Compass adds weight to management team

Troubled contract caterer Compass has taken steps to shore up its senior management team at the end of a year which has seen three profit warnings, a UN investigation, boardroom changes and the dismissal of its UK boss.

The world's largest contract catering firm announced that Gary Green, chief executive officer of the Americas, would act as interim chief executive for the UK and Ireland.

The temporary appointment covers the management hole left by the dismissal of Peter Harris, who was sacked earlier this month over alleged business misconduct involving a United Nations contract in Liberia.

Trevor Biggs, executive director, commercial, for the UK and Ireland, will oversee the day-to-day management of the division.

Speaking at its annual results presentation, Compass said that it had also hired headhunter Korn Ferry to find a successor to group chief executive Mike Bailey.

It also confirmed that Sir Roy Gardner would replace chairman Sir Francis Mackay by next summer.

For the year to 30 September, Compass posted a 54% drop in pre-tax profit to £171m (from £370m) on turnover up 7.9% to £12.7b.

Underlying profits (excluding goodwill, amortisation and exceptional items) dropped by 9.9% to £581m (from £645m).

"Three out of our four geographies - North America, Continental Europe and the Rest of the World - have performed to our expectations, with North America and the Rest of the Word [excluding the Middle East military business] delivering a particularly strong result this year," Bailey said.

Declining military contracts in the Middle East will reduce turnover from £35m in 2005 to just £5m in 2006.

Bailey described the UK performance as unsatisfactory, but added that steps to turn the business around were well under way and would result in cost-savings of £50m in 2006.

Like-for-like UK turnover increased by 6% to £2.8b, but operating profit (excluding goodwill, amortisation and exceptionals) dropped by 30% (or £89m) to £205m.

Bailey said that the UK division had suffered through ongoing cost pressures in the business and industry sector, the London bombings, increased pension costs, lower disposal profits, restructuring costs and the sale of the Gatwick Meridien hotel.

Turnover in education dropped by 1%. Bailey claimed most caterers in the sector were suffering from "recent negative publicity regarding the standard of school meals".

By Angela Frewin