Annual Report 2018 - compass-group.com

1 Annual Report 2018. STRATEGIC Report . 2 2018 performance at a glance 4 Our business at a glance 6 Our market position 7 Our sectors 8 Chairman's statement 10 Our business model and strategy 12. 14. How we create value Chief Executive's review Sharpening our 18. 20. Key performance indicators Regional review focus through: 20 North America Performance, People and Purpose 22 Europe 24 Rest of World 26 People Report 28 Business review 35 Risk management 36 Principal risks As the industry leader, we have an 38 Corporate responsibility important long term role to play in society. We drive our financial Performance by CORPORATE GOVERNANCE.

2 44 Governance and Directors' Report delivering great food to our clients and 44 Chairman's letter consumers combined with a rigorous focus 46 Introduction to Corporate Governance on execution. We are further enhancing our 49 Board of Directors People proposition and developing a clearer 52 Corporate Governance Report 56 Audit Committee Report social Purpose to improve the long term 64 Corporate Responsibility Committee Report quality and sustainability of our 68 Nomination Committee Report financial results. 71 Directors' Remuneration Report 94 Other statutory disclosures FINANCIAL STATEMENTS.

3 101 Directors' responsibilities 102 Independent auditor's Report 108 Consolidated financial statements 114 Group accounting policies 122 Notes to the consolidated financial statements 183 Parent Company financial statements 185 Parent Company accounting policies 187 Notes to the Parent Company financial statements SHAREHOLDER INFORMATION. 190 Shareholder information 193 Notice of Annual General Meeting GLOSSARY. 202 Glossary of terms Visit our website for related information Our Corporate Responsibility Report will be available online in early 2019. Performance We drive our financial performance by providing our clients with great and healthy food, combined with a rigorous focus on operational execution + 2018 has been another strong year with good organic revenue growth of Compass Group PLC Annual Report 2018 1.

4 2018 PERFORMANCE AT A GLANCE. Consistent performance UNDERLYING UNDERLYING UNDERLYING UNDERLYING BASIC. REVENUE OPERATING PROFIT OPERATING MARGIN EARNINGS PER SHARE. 23,239m 1,741m 23,239. 22,852. 1,741. 1,705. 19,871. 1,445. 17,843. 17,058. 1,296. 1,245. 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018. STATUTORY STATUTORY DIVIDEND STATUTORY BASIC. REVENUE OPERATING PROFIT PER SHARE EARNINGS PER SHARE. 22,964m 1,690m 22,964. 22,568. 1,690. 1,665. 19,605. 1,409. 17,590. 16,854. 1,261. 1,214. 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018.

5 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 Board 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 202 and 203.

6 A summary of the adjustments from statutory to underlying results is shown on page 166 and further detailed in the consolidated income statement (page 108), reconciliation of free cash flow (page 113), note 1, segmental reporting (pages 122 to 125) and note 5, tax (pages 129 and 130). GLOBAL LOST GLOBAL GREENHOUSE NUMBER OF SITES. TIME INCIDENT FOOD SAFETY GAS INTENSITY OFFERING HEALTHY. FREQUENCY RATE INCIDENT RATE RATIO EATING PROGRAMMES. -39% -33% -14% +9%. (since 2014) (since 2014) (since 2014) (since 2014). 18,240. 17,980. 17,576. 16,900. 16,715. 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018.

7 2 Compass Group PLC Annual Report 2018. People We are committed to developing an inclusive and welcoming environment for all our people We are proud that our US business has been ranked in the Forbes 2018 The Best Employers for Diversity list. Compass Group PLC Annual Report 2018 3. OUR BUSINESS AT A GLANCE. We are the industry leader with a strategy focused on food 50 countries Food service is our core competence. We are the industry leader and create value for our clients and consumers by providing them with a range of dining solutions that are innovative, 55,000 client locations healthy and sustainable.

8 Our scale and focus on execution mean that we are typically the most efficient and lowest cost provider and can therefore offer 600,000 colleagues billion meals clients and consumers the greatest value as well as the most exciting and innovative solutions. We have a global footprint and manage the business in three geographic regions. This gives us balanced exposure to developed but attractive markets in North America and Europe as well as emerging markets with exciting long term growth prospects. NORTH AMERICA EUROPE REST OF WORLD. UNDERLYING REVENUE UNDERLYING REVENUE UNDERLYING REVENUE.

9 13,785m 5,783m 3,671m (2017: 13,322m) (20171: 5,598m) (20171: 3,932m). 59% 25% 16%. of Group total of Group total of Group total 1. Prior year comparatives have reclassified Turkey from Europe region into Rest of World region. 4 Compass Group PLC Annual Report 2018. Purpose As an industry leader, we understand the influence we can have on how food is produced and sourced Compass is a founding member of the Global Coalition for Animal Welfare (GCAW), an industry-led initiative that was launched in October 2018. In recognition of our ongoing commitment to advancing farm animal welfare, we have moved up from Tier 4 to Tier 3 in the Business Benchmark on Farm Animal Welfare.

10 Compass Group PLC Annual Report 2018 5. OUR MARKET POSITION. Significant structural growth opportunity across our core sectors and markets We estimate that the addressable global food services market is currently worth in excess of 200 billion. We have around a 10% share of that market by sales which makes us the leading global provider. Given that approximately 75% of the market is serviced by regional players or in-house providers, we believe that there is a significant structural growth opportunity for us. The market for food services continues to offer significant growth GLOBAL FOOD SERVICES MARKET c.