Business Week - Will Compass point to profit?
After massive restructuring, global catering and hospitality company Compass releases its interim results to expectant shareholders
Investors will see if Compass Group’s efforts to revamp its business are proving positive, when the global catering and hospitality company reports its interim results next Tuesday.
The company, which relisted on the London Stock Exchange in February, has been a hive of activity since its demerger from Granada. After restructuring, Compass announced three acquisitions, two joint ventures and the sale of five businesses, including international hotel chain Le Meridien.
Nervous investors are still awaiting news of the sale, which remains in the balance because the company insists it will not sell the business for less than #1.8bn.
Chairman Francis Mackay, an ACCA fellow, said Compass would ‘be seen as giving the business away’, if it sold for under this price. Meanwhile bidders for the chain are backing away, with Marriott dropping out, outbid by Japanese bank Nomura who offered #1.85m.
The proposed sale comes after Compass angered investors by selling its Posthouse hotels to Bass for #810m. Shares fell after the sale, as many believed the UK hotel chain could have fetched another #150m.
Group finance director Andrew Lynch will also take part in the acquisition of Swiss food vending company Selecta. The European Union cleared the deal, designed to strengthen the group’s position in Europe, last Thursday.
Compass offered 540 Swiss francs per registered share to acquire Selecta, receiving shareholder approval and permission from the Swiss Competition Commission.
Lynch, a fellow of the ICAEW, began his career at KPMG. Prior to joining Compass, Lynch was FD of Travellers Fare, acquired by the company in 1992.
In March, Compass said it had adjusted its underlying growth prospects for the catering division to 6% due to the outbreak of foot-and-mouth disease.
However, it added the effects of the crisis are ‘not material in the context of the group,’ and trading remains in line with expectations.
Compass asserted it is continuing to grow through sector-focused businesses and acquisitions.
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SNAPSHOT
Annual results to September 30, 2000
Global Turnover: #7.306m
Operating Costs: #20.9m
Market Capitalisation: #11.117m
Executive directors: Francis Mackay, chairman (1991), Michael Bailey, chief executive (1999), Andrew Lynch, group FD (1997)
Auditor: Deloitte & Touche
Company profile: Compass Group is the parent company of restaurants such as Upper Crust and Harry Ramsden’s and its franchised global brands include Burger King and Pizza Hut.
Founded in 1941 as Factory Canteens Ltd, the group underwent a management buyout in 1987 and listed on the London Stock Exchange in 1988.