Following the announcement by the Group in October 2000 of the proposed sale of the Forte Hotels division, the auction process continues to go well with the sale of the Cavendish Hotel announced on 6 December 2000 and the sale of the Cumberland Hotel announced on 14 March 2001. The total proceeds from the process to date are cash of GBP210 million. The process continues to be on track for making further information available to shareholders on the progress of the disposal of the remaining businesses within the Forte Hotels division by mid April 2001.
The Group’s three geographic regions of the UK, Continental Europe and the Rest of the World, and North America have continued to grow their like for like sales in the first half of the year. Like for like sales growth for the UK division is expected to be over 5% in the first half. Adjusting for the impact of the disruption to rail services and by the current foot and mouth outbreak, underlying growth in the division is expected to be over 6%. Like for like sales in Continental Europe and Rest of the World and in North America have been particularly strong, maintaining the 8% growth rate achieved last year. In the first half, business retention rates in the group continue in line with the 95% rate achieved for the last financial year.
Further progress has been made in margin improvement and the company anticipates that the trading results for the year for the foodservice businesses will be in line with expectations.
New Business growth – new business gains in each of the divisions continue to be strong major new contracts recently signed include:
France – Compass Group announces that Select Service Partner has gained the Bâle-Mulhouse Airport Operations in the new Schengen and International terminal. The contract, for foodservice and vending outlets to include Ritazza, is for an initial 7 years with a total value of over GBP7m.
In the UK major contract gains have recently included: a five year contract for Eurest Sutcliffe with Thomson Travel Group at their new UK distribution call centre in Glasgow, with annual revenues in excess of GBP2m;a five year contract with Royal Mint, Cardiff, with total revenues of GBP1.3m; and Roux Fine Dining has been appointed for a three year contract representing over GBP4.5 million revenues for client dining and hospitality at the Merrill Lynch’s new European headquarters in London.
Greece – Compass Group announces the award of a contract by Athens International Airport to Eurest Hellas, a 7-year, GBP11 million contract to provide employee foodservice and vending at the new Athens airport to be opened later this month. Foodservice will be provided for 8,000 airport employees through two restaurants and 5 snack bars. This is an important addition to the Group’s business in Greece, which also includes foodservice for hospitals, schools, a motorway restaurant and in-flight catering.
USA – Select Service Partner (SSP) recently announced the award of a 10 year, $95m (GBP65m) contract to run all of the food and beverage concessions at the Reno/Tahoe International Airport. More than 15,000 passengers pass through the airport on a daily basis, in addition to 2,000 employees and tenants based at the airport.
Denmark – The Group is delighted to announce it has been awarded 5-year contracts for three sites for South Denmark University. The total contract value is in excess of GBP6m and will include Upper Crust.
Germany – Earlier this month the Group announced the gain of a 10 year contract with VFB Stuttgart, a DEM 80m (GBP27m) contract at the newest football stadium in Germany. This was in addition to the announcement of the acquisition of HSG Hoechst Service Gastronomie (HSG) which will give Eurest, Compass Group’s business and industry foodservice specialist, exclusive responsibility for foodservice at the Industriepark Höchst. HSG is the Hoechst owned foodservice company which caters for over 20,000 staff and serves in excess of 1.1m meals a year at the site with an annual turnover of approximately DEM 40m (GBP13.5m). Industriepark Höchst has over 40 companies on site including not only Hoechst but also Aventis, Messer, Solvay, Nutrinova and DyStar.
Outlook – the Company remains committed to branding, international expansion and market segmentation in foodservice, with a focus on organic growth, margin improvement and return on capital employed.
Francis Mackay, Chairman, said: Compass Group is in a strong position to maintain its progress in all its divisions. The demerger and three key acquisitions announced in the last month are important moves in the strategic development of the group. We look forward with confidence to future growth as a strong and focused foodservice organisation.
Michael J Bailey, Chief Executive, commented: I am pleased to report that trading in the first half of the current year is in line with our expectations. Our UK team are making successful steps forward in the integration of our UK business and delivery of the synergies we anticipated. The combination of the recession resilience of our markets, excellent business retention, strong new business growth and some superb infill acquisition opportunities gives us confidence as to the continued successful performance of the Group world-wide.
