AND NON-AUDIT SERVICES ​ ​
Total audit and non-audit services 6.5 7.0

Compass Group PLC Annual Report 2019  165

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

4 EMPLOYEES
AVERAGE NUMBER OF EMPLOYEES, INCLUDING DIRECTORS AND PART-TIME EMPLOYEES 2019 2018
North America 288,133 269,752
Europe 157,879 149,382
Rest of World 150,440 176,707
Total 596,452 595,841

2019 20181
AGGREGATE REMUNERATION OF ALL EMPLOYEES INCLUDING DIRECTORS £m £m
Wages and salaries 9,637 8,970
Social security costs 1,547 1,431
Share-based payments 27 21
Pension costs – defined contribution plans 126 110
Pension costs – defined benefit plans 33 24
Total 11,370 10,556

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

In addition to the pension cost shown in operating costs above, there is a pensions-related net credit to finance income of £3 million
(2018: £nil).

The remuneration of directors and key management personnel1 is set out below. Additional information on directors’ and key
management remuneration, long term incentive plans, pension contributions and entitlements can be found in the audited section
of the Directors’ Remuneration Report on pages 98 to 121 and forms part of these accounts.
2019 2018
REMUNERATION OF KEY PERSONNEL1 £m £m
Salaries 7.3 6.7
Other short term employee remuneration 6.3 7.6
Share-based payments 4.6 3.5
Pension salary supplement 1.3 1.3
Total 19.5 19.1

1. Key management personnel is defined as the Board of Directors and the individuals who made up the Executive Committee from time to time during the year,
more details of which can be found on pages 70 and 71 and pages 24 and 25.

166  Compass Group PLC Annual Report 2019

5  FINANCE INCOME, COSTS AND OTHER FINANCING ITEMS
Finance income and costs are recognised in the consolidated income statement in the year in which they are earned or incurred.

2019 2018
FINANCE INCOME AND COSTS £m £m
FINANCE INCOME
Bank interest 7 6
Interest on net post employment benefit obligations (note 22) 3 –
Other finance income 2 –
Total finance income 12 6
FINANCE COSTS
Interest on bank loans and overdrafts 13 13
Interest on other loans 101 100
Finance lease interest – 1
Interest on bank loans, overdrafts, other loans and finance leases 114 114
Unwinding of discount on provisions 8 6

Consolidated Financial Statements

Total finance costs 122 120
ANALYSIS OF FINANCE COSTS BY DEFINED IFRS 9¹ CATEGORY
Fair value through profit or loss (unhedged derivatives) (4) 1
Derivatives in a fair value hedge relationship (11) (19)
Derivatives in a net investment hedge relationship 3 5
Other financial liabilities 126 127
Interest on bank loans, overdrafts, other loans and finance leases 114 114
Fair value through profit or loss (unwinding of discount on provisions) 8 6
Total finance costs 122 120
1. IFRS 9 ‘Financial instruments’.
The Group uses derivative financial instruments such as forward currency contracts, cross currency swaps and interest rate swaps to
hedge the risks associated with changes in foreign currency exchange rates and interest rates. As explained in section Q of the
Group’s accounting policies, such derivative financial instruments are initially measured at fair value on the contract date, and are
remeasured to fair value at subsequent reporting dates. For derivative financial instruments that do not qualify for hedge accounting,
any gains or losses arising from changes in fair value are taken directly to the consolidated income statement in the period.

FAIR VALUE MEASUREMENT

All derivative financial instruments are shown at fair value in the balance sheet. All the derivatives held by the Group at fair value are
considered to have fair values determined by Level 2 inputs as defined by the fair value hierarchy of IFRS 13 ‘Fair value
measurement’. The fair values of derivative financial instruments represent the maximum credit exposure.

2019 2018
FINANCING RELATED LOSSES/(GAINS) £m £m
HEDGE ACCOUNTING INEFFECTIVENESS
Unrealised net losses/(gains) on unhedged derivative financial instruments1 19 (4)
Unrealised net (gains)/losses on derivative financial instruments in a designated fair value hedge2 (163) 50
Unrealised net losses/(gains) on the hedged item in a designated fair value hedge 163 (44)
Total hedge accounting ineffectiveness 19 2
CHANGE IN THE FAIR VALUE OF INVESTMENTS
Gain from the changes in the fair value of investments1,3 (4) (4)
Total financing related losses/(gains) 15 (2)
1. Categorised as ‘fair value through profit or loss’ (IFRS 9).
2. Categorised as derivatives that are designated and effective as hedging instruments carried at fair value (IFRS 9).
3. Life insurance policies used by overseas companies to meet the cost of unfunded post employment benefit obligations included in note 22.

Compass Group PLC Annual Report 2019  167

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

6 TAX
2018
RECOGNISED IN THE CONSOLIDATED INCOME STATEMENT: 2019 (restated1)
INCOME TAX EXPENSE £m £m
CURRENT TAX ​ ​
Current year 387 380
Adjustment in respect of prior years (29) (11)
Current tax expense 358 369
DEFERRED TAX ​ ​
Current year (8) 17
Impact of changes in statutory tax rates (1) (6)
Adjustment in respect of prior years 2 5
Deferred tax expense (7) 16
TOTAL INCOME TAX ​ ​
Income tax expense 351 385
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

The income tax expense for the year is based on the effective United Kingdom statutory rate of corporation tax for the period of
19.0% (2018: 19.0%). Overseas tax is calculated at the rates prevailing in the respective jurisdictions.

The income tax effects of the adjustments between statutory and underlying results are shown in note 34 to the consolidated
financial statements. There is no difference between the statutory and underlying cash tax paid of £354 million (2018: statutory and
underlying £349 million).

2018
2019 (restated1)
RECONCILIATION ​OF EFFECTIVE TAX RATE £m £m
Profit before tax 1,469 1,523
Notional income tax expense at the effective UK statutory rate of 19.0% (2018: 19.0%)
on profit before tax 279 289
Effect of different tax rates of subsidiaries operating in other jurisdictions 112 128
Impact of changes in statutory tax rates (1) (6)
Permanent differences (18) (22)
Impact of share-based payments – 3
Tax on profit of associates and equity accounted joint ventures – (2)
Unrelieved current year tax losses 6 1
Prior year items (27) (6)
Income tax expense 351 385
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Permanent differences include the internal financing that is in place to ensure the Group’s overseas businesses are appropriately
capitalised. These intra-group arrangements provide a benefit to the Group’s effective tax rate. Prior year items relate to the
reassessment of prior year tax estimates, the application of the statute of limitations and the resolution of open items.

The global nature of the Group’s operations gives rise to several factors which could affect the future tax rate. These include the mix
of profits, changes to statutory tax rates or tax legislation and the foreign exchange rates applicable when those profits are translated
into sterling. In addition, the future tax charge may be affected by the impact of acquisitions, disposals or other restructurings and
the resolution of open issues with tax authorities.

Tax uncertainties and associated risks are increasing for all multi national groups as a consequence of changes to local and
international tax rules. Tax risk can arise from unclear regulations and differences in interpretation, but most significantly where tax
authorities apply diverging standards in assessing intra-group cross-border transactions. The Group has recognised potential
liabilities in respect of uncertain tax positions as described in section B of the Group accounting policies, none of which is individually
material. In determining such liabilities, having regard to the specific circumstances of each tax position and external advice where
appropriate, the Group assesses the range of potential outcomes and estimates whether additional tax may be due. The Group does
not currently anticipate any material changes to the amounts recorded at 30 September 2019 (see also note 28).

168  Compass Group PLC Annual Report 2019

6  TAX (CONTINUED)
2019 2018
TAX CHARGED TO OTHER COMPREHENSIVE INCOME £m £m
Current and deferred tax charge on actuarial and other movements on post employment benefits 10 29
Current and deferred tax charge on foreign exchange movements 2 1
Tax charges on items recognised in other comprehensive income 12 30
​ ​ ​
2019 2018
TAX CREDITED TO EQUITY £m £m
Current and deferred tax credit in respect of share-based payments (4) (1)
Tax credit on items recognised in equity (4) (1)

Net
Intangibles pensions Net Net
and contract and post self-funded short term
Tax fulfilment employment Tax insurance temporary
MOVEMENT IN NET DEFERRED TAX ASSET/ depreciation assets benefits losses provisions differences Total
(LIABILITY) £m £m £m £m £m £m £m

Consolidated Financial Statements

At 1 October 20171 (52) (300) 148 17 87 176 76
Credit/(charge) to income 3 63 (26) (4) (29) (25) (18)
Charge to equity/other comprehensive income – – (30) – – (3) (33)
Business acquisitions – (45) – 3 – 3 (39)
Reclassification between categories – (8) (8) – – 16 –
Other movements 1 – (1) 1 – (1) –
Exchange adjustment (2) 1 2 – 2 (1) 2
At 30 September 20181 (50) (289) 85 17 60 165 (12)
Implementation of IFRS 91 – – – – – 4 4
At 1 October, as adjusted (50) (289) 85 17 60 169 (8)
(Charge)/credit to income (30) (6) 13 (1) 4 27 7
(Charge)/credit to equity/other comprehensive income – – (10) – – 1 (9)
Business acquisitions (1) (24) – – – (2) (27)
Sale and closure of businesses – 2 – – – – 2
Other movements – (1) – – – – (1)
Exchange adjustment (5) (14) 8 – 3 6 (2)
At 30 September 2019 (86) (332) 96 16 67 201 (38)
1. The Group has adopted IFRS 9 ‘Financial instruments’ and IFRS 15 ‘Revenue from contracts with customers’ effective for the year ending 30 September
2019. IFRS 15 has been applied retrospectively and comparatives for the prior year have been restated, whilst IFRS 9 has been applied prospectively from
1 October 2018 by adjusting the opening balance sheet at that date. Additional information about the transitional impact of these standards is included
in note 1.

Net short term temporary differences relate principally to accruals and other liabilities and provisions of overseas subsidiaries.

After netting off balances within countries, the following are the deferred tax assets and liabilities recognised in the consolidated
balance sheet:
2018
2019 (restated1)
NET DEFERRED TAX BALANCE £m £m
Deferred tax assets 76 45
Deferred tax liabilities (114) (57)
Net deferred tax liability (38) (12)
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

Deferred tax assets have not been recognised in respect of tax losses of £232 million (2018: £41 million) and other temporary
differences of £24 million (2018: £20 million). Of the total tax losses, £212 million (2018: £26 million) will expire at various dates
between 2020 and 2025. These deferred tax assets have not been recognised as the timing of recovery is uncertain.

The Group does not recognise any deferred tax liability on temporary differences relating to potentially taxable unremitted earnings
of overseas subsidiaries totalling £474 million (2018: £474 million) because it is able to control the timing of reversal of these
differences. It is probable that no reversal will take place in the foreseeable future.

Compass Group PLC Annual Report 2019  169

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

7  EARNINGS PER SHARE

The calculation of earnings per share is based on earnings after tax and the weighted average number of shares in issue during the
period. The underlying earnings per share figures have been calculated based on earnings excluding the effect of the acquisition
related costs, one-off pension charge, cost action programme charge, gains and losses on sale and closure of businesses, hedge
accounting ineffectiveness, change in fair value of investments and the tax attributable to these amounts, but including share of
profit of joint ventures and associates classified as held for sale. These items are excluded in order to show the underlying trading
performance of the Group.
2018
2019 (restated1)
Attributable Attributable
profit profit
ATTRIBUTABLE PROFIT £m £m
Profit for the year attributable to equity shareholders of the Company 1,110 1,130
Adjustments stated net of tax: ​ ​
Acquisition related costs 41 37
One-off pension charge 10 –
Cost action programme charge 149 –
Share of profit of joint ventures and associates held for sale 25 –
Net loss on sale and closure of businesses 4 68
Other financing items including hedge accounting ineffectiveness
and change in the fair value investments 12 (1)
Underlying profit for the year from operations 1,351 1,234

2019 2018
Ordinary Ordinary
shares of shares of
AVERAGE NUMBER OF SHARES (MILLIONS OF ORDINARY SHARES) 111/20p each 111/20p each
Average number of shares for basic earnings per share 1,586 1,584
Dilutive share options 1 1
Average number of shares for diluted earnings per share 1,587 1,585

Basic earnings per share Diluted earnings per share

2018 2018
2019 (restated1) 2019 (restated1)
Earnings per Earnings per Earnings per Earnings per
​ share share share share
EARNINGS PER SHARE​ pence pence pence pence
From operations 70.0 71.3 69.9 71.3
Adjustments stated net of tax: ​ ​ ​ ​
Acquisition related costs 2.6 2.4 2.6 2.4
One-off pension charge 0.6 – 0.6 –
Cost action programme charge 9.4 – 9.4 –
Share of profit of joint ventures and associates held for sale 1.6 – 1.6 –
Net loss on sale and closure of businesses 0.2 4.3 0.2 4.3
Other financing items including hedge accounting ineffectiveness
and change in the fair value investments 0.8 (0.1) 0.8 (0.1)
From underlying operations 85.2 77.9 85.1 77.9
1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

170  Compass Group PLC Annual Report 2019

8 DIVIDENDS
A final dividend in respect of 2019 of 26.9 pence per share, £427 million in aggregate1, has been proposed, giving a total dividend in
respect of 2019 of 40.0 pence per share (2018: 37.7 pence per share). The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting to be held on 6 February 2020 and has not been included as a liability in these
financial statements.

2019 2018
Dividends Dividends
per share per share
DIVIDENDS ON ORDINARY SHARES pence £m pence £m
Amounts recognised as distributions to equity shareholders during
the year:
Final 2017 – – 22.3 353
Interim 2018 – – 12.3 195
Final 2018 25.4 403 – –
Interim 2019 13.1 208 – –
Total dividends 38.5 611 34.6 548

Consolidated Financial Statements

1. Based on the number of ordinary shares, excluding treasury shares, in issue at 30 September 2019 (1,586 million shares).

9 GOODWILL
During the year the Group made a number of acquisitions. See note 25 for more details.

GOODWILL £m
COST ​
At 1 October 2017 4,510
Additions 312
Disposals (2)
Reclassification to assets held for sale (38)
Currency adjustment 4
At 30 September 2018 4,786
Additions 198
Disposals (13)
Reclassification to assets held for sale (25)
Currency adjustment 146
At 30 September 2019 5,092
IMPAIRMENT ​
At 30 September 2018 516
At 30 September 2019 516
NET CARRYING VALUE​ ​
At 30 September 2018 4,270
At 30 September 2019 4,576

Compass Group PLC Annual Report 2019  171

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

9  GOODWILL (CONTINUED)
2019 2018
GOODWILL BY BUSINESS SEGMENT £m £m
USA 2,160 1,893
Canada 189 175
Total North America 2,349 2,068
UK 1,446 1,430
Rest of Europe 401 390
Total Europe 1,847 1,820
Japan 142 153
Rest of Rest of World 238 229
Total Rest of World 380 382
Total 4,576 4,270

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The
recoverable amount of a cash‑generating unit (CGU) is determined from value in use calculations. The key assumptions for these
calculations are externally derived long term growth rates, pre-tax discount rates and cash flow forecasts derived from the most
recent financial budgets and forecasts approved by management covering a five year period. Budgets and forecasts are based on
expectations of future outcomes taking into account past experience, adjusted for anticipated revenue growth, from both new
business and like for like growth and taking into consideration external economic factors. Cash flows beyond the five year period are
extrapolated using estimated growth rates based on local expected economic conditions and do not exceed the long term average
growth rate for that country. The pre-tax discount rates are based on the Group’s weighted average cost of capital adjusted for
specific risks relating to the country in which the CGU operates.
2019 2018
GROWTH AND DISCOUNT RATES Residual growth rates Pre-tax discount rates ​ Residual growth rates Pre-tax discount rates
USA 1.9% 6.8% ​ 2.0% 8.6%
Canada 2.1% 7.3% ​ 1.9% 8.5%
UK 2.0% 6.7% ​ 2.1% 8.0%
Rest of Europe 1.1 – 4.3% 6.1 – 11.8% ​ 1.2 – 4.0% 7.5 – 13.7%
Japan 1.2% 7.2% 1.3% 8.7%
Rest of World 0.9 – 9.6% 5.6 – 19.8% ​ 1.1 – 9.9% 7.0 – 18.5%

A sensitivity analysis has been performed in assessing recoverable amounts of goodwill for all CGUs. This has been based on
changes in key assumptions considered to be reasonably possible by management. The directors do not consider that any
reasonably possible changes in the key assumptions would cause the value in use of the net operating assets of the individually
significant CGUs disclosed above to fall below their carrying values.

As a result of the instability caused by the UK’s decision to exit the European Union (Brexit), there is a wide range of potential
outcomes regarding the possible future performance of the UK business. At this stage we consider that no reasonable change to any
of the key assumptions underpinning the UK’s impairment test would cause its carrying amount to exceed its recoverable amount.

172  Compass Group PLC Annual Report 2019

10  OTHER INTANGIBLE ASSETS
Client contract
and other intangibles
Computer Arising on
software acquisition1 Other2 Total
OTHER INTANGIBLE ASSETS £m £m £m £m
COST ​ ​ ​ ​
At 1 October 20173 325 717 348 1,390
Additions 54 – 110 164
Disposals (46) – (48) (94)
Business acquisitions – 239 – 239
Sale and closure of businesses – – (3) (3)
Reclassified 1 (1) 42 42
Reclassification to assets held for sale (5) (27) (6) (38)
Currency adjustment (4) (6) 13 3
At 30 September 20183 325 922 456 1,703
Additions 77 1 102 180

Consolidated Financial Statements

Disposals (7) – (19) (26)
Business acquisitions 2 266 – 268
Sale and closure of businesses (1) (6) – (7)
Reclassified (1) (3) (7) (11)
Reclassification to assets held for sale (1) (8) – (9)
Currency adjustment 9​ 54 21​ 84​
At 30 September 2019 403 1,226 553 2,182
AMORTISATION ​ ​ ​ ​
At 1 October 20173 229 176 149 554
Charge for the year 30 44 39 113
Disposals (45) 5 (32) (72)
Sale and closure of businesses – – (3) (3)
Reclassified (1) – 26 25
Reclassification to assets held for sale (4) (12) (3) (19)
Currency adjustment – (4) 4 –
At 30 September 20183 209 209 180 598
Charge for the year 34 62 54 150
Impairment – – 18 18
Disposals (5) – (17) (22)
Sale and closure of businesses – (3) – (3)
Reclassified 1 (2) (3) (4)
Reclassification to assets held for sale – (3) – (3)
Currency adjustment 5​ 10 7​ 22​
At 30 September 2019 244 273 239 756
NET BOOK VALUE ​ ​ ​ ​
At 30 September 20183 116 713 276 1,105
At 30 September 2019 159 953 314 1,426

1. The intangible assets arising on acquisition are mainly client contract related.
2. Client contract related intangible assets, other than those arising on acquisition, arise from payments made to clients to obtain the right to generate
significant consumer revenue.
3. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 'Revenue from contracts with customers'. Additional
information about the impact of IFRS 15 is included in note 1.

Compass Group PLC Annual Report 2019  173

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

11  CONTRACT BALANCES

The following table provides information about contract costs, contract assets and liabilities from contracts with customers and other
contract related balances.
2018
2019 (restated1)
CONTRACT BALANCES Notes £m £m
CONTRACT COSTS ​ ​ ​
Contract fulfilment assets ​ 934 803
Costs to obtain contracts ​ 42 35
Contract fulfilment assets and contract costs ​ 976 838
CONTRACT ASSETS ​ ​ ​
Accrued income 15 272 249
CONTRACT LIABILITIES ​ ​ ​
Deferred income 20 (373) (312)
OTHER CONTRACT BALANCES ​ ​ ​
Contract prepayments 15 84 68
Trade receivables 15 2,211 2,078
Net contract balances ​ 3,170 2,921

The Group’s deferred income and accrued income balances solely relate to revenue from contracts with customers. Movements
during the year were driven by transactions entered into by the Group within the normal course of business in the year.

Contract fulfilment assets relate to contributions towards assets that the Group uses in the performance of its obligations in its
contracts with clients.
2018
2019 (restated1)
CONTRACT FULFILMENT ASSETS £m £m
At 1 October 803 706
Additions 286 261
Derecognition (18) (14)
Business acquisitions – 4
Charge for the year (184) (164)
Reclassified (2) (11)
Reclassification to assets held for sale 1 –
Currency adjustment 48 21
At 30 September 934 803

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

IMPAIRMENT
Contract fulfilment assets and capitalised costs to obtain contracts are reviewed annually to identify indicators of impairment. When
such indicators exist, the Group determines the recoverability by comparing their carrying amount to the remaining consideration
that the Group expects to receive less the costs associated to providing services under the relevant contract. Management is
required to make an assessment of the costs that relate to providing services under the relevant contract. The ability to accurately
forecast such costs involves estimates around cost savings to be achieved over time and anticipated profitability of the contract.

If any indicators of impairment are identified, judgement is applied to ascertain whether or not the future economic benefits from
these contracts are sufficient to recover these assets. The directors believe that there is no impairment required.

174  Compass Group PLC Annual Report 2019

12  PROPERTY, PLANT AND EQUIPMENT
Land and Plant and Fixtures and
buildings machinery fittings Total
PROPERTY, PLANT AND EQUIPMENT £m £m £m £m
COST ​ ​ ​ ​
At 1 October 2017 392 1,446 736 2,574
Additions1 22 228 115 365
Disposals (29) (95) (50) (174)
Sale and closure of businesses (2) (11) (3) (16)
Business acquisitions 1 12 1 14
Reclassified 15 (11) – 4
Reclassification to assets held for sale (16) (98) (8) (122)
Currency adjustment – (1) (12) (13)
At 30 September 2018 383 1,470 779 2,632
Additions1 23 239 90 352
Disposals (28) (124) (46) (198)
Sale and closure of businesses (3) (13) (1) (17)

Consolidated Financial Statements

Business acquisitions 4 8 8 20
Reclassified 45 (3) (12) 30
Reclassification to assets held for sale (15) (5) (6) (26)
Currency adjustment 11 48 15 74
At 30 September 2019 420 1,620 827 2,867
DEPRECIATION ​ ​ ​ ​
At 1 October 2017 218 913 443 1,574
Charge for the year 23 167 77 267
Disposals (23) (76) (42) (141)
Sale and closure of businesses (1) (7) (3) (11)
Reclassified 1 5 1 7
Reclassification to assets held for sale (6) (53) (5) (64)
Currency adjustment (2) 2 (6) (6)
At 30 September 2018 210 951 465 1,626
Charge for the year 28 174 80 282
Impairment 4 14 18 36
Disposals (27) (105) (41) (173)
Sale and closure of businesses (1) (13) – (14)
Reclassified 4 3 23 30
Reclassification to assets held for sale (10) (1) (5) (16)
Currency adjustment 6 28 10 44
At 30 September 2019 214 1,051 550 1,815
NET BOOK VALUE ​ ​ ​ ​
At 30 September 2018 173 519 314 1,006
At 30 September 2019 206 569 277 1,052

The net book value of the Group's property, plant and equipment includes assets held under finance leases as follows:
Land and Plant and Fixtures and
PROPERTY, PLANT AND EQUIPMENT buildings machinery fittings Total
HELD UNDER FINANCE LEASES £m £m £m £m
At 30 September 2018 1 5 1 7
At 30 September 2019 3 9 1 13

1. Includes leased assets at a net book value of £1 million (2018: £3 million).

Compass Group PLC Annual Report 2019  175

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

13  INTERESTS IN JOINT VENTURES AND ASSOCIATES

Significant interests in associates are:
2019 2018
ASSOCIATES ownership1 ownership1
Twickenham Experience Limited2 England & Wales 16% 16%
Oval Events Limited3 England & Wales 37.5% 37.5%
AEG Facilities, LLC4 USA 49% 49%
Thompson Hospitality Services, LLC4 USA 49% 49%

1. % ownership is of the ordinary share capital.

2. Financial statements applied using the equity method relate to the year ended 30 June, rolled forward to 30 September.
3. Financial statements applied using the equity method relate to the year ended 30 January, rolled forward to 30 September.
4. Financial statements applied using the equity method relate to the year ended 31 December of the prior year, rolled forward to 30 September.

Significant interests in joint ventures are:

2019 2018
JOINT VENTURES ownership1 ownership1
Quadrant Catering Ltd2 England & Wales 49% 49%
ADNH-Compass Middle East LLC3 United Arab Emirates 50% 50%
Express Support Services Limitada4 Angola – 49%

1. % ownership is of the ordinary share capital.

2. 49% ownership entitles Compass Group to 50% of voting rights.
3. During the year the Group has classified its entire 50% interest in ADNH-Compass Middle East LLC as held for sale and discontinued equity accounting.
4. During the year the Group completed the acquisition of the remaining 51% interest in Express Support Services Limitada joint venture.

None of these investments are held directly by the ultimate Parent Company. All joint ventures provide food and/or support services
in their respective countries of incorporation and make their accounts up to 30 September. All holdings are in the ordinary shares of
the respective joint venture company.

These investments are structured through separate vehicles and the Group has a residual interest in their respective net assets.
Accordingly, the Group has classified its interests as joint ventures which are equity accounted. The tables below reconcile the
summarised financial information to the carrying amount of the Group's interests in its associates and joint ventures.
2019 2018
INTERESTS IN JOINT VENTURES AND ASSOCIATES £m £m
NET BOOK VALUE
At 1 October 263 220
Additions 27 32
Sale and closure of businesses (1) (4)
Share of profits less losses (net of tax)1 31 50
Dividends received2 (48) (35)
Transfer to disposal group classified as held for sale (55) (1)
Currency and other adjustments 9 1
At 30 September 226 263
COMPRISED OF
Interests in associates 209 179
Interests in joint ventures 17 84
Total 226 263

1. Excludes £25 million share of profit of joint ventures and associates classified as held for sale during the year.
2. Includes dividends received of £25 million of joint ventures and associates classified as held for sale during the year.

176  Compass Group PLC Annual Report 2019

13  INTERESTS IN JOINT VENTURES AND ASSOCIATES (CONTINUED)
The Group’s share of revenues and profits is included below:
2019 2018
Joint Joint
Associates ventures1 Total Associates ventures Total
JOINT VENTURES AND ASSOCIATES £m £m £m £m £m £m
SHARE OF REVENUE AND PROFITS ​ ​ ​ ​ ​ ​
Revenue 102 120 222 79 275 354
Expenses/tax2 (83) (108) (191) (59) (245) (304)
Profit after tax for the year 19 12 31 20 30 50
SHARE OF NET ASSETS ​ ​ ​ ​ ​ ​
Non-current assets 199 1 200 181 40 221
Current assets 97 23 120 79 140 219
Non-current liabilities (12) (1) (13) (13) (12) (25)
Current liabilities (75) (6) (81) (68) (84) (152)
Net assets 209 17 226 179 84 263

Consolidated Financial Statements

SHARE OF CONTINGENT LIABILITIES ​ ​ ​ ​ ​ ​
Contingent liabilities – (29) (29) – (30) (30)

1. Excludes revenue of £154 million and £129 million expenses, including the relevant portion of income tax, of joint ventures classified as held for sale during
the year.
2. Expenses include the relevant portion of income tax recorded by associates and joint ventures.

14 OTHER INVESTMENTS
2019 2018
OTHER INVESTMENTS​ £m £m
NET BOOK VALUE ​ ​
At 1 October 73 63
Additions 13 8
Disposals (3) (1)
Changes in fair value 8 –
Currency and other adjustments 5 3
At 30 September 96 73
COMPRISED OF1, 2 ​ ​
Other investments3 22 17
Life insurance policies and mutual fund investments4, 5 74 56
Total 96 73
1. IFRS 9 ‘Financial instruments’ was applied for the first time on 1 October 2018 and introduces new classifications for financial instruments, including
investments. Under IAS 39 ‘Financial instruments: recognition and measurement’, other investments were classified as available for sale. Additional
information about the impact of IFRS 9 is included in note 1.
2. As per the fair value hierarchies defined by IFRS 13 ‘Fair value measurement’, other investments are Level 1 and the life insurance policies are Level 2.
3. Categorised as ‘fair value through other comprehensive income’ financial assets (IFRS 9).
4. Categorised as ‘fair value through profit or loss’ and ‘fair value through other comprehensive income’ financial assets respectively (IFRS 9).
5. Life insurance policies used by overseas companies to meet the cost of unfunded post employment benefit obligations as set out in note 22.

Compass Group PLC Annual Report 2019  177

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

15  TRADE AND OTHER RECEIVABLES

2019 20181
Current Non-current Total Current Non-current Total
TRADE AND OTHER RECEIVABLES £m £m £m £m £m £m
NET BOOK VALUE ​ ​ ​ ​ ​ ​
At 1 October 2,852 105 2,957 2,696 104 2,800
Net movement 112 (13) 99 187 2 189
Currency adjustment 87 4 91 (31) (1) (32)
At 30 September 3,051 96 3,147 2,852 105 2,957
COMPRISED OF ​ ​ ​ ​ ​ ​
Trade receivables 2,283 1 2,284 2,141 – 2,141
Provision for impairment of trade receivables (73) – (73) (63) – (63)
Net trade receivables2 2,210 1 2,211 2,078 – 2,078
Other receivables3 449 116 565 400 120 520
Provision for impairment of other receivables3 (21) (25) (46) (8) (22) (30)
Net other receivables 428 91 519 392 98 490
Accrued income 272 – 272 249 – 249
Prepayments 138 4 142 128 7 135
Amounts owed by associates, joint ventures
and related parties2 3 – 3 5 – 5
Trade and other receivables 3,051 96 3,147 2,852 105 2,957

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.
2. Categorised as ‘amortised cost’ financial assets (IFRS 9).
3. Includes net contract prepayments balance of £84 million (2018: £68 million).

TRADE RECEIVABLES
The book value of trade and other receivables approximates to their fair value due to the short term nature of the majority of
the receivables.

Credit sales are only made after credit approval procedures have been completed satisfactorily. The policy for making provisions for
bad and doubtful debts varies from country to country as different countries and markets have different payment practices, but
various factors are considered, including how overdue the debt is, the type of receivable and its past history, and current market and
trading conditions. Full provision is made for debts that are not considered to be recoverable.

There is limited concentration of credit risk with respect to trade receivables due to the diverse and unrelated nature of the Group’s
client base. Expected credit losses are measured using historical cash collection data grouped according to payment terms. The
historical default rates are adjusted where macroeconomic factors are expected to have a significant impact when determining
future expected credit loss rates. The expected credit loss provision is calculated using a provision matrix, in which the provision
increases as balances age.

Trade receivables and contract assets are written off when there is no reasonable expectation of recovery and enforcement activity
has ceased. An impairment analysis is performed at each reporting date to measure expected credit losses. Accordingly, the
directors believe that there is no further credit provision required in excess of the provision for the impairment of receivables. The
book value of trade and other receivables represents the Group’s maximum exposure to credit risk.

Trade receivable days at 30 September 2019 were 39 days (2018: 41 days) on a constant currency basis.

178  Compass Group PLC Annual Report 2019

15  TRADE AND OTHER RECEIVABLES (CONTINUED)
The ageing of gross trade receivables and of the provision for impairment is as follows:
2019
Over 12
0-3 months 3-6 months 6-12 months months
Not yet due overdue overdue overdue overdue Total
TRADE RECEIVABLES £m £m £m £m £m £m
Expected loss rate – 3% 25% 32% 80% 3%
Gross trade receivables 1,695 472 55 22 40 2,284
Provision for impairment of trade receivables (8) (12) (14) (7) (32) (73)
Net trade receivables 1,687 460 41 15 8 2,211

2018
Over 12
​ 0-3 months 3-6 months 6-12 months months
Not yet due overdue overdue overdue overdue Total
TRADE RECEIVABLES £m £m £m £m £m £m
Gross trade receivables 1,615 414 51 24 37 2,141

Consolidated Financial Statements

Provision for impairment of trade receivables – (15) (10) (9) (29) (63)
Net trade receivables 1,615 399 41 15 8 2,078

Movements in the provision for impairment of trade and other receivables are as follows:
2019 2018
PROVISION FOR IMPAIRMENT OF TRADE Trade Other Total Trade Other Total
AND OTHER RECEIVABLES £m £m £m £m £m £m
At 1 October 63 30 93 73 26 99
Implementation of IFRS 91 18 1 19 – – –
At 1 October, as adjusted1 81 31 112 73 26 99
Charged to income statement 23 10 33 22 5 27
Credited to income statement (16) (4) (20) (13) – (13)
Utilised (16) (3) (19) (16) – (16)
Reclassification to assets held for sale (1) – (1) (1) – (1)
Reclassified – 9 9 1 4 5
Currency adjustment 2 3 5 (3) (5) (8)
At 30 September 73 46 119 63 30 93

1. Adjusted as a result of the Group’s adoption of IFRS 9 ‘Financial instruments’. Additional information about the impact of IFRS 9 is included in note 1.

At 30 September 2019, trade receivables of £524 million (2018: £463 million) were past due but not impaired. The Group has made
a provision based on a number of factors, including past history of the debtor and the expected credit loss, and all amounts not
provided for are considered to be recoverable.

16 INVENTORIES
2019 2018
INVENTORIES £m £m
NET BOOK VALUE ​ ​
At 1 October 353 353
Business acquisitions 11 7
Net movement 26 (7)
Currency adjustment 14 –
At 30 September 404 353

Compass Group PLC Annual Report 2019  179

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

17  CASH AND CASH EQUIVALENTS

2019 2018
CASH AND CASH EQUIVALENTS £m £m
Cash at bank and in hand 345 325
Short term bank deposits 53 644
Cash and cash equivalents1 398 969

1. Categorised as ‘amortised cost’ financial assets (IFRS 9).

2019 2018
CASH AND CASH EQUIVALENTS BY CURRENCY £m £m
Sterling 99 658
US Dollar 92 105
Euro 38 47
Japanese Yen 9 5
Other 160 154
Cash and cash equivalents 398 969

The Group’s policy to manage the credit risk associated with cash and cash equivalents is set out in note 19. The book value of cash
and cash equivalents represents the maximum credit exposure.

MASTER NETTING OR SIMILAR AGREEMENTS

The Group operates a multi-currency notional pooling cash management arrangement whereby cash balances and overdrafts held
within the same bank are offset to give a net balance which is included within cash and cash equivalents on the balance sheet.
These cash and bank overdraft figures before netting are shown in the table below:
2019
Gross Offset Net
£m £m £m
Cash and cash equivalents 412 (14) 398
Bank overdrafts (31) 14 (17)

2018
Gross Offset Net
£m £m £m
Cash and cash equivalents 989 (20) 969
Bank overdrafts (96) 20 (76)

18  SHORT TERM AND LONG TERM BORROWINGS

2019 2018
SHORT TERM AND LONG TERM Current Non-current Total Current Non-current Total
BORROWINGS £m £m £m £m £m £m
Bank overdrafts 17 – 17 76 – 76
Bank loans 5 – 5 5 – 5
Loan notes 162 1,211 1,373 191 1,261 1,452
Bonds – 2,467 2,467 538 2,347 2,885
Borrowings (excluding finance leases) 184 3,678 3,862 810 3,608 4,418
Finance leases 2 1 3 3 3 6
Borrowings (including finance leases)1 186 3,679 3,865 813 3,611 4,424

1. Categorised as ‘other financial liabilities’ (IFRS 9).

Interest on bank overdrafts and commercial paper is at the relevant money market rates. During the year, the Group established a
$2 billion commercial paper programme. Commercial paper is issued to meet short term liquidity requirements and is supported by
£2 billion of syndicated committed bank facilities which mature in August 2024. As at 30 September 2019, no commercial paper
was outstanding under the programme and no amounts were drawn under the syndicated committed bank facility.

All amounts due under bonds, loan notes and bank facilities are shown net of unamortised issue costs. Additionally, the Group
adjusts the carrying values of the bonds and loan notes that are designated in effective fair value hedge relationships, for fair value
gains and losses (based on observable market inputs) attributable to the risk being hedged.

180  Compass Group PLC Annual Report 2019

18  SHORT TERM AND LONG TERM BORROWINGS (CONTINUED)
2019 2018
Carrying Carrying
Nominal value value
LOAN NOTES value Redeemable Interest £m £m
US$ private placement $250m Oct 2018 3.31% – 191
US$ private placement $200m Sep 2020 3.09% 162 153
US$ private placement $398m Oct 2021 3.98% 323 305
US$ private placement $352m Oct 2023 4.12% 301 268
US$ private placement $100m Dec 2024 3.54% 81 76
US$ private placement $300m Sep 2025 3.81% 263 229
US$ private placement $300m Dec 2026 3.64% 243 230
1,373 1,452

2019 2018
Carrying Carrying
Nominal value value
BONDS value Redeemable Interest £m £m

Consolidated Financial Statements

Euro Eurobond €600m Feb 2019 3.13% – 538
Euro Eurobond €500m Jan 2023 1.88% 469 464
Euro Eurobond €750m Jul 2024 0.63% 695 669
Sterling Eurobond £250m Sep 2025 2.00% 260 246
Sterling Eurobond £250m Jun 2026 3.85% 249 249
Euro Eurobond €500m Sep 2028 1.50% 483 438
Sterling Eurobond £300m Jul 2029 2.00% 311 281
2,467 2,885

No bonds were issued during the year.

2019 2018
2019 2018 Facility Carrying Carrying
Nominal Nominal maturity value value
BANK LOANS value value date Interest1 £m £m
Other bank loans Various Various Various Floating 5 5
5 5

1. Interest rates are referenced to market specific benchmark rates for each currency equivalent plus a margin.

The maturity profile of borrowings (excluding finance leases) is as follows:

2019 2018
MATURITY PROFILE OF BORROWINGS (EXCLUDING FINANCE LEASES) £m £m
Within 1 year, or on demand 184 810
Between 1 and 2 years – 153
Between 2 and 3 years 323 –
Between 3 and 4 years 469 305
Between 4 and 5 years 996 464
In more than 5 years 1,890 2686
Borrowings (excluding finance leases) 3,862 4,418

Compass Group PLC Annual Report 2019  181

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

18  SHORT TERM AND LONG TERM BORROWINGS (CONTINUED)

The fair value of the Group’s borrowings is calculated by discounting future cash flows to net present values at current market rates
for similar financial instruments. The fair values have been determined by reference to Level 2 inputs as defined by the fair value
hierarchy of IFRS 13 ‘Fair value measurements’. The table below shows the fair value of borrowings excluding accrued interest:
2019 2018
Carrying Fair Carrying Fair
CARRYING VALUE AND FAIR VALUE OF BORROWINGS value value value value
(EXCLUDING FINANCE LEASES) £m £m £m £m
Bank overdrafts 17 17 76 76
Bank loans 5 5 5 5
Loan notes 1,373 1,411 1,452 1,449
Bank overdrafts, loans and loan notes 1,395 1,433 1,533 1,530
€600m Eurobond Feb 2019 – – 538 541
€500m Eurobond Jan 2023 469 470 464 471
€750m Eurobond Jul 2024 695 681 669 656
£250m Eurobond Sep 2025 260 263 246 247
£250m Eurobond Jun 2026 249 293 249 277
€500m Eurobond Sep 2028 483 480 438 440
£300m Eurobond Jul 2029 311 313 281 283
Bonds 2,467 2,500 2,885 2,915
Borrowings (excluding finance leases) 3,862 3,933 4,418 4,445

2019 2018
Present Present
Gross value Gross value
GROSS AND PRESENT VALUE OF FINANCE LEASE LIABILITIES £m £m £m £m
Finance lease payments falling due: ​ ​ ​ ​
Within 1 year 2 2 3 3
In 1 to 5 years 1 1 3 3
​ 3 3 6 6
Less: Future finance charges – – – –
Gross and present value of finance lease liabilities 3 3 6 6

2019 2018
Finance Finance
Borrowings leases Total Borrowings leases Total
BORROWINGS BY CURRENCY £m £m £m £m £m £m
Sterling 814 – 814 838 – 838
US Dollar 1,373 – 1,373 1,454 1 1,455
Euro 1,649 1 1,650 2,111 2 2,113
Other 26 2 28 15 3 18
Total 3,862 3 3,865 4,418 6 4,424

The Group had the following undrawn committed facilities available at 30 September, in respect of which all conditions precedent
had then been met:
2019 2018
UNDRAWN COMMITTED FACILITIES £m £m
Expiring between 1 and 5 years 2,000 1,690

182  Compass Group PLC Annual Report 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS
CAPITAL RISK MANAGEMENT
The Group manages its capital structure to ensure that it will be able to continue as a going concern. The capital structure of the
Group consists of cash and cash equivalents as disclosed in note 17; debt, which includes the borrowings disclosed in note 18; and
equity attributable to equity shareholders of the Company, comprising issued share capital, reserves and retained earnings as
disclosed in the consolidated statement of changes in equity.

FINANCIAL MANAGEMENT
The Group manages its interest rate and foreign currency exposure in accordance with the policies set out below. The Group’s
financial instruments comprise cash, borrowings, receivables and payables that are used to finance the Group’s operations. The
Group also uses derivatives, principally interest rate swaps, forward currency contracts and cross currency swaps, to manage
interest rate and currency risks arising from the Group’s operations. The Group does not trade in financial instruments. The Group’s
treasury policies are designed to mitigate the impact of fluctuations in interest rates and exchange rates and to manage the Group’s
financial risks. The Board approves any changes to the policies.

LIQUIDITY RISK
Liquidity risk is the risk that the Group may not be able to meet its financial obligations as they fall due.

Consolidated Financial Statements

The Group finances its operations through cash generated by the business and borrowings from a number of sources including the
bank, the public and the private placement markets. The Group has developed long term relationships with a number of financial
counterparties with the balance sheet strength and credit quality to provide credit facilities as required. The Group seeks to avoid a
concentration of debt maturities in any one period to spread its refinancing risk. The maturity profile of the Group’s principal
borrowings at 30 September 2019 shows that the average period to maturity is 5.4 years (2018: 5.4 years). Liquidity risk faced by
the Group is mitigated by having diverse sources of finance available to it and by maintaining substantial unutilised committed
banking facilities to maintain a level of headroom in line with Board approval. The level of undrawn facilities is set out in note 18.

FOREIGN CURRENCY RISK

The Group’s policy is to balance its principal projected cash flows by currency to actual or effective borrowings in the same currency.
As currency cash flows are generated, they are used to service and repay debt in the same currency. Where necessary, to implement
this policy, forward currency contracts and cross currency swaps are executed which, when applied to the actual currency liabilities,
convert these to the required currency.

The borrowings in each currency can give rise to foreign exchange differences on translation into sterling. Where the borrowings are
less than, or equate to, the net investment in overseas operations, these exchange rate variances are treated as movements on
reserves and recorded in the consolidated statement of comprehensive income rather than in the consolidated income statement.

Non-sterling earnings streams are translated at the average rate of exchange for the year. Fluctuations in exchange rates have given
and will continue to give rise to translation differences. The Group is only partially protected from the impact of such differences
through the matching of cash flows to currency borrowings.

The Group has minimal exposure to the foreign currency risk of trade receivables and payables as operations within individual
countries have little cross-border activity which might give rise to translation risks on trade related balances.

The main currencies to which the Group’s reported sterling financial position is exposed are the US dollar and the euro. As set out
above, the Group seeks to hedge its exposure to currencies by matching debt in currency against the cash flows generated by the
Group’s foreign operations in such currencies.

The effect on profit after tax and equity of a 10% strengthening of sterling against these currencies on the Group’s financial
instruments is shown below. A 10% weakening would result in an equal and opposite impact on the profit or loss and equity of the
Group. This table shows the impact on the financial instruments in place at 30 September and has been prepared on the basis that
the 10% change in exchange rates occurred on the first day of the financial year and applied consistently throughout the year.
2019 2018
​
Against Against Against Against
FINANCIAL INSTRUMENTS: US Dollar Euro US Dollar Euro
IMPACT OF STERLING STRENGTHENING BY 10% £m £m £m £m
(Decrease)/increase in profit for the year (after tax) (17) (10) 4 5
Increase in total equity 114 37 168 92

Compass Group PLC Annual Report 2019  183

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

INTEREST RATE RISK
As set out above, the Group has effective borrowings in a number of currencies and the policy is to ensure that, in the short term,
it is not materially exposed to fluctuations in interest rates in its principal currencies. The Group implements this policy either by
borrowing fixed rate debt or by using interest rate swaps so that the interest rates on at least 80% of the Group’s projected debt are
fixed for one year. For the second and third year interest rates are fixed within ranges of 30%–70% and 0%–40% respectively.

The sensitivity analysis given below has been determined based on the derivative and non-derivative financial instruments the Group
had in place at the year end date only.

The effect of a 1% increase in interest rates prevailing at the balance sheet date on the Group’s cash and cash equivalents and debt
subject to variable rates of interest at the balance sheet date would be £nil (2018: loss of £6 million) over the course of a year. A
similar 1% decrease in interest rates would result in an equal and opposite effect over the course of a year.
2019
Sterling US Dollar Euro Other Total
INTEREST RATE SENSITIVITY ANALYSIS £m £m £m £m £m
Increase in interest rate +1% +1% +1% +1% n/a
Floating rate exposure – (debt)/cash (286) (49) 138 180 (17)
(Decrease)/increase in profit for the year (after tax) (2) – 1 1 –

2018
Sterling US Dollar Euro Other Total
INTEREST RATE SENSITIVITY ANALYSIS £m £m £m £m £m
Increase in interest rate +1% +1% +1% +1% n/a
Floating rate exposure – cash/(debt) 154 (759) 10 (247) (842)
Increase/(decrease) in profit for the year (after tax) 1 (6) – (1) (6)

These changes are the result of the exposure to interest rates from the Group’s floating rate cash and cash equivalents and debt. The
sensitivity gains and losses given above may vary because cash flows vary throughout the year and interest rate and currency
hedging may be implemented after the year end date in order to comply with the treasury policies outlined above.

CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations.

The Group’s policy is to minimise its exposure to credit risk from the failure of any single financial counterparty by spreading its risk
across a portfolio of financial counterparties and managing the aggregate exposure to each against certain pre-agreed limits.
Exposure to counterparty credit risk arising from deposits and derivatives (including forward currency contracts and cross currency
swaps) is concentrated at the Group centre where possible. Financial counterparty limits are derived from the long and short term
credit ratings, and the balance sheet strength of the financial counterparty. All financial counterparties are required to have a
minimum long term credit rating from Moody’s of Baa2 and a short term credit rating from Moody’s of P-1 or equivalent from another
recognised agency. To reduce credit exposures, the Group has International Swaps and Derivatives Association (ISDA) Master
Agreements with all of its counterparties for financial derivatives, which permit net settlement of assets and liabilities in certain
circumstances. The maximum exposure to credit risk resulting from financial activities, without considering netting arrangements, is
equal to the carrying value of the Group’s financial assets.

The Group’s policy to manage the credit risk associated with trade and other receivables is set out in note 15.

HEDGING ACTIVITIES
The following section describes the derivative financial instruments the Group uses to apply the interest rate and foreign currency
hedging strategies described above.

FAIR VALUE HEDGES

The Group uses interest rate and cross currency interest rate swaps to hedge the fair value of fixed rate borrowings. These
instruments swap the fixed interest payable on the borrowings into floating interest rates and hedge the fair value of the borrowings
against changes in interest rates and foreign exchange rates. These swaps all qualify for fair value hedge accounting as defined by
IAS 39, some of which are designated in fair value hedge relationships where appropriate.

184  Compass Group PLC Annual Report 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
NET INVESTMENT HEDGES
The Group uses foreign currency denominated debt, forward currency contracts and cross currency swaps to partially hedge against
the change in the sterling value of its foreign currency denominated net assets due to movements in foreign exchange rates.
The carrying value of debt and derivatives in a net investment hedge was £1,339 million (2018: £1,683 million). A foreign exchange
loss of £133 million (2018: loss of £73 million) relating to the net investment hedges has been netted off within currency translation
differences as presented in the consolidated statement of comprehensive income.

DERIVATIVES NOT IN A HEDGING RELATIONSHIP

The Group has a number of derivative financial instruments that do not meet the criteria for hedge accounting. These include some
interest rate swaps and some forward currency contracts used for interest and cash management.

FAIR VALUE MEASUREMENT

All derivative financial instruments are shown at fair value in the consolidated balance sheet. The fair values have been determined
by reference to Level 2 inputs as defined by the fair value hierarchy of IFRS 13 ‘Fair value measurements’. Derivative financial
instrument fair values are present values determined from future cash flows discounted at rates derived from market sourced data.
There were no transfers between levels in either the year ended 30 September 2019 or 2018. The fair values of derivative financial
instruments represent the maximum credit exposure.

Consolidated Financial Statements

​ 2019 ​ 2018
Current Non-current Current Non-current Current Non-current Current Non-current
DERIVATIVE FINANCIAL assets assets liabilities liabilities assets assets liabilities liabilities
INSTRUMENTS £m £m £m £m £m £m £m £m
Interest rate swaps: ​ ​ ​ ​ ​ ​ ​ ​
Fair value hedges1 – 99 – – 4 6 – (19)
Not in a hedging relationship2 – 1 (3) (6) 4 4 – (1)
Cross currency swaps ​ ​ ​ ​ ​ ​ ​ ​
Fair value hedges1 – 107 – – 23 73 – (13)
Forward currency contracts ​ ​ ​ ​ ​ ​ ​ ​
Fair value hedges1 – – (2) – – – – –
Net investment hedges3 – – – – 3 – (9) –
Not in a hedging relationship2 – – (1) – – – (3) –
Total – 207 (6) (6) 34 83 (12) (33)

1. Derivatives that are designated and effective as hedging instruments carried at fair value (IFRS 9).
2. Derivatives carried at ‘fair value through profit or loss’ (IFRS 9).
3. Derivatives that are designated and effective in net investment hedges carried at fair value (IFRS 9).
2019 2018
​
Fair value Cash flow Fair value Cash flow
NOTIONAL AMOUNT OF DERIVATIVE FINANCIAL INSTRUMENTS swaps swaps swaps swaps
BY CURRENCY £m £m £m £m
Sterling 550 1,342​ 550 –
US Dollar 529 186​ 692 522
Euro 1,548 442 1,514 499
Japanese Yen – 92 – 118
Other – 143 – 277
Total 2,627 2,205​ 2,756 1,416

Compass Group PLC Annual Report 2019  185

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

​ 2019 2018
EFFECTIVE CURRENCY DENOMINATION OF Forward Effective Forward Effective
Gross currency currency of Gross currency currency of
BORROWINGS AFTER THE EFFECT borrowings contracts1 borrowings borrowings contracts1 borrowings
OF DERIVATIVES £m £m £m £m £m £m
Sterling 814 1,182 1,996 838 (109) 729
US Dollar 1,373 (202) 1,171 1,455 541 1,996
Euro 1,650 (1,207) 443 2,113 (1,020) 1,093
Japanese Yen – 94 94 – 138 138
Other 28 104 132 18 405 423
Total 3,865 (29) 3,836 4,424 (45) 4,379

1. Includes cross currency contracts.

2019
Less than 1 Between 1 Between 2 Between 3 Between 4 Over
​ year and 2 years and 3 years and 4 years and 5 years 5 years Total
GROSS DEBT MATURITY ANALYSIS £m £m £m £m £m £m £m
FIXED INTEREST ​ ​ ​ ​ ​ ​ ​
£300m Eurobond 2029 – – – – – 298 298
€500m Eurobond 2028 – – – – – 439 439
£250m Eurobond 2026 – – – – – 249 249
£250m Eurobond 2025 – – – – – 248 248
€750m Eurobond 2024 – – – – 659 – 659
€500m Eurobond 2023 – – – 441 – – 441
US private placements 162 – 323 – 286 567 1,338
Total fixed interest 162 – 323 441 945 1,801 3,672
Cash flow swaps (fixed leg) 786​ 1,261​ 158​ – – – 2,205​
Fair value swaps (fixed leg) – – – (442) (950) (1,235) (2,627)
Fixed interest liability 948​ 1,261​ 481 (1) (5) 566 3,250​
FLOATING INTEREST ​ ​ ​ ​ ​ ​ ​
Bank loans 5 – – – – – 5
Overdrafts 17 – – – – – 17
Total floating interest 22 – – – – – 22
Cash flow swaps (floating leg) (786) (1,261) (158) – – – (2,205)
Fair value swaps (floating leg) – – – 442 950 1,235 2,627
Floating interest (asset)/liability (764) (1,261) (158) 442 950 1,235 444
OTHER ​ ​ ​ ​ ​ ​ ​
Finance lease obligations 2 1 – – – – 3
Fair value adjustments to borrowings1 – – – 28 51 89 168
Other liability 2 1 – 28 51 89 171
Gross debt excluding derivatives 186 1 323 469 996 1,890 3,865
DERIVATIVE FINANCIAL INSTRUMENTS ​ ​ ​ ​ ​ ​ ​
Derivative financial instruments1 3 5 – (76) (50) (80) (198)
Forward currency contracts2 3 – – – – – 3
Gross debt 192 6 323 393 946 1,810 3,670

1. Non-cash item (changes in the value of this non-cash item are included in the other non-cash movements caption in note 27).
2. Non-cash item (changes in the value of this non-cash item are included in the currency translation gains/(losses) caption in note 27).

186  Compass Group PLC Annual Report 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
2019
Less than 1 Between 1 Between 2 Between 3 Between 4 Over
PRINCIPAL AND year and 2 years and 3 years and 4 years and 5 years 5 years Total
INTEREST MATURITY ANALYSIS £m £m £m £m £m £m £m
Gross debt 192 6 323 393 946 1,810 3,670
Overdrafts (17) – – – – – (17)
Fees and premiums capitalised on issue 3 3 3 3 3 4 19
Other non-cash items (6) (5) – 48 (1) (9) 27
Repayment of principal 172 4 326 444 948 1,805 3,699
Interest cash flows on debt and derivatives
(settled net) 84 89 77 71 60 120 501
Settlement of forward currency contracts
– payable leg (451) – – – – – (451)
Settlement of forward currency contracts
– receivable leg 449 – – – – – 449
Repayment of principal and interest 254 93 403 515 1,008 1,925 4,198

Consolidated Financial Statements

2018
Less than 1 Between 1 Between 2 Between 3 Between 4 Over
year and 2 years and 3 years and 4 years and 5 years 5 years Total
GROSS DEBT MATURITY ANALYSIS £m £m £m £m £m £m £m
FIXED INTEREST
£300m Eurobond 2029 – – – – – 297 297
€500m Eurobond 2028 – – – – – 442 442
£250m Eurobond 2026 – – – – – 249 249
£250m Eurobond 2025 – – – – – 248 248
€750m Eurobond 2024 – – – – – 662 662
€500m Eurobond 2023 – – – – 444 – 444
€600m Eurobond 2019 534 – – – – – 534
US private placements 191 153 – 305 – 805 1,454
Total fixed interest 725 153 – 305 444 2,703 4,330
Cash flow swaps (fixed leg) 802 614 – – – – 1,416
Fair value swaps (fixed leg) (593) – – – – (2,163) (2,756)
Fixed interest liability 934 767 – 305 444 540 2,990
FLOATING INTEREST
Bank loans 5 – – – – – 5
Overdrafts 76 – – – – – 76
Total floating interest 81 – – – – – 81
Cash flow swaps (floating leg) (802) (614) – – – – (1,416)
Fair value swaps (floating leg) 593 – – – – 2,163 2,756
Floating interest (asset)/ liability (128) (614) – – – 2,163 1,421
OTHER
Finance lease obligations 3 2 1 – – – 6
Fair value adjustments to borrowings1 4 – – – 20 (17) 7
Other liability 7 2 1 – 20 (17) 13
Gross debt excluding derivatives 813 155 1 305 464 2,686 4,424
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments1 (31) (3) – – (73) 26 (81)
Forward currency contracts2 9 – – – – – 9
Gross debt 791 152 1 305 391 2,712 4,352

1. Non-cash item (changes in the value of this non-cash item are included in the other non-cash movements caption in note 27).
2. Non-cash item (changes in the value of this non-cash item are included in the currency translation (losses)/gains caption in note 27).

Compass Group PLC Annual Report 2019  187

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

19  DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

2018
​
Less than 1 Between 1 Between 2 Between 3 Between 4 Over
PRINCIPAL AND year and 2 years and 3 years and 4 years and 5 years 5 years Total
INTEREST MATURITY ANALYSIS £m £m £m £m £m £m £m
Gross debt 791 152 1 305 391 2,712 4,352
Overdrafts (76) – – – – – (76)
Fees and premiums capitalised on issue 4 3 3 3​ 2 5 20
Other non-cash items 18 3 – – 53 (9) 65
Repayment of principal 737 158 4 308 446 2,708 4,361
Interest cash flows on debt and derivatives
(settled net) 103 89 81 74 71 192 610
Settlement of forward currency contracts
– payable leg (1,379) – – – – (453) (1,832)
Settlement of forward currency contracts
– receivable leg 1,368 – – – – 445 1,813
Repayment of principal and interest 829 247 85 382 517 2,892 4,952

20  TRADE AND OTHER PAYABLES

2019 2018
​ Current Non-current Total Current Non-current Total
TRADE AND OTHER PAYABLES £m £m £m £m £m £m
NET BOOK VALUE ​ ​ ​ ​ ​ ​
At 1 October 4,317 220 4,537 3,892 87 3,979
Net movement 256 (25) 231 351 119 470
Reclassification (5) 9 4 72 11 83
Currency adjustment 150 10 160 2 3 5
At 30 September 4,718 214 4,932 4,317 220 4,537
COMPRISED OF ​ ​ ​ ​ ​ ​
Trade payables1 2,088 – 2,088 1,876 1 1,877
Social security and other taxes 358 – 358 349 – 349
Other payables1 324 22 346 326 18 344
Contingent and deferred consideration on acquisitions1 35 174 209 33 177 210
Accruals2 1,538 18 1,556 1,414 24 1,438
Deferred income 373 – 373 312 – 312
Capital creditors 2 – 2 7 – 7
Trade and other payables 4,718 214 4,932 4,317 220 4,537

1. Categorised as ‘financial liabilities’ (IFRS 9).

2. Of this balance £691 million (2018: £672 million) is categorised as ‘other financial liabilities’ (IFRS 9).

The Group has Supply Chain Financing (SCF) arrangements in place. The principal purpose of these arrangements is to enable the
supplier, if it so wishes, to sell its receivables due from the Group to a third party bank prior to their due date, thus providing earlier
access to liquidity. From the Group’s perspective, the invoice payment due date remains unaltered and the payment terms of
suppliers participating in the SCF programmes are similar to those suppliers that are not participating, and to the wider industry
more generally. If a receivable is purchased by a third party bank, that third party bank does not benefit from additional security
when compared to the security originally enjoyed by the supplier.

At 30 September 2019, the value of invoices sold under the SCF programmes was £575 million, with £541 million related to the
Group’s programme in the USA (2018: £478 million and £444 million respectively). These amounts are included within trade
payables and all cash flows associated with the programmes are included within operating cash flow as they continue to be part of
the normal operating cycle of the Company.

188  Compass Group PLC Annual Report 2019

20  TRADE AND OTHER PAYABLES (CONTINUED)
2019
Between 1 Between 2 Between 3 Between 4 Over
​ and 2 years and 3 years and 4 years and 5 years 5 years Total
TRADE AND OTHER PAYABLES £m £m £m £m £m £m
Trade and other payables 163 36 3 1 11 214

2018
Between 1 and Between 2 and Between 3 Between 4 Over
​ 2 years 3 years and 4 years and 5 years 5 years Total
TRADE AND OTHER PAYABLES £m £m £m £m £m £m
Trade and other payables 45 132 28 3 12 220

The directors consider that the carrying amount of trade and other payables approximates to their fair value. The current trade and
other payables are payable on demand.

Trade payable days at 30 September 2019 were 81 days (2018: 78 days) on a constant currency basis.

21 PROVISIONS

Consolidated Financial Statements

Provisions in
Workers' respect of
compensation discontinued
and similar and disposed Onerous Legal and
obligations businesses contracts other claims Severance Other Total
PROVISIONS £m £m £m £m £m £m £m
At 1 October 2017 270 46 15 32 6 29 398
Reclassified1 11 – – – – (1) 10
Expenditure in the year (80) (6) (6) (4) (3) – (99)
Charged to income statement 76 42 (1) 3 1 – 121
Credited to income statement (9) (28) – (15) (1) (4) (57)
Business acquisitions – – 2 1 – – 3
Unwinding of discount 6 – – – – – 6
Currency adjustment 11 – 2 – (2) 1 12
At 30 September 2018 285 54 12 17 1 25 394
Reclassified1 – – – – – 4 4
Expenditure in the year (87) (41) (18) (2) (11) (6) (165)
Charged to income statement 93 38 69 2 48 7 257
Credited to income statement (7) (20) (2) – – (3) (32)
Business acquisitions – 1 7 3 – 1 12
Sale and closure of businesses – (3) – – – (1) (4)
Unwinding of discount 5 – 1 – – 2 8
Currency adjustment 15 2 – 1 – (3) 15
At 30 September 2019 304 31 69 21 38 26 489

1. Including items reclassified between accrued liabilities and other balance sheet captions.
2019 2018
PROVISIONS £m £m
Current 223 167
Non-current 266 227
Total provisions 489 394

Compass Group PLC Annual Report 2019  189

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

21  PROVISIONS (CONTINUED)

The provision for workers’ compensation and similar obligations relates mainly to the potential settlement of claims by employees in
the US for medical benefits and lost wages associated with injuries incurred in the course of their employment, and is essentially long
term in nature.

Provisions in respect of discontinued and disposed of businesses relate to estimated amounts payable in connection with onerous
contracts and claims arising from disposals. The final amount payable remains uncertain as, at the date of approval of these financial
statements, there remains a further period during which claims may be received. The timing of any settlement will depend upon the
nature and extent of claims received.

Provisions for onerous contracts represent the liabilities in respect of short and long term leases and other contracts which will be
utilised over the life of each individual contract. A full analysis is performed at least annually of the future profitability of all contracts
with marginal performances and of the balance sheet items directly linked to these contracts.

Provisions for legal and other claims relate principally to provisions for the estimated cost of litigation and other sundry claims. The
timing of the settlement of these claims is uncertain.

Provisions for severance primarily include people costs such as redundancy costs and cost of people change associated with the
cost action programme. The Group expects these provisions to be substantially utilised within the next two years.

Other provisions include environmental provisions. These are in respect of potential liabilities relating to the Group’s responsibility
for maintaining its operating sites in accordance with statutory requirements and the Group’s aim to have a low impact on
the environment. These provisions are expected to be utilised as operating sites are disposed of or as environmental matters
are resolved.

Provisions are discounted to present value where the effect is material using the discount rate applicable to the liability. In estimating
the provisions above management have made estimates and used assumptions in determining the nature, amount and timing of
potential outflows. Management do not consider that any of the provision estimates made at the date of the balance sheet are at a
significant risk of a material adjustment to the carrying amount of the liability recorded or any contract related balances.

22  POST EMPLOYMENT BENEFIT OBLIGATIONS

PENSION SCHEMES OPERATED
The Group operates a number of pension arrangements throughout the world which have been developed in accordance with
statutory requirements and local customs and practices. The majority of schemes are self-administered and the schemes’ assets are
held independently of the Group’s assets. Pension costs are assessed in accordance with the advice of independent, professionally
qualified actuaries. The Group makes employer contributions to the various schemes in existence within the range of 2% to 57% of
pensionable salaries (2018: 2% to 46%).

The contributions payable for defined contribution schemes of £126 million (2018: £110 million) have been fully expensed against
profits in the current year.

UK SCHEMES
UK employees that are in a pension arrangement are either in the Compass Retirement Income Savings Plan (CRISP) because they
meet the eligibility criteria, in a GAD section of the Compass Group Pension Plan (the Plan) or have been automatically enrolled into
the National Employment Savings Trust (NEST).

CRISP was launched on 1 February 2003 and has been the main vehicle for pension provision for eligible new joiners in the UK since
that date. CRISP is a defined contribution (money purchase) arrangement whereby the Group will match employee contributions up
to 6% of pay (minimum 5%). Within CRISP a new defined contribution section was established from April 2006 known as the
Compass Higher Income Plan (CHIP). Senior employees who contribute to CRISP are offered an additional employer-only
contribution into CHIP. The amount of contribution and eligibility for CHIP are decided annually at the Company’s discretion. A CHIP
payment may be taken in part, or in whole, as a cash allowance instead of a pension contribution.

CRISP has a corporate trustee. The Chairman is a former employee of the Group. The other six trustee directors are UK based
employees of the Group, three of whom have been nominated by CRISP members.

The Plan is a defined benefit arrangement. Those UK employees who transfer from the public sector under the Transfer of
Undertakings (Protection of Employment) Regulations 2006, typically up until 31 March 2015, have been eligible to join the Plan,
which has otherwise been closed to new entrants since 2003. Such transferees entered into the GAD sections of the Plan and are
known as ‘GAD members’. However, under the Government’s revised guidance for ‘Fair Deal for staff pensions’, the expectation is
and therefore the approach has been that the Group participates in the relevant public-sector pension scheme and closes the Plan
to future entrants. The Plan closed to future accrual for all existing members, other than GAD members, on 5 April 2010. The
affected members were offered membership of CRISP from 6 April 2010.

190  Compass Group PLC Annual Report 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)
The Plan is operated on a pre-funded basis. The funding policy is to contribute such variable amounts, on the advice of the actuary,
as achieves a 100% funding level on a projected salary basis. The actuarial assessments covering expense and contributions are
carried out by independent qualified actuaries. A formal actuarial valuation of the Plan is carried out every three years. The most
recent valuation of the Plan took place as at 5 April 2019. At the valuation date the total market value of the assets of the Plan was
£2,563 million which represented 106% of the benefits that had accrued to members after allowing for expected future increases
in earnings.

By agreement with the trustees, the Company is no longer funding any deficit. The next triennial valuation is due to be completed
as at 5 April 2022. The Plan is reappraised annually by independent actuaries in accordance with IAS 19 ‘Employee benefits’
requirements.

The Plan has a corporate trustee. There is an independent chairman and one other independent trustee director. There are a further
five trustee directors, who are either UK based employees or former employees of the Group (three of whom have been nominated
by Plan members).

The Company is subject to the Pension Automatic Enrolment Regulations for its workforce in the UK. All new UK employees who
meet the statutory eligibility criteria, and who do not join CRISP or the Plan, are automatically enrolled into the NEST. Responsibility

Consolidated Financial Statements

for the Group’s ongoing compliance with the Pension Automatic Enrolment Regulations and for ensuring that the administration and
investment of funds relating to automatic enrolment remain appropriate lies with the Group’s Pension Automatic Enrolment
Governance Committee.

The Lloyds Banking Group’s High Court hearing on Guaranteed Minimum Pension (GMP) equalisation was published on 26 October
2018. As a result, and based on actuarial advice, the Group has recognised £12 million of past service costs in the consolidated
income statement. This non-cash charge has been excluded from the Group’s underlying operating profit.

OVERSEAS SCHEMES
In the USA, the defined benefit plans are frozen to new participants and the main vehicles for retirement are the defined contribution
plans. The actuary provides Compass USA with the contributions required each year to the defined benefit plans, in order to work
towards a 100% funding level on a projected salary basis.

Compass USA participates in a number of unions and is required to abide by the individual collective bargaining agreements (CBA)
negotiated with each union. Under the terms of these CBAs, Compass USA is required to pay the union members’ salary and
contribute to various multi-employer benefit plans which include (i) post employment benefits, including pensions and post
employment healthcare, (ii) defined contribution plans, such as 401(k) and annuity and savings plans and (iii) other plans which
include legal funds, training funds and education funds.

Participation in multi-employer pension plans bears risks that differ from single-employer plans. These risks include:

• assets contributed to the plans by Compass USA may be used to provide benefits to employees of other participating employers
• if a participating employer stops contributing to the plan for any reason, the unfunded obligation remaining may transition to the
remaining employers participating in the plan
• if Compass USA stops participating in the plan for any reason, the company may be required to pay a proportionate amount to the
plan for its share of the unfunded liability, known as a withdrawal liability

Compass USA is involved with 37 multi-employer benefit plans (2018: 38). The Group is not aware of, and has no reasonable
expectation that, any plan in which it currently participates is in imminent danger of becoming insolvent, or is likely to experience a
mass withdrawal.

These plans are accounted for as defined contribution plans, as the information provided by the plan administrators is insufficient for
them to be accounted for as defined benefit plans. The Group made total contributions of £21 million in the year (2018: £17 million)
to these arrangements.

In Canada, Germany, Norway, Spain and Switzerland, the Group also participates in funded defined benefit arrangements.

In other countries, Group employees participate primarily in state arrangements to which the Group makes the appropriate contributions.

Other than where required by local regulation or statute, the defined benefit schemes are closed to new entrants. For these schemes
the current service cost will increase under the projected unit credit method as the members of the schemes approach retirement.

Compass Group PLC Annual Report 2019  191

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

ALL DEFINED BENEFIT SCHEMES
The Group’s obligations in respect of defined benefit pension schemes are calculated separately for each scheme by estimating the
amount of future benefit that employees have earned in return for their service in the current and prior years. That benefit is
discounted to determine its present value and the fair value of scheme assets is then deducted. The discount rate used is the yield
at the valuation date on high quality corporate bonds, whose term is consistent with the timing of the expected benefit payments
over future years.

The Group takes advice from independent actuaries relating to the appropriateness of the assumptions which include life
expectancy of members, expected salary and pension increases, and inflation. It is important to note that comparatively small
changes in the assumptions used may have a significant effect on the consolidated income statement and balance sheet.

The liabilities of the defined benefit schemes are measured by discounting the best estimate of future cash flows to be paid using
the projected unit method. This method is an accrued benefits valuation method that makes allowances for projected earnings.
These calculations are performed by a qualified actuary.

Disclosures showing the assets and liabilities of the schemes are set out below. These have been calculated using the following
assumptions:

​ UK schemes USA schemes Other schemes

​ 2019 2018 2019 2018 2019 2018
Discount rate 1.8% 2.9% 2.9% 4.0% 1.7% 2.4%
Inflation 3.3% 3.2% 2.2% 2.3% 1.8% 1.8%
CPI inflation 2.3% 2.5% n/a n/a n/a n/a
Rate of increase in salaries 3.3% 3.2% 3.0% 3.0% 2.2% 1.9%
Rate of increase for pensions in payment 3.2% 3.1% 2.2% 2.3% 0.2% 0.2%
Rate of increase for deferred pensions1 2.8% 2.8% 0.0% 0.0% 0.0% 0.0%

1. This assumption is presented as a weighted average.

The mortality assumptions used to value the current year UK pension schemes are derived from the S3PA generational mortality
tables (2018: S2PA generational mortality tables) with improvements in line with the projection model prepared by the 2018
Continuous Mortality Investigation of the UK actuarial profession (2018: 2015 model), with an S-kappa of 7.5, with 115% weighting
for male non-pensioners, 111% for male pensioners (2018: +0.2 years age rating for male non-pensioners, -0.2 years age rating for
male pensioners) and 102% weighting for all females (2018: -0.1 years age rating for all females), with a long term underpin of
1.5% p.a. (2018: 1.25% p.a.). These mortality assumptions take account of experience to date and assumptions for further
improvements in the life expectancy of scheme members. The Group estimates the average duration of the UK and USA plans’
liabilities to be 18 years (2018: 18 years) and nine years (2018: 9 years) respectively.

Examples of the resulting life expectancies for the UK Plan are as follows:
2019 2018
​LIFE EXPECTANCY AT AGE 65 Male Female Male Female
Member aged 65 in 2019 (2018) 21.5 24.4 22.6 24.5
Member aged 65 in 2044 (2043) 23.4 26.5 24.4 26.9

The other demographic assumptions have been set having regard to the latest trends in scheme experience and other relevant data.
The assumptions are reviewed and updated as necessary as part of the periodic actuarial valuation of pension schemes.

For the overseas schemes, regionally appropriate assumptions have been used where recommended by local actuaries. The
mortality assumptions used to value USA schemes are derived from the RP2014 combined healthy table, generational MP2018
scale. Examples of the resulting life expectancies for the US schemes are as follows:

​ 2019 2018

LIFE EXPECTANCY AT AGE 65 Male Female Male Female

Member aged 65 in 2019 (2018) 22.2 23.7 22.2 23.7
Member aged 65 in 2044 (2043) 24.1 25.6 24.2 25.6

192  Compass Group PLC Annual Report 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)
RISKS
The Group bears a number of risks in relation to its defined benefit pension schemes. These risks and how they mitigated for the
Group’s largest defined benefit plan are described below:

RISK Description of risk Mitigation

Interest A decrease in corporate bond yields will increase the As part of the investment strategy, the UK Plan aims to
rate schemes’ benefit obligations under IAS 19. The mitigate this risk through investment in a liability driven
schemes are therefore exposed to the risk that falls in investment (LDI) portfolio. LDI is a form of investing
interest rates will decrease the schemes’ surplus. designed to match to a large extent the movement in
pension plan assets with the movement in projected
benefit obligations over time.
Inflation The schemes' benefit obligations are linked to inflation. The UK Plan contains caps on increases to scheme
A higher rate of expected long term inflation will benefits to mitigate the risk of increase in inflation.
therefore lead to higher liabilities, both for the IAS 19 Additionally the UK Plan invests in LDI products which
and funding liability. increase (decrease) in value when expectations of
future inflation rates increase (fall), thus providing

Consolidated Financial Statements

protection against inflation risk.
Investment Asset returns are volatile and there is a risk that the To mitigate against investment risk the UK Plan invests
value of pension schemes' assets may not move in line in a way which aims to hedge a large proportion of the
with changes in pension scheme liabilities. movements in the corresponding liabilities and
investments are diversified across and within asset
classes, to avoid overexposure to any one asset class
or market. The trustees and the Group regularly
monitor the funding position and operate a diversified
investment strategy.
Life The schemes' obligations are to provide benefits for the The UK Plan's trustees and the Group regularly
expectancy life of the member and so increases in life expectancy monitor the impact of changes in longevity on
will lead to higher liabilities. scheme obligations.

SENSITIVITIES OF PRINCIPAL ASSUMPTIONS

Measurement of the Group’s defined benefit obligations is particularly sensitive to changes in key assumptions, including discount
rate, life expectancy and inflation. The sensitivities of the principal assumptions used to measure the defined benefit obligations of
the schemes are set out below:

ASSUMPTION Change in assumption Impact on scheme obligation 2019 Impact on scheme obligation 2018

UK
Discount rate Increase by 0.5% Decrease by £212 million Decrease by £188 million
Decrease by 0.5% Increase by £227 million Increase by £201 million
Inflation Increase by 0.5% Increase by £139 million Increase by £110 million
Decrease by 0.5% Decrease by £117 million Decrease by £106 million
CPI Inflation Increase by 0.5% Increase by £31 million Increase by £25 million
Decrease by 0.5% Decrease by £26 million Decrease by £24 million
Life expectations from age 65 Increase by 1 year Increase by £105 million Increase by £89 million
USA AND OTHERS
Discount rate Increase by 0.5% Decrease by £15 million Decrease by £12 million
Decrease by 0.5% Increase by £16 million Increase by £13 million
Inflation Increase by 0.5% Increase by £6 million Increase by £5 million
Decrease by 0.5% Decrease by £6 million Decrease by £5 million
Life expectations from age 65 Increase by 1 year Increase by £6 million Increase by £5 million

The sensitivities above consider the impact of the single change shown, with the other assumptions assumed to be unchanged. The
sensitivity analyses have been determined based on a method that extrapolates the impact on the defined benefit obligations as a
result of reasonable changes in key assumptions occurring at the end of the reporting period. In practice, changes in one assumption
may be accompanied by offsetting changes in another assumption (although this is not always the case). The impact of a change in
the UK inflation rate shown above includes the impact of a change in both the RPI and CPI inflation rates.

Compass Group PLC Annual Report 2019  193

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

The Group’s net pension surplus is the difference between the schemes’ assets and liabilities. Changes in the assumptions may
occur at the same time as changes in the market value of scheme assets. These may or may not offset the changes in assumptions.
For example, a fall in interest rates will increase the schemes’ liabilities but may also trigger an offsetting increase in the market
value of certain assets so there may be little effect on the Group’s liability.

ANALYSIS OF THE FAIR VALUE OF PLAN ASSETS

At 30 September 2019, the assets of the various schemes were invested in a diversified portfolio that consisted primarily of equities
and debt securities. The fair value of these assets is shown below by major category:
2019 2018
FAIR VALUE OF PLAN ASSETS UK USA Other Total UK USA Other Total
BY MAJOR CATEGORY £m £m £m £m £m £m £m £m
EQUITY TYPE ASSET
Global equities quoted 147 188 11 346 170 272 15 457
Global equities unquoted – – 17 17 – – 17 17
GOVERNMENT BONDS
UK fixed interest quoted 578 – – 578 554 – – 554
UK index linked quoted 1,346 – – 1,346 997 – – 997
Overseas quoted – – 16 16 – – 9 9
Overseas unquoted – – 21 21 – – 20 20
CORPORATE BONDS
Corporate bonds quoted 551 44 – 595 515 65 – 580
Corporate bonds unquoted – – – – – – – –
Diversified securities quoted – – – – – – – –
OTHER ASSETS
Property funds quoted 197 152 1 350 176 – 1 177
Property funds unquoted – – 15 15 – – 13 13
Insurance policies unquoted – – 12 12 – – 12 12
Other assets – – 11 11 – – 9 9
Cash and cash equivalents 9 55 1 65 13 48 1 62
At 30 September 2,828 439 105 3,372 2,425 385 97 2,907

The UK Plan has holdings of diversified global equity type investments, mainly shares in listed companies. The return on these
investments is variable, and they are generally considered to be ‘riskier’ investments. However, it is generally accepted that the yield
on these investments will contain a premium to compensate investors for this additional risk. There is significant uncertainty about
the likely size of this risk premium. In respect of investments held in global equities there is also a risk of unfavourable currency
movements. The trustee manages these risks by holding approximately 50% of those investments in funds which are hedged against
currency movements.

The UK Plan also holds corporate bonds and other fixed interest securities. The risk of default on these is assessed by various rating
agencies. Some of these bond investments are issued by HM Government. The risk of default on these is lower compared to the risk
on corporate bond investments, although some risk may remain. The expected yield on bond investments with fixed interest rates
can be derived exactly from their market value.

194  Compass Group PLC Annual Report 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)
2019 2018
MOVEMENTS IN THE FAIR UK USA Other Total UK USA Other Total
VALUE OF PLAN ASSETS £m £m £m £m £m £m £m £m
At 1 October 2,425 385 97 2,907 2,461 425 92 2,978
Currency adjustment – 24 3 27 – 11 1 12
Interest income on plan assets 69 11 2 82 65 11 1 77
Return on plan assets, excluding
interest income 425 (3) 3 425 – 20 1 21
Employee contributions – 36 2 38 – 35 2 37
Employer contributions 3 21 12 36 3 17 12 32
Benefits paid (94) (35) (14) (143) (104) (34) (12) (150)
Administration expenses paid from
plan assets – – – – – (1) – (1)
Disposals and plan settlements – – – – – (99) – (99)
At 30 September 2,828 439 105 3,372 2,425 385 97 2,907

Consolidated Financial Statements

MOVEMENT IN THE PRESENT 2019 2018
VALUE OF DEFINED BENEFIT UK USA Other Total UK USA Other Total
OBLIGATIONS £m £m £m £m £m £m £m £m
At 1 October 2,127 485 173 2,785 2,252 522 176 2,950
Currency adjustment – 29 4 33 – 13 (2) 11
Current service cost 1 12 8 21 2 10 6 18
Past service cost1 12 – – 12 – 1 – 1
Interest expense on benefit
obligations 60 15 4 79 60 15 2 77
Remeasurements – demographic
assumptions (108) – 2 (106) – (1) – (1)
Remeasurements – financial
assumptions 439 6 19 464 (82) 16 (3) (69)
Remeasurements – experience (5) (1) 5 (1) 1 (1) 2 2
Employee contributions – 36 2 38 – 35 2 37
Benefits paid (94) (35) (14) (143) (106) (31) (10) (147)
Disposals and plan settlements – – – – – (94) – (94)
Business combinations – – 1 1 – – – –
At 30 September 2,432 547 204 3,183 2,127 485 173 2,785

1. The Lloyds Banking Group’s High Court hearing on Guaranteed Minimum Pension (GMP) equalisation was published on 26 October 2018. As a result, and
based on actuarial advice, the Group has recognised £12 million of past service costs in the consolidated income statement.

Compass Group PLC Annual Report 2019  195

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)

2019 2018
PRESENT VALUE OF DEFINED UK USA Other Total UK USA Other Total
BENEFIT OBLIGATIONS £m £m £m £m £m £m £m £m
Funded obligations 2,380 439 128 2,947 2,079 385 110 2,574
Unfunded obligations 52 108 76 236 48 100 63 211
Total obligations 2,432 547 204 3,183 2,127 485 173 2,785

2019
POST EMPLOYMENT BENEFIT ASSETS/(OBLIGATIONS) UK1 Total UK2 USA Other Total
RECOGNISED IN THE BALANCE SHEET £m £m £m £m £m £m
Present value of defined benefit obligations (2,380) (2,380) (52) (547) (204) (803)
Fair value of plan assets 2,828 2,828 – 439 105 544
Post employment benefit asset/(obligations) recognised in
the balance sheet 448 448 (52) (108) (99) (259)

2018
POST EMPLOYMENT BENEFIT ASSETS/(OBLIGATIONS) UK1 Total UK2 USA Other Total
RECOGNISED IN THE BALANCE SHEET £m £m £m £m £m £m
Present value of defined benefit obligations (2,079) (2,079) (48) (485) (173) (706)
Fair value of plan assets 2,425 2,425 – 385 97 482
Post employment benefit asset/(obligation) recognised in
the balance sheet 346 346 (48) (100) (76) (224)

1. UK funded defined benefit pension scheme.

2. UK unfunded defined benefit pension scheme.

Certain Group companies have taken out life insurance policies and invested in mutual funds which will be used to meet unfunded
pension obligations. The current value of these policies and other assets, £74 million (2018: £56 million), may not be offset against
pension obligations under IAS 19 and is reported within note 14.

AMOUNTS RECOGNISED THROUGH THE CONSOLIDATED INCOME STATEMENT

The amounts recognised through the consolidated income statement within the various captions are as follows:
2019 2018
UK USA Other Total UK USA Other Total
​ £m £m £m £m £m £m £m £m
Current service cost 1 12 8 21 2 10 6 18
Past service cost1 12 – – 12 – 1 – 1
Loss on settlement2 – – – – – 5 – 5
Charged to operating expenses 13 12 8 33 2 16 6 24
Interest expense on benefit
obligations 60 15 4 79 60 15 2 77
Interest income on plan assets (69) (11) (2) (82) (65) (11) (1) (77)
Charged to finance costs (9) 4 2 (3) (5) 4 1 –
Total charged in the consolidated
income statement 4 16 10 30 (3) 20 7 24

1. The Lloyds Banking Group’s High Court hearing on Guaranteed Minimum Pension (GMP) equalisation was published on 26 October 2018. As a result, and
based on actuarial advice, the Group has recognised £12 million of past service costs in the income statement.
2. Compass Group USA Inc. Retirement Plan for Salaried Employees was settled. As a result, a £5 million loss was recognised in the consolidated income
statement on the settlement of the scheme liabilities for the year ended 30 September 2018.

196  Compass Group PLC Annual Report 2019

22  POST EMPLOYMENT BENEFIT OBLIGATIONS (CONTINUED)
The Group made total contributions to defined benefit schemes of £36 million in the year (2018: £32 million) and expects to make
total contributions to these schemes of £30 million in 2020, including £16 million related to the defined benefit plans in the USA and
£3 million in the UK.

The UK Plan is the largest scheme within the Group and was in surplus on a funding basis at the date of the most recent actuarial
valuation as at 5 April 2019 and so no deficit contributions are currently required. The remaining Group funded schemes do not have
significant minimum funding requirements whilst contributions to unfunded pension schemes are quite stable. As a result, we do not
expect the required future contributions to change substantially beyond next year.

AMOUNTS RECOGNISED THROUGH THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The amounts recognised through the consolidated statement of comprehensive income are as follows:
2019 2018
​ £m £m
Effect of changes in demographic assumptions 106 1
Effect of changes in financial assumptions (464) 69
Effect of experience adjustments 1 (2)

Consolidated Financial Statements

Remeasurement of post employment benefit obligations – (loss)/gain (357) 68
Return on plan assets, excluding interest income – gain 425 21
Total recognised in the consolidated statement of comprehensive income 68 89

23  SHARE CAPITAL

During the year, 2,341,811 treasury shares were released to satisfy employee share‑based payments commitments
(2018: 2,556,731), leaving a balance held at 30 September 2019 of 3,329,634 (2018: 5,671,445). Proceeds received from the
reissuance of treasury shares to satisfy employee share awards were £0.4 million (2018: £0.5 million).

​ 2019 2018
ALLOTTED SHARE CAPITAL Number of shares £m Number of shares £m
Allotted and fully paid: ​ ​ ​ ​
Ordinary shares of 111/20 pence each 1,589,736,625 176 1,589,736,625 176
At 30 September ​ 176 ​ 176

24 SHARE-BASED PAYMENTS
INCOME STATEMENT EXPENSE
The Group recognised an expense of £27 million (2018: £21 million) in respect of share-based payment transactions. All share-
based payment plans are equity-settled.

The expense is broken down by share-based payment scheme as follows:

2019 2018
​ £m £m
Long term incentive plans 24 18
Other share-based payment plans 3 3
​ 27 21

LONG TERM INCENTIVE PLANS

Full details of The Compass Group PLC Long Term Incentive Plan 2010 (2010 LTIP) can be found in the Directors’ Remuneration
Report on pages 98 to 121.

The following table shows the movement in share awards during the year:
2019 2018
LONG TERM INCENTIVE PLANS Number of shares Number of shares
Outstanding at 1 October 5,897,389 6,306,286
Awarded 2,191,879 2,252,014
Vested (1,779,067) (1,717,595)
Lapsed (518,350) (943,316)
Outstanding at 30 September 5,791,851 5,897,389

Compass Group PLC Annual Report 2019  197

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

24  SHARE-BASED PAYMENTS (CONTINUED)

The vesting conditions of the LTIP awards are included in the Directors’ Remuneration Report.

The fair value of awards subject to FCF and ROCE performance targets was calculated using the Black-Scholes option pricing model.
The vesting probability of each element has been assessed based on a simulation model of the FCF and ROCE forecasts.

The weighted average share price at the date of vesting for LTIP awards vested during 2019 was 1,673.00 pence
(2018: 1,538.44 pence).

The LTIP awards outstanding at the end of the year have a weighted average remaining contractual life of 1.4 years
(2018: 1.4 years).

For the year ended 30 September 2019, a Board LTIP award was made on 21 November 2018 and 16 May 2019 for which the
estimated fair value was 1,185.63 pence and 1,229.53 pence respectively. Leadership LTIP awards were also made on
21 November 2018 and 16 May 2019 for which the estimated fair value were 1,366.01 pence and 1,227.53 pence respectively.

For the year ended 30 September 2018, a Board LTIP award was made on 9 February 2018 for which the estimated fair value was
1,071.36 pence. Leadership LTIP awards were also made on 22 November 2017 and 10 May 2018 for which the estimated fair
value were 1,252.19 pence and 1,040.24 pence respectively.

These awards were all made under the terms of the 2010 LTIP. The inputs to the option pricing model are reassessed for each
award. The following assumptions were used in calculating the fair value of LTIP awards made during the year:

ASSUMPTIONS – LONG TERM INCENTIVE PLANS 2019 2018

Expected volatility 17.6% 17.7%
Risk free interest rate 1.2% 1.5%
Dividend yield 2.2% 2.2%
Expected life 2.7 years 2.6 years
Weighted average share price at date of grant 1,746.52p 1,510.60p

OTHER SHARE-BASED PAYMENT PLANS

The following table shows the movements in other smaller share-based payment plans during the year:
2019 2018
OTHER SHARE-BASED PAYMENT PLANS Number of shares Number of shares
Outstanding at 1 October 2,175,063 3,349,787
Awarded 386,991 90,210
Vested, released and exercised (617,596) (854,711)
Lapsed (following net settlement) (218,773) (244,768)
Lapsed (102,649) (165,455)
Outstanding at 30 September 1,623,036 2,175,063

198  Compass Group PLC Annual Report 2019

24  SHARE-BASED PAYMENTS (CONTINUED)
The expense relating to these plans is not significant and no further disclosure is necessary except for the general details
provided below:

SHARE OPTIONS
Full details of The Compass Group Share Option Plan 2010, the Compass Group Share Option Plan, the Compass Group
Management Share Option Plan and the UK Sharesave Plan are set out in prior years’ annual reports which are available on the
Company’s website.

DEFERRED ANNUAL BONUS PLAN (DAB)

Certain senior executives participate in the DAB. A portion of the annual bonus awarded to certain executives is converted into
shares. Subject to the achievement of local organic revenue growth and cumulative PBIT over the three year deferral period, the
number of deferred shares may be increased. Enhancements to the deferred shares are only released to the participants subject to
the performance levels being met.

RESTRICTED SHARES
These are occasional awards to certain employees in order to incentivise the achievement of particular business objectives under
specific circumstances or where similar such shares have been forfeited by a new employee on joining the Company. The plan can

Consolidated Financial Statements

take different forms such as an award of shares dependent on a service or achievement of specific performance conditions other
than service.

LONG TERM BONUS PLAN

Certain executives participating in the Long Term Bonus Plan in prior years received an award of deferred Compass Group PLC
shares. The award of bonus shares is subject to performance conditions and matching shares may be released by the Company
following the completion of a further period of service. The terms of the plan require that these shares are purchased in the market,
rather than being issued by the Company. The shares are purchased and distributed by the Executive Share Option Plan (ESOP) and
the Compass Group All Share Schemes Trust (ASST).

Compass Group PLC Annual Report 2019  199

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

25  ACQUISITION, SALE AND CLOSURE OF BUSINESSES

ACQUISITIONS
The total cash spent on acquisitions during the year, net of cash acquired, was £451 million (2018: £420 million). The most
significant acquisition during the year relates to Client Rewards.

On 12 December 2018, Compass Group USA, Inc., a USA subsidiary of the Group, purchased the trading net assets of Client
Rewards for an initial consideration of £164 million ($209 million). Client Rewards is an Iowa based company that provides
procurement and supply chain management services. The preliminary goodwill in relation to the assets acquired is £78 million
($100 million).

In addition to the acquisition set out above, the Group has also completed several smaller bolt-on acquisitions in several countries. A
summary of all acquisitions completed during the period is included below:
2019 2018
Book value Fair value Book value Fair value
​ £m £m £m £m
Net assets acquired ​ ​ ​ ​
Goodwill arising on acquisition – 198 – 312
Contract related and other intangibles arising on acquisition 18 268 27 243
Trade and other receivables 33 33 46 46
Other assets 30 30 21 21
Cash and cash equivalents 12 12 9 9
Deferred tax – (27) – (39)
Trade and other payables (46) (46) (51) (51)
Other liabilities (14) (14) (15) (16)
Fair value of net assets acquired ​ 454 ​ 525
​ ​ ​ ​ ​
Non-controlling interest acquired ​ – ​ (4)
​ ​ ​ ​ ​
Satisfied by ​ ​ ​ ​
Cash consideration ​ 422 ​ 406
Contingent consideration1 ​ 32 ​ 115
Total consideration ​ 454 ​ 521
​ ​ ​ ​ ​
Cash flow ​ ​ ​ ​
Cash consideration ​ 422 ​ 406
Cash acquired ​ (12) ​ (9)
Acquisition transaction costs ​ 8 ​ 4
Net cash outflow arising on acquisition ​ 418 ​ 401
Deferred consideration and other payments relating to previous
acquisitions ​ 33 ​ 19
Total cash outflow arising from the purchase of subsidiary companies ​ 451 ​ 420

1. Contingent consideration is an estimate at the date of acquisition of the amount of additional consideration that will be payable in the future. The actual
amount paid can vary from the estimate depending on the terms of the transaction and, for example, the actual performance of the acquired business.

The adjustments made in respect of acquisitions in the year to 30 September 2019 are provisional and will be finalised within 12
months of the acquisition date, principally in relation to the valuation of contracts acquired.

The goodwill arising on the acquisition of the businesses represents the premium the Group paid to acquire companies which
complement the existing business and create significant opportunities for cross-selling and other synergies. The goodwill arising is
not expected to be deductible for tax purposes.

In the period from acquisition to 30 September 2019, the acquisitions contributed revenue of £123 million and operating profit of
£14 million to the Group’s results (2018: £210 million and £13 million respectively).

If the acquisitions had occurred on 1 October 2018, it is estimated that the combined sales of Group and equity accounted joint
ventures for the year would have been £25,308 million and total Group operating profit (including associates) would have been
£1,608 million.

200  Compass Group PLC Annual Report 2019

25  ACQUISITION, SALE AND CLOSURE OF BUSINESSES (CONTINUED)
SALE AND CLOSURE OF BUSINESSES
Following a strategic review of the business, the Group decided to take actions to simplify its portfolio of businesses based on an
assessment of market growth opportunity, scalability and the Group’s market position and capabilities.

As a result of this review, the Group is in the process of selling or exiting its operations in a number of countries, sectors or
businesses. The Group has successfully completed the disposal of several businesses, including its operations in South Africa,
Vision Security Group in the UK, Sports & Leisure in Japan and part of its US laundries business. The Group's consolidated income
statement includes a £7 million net loss on sale and closure of businesses (2018: £58 million loss) and a related tax credit of
£3 million. The net loss includes £57 million of asset write downs and exit costs relating to committed or completed business exits
and those that were held for sale which has been offset by a net gain of £50 million (2018: £3 million loss) on completed disposals.
Included within the net loss is a £22 million write down of net assets for businesses that are held for sale where the carrying amount
was higher than net realisable value (2018: £19 million).

As at the balance sheet date, the Group has classified certain businesses as held for sale as these disposals are highly probable and
are expected to be completed within 12 months.

The major classes of assets and liabilities classified as held for sale as at year end are as follows:

Consolidated Financial Statements

2019 2018
Carrying Carrying
amount amount
​ £m £m
Goodwill 21 21
Other intangible assets 6 17
Property, plant and equipment 44 58
Interest in joint ventures and associates 55 1
Trade and other receivables 42 82
Inventories 20 33
Other 2 24
Total assets held for sale 190 236
Trade and other payables (20) (70)
Other (10) (2)
Total liabilities directly associated with the assets held for sale (30) (72)

Cumulative income or expenses included in other comprehensive income relating to these businesses amount to £38 million of
foreign exchange gain (2018: £21 million loss).

The non-recurring fair value measurement of the businesses held for sale is categorised as a Level 3 fair value, and is primarily based
on offers received or agreed sale price for these businesses from interested parties.

Compass Group PLC Annual Report 2019  201

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

26  RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED FROM OPERATIONS

2018
2019 (restated1)
RECONCILIATION OF OPERATING PROFIT TO CASH GENERATED FROM OPERATIONS £m £m
Operating profit before joint ventures and associates 1,570 1,643
Adjustments for: ​ ​
Acquisition related costs 54 49
One-off pension charge 12 –
Cost action programme charge 190 –
Amortisation of intangible assets 88 69
Amortisation of contract fulfilment assets 184 164
Amortisation of contract prepayments 23 21
Depreciation of property, plant and equipment 282 267
Unwind of costs to obtain contracts 14 13
Gain on disposal of property, plant and equipment/intangible assets/contract fulfilment assets – (7)
Other non-cash changes (2) –
Decrease in provisions (41) (45)
Investment in contract prepayments (30) (27)
Increase in costs to obtain contracts (19) (16)
Post employment benefit obligations net of service costs (15) (8)
Share-based payments – charged to profits 27 21
Operating cash flows before movement in working capital 2,337 2,144
Increase in inventories (30) (30)
Increase in receivables (121) (208)
Increase in payables 210 364
Cash generated from operations 2,396 2,270

1. Prior year comparatives have been restated as a result of the Group’s full retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’.
Additional information about the impact of IFRS 15 is included in note 1.

202  Compass Group PLC Annual Report 2019

27  RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
This table is presented as additional information to show movement in net debt, defined as overdrafts, bank and other borrowings,
finance leases and derivative financial instruments, net of cash and cash equivalents.
Gross debt
Total
Cash Bank overdrafts Derivative
and cash Bank and other and Finance financial Total
equivalents overdrafts borrowings borrowings leases instruments gross debt Net debt
NET DEBT £m £m £m £m £m £m £m £m
At 1 October 2017 387 (8) (3,941) (3,949) (10) 126 (3,833) (3,446)
Net increase in cash and cash equivalents 602 – – – – – – 602
Cash outflow from repayment of bank loans – – 1,074 1,074 – – 1,074 1,074
Cash inflow from borrowing of bank loans – – (772) (772) – – (772) (772)
Cash inflow from issue of bonds – – (686) (686) – – (686) (686)
Cash (inflow)/outflow from other changes in
gross debt – (67) 17 (50) – 2 (48) (48)
Cash outflow from repayments of obligations

Consolidated Financial Statements

under finance leases – – – – 6 – 6 6
Increase in net debt as a result of new
finance leases – – – – (2) – (2) (2)
Reclassified as held for sale (22) – – – – – – (22)
Currency translation gains/(losses) 2 (1) (62) (63) – (6) (69) (67)
Other non-cash movements – – 28 28 – (50) (22) (22)
At 30 September 2018 969 (76) (4,342) (4,418) (6) 72 (4,352) (3,383)
Net decrease in cash and cash equivalents (579) – – – – – – (579)
Cash outflow from repayment of bank loans – – 1,830 1,830​ – – 1,830​ 1,830
Cash inflow from borrowing of bank loans – – (1,830) (1,830)​ – – (1,830)​ (1,830)
Cash outflow from repayment of loan notes – – 195 195 – – 195 195
Cash outflow from repayment of bonds – – 530 530 – – 530 530
Cash outflow from other changes in gross
debt – 60 2 62 – 14 76 76
Cash outflow from repayments of obligations
under finance leases – – – – 4 – 4 4
Increase in net debt as a result of new
finance leases – – – – (1) – (1) (1)
Reclassified as held for sale (1) – – – – – – (1)
Currency translation gains/(losses) 9 (1) (64) (65) – (30) (95) (86)
Other non-cash movements – – (166) (166) – 139 (27) (27)
At 30 September 2019 398 (17) (3,845) (3,862) (3) 195 (3,670) (3,272)

Compass Group PLC Annual Report 2019  203

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

27  RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT (CONTINUED)

Other non-cash movements are comprised as follows:
2019 2018
OTHER NON-CASH MOVEMENTS IN NET DEBT £m £m
Amortisation of fees and discount on issuance (6) (4)
Loans acquired through business acquisition – (12)
Changes in the fair value of bank and other borrowings in a designated fair value hedge (160) 44
Bank and other borrowings (166) 28
Changes in the value of derivative financial instruments including accrued income 139 (50)
Other non-cash movements (27) (22)

2019
Cash
CASH FLOWS ARISING (inflow)/
Repayment Borrowing of Repayment Repayment outflow from Purchase of
FROM FINANCING of bank loans bank loans of loan notes of bonds other Dividends own shares Total
ACTIVITIES £m £m £m £m £m £m £m £m
Debt 1,830 (1,830) 195 530 80 – – 805
Equity – – – – – 616 4 620
Total ​ ​ ​ ​ ​ ​ ​ 1,425

2018
Cash
CASH FLOWS ARISING (inflow)/
Repayment Borrowing of Repayment Issue of outflow from Purchase of
FROM FINANCING of bank loans bank loans of loan notes bonds other Dividends own shares Total
ACTIVITIES £m £m £m £m £m £m £m £m
Debt 1,074 (772) – (686) (43) – – (427)
Equity – – – – 5 557 – 562
Total ​ ​ ​ ​ ​ ​ ​ 135

28  CONTINGENT LIABILITIES

2019 2018
PERFORMANCE BONDS, GUARANTEES AND INDEMNITIES £m £m
Performance bonds, guarantees and indemnities (including those of associated undertakings)1 383 358

1. Excludes post employment obligations and borrowings (including finance and operating leases) recorded on the balance sheet or disclosed in note 30.

PERFORMANCE BONDS, GUARANTEES AND INDEMNITIES

The Company and certain subsidiary undertakings have, in the normal course of business, given guarantees and entered into
counter-indemnities in respect of such guarantees relating to the Group’s own contracts and/or the Group’s share of certain
contractual obligations of joint arrangements and associates. Where the Group enters into such arrangements, it does so in order to
provide assurance to the beneficiary that it will fulfil its existing contractual obligations. The issue of such guarantees and
indemnities does not therefore increase the Group’s overall exposure and the disclosure of such performance bonds, guarantees
and indemnities is given for information purposes only.

204  Compass Group PLC Annual Report 2019

28  CONTINGENT LIABILITIES (CONTINUED)
EUREST SUPPORT SERVICES
On 21 October 2005, the Company announced that it had instructed Freshfields Bruckhaus Deringer to conduct an investigation
into the relationships between Eurest Support Services (ESS) (a member of the Group), IHC Services Inc. (IHC) and the United
Nations (UN). Ernst & Young assisted Freshfields Bruckhaus Deringer in this investigation. On 1 February 2006, it was announced
that the investigation had concluded.

The investigation established serious irregularities in connection with contracts awarded to ESS by the UN. The work undertaken by
Freshfields Bruckhaus Deringer and Ernst & Young gave no reason to believe that these issues extended beyond a few individuals
within ESS to other parts of ESS or the wider Compass Group of companies.

The Group settled all outstanding civil litigation against it in relation to this matter in October 2006, but litigation continues between
competitors of ESS, IHC and other parties involved in UN procurement.

IHC’s relationship with the UN and ESS was part of a wider investigation into UN procurement activity being conducted by the United
States Attorney’s Office for the Southern District of New York, and with which the Group co-operated fully. The current status of that
investigation is uncertain and a matter for the US authorities. Those investigators could have had access to sources unavailable to
the Group, Freshfields Bruckhaus Deringer or Ernst & Young, and further information may yet emerge which is inconsistent with, or

Consolidated Financial Statements

additional to, the findings of the Freshfields Bruckhaus Deringer investigation, which could have an adverse impact on the Group.
The Group has, however, not been contacted by, or received further requests for information from, the United States Attorney’s
Office for the Southern District of New York in connection with these matters since January 2006. The Group has co-operated fully
with the UN throughout.

OTHER LITIGATION AND CLAIMS

The Group is also involved in various other legal proceedings incidental to the nature of its business and maintains insurance cover to
reduce financial risk associated with claims related to these proceedings. Where appropriate, provisions are made to cover any
potential uninsured losses.

The increasingly complex international corporate tax environment and an increase in audit activity from tax authorities means that
the potential for tax uncertainties and disputes has increased. The Group is currently subject to a number of audits and reviews in
jurisdictions around the world that primarily relate to complex corporate tax issues. None of these tax audits is currently expected to
have a material impact on the Group’s financial position. In addition, we continue to engage with tax authorities and other regulatory
bodies on both payroll and sales tax reviews, and compliance with labour laws and regulations. Again, we currently do not expect any
of these to have a material impact on the Group’s financial position.

In April 2019, the European Commission published its final decision on the Group Financing Exemption in the UK’s Controlled
Foreign Company legislation concluding that part of the legislation is in breach of EU State Aid rules. Like many other multinational
groups that have acted in accordance with the UK legislation in force at the time, the Group may be affected. The UK government
and UK-based multinational companies, including Compass, have appealed to the General Court of the European Union against the
decision. The UK government is required to start collection proceedings in advance of the appeal results and it is possible that the
Group will be required to make a payment in the year ending 30 September 2020. At present it is not possible to determine the
amount that the UK government will seek to collect. If the decision of the European Commission is upheld, we have calculated our
maximum potential liability to be £113 million at 30 September 2019. The final impact on the Group remains uncertain and our
current assessment is that no provision is required.

During the course of the year, the federal tax authorities in Brazil have issued a number of notices of deficiency which we have
formally objected to and which are now proceeding through the appeals process. These assessments relate primarily to the PIS /
COFINS treatment of certain food costs and the corporate income tax treatment of goodwill deductions. As at 30 September 2019,
the total amount assessed in respect of these matters is £44 million. The possibility of further assessments cannot be ruled out and
the judicial process is likely to take a number of years to conclude. Based on the opinion of our local legal advisors, we do not
currently consider it likely that we will have to settle a liability with respect to these matters, and on this basis no provision has been
recorded. We therefore do not currently expect any of these issues to have a material impact on the Group’s financial position.

OUTCOME
Although it is not possible to predict the outcome or quantify the financial effect of these proceedings, or any claim against the Group
related thereto, in the opinion of the directors, any uninsured losses resulting from the ultimate resolution of these matters will not
have a material effect on the financial position of the Group. The timing of the settlement of these proceedings or claims is uncertain.

Compass Group PLC Annual Report 2019  205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

29  CAPITAL COMMITMENTS

2019 2018
CAPITAL COMMITMENTS £m £m
Contracted for but not provided for 605 498

The majority of capital commitments are for intangible assets.

30 OPERATING LEASE AND CONCESSIONS COMMITMENTS

The Group leases offices and other premises under non-cancellable operating leases. The leases have varying terms, purchase
options, escalation clauses and renewal rights.

Future minimum rentals payable under non-cancellable operating leases and concessions agreements are as follows:
2019 2018
Operating leases Other Operating leases Other
Land and Other occupancy Land and Other occupancy
OPERATING LEASE AND buildings assets rentals buildings assets rentals
CONCESSIONS COMMITMENTS £m £m £m £m £m £m
Falling due within 1 year 81 90 61 70 71 75
Falling due between 2 and 5 years 221 167 106 188 127 154
Falling due in more than 5 years 241 27 108 150 11 162
Total 543 284 275 408 209 391

31  RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties of Compass Group PLC:

SUBSIDIARIES
Transactions between the ultimate Parent Company and its subsidiaries, and between subsidiaries, have been eliminated
on consolidation.

JOINT VENTURES
There were no significant transactions between joint ventures or joint venture partners and the rest of the Group during the year.

ASSOCIATES
The balances with associated undertakings are shown in note 15. There were no significant transactions with associated
undertakings during the year.

KEY MANAGEMENT PERSONNEL

The remuneration of directors and key management personnel is set out in note 4. During the year there were no other material
transactions or balances between the Group and its key management personnel or members of their close families.

206  Compass Group PLC Annual Report 2019

32  POST BALANCE SHEET EVENTS
There are no material post balance sheet events.

33  EXCHANGE RATES

2019 2018
AVERAGE EXCHANGE RATE FOR THE YEAR1
Australian Dollar 1.81 1.77
Brazilian Real 4.96 4.73
Canadian Dollar 1.69 1.73
Chilean Peso 875.59 850.39
Euro 1.13 1.13
Japanese Yen 140.53 149.06
New Zealand Dollar 1.92 1.93
Norwegian Krone 11.02 10.88
Turkish Lira 7.16 5.92
UAE Dirham 4.69 4.95

Consolidated Financial Statements

US Dollar 1.28 1.35

CLOSING EXCHANGE RATE AT 30 SEPTEMBER1

Australian Dollar 1.83 1.80
Brazilian Real 5.13 5.21
Canadian Dollar 1.63 1.69
Chilean Peso 897.37 860.15
Euro 1.13 1.12
Japanese Yen 133.18 148.12
New Zealand Dollar 1.97 1.97
Norwegian Krone 11.20 10.62
Turkish Lira 6.96 7.83
UAE Dirham 4.53 4.79
US Dollar 1.23 1.30

1. Average rates are used to translate the income statement and cash flow statement. Closing rates are used to translate the balance sheet. Only the most
significant currencies are shown.

Compass Group PLC Annual Report 2019  207

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

34  STATUTORY AND UNDERLYING RESULTS

2019 Adjustments 2019
Statutory Underlying
Notes £m 1 2 3 4 5 6 7 £m
Operating profit 2 1,601 54 12 190 25 – – – 1,882
Net loss on sale and closure
of businesses (7) – – – – – 7 – –
Net finance cost (125) – – – – – – 15 (110)
Finance income 12 – – – – – – – 12
Finance costs (122) – – – – – – – (122)
Other financing items (15) – – – – – – 15 –
Profit before tax 1,469 54 12 190 25 – 7 15 1,772
Income tax expense (351) (13) (2) (41) – – (3) (3) (413)
Tax rate 23.9% 23.3%
Profit for the year 1,118 41 10 149 25 – 4 12 1,359
Non-controlling interests (8) – – – – – – – (8)
Profit attributable to equity
shareholders of the Company 1,110 41 10 149 25 – 4 12 1,351
Average number of shares 1,586 1,586
BASIC EARNINGS PER SHARE
(PENCE) 7 70.0 2.6 0.6 9.4 1.6 – 0.2 0.8 85.2

2018 Adjustments 2018

Statutory Underlying
(restated1) (restated1)
Notes £m 1 2 3 4 5 6 7 £m
Operating profit 2 1,693 49 – – – 2 – – 1,744
Net loss on sale and closure of
businesses (58) – – – – – 58 – –
Net finance cost (112) – – – – – – (2) (114)
Finance income 6 – – – – – – – 6
Finance costs (120) – – – – – – – (120)
Other financing items 2 – – – – – – (2) –
Profit before tax 1,523 49 – – – 2 58 (2) 1,630
Income tax expense (385) (12) – – – (2) 10 1 (388)
Tax rate 25.3% 23.8%
Profit for the year 1,138 37 – – – – 68 (1) 1,242
Non-controlling interests (8) – – – – – – – (8)
Profit attributable to equity
shareholders of the Company 1,130 37 – – – – 68 (1) 1,234
Average number of shares 1,584 – – – – – – – 1,584
BASIC EARNINGS PER SHARE
(PENCE)2 7 71.3 2.4 – – – – 4.3 (0.1) 77.9

1. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.
2. Underlying constant currency earnings per share is based on a Group constant currency profit attributable to equity shareholders of the Company and
includes positive constant currency adjustment of £39 million net of £12 million constant currency adjustment to income tax expense.

208  Compass Group PLC Annual Report 2019

34  STATUTORY AND UNDERLYING RESULTS (CONTINUED)
The Executive Committee manages and assesses the performance of the Group using various underlying and other alternative
performance measures. These measures are not recognised under EU-adopted IFRS and may not be directly comparable with
alternative performance measures used by other companies. Underlying and other alternative performance measures are defined in
the glossary of terms on pages 246 and 247. Underlying operating profit is considered to better reflect ongoing trading, facilitate
meaningful year on year comparison and hence provides financial measures that, together with the results prepared in accordance
with adopted IFRS, provide better analysis of the results of the Group. In determining the adjustments to arrive at underlying result,
we use a set of established principles relating to the nature and materiality of individual items or group of items, including, for
example, events which (i) are outside the normal course of business, (ii) are incurred in a pattern that is unrelated to the trends in the
underlying financial performance of our ongoing business, or (iii) are related to business acquisitions or disposals as they are not part
of the Group’s ongoing trading business, and the associated cost impact arises from the transaction rather than from the continuing
business. Adjustments from statutory to underlying results are explained further below.

1. Acquisition related costs

Represent charges in respect of intangible assets acquired through business combinations, direct costs incurred as part of a
business combination or other strategic asset acquisitions and changes in consideration in relation to past acquisition activity.
See note 3 for details.

Consolidated Financial Statements

2. One-off pension charge
One-off pension charge in relation to GMP equalisation, see note 22 (page 191) for additional details.

3. Costs action programme charge

Charges related to actions taken to adjust our cost base, see note 3 for additional details.

4. Share of profit of joint ventures and associates held for sale

The Group’s share of profit of joint ventures and associates after these were classified as held for sale, see note 13 for additional details.

5. Tax on share of profit of joint ventures

Reclassification of tax on share of profit of joint ventures to income tax expense.

6. Net gain/(loss) on sale and closure of businesses

These represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets. See note 25 for
additional details.

7. Other financing items

Represent financing items including hedge accounting ineffectiveness and change in the fair value of investments. See note 5
for details.

Compass Group PLC Annual Report 2019  209

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

35  ORGANIC REVENUE AND ORGANIC PROFIT

Geographical segments
Central
North America Europe Rest of World Activities Group
£m £m £m £m £m
2019 ​ ​ ​ ​ ​
Combined sales of Group and share of equity accounted
joint ventures1 15,694 5,854 3,604 – 25,152
% growth reported rates 14.4% 1.6% (1.7%) – 8.7%
% growth constant currency 8.5% 1.6% 0.8% – 5.7%
Organic adjustments (104) (69) (194) – (367)
Organic revenue 15,590 5,785 3,410 – 24,785
% growth organic 7.7% 4.1% 4.3% – 6.4%
20182 ​ ​ ​ ​ ​
Combined sales of Group and share of equity accounted
joint ventures 13,718 5,762 3,667 – 23,147
Currency adjustments 743 (3) (92) – 648
Constant currency underlying revenue 14,461 5,759 3,575 – 23,795
Organic adjustments 11 (203) (306) – (498)
Organic revenue 14,472 5,556 3,269 – 23,297
2019 ​ ​ ​ ​ ​
Regional underlying operating profit1 1,290 368 285 (80) 1,863
Share of profit of associates1 10 8 1 – 19
Group underlying operating profit1 1,300 376 286 (80) 1,882
Underlying operating margin (excluding associates) 8.2% 6.3% 7.9% – 7.4%
% growth reported rates 14.9% (6.8%) 3.3% – 7.9%
% growth constant currency 9.0% (6.6%) 5.9% – 4.7%
Organic adjustments (5) – (23) – (28)
Regional underlying organic operating profit (excluding
associates) 1,285 368 262 (80) 1,835
Group underlying organic operating profit (including
associates)1 1,295 376 263 (80) 1,854
% growth organic 7.9% (8.0%) 7.4% – 3.8%
20182 ​ ​ ​ ​ ​
Regional underlying operating profit 1,123 395 276 (70) 1,724
Share of profit of associates 14 6 – – 20
Group underlying operating profit 1,137 401 276 (70) 1,744
Underlying operating margin (excluding associates) 8.2% 6.9% 7.5% ​ 7.4%
Currency adjustments – profit 61 (1) (7) – 53
Currency adjustments – associates 1 – – – 1
Regional constant currency underlying profit (excluding
associates) 1,184 394 269 (70) 1,777
Group constant currency underlying operating profit
(including associates) 1,199 400 269 (70) 1,798
Organic adjustments 7 6 (25) – (12)
Regional underlying organic operating profit (excluding
associates) 1,191 400 244 (70) 1,765
Share of profit from associates – constant currency 15 6 – – 21
Group underlying organic operating profit (including
associates) 1,206 406 244 (70) 1,786

1. Underlying revenue and underlying operating profit include share of profit of joint ventures and associates classified as held for sale during the year.
2. Prior year comparatives have been restated as a result of the Group’s retrospective adoption of IFRS 15 ‘Revenue from contracts with customers’. Additional
information about the impact of IFRS 15 is included in note 1.

210  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC
Country of %
PRINCIPAL SUBSIDIARIES Incorporation Holding Principal Activities
Ground Floor 35-51 Mitchell Street, McMahons Point, NSW 2060, Australia ​ ​ ​
Compass Group (Australia) Pty Limited Australia 100 Food and support services
​ ​ ​ ​
Chaussée de Haecht 1179, B-1130 Bruxelles, Belgium ​ ​ ​
Compass Group Belgilux S.A. Belgium 100 Food services
​ ​ ​ ​
Rua Tutoia, 119, Vila Mariana, São Paulo, 04007-000, Brazil ​ ​ ​
GR Serviços e Alimentação Ltda. Brazil 100 Food and support services
​ ​ ​ ​
1 Prologis Boulevard, Suite 400, Mississauga, Ontario L5W 0G2, Canada ​ ​ ​
Compass Group Canada Ltd. Groupe Compass Canada Ltée (iii) (iv) (v) (vi) (viii) Canada 100 Food and support services
​ ​ ​ ​
Av. del Valle 787, 5 floor, Huechuraba, Santiago, Chile ​ ​ ​
Compass Catering Y Servicios Chile Limitada Chile 100 Food and support services

Consolidated Financial Statements

​ ​ ​ ​
123 Avenue de la République – Hall A, 92320 Châtillon, France ​ ​ ​
Compass Group France Holdings SAS France 100 Holding company
Compass Group France SAS France 100 Food and support services
​ ​ ​ ​
Helfmann-Park 2, 65760, Eschborn, Germany ​ ​ ​
Compass Group Deutschland GmbH Germany 100 Holding company
Eurest Deutschland GmbH Germany 100 Food service to business and industry
Eurest Services GmbH Germany 100 Support services to business and industry
Medirest GmbH & Co OHG Germany 100 Food service to the healthcare and senior
living market
​ ​ ​ ​
Via Angelo Scarsellini, 14, 20161, Milano, Italy ​ ​ ​
Compass Group Italia S.p.A. Italy 100 Food service and support services
​ ​ ​ ​
Hamarikyu Kensetsu Plaza, 5-5-12, Tsukiji, Chuo-ku, Tokyo 104-0045, Japan ​ ​ ​
Seiyo Food-Compass Group, Inc. Japan 100 Food and support services
​ ​ ​ ​
Laarderhoogtweg 11, 1101 DZ, Amsterdam, Netherlands ​ ​ ​
Compass Group International B.V. Netherlands 100 Holding company
Compass Group Nederland B.V. Netherlands 100 Food and support services
Compass Group Nederland Holding B.V. Netherlands 100 Holding company
​ ​ ​ ​
Drengsrudbekken 12, 1383, PO Box 74, NO-1371, Asker, Norway ​ ​ ​
Compass Holding Norge A/S Norway 100 Holding company
​ ​ ​ ​
Calle R, s/n, Mercapalma, 07007 Palma de Mallorca, Baleares, Spain ​ ​ ​
Compass Group Holdings Spain, S.L.U. Spain 100 Holding company
​ ​ ​ ​
Oberfeldstrasse 14, 8302, Kloten, Switzerland ​ ​ ​
Compass Group (Schweiz) AG Switzerland 100 Food and support services
Restorama AG Switzerland 100 Food service
​ ​ ​ ​
İçIerenköy Mah. Yesil vadi sokak, No: 3 D: 12-13-14, 34752 Atasehir, Istanbul, ​ ​ ​
Turkey
Sofra Yemek Űretim Ve Hizmet A.Ş. (iii) Turkey 100 Food and support services

Compass Group PLC Annual Report 2019  211

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

Country of %
PRINCIPAL SUBSIDIARIES Incorporation Holding Principal Activities
Parklands Court, 24 Parklands, Birmingham Great Park, Rubery, Birmingham,
B45 9PZ, United Kingdom
Compass Contract Services (U.K.) Limited UK 100 Food and support services
Compass Group, UK and Ireland Limited UK 100 Holding company
Foodbuy Europe Limited (iii) (iv) UK 100 Client procurement services management in
the UK

Compass House, Guildford Street, Chertsey, Surrey, KT16 9BQ, United

Kingdom
Compass Group Holdings PLC (i) (iii) UK 100 Holding company and corporate activities
Hospitality Holdings Limited (i) UK 100 Intermediate holding company

2710 Gateway Oaks Drive, Suite 150N, Sacramento, CA 95833-3505, USA

Bon Appétit Management Co. (viii) USA 100 Food service

251 Little Falls Drive, Wilmington, DE 19808, USA

Compass Group USA Investments Inc. USA 100 Holding company
Compass Group USA, Inc. (viii) USA 100 Food and support services
Crothall Services Group USA 100 Support services to the healthcare market
Foodbuy, LLC USA 100 Purchasing services in North America
Restaurant Associates Corp. USA 100 Fine dining facilities

80 State Street, Albany, NY 12207-2543, USA

Flik International Corp. USA 100 Fine dining facilities

801 Adlai Stevenson Drive, Springfield, IL 62703, USA

Levy Restaurants Limited Partnership USA 100 Fine dining and food service at sports and
entertainment facilities

40 Technology Pkwy South, #300, Norcross, GA 30092, USA

Morrison Management Specialists, Inc. (viii) USA 100 Food service to the healthcare and senior
living market

212  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
Chez: Eurojapan Résidence No.23, RN n°3 Chaussée de Haecht 1179, B-1130
BP 398, Hassi Messaoud, Algeria Brussels, Belgium
Eurest Algerie SPA Algeria 100 Compass Group Service Solutions S.A. Belgium 100
Rua Dr. Ayres de Menezes Street, No.120, F.L.R. Holding S.A. (ii) Belgium 100
District Maianga, Maianga Municipality,
Luanda, Angola
Haachtsesteenweg 1179, 1130 Brussels,
Express Support Services, Limitada Angola 100 Belgium
N.V. Gourmet Invent Belgium 100
Esteban Echeverría 1050, 6th floor, Vicente
Lopez (1602), Buenos Aires, Argentina
Rua Orissanga, 200, 1st Floor,
Servicios Compass de Argentina S.A. Argentina 100 Mirandópolis, São Paulo, 04. 052-030,
Brazil
Ground Floor 35 – 51 Mitchell Street, Clean Mall Serviços Ltda. Brazil 100
McMahons Point, NSW 2060, Australia
Compass Australia PTY Ltd (ii) Australia 100 Rua Orissanga, 200, 3rd Floor,

Consolidated Financial Statements

Compass (Australia) Catering & Services Australia 100 Mirandópolis, São Paulo, 04.052-030,
PTY Ltd (iii) (iv) Brazil
Compass Group B&I Hospitality Services Australia 100 GRSA Serviços LTDA. Brazil 100
PTY Ltd
Compass Group Defence Hospitality Services Australia 100 Craigmuir Chambers, PO Box 71, Roadtown,
PTY Ltd Tortola, VG1110, British Virgin Islands
Compass Group Education Hospitality Australia 100 Compass Group Holdings (BVI) Limited British Virgin 100
Services PTY Ltd Islands
Compass Group Healthcare Hospitality Australia 100
Services PTY Ltd
c/o Action Group Ltd., No.12, Street 614,
Compass Group Health Services Pty Ltd Australia 100 Sangkat Boeung Kok II, Khan Tuol Kork,
Compass Group Management Services Australia 100 Phnom Penh City, Cambodia
PTY Ltd Compass Group (Cambodia) Co. Ltd. (ii) Cambodia 100
Compass Group Relief Hospitality Services Australia 100
PTY Ltd
100, Rue n° 1044 Hydrocarbures,
Compass Group Remote Hospitality Services Australia 100 Bonapriso, BP 5767, Douala, Cameroon
PTY Ltd
Eurest Cameroun SARL (ii) Cameroon 100
Delta Facilities Management PTY Ltd Australia 100
Eurest Camp Logistics Cameroun SARL (ii) Cameroon 100
Delta FM Australia PTY Ltd Australia 100
Eurest (Australia) – Victoria PTY Ltd Australia 100
1 Prologis Boulevard, Suite 400,
Eurest (Australia) Food Services – Australia 100 Mississauga, Ontario L5W 0G2, Canada
NSW Pty Ltd
Canteen of Canada Limited Canada 100
Eurest (Australia) Food Services – Australia 100
Compass Canada Support Canada 100
Wollongong PTY Ltd
Services Ltd (iii) (iv) (v) (vi) (viii)
Eurest (Australia) Food Services PTY Ltd Australia 100
Compass Group Ontario Ltd Canada 100
Eurest (Australia) Licence Holdings PTY Ltd Australia 100
Eurest (Australia) PTY Ltd Australia 100
350 – 7th Avenue SW, Suite 3400, Calgary,
Foodbuy Pty Ltd Australia 100 AB T2P 3N9, Canada
LAPG Education PTY Ltd Australia 100 2104797 Alberta Ltd (iii) (iv) (v) (vi) (viii) Canada 100
LAPG PTY Ltd Australia 100 City Coin Vending Services Ltd (iii) (iv) (v) (viii) Canada 100
Life’s A Party Group PTY Ltd Australia 100
Life’s A Party PTY Ltd Australia 100 Suite 2300, Bentall 5, 550 Burrard Street,
Omega Security Services PTY Ltd Australia 100 Vancouver, BC V6C 2B5, Canada
Restaurant Associates (Australia) PTY Ltd Australia 100 Tejazz Management Services Inc. Canada 100
Sargem PTY Ltd Australia 100
1969 Upper Water Street, Purdy’s Wharf
Level 22, 135 King Street, Sydney, Tower II, Suite 1300, Halifax, NS B3J 3R7,
NSW 2000, Australia Canada
MBM Integrated Services Pty (ii) Australia 100 Crothall Services Canada Inc. (iii) (iv) Canada 100

IZD Tower, Wagramer Strasse 19/4. Stock, 1959 Upper Water Street, Suite 1100,
1220 Wien, Austria Halifax, Nova Scotia, B3J 3E5, Canada
Compass Group Austria Holdings One GmbH Austria 100 East Coast Catering (NS) Limited Canada 100
Compass Group Austria Holdings Two GmbH Austria 100
Eurest Restaurationbetriebs GmbH Austria 100
Kunz Gebäudereinigung GmbH Austria 100

Compass Group PLC Annual Report 2019  213

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
30 Queen’s Road, St. John’s, Newfoundland 195, Arch. Makariou III Avenue, Neocleous
and Labrador, A1C 2A5, Canada House, 3030 Limassol, Cyprus
East Coast Catering Limited (iii) (iv) (viii) (v) Canada 100 ESS Design & Build Ltd (ii) Cyprus 100
Long Harbour Catering Limited Partnership (x) Canada 100 Eurest Support Services (Cyprus) Cyprus 100
Long Harbour Catering Limited Canada 100 International Ltd

421 7th Avenue SW, Suite 1600, Calgary, Jankovcova, 1603/47a, Holešovice 170 00,
Alberta, T2P 4K9, Canada Prague 7, Czech Republic
Great West Catering Ltd Canada 100 Compass Group Czech Republic s.r.o. Czech Republic 100
Tamarack Catering Ltd Canada 100 SCOLAREST- zařízení školního stravování Czech Republic 100
spol. s.r.o

2580 Rue Dollard, Lasalle, Quebec, H8N

1T2, Canada Rued Langgards Vej 8, 1. sal, 2300
København S, DK, Denmark
Groupe Compass (Québec) Ltée (iii) (iv) (v) (vi) (viii) Canada 100
Compass Group Danmark A/S Denmark 100

550 Burrard Street, Suite 2300, Bentall 5,

P.O. Box 30, Vancouver, British Columbia, PL 1271, 00101, Helsinki, 00101, Finland
V6C 2B5, Canada Compass Group Finland OY Finland 100
Town Square Food Services Ltd Canada 100
123 Avenue de la République – Hall A,
1177 West Hastings Street, Suite 1900, 92320 Châtillon, France
Vancouver, British Columbia, 7000 Set Meal SAS France 100
Canada V6E 2K3 Academie Formation Groupe Compass SAS France 100
Wosk’s Vending Service Ltd. (iii) (iv) Canada 100 Caterine Restauration SAS France 100
Delisaveurs SAS France 100
1700 – 360 Main Street, Winnipeg, Eurest International SNC France 100
Manitoba, Canada R3C 3Z3
Eurest Sports & Loisirs SAS France 100
Gourmet Coffee Specialists Ltd. (iii) (iv) (v) (vi) Canada 100
Evhrest SAS France 100
La Puyfolaise de Restauration SAS France 100
Av. del Valle 787, 5th floor, Huechuraba,
Levy Restaurants France SAS France 100
Santiago, Chile
Mediance SAS France 100
Cadelsur S.A. Chile 100
Memonett SAS France 100
Compass Catering S.A. Chile 100
Servirest SAS France 100
Compass Servicios S.A. Chile 100
SHRM Angola SAS (ii) France 100
Scolarest S.A. Chile 100
Société De Prestations En Gestion France 100
Immobiliere SAS
No. 1999 Floor 2, Xin Zhu Road, Minhang
Société Nouvelle Lecocq SAS France 100
District, 200237, China
Sud Est Traiteur SAS France 100
Compass (China) Management Services China 100
Company Limited
Rue des Artisans, ZA de Bel Air, 12000
Rodez, France
Room 532 Floor 5 No. 28 Lane 2777, East
Jinxiu Road, Pudong District, Shanghai Central Restauration Martel (CRM) France 100
201206, China
Shanghai Eurest Food Technologies China 100 Zone Artisanale, 40500 Bas Mauco, France
Service Co., Ltd. Culinaire Des Pays de L’Adour SAS France 100

Autopista Norte No. 235 – 71, Bogota D.C., 40, Bd de Dunkerque, 13002 Marseille,
Colombia France
Compass Group Services Colombia S.A. Colombia 100 Société International D’Assistance SA (ii) France 100

Enceinte de Brometo Centre Ville, BP 5208, Lieu Dit la Prade, 81580 Soual, France
Pointe-Noire, The Democratic Republic of Occitanie Restauration SAS France 100
the Congo
Eurest Services Congo SARL (ii) Congo 100
3 rue Camille Claudel Atlanparc Bat.M,
Zone Kerluherne, CS 20043, 56890
Plescop, France
Oceane de Restauration SAS France 100

214  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
Rue Eugène Sué, Zone Industrielle de 3rd Floor, 43a, Yeats Way, Parkwest
Blanzat, 03100 Montluçon, France Business Park, Dublin 12, Ireland
Sogirest SAS France 100 Amstel Limited (ii) Ireland 100
Catering Management Ireland Limited (ii) Ireland 100
ZONE OPRAG, (Face á Bernabé Nouveau Cheyenne Limited (ii) Ireland 100
Port), BP 1292, Port Gentil, Gabon Compass Catering Services, Ireland Limited Ireland 100
Eurest Support Services Gabon SA Gabon 100 COH Ireland Investments Unlimited Ireland 100
Company (viii)(ix)
Helfmann-Park 2, 65760, Eschborn, Germany Drumburgh Limited (ii) Ireland 100
Compass Group GmbH Germany 100 Management Catering Services Limited Ireland 100
Eurest Bremen GmbH Germany 100 National Catering Limited (ii) Ireland 100
Eurest Köln GmbH Germany 100 Rushmore Investment Company Limited (ii)(viii) Ireland 100
Eurest Süd GmbH Germany 100 Sutcliffe Ireland Limited Ireland 100
Food Affairs GmbH Germany 100 Zadca Limited (ii) Ireland 100

Consolidated Financial Statements

Kanne Café GmbH Germany 100
Menke Menue GmbH Germany 100 12-14 Finch Road, Douglas, IM99 1TT,
Royal Business Restaurants GmbH Germany 100 Isle of Man
S.B. Verwaltungs GmbH (ii) Germany 100 Consolidated Services Limited Isle of Man 100

Sankt-Florian-Weg 1, 30880, Laatzen, Tower House, Loch Promenade, Douglas,

Germany IM1 2LZ, Isle of Man
Eurest West GmbH & Co. KG Germany 100 Queen’s Wharf Insurance Services Limited (viii) Isle of Man 100
orgaMed Betriebsgesellschaft fűr Germany 100
Zentralsterilisationen GmbH Shin-Hie Building 2nd Floor, 3-3-3,
plural Gebäudemanagement GmbH Germany 100 Hakataeki-Higashi, Hakata-ku, Fukuoka-
City, Fukuoka-Prefecture, 812-0013 Japan
plural Personalservice GmbH Germany 100
Eishoku-Medix, Inc. Japan 100
plural servicepool GmbH Germany 100

Hamarikyu Kensetsu Plaza, 5-5-12, Tsukiji,

Pfaffenwiese, 65929 Frankfurt/M., Germany
Chuo-ku, Tokyo 104-0045, Japan
LPS Event Gastronomie GmbH Germany 100
Eurest Japan, Inc. Japan 100
Fuyo, Inc. Japan 100
Zum Fliegerhorst 1304, 63526 Erlensee,
MFS, Inc. Japan 100
Germany
Nihon Kyushoku Service, Inc. Japan 100
Foodbuy CE GmbH Germany 100
Seiyo Food-Compass Group Holdings, Inc. Japan 100
M.S.G. Frucht GmbH Germany 100

1-14-2, Kurumada-cho, Showa-ku,

PO Box 119, Martello Court, Admiral Park,
Nagoya-City, Aichi-Prefecture,
St Peter Port, Guernsey, GY1 3HB
466-0001, Japan
Compass Group Finance Ltd Guernsey 100
Sun Food Inc. Japan 100

Room 805, 8/F, New Kowloon Plaza, 38 Tai

44 Esplanade, St Helier, Jersey, JE4 9WG
Kok Tsui Road, Kowloon, Hong Kong
Malakand Unlimited Jersey 100
Compass Group Hong Kong Ltd Hong Kong 100
Encore Catering Ltd Hong Kong 100
060011, Atyrauskaya Oblast, Atyrau City,
Shing Hin Catering Group Ltd Hong Kong 100
Beibarys Sultan Avenue 506, Kazakhstan
Compass Kazakhstan LLP Kazakhstan 100
Irinyi József u. 4-20. B épület, H-1117
TOO Eurest Support Services LLP Kazakhstan 100
Budapest, Hungary
TOO ESS Support Services LLP Kazakhstan 100
Eurest Étteremüzemeltető Korlátolt Hungary 100
Felelősségű Társaság
209/8919 Sigma Road Off Enterprises
Road, PO BOX 14 662, Nairobi, Kenya
Unit #426, 4th Floor, Tower A, Space I
– Tech Park Sohna Road, Sector 49 Kenya Oilfield Services Ltd (ii) Kenya 100
Gurgaon, Gurgaon HR 122018 IN, India
Compass Group (India) Support Services India 100
Private Ltd
Compass India Support Services Private Limited India 100

Compass Group PLC Annual Report 2019  215

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
19, Rue Léon Laval, L-3372 Leudelange, Luzernestraat 57, 2153 GM, Nieuw-Vennep,
Luxembourg Netherlands
Automat’ Services SARL Luxembourg 100 Famous Flavours B.V. (viii) Netherlands 100
Eurest Luxembourg S.A. Luxembourg 100
IMMO Capellen S.A. Luxembourg 100 Stationsweg 95, 6711 PM Ede, Netherlands
Innoclean S.A. Luxembourg 100 Xandrion B.V. Netherlands 100
Novelia Senior Services S.A. Luxembourg 100
85 Avenue du Général de Gaulle, Immeuble
Level 21, Suite 21.01, The Gardens South Carcopino 3000, BP 2353, 98846 Nouméa
Tower, Mid Valley City, Lingkaran Syed Cedex, New Caledonia
Putra, 59200 Kuala Lumpur, Malaysia Eurest Caledonie SARL (ii) New Caledonia 100
Compass Group Malaysia Sdn Bhd Malaysia 100
Level 3, 15 Sultan Street, Ellerslie 1051,
50-8-1, TKT.8, Wsima UOA Damansara, New Zealand
50 Jalan. Dungun, Damansara Heights, Compass Group New Zealand Limited New Zealand 100
Kuala Lumpur, 50490, Malaysia Crothall Services Group Limited (ii) New Zealand 100
S.H.R.M. Sdn. Bhd. (ii) Malaysia 100 Eurest NZ Limited (ii) New Zealand 100

Calle Jaime Balmes 11, Oficina 101 letra D, Drengsrudbekken 12, 1383, PO Box 74,
Colonia Los Morales Polanco, Alcaldía NO-1371, Asker, Norway
Miguel Hidalgo, 11510 Ciudad de México,
Eurest A/S (iii) (iv) Norway 100
Mexico
Eurest Proper Meals de Mexico Mexico 100
S.A. de C.V. (iii) (iv) Forusparken 2, 4031 Stavanger, Postboks
8083 Stavanger Postterminal, 4068,
Servicios Corporativos Eurest-Proper Meals Mexico 100
Stavanger, Norway
de Mexico S.A. De C.V. (iii) (iv)
ESS Mobile Offshore Units A/S Norway 100
ESS Support Services A/S Norway 100
c/o 251 Little Falls Drive, Wilmington,
DE 19808, USA
Food Works of Mexico, Mexico 100 c/o Warner Shand Lawyers Waigani, Level 1
S. de R.L. de C.V. (ii) (iii) (iv) RH Hypermarket, Allotment 1 Section 479
(off Kennedy Road), Gordons NCD, Papua
Food Works Services of Mexico, S. de R.L. Mexico 100
New Guinea
De C.V. (ii) (iii) (iv)
Eurest (PNG) Catering & Services Ltd (ii) Papua New 100
Guinea
Laarderhoogtweg 11, 1101 DZ, Amsterdam,
Netherlands
Unit 2410 24th flr City & Land Mega Plaza
Aurora HoldCo B.V. Netherlands 100
Adb Ave. Ortigas Ctr. San Antonio, Pasig
CGI Holdings (2) B.V. Netherlands 100 City 1605, Philippines
Compass Group Holding B.V. Netherlands 100 Compass Group Philippines Inc (ii) Philippines 100
Compass Group Finance Netherlands B.V. Netherlands 100
Compass Group International 10 B.V. (ii) Netherlands 100 Ul. Olbrachta 94, 01-102 Warszawa, Poland
Compass Group International 2 B.V. Netherlands 100 Compass Group Poland Sp. Z o.o. Poland 100
Compass Group International 3 B.V. Netherlands 100
Compass Group International 4 B.V. Netherlands 100 Edíficio Prime, Avenida da, Quinta Grande,
Compass Group International 5 B.V. Netherlands 100 53-60, Alfragide 2614-521 Amadora,
Compass Group International 6 B.V. (ii) Netherlands 100 Portugal
Compass Group International 9 B.V. Netherlands 100 Eurest (Portugal) – Sociedade Europeia de Portugal 100
Restaurantes, Lda.
Compass Group International ESS Netherlands 100
Shanghai B.V. Eurest Catering & Services Group Portugal, Lda. Portugal 100
Compass Group International Finance 1 B.V. Netherlands 100
Compass Group International Finance 2 B.V. Netherlands 100 Bucureşti Sectorul 4, Strada Sold.,
Ilie Şerban, Nr. 8B., Romania
Compass Group Shanghai Eurest B.V. (ii) Netherlands 100
Eurest ROM SRL Romania 100
Compass Group Vending Holding B.V. Netherlands 100
Compass Hotels Chertsey B.V. Netherlands 100
Eurest Services B.V. Netherlands 100
Eurest Support Services (ESS) B.V. Netherlands 100
Eurest Support Services Sakhalin B.V. (ii) Netherlands 100
Stichting Forte International Netherlands 100

216  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
7 Gasheka Street, Bld. 1, 123056, Moscow, c/o Ueltschi Solutions GmbH, Gwattstrasse
Russia 8, CH-3185 Schmitten, Switzerland
Aurora Rusco OOO Russia 100 Sevita AG (in liquidation) (ii) Switzerland 100
Sevita Group GmbH Switzerland 100
20 Kulakova Street, Bld 1 , Premises III,
Floor 4, Room 2 ,Moscow, Russia İçerenköy Mah. Yesil vadi sokak, No: 3 D:
Compass Group Rus OOO Russia 100 12 9, 34752 Atasehir, Istanbul, Turkey
Euroserve Gűvenlik A.Ş. Turkey 100
11 Changi South Street 3, Builders Shop
Building, #04-02/03, 486122, Singapore İçerenköy Mah. Yesil vadi sokak, No: 3 D:
Compass Group (Singapore) PTE Ltd (iii) (iv) Singapore 100 12 10, 34752 Atasehir, Istanbul, Turkey
SHRM Far East Pte Ltd (ii) Singapore 100 Euroserve Hizmet ve işletmecilik A.Ş. Turkey 100

8 Marina Boulevard, # 05-02, Marina Bay Dubai Airport Free Zone, Dubai, United
Financial Centre, 018981, Singapore Arab Emirates

Consolidated Financial Statements

Compass Group Asia Pacific PTE. Ltd Singapore 100 Compass Camea FZE UAE 100

Karadžičova 2, Staré mesto, 811 09 Parklands Court, 24 Parklands, Birmingham

Bratislava, Slovakia Great Park, Rubery, Birmingham, B45 9PZ,
Compass Group Slovakia s. r. o. Slovakia 100 United Kingdom
14Forty Limited (ii) UK 100
Calle Frederic Mompou 5, planta 5a, 3 Gates Services Limited (ii) UK 100
Edificio Euro 3, 08960, San Just Desvern, A.C.M.S. Limited (ii) UK 100
Barcelona, Spain Bateman Catering Limited (ii) (vii) UK 100
Asistentes Escolares, S.L. Spain 100 Bateman Healthcare Services Limited (ii) UK 100
Eurest Catalunya, S.L.U. Spain 100 Baxter and Platts Limited (iii) (iv) (v) UK 100
Medirest Social Residencias, S.L.U. Spain 100 Bromwich Catering Limited (ii) UK 100
Business Clean Limited (ii) UK 100
Calle Castilla 8-10 – C.P. 50.009, Zaragoza, Capitol Catering Management Services UK 100
Spain Limited
Servicios Renovados de Alimentacion, S.A.U. Spain 100 Carlton Catering Partnership Limited (ii) (iii) UK 100
Castle Independent Limited UK 100
Calle Pinar de San Jose 98, Planta 1a, Cataforce Limited (ii) UK 100
28054, Madrid, Spain
Caterexchange Limited (ii) UK 100
Eurest Club de Campo, S.L.U. Spain 100
Caterskill Group Limited (ii) UK 100
Eurest Servicios Feriales, S.L.U. Spain 100
Caterskill Management Limited (ii) UK 100
Chalk Catering Ltd (ii) UK 100
Poligono Ugaldeguren 1, Parcela 7,
Chartwells Limited (ii) UK 100
48160 Derio (Vizcaya), Spain
Circadia Limited (ii) UK 100
Eurest Euskadi S.L.U. Spain 100
Cleaning Support Services Limited (ii) UK 100
Compass Accounting Services Limited (ii) UK 100
Calle R, s/n, Mercapalma, 07007 Palma de
Mallorca, Baleares, Spain Compass Catering Services Limited (ii) UK 100
Compass Group Holdings Spain, S.L.U. Spain 100 Compass Cleaning Services Limited (ii) UK 100
Levy Compass Group Holdings, S.L. (ii)
Spain 100 Compass Contract Services Limited (ii) UK 100
Compass Contracts UK Limited (ii) (viii) UK 100
Box 1222, 164 28, Kista, Sweden Compass Experience Limited (ii) (vii) UK 100
Compass Group AB Sweden 100 Compass Food Services Limited UK 100
Compass Group Sweden AB Sweden 100 Compass Group Medical Benefits Limited (ii) UK 100
Compass Mobile Catering Limited (ii) UK 100
c/o BDO AG, Industriestrasse 53 6312 Compass Office Cleaning Services Limited (ii) UK 100
Steinhausen, Switzerland Compass Payroll Services Limited (ii) UK 100
Creative New Food Dream Steam GmbH Switzerland 100 Compass Planning and Design Limited (ii) UK 100
Compass Purchasing Limited UK 100
Oberfeldstrasse 14, 8302, Kloten, Compass Restaurant Properties Limited (ii) (vii) UK 100
Switzerland Compass Road Services Limited (ii) UK 100
Eurest Services (Switzerland) AG Switzerland 100 Compass Security Limited (ii) (vii) UK 100
Royal Business Restaurants GmbH Switzerland 100 Compass Security Oldco Group Limited (ii) UK 100
Compass Security Oldco Holdings Limited (ii) UK 100

Compass Group PLC Annual Report 2019  217

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
Compass Security Oldco Investments Limited (ii) UK 100 P & C Morris (Catering) Ltd (ii) (vii) UK 100
Compass Services (Midlands) Limited (ii) UK 100 P & C Morris Catering Group Limited (ii) UK 100
Compass Services for Hospitals Limited (ii) (viii) UK 100 Payne & Gunter Limited UK 100
Compass Services Group Limited UK 100 PDM Training and Compliance Services UK 100
Compass Services Limited (ii) UK 100 Limited (ii)
Compass Services Trading Limited (ii) UK 100 Pennine Services Limited (ii) UK 100
Compass Services, UK and Ireland Limited UK 100 Peter Parfitt Leisure Overseas Travel Limited UK 100
Compass Services (U.K.) Limited UK 100 Peter Parfitt Sport Limited (ii) (vii) UK 100
Compass Staff Services Limited (ii)
UK 100 PPP Infrastructure Management Limited UK 100
Cookie Jar Limited (ii)
UK 100 Prideoak Limited (ii) UK 100
CRBS Resourcing Limited (ii) UK 100 QCL Limited (ii) UK 100
CRN 1990 (Four) Limited (ii) UK 100 Reliable Refreshments Limited UK 100
Customised Contract Catering Limited (ii) UK 100 Rhine Four Limited (ii)(vii) UK 100
Cygnet Food Holdings Limited (ii)
UK 100 Roux Fine Dining Limited (ii) UK 100
Cygnet Foods Limited UK 100 Scolarest Limited UK 100
Dine Contract Catering Limited UK 100 Security Office Cleaners Limited (ii) UK 100
DRE Developments Limited (ii) UK 100 Selkirk House (CVH) Limited (ii) UK 100
Eaton Catering Limited (ii)
UK 100 Selkirk House (FP) Limited (ii) (iii) (iv) (v) UK 100
Eaton Wine Bars Limited (ii) UK 100 Selkirk House (GHPL) Limited (ii) (viii) UK 100
Eurest Airport Services Limited (ii) UK 100 Selkirk House (GTP) Limited (ii) UK 100
Eurest Defence Support Services Limited (ii) UK 100 Selkirk House (WBRK) Limited UK 100
Eurest Offshore Support Services Limited (ii) (viii)
UK 100 Shaw Catering Company Limited UK 100
Eurest Prison Support Services Limited (ii)
UK 100 Ski Class Limited (ii) UK 100
Eurest UK Limited (ii) UK 100 Solutions on Systems Ltd (ii) UK 100
Everson Hewett Limited (iii) (iv) UK 100 Summit Catering Limited UK 100
Facilities Management Catering Limited (ii) UK 100 Sunway Contract Services Limited UK 100
FADS Catering Limited (ii)
UK 100 Sutcliffe Catering Midlands Limited (ii) UK 100
Fairfield Catering Company Limited (ii) UK 100 Sutcliffe Catering South East Limited (ii) UK 100
Fingerprint Managed Services Limited (ii) UK 100 Sycamore Newco Limited UK 100
Funpark Caterers Limited (ii) (iii) UK 100 The Bateman Catering Organization UK 100
Limited (ii) (viii)
Goodfellows Catering Management Services UK 100
Limited The Cuisine Centre Limited (ii) UK 100
Gruppo Events Limited (ii)
UK 100 THF Oil Limited (ii) UK 100
Hallmark Catering Management Limited (ii) UK 100 Tunco (1999) 103 Limited (ii) UK 100
Hamard Catering Management Services UK 100 Vendepac Holdings Limited (viii) UK 100
Limited (ii) (vii) Waseley Fifteen Limited (ii) UK 100
Hamard Group Limited (ii) UK 100 Waseley Nominees Limited (ii) UK 100
Henry Higgins Limited (ii) UK 100 Wembley Sports Arena Limited (ii) UK 100
Hospital Hygiene Services Limited (ii) UK 100 Wheeler’s Restaurants Limited (ii) (vii) UK 100
ICM Five Star Limited (ii) UK 100 Woodin & Johns Limited UK 100
Integrated Cleaning Management Limited UK 100
Integrated Cleaning Management Support UK 100
Services Limited
Keith Prowse Limited (ii) UK 100
Kennedy Brookes Finance Limited (ii) UK 100
Knott Hotels Company of London (ii) UK 100
Langston Scott Limited (ii) UK 100
Leisure Support Services Limited (iii) (iv) UK 100
Leith’s Limited (ii) UK 100
Letheby & Christopher Limited UK 100
Meal Service Company Limited (ii) UK 100
Milburns Catering Contracts Limited (ii) UK 100
Milburns Limited (ii) UK 100
Milburns Restaurants Limited (ii) (iii) UK 100
National Leisure Catering Limited (ii) UK 100
NLC (Holdings) Limited (ii) UK 100
NLC (Wembley) Limited (ii) UK 100

218  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
Compass House, Guildford Street, Chertsey, 8040 Excelsior Drive, Suite 400, Madison,
Surrey, KT16 9BQ, United Kingdom WI 53717, USA
Audrey (London) Limited (ii) UK 100 Ace Foods, Inc. USA 100
Audrey Investments Limited (ii) UK 100
Bateman Services Limited (ii) UK 100 2710 Gateway Oaks Drive, Suite 150N,
Compass Group Finance No.2 Limited (i) UK 100 Sacramento, CA 95833-3505, USA
Compass Group Finance No.3 Limited UK 100 Bon Appétit Management Company USA 100
Foundation
Compass Group Finance No.4 Limited (i) (iii) (iv) (viii) UK 100
Cosmopolitan Catering, LLC USA 100
Compass Group Finance No.5 Limited (ii) (xi) UK 100
CulinArt of California,Inc. USA 100
Compass Group North America Investments UK 100
No.2 Rainbow Vending, Inc. USA 100
Compass Group North America Investments UK 100
Limited 211 E. 7th Street, Suite 620, Austin, TX
Compass Group Pension Trustee Company UK 100 78701-3218, USA
Limited (ii) Bamco Restaurants of Texas LLC USA 100

Consolidated Financial Statements

Compass Group Procurement Limited UK 100 Levy Premium Foodservice, L.L.C. (ii) USA 100
Compass Group Trustees Limited (ii) UK 100 Morrison’s Health Care of Texas, Inc. USA 100
Compass Healthcare Group Limited (ii) (viii) UK 100 University Food Services, Inc. USA 100
Compass Hospitality Group Holdings Limited (ii) UK 100
Compass Hospitality Group Limited (ii) UK 100 2345 Rice Street, Suite 230, Roseville, MN
Compass Hotels Chertsey (iii) UK 100 55113, USA
Compass Nominee Company Number UK 100 Canteen One Company, Inc. USA 100
Fourteen Limited (ii) Canteen One Consolidation Services, LLC USA 100
Compass Overseas Holdings Limited UK 100 Canteen One, LLC USA 100
Compass Overseas Holdings No.2 Limited UK 100 Street Eats Limited USA 100
Compass Overseas Services Limited (ii) UK 100 Visinity, LLC USA 100
Compass Pension Trustees Limited (ii) UK 100
Compass Quest Limited (ii) UK 100 251 Little Falls Drive, Wilmington, DE
Compass Secretaries Limited (ii) UK 100 19808, USA
Compass Site Services Limited (ii) (vii) UK 100 Canteen One, Inc. USA 100
Compass UK Pension Trustee Co Limited (ii) UK 100 Cataforce, Inc. USA 100
Crisp Trustees Limited (ii) UK 100 Compass LCS, LLC USA 100
Gogmore (ii)
UK 100 Compass LV, LLC USA 100
Meritglen Limited (ii) (vii) (viii) UK 100 Compass Paramount, LLC USA 100
New Famous Foods Limited (ii) UK 100 Concierge Consulting Services, LLC USA 100
Nextonline Limited (iii) (iv) UK 100 Convenience Foods International, Inc. USA 100
Riversdell (ii)
UK 100 Crothall Healthcare Inc. USA 100
Sevita (UK) Limited UK 100 Crothall Laundry Services Inc. USA 100
The Compass Group Foundation UK 100 Eurest Services, Inc. USA 100
The Excelsior Insurance Company Limited UK 100 Facilities Holdings, LLC USA 100
Flik One, LLC USA 100
Suite D, Pavilion 7 Kingshill Park, Venture Levy Oklahoma, Inc. USA 100
Drive, Arnhill Business Park, Westhill, Levy Prom Golf, LLC USA 100
Aberdeenshire, AB32 6FL, United Kingdom Morrison Investment Company, Inc. USA 100
CCG (UK) Ltd (ii) UK 100 RAC Holdings Corp. (iii) USA 100
Coffee Partners Limited (ii) UK 100 Rank + Rally, LLC USA 100
Compass Offshore Catering Limited (ii) (viii) UK 100 S-82 LLC USA 100
Compass Scottish Site Services Limited (ii) UK 100 SpenDifference LLC USA 100
Waseley (CVI) Limited (ii) UK 100 Touchpoint Support Services, LLC USA 100
Waseley (CVS) Limited (ii) UK 100 Unidine Lifestyles, LLC USA 100
University Food Services, LLC USA 100
1st Floor, 12 Cromac Quay, Cromac Wood, Vendlink, LLC USA 100
Belfast, Northern Ireland, BT7 2JD,
Yorkmont Four, Inc. USA 100
United Kingdom
Lough Erne Holiday Village Limited (ii) UK 100

Compass Group PLC Annual Report 2019  219

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

Country of % Country of %
OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding OTHER WHOLLY OWNED SUBSIDIARIES Incorporation Holding
801 Adlai Stevenson Drive, Springfield, 2595 Interstate Drive, Suite 103,
IL 62703, USA Harrisburg, PA 17110, USA
Bistro Restaurant Limited Partnership USA 100 Crothall Facilities Management, Inc. USA 100
Curiology, LLC USA 100 Custom Management Corporation Of USA 100
E15, LLC USA 100 Pennsylvania
Levy (Events) Limited Partnership USA 100 Morrison’s Custom Management Corporation USA 100
of Pennsylvania
Levy (IP) Limited Partnership USA 100
Newport Food Service, Inc. USA 100
Levy Food Service Limited Partnership USA 100
Williamson Hospitality Services, Inc. USA 100
Levy GP Corporation USA 100
Levy Holdings GP, Inc. USA 100
50 West Broad Street, Suite 1330,
Levy Illinois Limited Partnership USA 100
Columbus, OH 43215, USA
Levy Premium Foodservice Limited USA 100
Cuyahoga Dining Services, Inc. USA 100
Partnership
Levy R & H Limited Partnership USA 100
40 Technology Pkwy South, #300, Norcross,
Levy World Limited Partnership USA 100
GA 30092, USA
Professional Sports Catering, LLC USA 100
Food Services Management By Mgr, LLC USA 100
Restaurant One Limited Partnership USA 100
Morrison Alumni Association, Inc. USA 100
Superior Limited Partnership USA 100
The M-Power Foundation, Inc. USA 100

7 St. Paul Street, Suite 820, Baltimore, MD

221 Bolivar Street, Jefferson City, MO
21202, USA
65101, USA
Bon Appétit Maryland, LLC USA 100
Dynamic Vending, Inc. USA 100

4000 Faber Place Drive STE. 300, North

Princeton South Corporate Ctr, Suite 160,
Charleston, South Carolina 29405, USA
100 Charles Ewing Blvd, Ewing, NJ 08628,
CGSC Capital, Inc. USA 100 USA
Gourmet Dining, LLC USA 100
501 Louisiana Avenue, Baton Rouge, LA
70802-5921, USA
300 Deschutes Way SW, Suite 304,
Coastal Food Service, Inc. USA 100 Tumwater, WA 98501, USA
S.H.R.M. Catering Services, Inc. USA 100 Inter Pacific Management, Inc. USA 100

80 State Street, Albany, 2900 SW Wanamaker Drive, Suite 204,

NY 12207-2543, USA Topeka, KS 66614, USA
Coffee Distributing Corp. USA 100 Myron Green Corporation USA 100
CulinArt Group, Inc. USA 100 PFM Kansas, Inc. USA 100
CulinArt, Inc. USA 100 Treat America Company, LLC USA 100
Mazzone Hospitality, LLC USA 100 Treat America Limited USA 100
Quality Food Management, Inc. USA 100
RA Tennis Corp. USA 100 8825 N. 23rd Avenue, Suite 100, Phoenix,
RANYST, Inc. USA 100 AZ 85021, USA
Restaurant Associates LLC USA 100 Prodine, Inc. USA 100
Restaurant Associates, Inc. USA 100 Sacco Dining Services, Inc. USA 100
Restaurant Services Inc. USA 100
2908 Poston Avenue, Nashville, TN 37203,
2626 Glenwood Avenue, Suite 550, Raleigh, USA
NC 27608, USA Southeast Service Corporation USA 100
Compass 2K12 Services, LLC USA 100
Compass HE Services, LLC USA 100 1400 West Benson Blvd, Suite 370,
Compass One, LLC USA 100 Anchorage, AK 99503, USA
Compass Two, LLC USA 100 Statewide Services, Inc. USA 100

1709 North 19th Street, Suite 3, Bismarck,

ND 58501-2121, USA
Compass ND, LLC USA 100

220  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of
MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or % MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or %
SIGNIFICANT HOLDINGS Establishment Holding SIGNIFICANT HOLDINGS Establishment Holding
Ground Floor 35 – 51 Mitchell Street, R. Prof. Atílio Innocenti 165, 2º andar, Sala
McMahons Point, NSW 2060, Australia 02-119, Vila Nova Conceição, 04538-000,
ESS Eastern Guruma PTY Ltd Australia 60 São Paulo, SP, Brazil
ESS Gumala PTY Ltd Australia 60 AEG Administracao de Estadios do Sudeste LTDA Brazil 50
ESS NYFL PTY Ltd Australia 60
12 Kodiak Crescent, Toronto, Ontario,
M3J 3G5, Canada
Level 3, 12 Newcastle Street, Perth 6000,
Australia Imperial Coffee and Services Inc. (iii) (iv) (v) Canada 88
ESS Thalanyji PTY Ltd Australia 60
ESS Larrakia PTY Ltd Australia 50 1 Prologis Boulevard, Suite 400,
Mississauga, Ontario, L5W 0G2, Canada
1912219 Ontario Inc. (iii) (iv) (v) (vi) (viii) Canada 75
Pavilion on the Lake, Brisbane
Entertainment Centre, Melaleuca Drive, Compass Group Sports and Entertainment Canada 67
Boondall, Qld 4034, Australia – (Quebec) (x)

Consolidated Financial Statements

AEG Ogden (BCEC) Pty Ltd Australia 44 ECC – ESS Support Services (x) Canada 50
AEG Ogden (Brisbane Stadium Management) Australia 44 2265668 Ontario Ltd (iii) (iv) (v) (vi) (viii) Canada 49
Pty Ltd Amik Catering LP (x) Canada 49
AEG Ogden (Brisbane) Pty Ltd Australia 44 Dease River – ESS Support Services (x) Canada 49
AEG Ogden (Cairns) Pty Ltd Australia 44 Dene West Limited Partnership (x) Canada 49
AEG Ogden (Consulting) Pty Ltd Australia 44 ECC – Mi’kmaq Support Services (x) Canada 49
AEG Ogden (Convex) Pty Ltd Australia 44 ESS – DNDC Support Services (x) Canada 49
AEG Ogden (Darwin) Pty Ltd Australia 44 ESS – Duncan’s and Paddle Prairie Support Canada 49
AEG Ogden (Dubai) Pty Ltd Australia 44 Services (x)
AEG Ogden (Global Partnerships) Pty Ltd Australia 44 ESS – East Arm Camp Services (x) Canada 49
AEG Ogden (Newcastle) Pty Ltd Australia 44 ESS – Kaatodh Camp Services (x) Canada 49
AEG Ogden (Perth Arena) Pty Ltd Australia 44 ESS – Loon River Support Services (x) Canada 49
AEG Ogden (Perth Stadium) Pty Ltd Australia 44 ESS – Missanabie Cree Support Services (x) Canada 49
AEG Ogden (Perth) Pty Ltd Australia 44 ESS – Na Cho Nyak Dun Camp Services (x) Canada 49
AEG Ogden (SEC) Pty Ltd Australia 44 ESS – Ochapowace Support Services (x) Canada 49
AEG Ogden (Sydney Arena) Pty Ltd Australia 44 ESS – Pessamit Camp Services (x) Canada 49
AEG Ogden (Sydney) Pty Ltd Australia 44 ESS – Wapan Manawan Services de Soutien (x) Canada 49
AEG Ogden (Venue Services) Pty Ltd Australia 44 ESS Haisla Support Services (x) Canada 49
AEG Ogden Holdings Pty Ltd (iii) (iv) (v)
Australia 44 ESS HLFN Support Services (x) Canada 49
AEG Ogden Pty Ltd (iii) (iv) Australia 44 ESS KNRA Support Services (x) Canada 49
ICC Sydney Pty Ltd Australia 44 ESS Komatik Support Services (x) Canada 49
Kings Basketball Pty Ltd (iii) (iv) (v) Australia 44 ESS Liard First Nation Support Services (x) Canada 49
Showclean Pty Ltd Australia 44 ESS McKenzie Support Services (x) Canada 49
Sydney Arena Sports Investments Pty Ltd Australia 44 ESS Okanagan Indian Band Support Services (x) Canada 49
Sydney Exhibition Centre at Glebe Island Pty Ltd Australia 44 ESS Tataskweyak Camp Services (x) Canada 49
Sydney Live Pty Ltd Australia 44 ESS/Bushmaster Camp Services (x) Canada 49
The Arena Network Asia Pacific Pty Ltd Australia 44 ESS/Fort a la Corne Support Services (x) Canada 49
Australian Pavilion Services Pty Ltd Australia 22 ESS/McLeod Lake Indian Band Support Canada 49
Services (x)
Combined Venues Group Pty Ltd Australia 22
ESS/Mosakahiken Cree Nation Support Canada 49
Services (x)
AZ1010, Baku City, Yasamal District, jafar
ESS/Nuvumiut Support Services (x) Canada 49
Jabbarli, House 44, Caspian Plaza, Baku
1065, Azerbaijan ESS/Takla Lake Support Services (x) Canada 49
ESS Support Services LLC Azerbaijan 50 ESS/WEDC Support Services (x) Canada 49
Eurest Support Services LLC Azerbaijan 50 First North Catering (x) Canada 49
KDM – ESS Support Services (x) Canada 49
Av. Rio Branco, 1, sala 1201 Parte, Centro, Mi’Kmaq-ECC Nova Scotia Support Services (x) Canada 49
20090-003, Rio de Janeiro, RJ, Brazil Nisga'a Village – ESS Support Services (x) Canada 49
AEG Administracao de Estadios do Brasil LTDA Brazil 49 Poplar Point Camp Services (x) Canada 49
Songhees Nation Support Services (x) Canada 49

Compass Group PLC Annual Report 2019  221

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of
MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or % MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or %
SIGNIFICANT HOLDINGS Establishment Holding SIGNIFICANT HOLDINGS Establishment Holding
30 Queen’s Road, St. John’s, Newfoundland 5-7-5, Chiyoda, Naka-ku, Nagoya-City,
and Labrador, A1C 2A5, Canada Aichi-Prefecture, 460-0012, Japan
Labrador Catering Inc Canada 49 Seiyo General Food Co., Ltd Japan 50
Labrador Catering LP (x) Canada 49
060011, Atyrauskaya Oblast, Atyrau city,
1700-666 Burrard Street Park Place Beibarys Sultan avenue 506, Kazakhstan
Vancouver BC V6C2X8 Canada TOO Eurest Support Services Company B LLP Kazakhstan 50
AEG Facilities Canada Holdings, LP Canada 49
060011, Old Airport Road 64, Atyrau City,
Clearwater River Dene Nation Reserve No. Atyrau Oblast, Republic of Kazakhstan
222, P.O. Box 5050, Clearwater, TOO ESS Kazakhstan LLP Kazakhstan 60
Saskatchewan, S0M 3H0, Canada
Clearwater Catering Limited (iii) (iv) (v) (vi) Canada 49 10A Rue Henri Schnadt, L-2530,
Luxembourg
130 King Street West, Suite 1800, Toronto, Geria SA Luxembourg 25
Ontario, M5X 1E3, Canada
Umbrel Hospitality Group Inc. Canada 49 Level 18 The Gardena North Tower, Mid
Valley City, Lingkaran Syed Putra, Kuala
Room 234, No.195, Bong Xing Road, Lumpur, 59200, Malaysia
Pudong New District, China EM-SSIS Services Sdn. Bhd. (ii) Malaysia 42
Shanghai ESS Support Services Co., Ltd. (ii)
China 83 Urusan Bakti Sdn. Bhd. (ii) Malaysia 35

FO-110, Torshavn, Faroe Islands Level 54, Tower 2, PETRONAS Twin Towers,
P/F Eurest Føroyar Denmark 51 Kuala Lumpur City Centre,50088 Kuala
Lumpur, Malaysia
Convex Malaysia SDN BHD Malaysia 21
123 avenue de la République – Hall A,
92320 Châtillon, France
Sopregim SAS France 80 Suite 1301, 13th Floor, City Plaza Jalan
Tebrau, 80300 Johor Bahru Johor, Malaysia
Knusford Compass Sdn. Bhd. Malaysia 49
Steenbeker Weg 25, 24106, Kiel, Germany
Lubinus – orgaMed Sterilgut GmbH Germany 49
51/52 II Piazetta, Valletta, Malta
Eurest (Malta) Ltd (ii) (iii) Malta 51
Konrad-Zuse-Platz 2, 81829 München,
Germany
Leonardi EPM GmbH Germany 75 1 Avenue Henri Dunant, Palais De La Scala,
3eme, Etage – No 1125, 98000 MC, Monaco
Leonardi Vermögensverwaltungs GmbH Germany 75
Eurest Monaco S.A. (ii) Monaco 99.99
Leonardi Betriebsverwaltungs GmbH Germany 75
Leonardi GmbH & Co. KG Germany 75
Laarderhoogtweg 11, 1101 DZ, Amsterdam,
Leonardi Kaffee neu entdecken GmbH & Co. KG Germany 75
Netherlands
Compass Group International Netherlands 100
Hutschiner Straße 8, 81677, München, Coöperatief W.A. (x)
Germany
Compass Group International Netherlands 100
Leonardi SVM GmbH Germany 75 Coöperatief 2 W.A. (x)
Compass Group International Netherlands 100
Grillparzerstraße 8, 81675, München, Coöperatief 3 W.A. (x)
Germany Compass Group International Finance C.V. (x) Netherlands 100
Leonardi HPM GmbH Germany 75
Bdo Spicers, Level 8, 120 Albert Street,
MZSK & Associates, Chartered Accountants, Auckland, New Zealand
Level 9, The Ruby, Senapati Bapat Road, AEG Ogden (NZ) LTD New Zealand 44
Dadar-W, Mumbai 400028, India
AEG Ogden Hyderabad Pvt Ltd India 44
Okesnoyveien 16, 1366, Lysaker, 1366,
Norway
Hamarikyu Kensetsu Plaza, 5-5-12, Tsukiji, Forplejningstjenester A/S Norway 33.33
Chuo-ku, Tokyo 104-0045, Japan
Chiyoda Kyushoku Services Co., Ltd Japan 90

222  Compass Group PLC Annual Report 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)
OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of
MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or % MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or %
SIGNIFICANT HOLDINGS Establishment Holding SIGNIFICANT HOLDINGS Establishment Holding
Harbitzalléen 2A, 0275 Oslo, PÅ Box 4148, Building 8, Floor 4, Unit 416, Dubai Media
Sjølyst, 0217 Oslo, Norway City, Dubai, United Arab Emirates
Gress-Gruppen A/S Norway 33.33 AEG Ogden Middle East FZ-LLC UAE 44

c/o Warner Shand Lawyers Waigani, Level 1 Parklands Court, 24 Parklands, Birmingham
RH Hypermarket, Allotment 1 Section 479 Great Park, Rubery, Birmingham, B45 9PZ,
(off Kennedy Road), Gordons NCD, Papua United Kingdom
New Guinea Quaglino’s Limited UK 99
Eurest OKAS Catering Ltd (ii) Papua New 55 Chartwells Hounslow (Feeding Futures) UK 75
Guinea Limited (iii) (iv)
Eurest Lotic (PNG) JV Ltd (ii) Papua New 50 Eat Dot Limited (ii) (iii) UK 57.05
Guinea
Quadrant Catering Limited (iii) (iv) UK 49

2 Floor, Al Mana Commercial Tower, C-Ring

County Ground, Edgbaston, Birmingham,
road, Doha, P O BOX 22481, Qatar

Consolidated Financial Statements

B5 7QU, United Kingdom
Compass Catering Services WLL Qatar 20
Edgbaston Experience Limited (iii) (iv) UK 25

PO Box 31952, Al Khobar 31685 KSA,

The Oval, Kennington, London, SE11 5SS
Saudi Arabia
United Kingdom
Compass Arabia LLC Saudi Arabia 30
Oval Events Holdings Limited (iv) (v) (vi) UK 37.5
Oval Events Limited (iv) (v) (vi) UK 37.5
Calle Pinar de San Jose 98, Planta 1a,
28054, Madrid, Spain
The O2, Peninsula Square, London,
Gourmet on Wheels, S.L.U. Spain 99
SE10 0DX, United Kingdom
AEG Facilities (UK) Ltd UK 49
Nationalarenan i Solna AB, Putte Kocks
Plats 1, SE-169 79 Solna, Sweden
San Gabriel 4004, Montevideo- 12000,
Nationalarenan I Solna AB Sweden 49
Uruguay
AEG Facilities Uruguay SA Uruguay 49
Stockholm Live AB, P.O. Box 10055,
SE-121, 27 Stockholm-Globen, Sweden
84 State Street, Boston, MA 02109, USA
Stockholm Live AB Sweden 49
Fame Food Management Inc. USA 84
The Food Management Enterprise USA 84
PD Services AG, Mühlebachstrasse 6, 8008
Corporation
Zürich, Switzerland
Levy Maryland, LLC USA 74
AEG Management Switzerland Gmbh Switzerland 49

251 Little Falls Drive, Wilmington,

Vedat Gunyol Cad, Demir Sok, No: 1/A,
DE 19808, USA
Istanbul, Turkey
B & I Catering, LLC USA 90
AEG Danismanlikve Isletme Faaliyetleri Turkey 49
Anonim Ltd Sirketi CMCA Catering, LLC USA 90
PCHI Catering, LLC USA 90
Office No. 204, Mawilah, Al Sharjah, P O Wolfgang Puck Catering and Events, LLC USA 90
Box: 1897, United Arab Emirates WPL, LLC USA 90
Abu Dhabi National Hotels – Compass LLC UAE 50 Community Living Holdings, LLC USA 84
Unidine Corporation USA 84
Abu Dhabi National Hotels Company Building, Levy LA Concessions, LLC USA 62.5
Sheikh Rashid Bin Saeed Al Maktoum Street, Learfield Levy Foodservice, LLC USA 50
Abu Dhabi, United Arab Emirates Restaurant Services I, LLC USA 50
Abu Dhabi National Hotels Compass Middle UAE 50 Parlay Solutions, LLC USA 50
East LLC
Thompson Facilities Services LLC USA 49
Thompson Hospitality Services, LLC USA 49
The Owner Saeed Ahmed Ghobash, Oud
Metha, Street Bur Dubai, P.O. BOX 31769 WP Casual Catering, LLC USA 45
Dubai, United Arab Emirates Chicago Restaurant Partners, LLC USA 42
Abu Dhabi National Hotels – Compass UAE 50
Emirates LLC

Compass Group PLC Annual Report 2019  223

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

36  DETAILS OF RELATED UNDERTAKINGS OF COMPASS GROUP PLC (CONTINUED)

OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of OTHER SUBSIDIARIES, JOINT ARRANGEMENTS, Country of
MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or % MEMBERSHIPS, ASSOCIATES AND OTHER Incorporation or %
SIGNIFICANT HOLDINGS Establishment Holding SIGNIFICANT HOLDINGS Establishment Holding
2710 Gateway Oaks Drive, Suite 150N, AEG Management HCC, LLC USA 49
Sacramento, CA 95833-3505, USA AEG Management KC, LLC USA 49
C&B Holdings, LLC USA 90 AEG Management LACC, LLC USA 49
H & H Catering, L.P. USA 90 AEG Management Louisville, LLC USA 49
AEG Management Nassau, LLC USA 49
2626 Glenwood Avenue, Suite 550, Raleigh, AEG Management NJ, LLC USA 49
NC 27608, USA
AEG Management Oakland, LLC USA 49
Waveguide LLC USA 57
AEG Management Pittsburgh, LLC USA 49
AEG Management PR, LLC USA 49
2215-B Renaissance Drive, Las Vegas, NV
AEG Management TWN, LLC USA 49
89119, USA
AEG Management VAB, LLC USA 49
GLV Restaurant Management USA 90
Associates, LLC AEG Management WA, LLC USA 49
AEG Ontario Arena, LLC USA 49
211 E. 7th Street, Suite 620, Austin, TX AEG Ontario Sports & Entertainment, LLC USA 49
78701-3218, USA AEG Ontario, LLC USA 49
Wolfgang Puck Catering & Events of Texas, USA 90 AEG Management SD, LLC USA 39
LLC
3500 Sports Arena Blvd., San Diego CA
980 N. Michigan Ave., Suite 400, Chicago, 92110, USA
IL 60611, USA San Diego Entertainment, Inc USA 39
Convention Hospitality Partners USA 80
Atlanta Sports Catering USA 50 c/o Union Square Hospitality Group, LLC
Orlando Foodservice Partners USA 50 Attn: Chief Legal Officer, 853 Broadway,
17th Floor, New York, New York, 10003
USA
1400 West Benson Blvd, Suite 370,
Anchorage, AK 99503, USA Hudson Yards Catering, LLC USA 30
KIJIK/ESS, LLC USA 80
Statewide/GanaAYoo JV USA 50 425 Walnut Street – #1800, Cincinnati OH
45202, USA
Arena Management Holdings, LLC USA 27
801 Adlai Stevenson Drive, Springfield, IL
62703, USA Cincinnati Cyclones, LLC USA 27
110 East Pearson Limited Partnership USA 66
Park Concession Management, LLC USA 50 6055 Lakeside Commons Drive, Suite 440,
Macon, GA, 31210, USA
Park Foodservice, LLC USA 50.1
Kimco Holdings, LLC (iv) USA 20

40 Technology Pkwy South, #300, Norcross, NOTES

GA 30092, USA 1. Unless otherwise stated, indirectly owned by Compass Group PLC, active
Eversource LLC USA 51 status and ordinary shares issued.
2. In some of the jurisdictions where we operate, share classes are not
defined and in these instances, for the purposes of disclosure, we have
80 State Street, Albany, NY 12207-2543, classified these holdings as ordinary.
USA 3. A number of the companies listed are legacy companies which no longer
RA Patina, LLC USA 50 serve any operational purpose.

CLASSIFICATIONS KEY
111 Eighth Avenue New York, NY 10011, (i) Directly owned by Compass Group PLC
USA (ii) Dormant/non-trading
(iii) A Ordinary shares
RA Patina Management LLC USA 50 (iv) B Ordinary shares
(v) C Ordinary and/or Special shares
(vi) D, E and/or F Ordinary shares
Corporation Trust Centre, 1209 Orange
(vii) Deferred shares
Street, Wilmington, DE 19801, USA (viii) Preference including cumulative, non-cumulative and redeemable shares
AEG Facilities, LLC USA 49 (ix) Redeemable shares
AEG Facilities Canada Holdings, LP USA 49 (x) No share capital, share of profits
(xi) Limited by guarantee
AEG Management Bakersfield, LLC USA 49
AEG Management Brooklyn, LLC USA 49
AEG Management Chicago, LLC USA 49
AEG Management DL, LLC USA 49
AEG Management FL, LLC USA 49
AEG Management Glendale, LLC USA 49

224  Compass Group PLC Annual Report 2019

PARENT COMPANY BALANCE SHEET
At 30 September 2019

2019 2018
COMPASS GROUP PLC Notes £m £m
FIXED ASSETS
Investments 2 1,061 1,035
CURRENT ASSETS
Debtors: amounts falling due within one year 3 7,521 10,068
Debtors: amounts falling due after more than one year 3 2,202 83
Cash at bank and in hand 39 605
Current assets 9,762 10,756
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Creditors: amounts falling due within one year1 4 (4,972) (5,826)
NET CURRENT ASSETS
Net current assets 4,790 4,930
TOTAL ASSETS LESS CURRENT LIABILITIES
Total assets less current liabilities1 5,851 5,965
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Creditors: amounts falling due after more than one year1 4 (3,684) (3,641)
Provisions for liabilities 5 (3) (3)
Net assets 2,164 2,321
EQUITY
Share capital 7 176 176
Share premium account 182 182
Capital redemption reserve 295 295
Share-based payment reserve 259 232
Profit and loss reserve 1,252 1,436

Parent Company Financial Statements

Total equity 2,164 2,321

1. Represented to reclassify £1,107 million creditors falling due within one year to creditors falling due after more than one year. As a result, net current assets
and creditors falling due after more than one year have increased by the same amount. There has been no change to net assets.

Approved by the Board of Directors on 26 November 2019 and signed on its behalf by
Dominic Blakemore, Director
Karen Witts, Director

Compass Group PLC Annual Report 2019  225

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2019

Capital Share-based
Share Share premium redemption payment Profit and loss
capital account reserve reserve reserve Total
EQUITY £m £m £m £m £m £m
At 1 October 2017 176 182 295 211 1,127 1,991
Fair value of share-based payments – – – 21 – 21
Dividends paid to shareholders – – – – (548) (548)
Profit for the year – – – – 857 857
At 30 September 2018 176 182 295 232 1,436 2,321
Fair value of share-based payments – – – 27 – 27
Dividends paid to shareholders – – – – (611) (611)
Profit for the year – – – – 427 427
At 30 September 2019 176 182 295 259 1,252 2,164

226  Compass Group PLC Annual Report 2019

PARENT COMPANY ACCOUNTING POLICIES
For the year ended 30 September 2019

INTRODUCTION C  CHANGE IN ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of The Company has updated its accounting policies to reflect the
the separate financial statements of Compass Group PLC (the impact of the adoption of IFRS 9 as described in note F.
Company) are set out below:
The adoption of IFRS 9 and the effect of adopting other new
A  ACCOUNTING CONVENTION AND BASIS OF IFRS standards had no material impact on the Company’s
PREPARATION results or balance sheet.
These financial statements are prepared in accordance with the
historical cost convention, except as described in the accounting D  INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
policy on financial instruments, Financial Reporting Standard Investments are stated at cost less provision for any impairment.
101 Reduced Disclosure Framework (FRS 101), and in In the opinion of the directors the value of such investments are
accordance with applicable United Kingdom laws. In preparing not less than shown at the balance sheet date.
these financial statements, the Company applies the
Investment income is measured at the fair value of the
recognition, measurement and disclosure requirements of
consideration received or receivable. It represents dividend
International Financial Reporting Standards as adopted by the
income which is recognised when the right to receive payment
EU (Adopted IFRSs), but makes amendments where necessary
is established.
in order to comply with the Companies Act 2006 (CA 2006) and
has set out below where advantage of the FRS 101 disclosure E  FOREIGN CURRENCY
exemptions has been taken. These financial statements thus Assets and liabilities in foreign currencies are translated into
present information about the Company as an individual sterling at the rates of exchange ruling at the year end. Gains
undertaking not as a Group undertaking. and losses arising on retranslation are included in the income
statement for the period.
These financial statements have been prepared on a going
concern basis. This is discussed in the Business Review on F  FINANCIAL ASSETS AND LIABILITIES
pages 34 to 40. Financial assets and financial liabilities are recognised when the
Company becomes a party to the contractual provisions and
B EXEMPTIONS
derecognised when it ceases to be party to such provisions.
The Company’s financial statements are included in the
Such assets and liabilities are classified as current if they are
Compass Group PLC consolidated financial statements for the

Parent Company Financial Statements

expected to be realised or settled within 12 months of the
year ended 30 September 2019. As permitted by section 408 of
balance sheet date. If not, they are recognised as non-current.
the CA 2006, the Company has not presented its own profit and
loss account. Financial assets and liabilities are initially recorded at fair value
including, where permitted by IFRS 9, any directly attributable
In these financial statements, the Company has applied the
transaction costs. For those financial assets that are not
exemptions under FRS 101 in respect of the following disclosures:
subsequently held at fair value, the Company assesses whether
• a cash flow statement and related notes there is evidence of impairment at each balance sheet date.
• transactions with wholly owned subsidiaries
The Company classifies its financial assets and liabilities into the
• capital management following categories:
• as required by IFRS 13 ‘Fair Value Measurement’ and IFRS 7
‘Financial Instrument Disclosures’ • financial assets and liabilities at amortised cost,
• the effect of new but not yet effective IFRSs • financial assets and liabilities at fair value through profit
• disclosures in respect of compensation of key management and loss
personnel
Where financial assets or liabilities are eligible to be carried at
• IFRS 2 ‘Share Based Payments’ in respect of Group settled
either amortised cost or fair value the Company does not apply
share based payments
the fair value option.

Compass Group PLC Annual Report 2019  227

PARENT COMPANY ACCOUNTING POLICIES (CONTINUED)
For the year ended 30 September 2019

The Company uses derivative financial instruments to manage Fair value is measured using either the binomial distribution or
its exposure to fluctuations in foreign exchange rates and Black-Scholes option pricing models as is most appropriate for
interest rates. Derivative instruments utilised include interest each scheme. The expected life used in the models has been
rate swaps, currency swaps and forward currency contracts. The adjusted, based on management’s best estimate, for the effects
Company and Group policy is disclosed in the accounting of exercise restrictions and behavioural considerations.
policies to the consolidated financial statements.
The issue of share incentives by the Company to employees of
Borrowings are recognised initially at fair value, net of its subsidiaries represents additional capital contributions. An
transaction costs incurred. Borrowings are subsequently stated addition to the Company’s investment in Group undertakings is
at amortised cost unless they are part of a fair value hedge reported with a corresponding increase in shareholders’ funds.
accounting relationship. Borrowings that are part of a fair value For details of the charge see note 24 to the consolidated
hedge accounting relationship are measured at amortised cost financial statements.
adjusted for the fair value attributable to the risk being hedged.
J  FINANCIAL GUARANTEES AND LOAN COMMITMENTS
Amounts owed by or to Group undertakings are initially Financial guarantee contract liabilities are measured initially at
measured at fair value and are subsequently reported at their fair values. These liabilities are subsequently measured at
amortised cost. Allowance losses on intercompany receivables the higher of the amount determined under IAS 37 and the
are calculated by reviewing 12-month expected credit losses amount initially recognised (fair value) less where appropriate,
using historic and forward looking data on credit risk. cumulative amortisation of the initial amount recognised.

Non-interest bearing payables are stated at their nominal value

as they are due on demand.

G DIVIDENDS
Dividends are recognised in the Company’s financial statements
in the year in which they are approved in general meeting by the
Company’s shareholders. Interim dividends are recognised
when paid.

H  DEFERRED TAX
Deferred tax is provided at the anticipated rates on temporary
differences arising from the inclusion of items of income and
expenditure in tax computations in periods different from those
in which they are included in the financial statements. Deferred
tax assets are recognised to the extent that it is regarded as
more likely than not that they will be recovered.

I  SHARE-BASED PAYMENTS
The Group issues equity-settled share-based payments to
certain employees. Equity-settled share-based payments are
measured at fair value (excluding the effect of non market-based
vesting conditions) at the date of grant. The fair value
determined at the grant date of the equity-settled share-based
payments is expensed on a straight line basis over the vesting
period, based on the Group’s estimate of the shares that will
eventually vest and adjusted for the effect of the non market-
based vesting conditions.

228  Compass Group PLC Annual Report 2019

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
For the year ended 30 September 2019

1 INCOME STATEMENT DISCLOSURES

The Company’s profit on ordinary activities after tax was £427 million (2018: £857 million).

The Company had no direct employees in the course of the year (2018: none).
2019 2018
AUDIT SERVICES £m £m
Fees payable to the Company’s auditor for the audit of the Company’s annual financial statements 0.9 0.9
Fees payable for other services 0.1 0.1

2 INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

2019 2018
INVESTMENTS IN SUBSIDIARY UNDERTAKINGS £m £m
COST
At 1 October 1,036 1,018
Share-based payments to employees of subsidiaries 27 21
Recharged to subsidiaries during the year (1) (3)
At 30 September 1,062 1,036
PROVISIONS
At 1 October and 30 September (1) (1)
NET BOOK VALUE
At 30 September 1,061 1,035

The principal subsidiary undertakings are listed in note 36 to the consolidated financial statements.
3 DEBTORS
2019 2018
Falling due Falling due
Falling due after more Falling due after more

Parent Company Financial Statements

within 1 year than 1 year Total within 1 year than 1 year Total
DEBTORS £m £m £m £m £m £m
Amounts owed by subsidiary undertakings 7,519 1,995 9,514 10,035 – 10,035
Derivative financial instruments 1 207 208 33 83 116
Deferred tax 1 – 1 – – –
Total 7,521 2,202 9,723 10,068 83 10,151

The book value of amounts owed by subsidiary undertakings falling due within one year approximates their fair value due to the short
term nature of these receivables.

The fair value of amounts owed by subsidiary undertakings falling due after more than one year is £1,995 million (2018: £nil). This
approximates book value due to these balances being acquired at fair value shortly prior to 30 September 2019.
2019 2018
Net short term Net short term
temporary temporary
differences differences
MOVEMENT IN DEFERRED TAX ASSET £m £m
At 1 October – –
Charge to income statement 1 –
At 30 September 1 –

The deferred tax asset arises on certain derivative financial instruments and will be recovered no later than the maturity dates
of these instruments.
Details of the derivative financial instruments are shown in note 19 to the consolidated financial statements.

Compass Group PLC Annual Report 2019  229

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
For the year ended 30 September 2019

4 CREDITORS
2019 2018
Falling due Falling due
Falling due after more Falling due after more
within 1 year than 1 year Total within 1 year than 1 year Total
CREDITORS £m £m £m £m £m £m
Bank overdrafts 3 – 3 51 – 51
Bank overdrafts and loans (note 6) 3 – 3 51 – 51
Loan notes 162 1,211 1,373 191 1,261 1,452
Bonds – 1,289 1,289 538 1,240 1,778
Loan notes and bonds (note 6) 162 2,500 2,662 729 2,501 3,230
Derivative financial instruments 7 6 13 12 33 45
Accruals and deferred income 33 – 33 51 – 51
Current tax 17 – 17 11 – 11
Amounts owed to subsidiary undertakings1 4,750 1,178 5,928 4,972 1,107 6,079
Total 4,972 3,684 8,656 5,826 3,641 9,467

1. Represented to reclassify £1,107 million creditors falling due within one year to creditors falling due after more than one year. These amounts owed to
subsidiary undertakings are arms length interest bearing loans with repayment dates greater than twelve months. There was no change to total creditors.
2019 2018
Carrying Carrying
Nominal value value
LOAN NOTES value Redeemable Interest £m £m
US$ private placement $250m Oct 2018 3.31% – 191
US$ private placement $200m Sep 2020 3.09% 162 153
US$ private placement $398m Oct 2021 3.98% 323 305
US$ private placement $352m Oct 2023 4.12% 301 268
US$ private placement $100m Dec 2024 3.54% 81 76
US$ private placement $300m Sep 2025 3.81% 263 229
US$ private placement $300m Dec 2026 3.64% 243 230
Total 1,373 1,452

The Company has fixed term, fixed interest private placements denominated in US dollar.
2019 2018
Carrying Carrying
Nominal value value
BONDS value Redeemable Interest £m £m
Euro Eurobond €600m Feb 2019 3.13% – 538
Euro Eurobond €500m Jan 2023 1.88% 469 464
Sterling Eurobond £250m Sep 2025 2.00% 260 246
Sterling Eurobond £250m Jun 2026 3.85% 249 249
Sterling Eurobond £300m Jul 2029 2.00% 311 281
Total 1,289 1,778

The book value of amounts owed to subsidiary undertakings falling due within one year approximates their fair value due to the short
term nature of these payables. The fair value of amounts owed to subsidiary undertakings falling due after more than one year is
shown below.
2019 2018
AMOUNTS OWED TO SUBSIDIARY
Carrying Fair Carrying Fair
UNDERTAKINGS FALLING DUE AFTER Nominal value value value value
MORE THAN 1 YEAR value Redeemable Interest £m £m £m £m
Euro intercompany loan €750m Jul 2024 0.73% 695 686 669 656
Euro intercompany loan €500m Sep 2028 1.60% 483 489 438 440
Total 1,178 1,175 1,107 1,096

230  Compass Group PLC Annual Report 2019

4 CREDITORS (CONTINUED)
During the year, the Company set up a commercial paper programme of $2 billion which is available to be used to meet short term
liquidity requirements and is supported by £2 billion of syndicated committed bank facilities. As of 30 September 2019, no
commercial paper was outstanding under the programme and no amounts had been drawn at any time under the syndicated facility.

Details of the derivative financial instruments are shown in note 19 to the consolidated financial statements.

5 PROVISIONS FOR LIABILITIES

Legal and
other claims
PROVISIONS £m
At 1 October 2017 31
Credited to income statement (28)
At 30 September 2018 3
At 1 October 2018 3
Charged to income statement -
At 30 September 2019 3

Provisions for legal and other claims relates to provisions for the estimated cost of litigation and other sundry claims.
The timing of the settlement of these claims is uncertain.

6 MATURITY OF FINANCIAL LIABILITIES, OTHER CREDITORS AND DERIVATIVE FINANCIAL INSTRUMENTS

The maturity of financial liabilities, other creditors and derivative financial instruments as at 30 September is as follows:
2019 2018
Bank Loan Bank Loan
overdrafts notes and overdrafts notes and
and loans bonds and loans bonds
(note 4) (note 4) Other1 Total (note 4) (note 4) Other1 Total
MATURITY £m £m £m £m £m £m £m £m

Parent Company Financial Statements

Between 1 and 2 years – – 5 5 – 153 (3) 150
Between 2 and 5 years – 1,174 (126) 1,048 – 769 (73) 696
In more than 5 years – 1,326 (80) 1,246 – 1,579 26 1,605
In more than 1 year – 2,500 (201) 2,299 – 2,501 (50) 2,451
Within 1 year, or on demand 3 162 6 171 51 729 (21) 759
Total 3 2,662 (195) 2,470 51 3,230 (71) 3,210

1. Other includes the debtor and creditor amounts associated with derivative financial instruments.

7 SHARE CAPITAL
Details of the share capital, share option schemes and share-based payments of Compass Group PLC are shown in notes 23 and 24
to the consolidated financial statements.

8 CONTINGENT LIABILITIES
2019 2018
CONTINGENT LIABILITIES £m £m
Guarantees and indemnities (including subsidiary undertakings’ overdrafts) 399 411
Parental guarantee issued under the Euro Medium Term Note Programme 1,124 1,113
Total 1,523 1,524

Details regarding certain contingent liabilities which involve the Company are set out in note 28 to the consolidated financial statements.

Compass Group PLC Annual Report 2019  231

Shareholder Information
REGISTRAR or use of any email or attachments from the Company and
All matters relating to the administration of shareholdings in the recommends that shareholders subject all messages to virus
Company should be directed to Link Asset Services (the checking procedures prior to use. Please note that any
registrar), The Registry, 34 Beckenham Road, Beckenham, Kent electronic communication sent by a shareholder to the Company
BR3 4TU; email: [email protected]; telephone within or the registrar containing a computer virus will not be accepted.
the UK: Freephone 0800 029 4520 and from overseas:
+44 333 300 1568. The Company’s obligation is satisfied when it transmits an
electronic message. It cannot be held responsible for a failure in
Shareholders can register online to view their Compass transmission beyond its control. In the event that the Company
Group PLC shareholding details using the Share Portal, a service becomes aware that an electronic transmission is not
offered by the registrar, www.signalshares.com. Shareholders successful, a paper notification will be sent to the shareholder at
registering for the Share Portal will require their investor code their registered address. Shareholders wishing to continue to
which is shown on share certificates. The service enables receive shareholder information in the traditional paper format
shareholders to: should confirm this via www.signalshares.com or write to Link
Asset Services.
• check their shareholdings in Compass Group PLC 24 hours
a day PUBLISHED INFORMATION
• gain easy access to a range of shareholder information If you would like to receive a hard copy of this Annual Report
including indicative valuation and payment instruction details and/or a copy of the Notice of Annual General Meeting in
• appoint a proxy to attend general meetings of Compass another format such as large print, Braille or an audio version
Group PLC on CD, please contact the Group Company Secretariat at
Compass Group PLC, Compass House, Guildford Street,
ELECTRONIC COMMUNICATIONS Chertsey, Surrey KT16 9BQ. Our 2019 Annual Report and
The Company’s Annual Report and all other shareholder the Notice of Meeting are available on our website
communications can be found on our website www.compass-group.com.
www.compass-group.com.
CASH DIVIDENDS
We would encourage all shareholders to receive an email The Company normally pays a dividend twice each year. We
notification of when shareholder documents become available encourage UK resident ordinary shareholders to elect to have
online as this helps to reduce our impact on the environment. their dividends paid directly into their bank or building society
By electing to receive shareholder communications in this account. This is a more secure method of payment and avoids
way you will: delays or cheques being lost. Most ordinary shareholders
resident outside the UK can also have any dividends in excess of
• be able to read and/or download the information at £10 paid into their bank account directly via Link Asset Services’
your leisure global payments service. Details and terms and conditions may
• help the Company to save money by reducing the number of be viewed at http://ips.linkassetservices.com.
paper documents we produce and post
• promote more effective communications with shareholders DIVIDEND REINVESTMENT PLAN (DRIP)
A DRIP service is provided by Link Market Services Trustees
• support our efforts to be environmentally responsible
Limited. The DRIP allows eligible shareholders to use the whole
You can register to receive email communications: of their cash dividend to buy additional shares in the Company,
www.signalshares.com. thereby increasing their shareholding. Additional information,
including details of how to sign up, can be obtained from the
The provision of a facility to communicate with Company’s website www.compass-group.com, and from Link
shareholders electronically does not discriminate between Market Services Trustees Limited; email: [email protected];
registered shareholders of the same class. The facility is telephone within the UK: Freephone 0800 029 4520 and from
available to all registered shareholders on equal terms and overseas: +44 333 300 1568.
participation is made as simple as possible. Please note that it is
the shareholder’s responsibility to notify the registrar (through The latest date for receipt of new applications to participate
www.signalshares.com, by post or email: enquiries@linkgroup. in the DRIP in respect of the 2019 final dividend is
co.uk) of any change to their email address. Before electing 3 February 2020.
for electronic communication, shareholders should ensure that
SHARE PRICE INFORMATION
they have the appropriate computer capabilities. The Company
The price of the Company’s shares is available on the
takes all reasonable precautions to ensure no viruses are
Company’s website www.compass-group.com. This is supplied
present in any communication it sends out, but cannot accept
with a 15 minute delay to real time.
any responsibility for loss or damage arising from the opening

232  Compass Group PLC Annual Report 2019

SHARE DEALING IDENTITY THEFT
The Company’s shares can be traded through most banks, Advice on protecting your Compass Group PLC shares:
building societies, stockbrokers or ‘share shops’. In addition, the
Company’s registrar offers online and telephone dealing services • keep all Compass correspondence in a safe place, or destroy
to buy or sell Compass Group PLC shares. The service is only correspondence by shredding
available to private shareholders aged 18 or over, resident in the • when changing address, inform the registrar, Link Asset
UK, EEA, Channel Islands or Isle of Man. Full details can be Services. If a letter from Link Asset Services is received
obtained from www.linksharedeal.com or by telephoning within regarding a change of address and you have not moved,
the UK: Freephone 0800 029 4520. contact the registrar immediately
• consider having your dividends paid directly into your bank or
SHAREGIFT building society account. This will reduce the risk of the
ShareGift, the charity share donation scheme, is a free service cheque being intercepted or lost in the post. You can
for shareholders wishing to give shares to charitable causes. It is complete a Request for Payment of Interest or Dividends form
particularly useful for those shareholders who may wish to which are available from and should be returned to the
dispose of a small quantity of shares where the market value registrar. Alternatively, register online at www.signalshares.com
makes it uneconomic to sell on a commission basis. Further using the Share Portal service. If you require further
information can be obtained from ShareGift’s website information please contact the registrar on changing your
www.sharegift.org; telephone within the UK: 020 7930 3737 bank or building society account, inform the registrar of the
and from overseas: +44 20 7930 3737; email: [email protected], details of the new account and respond to any letters Link
or from the registrar. Asset Services send you about this
• when buying or selling shares, deal only with brokers
AMERICAN DEPOSITARY RECEIPTS
registered in your country of residence or the UK
Compass Group PLC operates an American Depositary Receipts
programme (ADR) which are traded on the over-the-counter
WARNING ABOUT SHARE FRAUD
market under the symbol CMPGY. One ADR represents one
Investment scams are often sophisticated and difficult to spot.
ordinary Compass share. BNY Mellon (BNY) maintains the
Fraudsters use persuasive and high pressure tactics to lure
Company’s American Depositary Receipt register. If you have
investors into scams. They may offer to sell shares that turn out
any enquiries about your holding of Compass American
to be worthless or non-existent, or to buy shares at an inflated
Depositary Shares, you should contact BNY Mellon by
price in return for an upfront payment.
regular mail: BNY Mellon, PO Box 505000, Louisville,
KY 40233-5000, USA or by overnight or certified registered Whilst high profits are promised, if you buy or sell shares in this
mail: BNY Mellon, 462 South 4th Street, Suite 1600, Louisville, way, you will probably lose your money.
KY 40202, USA. Alternatively you can email Computershare at
[email protected]. Further information
can be found on BNY’s website at www.mybnymdr.com using
the symbol CMPGY and at www.compass-group.com.

UNSOLICITED MAIL
We are legally obliged to make our register of members available
to the public, subject to a proper purpose test. As a
consequence of this, some shareholders might receive Shareholder Information
unsolicited mail. Shareholders wishing to limit the amount of
such mail should write to the Mailing Preference Service, MPS
FREEPOST 29 LON20771, London W1E 0ZT. Shareholders can
also register online at www.mpsonline.org.uk or request an
application form by calling from within the UK: 0345 0700 705
or by email: [email protected]. For all other queries, please
contact the MPS team from within the UK: 020 7291 3310.

Compass Group PLC Annual Report 2019  233

SHAREHOLDER INFORMATION (CONTINUED)

HOW TO AVOID SHARE FRAUD

• keep in mind that firms authorised by the Financial Conduct Authority (FCA) are unlikely to contact you out of the blue with an
offer to buy or sell shares
• do not get into a conversation. Note the name of the person and firm contacting you and then end the call
• check the Financial Services Register www.fca.org.uk to see if the person and firm contacting you are authorised by the FCA
• beware of fraudsters claiming to be from an authorised firm, copying its website or giving you false contact details
• use the firm’s contact details listed on the Register if you want to call it back
• call the FCA on: Freephone 0800 111 6768 if the firm does not have contact details on the Register or if you are told they are out
of date
• search the list of unauthorised firms to avoid at www.fca.org.uk
• consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or
the Financial Services Compensation Scheme
• think about getting independent financial and professional advice before you hand over any money – don’t use an advisor from
the firm that contacted you
• remember: if it sounds too good to be true, it probably is!

REPORT A SCAM
If you are approached by fraudsters, please tell the FCA using the share fraud reporting form at www.fca.org.uk/scamsmart, where
you can find out more about investment scams, or call the FCA Consumer Helpline on: Freephone 0800 111 6768.

If you have already paid money to share fraudsters, you should contact Action Fraud on 0300 123 2040 or online at
www.actionfraud.police.uk.

FINANCIAL CALENDAR 2020*

16 17 3 6 24 13 18 19 6 27 24
Jan Jan Feb Feb Feb May Jun Jun Jul Jul Nov
Ex-dividend Record Last day Annual Payment Half year Ex-dividend Record Last day Payment Full year
date for date for for DRIP General date for financial date for date for for DRIP date for financial
2019 final 2019 final elections Meeting 2019 final results 2020 interim 2020 elections 2020 results
dividend dividend dividend dividend interim interim
dividend dividend
** At the date of disclosure

234  Compass Group PLC Annual Report 2019

Notice of Annual General Meeting
External auditor’s reappointment and remuneration
THIS DOCUMENT IS IMPORTANT AND REQUIRES 15. To reappoint KPMG LLP as the Company’s auditor until
YOUR IMMEDIATE ATTENTION the conclusion of the next Annual General Meeting of
If you are in any doubt as to the action you should take, the Company.
you should immediately consult your stockbroker, bank 16. To authorise the Audit Committee to agree the auditor’s
manager, solicitor, accountant or other independent remuneration.
financial advisor authorised under the Financial Services Political donations
and Markets Act 2000. If you have sold or otherwise 17. To authorise the Company and any company which is, or
transferred all your shares in Compass Group PLC, becomes, a subsidiary of the Company during the period to
please send this Notice and the accompanying which this Resolution relates, to:
documents to the purchaser or transferee, or to the 17.1 make donations to political parties or independent
person who arranged the sale or transfer so that they election candidates;
can pass these documents to the person who now holds 17.2 make donations to political organisations other than
the shares. political parties; and
17.3 incur political expenditure, during the period
commencing on the date of this Resolution and
Notice is hereby given that the nineteenth Annual General ending on the date of the Company’s next Annual
Meeting of Compass Group PLC (the Company) will be held at General Meeting, provided that any such donations
10.30am on Thursday 6 February 2020 in the Live Room at and expenditure made by the Company, or by any
Rugby Football Union, Rugby House, Twickenham Stadium, such subsidiary, shall not exceed £100,000 per
200 Whitton Road, Twickenham, Middlesex TW2 7BA (the company and, together with those made by any such
Meeting) (the AGM) in order to transact the following business: subsidiary and the Company, shall not exceed in
aggregate £100,000.
To consider and, if thought fit, to pass the following Resolutions,
of which Resolutions 20 to 23 will be proposed as special Any terms used in this Resolution 17 which are defined in
resolutions and all other Resolutions will be proposed as Part 14 of the Companies Act 2006 shall bear the same
ordinary resolutions. meaning for the purposes of this Resolution.

ORDINARY RESOLUTIONS Payment of fees to non-executive directors

Annual Report and Accounts 18. To approve, in accordance with section 226B(1)(b) of the
1. To receive and adopt the Directors’ Annual Report and Companies Act 2006, an amendment to the operation
Accounts and the Auditor’s Report thereon for the financial of the Company's Remuneration Policy approved at the
year ended 30 September 2019. Company's Annual General Meeting on 8 February 2018
Directors’ Remuneration Report to replace the annual cap of £125,000 on the total fees
2. To receive and adopt the Directors’ Remuneration Report payable to each non-executive director of the Company
for the financial year ended 30 September 2019. with the aggregate cap on directors' fees specified in
Final dividend the Company's articles of association as approved by
3. To declare a final dividend of 26.9 pence per ordinary share shareholders from time to time.
in respect of the financial year ended 30 September 2019.
Election and re-election of directors Shareholder Information
4. To elect Karen Witts as a director of the Company.
5. To re-elect Dominic Blakemore as a director of
the Company.
6. To re-elect Gary Green as a director of the Company.
7. To re-elect Carol Arrowsmith as a director of the Company.
8. To re-elect John Bason as a director of the Company.
9. To re-elect Stefan Bomhard as a director of the Company.
10. To re-elect John Bryant as a director of the Company.
11. To re-elect Anne-Francoise Nesmes as a director of
the Company.
12. To re-elect Nelson Silva as a director of the Company.
13. To re-elect Ireena Vittal as a director of the Company.
14. To re-elect Paul Walsh as a director of the Company.

Compass Group PLC Annual Report 2019  235

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

Directors’ authority to allot shares 21. To authorise the directors subject to the passing of
19. 19.1 To renew the power conferred on the directors by Resolution 19 and in accordance with the power conferred
article 12 of the Company’s articles of association for on the directors by article 13 of the Company’s articles of
a period expiring at the end of the next Annual General association and in addition to any authority granted under
Meeting of the Company after the date on which this Resolution 20 to allot equity securities (as defined in the
Resolution is passed or, if earlier, at close of business Companies Act 2006) for cash under the authority given by
on 5 May 2021; and for that period the section 551 that Resolution and/or to sell ordinary shares held by the
amount shall be £58,432,400. Company as treasury shares for cash as if section 561 of the
19.2 In addition, the section 551 amount shall be increased Companies Act 2006 did not apply to any such allotment or
by £58,432,400 for a period expiring at the end of the sale, such authority to be:
next Annual General Meeting of the Company after the 21.1 limited to the allotment of equity shares or sale of
date on which this Resolution is passed, provided that treasury shares up to a nominal amount of
the directors’ power in respect of such latter amount £8,764,971 being not more than 5% of the issued
shall only be used in connection with a rights issue: ordinary share capital (excluding treasury shares) of
19.2.1 to holders of ordinary shares in proportion (as the Company as at 25 November 2019, being the last
nearly as may be practicable) to their existing practicable date prior to the publication of this Notice;
holdings; and 21.2 used only for the purposes of financing (or refinancing,
19.2.2 to holders of other equity securities as required if the authority is to be used within six months after the
by the rights of those securities or as the original transaction) a transaction which the directors
directors otherwise consider necessary, determine to be an acquisition or other capital
and that the directors may impose any limits or investment of a kind contemplated by the Statement
restrictions and make any arrangements which they of Principles on Disapplying Pre-Emption Rights most
consider necessary to deal with fractional recently published by the Pre-Emption Group prior to
entitlements, legal or practical problems under the the date of this Notice,
laws of, or the requirements of, any relevant regulatory
such authority to expire at the end of the next Annual
body or stock exchange, any territory, or any matter
General Meeting of the Company or, if earlier, at close of
whatsoever.
business on 5 May 2021, but in each case, prior to its expiry
SPECIAL RESOLUTIONS the Company may make offers, and enter into agreements,
Disapplication of pre-emption rights which would, or might require equity securities to be
20. To authorise the directors, subject to the passing of allotted (and treasury shares to be sold) after the authority
Resolution 19, and in accordance with the power conferred expires and the directors may allot equity securities (and
on the directors by article 13 of the Company’s articles of sell treasury shares) under any such offer or agreement as if
association, to allot equity securities (as defined in the the authority had not expired.
Companies Act 2006) for cash under the authority given by
that Resolution and/or to sell ordinary shares held by the Purchase of own shares
Company as treasury shares for cash as if section 561 of the 22. To generally and unconditionally authorise the Company,
Companies Act 2006 did not apply to any such allotment or pursuant to and in accordance with section 701 of the
sale, such authority to be limited: Companies Act 2006, to make market purchases (within
20.1 to allotments for rights issues and other pre-emptive the meaning of section 693(4) of that Act) of ordinary
issues; and shares of 111⁄20 pence each in the capital of the Company
subject to the following conditions:
20.2 to the allotment of equity securities or sale of treasury
shares (otherwise than under paragraph 20.1 above) 22.1 the maximum aggregate number of ordinary shares
up to a nominal amount of £8,764,971 being not more hereby authorised to be purchased is 158,642,000;
than 5% of the issued ordinary share capital 22.2 the minimum price (excluding expenses) which may
(excluding treasury shares) of the Company as at be paid for each ordinary share is 111⁄20 pence;
25 November 2019, being the last practicable date 22.3 the maximum price (excluding expenses) which may
prior to the publication of this Notice, be paid for each ordinary share in respect of a share
contracted to be purchased on any day, does not
such authority to expire at the end of the next Annual exceed the higher of (1) an amount equal to 105% of
General Meeting of the Company, or, if earlier, at the close the average of the middle market quotations for an
of business on 5 May 2021, but in each case, prior to the ordinary share as derived from the London Stock
expiry the Company may make offers, and enter into Exchange Daily Official List for the five business days
agreements, which would, or might, require equity immediately preceding the day on which the purchase
securities to be allotted (and treasury shares to be sold) is made and (2) the higher of the price of the last
after the authority expires and the directors may allot equity independent trade and the highest current
securities (and sell treasury shares) under any such offer or independent bid for an ordinary share as derived from
agreement as if the authority had not expired. the London Stock Exchange Trading System; and

236  Compass Group PLC Annual Report 2019

 22.4 this authority shall expire, unless previously renewed, EXPLANATORY NOTES TO THE RESOLUTIONS
varied or revoked by the Company, at the conclusion RESOLUTION 1 – ANNUAL REPORT AND ACCOUNTS
of the next Annual General Meeting of the Company The directors are required to present to the AGM the audited
or close of business on 5 August 2021, whichever is Accounts and the Directors’ and Auditor’s Reports for the
the earlier (except in relation to the purchase of financial year ended 30 September 2019.
ordinary shares, the contract for which was
concluded prior to the expiry of this authority and RESOLUTION 2 – DIRECTORS’ REMUNERATION REPORT
which will or may be executed wholly or partly after In accordance with section 439 of the Companies Act 2006 (CA
the expiry of this authority). 2006), shareholders are requested to approve the Directors’
Remuneration Report. The Directors’ Remuneration Report is
Notice of meetings other than Annual General Meetings set out on pages 98–121 of the 2019 Annual Report and
23. To authorise the directors to call a general meeting of the Accounts. The vote is advisory.
Company, other than an Annual General Meeting, on not
less than 14 clear working days’ notice, provided that this RESOLUTION 3 – FINAL DIVIDEND
authority shall expire at the conclusion of the next Annual The final dividend for the year ended 30 September 2019 will
General Meeting of the Company after the date of the be paid on 24 February 2020 to shareholders on the register at
passing of this Resolution. the close of business on 17 January 2020, subject to
shareholder approval.
Voting on all Resolutions will be by way of a poll.
RESOLUTIONS 4 TO 14 – ELECTION AND RE-ELECTION
By Order of the Board OF DIRECTORS
Biographical details of all the directors standing for election
and re-election appear on pages 70 and 71 of the 2019
Annual Report.

Alison Yapp The Company’s articles of association require one third of the
Group General Counsel and Company Secretary directors to retire by rotation each year and no director may
serve for more than three years without being re-elected by
16 December 2019 shareholders. However, in accordance with the UK Corporate
Governance Code 2016 (the Code), all the directors will submit
Registered Office: themselves for annual re-election by shareholders.
Compass House
Guildford Street Having conducted an evaluation during the year, it is the view of
Chertsey the Chairman that the performance of each of the directors
Surrey KT16 9BQ continues to be effective and each director demonstrates
Registered in England and Wales No. 4083914 commitment to the role and has sufficient time to meet his or
her commitment to the Company.

RESOLUTIONS 15 AND 16 – EXTERNAL AUDITOR’S

REAPPOINTMENT AND REMUNERATION
The auditor is appointed at every general meeting at which
accounts are presented to shareholders. The current Shareholder Information
appointment of KPMG LLP as the Company’s auditor will end at
the conclusion of the AGM and it has advised of its willingness to
stand for reappointment. In accordance with provisions of the
Code, it is best recommended practice for the Audit Committee
to be authorised to agree how much the auditor should be paid
and Resolution 16 grants this authority to the Audit Committee.

Compass Group PLC Annual Report 2019  237

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

RESOLUTION 17 – POLITICAL DONATIONS RESOLUTION 19 – DIRECTORS’ AUTHORITY

It is not Group policy to make donations to political parties. TO ALLOT SHARES
However, it is possible that certain routine activities undertaken The purpose of Resolution 19 is to renew the directors’ power to
by the Company and its subsidiaries might unintentionally fall allot shares. Resolution 19.1 seeks to grant the directors
within the wide definition of matters constituting political authority to allot, pursuant to article 12 of the Company’s
donations and expenditure in the CA 2006. Any expenditure that articles of association and section 551 of the CA 2006, relevant
is regulated under the CA 2006 must first be approved by securities with a maximum nominal amount of £58,432,400.
shareholders and will be disclosed in next year’s Annual Report. This represents 528,800,000 ordinary shares of 111⁄20 pence
This Resolution, if passed, will renew the directors’ authority each in the capital of the Company, which is approximately one
until the AGM to be held in 2021 (2021 AGM) (when the third of the Company’s issued ordinary share capital (excluding
directors intend to renew this authority) to make donations and treasury shares) as at 25 November 2019 (being the last
incur expenditure which might otherwise be caught by the terms practicable date prior to the publication of this Notice). The
of the CA 2006, up to an aggregate amount of £100,000 for the Company currently holds 3,301,961 shares in treasury. The
Company and for subsidiary companies. authority would, unless previously renewed, revoked or varied by
shareholders, remain in force up to the conclusion of the 2021
RESOLUTION 18 – PAYMENT OF FEES TO AGM of the Company or close of business on 5 May 2021,
NON-EXECUTIVE DIRECTORS whichever is earlier.
At our 2019 AGM, we received shareholder approval to pay the
full fee to each non-executive director in respect of each In accordance with the Investment Association Share Capital
non-executive role they perform for the Company without regard Management Guidelines (the Guidelines), Resolution 19.2 seeks
to the annual cap of £125,000 as set out in the Company’s to grant the directors authority to allot approximately a further
Remuneration Policy. The Company has reviewed this element one third of the Company’s issued ordinary share capital
of how we operate our Remuneration Policy following changes to (excluding treasury shares) in connection with a rights issue in
the remuneration policy and reporting requirements which came favour of ordinary shareholders with a nominal value of up to
into force on 10 June 2019. As a result of that review, the £58,432,400 (representing 528,800,000 ordinary shares of
Company concluded that it would be more appropriate to set the 111⁄20 pence each). Such additional authority will be valid until
cap on directors’ fees by reference to the aggregate cap in the the conclusion of the 2021 AGM.
Company’s articles of association which was approved by
shareholders in 2017 of £2,250,000. If the Company uses any of the additional one third authority
permitted by the Guidelines, the Company will ensure that all
This allows the Company to allocate appropriately compensated directors stand for re-election. The Company’s current practice
duties to individual directors as required whilst retaining current is that all directors submit themselves for re-election each year
limits on the total non-executive director fees payable. in accordance with the Code, notwithstanding the provisions set
out in the Guidelines.

The total authorisation sought by Resolution 19 is equal

to approximately two thirds of the issued ordinary share
capital of the Company (excluding treasury shares) as at
25 November 2019, being the last practicable date prior to
publication of this Notice.

Resolutions 1 to 19 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.

238  Compass Group PLC Annual Report 2019

RESOLUTIONS 20 AND 21 – DISAPPLICATION OF Subject to the passing of Resolution 19 and in addition to the
PRE-EMPTION RIGHTS authority granted by Resolution 20, Resolution 21 seeks to
If the Company issues new shares, or sells treasury shares, for replace the authority conferred on the directors at the 2019
cash (other than in connection with an employee share AGM to allot ordinary shares, or grant rights to subscribe for, or
scheme), it must first offer them to existing shareholders in convert securities into, ordinary shares or sell treasury shares for
proportion to their existing holdings. In accordance with investor cash (other than pursuant to an employee equity incentive share
guidelines, approval is sought by the directors to issue a limited scheme) up to an aggregate nominal value of approximately 5%
number of ordinary shares for cash without offering them to of the Company’s issued ordinary share capital (excluding
existing shareholders. treasury shares) without application of pre-emption rights
pursuant to article 13 of the Company’s articles of association
The Pre-Emption Group (which represents the Investment and section 561 of the CA 2006, provided that this authority will
Association and the Pension and Lifetime Savings Association) only be used for the purpose of:
published a revised statement of principles for the disapplication
of pre-emption rights (the Principles) in 2015. The Principles (i) an acquisition; or
provide that a general authority for the disapplication of (ii) a specified capital investment in respect of which sufficient
pre-emption rights over approximately 5% of the Company’s information regarding the effect of the investment on the
issued ordinary share capital should be treated as routine. This Company, the assets that are the subject of the investment
general authority, which the directors have sought and received and (where appropriate) the profits attributable to those
in previous years, is dealt with under Resolution 20. assets is made available to shareholders to enable them
to reach an assessment of the potential return on
Subject to the passing of Resolution 19, Resolution 20 seeks to the investment
replace the authority conferred on the directors at the 7
February 2019 Annual General Meeting (2019 AGM) to allot which is announced contemporaneously with the issue or which
ordinary shares, or grant rights to subscribe for, or convert has taken place in the preceding six month period and is
securities into, ordinary shares or sell treasury shares for cash disclosed in the announcement of the issue.
(other than pursuant to an employee equity incentive share
scheme) up to an aggregate nominal value of approximately 5% Other than in connection with a rights, scrip dividend, of other
of the Company’s issued ordinary share capital (excluding similar issue, the authority contained in this Resolution 21 would
treasury shares) without application of pre-emption rights be limited to a maximum nominal amount of £8,764,971.
pursuant to article 13 of the Company’s articles of association
and section 561 of the CA 2006. Other than in connection with a Together, Resolutions 20 and 21 represent 158,642,000
rights, scrip dividend, or other similar issue, the authority ordinary shares of 111⁄20 pence each in the capital of the
contained in this Resolution 20 would be limited to a maximum Company, which is approximately 10% of the Company’s
nominal amount of £8,764,971. issued ordinary share capital (excluding treasury shares) as
at 25 November 2019 (being the last practicable date prior
The Pre-Emption Group further provides that the Company may, to the publication of this Notice). The authority would, unless
as routine, seek to disapply pre-emption rights over the previously renewed, revoked or varied by shareholders, expire at
equivalent of approximately an additional 5% of the issued the conclusion of the AGM of the Company to be held in 2021 or
ordinary share capital of the Company, so long as certain criteria close of business on 5 May 2021, if earlier.
are met.
Shareholder Information

Compass Group PLC Annual Report 2019  239

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

Save for issues of shares in respect of various employee share As at 25 November 2019 (being the last practicable date prior to
schemes and any share dividend alternatives, the directors have the publication of this Notice), there were 1,589,736,625 111⁄20
no current plans to utilise the authorities sought by Resolutions pence ordinary shares in issue and 3,301,961 111⁄20 pence
19, 20 and 21, although they consider their renewal appropriate ordinary shares held in treasury for the purpose of satisfying the
in order to retain maximum flexibility to take advantage of Company’s obligations under employee equity incentive
business opportunities as they arise. In addition, and in line with schemes. These treasury shares represent 0.20% of the
best practice, the Company has not issued more than 7.5% of its Company’s issued ordinary share capital. Shares held in treasury
issued share capital on a non-pro rata basis over the last three are not eligible to participate in dividends and do not carry any
years. The limit also applies to shares issued from treasury. A voting rights.
renewal of this authority will be proposed at each subsequent
AGM and the directors confirm their intention to follow best As at 25 November 2019 (being the last practicable date prior to
practice set out in the Principles which provides that usage of the publication of this Notice), there were options to subscribe
this authority in excess of 7.5% of the Company’s issued share for ordinary shares issued by the Company outstanding over
capital in a rolling three year period would not take place without approximately 6,877,673 shares, which represent 0.43% of the
prior consultation with shareholders. Company’s issued ordinary share capital (excluding treasury
shares) at that date. If the authority to purchase the Company’s
RESOLUTION 22 – PURCHASE OF OWN SHARES ordinary shares was exercised in full, these options would
This Resolution authorises the directors to make limited on represent 0.48% of the Company’s issued ordinary share capital
market purchases of the Company’s ordinary shares. The power (excluding treasury shares).
is limited to a maximum of 158,642,000 shares (just under 10%
of the issued ordinary share capital as at 25 November 2019, RESOLUTION 23 – NOTICE OF MEETINGS OTHER THAN
being the last practicable date prior to the publication of this ANNUAL GENERAL MEETINGS
Notice) and details the minimum and maximum prices that can The Company’s articles of association allow the directors to call
be paid, exclusive of expenses. The authority conferred by this general meetings, other than AGMs, on 14 clear working days’
Resolution will expire at the conclusion of the Company’s next notice. However, under Section 307A of the CA 2006, all general
AGM or 18 months from the passing of this Resolution, meetings must be held on 21 days’ notice, unless shareholders
whichever is the earlier. agree to a shorter notice period, and the Company has met the
requirements for electronic voting under the CA 2006. This
The CA 2006 permits the Company to hold shares repurchased Resolution seeks to renew the authority granted by shareholders
as treasury shares. Treasury shares may be cancelled, sold for at last year’s AGM which preserved the Company’s ability to call
cash or used for the purpose of satisfying the Company’s general meetings, other than AGMs, on 14 clear working days’
obligations in connection with employee equity incentive notice, such authority to be effective until the Company’s next
schemes. The authority to be sought by this Resolution is AGM, when a similar resolution will be proposed. The directors
intended to apply equally to shares to be held by the Company confirm that the shorter notice period would not be used as a
as treasury shares. No dividends will be paid on shares which matter of routine, but only where flexibility is merited by the
are held as treasury shares and no voting rights will be attached business of the meeting and it is thought to be to the advantage
to them. Shares held as treasury shares will normally be used to of shareholders as a whole. An electronic voting facility will
satisfy the Company’s obligations under the Company’s be made available to all shareholders for any meeting held
employee equity incentive schemes. on such notice.

No share repurchases were made during the financial year Resolutions 20 to 23 will be proposed as special resolutions and
ended 30 September 2019 or to the date of this Notice. require that at least three quarters of the votes cast must be in
However, the directors consider it desirable for such general favour of a resolution for it to be passed.
authority to be available in order to maintain an efficient capital
structure whilst at the same time retaining the flexibility to fund
any bolt‑on acquisitions.

240  Compass Group PLC Annual Report 2019

RECOMMENDATION To appoint a proxy or to give an instruction to a previously
The directors consider that each of the Resolutions is in the best appointed proxy via the CREST system, the CREST message
interests of the Company and the shareholders as a whole and, must be received by the issuer’s agent (ID RA10) by
accordingly, recommend that all shareholders vote in favour of 10.30am on Tuesday 4 February 2020.
all Resolutions, as the directors intend to do in respect of their Please note, however, that proxy messages cannot be
own holdings. sent through CREST on weekends, public holidays or
after 8.00pm on any other day. For the purpose of this
IMPORTANT INFORMATION
deadline, the time of receipt will be taken to be the time
PROXIES
(as determined by the timestamp applied to the message
(i) A shareholder entitled to attend and vote at the AGM may
by the CREST Applications Host) from which the issuer’s
appoint a proxy or proxies (who need not be a shareholder
agent is able to retrieve the message. CREST personal
of the Company) to exercise all or any of his or her rights to
members or other CREST sponsored members and those
attend, speak and vote at the AGM. Where more than one
CREST members that have appointed voting service
proxy is appointed, each proxy must be appointed for
provider(s) should contact their CREST sponsor or
different shares.
voting service provider(s) for assistance with appointing
Proxies may only be appointed by:
proxies via CREST.
• going to www.signalshares.com and following the
For further information on CREST procedures, limitations
instructions for electronic submission provided
and system timings, please refer to the CREST manual. We
• requesting a paper Form of Proxy from the registrar, may treat as invalid a proxy appointment sent by CREST in
Link Asset Services, The Registry, 34 Beckenham the circumstances set out in Regulation 35(5)(a) of the
Road, Beckenham, Kent BR3 4TU; email: Uncertificated Securities Regulations 2001, as amended.
[email protected]; telephone within the
UK: Freephone 0800 029 4520 and from overseas: (iii) Pursuant to Regulation 41 of the Uncertificated Securities
+44 333 300 1568 Regulations 2001 and section 360B(2) of the CA 2006, the
• having an appropriate CREST message transmitted, if you Company specifies that only those shareholders registered
are a user of the CREST system (including CREST in the Register of Members of the Company as at close of
personal members). Please refer to the CREST manual on business on Tuesday 4 February 2020 or, in the event that
the Euroclear website (www.euroclear.com/CREST) for the Meeting is adjourned, in the Register of Members at the
further information close of business two days before the time of any adjourned
meeting, shall be entitled to attend or vote at the Meeting in
Submission of the Form of Proxy will not prevent a respect of the number of shares registered in their name at
shareholder from attending the Meeting and voting in the relevant time. Changes to entries on the Register of
person. However, if you do attend the Meeting and vote, Members after close of business on Tuesday 4 February
any proxy appointment will be treated as revoked. 2020 or, in the event that the Meeting is adjourned, at close
The electronic addresses provided in this Notice are of business two days before the time of any adjourned
provided solely for the purpose of enabling shareholders to meeting, shall be disregarded in determining the rights of
register the appointment of a proxy or proxies for the any person to attend or vote at the Meeting.
Meeting or to submit their voting directions electronically.
You may not use any electronic address provided in this
Notice of Meeting to communicate with the Company for Shareholder Information
any purposes other than those expressly stated.

(ii) To be effective, the Form of Proxy must be completed in

accordance with the instructions and received
by the Company’s registrar by 10.30am on
Tuesday 4 February 2020.

Compass Group PLC Annual Report 2019  241

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

NOMINATED PERSONS RIGHT TO ASK QUESTIONS

Any person to whom a copy of this Notice is sent who is a person Under section 319A of the CA 2006, shareholders have the
nominated under section 146 of the CA 2006 to enjoy right to ask questions at the AGM relating to the business of
information rights (Nominated Person) may, under an the Meeting and for these to be answered, unless such answer
agreement between him or her and the shareholder by whom he would interfere unduly with the business of the Meeting, involve
or she was nominated, have a right to be appointed (or to have the disclosure of confidential information, if the answer has
someone else appointed) as a proxy for the AGM. If a Nominated already been published on the Company’s website, or if it is not
Person has no such proxy appointment right or does not wish to in the interests of the Company or the good order of the Meeting
exercise it, he or she may, under any such agreement, have a that the question be answered.
right to give instructions to the shareholder as to the exercise of
voting rights. WEBSITE PUBLICATION OF AUDIT CONCERNS
Under section 527 of the CA 2006, shareholders have a right to
The statement of the rights of shareholders in relation to the request publication of any concerns that they propose to raise at
appointment of proxies in note (i) above does not apply to the AGM relating to the audit of the Company’s Accounts
Nominated Persons. The rights described in that note can only (including the Auditor’s Report and the conduct of the audit)
be exercised by shareholders of the Company. that are to be submitted to the Meeting or any circumstances
connected to the Company’s auditor who ceased to hold office
SHAREHOLDER RIGHTS AND AGM BUSINESS since the last AGM. The Company will publish the statement if
Under sections 338 and section 338A of the CA 2006, sufficient requests have been received in accordance with
shareholders meeting the threshold requirements which, section 527(2) of the CA 2006 which, broadly, requires a
broadly, require a minimum of 100 shareholders holding an minimum of 100 shareholders holding an average of 905
average of 905 ordinary shares each or shareholders holding ordinary shares each or shareholders holding at least 5% of the
at least 5% of the Company’s issued share capital (excluding Company’s issued ordinary share capital (excluding treasury
treasury shares), have the right to require the Company: (i) to shares) to make the request. The Company may not require the
give to shareholders of the Company entitled to receive notice members requesting any such website publication to pay its
of the AGM, notice of a resolution which may properly be moved expenses in complying with such request. Where a statement is
and is intended to be moved, at the AGM; and/or (ii) to include published, the Company will forward the statement to the
in the business to be dealt with at the AGM, any matter (other Company’s auditor not later than the time when it makes the
than a proposed resolution) which may be properly included in statement available on the website. The business which may be
the business. A resolution may properly be moved or a matter dealt with at the AGM includes any statement that the Company
may properly be included in the business unless: (a) (in the has been required under section 527 of the CA 2006 to publish
case of a resolution only) it would, if passed, be ineffective on its website.
(whether by reason of inconsistency with any enactment or the
Company’s constitution or otherwise); (b) it is defamatory; or
(c) it is frivolous or vexatious. Such a request may be in hard
copy or electronic form and must identify the resolution of
which notice is to be given or the matter to be included in the
business, must be authorised by the person or persons making
it, must be received by the Company not later than Wednesday
25 December 2019, being the date six weeks before the AGM,
and (in the case of a matter to be included in the business only)
must be accompanied by a statement setting out the grounds
for the request.

242  Compass Group PLC Annual Report 2019

DOCUMENTS AVAILABLE FOR INSPECTION ATTENDING THE AGM
Copies of the service agreements of the executive directors, If you are coming to the AGM, please bring the Notification
the letters of appointment of the non-executive directors, the Letter dated 16 December 2019 with you. It authenticates your
directors’ deeds of indemnity, the Register of Directors’ right to attend, speak and vote at the AGM and will speed your
Interests, and the Company’s articles of association and this admission. You may also find it useful to bring this Notice of
Notice will be available for inspection during normal business AGM and the Annual Report 2019 so that you can refer to them
hours from the date of dispatch of this Notice until the date of at the Meeting. All joint shareholders may attend and speak at
the AGM (Saturdays, Sundays and public holidays excepted) at the AGM. However, only one shareholder is entitled to vote. In
the registered office of the Company, Compass House, Guildford the case of joint holders of a share, the vote of the senior who
Street, Chertsey, Surrey KT16 9BQ and will also be made tenders the vote, whether in person or by proxy, shall be
available at the AGM for a period of 15 minutes prior to and accepted to the exclusion of the votes of the other joint holders.
during the continuance of the AGM. For this purpose, seniority shall be determined by the order in
which the names of the holders stand in the register.
TOTAL VOTING RIGHTS
As at 25 November 2019 (being the last practicable date prior to At the discretion of the Company, and subject to sufficient
the publication of this Notice), the Company’s issued share seating capacity, a shareholder may enter with one guest,
capital comprised 1,586,434,664 ordinary shares of 111⁄20 provided that the shareholder and their guest register to enter
pence each (excluding treasury shares). The holders of ordinary the AGM at the same time.
shares are entitled to attend and vote at general meetings of the
Company. On a vote by show of hands, every ordinary THE AGM
shareholder who is present has one vote and every proxy present The doors of the Live Room at Twickenham RFU Stadium will
who has been duly appointed by a shareholder entitled to vote open at 9.00am and the AGM will start promptly at 10.30am.
has one vote. On a vote by poll, every ordinary shareholder who Please see the map on page 245 for the location of Twickenham
is present in person or by proxy has one vote for every ordinary RFU Stadium. Car parking is available for shareholders as
share held. It is proposed that all votes on the Resolutions at the indicated on the map. For more information on how to get to the
AGM will be taken by way of a poll. venue, go to http://www.englandrugby.com/twickenham/
visiting-the-stadium/getting-here.
The total voting rights in the Company as at 25 November 2019
were 1,586,434,664 (excluding treasury shares). QUESTIONS
All shareholders or their proxies will have the opportunity to ask
INFORMATION AVAILABLE ON WEBSITE questions at the AGM. When invited by the Chairman, if you wish
The following information is available on the Company’s website to ask a question, please wait for a Company representative to
www.compass-group.com: bring you a microphone. It would be helpful if you could state
your name before you ask your question. A question may not be
(i) the matters set out in this Notice of Meeting answered at the Meeting if it is not considered to be in the
(ii) the total voting rights and number of shares of each class in interests of the Company or the good order of the Meeting or if it
respect of which shareholders are entitled to exercise voting would involve the disclosure of sensitive information. The
rights at the AGM Chairman may also nominate a representative to answer a
(iii) shareholders’ rights to include business to be dealt with at specific question after the Meeting or refer the questioner to the
the AGM Company’s website.
(iv) shareholders’ statements, resolutions and matters of Shareholder Information
business received by the Company after 16 December
2019

Compass Group PLC Annual Report 2019  243

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

VOTING AT THE AGM VENUE ARRANGEMENTS

The Company confirms that all Resolutions to be proposed at the For your personal safety and security, all hand baggage may be
AGM will be put to the vote on a poll. This will result in a more subject to examination. A cloakroom will be available to deposit
accurate reflection of the views of all of the Company’s coats and bulky items.
shareholders by ensuring that every vote is recognised, including
the votes of shareholders who are unable to attend the Meeting A sound amplification/hearing loop will be available in the
but who have appointed a proxy for the Meeting. On a poll, each meeting room.
shareholder has one vote for each share held.
There is wheelchair access. Anyone accompanying a
All of the votes of the shareholders present will be counted, and shareholder in need of assistance will be admitted to the AGM. If
added to those received by proxy, and the provisional final votes any shareholder with a disability has any questions regarding
will be displayed at the Meeting. attendance at the AGM, please contact the Group Company
Secretariat at Compass Group PLC, Compass House, Guildford
The indicative voting results, which will include all votes cast for Street, Chertsey, Surrey KT16 9BQ by 27 January 2020.
and against each Resolution at the Meeting, and all proxies
lodged prior to the Meeting, will be displayed at the Meeting and Security staff will be on duty to assist shareholders. The
the final results published on the Company’s website, the Company will not permit behaviour that may interfere with
London Stock Exchange and on the document storage system, another person’s security, safety or the good order of the AGM.
Morningstar, as soon as practicable after the Meeting. The
Please ensure that all electronic equipment (including mobile
Company will also disclose the number of votes withheld.
phones) is switched off throughout the AGM.
If you have already voted by proxy, you will still be able to vote at
Tea, coffee and light refreshments will be served before
the Meeting and your vote on the day will replace your previously
the Meeting.
lodged proxy vote.

Whomever you appoint as a proxy can vote or abstain from

voting as he or she decides on any other business which may
validly come before the AGM. This includes proxies appointed
using the CREST service. Details of how to complete the
appointment of a proxy either electronically or on paper are
given in the notes to this Notice.

244  Compass Group PLC Annual Report 2019

SHAREHOLDER ENQUIRIES DATA PROTECTION STATEMENT
Link Asset Services maintain the Company’s share register. If Your personal data includes all data provided by you, or on your
you have any enquiries about the AGM or about your behalf, which relates to you as a shareholder, including your
shareholding, you should contact Link Asset Services, The name and contact details, the votes you cast and your reference
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. number (attributed to you by the Company). The Company
determines the purposes for which and the manner in which
AMERICAN DEPOSITARY RECEIPT ENQUIRIES your personal data is to be processed. The Company and any
Compass Group PLC operates an American Depositary Receipts third party to which it discloses the data (including the
programme (ADR) which are traded on the over-the-counter Company’s registrar) may process your personal data for the
market under the symbol CMPGY. One ADR represents one purposes of compiling and updating the Company’s records,
ordinary Compass share. BNY Mellon (BNY) maintains the fulfilling its legal obligations and processing the shareholder
Company’s American Depositary Receipt register. If you have rights you exercise.
any enquiries about your holding of Compass American
Depositary Shares, you should contact BNY Mellon by PUBLISHED INFORMATION
regular mail: BNY Mellon, PO Box 505000, Louisville, If you would like to receive this Notice and/or a copy of the
KY 40233-5000, USA or by overnight or certified registered Annual Report 2019 in an appropriate alternative format, such
mail: BNY Mellon, 462 South 4th Street, Suite 1600, Louisville, as large print, Braille or an audio version on CD, please contact
KY 40202, USA. Alternatively you can email Computershare at the Group Company Secretariat at Compass Group PLC,
[email protected]. Further information Compass House, Guildford Street, Chertsey, Surrey KT16 9BQ.
can be found on BNY’s website at www.mybnymdr.com using
the symbol CMPGY and at www.compass-group.com. Our 2019 Annual Report and this Notice are available on the
Company’s website www.compass-group.com.

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Compass Group PLC Annual Report 2019  245

Glossary of Terms
Capital employed Total equity shareholders' funds adjusted for net debt, post employment benefit obligations
net of associated deferred tax, amortised intangibles arising on acquisition, impaired goodwill
and excluding the Group's non-controlling partners' share of net assets and net assets of
discontinued operations.
Constant currency Restates the prior year results to the current year's average exchange rates.
EM & OR restructuring Emerging Markets and Offshore & Remote restructuring.
Free cash flow Calculated by adjusting operating profit for non-cash items in profit, cash movements in provisions,
contract prepayments and costs to obtain client contracts, post employment benefit obligations
and working capital, cash purchases and proceeds from disposal of non-current assets, net cash
interest, net cash tax, dividends received from joint ventures and associated undertakings, and
dividends paid to non-controlling interests.
Free cash flow conversion Underlying free cash flow expressed as a percentage of underlying operating profit.
Gross capital expenditure Includes the purchase of intangible assets, contract fulfilment assets, property, plant and
equipment and investment in contract prepayments. Assets purchased under finance leases were
included in gross capital expenditure until 2019.
Like for like revenue growth Calculated by adjusting organic revenue growth for new business wins and lost business.
Net capital expenditure Gross capital expenditure less proceeds from sale of property, plant and equipment,
intangible assets and cash proceeds from derecognition of contract fulfilment assets and
contract prepayments.
Net debt Bank overdrafts, bank and other borrowings, finance leases and derivative financial instruments,
net of cash and cash equivalents.
Net debt to EBITDA Net debt divided by underlying EBITDA.
NOPAT Net operating profit after tax (NOPAT) is calculated as underlying operating profit from continuing
operations less operating profit of non-controlling interests before tax, net of income tax at the
underlying rate of the year.
Organic profit Calculated by adjusting underlying operating profit for acquisitions (excluding current year
acquisitions and including a full period in respect of prior year acquisitions), sale and closure of
businesses (excluded from both periods) and exchange rate movements (translating the prior
period at current year exchange rates).
Organic profit growth Calculated by adjusting underlying operating profit for acquisitions (excluding current year
acquisitions and including a full period in respect of prior year acquisitions), sale and closure of
businesses (excluded from both periods) and exchange rate movements (translating the prior
period at current year exchange rates) and compares the current year results against the prior
year. In addition, where applicable, a 53rd week has been excluded from the prior year’s
underlying operating profit.
Organic revenue Calculated by adjusting underlying revenue for acquisitions (excluding current year acquisitions
and including a full period in respect of prior year acquisitions), sale and closure of businesses
(excluded from both periods) and exchange rate movements (translating the prior period at current
year exchange rates).
Organic revenue growth Calculated by adjusting underlying revenue for acquisitions (excluding current year acquisitions
and including a full period in respect of prior year acquisitions), sale and closure of businesses
(excluded from both periods) and exchange rate movements (translating the prior period at current
year exchange rates) and compares the current year results against the prior year. In addition,
where applicable, a 53rd week has been excluded from the prior year’s underlying revenue.
ROCE Return on capital employed (ROCE) divides NOPAT by the 12 month average capital employed.
Specific adjusting items acquisition related costs
one-off pension charge
cost action programme charge
share of profit of joint ventures and associates held for sale
tax on share of profit of joint ventures
gain/(loss) on sale and closure of businesses
other financing items including hedge accounting ineffectiveness and change in the fair value
of investments

246  Compass Group PLC Annual Report 2019

Underlying basic earnings Excludes specific adjusting items and the tax attributable to those items.
per share
Underlying cash tax rate Based on underlying cash tax and underlying profit before tax.
Underlying depreciation Excludes specific adjusting items.
and amortisation
Underlying EBITDA Based on underlying operating profit, adding back underlying depreciation and amortisation of
intangible assets and contract prepayments.
Underlying effective tax rate Based on underlying tax charge and underlying profit before tax.
Underlying free cash flow Free cash flow adjusted for costs in the year relating to the 2019 cost action programme.
Underlying net finance cost Excludes specific adjusting items.
Underlying operating Based on underlying revenue and underlying operating profit excluding share of profit after tax
margin – Group of associates.
Underlying operating Based on underlying revenue and underlying operating profit excluding share of profit after tax of
margin – Region associates and EM & OR restructuring.
Underlying operating profit Includes share of profit after tax of associates and profit before tax of joint ventures but excludes
– Group the specific adjusting items.
Underlying operating profit Includes share of profit before tax of joint ventures but excludes the specific adjusting items, profit
– Region after tax of associates and EM & OR restructuring.
Underlying profit before tax Excludes specific adjusting items.
Underlying revenue The combined sales of Group and share of joint ventures.
Underlying tax charge Excludes tax attributable to specific adjusting items.

Glossary

Compass Group PLC Annual Report 2019  247

FORWARD LOOKING STATEMENTS

Certain information included in this Annual Report and Accounts is forward looking and involves risks, assumptions and
uncertainties that could cause actual results to differ materially from those expressed or implied by forward looking statements.

Forward looking statements cover all matters which are not historical facts and include, without limitation, projections relating to
results of operations and financial conditions and the Company’s plans and objectives for future operations, including, without
limitation, discussions of expected future revenues, financing plans, expected expenditures and divestments, risks associated with
changes in economic conditions, the strength of the food and support services markets in the jurisdictions in which the Group
operates, fluctuations in food and other product costs and prices and changes in exchange and interest rates. Forward looking
statements can be identified by the use of forward looking terminology, including terms such as ‘believes’, ‘estimates’, ‘anticipates’,
‘expects’, ‘forecasts’, ‘intends’, ‘plans’, ‘projects’, ‘goal’, ‘target’, ‘aim’, ‘may’, ‘will’, ‘would’, ‘could’ or ‘should’ or, in each case,
their negative or other variations or comparable terminology. Forward looking statements in this Annual Report and Accounts are not
guarantees of future performance. All forward looking statements in this Annual Report and Accounts are based upon information
known to the Company on the date of this Annual Report and Accounts. Accordingly, no assurance can be given that any particular
expectation will be met and readers are cautioned not to place undue reliance on forward looking statements, which speak only at
their respective dates.

Additionally, forward looking statements regarding past trends or activities should not be taken as a representation that such
trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under
the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Company
undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future
events or otherwise.

Nothing in this Annual Report and Accounts shall exclude any liability under applicable laws that cannot be excluded in accordance
with such laws.

This report is printed on paper certified

in accordance with the FSC®
(Forest Stewardship Council®)
and is recyclable and acid-free.

Pureprint Ltd is FSC certified and ISO 14001

certified showing that it is committed to all round
excellence and improving environmental
performance is an important part of this strategy.

Pureprint Ltd aims to reduce at source the effect

its operations have on the environment and is
committed to continual improvement, prevention
of pollution and compliance with any legislation
or industry standards.

Pureprint Ltd is a Carbon / Neutral®

Printing Company.

The images in this document are representative of

the services provided by Compass Group PLC and
its subsidiaries and partners.

Designed and produced by Black Sun Plc

www.blacksunplc.com

248  Compass Group PLC Annual Report 2019

 COMPASS GROUP PLC
Compass House
Guildford Street, Chertsey
Surrey KT16 9BQ
United Kingdom
Registered in England and Wales
No. 4083914
T +44 1932 573 000
Find this Report online at
www.compass-group.com