Compass profits fall on back of UN scandal

Click to follow
The Independent Online

The embattled catering giant Compass insisted yesterday the fallout from a UN contract scandal had not dented its reputation with other customers.

Mike Bailey, who will leave as chief executive as soon as a replacement can be found, said the "unhelpful level of publicity" over allegations that it used privileged information to win a UN contract had not put customers off. "Our retention rate and new business pipeline are where I would expect," he said.

Compass reported a 10 per cent fall in pre-tax profits yesterday to £581m in line with the latest of its four profit warnings. Pricing pressure, cost inflation, restructuring charges and weak disposal proceeds all hit its profits, with the problems worst in the UK. But its shares rose 8 per cent to 216.75p, as there were no further profits warnings.

The group has injected £100m into its pension black hole, which ballooned to £530m from £426m last year, Mr Bailey said. It is due to complete a triennial review of its pension fund next year. Compass's lawyers have been in contact with the Serious Fraud Office, which is considering a formal inquiry over the UN allegations. It has fired three executives for "breaching its code of ethics" and has instructed the law firm Freshfields to investigate.

Mr Bailey said he was "not prepared" to elaborate on why Peter Harris, who was promoted to run the group's UK division in July, was sacked. He said the Freshfields report was not finished but did say its scope was restricted to the controversial contract to supply peacekeepers in Liberia in 2003. The group has made no financial provisions relating to the UN investigation.

Comments