FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SODEXHO ALLIANCE SA
CENTRAL INDEX KEY: 0001169715
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741]
IRS NUMBER: 000000000
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: 6-K
SEC ACT: 1934 Act SEC
FILE NUMBER:
FILM NUMBER:
BUSINESS ADDRESS:
STREET 1: 3 AVENUE NEWTON
STREET 2: 78180 MONTIGNY-LE-BRETONNEUX
CITY: FRANCE
STATE:
ZIP: 00000
BUSINESS PHONE: 0113313085
6-K
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
February 13, 2004
SODEXHO ALLIANCE SA
3, avenue Newton
78180 Montigny-le-Bretonneux
France
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
Contents: Annual Report
EXHIBIT LIST
Exhibit Description
99.1 Annual Report
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SODEXHO ALLIANCE SA
By: /s/ Sian Herbert-Jones
-------------------------------
Name: Sian Herbert-Jones
Title: Chief Financial Officer
Date: February 13, 2004
This document contains "forward-looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. These include,
but are not limited to, statements regarding anticipated future events and
financial performance with respect to our operations. Forward-looking statements
can be identified by the fact that they do not relate strictly to historical or
current facts. They often include words like "believe," "expect," "anticipate,"
"estimated," "project," "plan," "pro forma," and "intend" or future or
conditional verbs, such as "will," "would," and "may." Factors that could cause
actual results to differ materially from expected results include, but are not
limited to, those set forth in our Registration Statement on Form 20-F, as filed
with the Securities and Exchange Commission (SEC), the competitive environment
in which we operate, changes in general economic conditions and changes in the
French, American and/or global financial and/or capital markets. Forward-looking
statements represent management's views as of the date they are made, and we
assume no obligation to update any forward-looking statements for actual events
occurring after that date. You are cautioned not to place undue reliance on our
forward-looking statements.
Sodexho Alliance
Reference Document
2002 - 2003
All
you need..
..to be the best
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This annual report is a translation of the Document de Reference filed with the
French Autorite des Marches Financiers (AMF), on November, 28, 2003, under the
number D.03-1493, in accordance with the COB regulation number 98/01. It may be
used for a financial operation, if an operation notice approved by the AMF is
attached to it.
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Contents
Financial highlights 2002-2003................................... 4
The foundation of our commitment................................. 7
Executive Committee.............................................. 10
Sustainable Development:
For you, we commit ourselves..................................... 11
- Clients................................................. 13
- Customers............................................... 15
- Employees............................................... 19
- Suppliers............................................... 21
- Shareholders............................................ 23
- Host countries.......................................... 25
Our activities:
For you, our teams innovate daily................................ 30
Operational Committee............................................ 33
- Business and Industry................................... 35
- Prestige................................................ 42
- Defense................................................. 45
- Correctional Services................................... 49
- Healthcare.............................................. 54
- Seniors................................................. 60
- Education............................................... 66
- Remote Sites............................................ 72
- Service Vouchers and Cards.............................. 78
Investor Information:
For you, transparency is our priority............................ 84
- Financial summary....................................... 86
- Corporate governance.................................... 90
- Financial communications................................104
Sodexho in the world:
For you, we are present in 76 countries..........................113
- Trademark policy........................................114
- Steps in growth.........................................115
- Corporate directory.....................................117
Financial highlights________________________________________________
11.7 billion euro in revenues
308,000 employees at 23,900 sites
Present in 76 host countries
CONSOLIDATED REVENUES
--------------------------------------------------------------------
EUR billion US $ billion
1998-1999: 9.032 9.549
1999-2000: 10.505 10.235
2000-2001: 11.943 10.554
2001-2002: 12.612 11.488
2002-2003: 11.687 12.490
For fiscal 2003, consolidated revenues of 11.7 billion euro were 7.3% lower than
in the prior year. The appreciation of the euro against other currencies had a
negative impact on revenues of 10%.
REVENUES BY REGION
--------------------------------------------------------------------
North America 46%
Continental Europe 32%
United Kingdom and Ireland 13%
Africa, Asia and Pacific Rim 6%
Latin America 3%
REVENUES BY BUSINESS
--------------------------------------------------------------------
Food and Management Services 98%
----------------------------
o Business and Industry 41%
o Defense 3%
o Correctional Services 1%
o Healthcare 19%
o Seniors 5%
o Education 24%
o Remote Sites 5%
Service Vouchers and Cards 2%
--------------------------
The Service Vouchers and Cards activity represents 2 percent of consolidated
revenues. However, issue volume (i.e. the aggregate face value of the vouchers)
totaled 4.6 billion euro
NUMBER OF EMPLOYEES
--------------------------------------------------------------------
1998-1999: 269,973
1999-2000: 285,986
2000-2001: 313,469
2001-2002: 315,141
2002-2003: 308,385
NUMBER OF OPERATING SITES
--------------------------------------------------------------------
1998-1999: 21,103
1999-2000: 22,172
2000-2001: 24,325
2001-2002: 24,681
2002-2003: 23,873
EMPLOYEES BY REGION
--------------------------------------------------------------------
North America 38%
Continental Europe 26%
United Kingdom and Ireland 17%
Africa, Asia and Pacific Rim 10%
Latin America 9%
EARNINGS BEFORE INTEREST, TAX AND AMORTIZATION (EBITA)
--------------------------------------------------------------------
EUR million US $ million
1998-1999 453 479
1999-2000 539 525
2000-2001 586 518
2001-2002 528 481
2002-2003 514 549
Consolidated EBITA reached 514 million euros. The operating margin increased
from 4.2% to 4.4%.
NET FINANCIAL DEBT TO SHAREHOLDERS' EQUITY
--------------------------------------------------------------------
(includes minority interests)
1998-1999 80%
1999-2000 57%
2000-2001 62%
2001-2002 56%
2002-2003 52%
Net financial debt of 1.201 billion euro decreased by 162 million euro as
compared to the prior year.
CASH FLOW PROVIDED BY OPERATING ACTIVITIES
--------------------------------------------------------------------
EUR million US $ million
1998-1999 301 318
1999-2000 375 365
2000-2001 410 362
2001-2002 391 356
2002-2003 390 418
Cash flow provided by operating activities of 390 million euro was consistent
with the prior year.
GROUP NET INCOME
--------------------------------------------------------------------
EUR million US $ million
1998-1999 132 139
1999-2000 85 82
2000-2001 138 122
2001-2002 183 167
2002-2003 162 174
Group net income of 162 million euro was comparable to that of the prior year
calculated at the average fiscal 2003 exchange rates.
DIVIDENDS PAID
--------------------------------------------------------------------
EUR million US $ million
1998-1999 60 63
1999-2000 75 73
2000-2001 89 79
2001-2002 97 88
2002-2003 97* 104*
*Subject to shareholder approval at the Annual Shareholders' Meeting, February
3, 2004
--------------------------------------------------------------------
In view of the fact that net income was comparable to that of the prior year if
currency effects are excluded, the Board of Directors has recommended that the
dividend per share of 0.61euro be maintained. Including the associated tax
credit of 0.305 euro, the net dividend is 0.915 euro.
EARNINGS PER SHARE (in euro)
--------------------------------------------------------------------
1998-1999 0.98
1999-2000 0.63
2000-2001 1.00
2001-2002 1.15
2002-2003 1.02
Earnings per share of 1.02 euro declined by 11% from the prior year due to
currency effects.
The foundation
of our commitment____________________________________________________
How can the company create sustainable quality of life without an intentional,
ongoing effort on everyone's part? Sodexho establishes firm guidelines to
support its long-term strategy and its daily business. These guidelines are
simply stated in our philosophy. They are in the values and the ethical
principles that underpin our corporate culture.
Our Philosophy
Our purpose
Our company is a community that includes clients, customers, employees and
shareholders. Our purpose is to exceed their expectations.
Our choice: organic growth
To achieve this, we focus on organic growth in earnings and revenues, while
contributing to the economic health of the countries where we provide our
services. When all of our employees are committed to growth, then growth
happens.
Our mission
Improve the Quality of Daily Life.
Our objective
Sodexho aims to be, for all of our clients, the benchmark wherever we offer our
services, in every country, in every region, in every city.
Our Core Values
We do the utmost to ensure that all of the group's employees share our three
core values:
Service spirit
"True dignity lies in being of service to others," says Pierre Bellon. Service
spirit is an attitude to daily life, a way of being. It is listening, paying
attention to details. It is also being available, responsive, welcoming and
efficient, so that what we say is what we do. Sodexho managers are entrepreneurs
who know their customers and who make their own decisions. Service is their
business.
Team spirit
In a team, everyone has their qualities, personalities and particular skills.
The winning team is the one whose members respect and appreciate each other.
They decide their strategy and tactics together, and then put their ideas into
practice without anyone seeking more credit than anyone else.. The team
manager's job is to combine all this talent, and channel the energy into a
single direction. Winning is the objective, putting the group's interest before
individual ambition. Team spirit is as essential at our sites as it is in the
boardroom.
Spirit of progress
Every day, Sodexho team members strive to give their best. This means going the
extra mile, continuously improving performance and daring to take the
initiative. The company encourages them to question accepted routines, because
not only success but also clear analysis of failures is what leads to
sustainable progress. For Sodexho, each achievement is a step towards greater
performance. That is why we are so committed to innovation, improvement and
anticipating the needs of clients and customers. The group's progress comes
directly from the collective and personal progress of all of its people.
Our Ethical Principles
Our ethical principles are loyalty, respect for people, transparency and
business integrity.
Loyalty
Means mutual trust
Sodexho shares with its clients, employees, shareholders and suppliers a number
of common objectives based on mutual trust, which supports fair, loyal
relationships among its various stakeholders. This loyalty is one of the
foundations of our organization and our business processes.
Respect for people
The heart of Sodexho
Sodexho is committed to equal opportunity for all equally-qualified employees
regardless of their race, national origin, creed, opinions, gender, lifestyle or
age. Because respect is an inalienable part of our commitment to Quality of
Life, Sodexho is extremely attentive to personal dignity. We cannot conceive of
life in society without the consideration that every individual deserves
regardless of the type of relationship that binds us.
Transparency
More than just the right to useful information, for Sodexho, transparency is a
constant attitude and an important part of our culture:
- We are committed to ensuring that every employee is informed in clear,
practical terms, both of his or her objectives, rights and duties, and of
important corporate news and events. Employees are expected to be completely
transparent in the information they provide.
- We provide all shareholders with equal access to the same accurate, clear,
information about our company and our business.
- We supply clients with high-quality products and services and always seek to
create value for them. - We offer suppliers clear, understandable contracts,
while demanding that they comply with the same ethical principles.
Business integrity
An absolute commitment to the highest standard of integrity and ethical business
practices Wherever we do business, we condemn any actions or business practices
that are not based on our core principles of trust, integrity and fairness.
Corruption and unfair competition do not help to create or sustain long-term,
peaceful partnerships. All of our partners are aware of this commitment and are
strongly encouraged to maintain the same high standards of business ethics that
have been a hallmark of our company.
Executive Committee_____________________________________________________
ELISABETH CARPENTIER
Senior Vice President, Human Resources
Sodexho Alliance
JEAN-MICHEL DHENAIN
Group Chief Operating Officer
Executive Committee Vice President
Sodexho Alliance
SIAN HERBERT-JONES
Chief Financial Officer
Sodexho Alliance
VINCENT HilleNmeyer
Senior Vice President, Strategic Planning and Control
Sodexho Alliance
MICHEL LANDEL
Group Chief Operating Officer
Executive Committee Vice President
Sodexho Alliance
RICHARD Macedonia
Chief Operating Officer
Sodexho
North America
CLODINE PINCEMIN
Senior Vice President, Corporate Communications
Sodexho Alliance
SUSTAINABLE DEVELOPMENT
For you,
we commit ourselves...
For our clients________________________________________________________
....to create strong, long-term partnerships
Sodexho commits itself to create value for its clients over the long term,
thereby forging strong partnerships.
Client satisfaction is the center of all our actions. We help to improve the
appeal, reputation and efficiency of each client's organization by constantly
looking for ways to improve the quality of our services in a shared quest for
innovation.
> Strong partnerships are built when we understand and respond to the needs of
our customers every day.
With a view to adapting our offering, we rely on a battery of tools, to better
understand client needs. Fresh Eyes Reviews, an interview process involving
upper management, is one such action, initiated by the Sodexho Healthcare
segment in the United States. Sodexho in France has also launched this
initiative in long-stay healthcare establishments. Also in France, Sodexho has
developed for the Ford Motor Company a flexible, food service offering, adapted
to production scheduling at the client's Bordeaux factory. In addition, we are
helping our client to show good corporate citizenship by participating, for
instance, in the cleanup of beaches, polluted by the Prestige tanker disaster.
> Long-term commitment shared with clients, enhances their value.
Sodexho School Services in the U.S. is proud to co-sponsor several national
awards that honor initiatives to advance student learning, including the Magna
Awards, which honor bold, innovative school board leadership. The Civic Star
Award recognizes the value of school/community partnerships, the National
Teachers Hall of Fame salutes the career performances of K-12 educators, and the
National School Public Relation Association recognizes their commitment to their
establishment.
(See "Our Activities" and the sections "Better together")
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Loyalty
[Canada] 97% client retention rate!
This impressive measure of client loyalty came on the heels of a very
broad-based survey, carried out in 2002 throughout our different business
segments, the better to understand changing client expectations and prepare our
response to their emerging needs. It is also thanks to these policies of
listening and local presence with clients that our Canadian subsidiary proudly
celebrated 35 years of service to Acadia University (Nova Scotia) and Canadian
National Railways, in Montreal, plus 30 years of service to Luther Home and
Investors Group (Manitoba), and to Brock University (Ontario). Brock University
President and Vice Chancellor, Dr. David Atkinson, commented, "The relationship
between Sodexho and Brock University is a remarkable one from which Brock has
benefited enormously over the years."
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Key Performance Indicator
> A client retention rate objective of 95% for all countries in which we operate
Retention rate in 2002-2003: 93%
The client retention rate is calculated on the previous financial year revenues
for contracts lost to a competitor or to self-operation, divided by the total
previous financial year revenues. Contracts terminated at Sodexho's initiative,
and site closures resulting from businesses moving abroad are also included.
Our retention rate is calculated exhaustively. Other companies may use another
approach.
It obviously varies by country. In the UK, following our decision to terminate
contracts, our retention rate was nearly 90 percent. In other countries, such as
Canada and the U.S., it is greater than our objective of 95 percent.
For our customers_______________________________________________________
....to improve the Quality of Daily Life, safely.
Sodexho commits itself to developing a portfolio of services that help improve
the quality of life for everyone who has entrusted us with their well-being.
Learning what makes a difference...
The needs of a growing child, an athletic adult, or a dependant senior are quite
different, and quality of life criteria vary greatly depending on each
customer's age, living environment and nationality. The Sodexho Research
Institute on the Quality of Daily Life, the Conviv'styles(R) customer research
program in Europe, and other specific national studies demonstrate our
commitment to understanding socio-cultural trends and to analyzing the behavior
and expectations of our clients and customers in order to expand and improve our
portfolio of customized solutions.
....and tailoring our response
Sodexho aims to keep cooking simple, while partnering with celebrated chefs,
like Marc Veyrat, Michel Bras and Antoine Edelman, to provide enjoyment and
health in equal measure and, thus, satisfy customer aspirations. The goal is to
add a pinch of happiness in the everyday lives of the people who frequent our
serving locations -- children, students, workers, healthcare patients and
seniors. The service portfolio continually expands, from food carts for office
buildings and dry cleaning on the premises, to stretcher bearers and television
repairs in hospitals, to tutorial events in schools, to uniform cleaning for the
military, to gray-water treatment on remote sites...the list goes on.
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Multiservice offering
[France]
Global Hospitality
In a healthcare establishment, such as the Saint-Louis Clinic in Poissy, Sodexho
works to improve not only quality of life for patients, but also for visitors
and medical and administrative staff. Our multiservice offering, Global
Hospitality, speaks to both their respective desires and constraints: main hall
reception, food service, convenience shopping and vending machines, newspaper
delivery to your room, general housekeeping and specialized cleaning of
operating theaters, and maintenance... It all contributes to freeing medical
staff to devote more time to care for their patients, and to offering patients
as much choice as possible in occupying their free time.
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Key Performance Indicators
> Percentage of revenues from non-food services
In 2002-2003: 19%
> Publication of studies on consumer behavior
- 2002: The Seventh School Meals Survey, conducted every two years in the UK, to
track the evolving eating habits of schoolchildren (ages 5 to 16) and the
expectations of their parents. Adapted versions were launched in the U.S. in
2001 (Kids and School Meals Study at www.sodexhousa.com) and in Finland in 2002.
- 2003: the Patient Experience Survey, launched in the UK, is in the same
spirit, and provides insight into hospital patient opinions, especially
concerning non-medical services.
- Since June 2002, www.conviv'styles.com is an online tool for customer research
and analysis of specific serving locations.
Sodexho commits itself to reduce food safety risks.
As the world's leading food service provider, Sodexho has a critical obligation
to maintain the highest food safety standards for customers, particularly since
we serve some of the most vulnerable segments of the population, including
children, hospital patients and the elderly. It therefore needs to understand
and evaluate risks, implement preventive procedures, and communicate. Risk
prevention begins with quality assurance and traceability of provisions (see
Suppliers). In France, Sodexho has taken the further step of constituting a
Scientific Council that, together with the Pasteur Institute in Lille, has a
mission of assessing and alerting the public in the event of a food safety
issue. In each country, a task force manages alerts, immediately informs clients
and customers, and when appropriate, blocks suspect products. This conforms to
the main components of the HACCP system (Hazard Analysis and Critical Control
Points), and underlines our policies of transparency in information, in which
our employees have been trained.
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Food safety
[Brazil]
A "gateway" to food quality assurance
In order to encourage site managers to bone up on food safety, a "food quality
assurance" diploma was added to the new manual of procedures. This included a
closed-doors exam that was held the same day throughout the country. The test
took three hours during which time the candidates had to demonstrate their
knowledge of food norms and processes. Those with the six highest scores were
awarded two-year university scholarships, to pursue the subjects of their choice
at night school.
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Key Performance Indicators
> Annual publication, by major region, of the number of bacteriological tests
conducted at Sodexho-managed establishments
For example, during the fiscal year, 3,000 tests were conducted in France.
> Application of safety standards on Sodexho sites
In the U.S., every Sodexho account is audited each year for compliance with food
and safety regulations, and the Gold 100 Award was created to recognize
locations that achieve 100% compliance with HACCP standards. To ensure that all
managers remain trained in the most up-to-date food safety procedures, Sodexho
in the U.S. offers supplemental training programs via its corporate intranet
site.
Sodexho is committed to educating children and young people about the importance
of eating right and to teaching them good nutritional habits.
At Sodexho we believe we have a special responsibility to educate people about
good nutrition. We have a role to play, partnering with experts, educators and
doctors to impart information to customers that will have a beneficial impact on
their future growth and development. In France, Sodexho participated in Semaine
du Gout (Flavor Week), promoting the theme "Eat well for health" at all of its
serving locations, which featured fish and vegetables. Sodexho in the U.S. has
Develop School Stars, so teachers and parents can demonstrate to children the
principles of healthy, balanced diets. And our subsidiary in Hong Kong has its
program, Healthwise, to help corporate employees to choose meals, adapted to
sedentary lifestyles.
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Nutrition and health
[France] Blending food and health
Sodexho promotes research into the relationship between diet and health. It
therefore has supported, from the start, the program SU.VI.MAX, one of the
broadest-based epidemiological studies ever undertaken to understand this
complex phenomenon. SU.VI.MAX spanned a period of eight years and involved more
than 13,000 subjects, representative of the French population. The findings,
presented in June 2003, offer scientific evidence that the intake of antioxidant
vitamins and minerals reduces, in men, the incidence of cancer by 31 percent,
and the risk of mortality by 37 percent. So we encourage the eating of
vegetables by making them appetizing, tasty, and -- why not? -- fun! Just try
some of the excellent fare prepared by Michel Bras or Marc Veyrat, during one of
their famous cooking events.
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Key Performance Indicator
> Publication of nutritional information for customers
- France - two new booklets in the series L'Appetit de Savoir, about fruits and
vegetables, available at many serving locations.
- USA - Top Ten Tips for Fighting the Freshman 15, a popular program designed to
help college students avoid gaining excessive weight during their first year
away from home.
- Belgium - an illustrated album, called Arthur et Zoe, helps educate children
(ages 8 to 10) about healthy lifestyle and nutrition choices.
For our employees________________________________________________________
....to encourage a fulfilling professional life
Sodexho commits itself to provide its employees with a powerful "social
elevator."
Sodexho offers employees of all backgrounds genuine opportunities to move up
within the company, whatever his or her duties, or place of work are at the time
of hiring. Sodexho favors the advancement of its best performers, which is a key
element in employee motivation and group identity, plus a lever for our
development as a company.
For instance, at Sodexho in France each manager has the possibility of changing
jobs every 5 years. As a result, nearly two-thirds of all managerial jobs posted
each year are filled by internal candidates. At Sodexho in Argentina, 40 percent
of employees that follow a training program are promoted.
> Recruitment and training of young people is an important component of our
internal promotion policies. Indeed, 75 percent of managers recruited by Sodexho
in France and 65 percent of Sodexho employees in Peru are less than 30 years
old. On-the-job training is the favorite mode of advancement, and all of our
subsidiaries offer a wide variety of carefully designed solutions for acquiring
new skills. At Sodexho in France, 5,000 people each year take at least one
training course. Many training programs are also conducted in partnership with
universities and schools, such as the Victorian University of Technology in
Australia and the School of Business in Argentina, ranked 17th among the world's
best schools.
> Sodexho is also attentive to each employee's personal growth objectives, and
to knowledge sharing at all levels. The Sodexho University in North America
offers employees both traditional and online training, associating the
acquisition of trade skills with personal development. As for the Sodexho
Management Institute, it welcomes the group's senior managers to seminars for
the exchange of know-how and fosters sharing a common managerial culture and
vision.
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Internal promotion
[China]
Growth shared with the group's young managers
Hired in May 1996 by our Shanghai subsidiary, Xiao Feng (age 33) moved up
through the ranks, from her first job as accountant to the position of finance
director for Sodexho in China. Promoted to head accountant, then deputy
controller, then controller, Xiao Feng is today one of our youngest directors,
after only 6 years with the group.
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Key Performance Indicator
> Number of internal promotions as a percentage of total job vacancies During
the 2003 fiscal year in France and in Argentina, this rate reached 60 percent.
Sodexho commits itself to promote and respect diversity.
Our ability to integrate the skills and experiences of people from countries
with different cultures, and at vastly different stages of economic development,
drives our growth and success.
> Equal opportunity and cultural diversity are Sodexho priorities. More than 50
nationalities are represented in our Belgian workforce -- in Norway, our people
come from more than 40 different countries from around the world. At Sodexho in
the U.S., four employee network groups support professional development for
women, Latino-American, African-American and Pan-Asian team members.
> Equal representation of men and women is a group reality, although the mix
varies by subsidiary. Women make up 58 percent of our global workforce, and also
hold 42 percent of managerial positions. At Sodexho in Venezuela led by Ana
Maria Sierra, 73 percent of site managers are women; at Sodexho in Colombia,
Australia and the UK, the rate surpasses 50 percent. At Sodexho in the U.S., the
newly created WiNG (the Sodexho Women's Network Group) promotes the enhancement
of women's individual and professional growth.
> Different initiatives also favor the hiring of disabled individuals. In
France, where the Group is partnering with Entraide Universitaire (a social
service organization), Sodexho created Cafe Signes, a site managed by and
designed for deaf-mutes. In the U.S., Sodexho has been recognized for its
employment of the disabled by Montgomery County (Maryland) and by the Governor
of Nevada.
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Diversity
[North America]
Best practice
Sodexho in North America values and promotes equal opportunity and diversity in
the company. In October 2003, Michel Landel received the Diversity Best
Practices CEO Leadership Award for this effort. In 2002, Sodexho in the U.S.
implemented a performance evaluation and bonus system based on measurable
diversity goals, and the Office of Diversity, led by the company's Senior Vice
President and Chief Diversity Officer now oversees Sodexho's diversity strategy
for employees, suppliers, customers and the communities in which Sodexho lives
and works. Sodexho in Canada launched a Diversity Council, to support diversity
throughout the organization. The Council's mission encompasses recruiting,
retention, training, promotion, mentoring, customer service and leadership.
These initiatives are in harmony with the group's strategic imperative that
diversity is both an ethical responsibility and a key success factor.
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Key Performance Indicator
> Employee satisfaction survey, to be conducted every two years
In 2002-03, an employee survey was conducted in Italy, with 909 people polled:
73% say they are proud and very satisfied to work for Sodexho.
72% think their supervisors listen to them.
73% consider they benefit from a good balance between their professional
and private lives.
60% believe that Sodexho personnel benefits from equal consideration,
regardless of age, race, sex or physical aptitude.
For our suppliers________________________________________________________
....to build balanced long-term relationships
Sodexho commits itself to pursue procurement policies that guarantee the origins
of the products it uses.
Sodexho believes in forging balanced long-term business relationships with
suppliers, choosing them both for providing high-quality products in the
quantities needed, and for committing to ethical standards. For instance,
Sodexho in France contractually specifies Total Quality and traceability for
each agro-industrial sector. This way, it knows the exact composition of
products, checks on their manufacture, inspects their delivery, and can track
them no matter where their serving location is. For Sodexho in Finland, food
suppliers commit themselves to food safety and traceability of products, too,
and have ISO 9001 and ISO 14001 certifications.
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Transparency
[France]
What do fish have in common with cows?
Sodexho adheres to the Transparency Guidelines of the National Syndicate of
Corporate Caterers, concerning traceability of supplies of beef and fish
products. Therefore, all of its suppliers must meet the same strict requirements
as to the origins, breeding and rearing of these animals. An independent
organization audits respect for these guidelines.
--------------------------------------------------------------------------------
Key Performance Indicator
> Purchases of approved products as a percentage of total products
Subsequent to recent changes in our key performance indicators with regard to
purchasing, we will present these results in next year's annual report.
Sodexho commits itself strongly to encouraging suppliers to respect its
sustainable development values.
Sodexho asks its suppliers to pledge their support for its sustainable
development process, in particular by embracing principles defined by the
International Labor Organization. Sodexho in the U.S. met with its 40 largest
vendors to confirm their commitments and actions, especially in the area of
respect for human rights. Its program in favor of diversity in the workplace
also benefited, as there has been a 50-percent increase in the number of
Sodexho's supplier companies that are owned by women and minorities.
--------------------------------------------------------------------------------
Values
[USA]
Fostering harmony
Sodexho interceded in a dispute between one of its suppliers and local farm
workers, who felt their wages were too low and were concerned about poor working
conditions. Sodexho asked the supplier to resolve the crisis quickly or risk
losing the contract. Within weeks, both sides began negotiations to resolve the
dispute.
--------------------------------------------------------------------------------
Key Performance Indicator
> Percentage of purchases sourced from approved suppliers
Subsequent to recent changes in our key performance indicators with regard to
purchasing, we will present these results in next year's annual report.
For our shareholders_____________________________________________________
....to insure that all shareholders receive the same information at the same time
Sodexho commits itself to provide all shareholders with the same simultaneous
accurate, clear, transparent information, on a regular basis.
Sodexho's independence and long-term sustainability are integral parts of our
corporate culture. Thanks to our business model, we maintain a healthy balance
sheet, and thus, without capital increases, we reimburse our debt, finance
growth, and ensure the regular payment of dividends to our shareholders.
Sodexho respects the principles of good corporate governance (see page 90). We
are particularly vigilant as to the accuracy and relevance of our financial
communications. To provide complete transparency, Sodexho Alliance and all
stakeholders in the investor relations process commit themselves to respect
principles guaranteeing fair treatment for all shareholders (see page 104).
Sodexho is attentive to the concerns of shareholders and the financial
community, seeking to improve constantly the efficiency of its investor
relations process. Every year, we survey shareholders concerning the quality of
our investor information. In addition, they receive, after each annual
shareholders' meeting, an information packet that summarizes responses to their
questions, and presents the survey's findings.
In sum, we make sure that our shareholders have the information they need to
understand our strategic choices and objectives. This information is also
available on the Sodexho Alliance Web site (go to www.sodexho.com), which
additionally enables users to check on our share price in real time, plus
participate in meetings and constructive dialog with financial analysts.
In 2003 for the second year in a row, the French magazine "Enjeux-Les Echos"
placed Sodexho Alliance at the top of its list of CAC 40 non-financial
companies, cited for their transparency. What is more, another French magazine,
"Le Journal des Finances," noted that Sodexho Alliance ranks number 6 among
companies with the best long-term stock market performance.
--------------------------------------------------------------------------------
Financial communications
[International] What our shareholders think
Main 2003 shareholder survey findings:
>> A growing number of shareholders hold their shares for 5 years or more :
31% compared to 26% in 2002.
>> An overwhelming majority of shareholders are happy with Sodexho's financial
standing: 49% believe it is satisfactory, and 24% believe it is very
satisfactory.
>> 7 shareholders out of 10 consider Sodexho to be fairly responsive to
economic change, and 42% note its strong market position.
>> A majority of shareholders judge the transparency and regularity of
information to be sufficient, but do not agree it is sufficiently
instructive.
--------------------------------------------------------------------------------
Key Performance Indicator
> Yearly shareholder survey concerning the quality of information they receive
For the 2003 fiscal year, 24,868 shareholders were polled, each holding at least
80 shares. 1,371 responded, for a response rate of 5.5 percent, compared to 5.4
percent for the previous year.
For our host countries
in which we operate______________________________________________________
....to contribute to their economic and social development
Sodexho commits itself to support the development of local economies by
promoting local hiring, the purchase of local products and, in the most
disadvantaged countries, creating local initiatives to stimulate economic
growth.
Our commitment to improving quality of life involves us in the economic and
social development of our host countries. We help people build their future. To
do so, we commit ourselves to involving local communities in our contracts by
hiring from the local workforce, creating and operating training centers,
purchasing local products, and promoting the creation of micro-enterprises.
>For instance, Sodexho in Australia participates in the Corporate Leaders for
Indigenous Employment Project. This confirms our commitment to increase the
number of employment and training opportunities for indigenous Australians, with
a view not just to job creation, but also to secure permanent jobs and careers
with Sodexho.
> In 1999, Sodexho in Peru created a training center near the Antamina mine
site, both to cover its own needs for serving staff, and also those of other
sub-contractors. In two years, over 400 local residents were trained and some
20,000 hours of instruction dispensed. In a project with the local parish, the
training center is still operational, today. In addition, Sodexho fostered the
development of vegetable farming, trout breeding, and the manufacture of
yogurts.
> Sodexho in New Caledonia and in Nigeria has assisted in the founding of
micro-enterprises for public transportation, and for waste collection.
--------------------------------------------------------------------------------
Local partnering
[Canada]
Sodexho puts progress into practice
In February 2003, Sodexho's Canadian subsidiary was cited for Gold Level
Achievement in the Progressive Aboriginal Relations Program (PAR). Successful
participation in PAR signals that Sodexho is establishing fair, balanced
business relationships with native communities, opening many doors for their
future progress. In a further development, Garry C. Knox, President of Sodexho
in Canada, is co-chairing the Canadian Council of Aboriginal Business (CCAB).
These efforts and this recent appointment speak to our strategic commitment to
diversity and inclusion throughout the company.
--------------------------------------------------------------------------------
Key Performance Indicators
> Percentage of employees hired locally
In 2002-2003: 97%
> Percentage of local purchasing in emerging countries
Subsequent to recent changes in our key performance indicators with regard to
purchasing, we will present these results in next year's annual report.
Sodexho commits itself to expand its program to fight malnutrition to the main
countries in which it operates.
We refuse to accept that 800 million people worldwide suffer from malnutrition
and consider it our duty to fight hunger. The Sodexho Foundation takes up this
challenge through its program, S.T.O.P. Hunger. Initially only in North America,
the Sodexho group has decided to extend S.T.O.P. Hunger to all of its major host
countries.
We envisage numerous actions, giving particular attention to hunger among
children. For example, thanks to one program, Feeding Our Future, tens of
thousands of meals are supplied to children, in eleven cities in the U.S. and
four in Canada, during summer vacation, when school cafeterias are closed. In
another annual initiative, Campus Kitchens brings together student volunteers,
who collect, prepare and serve over 2.6 million meals to the underprivileged.
In January 2003, Sodexho in France was cited for its S.T.O.P. Hunger program,
and received the Prize for Ethics and Governance, jointly awarded by a local
trade school (Ecole des Cadres et Createurs d'Entreprises) and the French
publication, "Le Figaro."
--------------------------------------------------------------------------------
S.T.O.P. Hunger
[USA]
Weighing in against obesity
Malnutrition can also lead to obesity. One American child out of four is grossly
overweight, and poor families are often the most affected. This situation pushed
one employee of our American subsidiary, in association with a humanitarian
organization, to offer to teach parents how they could prepare healthy, balanced
meals on a tight budget. In 2002, this courageous action resulted in Sodexho
voting this person one of eight employees, elected Heroes in Daily Life.
--------------------------------------------------------------------------------
Key Performance Indicator
> Number of group programs and initiatives in the fight against malnutrition
The Sodexho Foundation in the U.S. operates five major programs: Servathon,
Feeding Our Future, food donations, the Campus Kitchens project, and Heroes in
Daily Life. Since 1999, the Sodexho Foundation has donated over $1.2 million,
and has received various national and international citations.
Sodexho in Canada has also adopted these five programs. In 2003, the Sodexho
Foundation in Canada announced its first Heroes of Daily Life winners, while
adding the city of Vancouver to the Feeding Our Future program.
During the past year, Sodexho in France, the UK, Belgium and Australia began to
study ways they could participate in the fight against malnutrition, and what
might be done to help needy children.
For details, go to www.helpstophunger.org.
Sodexho commits itself to help protect the environment in its host countries.
While considered as a non-polluting business, Sodexho has always paid careful
attention to the environment as a way of creating the conditions for better
quality of life. Thus, we want to take action in four areas: pollution
prevention, waste treatment, energy control, and water consumption.
For example, Sodexho in the U.S. works with its clients to increase the
percentage of waste recycled, implementing its training program, Recycling 101,
a site manager's guide to starting a recycling program. What is more, Sodexho is
exploring composting as a way to manage the waste stream.
Sodexho in Finland is the first player in the Finnish food service marketplace
to receive both Year 2000 ISO 9001 and ISO 14001 certification for all its
operational and administrative activities on 84 sites.
And Sodexho in the UK innovates with its Earth's Nectar Package, with the
mission to offer a lifestyle choice that focuses on overlapping issues, facing
clients and customers: the environment, nature and food, on the one hand, and on
the other, fair trade/direct trade, detergents and disposables.
--------------------------------------------------------------------------------
Environmental protection
[France] An example worth following
Sodexho manages 10 restaurants and clubs at the Technocentre, the R&D pole of
the Renault group, employing 10,000 people. As a partner in earning ISO 14001
certification with its client, Sodexho implemented an exemplary program for
environmental protection: selective waste sorting and collection, composting
vegetable waste, biological treatment of cooking oil vats, reduced water and
electricity consumption, and reduced pollution of effluents, such as detergents.
--------------------------------------------------------------------------------
Key Performance Indicator
> Number of assistance packages offered to local initiatives
In November 2001, Sodexho in France signed an environmental charter with the
city of Grasse. For the first time in France, a city and a food service company
committed themselves to such a shared overall effort. Intended to inform young
customers about respect for the environment, to communicate with families, and
to train municipal personnel, this charter comprises a plan for managing energy
and fluid consumption. The charter also calls for annual self-diagnosis with key
performance indicators, which enabled Sodexho to earn, in June 2003, a
Sustainable Development label for this action, awarded by the Provence-Alps-Cote
d'Azur region.
A continuous improvement process
In 2003, Sodexho formalized its sustainable development strategy, which is set
for gradual deployment in all its host countries.
The process, which involved discussions and consensus-building with a working
group comprising representatives from all our businesses and regions, has
resulted in a document entitled Ethical Principles and Sustainable Development
Contract, which can be consulted on our Web site at www.sodexho.com.
Sodexho's sustainable development strategy has always been based on everyday
practices that demonstrate our social, economic and environmental commitment.
These practices reflect a continuous improvement process that is tailored to the
specific cultural, economic and social features of each country in which we
operate. To measure our progress, we have developed key performance indicators
for all of our stakeholders.
Adherence that confirms our unwavering commitment
Global Compact
The Sodexho group demonstrates its shared commitment though adherence to the
Global Compact between the United Nations (UN) and the worldwide business
community. This "contract" was drawn up to incite businesses, both large and
small, to uphold and promulgate a set of core values in the areas of human
rights, labor standards and environmental practice. It also aims to publicize
international agreements and to encourage their application.
For further information, go to:
Sodexho and its commitments www.sodexho.com
www.sodexhousa.com
www.sodexhodiversity.com
www.helpstophunger.org
Global Compact www.unglobalcompact.org
Global Sullivan Principles www.globalsullivanprinciples.org
Study Centre of Corporate
Social Responsibility www.orse.org
Sodexho Alliance is listed in the FTSE4Good and ASPI euro zone socially
responsible indices.
ACTIVITIES
For you...
...our teams
innovate daily
Innovation
To improve quality of life every day for each client and customer, throughout
the world, Sodexho has made innovation one of its priorities and one of the
pillars of its development.
Sodexho, true to the spirit of innovation, motivates its teams to anticipate the
needs and aspirations of everyone it serves each day. What is more, 51 percent
of its innovations emerge as a direct result of listening to its clients and
customers, 28 percent come from analyzing its professional environment, and 21
percent are the fruit of in-house synergies.
On average, every two years, some 1,500 innovators from all countries present
800 innovations; roughly 100 are selected from this international pool, and
around 20, those with the strongest track record of creating value for clients,
customers and the group, are developed worldwide.
Food and
Management Services____________________________________________________
Number 1 worldwide
98% of group revenues
11.439 billion euro in consolidated revenues
12.225 billion US$ in consolidated revenues
Business and Industry
Prestige
Defense
Correctional Services
Healthcare
Seniors
Education
Remote Sites
Service Vouchers and Cards______________________________________________
Number 2 worldwide
2% of group revenues
4.6 billion euro in issue volume
248 million euro in consolidated revenues
265 million US$ in consolidated revenues
285,000 clients
11.5 million consumers
825,000 affiliates
1.6 billion vouchers issued
Operational Committee__________________________________________________
ROD BOND
President, School Services
Food and Management Services
USA
RICK Brockland
President, Campus Services
Food and Management Services
USA
ELISABETH CARPENTIER
Senior Vice President, Human Resources
Sodexho Alliance
GEORGE Chavel
President, Health Care Services
Food and Management Services
USA
YANN Coleou
President
Food and Management Services
France
Jean-Michel DHENAIN
Group Chief Operating Officer, Sodexho Alliance,
Responsible for Continental Europe, South America, Asia and Australia
RICK FLOORE
Internal Audit Director
Sodexho Alliance
SIAN HERBERT-JONES
Chief Financial Officer
Sodexho Alliance
VINCENT HilleNmeyer
Senior Vice President, Strategic Planning and Control
Sodexho Alliance
NICOLAS JAPY
President
Universal Sodexho
MICHEL LANDEL
Group Chief Executive Officer, Sodexho Alliance,
Responsible for North America, United-Kingdom and Ireland, and Remote Site
activity
RICHARD Macedonia
Chief Operating Officer
Sodexho
North America
TOM M. Mulligan
President, Corporate Services
Food and Management Services
USA
CLODINE PINCEMIN
Senior Vice President, Corporate Communications
Sodexho Alliance
PATRICK POIREAU
President
Food and Management Services
Asia and Australia
IVAN SEMENOFF
President
Sodexho Pass
Service Vouchers and Cards
MARK Shipman
Chief Executive
Food and Management Services
United Kingdom and Ireland
DAMIEN VERDIER
President Strategic Planning and Control
Food and Management Services
Continental Europe
PHILIPPE VORAZ
President
Food and Management Services
South America and Turkey
Business and Industry
Number 2 worldwide
4.682 5.004 40% 126,300 12,224
Revenues Revenues Share Number of Number of
(euro in (US$ in of group employees* sites
billions) billions)
*estimated
The food service market in figures
Estimated market value: 90 billion euro
Current outsourcing rate: 75%
Market share: we estimate that our share of the outsourced market, as well as
that of our main competitors worldwide, has not varied more than 1% during the
fiscal year.
Market trends
The food service market for business and industry remains sensitive to swings in
the economy. Today, clients focus on improving their competitiveness and are
looking for productivity gains. Nevertheless, this highly outsourced market
continues to present multiple opportunities for development.
Source: Sodexho
Michel Landel
Sodexho Worldwide Market Champion, Business and Industry
"Our goal is to be an exceptional partner for our clients every day, able to
contribute through our services to improving their competitiveness."
"Every day, we help our clients to improve the quality of life for their
employees, because an improved job environment contributes to higher levels of
worker satisfaction, greater team motivation, and ultimately to enhanced
productivity and an overall better corporate image. It has always been our
policy for our teams to focus on their core contribution, which is to nurture a
spirit of partnership with our clients everywhere.
"This strong focus on quality of life issues is evident in our food offering,
where we constantly promote the value of cultural differences, and differences
in tastes and dietary preferences. In the U.S., our customers and clients
reflect the incredible ethnic and international diversity found in offices,
schools, hospitals and campuses throughout the country. Yet, there is something
to satisfy everyone at each of our dining sites. Balanced meals are another
important focus at Sodexho. We not only provide a wide array of healthy food
choices, but we also provide nutrition facts about our fare, and advice on
healthy eating.
"It is through expanding on this partnering spirit that we realize our greatest
opportunities for organic growth. This translates directly into client
retention. The more clients remain loyal, the more solid a base we have on which
to build. Organic growth comes from stimulating sales at each serving location.
Our challenge is to convince everyone at each site that they would really rather
be eating with us. Finally, our third vector for organic growth is the expansion
of our range of services. Dry cleaning, concierge services, and home meal
replacement - these are just a few of our services that improve quality of life
for our customers. Front desk management, office cleaning, mailroom management,
and maintenance services are just a few that contribute to the productivity of
our clients."
--------------------------------------------------------------------------------
Client retention, as demonstrated by our 30-year partnership with
Hewlett-Packard, is the benchmark of our commitment.
--------------------------------------------------------------------------------
Achievements
Belgium
ISO 14001 certification for the site at the Theatre Royal de la Monnaie in
Brussels.
France
Year 2000 ISO 9001 certification for the Large Accounts division and three
regional business units; ISO 14001 certification for sites managed by Altys for
national jet engine manufacturer, SNECMA.
Hungary and the Netherlands
Year 2000 ISO 9001 certification for head offices and all sites.
UK
Sodexho Prestige, working for the 2002 Commonwealth Games , is cited as the
Event Caterer of the Year at the Cost Sector National Awards.
UK
The Sodexho facilities management team at the Ford Technical Centre in Dunton is
awarded ISO 14001 certification.
Better together
[UK]
GlaxoSmithKline
"The GSK-Sodexho business relationship has grown significantly during the past 3
years. GSK regards Sodexho as a key business partner and a company that has
demonstrated added value to business operations." Donna Myerthall, Stevenage
Site Director, GSK (and the Sodexho client for GSK R&D)
Singular success: more service for less
GlaxoSmithKline (GSK), the result of the merger of UK drug giants Glaxo Wellcome
and SmithKline Beecham at the end of the year 2000, is a world-leading
research-based pharmaceutical company, engaged in the discovery, development,
manufacture and marketing of pharmaceutical health-related products. GSK has an
annual research and development budget of 3.5 billion US$, the largest in the
world.
One of the key issues in the pharmaceutical industry is to shorten the time to
develop new molecules. Ideally, the process needs to be reduced by half. With
this sense of urgency, the research structure had to reallocate its resources to
accelerate its development process.
Following this move, the client wanted to rationalize the management of General
Services. Objectives were to deliver a more consistent and higher level of
service, plus reinforce team spirit among its people. GSK was not just looking
for a competent service provider, but for a business partner that shared the
same corporate values, spoke the same corporate language, and offered innovative
ideas continually to improve service delivery and effectiveness.
Sodexho responded with 'change management,' plus multiple support services. It
put forward its organizational skills - optimizing HR management, mobilizing
staff and account management teams, identifying best practice, defining
procedures, and promoting innovation.
Sodexho was awarded a yearly (pound)11 million multiservice contract for all GSK
R&D sites in the UK. Reasons for choosing Sodexho were its ability to: >>
integrate, manage and 'grow' people, >> deliver an innovative service suite, >>
guarantee cost reductions. Its culture and vision for the future were also
deciding factors.
Sodexho took over a very broad range of responsibilities, offering the client a
true 'one-stop shop' for the provision of support services. Significant
operational efficiencies were achieved together with an increase in the scope of
managed services. Sodexho was awarded the GSK R&D business in June 2002 and
successfully mobilized all operations with the smooth transfer, by September
2002, of approximately 700 people, previously managed by 25 contractors.
Sodexho is currently developing an expansion program. It wishes to encompass
both specialist and generalist activities within its 28 service categories, and
in turn allow GSK fully to concentrate on its core activities, i.e. researching
and developing new drugs. Sodexho has started this process within GSK R&D,
taking over the servicing of laboratory equipment with a team of specialist
engineers, and creating an administration helpdesk to monitor and record
actions.
With a view to reinforcing their already exemplary partnership, Sodexho
initiated a search for new sources of progress over the next 12 months,
including the ongoing development of innovations and the continuing transfer of
best working practices across all sites. What is more, the open, honest
relationship, which GSK and Sodexho share, has enabled the two companies to
expand their teamwork to include operations in North America, continental Europe
and Asia.
--------------------------------------------------------------------------------
In the first year of operation, Sodexho reduced costs by 10%, savings that were
ploughed back into the core business of GSK Research & Development.
--------------------------------------------------------------------------------
In brief
[Sweden and Poland]
Sodexho, Company of the Year
Sodexho in Sweden has become a major multiservice player that is present across
the country and continues to progress through organic growth. Thanks to this
performance, the French Chamber of Commerce in Sweden named the subsidiary
"French Company of the Year." The Intelligent Building Association named Sodexho
in Poland "Best Facilities Management Company of the Year 2003" for its
management of 37 conference centers, many of which boast ultra-modern
communication systems that require specialist maintenance.
[France]
Nutriguide for balanced nutrition online
Nutriguide is a value-added online service, which helps customers define the
best nutritional balance that corresponds to their personal habits. Intuitive to
use, the software and nutrition facts have been extensively qualified by Sodexho
teams and experts from the Pasteur Institute in Lille. Simply key in your
personal data (age, height, sex, weight and lifestyle), your alimentary habits,
based on the meal options that Sodexho offers... and you get your guide to
healthy eating for a day, a week or a month. Insurance giant, AXA is the first
client to use the service on its intranet and encourages its employees to log on
in the interest of improving their health. Indeed, as a leading underwriter of
life insurance, AXA was bound to set a good example.
[France]
Orion outsources property and facilities management to Altys
Orion Capital Managers is an international real estate firm. Recognizing
investor demand for modern, quality office buildings in the Paris market, Orion
acquired and leased an entirely renovated 32,000 m2 building, and then a second
prominent 20,000 m2 building. For these high-end operations, Sodexho's
specialized subsidiary, Altys, provided the top-quality service Orion needed to
fulfill its objectives. Altys guaranteed property management supervision by a
senior member of staff. It also provided multitechnical and multiservice
facilities management with the utmost care. Thanks to strong partnering
relationships like this, Orion continues to pursue major investment
opportunities.
Among our clients...
Companies
ABB, Camacari (Brazil), Brighouse (UK)
Akzo Nobel, 1 site (Canada), 2 sites (Germany), Malmo (Sweden), 6 sites (UK)
Alcatel, Vienna (Austria), Zaventem (Belgium), 15 sites (France)
Alcoa, Recife (Brazil)
AXA Group, 18 sites (France), Bristol (UK), 11 sites (Germany)
BAA, Gatwick and Stansted (UK)
Bentley Motor Cars, Crewe (UK)
Bristol Myers Squibb, 11 sites (USA)
Cadence Software, Delhi (India)
Cap Gemini Ernst & Young, 4 sites (Netherlands), 1 site (Spain), 6 sites (UK),
New York (USA)
Capital One, national account (USA)
Cisco Systems, 2 sites (Belgium), 3 sites (France), 9 sites (Germany),
3 sites (India), 3 sites (UK)
Citigroup, 5 sites (Poland)
CSC (Computer Services Corp.), Delhi (India)
Danone Group, Buenos Aires (Argentina), Danone Vitapole, Palaiseau (France),
Warsaw (Poland)
Dell, Bratislava (Slovakia)
Dior, Orleans (France)
Disney Studios, 7 sites (USA)
EADS, 7 sites (France), 1 site (UK), 2 sites (Germany)
Ericsson, Brussels (Belgium),1 site (Canada), 4 sites (Netherlands), Warsaw
(Poland)
ExxonMobil, 8 sites (USA)
Fidelity Investments, Boston, MA (USA)
Fleet Financial, national account (USA)
Ford Motor Company (Volvo), 4 sites (Australia), 1 site (Brazil), Boras
(Sweden), national account (USA), Valencia (Venezuela)
Franklin Templeton, San Francisco, CA (USA)
General Electric, 10 sites (USA) General Mills, 1 site (Canada), 4 sites (USA)
General Motors, 3 sites (Brazil), Sliedrecht (Netherlands), Luton (UK), 6 sites
(USA)
Gillette, Buenos Aires (Argentina), Chennai (India), 1 site (UK), national
account (USA)
GlaxoSmithKline, 2 sites (Canada), Tianjin (China), 12 sites (UK)
Hermes, Pantin (France)
Hewlett-Packard, Rome (Italy), Houston, TX (USA) and 42 sites in North America
Honda, AL (USA)
Household Finance, national account (USA)
HSBC, Pune (India), 21 sites (UK)
Hughes Software, Delhi (India) Ing Group, 32
sites (Netherlands), London (UK), 2 sites (Poland)
Inter-American Development Bank, Washington DC (USA)
JC Penney, 2 sites (USA)
JP Morgan Chase, London (UK), Arlington, VA (USA)
KLM, Rijswijck (Netherlands)
London Underground, 20 sites (UK)
Massmutual, national account (USA)
MBNA America, 1 site (Canada), 8 sites (USA)
Merck, 6 sites (USA)
Merrill Lynch, Mumbai (India), national account (USA)
Motorola, Beijing (China), Singapore
Museum of Science and Industry, Chicago, IL (USA)
Nestle, Buenos Aires (Argentina), Goinia (Brazil), Marseilles (France), New
Malden (UK), 2 sites (USA)
Nokia, Beijing (China), 7 sites (Finland)
Pepsico, 3 sites (China), 3 sites (Venezuela), 2 sites (UK), 2 sites (USA)
Nortel Networks, 3 sites (Canada), national account (USA)
Perot Systems, Dallas, TX (USA)
Pfizer, Guarulhos (Brazil), Oslo (Norway), Madrid (Spain), Sandwich (UK),
New York (USA)
Philips Electronics, Bogota (Colombia), Mumbai (India), Albuquerque, NM (USA)
PricewaterhouseCoopers, Brisbane (Australia), London (UK), Tampa, FL (USA)
PSA Peugeot Citroen, Buenos Aires (Argentina), Charleville (France), Berlin
(Germany)
Reebok, Canton, OH (USA)
Rhodia, Mulhouse (France)
Robert Bosch, Jihlava (Czech Republic), 2 sites (France), Mirkow (Poland),
Milton Keynes (UK)
RTL Group, (Luxembourg)
Sanofi-Synthelabo, Maasluis (Netherlands)
Schering Plough, 4 sites (USA)
Siemens, Toulouse (France), Munich (Germany), Beijing and Shanghai (China)
Solectron, Jaguariuna (Brazil)
Sony, Diegem (Belgium), 2 sites (USA)
State Street Bank, Boston, MA (USA)
Toyota, Santiago (Chile), 2 sites (UK), Torrance, CA (USA) Unilever, Buenos
Aires (Argentina), Cali, (Colombia), 3 sites (Netherlands), 2 sites (UK)
Volkswagen, Poznan (Poland), Crewe (UK)
Wal-Mart, all sites (Brazil), 19 sites (Germany)
Administrations
Driving Standards Agency, Bedford (UK)
European Parliament, Belgium
Government Centers, IN and MN (USA)
Local Government III District, Budapest (Hungary)
Parliament, Helsinki (Finland)
Senate, Rome (Italy)
Prestige________________________________________________________________
Sodexho Prestige operates in three major lines of business
Private Clubs, Associations and Conference Centers
Conventions, seminars, business get-togethers and receptions - for its corporate
clients, Sodexho Prestige provides fine dining and personalized service. For
every kind of business event, clients benefit from the refined atmosphere and
distinctive style that are typical of Sodexho Prestige.
Directors Tables and Executive Dining Rooms
Sodexho Prestige caters to the busy business executive's every whim. It offers
inventive cuisine, adapted to individual tastes, in discreet, elegant
surroundings, plus, of course, impeccable service. The atmosphere is always
tasteful yet relaxed, and conducive to high-level discussions.
Prestige Restaurants and Events
Sodexho Prestige operates in association with celebrated restaurants, such as
Les Arts, L'Atelier Renault, Le Roland-Garros and the Zyriab in Paris (France),
and the Swedish Parliament Restaurant, in Sweden. Internationally acclaimed for
their exquisite cuisine, these restaurants are also home to distinguished chefs.
Better together
[UK]
Royal Botanic Gardens at Kew
"Sodexho Prestige has provided proactive sales and marketing, which has offered
our clients greater flexibility and choice. This joint initiative has resulted
in greater opportunities to sell the entire Kew Gardens portfolio of venues."
Jill Preston, Director of Communications and Commercial Activities, Kew
Enterprises
A spectacular, magical event venue in London
The Royal Botanic Gardens at Kew is one of the most spectacular attractions in
Europe. The Gardens represent more than 250 years of historical landscape. The
site houses over 40 listed buildings and other structures. Sodexho Prestige
provides day catering for the over 1 million visitors per year. It also
organizes dinners and receptions in these exceptional event venues: from the
Victorian glasshouse to the Gallery in a former Royal Residence to a marquee
overlooking a water garden.
In addition, Sodexho Prestige participated in the development and renovation of
the 18th century Orangery, a Grade I listed building. Following its
refurbishment as a restaurant and function venue, the range of high-end
operations handled by Sodexho Prestige increased to include venue sales, venue
management, and conference and banqueting services.
RBG Kew Enterprises was founded in 1993 to consolidate commercial activities for
Kew Gardens. The partnership between RBG Kew Enterprises and Sodexho Prestige
has expanded and flourished over the years. The RBG Kew Enterprises and Sodexho
Prestige teams have also grown in response to a surge in the venue hire
business, where enquiries and sales continue to increase.
Among our clients...
Prestige restaurants and events
Ascot Racecourse, Berkshire (UK)
Blenheim Palace, Oxfordshire (UK)
Children's Museum of Indianapolis, IN (USA)
Detroit Institute of Arts, Detroit, MI (USA)
Dundas Castle, Edinburgh (UK)
Government Center of Indiana, Indianapolis (USA)
Hampden Park, Glasgow (UK)
Hampton Court Palace, Surrey (UK)
Huntington Library, Gardens-Cafe, Pasadena, CA (USA)
Kew Gardens (UK)
L'Atelier Renault, Paris (France)
Le Lido, Paris (France)
Le Roland-Garros, Paris (France)
Le Zyriab, Paris (France)
Lord's Cricket Ground, London (UK)
Los Angeles Music Center, CA, (USA)
Murrayfield stadium, Edinburgh (UK)
Museum of Life and Science, Durham, NC (USA)
Museum of Science, Boston, MA (USA)
Museum of Television and Radio, Beverly Hills, CA (USA)
Racecourses of Auteuil - Paris, Chantilly, Enghien, Longchamp - Paris, Vincennes
- Paris (France)
Racing Club de France, Pre Catelan, Paris (France)
Roland-Garros, Championship, ATP Tour, Paris (France)
Royal Horticultural Halls, London (UK)
Sandown Park Racecourse, Surrey (UK)
The Cabinet War Rooms, London (UK)
US Merchant Marine Academy, Kings Point, NY (USA)
Private Clubs, Associations and Conference Centers
Etoile Saint-Honore Business Center, Paris (France)
La Maison de la Recherche, Paris (France)
La Maison des Polytechniciens, Paris (France)
Les Etangs de Corot, Ville-d'Avray (France)
Les Salons de l'Aero-Club de France, Paris (France)
Les Salons de la Maison des Arts et Metiers, Paris (France)
Directors Tables and Executive Dining Rooms
Alcatel, Paris (France)
Alcatel CIT, Velizy (France)
Alcatel Hotel, Annecy (France)
A.O.N., Levallois-Perret (France)
Bank of Montreal (Canada)
Banque de Neuflize, Schlumberger, Mallet, Demachy, Paris (France)
BNP PARIBAS, Paris (France)
Bollore, Puteaux (France)
Bred, Paris (France)
Caisse Nationale des Caisses d'Epargne, Paris (France)
Canadian Imperial Bank of Commerce (Canada)
Chateau de Tremblay, Credit Agricole (France)
Christian Dior Parfums, Paris (France)
Credit Agricole Indosuez, Paris-La-Defense (France)
Dell Computer, Montpellier (France)
Ford France, Rueil-Malmaison (France)
IBM, La Defense (France)
La Poste, Paris (France)
MEDEF, Paris (France) Natexis, 2 sites, Paris (France)
Pechiney, Paris (France)
TF1, Boulogne (France)
Defense_________________________________________________________________
376 402 3% 9,200 794
Revenues Revenues Share of Number of Number of
(euro in (US$ in group employees* sites
millions) millions) revenues
*estimated
The food service market in figures
Estimated market value: 10 billion euro
Market trends
Outsourced service provision to the defense establishment continues to show
strong growth, with a definite move towards retail/branded-style service through
initiatives to modernize military messes. Moreover, for other activities, such
as cleaning, property maintenance, and recreation site management, larger
numbers of decision makers are considering private contractors.
At the other end of the scale, massive deployment capability is provided to the
military by civilian contractors, who provide engineering, maintenance, turnkey
camps, etc., as well as project management for large construction projects.
Sodexho supports these contracts.
Source: Sodexho
Andrew Leach
Managing Director, Sodexho Defence Services, UK and Ireland
"There will be large-scale investment in the wake of the international fight
against terrorism. Sodexho's opportunity to get involved will be immense."
"Over the next ten years, the pattern of military operations will be more mobile
than static, with large numbers of troops and associated support groups on the
move, deploying outside of their national borders. The opportunities for
contractors to provide services are sure to be immense with billions spent by
nations willing to participate in a global environment of peace and prosperity.
In addition to military operations, there are likely to be large building
programs for hospitals, schools and other infrastructure projects that will
require support for their construction workers. These projects will be varied
across all segments and will give Sodexho numerous opportunities to help.
"Military requirements are often very changeable and in a fast moving and fluid
environment, it is essential to have contractor support represented by managers
empowered to make decisions on-the-spot. These situations are the ultimate
logistics challenge.
"A more specific growth scenario concerns the British forces that are scheduled
to return to the UK from permanent bases in Germany. Sodexho is negotiating a
contract as part of a consortium to build and operate army barracks across the
south of England. This decision was motivated in part by the need to retain
seasoned soldiers and manpower by providing them with new, hotel-style
accommodations and services; this is particularly important in a post-war
situation.
"The difficulty is that there is very little new money in defense budgets. Most
military budgets around the world have had so many cuts that the lifestyle
services, provided to someone living in the armed forces, are pretty poor in
terms of accommodation, dining and recreation facilities. As a result,
procurement authorities are always looking for ways to make efficiencies and
savings so that they can actually spend more on lifestyle services and help to
retain personnel. The new barracks that are being built provide first class, en
suite accommodation for soldiers. We are making a very real contribution to
improving their quality of life.
"In sum, Sodexho enables military commanders to provide a better standard of
non-core service more cost effectively. Certainly, the Americans, the British
and the Australians are now all contracting out services so that they can
procure a better quality of life for their personnel."
--------------------------------------------------------------------------------
What Sodexho enables the armed forces to do is to have cutting-edge support
services at value-for-money prices.
--------------------------------------------------------------------------------
Achievements
Afghanistan
In synergy, Sodexho in the U.S. and Universal Sodexho win a contract to provide
catering and support services to NATO forces in Kabul.
UK
In May 2003, Investors in People recognizes Sodexho Defence Services for
matching British standards that set a level of good practice for training and
development of people to achieve business goals.
USA
The Department of Defense's Employer Support of Guards and Reservists (ESGR)
honors Sodexho as an "Outstanding Company" for the benefits it is providing to
its employees, who have been called up to active duty.
Better together
[Europe] US Army
In five locations in Germany (Grafenwohr, Wiesbaden, Mannheim, Seckenheim and
Hanau), Sodexho Defence Services successfully supplied rapid response in support
of pre-operational deployment.
Sodexho Defence Services (UK) feeds US troops as they stage through Germany
US Forces in Europe use in-theater contractors to supply catering and support
services on an ad hoc, as required basis. The support is short notice, requiring
immediate solutions to unexpected deployments. The recent conflict in the Middle
East massively increased the volume of support required. Sodexho Defence
Services (SDS) used its deployment with the Allied Rapid Reaction Corps (ARRC),
in Germany, as a reference for capability and performance.
In recognition, the US Army Contracting Branches in Europe awarded SDS a
contract to supply:
- Rapid response in support of pre-operational deployment - this involved
feeding US troops as they staged through Germany to undertake live firing and
field training exercises prior to Gulf deployment.
- Backfill of staff to cover for deployed military personnel - this concerned
manpower substitution as military chefs deployed to the Gulf. Initially, SDS was
to supply one-for-one support, but this quickly evolved into full dining
facility management with the deployment of a Sodexho Operations Manager and
supporting Catering Managers.
Sodexho showed it is an extremely efficient company with the capability to
distance-manage employees in-theatre, or directly from the UK on smaller
deployments. Employees are screened prior to appointment and only highly
motivated individuals are deployed.
Having the capability and willingness to flex with continuous operational
changes has given SDS a first-class reputation as a service provider.
Consequently, SDS is now a preferred supplier for all military deployment and
exercise scenarios, thus capitalizing on SDS's understanding of military ethos
and operational requirements.
[USA]
Catering to our client's first choice
Through its partnership with the US Marine Corps, Sodexho is creating
significant opportunities for minorities, women and the disabled. Nearly 30
percent of Sodexho's two contracts with the Corps are serviced through teaming
agreements with small, minority, disadvantaged, and women-owned businesses, and
with organizations that represent the interests of individuals with
disabilities.
[UK]
Quality of Life front and center
The UK Ministry of Defence is experimenting with Sodexho's innovative Lifestyle
Services at the Hyde Park Barracks, Central London, which is the home of the
Household Cavalry. Lifestyle Services include the Pay-As-You-Dine initiative. A
customer survey allows Sodexho to determine the lifestyle expectations of
military personnel, using the trial facilities. Payment is by cash or debit
card, or by smart card, which provides profiling data. Military and civilian
staff can purchase food, beverages and retail items in one location, thus
reducing time away from their station. Personnel stationed at the barracks have
had an excellent reaction to the concept.
Among our clients...
Australia Defense Force, 6 sites (Australia)
Aldershot, Catterick, Colchester and York Garrison (UK)
Cercle National des Armees, Paris (France)
Fortifikationsverket, 40 mess halls (Sweden)
MSB Yurtlar, Adana and Ankara (Turkey)
NATO Headquarters (Afghanistan)
US Marine Corps, 55 mess halls (USA)
US Merchant Marine Academy, Kings Point, NY (USA)
Armed forces in operations
French Army, Kosovo
KFOR, Kosovo
UK Ministry of Defence, Saudi Arabia
US Army, Qatar, South Korea
US Army Corps of Engineers, Qatar, USA (Alaska)
US Defense Logistics, South Korea
Correctional Services__________________________________________________
Revenues Revenues Share of Number of Number of
(euro in (US$ in group employees sites
millions) millions) revenues
145 155 1% 1,600 95
Market trends
Each country has its own history and approach to the governance of prisons, and
its own view on the private sector's contribution. Even though the needs of the
criminal justice system are clear, most countries are suffering severe budgetary
pressures that are forcing them to make choices. The private sector with its
increasingly positive record is providing that choice.
Source: Sodexho
Herb Nahapiet
Sodexho Worldwide Market Champion, Correctional Services
"Independent sources continue to show that the private sector has raised
standards of service in the Corrections sector, whilst at the same time reducing
costs."
"Many countries have not even begun to consider the advantages that the private
sector brings, but as they do, we are seeing more countries expressing keen
interest. For the prisoners, there is a greater range of services and
opportunities for education, training, employment and accommodation upon
release. The prisoners get an improved quality of life during imprisonment and
better chances of a fresh start. For Prison Services it brings choice, an
alternative to the public sector, and competition, which in turn forces up
standards and delivers lower costs, which in turn benefits the taxpayer. It has
been estimated that the private sector in England and Wales has made savings to
the tax payer of 60 to 90 million euro per year. This is beginning to have an
effect. Whilst market estimates are misleading, this segment does appear set to
grow significantly, because of the obvious and tangible benefits.
"Martin Narey, Commissioner for Correction in England and Wales, has said, `The
experience of private sector involvement in the provision and operation of
prisons has been a great success. Not only have the private-sector providers
demonstrated they can run prisons, which are among the best in this country, but
the introduction of competition has been a key catalyst for change in the
publicly run prisons.' This is true at Forest Bank in England, and Acacia in
Western Australia, where treatment, standards of delivery and the corresponding
lower costs of that delivery are allowing the government to put pressure on
public spending. The price advantage that the private sector procures is often
between 15 and 20 percent. This combination of better services at a lower cost,
`more for less,' is a crucial benefit to governments, national prison services,
staff and prisoners.
"Ours is a `social business.' So we need to ground our private sector practices
of efficiency and effectiveness in strong ethical values. Where governments are
showing an interest, we try to demonstrate, through visits to our operations and
independent reports, the benefits of this philosophy, as practiced by the
private sector in general and Sodexho in particular.
"So for example in the UK, where we already have full responsibility for some
facilities, we envisage making a further contribution, by going outside the
prison walls, in a project to speed ex-prisoners in their return to society.
This is the case for hostels, where we plan to receive ex-prisoners just after
their release. We thus hope to help government reduce the incidence of these
people re-offending. The British Home Office will evaluate the program, and if
it is successful it will be extended to other locations."
--------------------------------------------------------------------------------
Opportunities for organic growth in countries, which satisfy our `social
business' criteria, are increasing.
--------------------------------------------------------------------------------
Achievements
Australia
Two awards for the smartcard used at Acacia Prison:
- Asia Pacific Smartcard Forum Award for Excellence in Design and Innovation
- International Corrections and Prisons Association Technology Award
France
Year 2000 ISO 9001 certification for SIGES service provision at sites in the
North of France.
Netherlands
Year 2000 ISO 9001 certification for all sites managed by Sodexho.
UK
Year 2000 ISO 9001 certification for IRC Harmondsworth maintenance services.
Better together
A prisoner - who lives in a safe, secure environment, maintains family ties,
improves his reading and writing skills, begins to learn a work ethic and gets
job training - has more of a chance of returning to a normal life and not
re-offending again. All the evidence shows that providing prisoners with
employment upon release and a home to go to cuts the rate of re-offending by 50
percent.
Sodexho fosters education, a work ethic, rehabilitation and reinsertion
Sodexho provides all these services, in democratic countries that have
abolished the death penalty and hold rehabilitation to be a priority.
In France, Sodexho subsidiary SIGES participates in prisoner social reinsertion
as part of its mission. SIGES offers professional training programs, open to
prisoners who want to earn their Certificate of Professional Qualification
during detention. This is chiefly for prisoners who are interested in food
service skills and work in kitchens. SIGES prepares these prisoners for release,
giving them realistic prospects of finding employment. Moreover, SIGES proposes
candidates to Sodexho's different entities, which in turn commit to hiring
twenty ex-prisoners each year. In June 2003, out of seven candidates from the
Saint-Mihiel detention center, all received job training certificates, with two
candidates cited for having made the highest marks in the public school
district.
In Britain, Sodexho subsidiary UKDS has two contracts with the National
Probation Directorate to develop post-release hostels, for men and for women, in
Bristol. These hostels will focus on a holistic program for prisoners who
volunteer, and who have a history of drug use, but are 'clean' at the time of
release. The program has three phases. In prison, UKDS staff will assess
applicants and prepare them for release to a hostel. Phase two takes place at
the hostel, and includes a 12-week intensive support program. In addition, there
is training in life skills, to prepare participants for independent living.
Training for work is also a key feature. The third phase involves UKDS finding
suitable move-on housing for those completing the program, and then supporting
them in this for at least six months.
When successful, these projects arguably reduce street crime and minor theft by
significant amounts, and reduce the number of offenders who frequently return to
prison.
In brief
[UK]
Training centered on professionalism
UKDS has established a training center for prisoners at HM Prison and Young
Offender Institution Forest Bank, which offers educational and vocational
programs at all levels of achievement. In recognition, it has been awarded the
Basic Skills Quality Mark. This training center is one more component in a
policy of fostering employment upon release. The Chief Inspector of Prisons in
England and Wales, an independent body reporting to the Home Secretary,
inspecting the penitentiary establishment at Forest Bank, declared, "Forest Bank
is a very good local prison." Three examples of good practice for rehabilitation
were recommended in the report.
[France]
BIZNESS RESTO: prison enterprise
Role playing takes a new twist in the detention center at Bapaume. In this
prison for women, SIGES created an EEP (Entreprise d'Entrainement Pedagogique,
or structured training enterprise), named Bizness Resto. Participants are
treated like employees, and are placed in 'realistic' situations, which help
them learn to act responsibly at work. In total, 12 trades are taught, covering
the administrative skills one needs in a company. These include bookkeeping,
secretarial skills, purchasing, and sales. Successful employment is of course
the goal, such as for one prisoner, who secured a secretarial position in a
maintenance company, following her release.
[Australia]
Prisoner peer support
Peer support is for the welfare of prisoners within Acacia Prison. The
Indigenous Support Team administers this function, as its role is
welfare-focused. While peer support is multicultural, it is the Indigenous
prisoners who frequently require additional support from a member of their own
culture. This is a trusted position, showing confidence and respect for
indigenous prisoners, operated under the parameters of monitoring and
surveillance by custodial staff.
Among our clients...
Australia
Department of Justice
1 prison in the state of Western Australia: Acacia Prison
Chile
3 detention centers (under construction): La Serena, Alto Hospicio, and Rancagua
France
Ministry of Justice
5 detention centers in the south: Avignon, Grasse, Tarascon, Salon-de-Provence
and Aix-en-Provence
4 detention centers in the north: Bapaume, Longuenesse, Maubeuge and
Saint-Mihiel
Italy
36 detention centers
Netherlands
Ministry of Justice
28 detention centers
Portugal
11 detention centers
Spain
Catalonia
8 detention centers
UK
Home Office
1 prison: Forest Bank Prison
1 detention centre: Harmondsworth
2 more prisons are under construction at Ashford and Peterborough
Healthcare_____________________________________________________________
Number 1 worldwide
2.206 2.358 19% 56,100 3,468
Revenues Revenues Share Number of Number of
(euro in (US$ in of group employees* sites
billions) billions) revenues
*estimated
The food service market in figures
Estimated market value: 40 billion euro
Current outsourcing rate: 32%
Market share: during the financial year, we have noted a significant change in
the volume of the outsourced market, as well as in the market shares of Sodexho
and its main competitors worldwide. This change can be explained both by the
impact of exchange rates and by our increased understanding of the marketplace.
Market trends
Shorter stays and capital expenditure redirected more and more towards
technological upgrades have led to the downsizing or closing of establishments.
Hospital groups want better cost control and therefore, expanded partnering with
players who help them reinforce their positions in increasingly competitive
markets.
Source: Sodexho
Jean-Michel Dhenain
Sodexho Worldwide Market Champion, Healthcare
"Global Hospitality is our name for the job we do that contributes 70 percent to
what makes up quality of life in healthcare establishments."
"Sodexho has led this market for a decade. Together with our clients, we have
seen the sector change. The job is more complex, the environment more
competitive. Clients know how to succeed in their mission, but now need a
special partnering relationship, someone who can back them in their development
strategy, help daily to get the job done.
"Global Hospitality is our answer. It bundles listening, analyzing, expertise
and taking account of everyone's expectations: medical and administrative teams,
patients, their families and visitors. It meets establishment-critical needs
five ways: reception and information, food service, equipment maintenance,
hygiene, and environmental. What's more, it adds quality to leisure time. Global
Hospitality is the opposite of predefined solutions; it is a targeted, proactive
approach that fosters peace of mind for patients, reassures their friends and
families, plus motivates client staff.
"A clinic specialized in heart surgery needs different services than a maternity
ward. As soon as you walk through the door, we would like you to feel the
difference "It's about synergies and optimized budgets. Global Hospitality also
contributes to an establishment's reputation - because reputation depends on the
quality of therapy, but also on the feeling of well-being each establishment
embodies.
"This approach creates value for our clients, and is a main source of leverage
for our organic growth. Through sales growth and client retention, we become
quality-of-life specialists, which is essential to our clients' development,
too. Management of non-medical services consumes on average 25 percent of an
establishment's total budget, and impacts its reputation for 30 percent... That
is 70 percent of its Quality of Life proposition. Seen from that angle, and in
spite of an essentially stable market, the outlook is great!"
--------------------------------------------------------------------------------
For most patients in hospital, 95% of their time is free to do what they want.
That's immense potential for developing our 'people services.'
--------------------------------------------------------------------------------
Achievements
France
Year 2000 ISO 9001 certification for Sodexho Global Hospitality services at all
client sites.
Netherlands
Year 2000 ISO 9001 certification for head offices and all of the subsidiary's
sites.
UK
Citation for Britain's cleanest hospital for the Haslar Military Hospital in
Gosport at the 2002 presentation of the Golden Service Awards.
Better together
[USA]
Johns Hopkins Hospital
"In the highly stressful hospital environment, quality of life at work is more
than a luxury, or even a comfort, it is a vital need."
Kenneth Grant, Vice President General Services, Johns Hopkins Hospital,
Baltimore, MD.
Service worthy of scientific achievement, recognized worldwide
Johns Hopkins Hospital has earned a reputation for being the premier hospital in
the world for science, research and patient care. Since 1979, Sodexho has
accompanied this client in its quest for progress. We analyze the changing needs
and expectations of all participants in hospital life: doctors, nurses,
patients, and support and administrative staff. One workgroup recently
identified an ambitious goal: Raise service to the level of science. Because
Johns Hopkins Hospital is the benchmark of medical science, this is a huge
challenge. To start with, we strive to make the atmosphere and hospital
experience more pleasant, with four objectives in mind.
Service on the level of science, an experience of excellence:
- Labor and Delivery Unit
Sodexho is set to manage all non-clinical functions in maternity wards, to
enable nursing staff to concentrate on more care for their patients.
- Employees
Sodexho aims at reinforcing employee recognition, to develop confidence, loyalty
and motivation among personnel, who can then deliver world-class service.
- Retail Project
Sodexho is to modernize commercial and leisure spaces, to boost satisfaction
among the entire hospital community.
- Facilities Project
With nine separate retail venues operating in the hospital complex, the idea is
to upgrade and provide for technologically-advanced production in support of
everything from high-end waited food service to freshly-made sushi.
"Sodexho shares our commitment in the fight against disease and suffering, and
we are confident in their contribution," said a hospital spokesperson. Create a
warm, reassuring atmosphere, unburden hospital staff, and develop shared values
- today, the vision of improving quality of life is a priority for all.
[USA]
Dine at any time, day or night
In hospital, patients want more say when it comes to what they eat -- and when
they eat it. That's the idea behind At Your Request(TM) Room Service Dining from
Sodexho. Simply pick up the phone, and enjoy breakfast, lunch or dinner - day or
night! This is hotel-style a la carte dining at its best (well, at least as far
as doctor's orders will allow). With patient satisfaction top-of-mind, Mercy
Medical Center (Ohio) enjoyed watching its satisfaction rates jump from 50 to 92
percent thanks to Sodexho's brand of room service. Another benefit -- savings
from less wasted food.
[USA]
Add-on expertise in medical equipment
If hospitals need it, Sodexho gets it. That's why the group acquired the
American firm, Patriot Medical Technologies, Incorporated (renamed Clinical
Technology Management Services). This puts Sodexho a step ahead for managing,
maintaining, and repairing medical equipment of all kinds. With service
excellence a core concern of its healthcare clients, Sodexho in the U.S. shows
itself to be 100% professional.
[France]
Free time, happy time
Therapy takes up just 5 percent of most patients' hospital stays. With so much
free time on their hands, the one thing they don't want is to get bored. Sodexho
says "Stand Up!" That's our name for commercial space tastefully arranged for
leisure and relaxation. Vending machines, or if you prefer, a friendly smile at
our boutique, all add a touch of convenience to daily life in hospital. Busy
staff at the Saint-Louis clinic in Poissy (France) benefit, too, thanks to a
smart Residence Card (developed in synergy with Sodexho Pass), a chip-enabled
badge for ID, access control and e-purse all rolled into one. When you need time
to care, Sodexho is there.
Among our clients...
12 de Octubre Hospital, Madrid (Spain)
Ambroise Pare Hospital, Marseille (France)
Aatalklinik Wunnenberg, Bad Wunnenberg (Germany)
Academic Hospital of Middelheim, Antwerp (Belgium)
Aid-Equipment, Stockholm
County Council (Sweden)
Albert Einstein Hospital, Sao Paulo (Brazil)
Alemana Clinic, Santiago, Temuco (Chile)
Allergiatalo, Helsinki (Finland)
American Hospital, Neuilly-sur-Seine (France)
Antwerp University Hospital (Belgium)
APH Marseilles, 4 sites (France)
Austral University Hospital, Buenos Aires (Argentina)
Baptist Hospital, Hong Kong
Bjorken Hospital, Umea (Sweden)
Bordeaux-Nord Aquitaine Medical Centers (France)
Calgary Regional Health Authority (Canada)
Clinico Hospital, Valencia (Spain)
Danderyds Sjukhus, Stockholm (Sweden)
Davila Clinic, Santiago (Chile)
Detroit Medical Center, MI (USA)
Erasme University Hospital, Brussels (Belgium)
Fondazione Medica Maugeri, 5 sites (Italy)
Fundacion Hospital de Alcorcon, Madrid (Spain)
Glasgow Royal Infirmary, North Glasgow
University Hospital NHS Trust (UK)
Henry Ford Hospital, Detroit, MI (USA)
Hereford Hospital NHS Trust (UK)
Hofpoort Ziekenhuis, Woerden (Netherlands)
Hospital of the Catholic University of Chile, Santiago (Chile)
Instituto Argentino de Diagnostico y Tratamiento, Buenos Aires (Argentina)
International Peace and Maternity Hospital, Shanghai (China)
Invalid Foundation Orton, Helsinki (Finland)
Jin Shan Hospital, Shanghai (China)
Johns Hopkins Hospital, Baltimore, MD (USA)
Karolinska Sjukhuset, Stockholm (Sweden)
Kreiskliniken Aschersleben-Sta(beta)furth, Aschersleben (Germany)
Lahey Clinics Medical Center, Burlington, MA (USA)
Las Americas Clinic, Medellin (Colombia)
London Hospitals NHS Trust (UK)
Longjumeau Medical Center (France)
Marly Clinic, Bogota (Colombia)
Mary Washington Hospital, Fredricksburg, VA (USA)
McGill University Health Centre (Canada)
Menorah Medical Center, Overland Park, KS (USA)
Misericordia Hospital, Bogota (Colombia)
Morby Hospital, Stockholm (Sweden)
Municipality of Kisko (Finland)
NLPO, County Council of Stockholm (Sweden)
Northwick Park Hospital, North West London Hospitals NHS Trust (UK)
Nove de Julho Hospital, Sao Paulo (Brazil)
Oncology European Institute, Milan (Italy)
Ospedale Evangelico Internazionale, Genoa (Italy)
Policlinico Gemelli, Rome (Italy)
Queens Medical Center, Honolulu, HI (USA)
Richmond Hospital (Canada)
Saint-Vincent-de-Paul Hospital, Medellin (Colombia)
Saint-Louis Clinic, Poissy (France)
San Donato Group, Milano, 6 sites (Italy)
Sart Tilman University Hospital, Liege (Belgium)
Service & Healthcare Center, Punkaharju (Finland)
Shanghai Hospital (China)
Siemens Medical Circulatory Center, Eschenlohe (Germany)
Soma Clinic, Medellin (Colombia)
Southern Hospital, Malacca (Malaysia)
Stanford University Hospital & Lucille Packard, CA (USA)
Thunderbay Regional Hospital (Canada)
Tivoli Hospital, La Louviere (Belgium)
Tournai Medical Center (Belgium)
Union Clinic, Toulouse (France)
University Clinics, Darmstadt, Regensburg (Germany)
Vastra Nylands Hospital District Area, Ekenas (Finland)
Westmead Clinic, Sydney (Australia)
Seniors________________________________________________________________
Number 1 worldwide
651 695 5% 17,800 1,540
Revenues Revenues Share Number of Number
(euro in (US$ in of group employees* of sites
millions) millions) revenues
*estimated
The food service market in figures
Estimated market value: 30 billion euro
Current outsourcing rate: 16%
Market share: during the financial year, we have noted a significant change in
the volume of the outsourced market, as well as in the market shares of Sodexho
and its main competitors worldwide. This change can be explained both by the
impact of exchange rates and by our increased understanding of the marketplace.
Market trends
Longer life expectancy is pressuring long-term care infrastructures, as well as
driving the shift to alternative solutions, such as day care centers for seniors
and home care. These solutions imply a need for the development of new services.
Source: Sodexho
Jean-Michel Dhenain
Sodexho Worldwide Market Champion, Seniors
"Creating the conditions that allow people to age gracefully is a challenge for
modern society. Our global offering in response reflects this responsibility."
"This group of customers is particularly heterogeneous. Everyday life for active
seniors is dramatically different from that of dependent persons. Active people
want to remain independent and appreciate having numerous leisure options.
Dependent individuals need constant care and attention, but still want to feel
like they have a place in society.
"As for our clients, their problems are threefold: how to overcome malnutrition
(often physiological in origin), how to treat physical dependency, and what to
do about social isolation and loneliness among their residents. Sodexho offers
to help clients meet these challenges, and to make a creative contribution to
life in their establishments.
"We rely on dietetic expertise in defining our food service, and offer fare that
is high in protein, plus easy to swallow and digest. We have also expanded our
skills in nursing, to provide dependent seniors with daily assistance for their
personal hygiene, getting dressed, moving about and dining. At the same time, we
make ample use of our imaginations, when it comes to organizing their social
lives.
"The trend to longer life expectancy leverages the opportunities for organic
growth. This concerns efficiency gains that we bring to establishments, to help
them fulfill their mission. We create value all around: for seniors, who benefit
from a richer, more secure lifestyle, and for their families, who like to see
loved ones in the hands of competent, motivated caregivers, and in pleasant,
professional surroundings.
"Today, our thinking focuses on 'aging gracefully,' in order to define, over the
midterm, an offering, of course, adapted to the specific needs and expectations
of each establishment in each country. The objective is to brand our practices,
in the same way that we have branded our healthcare services (i.e. Global
Hospitality). With 'open life spaces,' offering many activities and services to
residents as well as to visitors, we hope this offering will contribute to
meeting the challenge of better integrating residences and seniors into the
urban environment and into society."
--------------------------------------------------------------------------------
- In France:
- Active seniors devote six and a half hours each day of their time and 20% of
their spending to leisure activities.
- Half of all people admitted to hospitals suffer from malnutrition.
- One out of three deaths among people over age 65 is the result of a fall.
--------------------------------------------------------------------------------
Achievements
Belgium
Sodexho chefs receive the 1st and 2nd prizes for Best Chef in retirement homes.
France
Renewed ISO 9001 certification for the subsidiary's support functions and all
sites.
USA
Shannondell, a home for active seniors, located in Audubon, Pennsylvania, is one
of only 70 establishments in the U.S. to receive Retirement Resort certification
from the Senior Hospitality Institute.
Better together
[Spain]
Fundacion Sociosanitaria de Barcelona
"Sodexho's experience and commitment have enabled us to improve the perceived
quality of food service. Further, our partnering relationship is sure to
accelerate a growth strategy that is beneficial for both parties." Jesus Garcia
Lago, Vice President, Fundacion Sociosanitaria de Barcelona
Private foundation applauds Sodexho partnering spirit
The Fundacion Sociosanitaria is a socio-medical foundation, which manages nine
healthcare establishments in Catalonia and Galicia: Sant Gervasi Hospital in
Barcelona, plus private short- and long-term healthcare residences, from
convalescence homes to assisted-living facilities for seniors. It is imperative
to offer impeccable well-adapted food service. When Fundacion Sociosanitaria
consulted Sodexho, food service was in fact its main concern.
Sodexho's presentation was for flexible, coordinated food service, and the
mobilization of a dedicated skills network. It was enthusiastically received.
The client accepted the creation of a modern kitchen, on the Sant Gervasi
hospital site, which would allow the client to provide its patients with meals
adapted to their pathologies: for instance, special menus for patients suffering
from Alzheimer's and psychiatric disorders. A dietary specialist joined the team
and makes the rounds among patients at each meal. Furthermore, an applied
nutrition Hazard Analysis and Critical Control Point program (HACCP) strongly
reinforces food safety.
Expertise, quality and flexibility of our offering, Global Hospitality - these
factors led the client to delegate additional responsibilities to Sodexho. After
three months, the client asked Sodexho to study the integration of a
housekeeping reporting platform into its management information system, as well
as a cleaning offering. Sodexho also helped formalize a tender for new buildings
in Sant Gervasi, with capacity for 400 residents.
For the client, the dedication of the Sodexho team is a major contribution.
Sodexho's Healthcare Director works closely with the client's management team,
and the account director coordinates the actions of eight resident managers.
Transparency is the keyword at monthly checkpoint and quarterly progress
meetings. This organization eases management, speeds communication among sites,
and improves the responsiveness of staff. Today, the plan is for accelerated
development, thanks to the partnership with Sodexho, which has allowed this
client to enhance its offering and to win new business, notably responsibility
for the residence, Ancianos Gran Canaria.
[Belgium, France, and the UK]
Good eating for everyone
What tastes good, looks good and smells good, when you have trouble swallowing?
That was the challenge facing Sodexho chefs, when they created reconstituted
meals for seniors, called Mixes Gourmands (Tasty Mixes). Healthy foods,
monitored for nutritional value, are blended, and then molded back into their
original shapes. Good to eat and easy to swallow, these dishes stimulate
appetites, a key factor in combating malnutrition. Like Sodexho's line of soft
desserts, Sodelicious, an innovation launched last year, these foods are also
real palate pleasers.
[Belgium, Canada, France, Italy, and the USA]
Letters home
For the third consecutive year, Sodexho and the Fondation Nationale de
Gerontologie organized the event, Letter to..., across all of France.
Participating seniors were asked to write a letter to an imaginary or real
correspondent, drawing on their creativity and their memories. Often
lighthearted, always full of emotion, the letters sometimes also served to bring
together relatives, children and friends. The letters were presented to a jury,
who chose the best ones for publication. Diplomas were also awarded, which was a
thrill for contestants. As part of Sodexho's innovation policy, the event is
being transferred to other operations abroad, where it can contribute to
reducing social isolation and loneliness among older residents.
Disabled persons
"Working with the disabled demands both professional and human competencies;
this cannot be improvised."
Encourage the disabled to take part in life, contribute to them gaining a skill
and finding a job, and help raise awareness among the general public as to the
need to improve the quality of their lives - Sodexho is involved daily in
lifestyle projects in socio-medical establishments. Every effort is made to
promote the dignity and rehabilitation of people, regardless of their
disabilities, including mental health.
In brief
[France]
Pass the dessert, please...
For the fifth time, Sodexho organized the annual event, Un Pour Tous, Tous Pour
Un (one for all, all for one). This year's theme was, "What if all the desserts
in the world could hold hands?" Some 90 establishments sent a team, comprised of
a Sodexho manager, a social worker and a disabled person. The idea was to
imagine or cook a dessert, inspired by the cuisine from a foreign land. This was
a memorable day! It was animated and convivial, with plenty of conversation,
sharing, and overachieving, plus a diploma for each participant! The best
recipes went home with the contestants and are now on their establishments'
menus.
Passport to health
Sometimes, disabled customers have a sweet tooth, neglect to eat a balanced
diet, and put on too much weight. One remedy involves using the colors in stop
lights - a method developed and tested in a French socio-medical institution.
The color red signals rich foods, yellow means foods that are only good in small
amounts, and green indicates you can eat all you want. The trick is to have on
your tray only one "red" item, two "yellow" dishes, and at least two "green"
ones. A "Passport to health" is handed out at the same time as the system is
explained. And it works. Customers discuss their choices at each meal and over
75 percent of them lose weight.
Among our clients...
Am Burgerplatz Retirement Home, Rodental (Germany)
Augustines Home, Meaux (France)
Avondale Retirement Village, Sydney (Australia)
Beckomberga Sjukhus, Stockholm (Sweden)
Beverly Gallen Seniors Suites, Santiago (Chile)
Brethren Village, Lancaster, PA (USA)
Caisses d'Epargne Foundation for Solidarity, 28 sites (France)
Carroll Lutheran Village, Westminster, MD (USA)
Casa Cardinal Maffi, Cecina (Italy)
Cerino Zegna Rest Home, Occhieppo (Italy)
Church of Scotland, The Elms, Edinburg (UK)
Club Neuilly Retirement Home, Neuilly-sur-Seine (France)
Copeland Oaks Retirement Center, Sebring, OH (USA)
CPAS, Antwerp, Dendermonde, Etterbeek, Halle, Nieuwpoort, Waterloo, Wervick
(Belgium)
Eichenhohe Retirement Home (German Red Cross), Hamburg (Germany)
Filen, Stockholm (Sweden)
Franz Ludwig Retirement Home, Bamberg (Germany)
Fundacion Sociosanitaria of Barcelona, 8 sites in Catalonia, 1 site in
Galicia (Spain)
GGz Friesland, Leeuwarden (Netherlands)
Goodwin House, Alexandria, VA (USA)
Hebrew Home, Rockville, MD (USA)
Hesperides Centre, Neuilly-sur-Seine (France)
Institut National des Invalides, Brussels (Belgium)
Instituto Geriatrico e di assistenza, Udine (Italy)
Instituto Guttmann II, Barcelona (Spain)
Jewish Care, Inc., Melbourne, Victoria (Australia)
Koca, Antwerp (Belgium)
La Bonanova Centre, Palma de Mallorca (Spain)
La Posada, Los Angeles, CA (USA)
Luther Manor, Milwaukee, WI (USA)
Maria-Gamla Stan, Stockholm (Sweden)
Marie Immaculee Home, 5 sites (Belgium)
Meadow Lakes, Hightstown, NJ (USA)
MEDIDEP Group, 68 sites (France)
Melbourne Nursing Room, 4 sites (Australia)
Montefiore Hospital Teresian House, Albany, NY (USA)
Municipalities of Varmdo, Vasteras (Sweden)
Municipality of Kisko (Finland)
Nonnenbrucke Retirement Home, Bamberg (Germany)
O'Conner Woods, Stockton, CA (USA)
Opera Pia Richiedei, Brescia (Italy)
Opera Pia Sant'Anna, Fossano (Italy)
Piltradet, Stockholm (Sweden)
Protegida Pflegeheim Service Centre, Santiago (Chile)
Re Carlo Alberto Valdesi Retirement Home, Turin (Italy)
Rockwood Retirement Communities, Spokane, WA (USA)
Roselius Foundation, 3 sites in Tuusula (Finland)
Sankt Irmgardisstift (Caritas), Viersen-Suchteln (Germany)
Sankt Nicolai Retirement Home, Neustadt Rubenberge (Germany)
Sant'Andrea, Monza (Italy)
Santa Catarina Service Centre, Sao Paulo (Brazil)
Service Center Aurinkomaki, Pornainen (Finland)
Service Center Hanna-koti, Helsinki (Finland)
Service Center Pyoro, Kuopio (Finland)
Service Center Vaskikoti, Tampere (Finland)
Shannondell, Audubon, PA (USA)
Stichting Continu, Utrecht (Netherlands)
Stichting de Jutter, Den Haag (Netherlands)
Stichting de Waalboog, Nijmegen (Netherlands)
Tanto, Stockholm (Sweden)
The Highlands, Wyomissing, PA (USA)
The Samarkand, Santa Barbara, CA (USA)
Vaderkvarnen, Stockholm (Sweden)
Vitalis Zorg Group, Eindhoven (Netherlands)
Winchester Gardens, Maplewood, NJ (USA)
Zuflucht Retirement Home, Soltau (Germany)
Education_______________________________________________________________
Number 1 worldwide
2.829 3.023 24% 71,400 4,703
Revenues Revenues Share of Number Number
(euro in (US$ in group of of
billions) billions) revenues employees* sites
*estimated
The food service market in figures
Estimated market value: 45 billion euro
Current outsourcing rate: 35%
Market share: we estimate that our share of the outsourced market, as well as
that of our main competitors worldwide, has not varied more than 1.5% during the
financial year.
Market trends
Education indisputably constitutes a thriving business sector in Western
economies, particularly universities in North America. Many schools are now
judged based on the way they manage their budgets and the value they get for
them. Consequently, administrators are benchmarking food and other service
delivery, often with a view to outsourcing.
Source: Sodexho
Rick Brockland
Sodexho Worldwide Market Champion, Education
"Our focus is to help make clients successful in their marketplaces. If we are
making our clients successful, Sodexho will be successful."
"From a client perspective, the only reason to outsource services starts from an
assumption that a company like Sodexho can do a better job of providing those
services than clients historically have done for themselves. The only question
then to be asked is, 'What products and services do individual clients need?'
"The university segment, the kindergarten-to-12th grade segment and the private,
independent school segment are the main education markets worldwide. Each
segment has very different dynamics. Our challenge is to understand the unique
needs of each individual client as well as the unique needs of clients and
customers within each segment and each country. Then, and only then, do we
tailor services that help those clients meet the needs of their customers in
ways that help them to be unique in what they do.
"When a client asks Sodexho to become a partner, we very much become a part of
that institution. Our success is and should be measured by the client's success
in attracting and serving its students and support staff. When the client is
healthy and grows, we are healthy and grow, as well.
"Our goal is to gain clients and keep those clients. Within the concept of
offering multiple services to those clients, our potential for growth is very
large.
"Today, one of the most significant issues worldwide is childhood obesity. We
are taking an industry-wide leadership approach on providing healthy food
offerings, and on educating students about proper nutrition and lifelong healthy
eating habits. We are also in the forefront of challenging our supplier partners
to join with us in this healthy food and educational effort.
"Sodexho's prospects for long-term growth within the education marketplace will
be measured by our ability to respond to the ever-changing needs of our clients.
Our culture is built around our being focused on our clients and their
customers. As we live our mission, focusing on the quality of daily life
whenever and wherever people come together, we will continue to create value for
our clients. In doing so, we will grow and prosper."
Achievements
Netherlands and Hungary
All local Sodexho Education sites are awarded Year 2000 ISO 9001 certification.
UK
Sodexho receives the Heartbeat Award for its delivered-meals service to 230
primary schools in West Sussex.
Better together
[Figeac, France]
Jeanne d'Arc Private Lycee and Middle School
"Boarding school is a social experience, which can be highly educational. It is
a natural extension of the academic values of the establishment."
Francois Demptos, Principal, Jeanne d'Arc
Make boarding school a very special place, where one learns the benefits and
joys of living in a community.
Boarding education: a new opportunity for Sodexho to improve Quality of Life.
In 2001, Sodexho's experience in the Education segment led it to identify
boarding school client and customer needs - from breakfast to bedtime. Since
February 2003, Jeanne d'Arc private school is among the first to benefit from
this effort. At first, the school administration only consulted Sodexho for food
service. Yet, it finally granted it complete boarding responsibility, including
housekeeping and management.
The families and students, who choose this institution versus a public school,
are looking for something much more intimate in terms of the importance of
conviviality and chances for sharing ideas. Therefore, the focus in this
environment is to spend a lot of time with the resident dining portion of the
offering, such that it creates a community feel. Starting in 2004, there will be
special common spaces (called Compli'cite), plus a lot of academic and social
programming wrapped around the food experience.
One major innovation will also be to create the position of 'house master.' This
is more than someone responsible for logistics (although the house master will
manage rentals to summer groups, which in non-academic times of the year
maximizes the client's use of facilities to make them more efficient). The house
master will strive to develop community spirit as a wellspring of self-worth.
This means the house master may also be cast in the role of confidant, or
mediate between students, the administration and the academic staff.
In sum, Sodexho is set to make many contributions to the core business of the
school. Its management mode reinforces the educational mission of the
establishment, strengthening its reputation. What is more, Sodexho simplifies
life for the administration, notably by improving the financial return on school
facilities during summer vacations.
--------------------------------------------------------------------------------
Sodexho teams can be present year round in establishments, where they manage
boarding facilities.
--------------------------------------------------------------------------------
[France]
Nutricom: a program for children
A balanced diet enables children to enjoy good health, an asset for life. That's
why Sodexho designed especially for them a program based on healthy eating,
adapted to different age groups and lifestyles. It includes four modules: learn
about yourself, know what you need, understand nutrition facts, and find out how
to choose what to eat. The Nutricom method offers clear answers about oneself
and one's nutritional needs, for instance, referring to the various food groups,
instead of using scientific terms. The Sodexho cafeteria tray shows you what's
good to eat....
[UK]
Nutri-jig, puzzling out good nutrition
In over 200 locations in West Sussex, children are discovering a large, circular
jigsaw puzzle, which reveals a picture of the balance of food groups. Teachers
also play a part and receive a comprehensive educational pack. This unique
learning aid for nutrition contains teacher's notes together with games and
exercises for the children to do. The Nutri-jig puzzle and teacher pack promote
good nutrition in primary schools and are instrumental in Sodexho's response to
this issue. School authorities agree, and have renewed Sodexho's contract for
another four years.
[Belgium, Chile, China, France, Italy, Spain, Sweden, UK and USA]
Go online with Sodexhoeducation.com
E-smarts: when it comes to innovation, Sodexhoeducation.com does it best. This
novel Web site is available in nine different countries and languages. Some
5,000 schools benefit, for more than 450 clients. There are Net advantages for
parents and students alike, who get up-to-the-minute information, or for
example, pay online, then communicate with a Sodexho dietician. Schools report
both simpler management and a boost to their image. Today, Sodexho teams are
standing by to connect you to Sodexhoeducation.com, fully adapting their service
to your establishment, no matter what language you speak.
[USA]
At the forefront of green design
Sodexho partners with national brand Herb n' Farm to deliver healthy, natural,
delicious food to 1,900 undergraduates at Colorado College, a four-year liberal
arts & sciences school in Colorado Springs. As a socially responsible company,
Herb n' Farm supports sustainable agriculture, fair trade and alternative
resource development. Sodexho is committed to providing high-quality
good-tasting meals to our customers at each of our 6,900 serving locations
nationwide, and plans to open numerous Herb n' Farm cafes in campus and other
types of Sodexho accounts. Like Herb n' Farm, Sodexho also supports sustainable
development practices, and is the only contract management company that is
authorized to open Herb n' Farm locations.
[UK and USA]
Managing client employees
Partnering spirit begins with people, when managing staff as an outsourced
service. How does Sodexho contribute to the careers of non-academic workers? The
answer is innovation. At the University of Bradford, School of Management (UK),
Sodexho's site supervisor gets support service staff more involved in the
business plan. And at Tulsa Public Schools (Oklahoma, USA), Sodexho helps
employees become better communicators, problem solvers and team players.
"Partnering with us, since 1994, Sodexho delivers consistently high quality
results," said Dr. David E. Sawyer, Tulsa Public Schools Superintendent.
Among our clients...
Alvstranden Gymnasium and University of Gothenburg (Sweden)
Arizona State University, Tempe (USA)
Atlanta Public Schools, (USA)
Beaufort County School District, NC (USA)
Brock University (Canada)
Canford School (UK)
Pontificia Universidad Catolica de Chile - Catholic University, Santiago (Chile)
Cardinal Mercier middle school (Belgium)
Central kitchen, Anderlecht (Belgium)
Chinese International School, Hong Kong (China)
Claude Bernard University, Lyon (France)
Downe House, Newbury (UK)
ENAC, Toulouse (France)
Fine Arts University, Beijing (China)
Fordham University, New York (USA)
French Lycee Jean Mermoz, Buenos Aires (Argentina)
French Lycees of: Budapest (Hungary), Madrid (Spain), Riyadh (Saudi Arabia),
Seoul (South Korea), Bathesda, MD (USA)
Georgia Institute of Technology (USA)
Gimnasio Moderno, Bogota (Colombia)
Granite School District, UT (USA) Griffith
Bribane (Australia)
Haagse Hogeschool, The Hague (Netherlands)
Helsinki School of Economics (Finland)
Hobart & William Smith College, Geneva (USA)
Huddersfield University (UK)
INSEAD (France and Singapore)
International School, Sotogrande, Cadiz (Spain)
International School, Dusseldorf (Germany)
International School, Helsinki (Finland)
International School, Perth (Australia)
Juilly middle school (France)
Kingswood Group, Norfolk and Isle of Wight (UK)
Lubbock Independent School District, TX (USA)
Massachusetts Institute of Technology, Cambridge, MA (USA)
Mosborough Primary School and Owler Brook Infant School, Sheffield (UK)
Passy Buzenval College, Rueil-Malmaison (France)
Providence School District, RI (USA)
Saddleback Valley Unified School District, CA (USA)
Saint Mary's College of California, Moraga (USA)
Saint Nicolas, Issy-les-Moulineaux (France)
Sainte Therese Campus, Ozoir-la-Ferriere (France)
Salem-Keizer School District, OR (USA)
Santa Rosa County School District, FL (USA)
School districts of Chalon-sur-Saone, Nice, Noisy-le-Grand and Rueil-Malmaison
(France)
School districts of Aosta, Cesano Maderno, Collegno and Pietrasanta (Italy)
Shanghai International School (China)
Stockholm University, Stockholm (Sweden)
Suzhou Singapore School (China)
The University of Technology, Helsinki (Finland)
Trinity School (UK)
Tulsa Public Schools, OK (USA)
United World College of South East Asia (Singapore)
United World College : Hong Kong (China), Montezuma, MO (USA), Vale of Glamorgan
(UK)
University Andres Bello, Santiago (Chile)
University Hospital (Argentina)
University of Cagliari (Italy)
University of South Carolina, Columbia (USA)
University of Tampa, FL (USA)
University of Technology, Eindhoven (Netherlands)
University of Toronto (Canada)
Western Kentucky University (USA)
Wiltshire County Council (UK)
Yau Ma Tei Catholic Primary School, Hong Kong (China)
York University (Canada)
Remote Sites____________________________________________________________
Number 1 worldwide
Revenues Revenues Share of Number Number
(euro in (US$ in group of of
millions) millions) revenues employees sites
550 588 5% 22,650 1,049
The food service market in figures
Estimated market value: 10 billion euro
Market trends
The market for remote site services strongly depends on mining, oil & gas, and
construction investment. With new projects and exploration moving into harsher
environments, this is where Sodexho now naturally finds opportunity.
Furthermore, clients continue to favor service providers, who commit to
sustainable development.
Source: Sodexho
Nicolas Japy
Sodexho Worldwide Market Champion, Remote Sites
"Our strategy of focusing on large accounts is beginning to pay off, since by
partnering with these clients, we have the greatest opportunity to grow
organically."
"Design, build and operate camps on remote sites is a special kind of business,
because many contracts only last for a very limited time, their duration
directly depending on that of our clients' worksites. For another thing, the
most accessible oil and gas fields are already being exploited, which means the
market is moving farther afield, to places that are even more difficult to
reach. For these reasons, our strategy is to concentrate on those new projects,
which are larger and last longer - even if those contracts can take years to
come together, and hinge on deep knowledge of local conditions, plus the ability
to nurture a partnering culture with indigenous companies, institutions,
organizations, et cetera. Recent contract wins confirm the validity of this
choice.
"Large accounts generate the most opportunity for organic growth in two ways.
First, the farther away the project is, the more likely it is for clients to
outsource their whole challenge of non-core services. This way, they can focus
on their core business. Second, once your team is on the ground, there is a
strong need for proactive partnering 'on the fly:' add-on services can amount to
an average of 20 to 30 percent of the initial value of a contract.
"Sodexho's experience under extreme conditions (taking into account geographic,
cultural and organizational constraints) and its multiservice offering - which
extends from the supply of turnkey camps to securing provisions of water and
fuel to providing maintenance and security on remote sites - this all
contributes to ensuring successful client operations. However, the most
important value-added of our know-how is that clients don't have to manage
unfamiliar skills, in unfamiliar geographical locations.
"In the same sense, the ties we establish with local partners enable us to back
our clients in a constructive process of sustainable development. We hire among
the indigenous workforce, offer training dedicated to our mission, and define
purchasing policies in favor of local suppliers. Today, the federating role we
play is a decisive factor in contract negotiations, and is a key to success on
each project."
--------------------------------------------------------------------------------
A well-designed camp can mean several million dollars in savings during the
construction phase, and greater savings, when the camp is operational.
Through training the indigenous workforce and by cooperating with regional
contractors, we act as a focus for local interests and help federate
development.
--------------------------------------------------------------------------------
Achievements
Australia
In October 2002, Sodexho affiliate, Minesite Catering, receives the National
Site Caterers Award at the National Awards for Excellence ceremony in Sydney.
Canada
The Canadian Council for Aboriginal Business (CCAB) cites our Remote Sites
activity as one of only five companies to receive an award for Gold Level
Achievement in the Progressive Aboriginal Relations Program (PAR).
Iceland
Sodexho starts up operations in a new country, as part of a project to build an
aluminum processing plant.
Better together
[Papua, New Guinea]
BP Indonesia
"We chose Sodexho because of its ability to understand our needs, while
respecting BP's commitment to no accidents, no risks for people, and no damage
to the environment." David Clarkson, Senior Vice President, Tangguh Project, BP
3,200 km east of Jakarta
Papua occupies the western half of New Guinea, the world's largest tropical
island. BP is set to develop the site of the Tangguh natural gas fields, which
is in the Berau-Bintuni Bay region of Papua. BP intends the Tangguh Project to
set high standards in socially and environmentally responsible resource
development.
From the outset, the Tangguh Project has been designed and implemented according
to an integrated, holistic approach, emphasizing community, partnership,
consultation and corporate responsibility. In addition to generating substantial
government revenues, the project works with diverse partners and local
communities to attain sustainable development, cultural preservation and
biodiversity conservation.
To get started, BP Indonesia looked for a partner to supply, install, maintain
and operate a 150-man base camp and accommodation facility. It chose Sodexho.
"This is not the first multiservice contract for our Indonesian team," recalled
a Sodexho Sales Manager in Asia. "We won because our experience and
understanding of the client's requirements made us more competitive."
The immediate challenge of this site was access. The site had no regular
transportation networks, no jetty, and no roads. Sodexho procured the camp
buildings from Brisbane, Australia, chartered a ship, and recruited professional
installation engineers, purchased vehicles, tools and equipment, plus arranged
for customs clearance. In line with its sustainable development policy, 60
percent of the Sodexho team were hired and trained on the site, and a program
for the protection of the environment was started up, which called for sorting
trash, and a waste-water treatment station.
Sodexho focused on satisfying BP Indonesia's requirements for a high standard of
safety management from its contractor as well as delivering the camp on schedule
and at a good price. In just 68 days, the fully-functional camp was
commissioned, two days ahead of schedule, to the total satisfaction of the
client, who then asked Sodexho to provide additional services.
[Worldwide]
Xchange contributes to local development
How to optimize the immediate and long-term benefits of each worksite for local
economies? Sodexho strives to add value in terms of sustainable development.
Xchange is Sodexho's name for its proactive approach. An additional advantage is
fostering good relations and mutual understanding between indigenous populations
and our clients. For instance in practice this means that, in Peru, it provides
hospitality training to local staff, in Tanzania, it supplies aid for the
production of fruits and vegetables, and in New Caledonia and in Nigeria, it
offers consulting services for the creation of small businesses.
[Russia]
A first on Sakhalin Island
The Liquefied Natural Gas (LNG) plant at Korsakov, south Sakhalin, is the first
LNG plant in Russia. The Sakhalin LNG plant is the world's first in a severely
cold climate, too. Chiyoda, our client, had several reasons to justify its
choice of Sodexho: a long-standing relationship with its company in Qatar and
Oman, and our capacity to handle large projects in extreme environments and
under difficult conditions. Sodexho has worked on Sakhalin for 10 years, gaining
an understanding of the difficult terrain. Sodexho also provides services to
Sakhalin Energy, and to Shell, the managers of the LNG project. Sodexho provided
advice to Chiyoda on how camp services could be structured for maximum value. On
a tight schedule, we are set to develop partnerships with local entities, hiring
and training both international and local personnel as part of a multiservice
contract, which is scheduled to begin in April 2004, serving up to 5,000 people.
Chiyoda has also awarded Sodexho the responsibility for additional services,
such as security (using the access control system, Sokeez), vehicle fleet
management, snow clearance and waste treatment. Multiservice activity represents
approximately 40 percent of the contract value. This success has made Sodexho a
key partner for Sakhalin Island's development over the next 2 to 3 years.
[North America]
A high-security pipeline
The TransAlaska pipeline transports 30 percent of North America's oil for
domestic consumption, making it one of the continent's most strategic sites. It
is 1,200 km long, traverses extremely rugged terrain, and requires constant
surveillance. Sodexho's subsidiary, Doyon Universal Services, a joint venture
with local native populations, has managed this contract for 10 years, working
for Alyeska Pipeline. Drawing from local workforces, 170 security professionals
have been specially trained to ensure the safety of the pipeline all along its
route.
Among our clients...
Oil & Gas
Agip, Norway, UK, USA
Alyeska Pipeline Company, USA (Alaska)
Apache Energy, USA
Bouygues Offshore, Nigeria, Western Africa
BP, Algeria, Argentina, Azerbaijan, Gulf of Mexico, Indonesia, Netherlands,
Norway, UK, USA (Alaska)
Clyde Petroleum, Netherlands
ConocoPhillips, Indonesia, Syria, UK, USA (Alaska)
Diamond Offshore, Singapore, UK
ENAP, Chile
EnCana, Canada
Ensco, Indonesia, Thailand, India
ExxonMobil, Canada, Gulf of Mexico, Norway, Russia (Sakhalin), Saudi Arabia, UK,
USA (California)
Global Industries, Gulf of Mexico
Global Santa Fe, Equatorial Guinea, Qatar, Thailand
Halliburton, Angola, Nigeria
Helmerich & Payne, Gulf of Mexico
Japan Drilling Company, Angola, Congo
KNPC, Kuwait
Maersk Contractors, Venezuela
Marathon Oil, Gabon, Gulf of Mexico, UK
Nabors Industries, Gulf of Mexico, Saudi Arabia, USA (Alaska)
NAM, Netherlands
Noble Drilling, Brazil, Gulf of Mexico, Netherlands, Nigeria, Qatar, UAE, UK
OBD Drilling, Indonesia
Occidental Petroleum, Qatar
Ocean Energy, Ivory Coast
Oceaneering, Angola, UK
Parker Drilling, Gulf of Mexico, Indonesia
Patra Drilling, Indonesia
PDO, Sultanate of Oman
PDVSA, Venezuela
Pemex, Mexico
Pluspetrol, Peru
Pride International, Angola, Gabon, Gulf of Mexico, India, Indonesia, Ivory
Coast
QGPC, Qatar
Rowan Companies, Gulf of Mexico
Saipem, Congo, Nigeria, Norway
Sakhalin Energy Consortium, Russia SBM, Congo Schlumberger, Algeria, Gabon,
Qatar, Sultanate of Oman, UAE, Venezuela Shell, Cameroon, Gabon, Gulf of
Mexico, Netherlands, Norway, Russia (Sakhalin), Sultanate of Oman, UK
Smedvig Offshore, Norway, UK
Smit International, Singapore
Stolt Offshore, Western Africa
TotalFinaElf, Argentina, Cameroon, Congo, Gabon, Gulf of Mexico, Nigeria,
Netherlands, Norway, UK
Transocean, Inc., Brazil, Cameroon, Congo, Gulf of Mexico, Ivory Coast, Nigeria,
Norway, Thailand, UK
Construction/Power
ABB, Saudi Arabia, Russia
Cosapi, Peru
Fluor Daniel, Bahamas, USA (Alaska)
Hydro-Quebec, Canada
Hyundai, Sultanate of Oman, UAE
JGC, Nigeria
Kellogg Brown & Root, Nigeria
Snamprogetti, Nigeria
Techint, Peru
Willbros, Nigeria
Mining
Anglo America, Chile
BHP Billiton, Canada, Chile
Barrick Gold, Australia, Canada, Tanzania
Cambior, Guyana, Surinam
Codelco, Chile
Croesus Mining, Australia
De Beers, Canada
Glencore, Kazakhstan
Kinross Gold Corporation, Russia
Lionore Mining International, Australia
MIM Holdings, Australia Noranda, Canada, Peru, Chile
North American Tungsten, Canada Rio Tinto, Australia, Chile Sons of Gwalia,
Australia Teck, Peru, USA (Alaska) Western Mining, Australia
Service Vouchers and Cards_____________________________________________
Number 2 worldwide
Revenues Revenues Share of Number Number
(euro in (US$ in group of of
million) million) revenues employees clients
248 265 2% 2,700 285,000
The market in figures
Estimated issue volume: 30 billion euro, not including the impact of new
services.
Market trends
From employee fringe benefits to innovative new services, which did not exist
only two years ago, the market undergoes rapid change, revealing new prospects
for considerable business development. Key factors are the political landscape
that governs corporate social policies, and the importance of motivation and
loyalty within retail distribution channels.
Source: Sodexho
Ivan Semenoff
President, Sodexho Pass
"No matter what the media (voucher, card or Internet), there are still plenty of
services to be imagined and networks to be built, which enhance relations
between companies and employees, or administrations and constituencies."
"Sodexho Pass has twenty years experience, one of the first to issue restaurant
vouchers. The value for companies - simple to manage, tax advantages, and
enthusiastic employee acceptance - led them to expand their use to managing
other kinds of fringe benefits. Gradually, vacation, healthcare, training and
other vouchers fleshed out our offering. Our partner networks diversified, too.
Some 825,000 affiliates worldwide now benefit from sales growth and stronger
consumer loyalty, thanks to our system.
"At the same time, administrations found Sodexho Pass a good partner to leverage
their social policies, such as for food stamps, vaccinations, cultural programs,
or refugee benefits. Our system and channels ensure complete accountability.
Administrations gain different sources of value-added: simplified management and
a way to combat fraud or illicit use of benefits. This all bolsters public
health, employment, education, and more.
"For the past four years, we have been growing on average 20 percent per annum,
but there is still plenty of upside potential. There isn't any cap on the number
of services possible. Sodexho Pass defines three service categories: Daily Life,
Incentive, Assistance.
"Recently, our focus shifted. Sodexho Pass is more and more present in incentive
and loyalty schemes, serving distribution channels, as well as in promoting
social policies.
"The marketplace is global. Our objective is to open up two new countries each
year. Our geographic expansion is also an important source of organic growth,
plus it contributes to hedging against currency exchange risks.
"Furthermore, it is by optimizing synergies with other Sodexho activities - for
instance, leveraging the multiapplication smart card as an integrator of
offerings in other markets - that we strengthen the potential for organic growth
across the entire company."
Better together
[Belgium]
Finance Ministry
"We're giving entrepreneurial spirit a boost, just like we did with training
vouchers." Jaak Gabriels, former Flemish, finance minister
Give Flemish small- and mid-sized enterprises (SMEs) a better chance to be
informed before deciding
Flemish authorities are looking at many ways to develop regional economies.
Better informed management at SMEs is one such scheme. These managers have twin
preoccupations: decision-making that requires outside consulting, and protecting
reserves by avoiding excessive capital expenditure.
Already last year, Sodexho Pass introduced training vouchers, 50-percent
financed by local Flemish government, to boost job-skills development for
employees of SMEs. The success of these vouchers led the Flemish, finance
minister at the time, Jaak Gabriels, to ask Sodexho Pass to adapt that program
to a new service concept - consultant vouchers - and to ensure the subsequent
operations. These new vouchers would enable SMEs to get expertise in
enterprise-critical areas, while also reigning in outlays for consulting
services.
Each year, an enterprise can receive up to 820 vouchers, with an issue value of
30 euro apiece. The Flemish government contributes half. Vouchers are on a Web
site, and grant access to an affiliate network of consultants. These meet
certain Quality requirements, for instance, ISO or Q*for certification. Other
experts can also be consulted, provided they are first vetted by a qualifying
government agency.
As enablers of better SME strategic decision-making, Sodexho Pass contributes to
two main objectives of Flemish authorities:
>> enhance entrepreneurial spirit,
>> reinforce the financial strength of enterprises.
On a macro-economic level, subsidies work towards their true purpose. They
profit enterprises and consultants alike, plus foster progress across the entire
region. The total budget for this operation is 5 million euro.
"UNIZO, representing small and independent Flemish enterprises, applauds this
measure, which it has lobbied for," stated Pieter Vanhecke, Economics Consultant
to UNIZO.
--------------------------------------------------------------------------------
Flemish SMEs have access to 330,000 consultant vouchers, starting March 4, 2003.
--------------------------------------------------------------------------------
[Spain]
What restaurant? Check your cell phone
Users of Sodexho Pass restaurant vouchers gain new mobility, when their cell
phones become restaurant guides. If your phone can send a text message, Sodexho
Pass can discover in less than 15 seconds where you are and send back a list of
the closest affiliated eateries. That includes addresses, culinary offering, and
approximate travel distances. It's all in real time, so you can even know the
daily special. Aficionados of the Sodexho Pass Spanish Web site know to avoid
peak periods, like between 1 p.m. and 3 p.m., and appreciate the choice of
16,000 participating restaurants.
[France]
Multiservice in a single, personalized card
Local issuers can now offer certain cardholders different services on a single
smart card. A Sodexho Pass chip card, initially intended to pay for textbooks,
is now enabled to provide three separate functions: textbook payment, plus
access to sports and cultural events. At first reserved to 244,000 students in
the Rhone-Alps region, there are currently 300,000 cardholders, since more
services have meant more beneficiaries: job seekers, the handicapped, and
members of local associations. The first multiapplication card in France, it is
set for adoption in seven other regions.
[Argentina]
SoEasy, more value for affiliates
Sodexho Pass affiliates make more and more calls to client service centers, to
know where their accounts stand. The SoEasy extranet platform provides this
information in real time, saving money. Piloted in Belgium, Sodexho Pass rolled
out the service in just three months in Argentina. A new application is set to
allow each affiliate to download a monthly statement, concerning their
operations.
Among our clients...
ABN Amro Bank, Argentina, Belgium, Brazil, Chile, Colombia, France, India,
Luxembourg, Spain, Turkey
Adecco, Argentina, Belgium, Brazil, Colombia, Czech Republic, France, Italy,
Luxembourg, Mexico, Romania, Spain, Turkey
AKZO Nobel, Belgium, Brazil, Hungary, Mexico
Alcatel, Brazil, China, Colombia, Hungary, India, Spain, Tunisia, Turkey
Allianz, Czech Republic, Germany, Italy, Mexico, Tunisia
Alstom, Argentina, Austria, Chile, Czech Republic, Germany, Hungary,
India, Mexico, Spain, Tunisia, Turkey
Aventis, Argentina, Belgium, Chile, Colombia, Czech Republic, France, India,
Italy, Mexico, Turkey
Axa Assurances, Chile, Colombia, Germany, Italy, Spain
Banco Bradesco, Brazil
BASF, Argentina, Belgium, China, Colombia, Turkey
BNP Paribas, Czech Republic, France, Germany, Luxembourg, Spain, Tunisia, Turkey
Carso Global Telecom, Mexico
Cisco Systems, Belgium, India, Luxembourg, Spain, Turkey
Citigroup, Brazil, Czech Republic, Slovakia
Coca-Cola, Argentina, Belgium, China, Colombia, India, Italy, Luxembourg, Czech
Republic, Slovakia, Tunisia
County Councils, Essex, Kent, Northampton, Norfolk (UK)
Credit Lyonnais, Czech Republic, France, India, Luxembourg, Slovakia, Spain,
Turkey
Department of Defense, Caracas (Venezuela)
Department of Health and Safety, Caracas (Venezuela)
Deutsche Bank, Argentina, Austria, Germany, India, Luxembourg, Spain
Deutsche Telekom, Austria, Czech Republic, Germany
Federal Province of Styria, Salzburg (Austria)
France Telecom, Argentina, France, Italy
French National Employment Agency, Paris (France)
Government of Rioja and Salta Counties (Argentina)
Government of Sardinia (Italy)
Hewlett-Packard, Austria, Belgium, Colombia, Czech Republic, Germany, India,
Italy, Mexico, Turkey
Home Office police, Vienna (Austria)
ING Group, Argentina, Belgium, Chile, Spain, Slovakia, Turkey
Itausa-Investimentos Itau, Brazil La Poste, Belgium, Hungary Manpower,
Argentina, Belgium, Colombia, Germany, Mexico, Tunisia
Ministry of Flemish Affairs, Belgium
Municipality of Lyon, (France)
Nokia, Colombia, India, Turkey
Nortel Networks, Colombia, Italy, Spain, Turkey
ONEM - Ministry of Employment, Brussels (Belgium)
Pepsi-Cola, Argentina, Brazil, Czech Republic, Hungary, Mexico,
Pfizer, Austria, Colombia, Czech Republic, India, Spain, Tunisia, Turkey,
Pharmacia, Argentina, China, Colombia, Czech Republic
Renault, Argentina, Austria, Belgium, Italy, Mexico, Romania
Royal Ahold, Argentina, Czech Republic, Slovakia
Samsung Electronics, Argentina, Austria, Belgium, Colombia, Germany, Mexico,
Slovakia, Tunisia
Siemens, Austria, Belgium, Brazil, Colombia, Czech Republic, France, Germany,
India, Mexico, Romania, Slovakia, Turkey
Sony, Austria, Belgium, Colombia, Czech Republic, Germany, France, India, Italy,
Spain
Total, Belgium, Brazil, Spain, Czech Republic, Tunisia, Turkey
Unilever, Argentina, Belgium, Colombia, Spain, Tunisia, Turkey
Volkswagen, Belgium, Mexico, Romania
INVESTOR INFORMATION
For you...
...transparency is our priority
Financial summary
Consolidated Financial Highlights
o Consolidated revenues during the fiscal year amounted to EUR 11,687 million,
with 3.1 % organic growth and a negative currency impact of 10%.
o Consolidated EBITA amounted to EUR 514 million.
o Group net income amounted to EUR 162 million in fiscal 2003, compared with EUR
183 million in the prior fiscal year.
o Earnings per share amounted to EUR 1.02.
Five-Year Consolidated Financial Summary (in millions of euro)
2002-2003 2002-2003 2001-2002 2000-2001 1999-2000 1998-1999
(in (in millions of euro, except per share amounts)
millions
of USD,
except
per share
amounts)
(4)
Revenues 12,490 11,687 12,612 11,943 10,505 9,032
Percentage
change
- at current
exchange rates 8.7 % (7.3)% 5.6 % 13.7 % 16.3 % 44.2 %
- at constant
exchange rates 3.2 % 2.7 % 8.1 % 8.6 % 10.7 % 42.9 %
Percentage of
revenues
generated
outside France - 85.2 % 86.7 % 88.7 % 88.5 % 88 %
Net income
before minority
interests : 184 171 196 205 154 188
- Group net
income 174 162 183 138 85 132
- Minority
interests 10 9 13 67 69 56
Cash provided
by operating
activities (3) 418 390 391 410 375 302
Dividends
distributed 104 97 97 89 75 60
Number of
employees
at August 31 - 308,385 315,141 313,469 285,986 269,973
Number of
sites - 23,873 24,681 24,325 22,172 21,103
Average number
of shares
outstanding
(1) - 159,021,546 158,814,504 138,180,536 134,262,484 133,873,969
Earnings
per share (2) 1.09 1.02 1.15 1.00 0.63 0.98
Dividends
per share (2) 0.65 0.61 0.61 0.56 0.56 0.45
Share price
at August 31
(in euro) (2) 31.34 26.68 29.90 53.00 44.10 38.88
(1) Based on the average number of shares outstanding per month. Figures for
1998-1999 and 1999-2000 have been restated for the March 7, 2001 four-for-one
stock split.
(2) Restated for note (1).
(3) Includes dividends received from subsidiaries accounted for using the equity
method.
(4) Euro have been translated into US dollars at the rate of USD 1 = EUR
0.93565, which is the average rate for fiscal 2003, excepted for the share price
which is calculated at the closing rate as of August, 31, 2003, USD 1 = EUR
0.915164.
Consolidated income statement
Fiscal Fiscal Fiscal Fiscal
2002-2003 2002-2003 2001-2002 2000-2001
(in millions of (in millions of euro,
USD, except per except per share amounts)
share amounts)
Revenues 12,490 11,687 12,612 11,943
Other income 40 37 54 113
Purchases (4,227) (3,955) (4,559) (4,416)
Employee costs (5,898) (5,519) (5,868) (5,437)
Other external
charges (1,584) (1,482) (1,464) (1,430)
Taxes, other
than income
taxes (84) (79) (74) (75)
Depreciation and
increase in
provisions (188) (175) (173) (112)
------- ------- -------- --------
Earnings before
interest,
exceptional items,
income taxes,
income from
equity method
investees,
goodwill
amortization
and minority
interests (EBITA) 549 514 528 586
Financial expense,
net (162) (152) (166) (122)
------- ------- -------- --------
Income before
exceptional items,
income taxes,
income from
equity method
investees,
goodwill
amortization
and minority
interests 387 362 362 464
Exceptional income
(expense), net 1 1 23 (51)
Income taxes (143) (134) (126) (162)
------- ------- -------- --------
Net income
before income
from equity
method
investees,
goodwill
amortization
and minority
interests 245 229 259 251
------- ------- -------- --------
Net income
(loss) from
equity method
investees 5 4 4 (2)
Goodwill
amortization (66) (62) (67) (44)
------- ------- -------- --------
Net income
before
minority
interests 184 171 196 205
Minority interests 10 9 13 67
------- ------- -------- --------
GROUP NET INCOME 174 162 183 138
======= ======= ======== ========
Earnings
per share 1.09 1.02 1.15 1.00
Diluted
earnings
per share 1.07 1.00 1.13 0.99
Euro have been translated into US dollars at the rate of USD 1 = EUR 0.93565,
which is the average rate for fiscal 2003.
Although revenues declined by 7.3 % due to exchange rate differences, organic
growth rose to 3.1%.
EBITA declined by 2.6%. Excluding the negative currency effect, EBITA amounted
to 9.8%. Group net income declined by 11.3%.
Consolidated balance sheet
Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31, Aug. 31,
2003 2003 2002 2001 2003 2003 2002 2001
(in (in millions of euro) (in (in millions of euro)
millions millions
of USD) of USD)
Fixed and intangible Group shareholders'
assets, net equity
Goodwill 1,630 1,492 1,616 1,710 Common stock 695 636 636 630
Intangible assets 2,935 2,686 2,940 3,021 Additional paid
in capital 1,296 1,186 1,191 1,141
Property, plant and 414 379 371 371 Consolidated
equipment reserves 466 427 571 634
------- ------- ------- -------
Financial investments 70 64 67 68 Total Group
shareholders'
Equity method equity 2,457 2,249 2,398 2,405
investees 21 19 11 6
------- ------- ------- -------
Total fixed
and intangible Minority
assets, net 5,070 4,640 5,005 5,176 interests 73 66 73 131
Provisions for
Current and other contingencies
assets and losses 98 89 99 93
Inventories 186 170 170 193 Liabilities
Accounts receivable,
net 1,511 1,383 1,456 1,518 Borrowings 2,718 2,488 2,693 2,781
Prepaid expenses, Accounts 8
other receivables payable 1,232 1,128 1,251 1,260
and other assets 696 637 606 567 Vouchers
Marketable securities 592 542 553 357 payable 868 794 732 729
Restricted cash 182 166 165 152 Other
Cash 623 570 589 704 liabilities 1,414 1,294 1,298 1,260
------- ------- ------- ------- ------- ------- ------- -------
Total current and Total
other assets 3,790 3,468 3,539 3,491 liabilities 6,232 5,704 5,974 6,038
------- ------- ------- ------- ------- ------- ------- -------
Total
Total assets 8,860 8,108 8,544 8,667 liabilities 8,860 8,108 8,544 8,667
======= ======= ======= ======= ======= ======= ======= =======
Euro have been translated into US dollars at the rate of USD 1 = EUR 0.915164,
which is the closing rate as of August 31, 2003.
Permanent capital covered 88% of fixed assets.
Borrowings, net of marketable securities, restricted cash and cash, amounted to
52% of shareholders' equity.
Cash flow statement
Fiscal Fiscal Fiscal Fiscal
2002-2003 2002-2003 2001-2002 2000-2001
(in millions of (in millions of euro)
USD)
Cash provided by operating activities (1) 418 390 391 410
Change in working capital from operating activities 106 100 228 144
------- ------ ------ ------
Net cash flow from operating activities 524 490 619 554
Tangible fixed assets, net of disposals (257) (241) (297) (238)
Fixed asset disposals 16 15 33 31
Financial investments, net of disposals (36) (33) (48) (1,739)
Changes in other financial assets and working capital from (20) (19) (3) (13)
investing activities
------- ------ ------ ------
Net cash used in investing activities (297) (278) (315) (1,959)
Dividends paid (112) (105) (102) (83)
Increase in shareholders' equity - - 59 1,020
Proceeds from borrowings 111 104 1,120 1,977
Repayment of borrowings (190) (178) (1,146) (1,142)
Change in working capital from financing activities (25) (23) (1) (9)
------- ------ ------ ------
Net cash provided by (used in) financing activities (216) (202) (70) 1,763
------- ------ ------ ------
INCREASE IN NET CASH, CASH EQUIVALENTS AND
MARKETABLE SECURITIES 11 10 234 358
======= ====== ====== =======
Euro have been translated into US dollars at the rate of USD 1 = EUR 0.93565,
which is the average rate for fiscal 2003.
(1) Includes dividends received from subsidiaries accounted for using the equity
method.
Corporate Governance____________________________________________________
The Board of Directors
The Board of Directors comprises twelve members, including one Canadian and one
British Director. At the present time, the term "independent director" does not
have a legal definition in French law. In the Bouton report " for the sake of
simplicity, the definition of independent director is set forth as follows: `a
director is independent when he or she has no relationship of any nature with
the Company, the Group or its management, which could compromise the exercise of
his or her free judgment.'"
In the spirit of this definition, the Board of Directors considers that all of
Sodexho Alliance's directors are independent.
Nonetheless, in order to conform to other definitions and with the advice of the
Selection Committee, the Board of Directors considers the following individuals
are independent directors: Mr. Paul Jeanbart, Mr. Edouard de Royere, Mr.
Francois Perigot, and Mr. Mark Tompkins.
Our Board of Directors is a cohesive authority which collectively represents all
of our shareholders and requires each Director to act in all circumstances in
the interests of all of our shareholders and in the interests of the business.
Directors are chosen for their ability to act in the interests of all
shareholders, in addition to their expertise, experience and understanding of
strategic challenges in markets where the Group operates, thus contributing to
an in-depth knowledge of our businesses.
To support its decision-making process, the Board has created three specialized
committees:
o The Selection Committee for Board members and corporate officers,
comprising Francois Perigot* (Committee Chairman), Pierre Bellon, Edouard
de Royere* and Remi Baudin, examines the Chairman's proposals, prepares
recommendations to present to the Board, and keeps an up-to-date,
confidential list of potential replacements in case a position becomes
vacant. During the fiscal year, the Selection Committee met three times to
review matters such as Mr. Pierre Bellon's succession, the replacement of
Albert George, President and Chief Operating Officer, for health reasons,
the assessment of directors' independence and the replacement of an
outgoing director whose term was expiring.
o The Compensation Committee, comprising Remi Baudin (Committee Chairman),
Pierre Bellon, Edouard de Royere* and Francois Perigot*, proposes
compensation packages for corporate officers and senior executives, and
recommends executive compensation and incentive policies.
The committee met three times during the fiscal year to provide the Board
of Directors with recommendations concerning the following: the
feasibility of a new Employee Savings Plan, new stock option plans and
revised rules, management retirement benefit plans and related comparisons
between France, the United Kingdom and the United States, and compensation
packages for the Chairman and Chief Executive Officer and the President
and Chief Operating Officer.
o The Audit Committee is comprised of Edouard de Royere* (Committee Chairman
and Finance Expert), Paul Jeanbart* and Mark Tompkins*. Sophie Clamens and
Remi Baudin are invited to attend all of the meetings, but are not
members.
As defined in its Charter, the Audit Committee is responsible for
preparing Board resolutions related to accounts and accounting procedures,
relations with the outside auditors and Group internal control procedures.
During fiscal 2003, the Audit Committee met three times to discuss various
issues which included the recruitment of a senior executive to head the
internal audit department, the company's accounting for retirement plan
obligations, the impact of International Financial Reporting Standards
(IFRS) on the consolidated financial statements and management's
initiative to evaluate internal control procedures for the President's
Report in order to comply with the recent French "Loi sur la Securite
Financiere" and section 404 of the Sarbanes-Oxley Act in the United
States.
The Audit Committee also approved the Internal Audit Plan for fiscal 2004
and implemented a procedure for its pre-approval of audit and non-audit
engagements of the company's external auditors and their affiliates.
*Independent director
Members of the Board of Directors as of August 31, 2003
First Term
elected expires
Pierre Bellon Chairman Nov. 14, 1974 2004
Remi Baudin Vice Chairman Feb. 25, 1983 2004
Astrid Bellon Member of the Executive Board, Bellon SA July 26, 1989 2004
Bernard Bellon Chief Executive Officer, Finadvance Feb. 26, 1975 2006
Francois-Xavier Bellon Member of the Executive Board, Bellon SA July 26, 1989 2004
Sophie Clamens Chairman of the Executive Board, Bellon SA July 26, 1989 2004
Paul Jeanbart* Chief Executive Officer, Rolaco Feb. 13, 1996 2005
Charles Milhaud Chairman of the Executive Board, CNCE Feb. 4, 2003 2006
Francois Perigot * Chairman of MEDEF International Feb. 13, 1996 2005
Edouard de Royere * Honorary Chairman, L'Air Liquide Feb. 13, 1996 2005
Nathalie Szabo Member of the Executive Board, Bellon SA July 26, 1989 2004
Mark Tompkins * Corporate Director Feb. 5, 2002 2005
* Independent director
Together, Board members directly own less than an aggregate 0.5% of the
Company's issued capital.
Operating Procedures of the Board of Directors
The Board of Directors is governed by the Board's Internal Rules that establish
its mission, set the number of Board members, define the Director's
responsibilities, and determine the number of Board meetings and the allocation
of Directors' fees. In addition, these rules also establish the policy for
issuing guarantees, set evaluation criteria for the Board's operating procedures
and define the authority of general management.
Mission of the Board of Directors
The Board of Directors is responsible for defining the company's strategy and
designating corporate officers who will manage the company in accordance with
this strategy, controlling its management, evaluating internal control
procedures and monitoring the quality of information provided to shareholders
and financial markets.
As required by law, the Board finalizes the Group's financial statements,
proposes dividends, determines investments and establishes financial policy.
Senior executives regularly inform the Board of the resources used in their
respective businesses and action plans introduced to meet objectives.
Financial statements are reviewed during in-depth meetings attended by the
entire Board, with the participation, when necessary, of the Group's operations
and finance managers, internal auditors and the statutory auditors. Lastly, the
Board is regularly informed of questions, comments and criticism expressed by
shareholders, whether in meetings organized by Sodexho or via letter, e-mail or
phone.
The Board met nine times during fiscal year 2003, in line with Sodexho
guidelines and procedures calling for a minimum of four meetings a year. The
average attendance rate was 82%.
The Director's Charter
o In addition to requirements stated in the by-laws, all Directors must
personally own at least 400 Sodexho Alliance shares.
o All unreleased information that Directors receive in the course of their
duties is considered confidential. In addition, Directors are forbidden from
trading in Sodexho Alliance securities during the three months immediately
preceding the Board meeting scheduled to close the accounts for the year.
o Except in case of force majeure, all Directors must attend the Annual Meeting
of Sodexho Alliance Shareholders
Allocation of Directors' Fees
Directors' fees, whose amount is determined at the Annual Meeting of
Shareholders, are allocated according to the following criteria:
70% for regular attendance at Board meetings.
5% for the additional portion allocated to the Chairman.
25% for participation in specialized committees.
For fiscal year 2003, an aggregate EUR 118,400 in Directors' fees was allocated
to members of the Board, out of a total EUR 150,000 approved by shareholders.
Evaluation of the Board of Directors' Operating Procedures
The Board of Directors appointed one of its members to evaluate its own
operating procedures based on individual survey questionnaires. The results of
this survey will be presented to the Chairman for discussion among the Board
members in order to evaluate the need, if any, for a review of the Board's
Internal Rules.
Information about Members of the Board of Directors
o Pierre Bellon
Born January 24, 1930
Married, four children
Graduate of Ecole des Hautes Etudes Commerciales
Background
Mr. Bellon joined Societe d'Exploitations Hotelieres, Aeriennes, Maritimes
et Terrestres in 1958 as Assistant Manager. He later served as Managing
Director and then Chairman and Chief Executive Officer.
- In 1966, he founded Sodexho SA, which became Sodexho Alliance SA in 1997.
Mr. Bellon is currently Chairman and Chief Executive Officer.
- Since 1988, he has served as Chairman and Chief Executive Officer of
Bellon SA, the family holding company that controls Sodexho, and also
served as Chairman of the Executive Board from 1996 to 2002. He became
Chairman of the Supervisory Board in February 2002.
Mr. Bellon was also:
o National President of the Center for Young Company Managers (formerly the
Center for Young Employers) from 1968 to 1970.
o President of the National Federation of Hotel and Restaurant Chains from
1972 to 1975.
o Member of the Economic and Social Council from 1969 to 1979.
He has also been:
o Vice-President of the MEDEF (formerly CNPF) since 1981.
o President/Founder of the Management Improvement Association.
o Member of the Board of the National Association of Joint-Stock Companies
(ANSA).
Other corporate offices held:
o L'Air Liquide (Member of the Supervisory Board until May 15, 2003)
o Pinault-Printemps-Redoute (Member of the Supervisory Board)
o Director of a number of companies within the Sodexho Group.
Number of Sodexho Alliance shares held: 12,900
With his children, Mr. Bellon holds 54.9% of shares in Bellon SA, which
owns a 38.63% interest in Sodexho Alliance.
o Remi Baudin
Born October 19, 1930
Married, four children
Graduate of Ecole des Hautes Etudes Commerciales
Background
Before helping Pierre Bellon to create Sodexho, Mr. Baudin took part in a
number of foreign projects for management consultancy SEMA, from 1957 to
1965.
He reorganized and managed the ship refueling business (1965-1969), then
created a joint venture with Sonatrach in remote site management and
headed the two companies' joint subsidiary in Algeria (1969-1970). He
successively managed the Food Services France division and started up
operations in Belgium (1971-1976); the France and Africa division,
overseeing start-ups in Cameroon, Nigeria, Ivory Coast, Angola, Benin,
Equatorial Guinea, Algeria and Libya (1977-1982); and the Food Services
France and Europe division (1982-1992).
Mr. Baudin is also Founding Chairman of FERCO, the European food services
confederation.
o Bellon SA (Chairman of the Supervisory Board from 1996 to 2002 and
currently serves as Vice Chairman)
o Sodexho Alliance (Vice Chairman of the Board of Directors)
Number of Sodexho Alliance shares held: 2,941
o Astrid Bellon
Born April 16, 1969
Graduate of ESLSCA
Earned a Master of Arts in film studies in New York.
Background
Ms. Bellon has worked in the television and movie industry since 1999. She
is a shareholder of Les Films d'a Cote, a company she created in 2000.
o Bellon SA (Member of the Executive Board)
Number of Sodexho Alliance shares held: 37,683
o Bernard Bellon
Born August 11, 1935
Married, three children
Degree in French Literature from IAE Aix - Marseille
Background
Mr. Bellon was Director of Compagnie Hoteliere du Midi (a member of the
Compagnie de Navigation Mixte Group) from 1962 to 1970 and then held
various managerial positions in banking at CIC-Banque de Union Europeenne
Group from 1970 to 1988. In 1988, he founded Finadvance SA, a venture
capital company, and has served as its Chairman since then.
o Bellon SA (Member of the Supervisory Board)
Other corporate offices held:
o Perfin SA (Managing Director)
o CIC France
o Allios Industrie
Number of Sodexho Alliance shares held: 376,732
o Francois-Xavier Bellon
Born September 10, 1965
Married, three children
Graduate of the European Business School
Background
Mr. Bellon began his career in the temporary employment industry as an
agency manager for Adia France (1990-1991), then for Ecco in Barcelona,
Spain (1992-1995), where he was promoted to Sales and Marketing Director
and Regional Director for Catalonia (1993-1995). He joined the Group in
1995 as Regional Manager followed by Development Manager in the healthcare
segment in France. Since 1999, he has held the position of Managing
Director of Sodexho in Mexico.
o Bellon SA (Member of the Executive Board)
Number of Sodexho Alliance shares held: 37,343
o Sophie Clamens
Born August 19, 1961
Married, four children
Graduate of Ecole des Hautes Etudes Commerciales du Nord
Background
From 1985 to 1987, Mrs. Clamens was employed by Credit Lyonnais in New York
as a mergers and acquisitions advisor for the bank's French clientele. She
later worked as a sales agent for a number of leading European fashion
houses, including Chanel, Valentino, Ungaro and Armani, from 1987 to 1992.
Mrs. Clamens joined the Group's Finance Department in 1994, initially as a
development analyst and was later responsible for strategic financial
planning.
Since 2002, she has been manager of Strategic and Management Control.
o Bellon SA (Chairman of the Executive Board since 2002)
o Sodexho Alliance (Secretary of the Audit Committee)
Number of Sodexho Alliance shares held: 7,964
o Paul Jeanbart
Born August 23, 1939
Married, three children
Civil engineer
Background
Co-founder, partner and Chief Executive Officer of the Rolaco Group since
1967
Other corporate offices held:
o Oryx Finance Limited, Grand Cayman (Chairman)
o Intercontinental Hotels Geneva (Chairman of the Board of Directors)
o Rolaco Holding SA (Managing Director)
o Semiramis Hotel Co., Delta International Bank, XL Capital Limited, and
Nasco Insurance Group (Member of the Boards of Directors)
o Club Mediterranee SA (Member of the Supervisory Board)
Number of Sodexho Alliance shares held: 400
o Charles Milhaud
Born February 20, 1943
Married, 2 children
Advanced degrees in Mathematics, Physics and Chemistry
Background
In 1964 Mr. Milhaud joined the Caisse d'Epargne and was appointed Chief
Executive Officer of the Bouches du Rhone and Corsica region in 1983. He
was also a member of the Supervisory Board of the Centre National des
Caisses d'Epargne (CENCEP) and in 1995 became Vice President of the Board
of Directors for Caisse Centrale des Caisses d'Epargne. In 1999, these two
institutions merged to create the Caisse Nationale des Caisses d'Epargne
(CNCE) of which Mr. Milhaud was appointed Chairman of the Executive Board.
Other corporate offices held:
o Eulia Compagnie Financiere (Chairman of the Board of Directors and Chief
Executive Officer)
o Credit Foncier de France (Chairman of the Supervisory Board)
o Financiere Oceor (Chairman of the Supervisory Board)
o CNP Assurance (Member of the Supervisory Board)
o Sopassure and Banque internationale des Mascareignes (Member of the
Boards of Directors)
o Banque de Tahiti, Holassure, Banque des Iles Saint-Pierre-et-Miquelon,
Banque des Antilles Francaises, Credit Saint-Pierrais, Banque de la Reunion
and Banque de Nouvelle-Caledonie (Permanent representative of CNCE on the
Boards of Directors)
o CM Investissements Sarl (Manager)
Number of Sodexho Alliance shares held: 400
o Francois Perigot
Born May 12, 1926
Married
Advanced law degree and graduate of Institut d'Etudes Politiques in Paris
Background
After serving as Chairman and Chief Executive Officer of Thibaud Gibbs et
Compagnie from 1968 to 1970, Mr. Perigot successively held the positions of
Chairman and Chief Executive Officer Unilever Spain and Chairman and Chief
Executive Officer Unilever France (1971-1986). From 1986 to 1998, he was
Chairman of Compagnie du Platre, and from 1988 to 1998 he served as Vice
Chairman, and later Chairman, of UNICE, the European union of employer and
industry confederations.
Mr. Perigot has also been:
o President of the Enterprise Institute (1983-1986).
o President of the National Council of French Employers (1986-1994).
o Member of the Executive Committee of the International Chamber of
Commerce (1987-1989).
o Member of the Economic and Social Council (1989-1999).
He is currently serving as:
o President of the Franco-Dutch Chamber of Commerce, since 1996.
o President of MEDEF International, since 1997.
o Chairman of the International Employers' Organization, since June 2001
Other corporate offices held:
o Astra Calve
o Lever
- CDC Participations
- Sabate-Diosos
Number of Sodexho Alliance shares held: 400
o Edouard de Royere
Born June 26, 1932
Married, three children
Graduate of Ecole Superieure de Commerce in Paris
Background
After working as an authorized representative with power of attorney for
Credit Lyonnais and as Director of Union Immobiliere et Financiere, Mr. de
Royere joined L'Air Liquide in 1966. He successively held the positions of
General Secretary to senior management and Investor Relations Manager, and,
in 1967, was appointed Company Secretary. After having served as a member
of the Board of L'Air Liquide from 1971 to 2001, Assistant Managing
Director of the Company in 1979, Vice Chairman in 1982 and Chairman and
Chief Executive Officer from 1985 to 1995. He has been a member of the
Supervisory Board since 2001.
He was named Honorary Chairman of L'Air Liquide in 1997.
He is also President of the National Association of Joint-Stock Companies
(ANSA).
Other corporate offices held:
o Danone (until April 2003)
o L'Oreal (until May 2003)
o Michelin (Member of the Supervisory Board)
Number of Sodexho Alliance shares held: 3,587
o Nathalie Szabo
Born January 26, 1964
Married, three children, legal guardian for two nephews
Graduate of the European Business School
Background
Mrs. Szabo began her career in the food services industry in 1987. From
1989 to 1992, she served as an account manager for Scott Traiteur, and
Sales Manager of "Le Pavillon Royal".
She joined Sodexho in March 1996 as Sales Director for Sodexho Prestige in
France. In 1999, she became Regional Manager and in September 2003 she was
appointed Managing Director for Sodexho Prestige.
o Bellon SA (Member of the Executive Board)
Number of Sodexho Alliance shares held: 1,147
o H.J. Mark Tompkins
Born November 2, 1940
Married, three children
Masters degree in Natural Sciences and Economy from the University of
Cambridge and an MBA from Institut Europeen d'Administration des Affaires
(INSEAD)
Background
Mr. Tompkins began his career in investment banking in 1964 with Samuel
Montagu & Company (now HSBC). From 1965 to 1971, he was a management
consultant with Booz Allen & Hamilton working on assignments in the UK,
continental Europe and the US. He joined the Slater Walker Securities group
in 1972 and was named Chief Executive Officer of Compagnie Financiere
Haussmann, a publicly traded company in France. From 1975 through 1987, he
was active in residential and commercial property investment in the Middle
East, Germany, Spain, France and the United States. In 1987 and subsequent
years, his focus moved to private equity and capital development in
publicly traded entities, notably in the healthcare, biopharmaceutical,
wholesale and distribution, tourism and leisure, and manufacturing sectors.
Other corporate offices held:
Mr. Tompkins is or was on the Board of Directors of:
o Baobaz S.A. (until October, 22, 2003)
o Bio Projects International Plc. (until September 1, 2003)
o Calcitech Ltd.
o Healthcare Enterprise Group Plc.
o Partners Holdings Plc. (until October 31, 2002)
o Kingkaroo (Pty) Ltd.
Number of Sodexho Alliance shares held: 400
Executive Compensation and Incentive Policies for Fiscal 2003
Compensation allocated to members of the Board of Directors in accordance with
article : L. 225-102-1 (French Commercial Code)
Total Sodexho Alliance Bellon SA
In euro (2) Directors' Fees (3)
Pierre Bellon 646,372 12,800 330,480
Remi Baudin 14,300 12,800 1,500
Astrid Bellon 59,800 6,400 53,400
Bernard Bellon 7,900 6,400 1,500
Francois-Xavier Bellon 256,773 6,400 112,900
Sophie Clamens 134,800 12,800 122,000
Patrice Douce (1) 35,460 3,200
Paul Jeanbart 12,800 12,800
Charles Milhaud 3,200 3,200
Francois Perigot 12,800 12,800
Edouard de Royere 12,800 12,800
Nathalie Szabo 106,608 6,400 67,900
Mark Tompkins 9,600 9,600
(1) Director until February 4, 2003
(2) Total amount which includes Directors' fees paid by Sodexho Alliance and
compensation of any kind allocated for responsibilities in Bellon SA and Sodexho
Alliance
(3) Compensation of any kind allocated for responsibilities in Bellon
S.A.
Compensation allocated to the Presidents and Chief Operating Officers in
accordance with article : L. 225-102-1 (French Commercial Code)
Compensation comprises base salary, performance bonus and fringe benefits. The
bonus, which represents a substantial proportion of total compensation, varies
depending on the degree to which annual objectives are met.
President and COO Base (1) Variable (2) Total
Jean Michel Dhenain (3) 284,564 149,732 EUR 434,296
Albert George (4) 252,671 158,795 EUR 411,466
Michel Landel (3) 538,598 309,075 EUR 847,673
(1) Base salary, fringe benefits, additional retirement
(2) Performance bonus and Restricted Share Units xercised in December 2002
(3) President and Chief Operating Officers for Sodexho Alliance as of June 12,
2003
(4) President and Chief Operating Officer for Sodexho Alliance until June 12,
2003, on leave of absence for health reasons since January 2003
Compensation allocated to members of the Executive Committee by Sodexho Alliance
In fiscal year 2003, the Group allocated total compensation of EUR 2,682,582 to
the seven people who were members of the Executive Committee as of August 31,
2003. Total compensation was comprised of a base amount of EUR 1,848,557 and a
variable amount of EUR 834,025.
Stock Option Policy
Stock options for Group executives are designed to meet two objectives:
o To link the financial interests of executives to those of our shareholders.
o To attract and retain the entrepreneurs we need to expand and strengthen our
market leadership.
Stock options granted to employees
Until 1999, thirteen plans granted stock options to a limited number of
employees. In 2000, the Board decided to broaden the stock option program to a
much larger number of executives. As a result, stock options deepen the
community of interests shared by executives and shareholders.
Date of Board Potential total Number of Exercise period Options expire Subscription Number of
Meeting number of shares options begins price options not
to be subscribed attributed to exercised at
Description (6) Group senior Aug. 31, 2003
executives (5) (4)
------------------------------------------------------------------------------------------------------------------------
Dec. 11, 1997 (2)
Options to
subscribe
new shares 103,066(1) 16,359 Dec. 11, 2001 Dec. 10, 2003 EUR 27.11(1) 53,168
Dec. 10, 1998 (2)
Options to subscribe
new shares 25,766(1) 19,631 Dec. 10, 2002 Dec. 9, 2003 EUR 38.17(1) 23,721
Feb. 23, 1999 (2)
Options to subscribe
new shares 16,359(1) 0 Feb. 23, 2003 Feb. 22, 2004 EUR 37.17(1) 16,359
Jan. 25, 2000 (2)
Options to purchase
existing shares 274,709(1) 22,578 Mar. 1, 2004 Jan. 24, 2005 EUR 39.86(1) 215,757
Apr. 4, 2000 (2)
Options to purchase
existing shares 14,117(1) 0 Mar. 1, 2004 Jan. 24, 2005 EUR 39.86(1) 7,489
Jan. 24, 2001 (3)
Options to purchase 356,392(1) 25,767 Mar. 1, 2005 Jan. 23, 2006 EUR 48.42(1) 319,135
existing shares
Jan. 11, 2002 (3)
Options to purchase
existing shares (A) 470,740 46,500 Jan. 11, 2006 Jan. 10, 2007 EUR 47 429,640
Jan. 11, 2002 (3)
Options to purchase
existing shares
(B) 1,186,542 60,000 Jan. 11, 2006 Jan. 10, 2008 EUR 47 1,121,617
Sep. 17, 2002 (3)
Options to purchase
existing shares 12,000 0 Apr. 1, 2006 Mar. 31, 2008 EUR 47 12,000
Oct. 10, 2002 (3)
Options to purchase
existing shares (A) 1,820 0 Oct. 10, 2006 Oct. 9, 2007 EUR 21.87 1,750
Oct. 10, 2002 (3)
Options to purchase
existing shares
(B) 1,186,542 60,000 Jan. 11, 2006 Jan. 10, 2008 EUR 47 1,121,617
Jan. 27, 2003 (3)
Options to purchase
existing shares
(A) 1,147,100 214,000 Jan. 27, 2004 Jan. 26, 2009 EUR 24 1,130,300
Jan. 27, 2003 (3)
Options to purchase
existing shares
(B) 1,713,950 40,000 Jan. 27, 2004 Jan. 26, 2009 EUR 24 1,705,340
Jan. 27, 2003 (3)
Options to purchase
existing shares
(C) 56,750 0 Jan. 27, 2004 Jan. 26, 2009 EUR 24 56,750
Jun. 12, 2003 (3)
Options to purchase
existing shares
(B) 84,660 0 Jan. 27, 2004 Jan. 26, 2009 EUR 24 84,660
(1) Adjusted for the April 1998 and July 2001 share issues and for the March
2001 four-for-one stock split, and after conversion of French-franc subscription
prices into euro
(2) Acting on the authorization approved by shareholders in Extraordinary
Meeting on Feb. 13, 1996
(3) Acting on the authorization approved by shareholders in Extraordinary
Meeting on Feb. 21, 2000
(4) Excluding departures of grantees.
(5) Options granted to current members of the Executive Committee.
(6) Options on Sodexho Alliance shares
(A) Plan reserved for non-US employees
(B) Plan reserved for US employees
(C) Plan reserved for US employees not residing in the United States
Attributed and exercised options for fiscal 2003
Attributed and exercised options for corporate officers
Corporate officers Number of shares Subscription Date of exercise Corresponding Number of options
attributed during price Option Plan exercised during
the fiscal year (1) the fiscal year
-------------------------------------------------------------------------------------------------------------------
Jean-Michel Dhenain 43,000 EUR 24 From Jan. 27, Jan. 27, 2003 0
2004 to Jan. 26, (A)
2009(2)
Michel Landel 60,000 EUR 24 From Jan. 27, Jan. 27, 2003 0
2004 to Jan. 26, (A)
2009(2)
Albert George 80,000 EUR 24 From Jan. 27, Jan. 27, 2003 0
2004 to Jan. 26, (A)
2009(2)
(1) Options on Sodexho Alliance shares
(2) 25 % of the options may be exercised on January 27th of each year of the
plan. All options may be exercised on January 27th of the fourth year of the
plan
Attributed and exercised options for the 10 employees who hold the largest
number of options
Number of shares Subscription Date of exercise Corresponding Number of options
attributed during price Option Plan exercised during
the fiscal year (1) the fiscal year
-------------------------------------------------------------------------------------------
361, 000 EUR 24 From Jan. 27, Jan. 27, 2003 0
2004 to Jan. 26,
2009(2)
(1) Options on Sodexho Alliance shares.
(2) 25 % of the options may be exercised on January 27th of each year of the
plan. All options may be exercised on January 27th of the fourth year of the
plan.
Financial communications
Listening to shareholders and the financial community
To respond more effectively to the expectations of individual and institutional
shareholders, Sodexho Alliance sets out to continuously improve its investor
relations programs by developing new information channels and organizing regular
meetings with shareholders.
Principles guiding our investor relations policy
Sodexho Alliance is committed to transparency in its investor relations and to
full compliance with the regulatory requirements of the two markets where its
shares are traded, Euronext Paris and the New York Stock Exchange. All
participants in the preparation of financial information are committed to
abiding by the principles that ensure fair and equitable treatment for all
shareholders.
Group spokespersons
Only members of the Executive Committee are authorized to provide financial
information. In addition, the Chairman and Chief Executive Officer has appointed
the Investor Relations Officer to act as Group spokesperson, with carefully
defined responsibilities.
Reviewing financial information
Financial information is reviewed prior to release to the investing public by a
Disclosure Committee composed of members from the Finance, Communications and
Human Resources Departments.
Publishing financial information
Usually any information that may have an impact on the share price is released
before the market opens in Paris.
Financial information is approved by the Chairman and Chief Executive Officer,
the Chief Financial Officer or the Board of Directors, depending on its nature.
A news release is then sent simultaneously to all members of the financial
community. The market authorities are also kept informed simultaneously.
Financial information is available on our website www.sodexho.com. Sodexho
Alliance does not release any financial information during the month before the
publication of its interim and full-year financial statements.
Code of Conduct for senior managers
In 2003, the Board of Directors adopted a written Code of Conduct for senior
managers, in order to emphasize the company's commitment to promoting
transparency and compliance with rules and regulations. Each of Sodexho
Alliance's Group's Executive Committee and senior financial managers, , signed a
statement acknowledging his or her compliance with the code.
Regular, transparent information
A primary source of investor information is the Sodexho Alliance website, which
enables shareholders not only to track the share price, but also to participate
in Annual Meetings and financial analyst meetings with the possibility of asking
questions online. Shareholders also have access to a wide variety of printed
documents, including the Annual Report, the abridged Annual Report, the Code of
Conduct for Senior Managers, presentations to analysts, news releases, press
kits, and Best Of, the Group's international magazine.
Periodic meetings and continuous contact
To create and nurture meaningful dialogue, Sodexho Alliance leverages a variety
of opportunities to meet with shareholders and other members of the financial
community. Major events are organized for the Annual Meeting, the presentation
of interim earnings, and the presentation of full-year earnings. The Group also
organizes quarterly telephonic conferences for financial analysts, which are
conducted by Sodexho Alliance's Chief Operating Officers and Chief Financial
Officer. In addition, investors are regularly invited to attend meetings in
various European countries and in the United States, during which they can
discuss issues with Group management. Other meetings on more specific topics are
prepared for financial analysts, to help enhance their understanding of our
business and operations. Sodexho Alliance also takes part in industry
presentations organized by stockbrokers.
INVESTOR CALENDAR
Presentation of first-quarter revenues: January 7, 2004
Annual Meeting of Sodexho Alliance Shareholders: February 3, 2004
Presentation of interim revenues: April 7, 2004
Presentation of interim earnings: May 6, 2004
Presentation of nine-month revenues: July 7, 2004
Presentation of full-year revenues: October 6, 2004
Presentation of full-year earnings: November 18, 2004
Annual Meeting of Sodexho
Alliance Shareholders: February 8, 2005
This calendar is regularly updated on our website:
www.sodexho.com
Advantages of being a registered shareholder
Shareholders who register their shares are exempt from paying custody fees, are
automatically invited to the Annual Meeting, and are kept regularly and directly
informed about developments affecting our Group. Their accounts are managed by
Societe Generale, the bank that also acts as transfer agent for all Sodexho
Alliance shares.
SHAREHOLDER CONTACTS
Societe Generale Nantes : + 33 2 51 85 52 47
Sodexho Alliance : + 33 1 30 85 72 03
INVESTOR INFORMATION IS AVAILABLE:
On the Sodexho Alliance website
www.sodexho.com
*
Via a voice server, if you are calling from France
08 91 67 19 66
(in French only, charged to your phone bill at 22.5 euro cents a minute)
*
By phone, fax or email
Jean-Jacques Vironda, Investor Relations
Phone: +33 (0) 1 30 85 72 03
Fax: +33 (0) 1 30 85 50 05
e.mail : jeanjacques.vironda@sodexhoalliance.com
*
By mail
Sodexho Alliance Investor Relations
B.P. 100, 78883 Saint-Quentin-en-Yvelines Cedex France
The Sodexho Alliance Share
The Sodexho Alliance share is traded on the Euronext Paris First Market
(Euroclear code FR 0000121220), where it has been part of the benchmark CAC 40
index since May 22, 1998. The share has also been traded on the New York Stock
Exchange (SDX) since April 3, 2002.
The share was first listed in Paris on March 2, 1983 at an adjusted price of EUR
1.55. Since then, its value has been multiplied by 17, with the share closing at
EUR 26.7 on August 31, 2003 (session on August 29, 2003). This was 2 times
better than the CAC 40 index, which increased 9 times during the same period.
Excluding dividends, the share has gained an average of 15% a year.
In a highly unstable stock market environment, the share decreased by 10% during
fiscal 2003 compared with a 1% increase in the CAC 40 index. Revenues generated
from our Business and Industry segment were particularly affected by the
economic slowdown and a depreciation of the US dollar had a penalizing effect on
the share price of companies who have significant presence in the United States.
Adjusted price of the Sodexho Alliance share
Sept. 1, 2002 - Aug. 31, 2003 (in euro)
Source: Sodexho
Adjusted price of the Sodexho Alliance share
Since the initial public offering to Aug. 31, 2003 (in euro)
Source: Sodexho
Price on Sept. 1, 2002 29.55
Low for the year 17.95
High for the year 30.83
Price on August 31, 2003 26.68
Average daily trading volume
Volume 761,423
Value (in euro) 17,151,638
Source: Euronext
Volumes traded on the New York Stock Exchange since the April 3, 2002 listing
were not significant, with an average of fewer than 2,000 shares traded a day.
Dividend per share performance (in euro)
Aug. 31, 1999 - Aug. 31, 2003
Aug.31, 2003 Aug. 31, 2002 Aug. 31, 2001 Aug. 31, 2000(1) Aug. 1,1999(1)
Total payout 97,003,155 97,003,064 89,009,481 75,236,065 59,622,341
Number of shares in
issue carrying dividend
rights 159,021,565 159,021,416 158,945,502 134,350,116 133,982,788
Dividends per share 0.61 0.61 0.56 0.56 0.445
(1)The number of shares in issue and the dividend have been restated for the
March 7, 2001 four-for-one stock split.
Earnings per share (1)
Dividends per share (2)
In euro 2002-2003 2001-2002 2000-2001 1999-2000(3) 1998-1999(3)
Earnings per share 1.02 1.15 1.00 0.63 0.99
Dividend before tax credit per share 0.61 0.61 0.56 0.56 0.445
(1) Based on the average number of shares outstanding per month.
(2) Dividend before tax credit per share based on the number of shares in issue
at August 31 of each year.
(3) Figures have been restated for the March 7, 2001 four-for-one stock split.
Dividend and yield for fiscal 2003
Dividend before tax credit EUR 0.610
Tax credit EUR 0.305
Dividend including tax credit EUR 0.915
Yield including tax credit based
on the August 31, 2003 share price 3.4 %
Dividends not claimed within five years of the date they were payable to
shareholders are forfeited and remitted by the Company to the Caisse des Depots
et Consignations.
The 1996 equity warrant
The 1996 warrant has been traded on the Euronext Paris Cash Market since June
11, 1996. Until November 6, 1997, each warrant entitled the bearer to purchase
one new Sodexho Alliance share at a price of FRF 2,700 (EUR 411.61). Following
the adjustment resulting from the capital increase that month, each warrant gave
the right to purchase 1.02 Sodexho Alliance shares at a price of FRF 2,700 (EUR
411.61). As a result of the four-for-one stock split on March 7, 2001 and the
capital increase on July 4, 2001, each warrant now gives the right to purchase
16.66 new Sodexho Alliance shares at a price of EUR 411.61 until June 7, 2004.
o Number of warrants issued: 400,000
o Warrants outstanding as of August 31, 2003: 374,773
o Warrants outstanding as of November 15, 2003: 374,773
1996 warrant price
Sept. 1, 2002 - Aug. 31, 2003 (in euro)
Source: Sodexho
Price on Sept. 1, 2002 140
Low for the year 32
High for the year 146
Price on August 31, 2003 63
Average daily trading volume
Volume 454
Value EUR 25,004
Source: Euronext
Capital
Change in issued capital
As of September 1, 2002 and November 15, 2003
Type of transaction Number of shares Capital (in euro)
created
Capital at September 1, 2003 159,021,416 636,085,664
Exercise of warrants (9) 149 596
Capital at August 31, 2003 159,021,565 636,086,260
Capital at November 15, 2003 159,021,565 636,086,260
An independent company
Sodexho remains an independent company, with 78,153 shareholders as of August
31, 2003. Of these, 34,599 were employees participating in the Employee Stock
Ownership Plan.
Major shareholders include:
o Societe Bellon SA .....................38.63 %
o Employees ..............................1.67 %
o Sodexho Alliance treasury shares........1.59 %
o French investors.......................36.88 %
- Individuals........................7.67 %
- Institutions......................29.21 %
o Non-French shareholders................21.23 %
To our knowledge, no shareholder other than Bellon SA and Caisse des Depots et
Consignations owns more than 5% of outstanding shares or voting rights.
Shareholder structure
At August 31, 2003
SODEXHO IN THE WORLD
For you...
...we are present in
76 countries
Trademark policy _______________________________________________________
The Sodexho name leverages the group's solid reputation
In today's service industries, brand management plays a vital role in
competitive differentiation, client retention and employee motivation. It
highlights corporate identity and communicates a company's values to its
different audiences. In addition, trademarks offer major advantages for future
alliances. That is why the group has set as a strategic objective that the
Sodexho name rank among the world's leading trademarks, widely recognized and
acknowledged as references in their marketplaces. The group is therefore
capitalizing on a single worldwide identity: Sodexho. This policy extends to
each business and each market segment. The group's brand name is Sodexho, while
Sodexho Alliance uniquely refers to the holding company listed on the Paris
Bourse and New York Stock Exchange.
Steps in growth_________________________________________________________
1966 Pierre Bellon launches Sodexho, in Marseille, founded on the
Bellon family's experience of more than 60 years in maritime
catering for luxury liners and cruise ships. Operations initially
serve staff restaurants, schools and hospitals.
1968 Operations commence in the Paris area.
1971-1978 International expansion begins with a contract in Belgium.
Development of the Remote Site Management business, first in
Africa, then in the Middle East. Sodexho's Service Voucher
business enters Belgium and Germany.
1983 Initial public offering of Sodexho shares on the Paris Bourse.
1985-1993 Sodexho establishes activities in the Americas, Japan, South
Africa and Russia, and reinforces its presence in the rest of
Eastern Europe.
1995 Sodexho forms alliances with Gardner Merchant in the UK and
Partena in Sweden, and becomes the world market leader in food
service.
1996 The group's Service Voucher business establishes its presence in
Brazil, with the acquisition of Cardapio.
1997 The group's holding company changes its name to Sodexho Alliance.
Sodexho Alliance joins forces with Universal Ogden Services, the
leading remote site service provider in the United States.
1998 Founding of Sodexho Marriott Services, with Sodexho holding 48.4
percent of the outstanding shares. The new company is the North
American market leader for food and management services. Sodexho
acquires a stake in Luncheon Tickets, Argentina's second largest
issuer of service vouchers. Sodexho Alliance shares are accepted
into the CAC40 index of the Paris Bourse.
1999 With the acquisition of Refeicheque, Sodexho becomes Brazil's
second largest service voucher issuer.
2000 Albert George is appointed President of Sodexho Alliance. Sodexho
Alliance and Universal Services merge to form Universal Sodexho,
becoming the North American and world market leader in remote
site management.
2001 In April, Sogeres (France) and Wood Dining Services (USA) join
Sodexho Alliance. In May, the group disposes of its 8-percent
shareholding in Corrections Corporation of America (CCA). Sodexho
acquires 53 percent of the share capital of Sodexho Marriott
Services, which changes its name to Sodexho, Incorporated, in
June.
2002 On April 3, 2002, Sodexho Alliance shares are listed on the New
York Stock Exchange. Two new subsidiaries begin operations in
Portugal and Greece.
2003 In June, Jean-Michel Dhenain and Michel Landel are appointed
Group Chief Operating Officers, succeeding Albert George.
Corporate directory
SODEXHO Food and Management Services
ARGENTINA
SODEXHO
BUENOS AIRES
Tel. (54) 114 342 97 63
Fax (54) 114 343 59 58
www.sodexho-ar.com
AUSTRALIA
SODEXHO
ADELAIDE
Tel. (61) 8 8348 7000
Fax (61) 8 8348 7068
SODEXHO
BRISBANE
Tel. (61) 7 3377 4130
Fax (61) 7 3217 7346
SODEXHO
MELBOURNE
Tel. (61) 3 9880 6300
Fax (61) 3 9880 6333
SODEXHO
PERTH
Tel. (61) 8 9242 0770
Fax (61) 8 9242 1555
SODEXHO
SYDNEY
Tel. (612) 9213 6100
Fax (612) 9213 6111
www.sodexho-au.com
AUSTRIA
SODEXHO MM Catering
VIENNA
Tel. (43) 1 32 86 057
Fax (43) 1 32 86 057-300
BELGIUM
SODEXHO
BRUSSELS
Tel. (32) 2 679 12 11
Fax (32) 2 679 14 56
www.sodexho.be
BRAZIL
SODEXHO
SAO PAULO
Tel. (55) 11 5693 5000
Fax (55) 11 5686 8400
www.sodexho.com.br
CANADA
SODEXHO
BURLINGTON - Ontario
Tel. (1 905) 632 85 92
Fax (1 905) 632 56 19
www.sodexhoCA.com
CHILE
SODEXHO
SANTIAGO DE CHILE
Tel. (56) 2 810 01 00
Fax (56) 2 810 05 01
www.sodexho-cl.com
SIGES
SANTIAGO DU CHILI
Tel. (562) 8100 125
Fax (562) 8100 524
CHINA (see Hong Kong)
SODEXHO
CANTON
Tel. (86) (0) 20 83 63 58 88
Fax (86) (0) 20 83 63 57 99
www.sodexho-cn.com
SODEXHO
BEIJING
Tel. (86) (0) 10 65 68 36 36
Fax (86) (0) 10 65 68 03 85
www.sodexho-cn.com
SODEXHO
SHANGHAI
Tel. (86) 21 62 09 60 08
Fax (86) 21 62 09 60 09
www.sodexho-cn.com
COLOMBIA
SODEXHO
SANTA FE DE BOGOTA
Tel. (57) 1 629 08 05
Fax (57) 1 620 39 29
COSTA RICA
SODEXHO
SAN JOSE
Tel. (506) 296 47 30
Fax (506) 296 36 87
CZECH REPUBLIC
SODEXHO
PRAHA
Tel. (420) 2 27 02 74 74
Fax (420) 2 27 23 00 60
www.sodexho-cat.cz
DENMARK
SODEXHO
MIDDELFART
Tel. (45) 63 41 02 22
Fax (45) 63 41 02 33
FINLAND
SODEXHO
HELSINKI
Tel. (358) 9 683 47 20
Fax (358) 9 540 77 110
www.sodexho.fi
FRANCE
SODEXHO
HEAD OFFICE
SAINT-QUENTIN-EN-YVELINES
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
SODEXHO
BUSINESS AND INDUSTRY
SAINT-QUENTIN-EN-YVELINES
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
SODEXHO
HEALTHCARE
SAINT-QUENTIN-EN-YVELINES
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
SODEXHO
EDUCATION
PLAISIR
Tel. (33) (0)1 30 07 62 00
Fax (33) (0)1 30 07 62 01
www.sodexhoeducationfr.com
ALTYS
NANTERRE
Tel. (33) (0)1 55 69 32 32
Fax (33) (0)1 55 69 32 40
www.altys.fr
SIGES
SAINT-QUENTIN-EN-YVELINES
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
BATEAUX PARISIENS
PARIS
Tel. (33) (0)1 44 11 33 44
Fax (33) (0)1 45 56 07 88
www.bateauxparisiens.com
SODEXHO PRESTIGE
PARIS
Tel. (33) (0)1 46 99 25 50
Fax (33) (0)1 46 99 35 48
www.sodexho-prestige.fr
SOGERES
BOULOGNE
Tel. (33) (0)1 46 99 33 33
Fax (33) (0)1 46 05 55 59
www.sogeres.fr
L'AFFICHE
BOULOGNE
Tel. (33) (0) 1 49 99 35 00
Fax (33) (0) 1 46 05 35 48
www.laffiche.fr
FRENCH GUYANA
SODEXHO
KOUROU
Tel. (33) (0)5 94 32 72 21
Fax (33) (0)5 94 32 87 57
GERMANY
SODEXHO
HOCHHEIM
Tel. (49) 6146 60 20
Fax (49) 6146 90 49 29
www.sodexho.de
GREECE
SODEXHO HELLAS ABEE
ATHENS
Tel. (30) 210 6254 950
Fax (30) 210 6254 954
www.sodexho-gr.com
GUADELOUPE
SODEXHO ANTILLES
BAIE MAHAULT
Tel. (33) (0)5 90 38 24 62
Fax (33) (0)5 90 25 08 87
HONG KONG (see China)
SODEXHO
KOWLOON
Tel. (852) 23 88 86 82
Fax (852) 27 80 12 62
www.sodexho-hk.com
HUNGARY
SODEXHO
BUDAPEST
Tel. (36) 1 206 20 16
Fax (36) 1 206 20 15
IRELAND
SODEXHO
DUBLIN
Tel. (353) 1283 3654
Fax (353) 1283 3991
www.sodexho.ie
ITALY
SODEXHO
MILAN
Tel. (39) 02 69 68 41
Fax (39) 02 68 87 169
www.sodexho-it.com
JAPAN
LEOC
TOKYO
Tel. (81 3) 57 74 75 00
Fax (81 3) 57 74 75 55
www.leoc-j.com
LUXEMBOURG
SODEXHO
WINDHOF
Tel. (352) 26 109 200
Fax (352) 26 109 209
Sodexho-lu.com
MALAYSIA
SODEXHO FOOD AND MANAGEMENT SERVICES
PETALING JAYA
Tel. (603) 5638 4476
Fax (603) 5637 7208
www.sodexho-my.com
MEXICO
SODEXHO
MEXICO
Tel. (525) 254 36 52
Fax (525) 254 49 94
www.sodexho-mx.com
MOROCCO
SODEXHO
CASABLANCA
Tel. (212) 22 99 00 51
Fax (212) 22 98 88 73
NEW CALEDONIA
RESTAURATION FRANCAISE
NOUMEA
Tel. (687) 41 45 80
Fax (687) 41 45 81
NORWAY
SODEXHO
ETTERSTAD
Tel. (47) 22 08 91 00
Fax (47) 22 08 91 01
www.sodexho-no.com
ABRA
OSLO
Tel. (47) 81 53 30 90
Fax (47) 23 39 69 10
PERU
SODEXHO
LIMA
Tel. (51) 1 44 15 111
Fax (51) 1 42 29 702
POLAND
SODEXHO
WARSAW
Tel. (48) 22 33 89 600
Fax (48) 22 33 89 601
www.sodexho.com.pl
POLYNESIA
SODEXHO
PAPEETE - Tahiti
Tel. (689) 43 92 73
Fax (689) 41 09 44
PORTUGAL
SODEXHO
LISBOA
Tel. (351) 21 371 52 04
Fax (351) 21 386 02 22
REUNION ISLAND
SODEXHO REUNION
SAINTE CLOTILDE
Tel. (33) (0)2 62 73 18 32
Fax (33) (0)2 62 73 18 40
RUSSIA
SODEXHO
MOSCOW
Tel. (7 095) 745 50 85 Fax (7 095) 745 50 54 www.sodexho.ru
SINGAPORE
SODEXHO
SINGAPORE
Tel. (65) 6743 89 98
Fax (65) 6745 22 32
www.sodexho-sg.com
SLOVAKIA
SODEXHO
BRATISLAVA
Tel. (421) 254 791 392
Fax (421) 254 791 394
www.sodexho-cat.sk
SLOVENIA
SODEXHO
LJUBLJANA
Tel. (386) 14 205 800
Fax (386) 14 205 852
SOUTH AFRICA
SODEXHO
RIVONIA
Tel. (27) 11 803 66 00
Fax (27) 11 803 67 85
SOUTH KOREA
SODEXHO
SEOUL
Tel. (82) 2 594 29 43
Fax (82) 2 594 29 44
www.sodexho-kr.com
SPAIN
SODEXHO
SANTA COLOMA DE CERVELLO (BARCELONA)
Tel. (34) 93 635 22 00
Fax (34) 93 630 88 85
SWEDEN
SODEXHO
STOCKHOLM
Tel. (46) 85 78 84 000
Fax (46) 85 78 84 010
www.sodexho-se.com
ACC
NORRKOPING
Tel. (46) 11 28 59 00
Fax (46) 11 18 52 10
THE NETHERLANDS
SODEXHO
ROTTERDAM
Tel. (31) 10 288 42 88
Fax (31) 10 288 42 22
www.sodexho-nl.com
TUNISIA
SODEXHO
TUNIS
Tel. (216-71) 86 18 99
Fax (216-71) 86 22 46
TURKEY
SODEXHO TOPLU YEMEK
ISTANBUL
Tel. (90) 216 474 97 40 Fax (90) 216 474 97 38 www.sodexho-tr.com
UNITED KINGDOM
SODEXHO
LONDON
Tel. (44) 20 7815 0610
Fax (44) 20 7832 7832
www.sodexho-uk.com
SODEXHO
HEALTHCARE
MANCHESTER
Tel. (44) 16 1873 6800
Fax (44) 16 1873 6869
www.sodexho-uk.com
SODEXHO
DEFENSE
ALDERSHOT (St. Annes)
Tel. (44) 12 5235 3100
Fax (44) 12 5235 3101
www.sodexhodefence.co.uk
SODEXHO
BUSINESS AND INDUSTRY
KENLEY
Tel. (44) 20 8763 1212
Fax (44) 20 8763 1044
SODEXHO
EDUCATION
SWINDON
Tel. (44) 17 9351 2112
Fax (44) 17 9361 5075
SODEXHO
LEISURE
ALPERTON
Tel. (44) 20 8566 9222
Fax (44) 20 8991 9636
CATAMARAN CRUISERS/BATEAUX LONDON
LONDON
Tel. (44) 20 7839 3572
Fax (44) 20 7839 1034
www.bateauxlondon.com
UNITED KINGDOM DETENTION SERVICES
LONDON
Tel. (44) 20 7725 7210
Fax (44) 20 7725 7211
UNITED STATES
BATEAUX NEW YORK
New York City (NY)
Tel. (1) 212 352 9009
Fax (1) 212 352 1367
www.bateauxnewyork.com
SODEXHO NORTH AMERICA
GAITHERSBURG - Maryland
Tel. (1) 301 987 4000
Fax (1) 301 987 4439
www.sodexho-usa.com
SPIRIT CRUISES
NORFOLK - Virginia
Tel. (1) 757 627 2900
Fax (1) 757 640 9315
www.spiritcruises.com
VENEZUELA
SODEXHO
CARACAS
Tel. (58) 212 266 60 11
Fax (58) 212 266 95 21
Universal Sodexho Remote Sites
ANGOLA
SODEXHO
LUANDA
Tel. (244-2) 37 10 38 or 33 30 23
Fax (244-2) 37 09 36 or 37 10 38
CAMEROON
SODEXHO
DOUALA
Tel. (237) 342 82 80
Fax (237) 968 49 95
CONGO
UNIVERSAL SODEXHO
POINTE NOIRE
Tel. (242) 94 19 70
Fax (242) 94 09 29
EQUATORIAL GUINEA
SODEXHO
MALABO
Tel. (240) 948 24
Fax (240) 948 23
FRANCE
UNIVERSAL SODEXHO
HEAD OFFICE
SAINT-QUENTIN-EN-YVELINES
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 85 54 50
www.universalsodexho.com
GABON
UNIVERSAL SODEXHO
PORT-GENTIL
Tel. (241) 55 22 77
Fax (241) 56 56 53
GHANA (see Ivory Coast)
UNIVERSAL SODEXHO
ABIDJAN
Tel. (225) 22 40 91 40/41/42
Fax (225) 22 40 91 44
INDIA
UNIVERSAL SODEXHO
MUMBAI
Tel. (91-22) 28 30 36 50
Fax (91-22) 28 30 36 53
INDONESIA
PT UNIVERSAL OGDEN INDONESIA
JAKARTA
Tel. (62-21) 718 22 30
Fax (62-21) 719 69 81
IVORY COAST
UNIVERSAL SODEXHO
ABIDJAN
Tel. (225) 22 40 91 40/41/42
Fax (225) 22 40 91 44
KAZAKHSTAN
UNIVERSAL SODEXHO EURASIA
ALMATY
Tel. (7-3272) 980 250
Fax (7-3272) 980 251/65
KUWAIT
TARIQ AL GHANIM
AL SHUWAIKH
Tel. (965) 488 00 34
Fax (965) 489 47 45
LEBANON
SODEXHO SERVICES
BEIRUT
Tel. (961-1) 611 186/7
Fax (961-1) 611 188
NIGERIA
UNIVERSAL SODEXHO
PORT HARCOURT
Tel. (234-84) 232 219
Fax (234-84) 238 334
NORWAY
UNIVERSAL SODEXHO
SANDNES
Tel. (47) 51 70 71 72
Fax (47) 51 70 71 73
QATAR
TEYSEER SERVICES COMPANY
DOHA
Tel. (974) 442 85 05 or 06
Fax (974) 442 80 70
www.teyseer-services.com
RUSSIA
UNIVERSAL SODEXHO EURASIA
YUZNO SAKHALINSK
Tel. (7-4242) 727 020 Fax (7-4242) 727 011
SAUDI ARABIA
NCMS
RIYAD
Tel. (966-1) 478 52 80
Fax (966-1) 477 72 51
SINGAPORE
UNIVERSAL REMOTE SITE SERVICES
SINGAPORE
Tel. (65) 6463 90 52 Fax (65) 6465 74 89 www.sodexho-sg.com
SULTANATE OF OMAN
SOCAT
MUSCAT
Tel (968) 60 34 05
Fax (968) 60 43 01
TANZANIA
SODEXHO
DAR ES SALAM
Tel./Fax (255) 222 775 142
THAILAND
UNIVERSAL AMARIT CATERING COMPANY
BANGKOK
Tel. (66-2) 381 12 04 or 10 20
Fax (66-2) 381 12 09
THE NETHERLANDS
UNIVERSAL SODEXHO
HOORN
Tel. (31-229) 232 344
Fax (31-229) 238 808
TUNISIA
SABA
TUNIS
Tel. (216-71) 86 27 77
Fax (216-71) 86 03 33
UNITED ARAB EMIRATES
KELVIN CATERING SERVICES
ABU DHABI
Tel. (971-2) 644 85 30
Fax (971-2) 644 75 74
UNITED KINGDOM
UNIVERSAL SODEXHO
ABERDEEN - Scotland
Tel. (44) 12 2432 4388
Fax (44) 12 2432 4425
UNITED STATES
UNIVERSAL SODEXHO
HARAHAN - Louisiana
Tel. (1) 504 733 5761
Fax (1) 504 731 1679
www.universalsodexho.com
DOYON UNIVERSAL SERVICES
ANCHORAGE - Alaska
Tel. (1) 907 522 1300
Fax (1) 907 522 3531
VENEZUELA
UNIVERSAL SODEXHO
MARACAIBO
Tel. (58) 261 787 61 55
Fax (58) 261 787 62 01
SODEXHO PASS Service Vouchers and Cards
ARGENTINA
SODEXHO PASS, LUNCHEON TICKETS
BUENOS AIRES
Tel. (54) 11 43 45 60 00 or 69 90 ext 6401
Fax (54) 11 43 45 42 20
www.sodexho-ar.com
AUSTRIA
SODEXHO PASS
VIENNA
Tel. (43) 1 32 86 06 00
Fax (43) 1 32 86 06 02 00
www.sodexho-pass.at
BELGIUM
SODEXHO PASS
BRUSSELS
Tel. (32) 2 547 55 11
Fax (32) 2 547 55 01
www.sodexho-be.com
BRAZIL
SODEXHO PASS
SAO PAULO
Tel. (55) 11 3704 4700
Fax (55) 11 3078 4953
www.sodexhopass.com.br
CHILE
SODEXHO PASS
SANTIAGO DE CHILE
Tel. (562) 687 0200
Fax (562) 687 0205
www.sodexhopass.cl
CHINA (see Hong Kong)
SODEXHO PASS
SHANGHAI
Tel. (86) 21 62 09 60 01
Fax (86) 21 62 09 60 02
COLOMBIA
SODEXHO PASS
SANTA FE DE BOGOTA
Tel. (57) 1 312 00 84
Fax (57) 1 312 30 98
www.sodexhopass.com.co
CZECH REPUBLIC
SODEXHO PASS
PRAHA
Tel. (420) 2 33 11 34 35
Fax (420) 2 33 11 34 00
www.sodexhopass.cz
FRANCE
SERVICE VOUCHERS AND CARDS
PUTEAUX
Tel. (33) (0)1 41 25 26 27
Fax (33) (0)1 41 25 26 98
www.sodexho-ccs.com
SODEXHO PASS INTERNATIONAL
Tel. (33) (0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
www.sodexhopass.com
GERMANY
SODEXHO PASS
FRANKFURT
Tel. (49) 6973 99 60
Fax (49) 6973 99 66 001
www.sodexhopass-de.com
HUNGARY
SODEXHO PASS
BUDAPEST
Tel. (36) 1 363 66 46
Fax (36) 1 267 14 17
www.sodexho-pass.hu
INDIA
SODEXHO PASS
MUMBAI
Tel. (91) 22 685 59 59
Fax (91) 22 685 59 73
www.sodexhoindia.com
ITALY
SODEXHO PASS
MILAN
Tel. (39) 02 38 05 71
Fax (39) 02 38 00 30 44
www.sodexhopass-it.com
LUXEMBOURG
SODEXHO PASS
LUXEMBOURG
Tel. (352) 46 16 65-1
Fax (352) 46 16 66
www.sodexho-lu.com
MEXICO
SODEXHO PASS
MEXICO
Tel. (52) 555 262 29 04/05
Fax (52) 555 254 50 21
www.sodexhopass-mx.com
PHILIPPINES
SODEXHO PASS
PAZIG CITY
Tel. (6) 326 876 408
Fax (6) 326 877 967
POLAND
SODEXHO PASS
WARSAW
Tel. (48) 22 53 51 111
Fax (48) 22 53 51 219
www.sodexhopass.pl
ROMANIA
SODEXHO PASS
BUCAREST
Tel. (40) 21 232 99 52 60
Fax (40) 21 232 88 08 or (40) 21 233 14 78
www.sodexhopass.ro
SLOVAKIA
SODEXHO PASS
BRATISLAVA
Tel. (421) 243 41 30 57
Fax (421) 243 41 30 51
www.sodexhopass.sk
SPAIN
SODEXHO PASS
MADRID
Tel. (34) 91 445 28 66
Fax (34) 91 594 17 58
www.sodexhopass.es
TUNISIA
SODEXHO PASS
TUNIS BELVEDERE
Tel. (216-71) 84 45 38 or 84 57 55
Fax (216-71) 84 97 93
TURKEY
SODEXHO PASS
MECIDIYEKOY ISTANBUL
Tel. (90) 212 216 91 70 or 80
Fax (90) 212 216 95 15
UNITED KINGDOM
SODEXHO PASS
ALDERSHOT
Tel. (44) 12 5236 9711
Fax (44) 12 5236 9705
www.sodexhopass.co.uk
UNITED STATES
SODEXHO PASS
NEWTON - Massachusetts
Tel. (1) 617 630 9955
Fax (1) 617 630 9517
www.sodexhopassusa.com
VENEZUELA
SODEXHO PASS
CARACAS
Tel. (58) 212 206 55 11
Fax (58) 212 206 54 34
www.sodexho-pass.com.ve
SODEXHO ALLIANCE
Head Office : Parc d'Activites du Pas-du-Lac
3, avenue Newton - 78180 Montigny-le-Bretonneux - France
P.O. Box : B.P. 100 - 78883
Saint Quentin en Yvelines
Cedex - France Tel. (33)
(0)1 30 85 75 00
Fax (33) (0)1 30 43 09 58
www.sodexho.com
[Fiscal 2003]
--------------------------------------------------------------------------------
FINANCIAL REVIEW
--------------------------------------------------------------------------------
Financial statements for the year ended August 31, 2003
Contents
Board of Director's Report to the
Shareholders' Meeting on February 3, 2004 128
Group Consolidated Financial Statements 151
Statutory Auditors' Report on the Consolidated Financial Statements 191
Additional Information regarding the
Consolidated Financial Statements 192
Sodexho Alliance Statutory Financial Statements 214
Statutory Auditors' Report on the Statutory Financial Statements 235
Additional Information regarding
the Statutory Financial Statements 238
General Information about Sodexho
Alliance and its Issued Capital 240
February 3, 2004 Shareholders' Meeting Resolutions 252
Auditors' Special Report 262
Responsibility for the Annual Report and the audit 263
Auditors
Statutory PRICEWATERHOUSECOOPERS AUDIT
KPMG AUDIT
Alternates Patrick FROTIEE
Didier THIBAUT DE MENONVILLE
Investor relations
Jean-Jacques VIRONDA, Investor Relations
--------------------------------------------------------------------------------
Board of Directors' Report to the Shareholders' Meeting on February 3, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1- SODEXHO Group
--------------------------------------------------------------------------------
For Fiscal 2003, Sodexho Alliance reported consolidated revenues of EUR 11.7
billion and Group net income of EUR 162 million. The Board of Directors has
determined that with this performance, Sodexho's teams succeeded in overcoming
unfavorable economic conditions in a difficult political climate.
As a result of the appreciation of the euro against other currencies, currency
conversion had a negative effect on all income statement line items. However,
these exchange rate variations do not result in operating risk because both the
receipts and expenses of each of our subsidiaries are in the same currency,
unlike exporting businesses.
Organic growth in revenues amounted to 3.1%, representing an improvement over
growth of 1.9% reported in the previous fiscal year. Group net income,
calculated using the average exchange rate for fiscal 2003, was nearly the same
as in fiscal 2002, when calculated at the same rate.
Fiscal 2003 highlights:
- Albert George, who had been appointed President and Chief Operating
Officer of Sodexho Alliance on February 20, 2000, resigned from his
position for health reasons early in the year. In response, on June 12,
2003, the Board of Directors, acting on a motion by Pierre Bellon and with
the approval of the Selection Committee, appointed:
o Jean-Michel Dhenain as President and Chief Operating Officer,
responsible for the Food and Management Services activity in
Continental Europe, South America and Asia/Australia.
o Michel Landel as President and Chief Operating Officer, responsible
for the Food and Management Services activity in North America, the
United Kingdom and Ireland, as well as for Remote Site Management.
- To improve earnings and continue to internationalize the organization,
Sodexho strengthened its senior management team during the year. Richard
Macedonia was appointed Chief Operating Officer of Sodexho Inc. in North
America. He also joined the Group's Executive Committee, as did Vincent
Hillenmeyer, Senior Vice President, Strategic Planning and Control.
- The Operational Committee added two new members: George Chavel, the new
President of the Health Care Services Division in the United States, and
Rick Floore, Internal Audit Director. The Committee now has 19 members.
- In October 2002, Sodexho, Inc. commenced the management of 55 US Marine
Corps facilities on both the East and West Coasts of the United States.
Launching a contract of this size in a new segment in the United States was
even more daunting given that the departure of US troops for Iraq required
the ability to respond immediately. As a result of the partnering
relationship forged with the Marine Corps and the wholehearted involvement
of our teams, we were able to effectively respond to the challenge.
1.1 Financial Highlights___________________________________________
Our 23,873 sites are as follows:
- 13,113 businesses and government agencies
- 4,703 schools, colleges and universities
- 3,468 healthcare institutions
- 1,540 senior residences
- 1,049 remote sites
Sodexho currently operates in 76 countries, and as of August 31, 2003, had
308,385 employees.
For the year, consolidated revenues totaled EUR 11.7 billion, a 7.3%
decline, as follows:
Organic growth.............................. +3.1%
Acquisitions net of disposals............... -0.4%
Currency effect............................ -10.0%
Total....................................... -7.3%
The currency effect resulted mainly from the 14.8% increase in the euro
against the US dollar. More than half of our revenues are denominated in
dollars or in currencies with strong links to the dollar.
The Business and Industry segment reported organic growth of 3.1% for the
year, compared with a decline of 2% in fiscal 2002. This performance was
led by the development of the Defense business in the United States and
Sweden and by a number of important new contracts. The Education and
Healthcare segments continued their expansion, reporting organic growth of
2.9% and 2.6% respectively.
- Condensed consolidated income statement
(in millions of euro) Fiscal year Fiscal year % change at % change at
ended Aug. ended Aug. current exchange constant exchange
31, 2003 31, 2002 rates rates
Revenues 11,687 12,612 (7.3%) 2.7%
Gross profit 1,723 1,828 (5.7%) 5.6%
Overheads (1,209) (1,301) 7.0% (3.8%)
EBITA 514 528 (2.6%) 9.8%
Net financial expense (152) (166) 8.2% (1.2%)
Net exceptional income 1 23
Group net income 162 183 (11.3%) (2.2%)
Earnings per share (in euro) 1.02 1.15 (11.4%) (2.3%)
Average number of
shares outstanding
(in millions) 159.0 158.8 0.1% -
- EBITA
EBITA declined by 2.6% to EUR 514 million. At constant exchange rates,
however, it rose by 9.8%.
EBITA margin was 4.4%, versus 4.2% in fiscal 2002. The improvement
resulted from the initial positive effects of action plans designed to
restore profitability in our UK subsidiary and from an improvement in
margins in Continental Europe and North America.
- Group net income
Excluding the currency effect, Group net income after exceptional
items totaled EUR 162 million. This was nearly the same as in fiscal
2002, calculated at the average fiscal 2003 exchange rate.
1.2 Revenues and EBITA by activity___________________________________
Revenues by activity Fiscal year Fiscal year % change at % change at
(in millions of euro) ended August ended August current constant
31, 2003 31, 2002 exchange rates exchange rates
Food and Management
Services
North America 5,427 6,039 (10.1%) 4.6%
Continental Europe 3,585 3,491 2.7% 2.8%
United Kingdom 1,453 1,684 (13.7%) (6.9%)
and Ireland 974 1,119 (12.9%) 3.9%
Rest of the World
------- ------- ------- -------
Total 11,439 12,333 (7.3%) 2.5%
Service Vouchers and Cards 248 279 (11.3%) 11.4%
------- ------- ------- -------
Total 11,687 12,612 (7.3%) 2.7%
======= ======= ======= =======
EBITA by activity Fiscal year Fiscal year % change at % change at
(in millions of euro) ended August ended August current constant
31, 2003 31, 2002 exchange rates exchange rates
Food and Management
Services
North America 268 293 (8.3%) 5.8%
Continental Europe 167 150 11.1% 11.2%
United Kingdom and Ireland 21 12 71.7% 72.0%
Rest of the World 18 31 (41.5%) (30.2%)
------- ------- ------- -------
Total 474 486 2.5% 6.8%
Service Vouchers and Cards 68 77 (11.6%) 14.9%
Corporate Expenses (28) (35) 19.6% 19.5%
------- ------- ------- -------
Total 514 528 2.6% 9.8%
======= ======= ======= =======
For fiscal 2003, operations outside the euro zone accounted for 72% of revenues
(of which 48% were in US dollars) and 65% of EBITA (of which 49% were in US
dollars).
To reflect changes in our operational organization, the presentation of our
results by activity has been modified beginning in fiscal 2003. The Remote Site
Management business is now included under Food and Management Services in the
Rest of the World, while our River and Harbor Cruises operations are included in
Food and Management Services in the appropriate region.
1.2.1. Food and Management Services
The Food and Management Services activity represented 98% of
consolidated revenues and 87% of consolidated EBITA, before corporate
expenses. Revenues totaled EUR 11.4 billion. Organic growth in
revenues amounted to 2.9%, a significant improvement over the 1.6%
growth reported in fiscal 2002.
- Analysis by region
o North America
In North America, revenues totaled EUR 5.4 billion, with
organic growth of 4.3%.
The Business and Industry segment reported organic growth in
revenues of 5.8%. The fiscal year was highlighted by the
creation of the Defense segment, which contributed EUR 133
million to revenues. Excluding Defense, Business and
Industry revenues declined by only 0.6%.
The negative impact of industrial delocalizations and
workforce cutbacks were offset by the gradual start-up
during the year of contracts with Sony, General Electric
Medical Systems and General Mills, as well as a national
contract with Hewlett Packard.
Organic growth in the Healthcare and Seniors segment
amounted to 3.5%. This growth reflects good results on
existing sites and the signing of multi-service contracts
late in the fiscal year. Other recent contracts--such as
those signed with the Spring Valley Hospital Center, the
North Colorado Medical Center and the Medical Center of
Louisiana--will have a positive impact on our fiscal 2004
results.
The Education segment recorded organic growth of 3.7%. Major
contracts were signed late in the year with public schools
in Atlanta, with Rowan University (New Jersey), with the
University of Connecticut and with Morehouse College
(Georgia).
EBITA totaled EUR 268 million and the EBITA margin rose to
4.9%, from 4.8% in the previous fiscal year. The improvement
was due to higher revenues from existing sites in Healthcare
and Education, as well as to ongoing programs to optimize
purchasing and labor costs in all segments. It was partially
offset by start-up expenses in the Defense segment and by
the cost of implementing new information systems.
o Continental Europe
Revenues totaled EUR 3.6 billion, with organic growth
amounting to 3.6%. By segment, organic growth was 4.0% in
Business and Industry, 3.7% in Healthcare and 2.1% in
Education.
In France, the Healthcare segment continued to enjoy steady
growth, notably through Global Hospitality contracts such as
those signed with the Chenieux clinics in Limoges and the
Clinique Saint Louis in Poissy, near Paris. Strikes in May
and June weighed on growth, particularly in the Education
segment. In Business and Industry, growth was maintained,
despite a depressed economic environment.
In Northern Europe, organic growth was strong, due to the
start-up of contracts with the Swedish Army and the City of
Stockholm in Healthcare, as well as new contracts in
Business and Industry, including Nokia and Vattenfall in
Sweden.
In other countries, a number of major contracts were signed
both in food services and multi-services, including with
Banco Santander in Spain, Euroforum in the Netherlands and
Wal-Mart in Germany.
The Prestige activity continues to develop steadily, notably
with renowned restaurants such as Le Roland Garros in France
and the Parliament Restaurant in Sweden.
EBITA in Continental Europe rose by 11.3%, while the EBITA
margin increased to 4.7% from 4.3% in fiscal 2002. These
solid results were led by a strong improvement in gross
profit due mainly to our ongoing Five-Step Approach to
optimize purchasing and, to a lesser extent, to the
implementation of a selective strategy that has sometimes
resulted in our non-renewal of insufficiently profitable
contracts.
In addition, overheads were effectively brought under
control and are now increasing in line with revenue growth.
o United Kingdom and Ireland
Revenues totaled EUR 1.5 billion, a decline of 13.7% of
which 6.8% is the result of a negative currency effect.
Revenues were also impacted by the third-quarter fiscal 2002
sale of Lockhart.
On a constant consolidation basis and excluding the currency
effect, revenues were down 3.9%. This decline was due to a
decision by the new management team to cancel a number of
unprofitable contracts, notably in the Hotels sub-segment; a
drop-off in the retention rate as a few clients, notably in
the Healthcare segment, decided to return to self-operated
services; and the impact of site closings and spending cuts
by clients in the Business and Industry segment.
A number of new contracts were obtained during the fiscal
year, notably for a multi-service package with
GlaxoSmithKline, two detention centers currently under
construction, and the British Army's Deep Cut Garrison.
EBITA amounted to EUR 21 million for a margin of 1.4%,
compared with 0.7% in fiscal 2002. The action plan to
improve profitability in our UK and Ireland subsidiary is
well underway. As announced early in the year, the priority
is to turn the business around, and the plan calls for
diligent management of food and labor costs on site and for
renegotiating or terminating certain contracts. Gross margin
improved by 0.8%, despite disappointing operating results at
the Land Technology subsidiary.
The action plan also includes training and incentive
programs for local teams, as well as strict control of
overheads. Important training initiatives were launched,
including the Sodexho Way to tighten site management
practices, and another initiative to support the wider use
of contract policies. Substantial investments were also made
in human resources, with the hiring of senior managers from
outside the organization to strengthen, for example, the
sales department, the marketing department and the
Healthcare division management team.
Despite an additional EUR 4.7 million in depreciation for
new information systems, overheads were reduced by more than
(pound)7 million (EUR 10 million) for the fiscal year.
The objective for the next two or three years is to restore
profitability to generate EBITA margins in the United
Kingdom and Ireland comparable to those of the Group.
o Rest of the World
In Sodexho's other regions, revenues totaled EUR 974
million, with organic growth of 3.9%.
In Latin America, despite an unfavorable economic
environment for manufacturers, Sodexho continued to grow and
was awarded a large number of multi-service contracts,
notably with Coca-Cola, Codelco Norte and Carrefour in
Chile, PepsiCo and Clariant in Venezuela, Grupo Techint in
Peru, and Exito in Colombia.
In China, growth remained strong during the year, thanks to
major successes in all segments. Contracts were signed with
Motorola, Shanghai Container Terminals Limited and Richina
in Business and Industry, and with the Yew Chung Shanghai
International School and the Central Academy of Fine Arts in
Education. The Healthcare segment continued to develop, as
contracts were signed with hospitals in Jinshan and Dachang.
In Australia, strong growth was reported, notably by our
subsidiary Minesite, which signed a contract to provide
services for Golden Valley Mines.
The Remote Site Management segment recorded good results in
the North Sea and in Alaska for the year, although the
slowdown in drilling operations in the Gulf of Mexico
persisted. Sales teams were strengthened and our strategy of
following clients as they develop their onshore and offshore
projects began to produce results, such as the three-year
contract signed with Chiyoda for its site on Sakhalin
Island, Russia.
Overall, EBITA in the Rest of the World totaled EUR 18
million, compared with EUR 32 million in the previous fiscal
year. The EBITA margin decreased to 1.9% for the year, from
2.8% in fiscal 2002. A challenging economic environment and
stiffer competition in Latin America impacted on results.
The Remote Site EBITA margin was also adversely affected by
start-up costs for a number of contracts, by investments to
strengthen the sales force, and by the allocation of certain
development expenses previously borne by the Group.
1.2.2. Service Vouchers and Cards
In fiscal 2003, Sodexho Pass reported EUR 248 million in revenues from
operations in 26 countries.
Organic growth was 11.3%, mainly due to strong sales in our core meal
and food voucher businesses. Among the year's significant contracts
were Telecom Argentina SA and Grupo Techint in Argentina, the Belgian
national railway (SNCB), the Venezuelan Ministry of Health, and
General Motors in Mexico. Growth was also driven by new services
provided to existing clients. Examples include the culture card in
France, which was extended to 199,000 high school students in the
Center and Burgundy regions, an Education voucher in Hungary for
15,000 postal service beneficiaries, and the Adviescheque voucher in
Belgium, which facilitates access to consulting services for small
businesses.
Issue volume amounted to EUR 4.6 billion. Issue volume is total face
value, calculated at average exchange rates for fiscal 2003,
multiplied by the number of vouchers and cards.
EBITA totaled EUR 68 million, versus EUR 77 million in fiscal 2002. Of
this total, 74% was denominated in currencies other than the euro,
resulting in a more significant currency effect than for Sodexho's
other businesses. The EBITA margin of 27.5% is comparable to that of
the prior year.
1.2.3. Corporate expenses
For the year, corporate expenses of EUR 28 million were down by 19.6%
from the prior year. This was the result of the allocation of
corporate expenses to each operating entity.
1.2.4. Net financial expense
Net financial expense totaled EUR 152 million, as compared to EUR 166
million in fiscal 2002. The improvement resulted from a reduction in
interest expense due to the reduction in debt and exchange rate
variances and from the impact of items that affected the prior year,
notably the provision of EUR 19 million on Sodexho Alliance shares
held and the non repetition of foreign currency exchange gains
realized in the prior year in the Service Vouchers and Cards business,
when funds were converted into strong currencies.
1.2.5. Net exceptional income
Net exceptional income totaled EUR 1 million. It included a purchase
price complement received in connection with the sale of Corrections
Corporation of America shares in fiscal 2001, offset by provisions for
stock options, losses on shares held as treasury shares, restructuring
costs in the United Kingdom and the United States, and exceptional
expense for litigation.
1.2.6. Income tax
Income tax of EUR 134 million represented an effective tax rate of
36.9%. Excluding tax-exempt items, the effective rate was comparable
to the prior-year rate.
1.3 Financial position as of August 31, 2003_______________________________
The following table shows cash flow items for fiscal 2002 and fiscal 2003.
Fiscal year ended
August 31,
2003 2002
(in millions of euro)
Cash provided by operating activities.............. 390 391
Cash flow from changes in working capital.......... 100 228
----- -----
Net cash flow from operating activities............ 490 619
Net tangible and intangible fixed assets...........(225) (268)
Financial investments.............................. (53) (47)
----- -----
Net cash used in investing activities..............(278) (315)
Net cash used in financing activities..............(202) (70)
----- -----
Net increase in cash and cash equivalents.......... 10 234
===== =====
Cash provided by operating activities totaled EUR 390 million, nearly the same
as in fiscal 2002 despite the negative 13% currency effect, thereby confirming
Sodexho's capacity to generate cash flow. Cash flows from changes in working
capital came to EUR 100 million, of which approximately 40% came from the
Service Vouchers and Cards business. The remainder came from organic growth and
measures initiated by operational teams in Food and Management Services to
improve client receivables, which is one of the Group's strategic priorities.
Net cash flow from operating activities thus amounted to EUR 490 million.
Net capital expenditures of EUR 225 million represented 1.9% of consolidated
revenues. During the year, significant investments in information systems were
made in the principal countries where the Group operates.
Acquisition expenditures of EUR 34 million mainly comprised:
- The purchase of the remaining 23% stake in Sodexho Pass do Brasil held by
minority shareholders.
- The purchase of 91.4% of the outstanding shares of Patriot Medical
Technologies, Inc., a US company based in Tennessee, which specializes in
providing engineering services to the medical sector.
Net cash used in financing activities totaled EUR 202 million, half of which to
pay down debt by EUR 97 million, with the remaining EUR 105 million paid out as
dividends.
Net debt decreased by EUR 162 million (EUR 82 million of which is due to the
currency effect at August 31, 2003), to EUR 1,201 million. This represents 52%
of shareholders' equity including minority interests.
As of August 31, 2003, financial debt totaled EUR 2,488 million, comprised
mainly of three euro bond issues totaling EUR 1,605 million, and US dollar
credit facilities totaling $718 million. The remaining debt consists of capital
leases and other credit lines.
As in prior years, the Group's policy continues to be to finance acquisitions
through borrowings in the acquired company's currency, to reduce currency
exchange risks and generally at fixed interest rates depending on market
conditions. As of August 31, 2003, 91% of our borrowings are at fixed rates, and
our average interest rate was 5.5%.
As of August 31, 2003, Sodexho had available credit facilities totaling EUR 119
million and off balance sheet commitments of EUR 150 million, representing 7% of
consolidated shareholders' equity (see note VII-21 to the consolidated financial
statements).
The Board of Directors will request authorization at the next Shareholders'
Meeting to issue bonds for a maximum of EUR 1,200 million, for a duration of 5
years, and to increase the Group's long-term capital.
1.4 Principal accounting policies_______________________________________
The Group's consolidated financial statements are prepared in accordance
with the CRC Regulation 99-02. The principal rules are as follows:
1.4.1 Revenues
In the Food and Management Services activity, revenue is recognized in
the period in which services are provided pursuant to the terms of the
contractual relationships with clients.
Revenues for the Service Vouchers and Cards activity include
commissions received from customers, commissions received from
affiliates, and investment income realized on the nominal value of the
vouchers during the period from their issuance through redemption.
1.4.2 Currency translation
For subsidiaries located in foreign countries, assets and liabilities
are translated using the end of period exchange rate.
Income statement and cash flow statement line items are translated
using the average exchange rate for the year, calculated using monthly
averages which are based on the current and previous month-end rates.
Exchange rates used are obtained from Euronext Paris and other
international financial markets.
The difference between the translation of the income statement at
average and period end rates, as well as the difference between the
opening balance sheet accounts as translated at beginning and end of
period rates is recorded in shareholders' equity.
Foreign exchange gains and losses resulting from intragroup
transactions in foreign currencies during the year are recorded in the
income statement.
Translation differences on monetary assets and liabilities denominated
in foreign currencies are recorded in the income statement.
For countries considered highly inflationary, the difference between
the translation of the income statement at average and end of period
exchange rates is recorded in the income statement. As of August 31,
2003, no countries are considered highly inflationary.
1.4.3 Market shares
The initial inclusion of the companies Sodexho, Inc., Wood Dining
Services, Sogeres, Sodexho Services Group, Sodexho Scandinavian
Holding AB and Universal Services in the consolidation scope at their
fair value led us to record intangible assets which represent the
value attributed to the significant market shares held by these six
companies in their principal geographic markets (the United States,
France, the United Kingdom and Ireland, Netherlands, Australia and
Sweden).
Market share is principally determined based on an average of
multiples of revenues and EBITA achieved by the acquired companies in
the applicable countries and is reviewed annually for diminution in
value.
Market share intangible assets are not amortized in the consolidated
financial statements. If there is a significant diminution in the
market share value for more than two consecutive years, as recomputed
based on actual results of the applicable subsidiary as compared to
the original calculation, it is written down.
The impairment evaluation for market shares and goodwill is further
supported by a calculation of the fair value of the assets as of
August 31, 2003 as determined based on the discounted future cash
flows.
1.4.4 Goodwill
Goodwill represents the excess of acquisition cost over the identified
assets and liabilities assumed, as of the initial inclusion of an
acquired company in the consolidation scope. Due to the long-term
nature of the Group's business, goodwill is generally amortized over
thirty years (on a pro rata basis in the year of acquisition).
1.4.5 Retirement benefits
For funded plans to which the subsidiary makes a contribution, the
amount of the contribution is recorded as the annual expense of the
plan. In the other cases, the group's benefit obligation relating to
defined benefit pension and retirement indemnity are recorded as a
liability in the balance sheet.
1.4.6 Stock options
Sodexho Alliance has acquired treasury shares (which are recorded in
deposits and marketable securities) in connection with its stock
option plans. A liability is recorded if at the closing date of the
period, the market price of the shares acquired is superior to the
exercise price of the options awarded. If the number of treasury
shares acquired is less than the number of "in the money" options
awarded, a liability is recorded for the difference between the market
price at August 31 and the exercise price, multiplied by the number of
remaining shares to be acquired for the applicable tranche of stock
options.
--------------------------------------------------------------------------------
2 - Sodexho Alliance S.A.
--------------------------------------------------------------------------------
2.1 Social and Environmental Information
During the fiscal year, the Board of Directors, as well as members of the
Executive and Operational Committees, committed themselves to respecting a
Group Ethical Principles and Sustainable Development Contract.
In accordance with commercial law article L 225-102-1, information on how
Sodexho Alliance addresses the consequences of environmental and social
issues within Sodexho Alliance's activities in France is presented below.
Social and environmental definitions and regulations vary significantly
throughout the 76 countries where the Group operates. It is for this reason
that the Board of Directors has chosen to illustrate its commitment to
sustainable development as shown through examples contained elsewhere in
this document.
2.1.1 Employment
On August 31, 2003, Sodexho Alliance employed 167 employees, as
follows:
Managers Supervisors Other staff Total
Men 37 6 9 52
Women 38 30 47 115
----- ----- ----- -----
Total 75 36 56 167
===== ===== ===== =====
Furthermore, 25 % of the employees are younger than 30 years of age,
35 % are between 30 and 40 years of age and 18 % are over 50 years of
age. This reflects the Group's policy of recruiting additional
entrepreneurs to facilitate their integration into the workforce and
rapidly offering them responsibility.
During the year, 148 people were recruited by Sodexho Alliance and
among them 12 benefited from indeterminate length contracts (6
managers, 3 supervisors and 3 staff members). In order to keep up with
additional growth, Sodexho Alliance recruited 136 people on fixed-term
contracts (133 staff members, 2 supervisors and 1 manager) and 3
apprentice contracts.
Sodexho Alliance dismissed 9 people, none for economic reasons.
In terms of work schedules, managers work 216 days per year and
supervisors and other staff work 1,596 hours per year. 6 people work
part-time (3 staff members, 1 supervisor and 2 managers). There was a
total of 1,752 hours in over-time.
During the year, the absentee rate was as follows:
Managers Supervisors Other staff Total
Number of days due to a
work-related accident 0 13 7 20
Number of days due
to sick leave 288 376 464 1,128
Number of days due
to maternity leave 265 52 130 447
leave
----- ----- ----- -------
Total 553 441 601 1,595
===== ===== ===== =======
In terms of remuneration, average annual salaries were as follows:
Average annual salary in euro Managers Supervisors Other staff
Men 86,435 30,004 21,422
Women 58,673 31,942 22,457
Salary negotiations were based on collective agreements. There was no
employee profit sharing for fiscal 2003.
The hygiene, security and working conditions committee (CHSCT) met
four times during the year and declared three work related accidents
which resulted in a total of 20 days sick leave.
Sodexho Alliance devoted 3.31% of its payroll to training as follows:
Managers Supervisors Other staff Total
Number of training hours 1,427 812 1,255 3,494
Number of trainees 58 36 90 184
Men (in %) 50 14 18 27
Women (in %) 50 86 82 73
Sodexho Alliance devoted a total of EUR 24,000 to integrating the
disabled into the workforce and currently employs two disabled people.
The company also contributed EUR 70,000 to the workers council.
2.1.2 Environmental information
Energy consumption during the year was 1,598,431 KWH, corresponding to
the corporate office's needs.
The amount of water used during the same fiscal year amounted to 1,822
cubic meters and is supplied by the local water department.
2.2 Issued Capital
As of August 31, 2003, the issued capital of Sodexho Alliance totaled EUR
636,086,260, comprising 159,021,565 shares at 4 euro per share. As of
August 31, 2002, issued capital totaled EUR 636,085,664.
2.2.1. Changes in capital
During fiscal 2003, the exercise of equity warrants created 149
shares.
(1) Management stock options
As of August 31, 2003, 93,248 management stock subscription
options were outstanding, representing an aggregate amount of EUR
2,954,879.
As of the same date, 5,085,838 management stock purchase options
were outstanding, representing an aggregate amount of EUR
169,342,272.
(2) Significant equity interests
As of August 31, 2003, Bellon S.A. held 38.63% of the issued
capital of Sodexho Alliance in comparison to 38.69% held on
August 31, 2002 and Sofinsod, a wholly-owned subsidiary of
Sodexho Alliance, held an 18.5% direct and indirect interest in
Bellon S.A. Employee share ownership, at the end of the fiscal
year, represented 1.67% of the Group's capital.
(3) Company share repurchase program
The Annual Meeting of Shareholders of February 4, 2003 authorized
the Board of Directors to effect a stock repurchase program,
based on the prospectus issued on January 14, 2003 and approved
by the Commission des Operations de Bourse under number 03-007.
Pursuant to this authorization, during fiscal 2003, 969,740
shares were repurchased at the average price of EUR 24.63. The
total number of these shares represent 0.6% of issued capital as
of August 31, 2003. During the year, the company sold 937,740
shares.
Shareholders will be asked to give the Board an 18-month
authorization to repurchase Group shares on the open market
subject to compliance with the law and the following specific
limits:
Maximum purchase price: 40 euro
Maximum number of shares: 10 % of issued capital
Shares purchased under the authorization may be:
- Used to optimize management of the Company's assets and
finances.
- Used to stabilize the price of the Company's shares.
- Transferred to employees of the Company exercising their stock
purchase options.
- Granted to senior managers, as compensation, based on their
performance.
- Exchanged for other securities, in particular in conjunction
with acquisitions or the issue of share equivalents.
- Canceled, held, sold, contributed or transferred.
2.2.2. Acquisition of equity interests
There were no significant acquisitions of equity interests during
fiscal 2003.
2.2.3. Dividends
As a result of the exercise of equity warrants and stock options, a
total of 159,021,565 shares carry dividend rights.
Following the closing of the accounts resulting in net income
excluding the currency effect equal to the previous year and based on
the Group's excellent financial model which allows us to generate
cash, the Board of Directors has recommended paying a net dividend of
EUR 0.61 per share, unchanged from last year. Including the tax credit
of EUR 0.305, the total distribution comes to EUR 0.915 per share.
This represents a total distribution of EUR 97,003,155.
Pursuant to article L 223-16 of the Commercial Code, the table below
shows dividend payments for the last four years, as well as the
recommended dividend for fiscal 2003 (1).
(1)Fiscal 2003 Fiscal 2002 Fiscal 2001 (2)Fiscal 2000 (2)Fiscal 1999
Number of shares outstanding 159,021,565 159,021,416 158,945,502 134,350,116 133,982,788
Dividend per share, before tax
credit (in euro) 0.61 0.61 0.56 0.56 0.445
Tax credit (in euro) 0.305 0.305 0.28 0.28 0.225
Dividend per share including
tax credit (in euro) 0.915 0.915 0.84 0.84 0.67
Closing share price on the 24.04 26.00 45.70 50.40 43.70
last trading day in November
following the fiscal year-end
(in euro)
(1) Dividend subject to shareholder approval at the Annual Meeting on February
3, 2004
(2) Adjusted for the March 7, 2001 four-for-one stock-split.
2.2.4. Sodexho Alliance S.A. financial results
For the year ended August 31, 2003, Sodexho Alliance S.A. had net
income of EUR 79,261,607.
Income appropriation
Net income for the year.......................... EUR 79,261,607
plus retained earnings brought
forward from prior year.......................... UR 702,506,930
Total to be appropriated......................... EUR 781,768,537
Recommended appropriations:
* Transfer to the legal reserve.......................... EUR 59
* Net dividend................................... EUR 97,003,155
(to be paid on the 159,021,565 shares outstanding, representing a
dividend per share of EUR 0.61 giving rise to a tax credit of EUR
0.305)
* Retained earnings............................. EUR 684,765,323
2.2.5. Re-election of members of the Board of Directors
The Board of Directors will ask shareholders to re-elect Mrs. Sophie
Clamens, Mrs. Nathalie Szabo and Miss Astrid Bellon, as well as Mr.
Pierre Bellon, Mr. Remi Baudin and Mr. Francois-Xavier Bellon, whose
terms are expiring, for a term of three years ending at the Annual
Meeting for the fiscal year ending August 31, 2006.
2.2.6. Renewal of the authorization to increase long-term capital
The Board of Directors will also ask shareholders to renew the
authorization given at the February 4, 2003 Annual Meeting to increase
the Company's long-term capital. This authorization was not used in
fiscal 2003. The renewed authorization will allow the Board of
Directors, on one or several occasions, to issue shares, equity
warrants or other share equivalents or to issue bonus shares to be
funded through earnings, additional paid-in capital, retained earnings
or other amounts. Shareholders will be given either a preferential
right to subscribe to the issues or the right to subscribe to the
issues on a priority basis. The authorization will be subject to the
following limits:
- The aggregate par value of shares issued under the authorization may
not exceed EUR 63 million.
- The aggregate face value of debt securities issued under the
authorization may not exceed EUR 570 million.
Any bonus share issues paid up by capitalizing retained earnings,
additional paid-in capital or earnings will not be taken into account
in the EUR 63 million ceiling referred to above.
This blanket authorization is designed to allow the Board of Directors
to act in the Company's best interests by deciding on the most
appropriate method of raising long-term capital when the need arises,
taking into account market opportunities.
Any issues to be carried out under this authorization have not yet
been decided and it is impossible to predict future changes in
conditions on the domestic and international financial markets.
Therefore, at this time, it is not possible to provide detailed
information about the dilutive impact of any such issues for
individual shareholders.
In addition, for reasons of the increases in issued capital as
proposed above and in consideration of the legal requirements of Law
no. 2001-152 of February 19, 2001 pertaining to employee savings
plans, shareholders are asked to vote to authorize one or more capital
issuances reserved for the benefit of employees participating in a
company savings plan or a voluntary partner savings plan, should the
case arise.
--------------------------------------------------------------------------------
3 - Outlook
--------------------------------------------------------------------------------
The outlook is good. The potential market to conquer is large in all of our
activities and in the countries where Sodexho does business. This growth
potential is estimated at more than EUR 380 billion.
Sodexho is number one worldwide in the segments with the greatest potential :
Healthcare, Seniors, Education and Defense.
In addition, Sodexho's financial model is excellent. Our activities are not
capital intensive ; for fiscal 2003, net capital expenditures represented only
1.9% of revenues. Operating cash flow was EUR 390 million. This allows us to
finance growth, reimburse debt and reward our shareholders.
Based on current information and today's economic climate, at the November 12,
2003 meeting, the Board of Directors fixed and confirmed the following minimum
objectives for fiscal 2004 :
- Organic growth in revenues equal to that of fiscal 2003
- EBITA of EUR 550 million, which corresponds to an EBITA margin of 4.6%
- Growth in Group Net Income, excluding exceptional items, of 5%
These objectives are based on the exchange rates used in the fiscal 2003 income
statement.
In order to attain or exceed these objectives, our strategy is confirmed. It
rests upon six strategic objectives :
1. Accelerate organic growth
2. Improve our human resources planning
3. Improve operational management
4. Improve cash flow
5. Reinforce control
6. Encourage transparency and communication
3.1. Accelerate organic growth
Our organic growth is the result of three priorities:
o Retain existing clients:
Our objective to improve client retention from 93% to 95% is one of
the Group's priorities for the next three years. Methods will need to
be developed to focus on current clients and action plans will also
support this priority. The Operational Committee is addressing this on
a global level by using existing best practices in the Group. In
particular, we plan to develop a common and standardized method
throughout the Group drawing upon expertise from Sodexho in North
America and their experience, having developed a client retention
philosophy which has been successful for the past several years.
o Develop our revenues with existing clients:
- By enlarging our food offering: we estimate that we only feed half
of the employees in a client company in Continental Europe and less
than half in North America. To counteract this, we have developed a
"Full potential" approach in several countries with innovative
implementation plans and adapted merchandising, such as Plazza Express
in the Business and Industry segment in France. In the Education
segment in North America, we have increased the number of meals served
on existing sites by 5.5%.
- By offering multi-services: we are global specialists for the
Business and Industry segment, the Education segment, the Healthcare
segment and the Defense segment. Our multi-service strategy is
determined and developed by client segment and sub-segment, as their
needs and expectations are different. Today, for the Group, services
other than food services represent 19% of our revenues.
o Win new contracts:
In our existing segments, we have had numerous important contract
wins. We are also developing new client segments or sub-segments. For
example, our experience and leading position in the United Kingdom for
Defense, has helped us to develop the segment in Australia, North
America, Sweden and Turkey, and we are currently responding to a
number of requests for tender.
3.2. Improve our human resources planning
We plan to address the following five priorities:
1. Support internal promotion such as the nomination of the two Presidents
and Chief Operating Officers. The Selection Committee, seconded by the
Board of Directors, confirmed this priority which has been, since its
creation, a key element of the Group's human resources policy;
2. Encourage the use of employee evaluations to identify managers with
significant potential and future entrepreneurs;
3. Reinforce our workforce by externally recruiting senior managers. Seven
recruitments are currently in progress;
4. Facilitate manager mobility from one entity to another in order to
benefit from their skills and knowledge as much as possible;
5. Systematically create succession plans for the Group's principal
managers in order to accelerate the rejuvenation of our teams.
3.3. Improve operational management
Improving our EBITA and our margin:
o The first improvement driver gross profit:
We are constantly improving this key performance indicator for our
units. The two main items of focus are labor costs and purchasing.
Thanks to our advanced planning management methods, manpower is
optimized onsite to meet fluctuating needs.
As for purchasing, our volumes by continent allow us to be competitive
throughout the world. Our "Five Step Approach" , which includes menu
management and information systems will help us to continually improve
our productivity. The "Five Step Approach" allows us to create a
recipe and menu catalog by client segment and determine, in advance,
the appropriate ingredients. These are then negotiated directly with
food industry manufacturers, with logistic costs negotiated
separately. We also seek to keep food waste to a minimum.
o The second improvement driver is to decrease overheads:
This translates to overheads. In the past, we increased our overheads
without questioning whether it was in the client's best interests,
which often happens in large companies. We are committed to resolving
this drift, however, without sacrificing our investments in
development. At constant exchange rates, in fiscal 2003, our overheads
changed by 3.8%, which is proof that we are on the right path.
3.4. Improve cash flow
Since its creation, Sodexho has been able to generate cash to ensure the
Group's growth.
Operational and finance teams are responsible for generating cash and a
portion of their annual bonus depends on it.
We have decided to maintain this strategy as it ensures the financial
independence of the Group.
3.5. Reinforce control
A mapping of risks and commitments was presented to the Audit Committee. We
are currently in the process of reviewing and updating, when necessary,
procedures and delegations for all of the Group's geographical areas and
activities. This assessment is particularly focused on the delegation
policy for contracts with clients.
We are continuing to improve our reporting - both with the use of key
performance indicators or simple "scorecards" at each level of the
organization - and with our recent investments in information systems for
Group reporting, which allow the hierarchy to maintain appropriate control
and managers to monitor their income statements, balance sheets and cash
flow and report to Group management on a monthly basis.
An Internal Audit Director was recruited in March 2003 who regularly
reports to the Audit Committee.
During fiscal 2003, the Audit Committee met three times to discuss various
issues which included the company's accounting for retirement plan
obligations, the impact of International Financial Reporting Standards
(IFRS) on the consolidated financial statements and management's initiative
to evaluate internal control procedures for the President's Report in order
to comply with the recent French "Loi de Securite Financiere" and section
404 of the Sarbanes-Oxley Act in the United States
The Audit Committee also approved the Internal Audit Plan for fiscal 2004
and implemented a procedure for its pre-approval of audit and non-audit
engagements of the company's external auditors and their affiliates.
Finally, the Board of Directors appointed one of its members to evaluate
its own operating procedures based on individual survey questionnaires. The
results of this survey will be presented to the Chairman for discussion
among the Board members in order to evaluate the need, if any, for a review
of the Board's Internal Rules.
3.6. Encourage transparency and communication
In a decentralized company like ours, the development of internal
communication is essential and new technologies for information and
communication will help us.
Transparency is an integral part of our core values and we are proud to
have been ranked among the most transparent non-financial services
companies for the CAC 40 (ranked by the magazine les Enjeux - les Echos and
Development Institute International).
Since its creation, the company has always been attentive to ethical
issues. But, due to our size, we have decided to formalize our approach in
a document that identifies the four principal ethics upheld by the Group.
Respect for people
Transparency
Refusal to engage in corrupt practices and unfair competition
Loyalty
This document, which also specifies our commitments to sustainable
development on behalf of our clients, customers, employees, suppliers,
shareholders and the countries where Sodexho is present, was distributed in
September 2003. The members of the Operational Committee have committed
themselves to these principles and have signed the document.
In addition, the Board would like to congratulate Sodexho, Inc. in North
America for its actions in favor of minorities which earned them, among
others, the following awards:
- In 2002, Sodexho, Inc. was ranked 20th among the top 100 employers by the
Black Collegian, a committee for the promotion and education of African
American minorities in the United States,
- Sodexho, Inc. was selected for the second time among the top fifty "Latin
Style" companies. "Latin Style" is an annual, special report that
recognizes companies who offer significant opportunities to Hispanic women,
- In October, Michel Landel, President and Chief Executive Officer of
Sodexho in North America, was honored with the "Diversity Best Practices'
CEO Leadership Award" which is awarded to the top ten Presidents and CEOs
of American companies for their ongoing commitment to creating an
environment of diversity and inclusion within their companies.
Group management will focus energies within the Group to improve Sodexho's
performance as compared to that of its competitors.
The Board of Directors has expressed its confidence in the Group's future
because Sodexho's strengths are numerous :
- Sodexho's values: service spirit , team spirit, and the spirit of progress.
- Sodexho's mission :"Improve the quality of daily life," which gives meaning to
all of our team members.
- Sodexho's worldwide network and its presence in 76 countries.
- Sodexho's strong competitive positions.
- Sodexho's excellent financial model.
The Board of Directors would like to thank our clients for their continued
trust, our people who maintain their professionalism and efficiency every day to
ensure our success around the world, and our shareholders for their loyalty.
The Board of Directors
--------------------------------------------------------------------------------
Presentation of the activities
--------------------------------------------------------------------------------
1 ACTIVITES
1.1. Food and Management Services
Business and Industry
- Corporations and public organizations that outsource services choose
Sodexho as a partner who listens. Always innovative, Sodexho delivers a
full suite of services that enable clients to focus on their core business
while reducing their costs.
- To meet a variety of customer expectations and improve their quality of
life, Sodexho customizes its food service concepts and constantly expands
its multi-service offering, which ranges from reception and janitorial
services to conference room management, building maintenance, and more.
- With a dedicated organization, Sodexho ensures that its international
clients benefit from transfers of best practices and purchasing synergies.
- From World Youth Days to the Olympics, Sodexho is also the natural
partner for major events.
Prestige
- Refinement, distinction, talent and creativity: for major business
clients and executive diners alike, our promise is a touch of the
delightful, as well as savoir-faire in the art of everyday living.
- Business meetings, seminars and receptions: Sodexho Prestige meets
expectations with the discreet elegance of respect for enduring traditions
in today's busy world.
- Sodexho Prestige works with master chefs to ensure its cuisine truly
delivers not just fine dining, but passion, on every occasion, for every
customer, on every site.
Defense
- In the Defense segment, Sodexho offers a range of complex, innovative
multi-service solutions, thereby satisfying the military's need to focus
human and financial resources on its core mission.
Correctional Services
- Safety and security are the main priorities in a prison. Nonetheless, as
in all its activities, Sodexho strives to enhance the quality of daily
life, which for inmates means improving their living conditions. To help
them successfully return to society, inmates receive high-quality services
and take part in behavioral training and apprenticeship programs, in an
atmosphere of fairness and respect for themselves and others.
- This is why Sodexho operates only with unarmed personnel in democratic
countries that do not allow the death penalty and where rehabilitation and
reintegration of inmates into society are a priority.
Healthcare
- Healthcare is a sensitive area, requiring extensive expertise and the
ability to anticipate. Sodexho serves healthcare institutions worldwide,
constantly innovating in a myriad of ways, and is expanding its range of
services.
- By carefully listening to patients, their families and caregivers,
Sodexho responds to each client's needs with an integrated portfolio of
services, including housekeeping, systems maintenance and sterilization of
surgical instruments.
- By providing appetizing meals and attentive service, Sodexho offers
comfort and reassurance to patients and their families, for a better
quality of daily life and a sense of security.
Seniors
- Findings of the Sodexho Research Institute point to the needs and
expectations of seniors in terms of quality of daily life, and Sodexho
adapts its offering to their lifestyles.
- Because nursing and residential homes are central to daily life for these
customers, Sodexho serves tasty meals in comfortable, pleasant
surroundings. Through personalized catering, an expanded range of
specialized services, and 24/7 availability, Sodexho puts the zest back
into life.
- Sodexho also provides home services, in answer to the desire of many
seniors to maintain their independence and to benefit from personalized
assistance.
Education
- From nursery schools to universities: public- and private-sector clients
want to satisfy varying expectations, depending on the age group, while
optimizing costs.
- What do children want? Recognition and freedom. What do parents want?
Nutrition education and food safety.
- Creative food service concepts, healthy meals, imaginative environments,
fun and games, plus multi-service management: Sodexho does it best.
Remote Sites
- Clients in oil and gas, mining, construction and public works want a
service provider capable of handling all their requirements, often under
extreme conditions.
- In addition to providing food and hotel services, Universal Sodexho
leverages over 20 years of experience in providing a range of more than 40
services at remote sites on land and offshore to make quality of life a
day-to-day reality.
- Sodexho supports local economic and social development by creating jobs,
providing training programs, introducing regional purchasing policies and
forging local partnerships.
1.2. Service Vouchers and Cards
Sodexho Pass
- Today, employers are looking for new ways to manage fringe benefits,
while public services seek ways to manage and better monitor social
benefits. Everyone wants practical, reliable and secure systems.
- Sodexho Pass sets the pace with operations in 26 countries, 825,000
affiliates, and 11.5 million users each year, who use Sodexho Pass service
vouchers and cards to pay for everything from lunch to medicines to home
care.
- Sodexho Pass innovates and constantly expands the range of its payment
solutions, to simplify and improve the quality of daily life for its
clients, affiliates and users.
--------------------------------------------------------------------------------
2- Condensed Group Organizational Chart
--------------------------------------------------------------------------------
Consolidated Financial Statements
I Consolidated Income Statement
(in millions of euro) Year ended % revenues Change Year ended Year ended
August 31, August 31, August 31,
2003 2002 2001
REVENUES 11,687 100% (7.3%) 12,612 11,943
Other income 37 54 113
Purchases (3,955) (33.8%) (4,559) (4,416)
Employee costs (5,519) (47.2%) (5,868) (5,437)
Other external charges (1,482) (12.7%) (1,464) (1,430)
Taxes, other than income taxes (79) (0.7%) (74) (75)
Depreciation and increase in provisions (175) (1.5%) (173) (112)
------- ------- ------- ------- -------
EARNINGS BEFORE INTEREST,
EXCEPTIONAL ITEMS, INCOME
TAXES, INCOME FROM EQUITY
METHOD INVESTEES, GOODWILL
AMORTIZATION AND MINORITY
INTERESTS (EBITA) 514 4.4% (2.6%) 528 586
Financial expense, net (152) (1.3%) (8.2%) (166) (122)
------- ------- ------- ------- -------
INCOME BEFORE EXCEPTIONAL
ITEMS, INCOME TAXES, INCOME
FROM EQUITY METHOD INVESTEES,
GOODWILL AMORTIZATION AND
MINORITY INTERESTS 362 3.1% (0.1%) 362 464
Exceptional (expense) income, net 1 0.0% 23 (51)
Income taxes (134) (1.1%) (6.8%) (126) (162)
------- ------- ------- ------- -------
INCOME BEFORE INCOME FROM
EQUITY METHOD INVESTEES,
GOODWILL AMORTIZATION AND
MINORITY INTERESTS 229 2.0% (11.7%) 259 251
Net income (loss) from
equity method investees 4 4 (2)
Goodwill amortization (62) (0.5%) 8.2% (67) (44)
------- ------- ------- ------- -------
GROUP NET INCOME BEFORE
MINORITY INTERESTS 171 1.5% (12.4%) 196 205
Minority interests in net income of
consolidated subsidiaries 9 0.1% (28.3%) 13 67
------- ------- ------- ------- -------
GROUP NET INCOME 162 1.4% (11.3%) 183 138
======= ======= ======= ======= =======
EARNINGS PER SHARE (in euro) 1.02 (11.4%) 1.15 1.00
DILUTED EARNINGS PER SHARE (in euro) 1.00 (11.6%) 1.13 0.99
II Consolidated Balance Sheet
ASSETS (in millions of euro) August 31, 2003 August 31, 2002 August 31, 2001
FIXED AND INTANGIBLE ASSETS, NET
Goodwill 1,492 1,616 1,710
Intangible assets 2,686 2,940 3,021
Property, plant and equipment 379 371 371
Financial investments 64 67 68
Equity method investees 19 11 6
------ ------ -----
o Total fixed and intangible
assets, net 4,640 5,005 5,176
CURRENT AND OTHER ASSETS
Inventories 170 170 193
Accounts receivable, net 1,383 1,456 1,518
Prepaid expenses, other
receivables and other assets 637 606 567
Marketable securities 542 553 357
Restricted cash 166 165 152
Cash 570 589 704
------ ------ -----
o Total current and other assets 3,468 3,539 3,491
------ ------ -----
TOTAL ASSETS 8,108 8,544 8,667
====== ====== =====
LIABILITIES AND SHAREHOLDERS' EQUITY
(in millions of euro)
SHAREHOLDERS' EQUITY
Common stock 636 636 630
Additional paid in capital 1,186 1,191 1,141
Consolidated reserves 427 571 634
------ ------ -----
o Total Shareholders' Equity 2,249 2,398 2,405
MINORITY INTERESTS 66 73 131
PROVISIONS FOR CONTINGENCIES AND LOSSES 89 99 93
LIABILITIES
Borrowings 2,488 2,693 2,781
Accounts payable 1,128 1,251 1,268
Vouchers payable 794 732 729
Other liabilities 1,294 1,298 1,260
------ ------ -----
o Total Liabilities 5,704 5,974 6,038
------ ------ -----
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES 8,108 8,544 8,667
====== ====== =====
III Consolidated Cash Flow Statement
(in millions of euro) Year ended Year ended Year ended
August 31, 2003 August 31, 2002 August 31, 2001
OPERATING ACTIVITIES
Consolidated net income before income
(loss) from equity method investees and 167 192 207
minority interests
o Non cash items
Depreciation and provisions 215 254 157
Deferred taxes (9) 5 20
Losses (gains) on disposal and other,
net of tax 14 (61) 26
------ ----- -----
o Cash provided by operating
activities 387 390 410
Dividends received from equity method
investees 3 1 0
Change in working capital from
operating activities 100 228 144
o Net cash provided by operating
activities 490 619 554
INVESTING ACTIVITES
Tangible and intangible fixed assets (241) (297) (238)
Fixed asset disposals 15 33 31
Acquisitions, net of dispositions, of
consolidated subsidiaries (33) (48) (1,739)
Change in working capital from
investing activities (19) (3) (13)
------ ----- -------
o Net cash used in investing (278) (315) (1,959)
activities
FINANCING ACTIVITIES
Dividends paid to parent company (94) (87) (74)
shareholders
Dividends paid to minority shareholders (11) (15) (9)
of consolidated companies
Increase in shareholders' equity 0 59 1,020
Proceeds from borrowings 104 1,120 1,977
Repayment of borrowings (178) (1,146) (1,142)
Change in working capital from
financing activities (23) (1) (9)
------ ----- -------
o Net cash provided by (used in) (202) (70) 1,763
financing activities
------ ----- -------
INCREASE IN NET CASH, CASH
EQUIVALENTS AND MARKETABLE
SECURITIES 10 234 358
====== ===== ========
Cash, cash equivalents,
and marketable securities,
as of beginning of period 1,307 1,213 896
Add: provisions as of beginning
of period 23 1 0
Cash, cash equivalents, and
marketable securities, as
of end of period 1,278 1,307 1,213
Add: provisions as of end
of period 8 23 1
Net effect of exchange
rates on cash 54 118 40
------ ----- -------
INCREASE IN NET CASH,
CASH EQUIVALENTS, AND
MARKETABLE SECURITIES 10 234 358
====== ===== ========
Notes to the consolidated Financial Statements
IV SIGNIFICANT EVENTS
The Group, through its U.S. subsidiary, Sodexho, Inc., acquired 91.4% of
Patriot Medical Technologies, Inc., a U.S. company based in Tennessee, for
U.S.$ 3.1 million (EUR 2.9 million). This company, formed in 1997 and
specialized in engineering services in the medical sector, has annual
revenues of U.S. $ 25 million. Goodwill recorded in connection with the
transaction of EUR 9.4 million will be amortized over 30 years. This entity
contributed an EBITA loss of EUR 0.2 million to Sodexho Alliance's
consolidated income statement for the year.
Sodexho Pass International acquired an additional 23% of Sodexho Pass do
Brazil, in which it already held 77% of the outstanding shares, for EUR
27.6 million. Goodwill of EUR 25.6 million recorded in connection with the
transaction will be amortized over 30 years.
In May 2003, Sodexho Alliance received a purchase price complement of EUR
28.6 million in connection with the sale of its shares in Corrections
Corporation of America in fiscal 2001.
V SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, VALUATION AND CONSOLIDATION
METHODS, AND PRIOR YEAR COMPARATIVES
The Group financial statements have been prepared in accordance with
accounting principles established by the Comite de la Reglementation
Comptable No 99-02 ("CRC Regulation 99-02") in France.
The financial statements have been prepared on a basis consistent with the
prior year, except with respect to the provision of EUR 19 million recorded
in financial expense in fiscal 2002 on Sodexho Alliance shares in
connection with employee stock option programs in order to reflect the
lower of cost or market. In accordance with the CNC opinion, such
provisions and the release thereof are now included in exceptional items,
where losses pertaining to stock compensation are also recorded.
Amounts in tables are expressed in millions of euro, unless indicated
otherwise.
1 Fiscal year
The majority of fully-consolidated companies have a year ending August
31.
All fully consolidated companies that do not have an August 31
year-end are consolidated on the basis of financial statements
prepared on August 31, 2003 and for the twelve month period then
ended.
2 Revenue recognition
In the Food and Management Services, revenue is recognized in the
period in which services are provided pursuant to the terms of the
contractual relationships with clients.
Revenues for the service voucher segment include commissions received
from customers, commissions received from affiliates and investment
income realized on the nominal value of the vouchers during the period
from their issuance through redemption.
3 Retirement benefits
For funded plans to which the subsidiary makes a contribution, the
amount of the contribution is recorded as the expense of the plan.
Otherwise the Group's benefit obligations relating to defined benefit
pension and retirement indemnity plans are recorded in the balance
sheet.
4 Stock options
Sodexho Alliance has acquired treasury shares in connection with its
stock option plans which are recorded in marketable securities. A
liability (and corresponding expense) is recorded if at the closing
date of the period, the acquisition cost of the shares acquired is
superior to the exercise price of the options awarded. If the number
of treasury shares acquired is less than the number of options
awarded, a liability (and corresponding expense) is recorded for the
difference between the market price at the end of the period and the
exercise price, multiplied by the number of remaining shares to be
acquired for the applicable tranche of stock options.
5 Exceptional Items
Exceptional income and expenses are recorded for significant items
which, due to their unusual character and non-recurring nature, are
not considered to be inherent to the operating activities of the
Group. In general, such costs relate to gains or losses on asset
dispositions, restructuring costs, exceptional depreciation of fixed
and intangible assets, or provisions or expenses recorded in
connection with stock option plans.
6 Earnings per share
Earnings per share and diluted earnings per share are calculated using
methods recommended by Advice No. 27 of the Ordre des Experts
Comptables. Earnings per share is calculated by dividing group net
income by the average number of shares outstanding during the year. In
the calculation of diluted earnings per share, the denominator is
increased by the number of potential shares outstanding, and the
numerator is increased by the net-of-tax interest income (calculated
at the Taux Moyen Mensuel du Marche Monetaire Euro) on the proceeds
which would have resulted from the issuance of these shares. The
potential shares included in diluted earnings per share relate to
stock options awarded but not yet exercised and warrants outstanding
from the 1996 bond issuance, which are exercisable prior to June 2004.
7 Foreign currency transactions and translation
For subsidiaries located in countries with stable currencies, assets
and liabilities are translated using the end of period exchange rate.
Income statement and cash flow statement line items are translated
using the average exchange rate for the year, calculated using monthly
averages. The monthly average exchange rates are calculated as the
average of the end of month rate and the rate for the prior month.
Exchange rates used are obtained from Euronext Paris and other
international financial markets. The difference between the
translation of the income statement at average and period end rates,
as well as the difference between the opening balance sheet accounts
as translated at beginning and end of period rates is recorded in
shareholders' equity. Foreign exchange gains and losses resulting from
intragroup transactions in foreign currencies during the year are
recorded in the income statement.
The financial statements of the following subsidiaries reflect
currency devaluations as required by local regulations:
- Sodexho Chile (sub-consolidation)
- Siges Chile
- Sodexho Pass Chile
- BAS (Chile)
- Sodexho Colombia
- Sodexho Peru
- Sodexho Pass de Colombia
- Prestaciones Mexicanas SA de CV
- Promocupon (Mexico)
- Sodexho Servicios de Personal (Mexico)
- Sodexho Sitios Remotos de Peru
- Sodexho Mexico
- Sodexho Servicios Operativos (Mexico)
- Sodexho Restoran Servisleri (Turkey)
- Sodexho Mantenimiento y Servicios (Mexico)
- Sodexho Argentina
- Sodexho Toplu Yemek (Turkey)
- Sodexho Venezuela Alimentacion y Servicios
- Luncheon Tickets (Argentina)
- Sodexho Pass Venezuela
- Universal Sodexho Services de Venezuela
- Universal Sodexho Empresa Servicios y Campamentos (Venezuela)
The inclusion of monetary corrections imposed by local regulators on
these subsidiaries in the consolidated financial statements had no
impact on the income statement. Foreign currency translation
differences for these subsidiaries are recorded in the currency
translation adjustment account in shareholders' equity in the same
manner as for the subsidiaries in countries with stable currencies.
For subsidiaries located in highly inflationary countries, differences
between net income translated at average and period-end rates are
included in net financial expense. The impact of these differences on
the consolidated income statement was not significant in any of the
periods presented. As of August 31, 2003, none of the countries in
which the Group operates was considered to be highly inflationary.
Translation differences on monetary assets and liabilities denominated
in foreign currencies are recorded in the income statement.
Translation differences related to a monetary component of a net
investment in a company within a consolidated foreign subsidiary are
recorded in consolidated shareholders' equity until the sale or
liquidation of the net investment.
8 Valuation of assets and liabilities
Assets and liabilities of acquired companies have been recorded at
their respective fair values effective September 1, 2000.
8.1 Intangible assets
The inclusion in the consolidation scope of the fair value of the
following companies Sodexho, Inc., Wood Dining Services, Sogeres,
Sodexho Services Group Ltd, Sodexho Scandinavian Holding AB and
Universal Services, resulted in the recording of an intangible
asset which represents the value attributed to the significant
market shares held by these six companies in their principal
geographic markets (the Great Britain and Ireland, the United
States, the Netherlands, France, Australia and Sweden).
Market share is principally determined based on an average of
multiples of revenues and EBITA achieved by the acquired
companies in the applicable countries and is reviewed annually
for diminution in value. Market shares are not amortized in the
consolidated financial statements. If there is a significant
diminution in the market share value for more than two
consecutive years, as recomputed based on actual results of the
applicable subsidiary as compared to the original calculation, it
is written down.
The impairment evaluation for market shares and goodwill is
further supported by a calculation of the fair value of the
assets as of August 31, 2003 as determined based on the
discounted future cash flows.
No deferred taxes are recorded on market shares.
8.2 Goodwill
Goodwill represents the excess of acquisition cost over the fair
value of the identified assets and liabilities assumed, as of the
initial inclusion of an acquired company in the consolidation
scope. Due to the long-term nature of the Group's business,
goodwill is generally amortized over thirty years (calculated on
a pro rata basis in the year of acquisition).
8.3 Property, plant and equipment
Leased assets are recorded on the balance sheet as capital leases
in instances where a Group company is deemed to bear
substantially all of the risks and rewards of the leased asset. A
corresponding obligation is recorded as a liability, and the
related rental cost is allocated between depreciation and
interest expense in the income statement.
Depreciation of property, plant and equipment is calculated on a
straight-line basis over the estimated useful lives of the
respective assets giving consideration to the local economic
conditions and climate.
The following useful lives are generally used by Group companies:
- Software 25%
- Enterprise resource planning (ERP) systems 20%
- Buildings 3,33% - 5%
- Facilities and fixtures 10%
- Plant and machinery 10% - 50%
- Vehicles 25%
- Office and computer equipment 20% - 25%
- Other fixed assets 10%
Organization costs are amortized over a maximum duration of five
years.
9 Accounts Receivables
Client receivables are recorded at their nominal values.
The allowance for doubtful accounts is estimated based on the risk of
the non-recoverability of certain client receivables.
10 Deferred income taxes
Deferred income taxes are recorded on temporary differences between
the tax basis of assets and liabilities and their carrying values for
financial reporting purposes as well as on consolidation adjustments.
As the pattern of temporary difference reversals is not fixed,
deferred taxes recorded on the balance sheet have not been present
valued. In addition, deferred tax assets pertaining to net operating
loss carry-forwards (net of deferred tax liabilities), are only
recorded in cases where recovery is deemed probable.
11 Vouchers payable
Vouchers payable represents the face value of vouchers in circulation
or presented to Sodexho Alliance but not yet reimbursed to the
affiliate.
12 Financial instruments
Group policy is to finance acquisitions through borrowings in the
acquired company's currency generally at fixed rates of interest. In
most cases where variable rate debt has been negotiated, the variable
rate interest is swapped into fixed rates through the use of
interest-rate swap agreements. Similarly, in most cases where
acquisition financing has been negotiated in a currency other than
that of the acquired company, a currency swap agreement is negotiated.
All such agreements are designated as hedges at contract inception.
The Group does not engage in speculative transactions.
The accounting for swaps is as follows:
- For swaps negotiated on inter-company debt, the difference between
the amount of the debt at the originally negotiated rates and at the
swapped rates is recorded as debt.
- For other swap agreements, the related loans and borrowings are
recorded at the swapped interest rate and currency.
13 Deferred financing charges
Deferred financing costs incurred in connection with bond issuances
are amortized over the maturity of the related debt.
14 Provisions for contingencies and losses
A provision for contingencies and losses is recorded when it is
probable that there exists a legal, equitable, or constructive
obligation to sacrifice economic benefits to a third party in the
future without an expectation of receiving proceeds of a similar
amount from the third party. Provisions for contingencies and losses
primarily include payroll and other taxes, client and supplier
litigation, and employee litigation.
VI ANALYSIS OF OPERATING ACTIVITIES AND GEOGRAPHIC INFORMATION
In fiscal 2003 the Group changed the manner in which it reports its
operating segments to remain in line with the operating organization of the
Group. Accordingly, the Remote Sites activity is now included in the Food
and Management Services activity in the Rest of the World geographical
region, and the River and Harbour Cruise activity is now reported in the
relevant geographic area within the Food and Management Services activity.
(In millions of Euro) Year ended Change Year ended
August 31, 2003 August 31, 2002
REVENUES
o By Operating Activity :
Food and Management Services
North America 5,427 (10.1%) 6,039
Continental Europe 3,585 2.7% 3,491
Great Britain and Ireland 1,453 (13.7%) 1,684
Rest of the World 974 (12.9%) 1,119
Service Vouchers and Cards 248 (11.3%) 279
------- ------- --------
TOTAL 11,687 (7.3%) 12,612
======= ======= ========
o by Geographic Zone:
North America 5,427 (10.1%) 6,038
France 1,734 1.1 % 1,715
Great Britain and Ireland 1,465 (13.5 %) 1,694
Rest of Europe 1,978 4.1 % 1,901
Rest of the World 1,083 (14.3 %) 1,264
------- ------- --------
TOTAL 11,687 (7.3 %) 12,612
======= ======= ========
Year ended Change Year ended
August 31, 2003 August 31, 2002
Net Fixed Assets
o By Operating Activity :
Food and Management Services
North America 2,720 (9.8%) 3,015
Continental Europe 715 0.4% 712
Great Britain and Ireland 876 (8.1%) 954
Rest of the World 148 (6.1%) 158
Service Vouchers and Cards 147 11.1% 132
Holding Companies 34 (0.8%) 34
------- ---------- -------
TOTAL 4,640 (7.3%) 5,005
======= ========== =======
o by Geographic Zone:
North America 2,720 (9.8%) 3,015
France 364 0.3% 363
Great Britain and Ireland 876 (8.5%) 957
Rest of Europe 418 1.2% 413
Rest of the World 262 3.2% 257
------- ---------- -------
TOTAL 4,640 (7.3%) 5,005
======= ========== =======
EBITA (before corporate expenses):
o By Operating Activity :
Food and Management Services
North America 268 (8.3%) 293
Continental Europe 167 11.1% 150
Great Britain and Ireland 21 71.7% 12
Rest of the World 18 (41.5%) 31
Service Vouchers and Cards 68 (11.6%) 77
Holding Companies (28) 19.6% (35)
------- ---------- -------
TOTAL 514 (2.6%) 528
======= ========== =======
Group Employees Year ended Change Year ended
August 31, 2003 August 31, 2002
o by Geographic Zone:
North America 119,009 1.1% 117,689
Great Britain and Ireland 51,843 (16.2%) 61,835
France 30,465 0.0% 30,477
Rest of Europe 49,897 0.9% 49,438
Rest of the World 57,171 2.6% 55,702
--------- --------- ---------
TOTAL 308,385 (2.1%) 315,141
The tables below show the Revenue and EBITA (before corporate
expenses) by activity under the prior presentation:
(In millions of euro) Year ended Change Year ended
August 31, 2003 August 31, 2002
Revenue
o By Operating Activity :
Food and Management Services
North America 5,387 (10.1%) 5,995
Great Britain and Ireland 1,444 (13.7%) 1,674
Continental Europe 3,501 2.6% 3,413
Rest of the World 477 (15.8%) 566
Remote Sites 543 (8.0%) 590
Service Vouchers and Cards 248 (11.3%) 279
River and Harbor Cruises 87 (8.3%) 95
------- -------- -------
TOTAL 11,687 (7.3%) 12,612
Year ended Change Year ended
August 31, 2003 August 31, 2002
EBITA
(before corporate expenses)
o By Operating Activity :
Food and Management Services
North America 270 (9.2%) 297
Great Britain and Ireland 22 56.5% 14
Continental Europe 158 13.1% 140
Rest of the World 6 (17.9%) 7
Remote Sites 22 (13.4%) 26
Service Vouchers and Cards 68 (11.6%) 77
River and Harbor Cruises 7 N/A 2
Holding Companies (39) (10.8%) (35)
------ -------- ------
TOTAL 514 (2.6%) 528
====== ======== ======
VII ANALYSIS OF THE INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH FLOWS
Note 1) - Financial Expense, Net
Year ended August Year ended August
31, 2003 31, 2002
o Interest income 24 39
o Net variation in
financial provisions (3) (26)
o Net exchange (loss) / gain (8) 1
o Interest expense (165) (180)
------ -------
TOTAL (152) (166)
The improvement in net financial expense of EUR 14 million in fiscal 2003
was mainly the result of the prior year reflecting a EUR 19 million
provision. Exchange losses increased by EUR 9 million from the prior year
when significant exchange gains were realized by our Luncheon Ticket
subsidiary on its investments in strong currencies prior to the devaluation
of the Argentine peso. Interest expense for fiscal 2003 primarily included
EUR 38 million of interest expense on the credit facility arranged in April
2001 at the Sodexho, Inc. subsidiary, and interest of EUR 91 million on the
1996, 1999 and 2002 bond issuances. Reimbursements of borrowings of EUR 74
million and the decline of the US dollar against the euro reduced our
interest expense by EUR 15 million over the prior year.
Note 2) - Exceptional Items
Net exceptional income of EUR 1 million in fiscal 2003 included EUR 28.6
million received as a purchase price complement in connection with the sale
of the shares in Corrections Corporation of America in fiscal 2001. This
income was offset by EUR 13.6 million in losses and provisions pertaining
to Sodexho Alliance shares held in connection with stock option plans, EUR
7.6 million in restructuring costs in our U.S. and U.K. subsidiaries and
litigation expenses of EUR 5 million.
Note 3) - Income Tax Provision
Following is a reconciliation of income taxes computed at Sodexho
Alliance's statutory rate to the actual income tax provision for the year
ended August 31, 2003.
Income before exceptional items, income taxes, income from 362
equity method investees and goodwill amortization
Exceptional income 1
----------
Income before taxes 363
Sodexho Alliance tax rate 35.43 %
----------
Theoretical tax provision (129)
Effect of differing jurisdictional tax rates (2)
Permanent differences 7
Other taxes (4)
Net operating loss carryforwards utilized in the current
year but generated in prior years and not previously
recognized 2
Current year non-recognition of net operating loss
carryforwards (5)
----------
Actual tax provision (131)
Current income taxes (140)
Deferred income taxes 9
----------
Sub-total (131)
Withholding taxes (3)
----------
Total Income taxes (134)
==========
Note 4) - Goodwill
August 31, Additions Decreases Translation August 31,
2002 during the during the adjustments 2003
year year
Sodexho Inc. (including Wood Dining Gross 1,039.8 9.5 2.3 (78.0) 969.0
Services) Amort (61.2) (32.9) 3.7 (90.4)
Sodexho Services Group Gross 272.1 (22.2) 249.9
Amort (68.8) (8.6) 5.9 (71.5)
Sodexho Pass do Brazil Gross 63.4 25.6 (1.4) 87.6
Amort (9.7) (2.9) 0.1 (12.5)
Sodexho Management Services Gross 56.0 (4.6) 51.4
Amort (9.0) (1.8) 0.8 (10.0)
Sogeres Gross 56.0 0.5 56.5
Amort (2.1) (1.9) (4.0)
Sodexho Scandinavian Holding AB Gross 53.7 2.3 (0.2) 55.8
Amort (9.0) (1.8) (10.8)
Sodexho Espana Gross 28.5 28.5
Amort (7.4) (0.9) (8.3)
Sodexho Belgique Gross 22.9 22.9
Amort (8.0) (0.7) (8.7)
Tillery Valley Foods Gross 22.7 (1.9) 20.8
Amort (4.5) (0.7) 0.4 (4.8)
Luncheon Tickets Gross 22.5 22.5
Amort (3.0) (0.7) (3.7)
Sodexho Italia Gross 17.9 0.2 17.7
Amort (2.4) (0.7) (3.1)
Universal Services Gross 17.2 17.2
Amort (1.6) (0.5) (2.1)
Other goodwill Gross 172.4 2.7 3.3 (2.4) 169.4
(gross amounts less than EUR 15 Amort (42.7) (7.5) (2.7) 0.4 (47.1)
million)
------ ----- ------- ------ --------
Total
Gross 1,845.1 40.6 5.8 (110.7) 1,769.2
Amort (229.4) (61.6) (2.7) 11.3 (277.0)
Net 1,615.7 (21) 3.1 (99.4) 1,492.2
======= ====== ======= ======= =========
Note 5) - Intangible Assets
Changes
Additions Decreases in
August 31, during the during the consolidation Translation August 31,
2002 year year scope adjustments 2003
Market Shares:
North America (FMS) 1,851.0 (185.3) 1,665.7
North America (RS) 44.4 (4.4) 40.0
United Kingdom, Ireland 589.3 (48.9) 540.4
Netherlands 86.1 86.1
Sweden 77.9 (0.5) 77.4
Australia 10.2 0.5 10.7
France 137.0 137.0
-------- ----- ------ ------ -------- --------
o Total Cost 2,795.9 0.0 0.0 0.0 (238.6) 2,557.3
Diminutions in value
(Australia) (1.2) (0.3) (0.1) (1.0)
-------- ----- ------ ------ -------- --------
o Net book value 2,794.7 0.0 (0.3) 0.0 (238.7) 2,556.3
Other Intangible Assets:
Cost 190.6 57.6 24.8 (0.3) (35.8) 187.3
Accumulated amortization and
diminutions in value (45.2) (26.9) (4.9) 9.6 (57.6)
-------- ------ ------ ------ -------- --------
o Net book value 145.4 30.7 19.9 (0.3) (26.2) 129.7
TOTAL:
Cost 2,986.5 57.6 24.8 (0.3) (274.4) 2,744.6
Accumulated amortization and
diminutions in value (46.4) (26.9) (5.2) 9.5 (58.6)
-------- ------ ------ ------ -------- --------
o Net book value 2,940.1 30.7 19.6 (0.3) (264.9) 2,686.0
======== ====== ====== ====== ======== ========
FMS : Food and Management Services
RS : Remote Sites
Note 6) - Property, Plant and Equipment
Additions Decreases Changes in
August 31, during the during the consolidation Translation August 31,
2002 year year scope adjustments 2003
LAND
Cost 8,3 (0,5) 7,8
Accumulated depreciation. (0,4) (0,4)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 7,9 0,0 0,0 0,0 (0,5) 7,4
buildings
Cost 74,8 3,7 2,1 0,0 (5,2) 71,2
Accumulated depreciation. (32,9) (3,9) (1,0) 3,4 (32,4)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 41,9 (0,2) 1,1 0,0 (1,8) 38,8
Facilities and fixtures
Cost 121,4 15,5 9,0 (3,9) 124,0
Accumulated depreciation (70,8) (15,5) (6,6) 0,0 8,8 (70,9)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 50,6 0,0 2,4 0,0 4,9 53,1
Plant and machinery
Cost 360,1 44,9 16,1 0,8 (43,3) 346,4
Accumulated depreciation. (224,4) (50,2) (25,6) 0,1 30,7 (218,2)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 135,7 (5,3) (9,5) 0,9 (12,6) 128,2
Vehicles
Cost 87,0 4,4 6,4 0,1 (3,7) 81,4
Accumulated depreciation. (67,2) (7,6) (5,8) 7,7 (61,3)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 19,8 (3,2) 0,6 0,1 4,0 20,1
Office and computer
equipment
Cost 178,3 22,8 12,6 0,2 6,2 194,9
Accumulated depreciation. (126,3) (27,8) (13,7) (0,1) 5,2 (135,3)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 52,0 (5,0) (1,1) 0,1 11,4 59,6
Other fixed assets
Cost 94,3 30,9 5,1 0,0 2,6 122,7
Accumulated depreciation. (31,6) (10,8) (3,6) 0,0 (11,8) (50,6)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 62,7 20,1 1,5 0,0 (9,2) 72,1
TOTAL
Cost 924,2 122,2 51,3 1,1 (47,8) 948,4
Accumulated depreciation. (553,6) (115,8) (56,3) 0,0 44,0 (569,1)
------------- ------------- -------------- ------------- ------------- --------------
o Net book value 370,6 6,4 (5,0) 1,1 (3,8) 379,3
============= ============= ============== ============= ============= ==============
- Capital Leases
Assets recorded under capital lease arrangements totaled EUR 48
million as of August 31, 2003 (EUR 44 million as of August 31,
2002) which was net of accumulated amortization of EUR 72
million.
Note 7) - Financial investments
Increases/ Changes
(decreases) in
August 31, during the consolidation Translation August 31,
2002 year scope adjustments 2003
Investment securities
Cost 19,5 1,8 (0,2) (0,6) 20,5
Diminutions in value (8,6) (1,4) 0,5 (9,5)
--------------- ------------- ----------- ----------- -------------
Net book value 10,9 0,4 (0,2) (0,1) 11,0
Other investments
Cost 23,3 (1,0) (0,1) 22,2
Diminutions in value (1,3) (1,3)
--------------- ------------- ----------- ----------- --------------
Net book value 22,0 (1,0) 0,0 (0,1) 20,9
--------------- ------------- ----------- ----------- --------------
Receivables from investees
Cost 14,2 0,5 (0,2) (0,8) 13,7
Diminutions in value 0,0 0,0
--------------- ------------- ----------- ----------- --------------
Net book value 14,2 0,5 (0,2) (0,8) 13,7
--------------- ------------- ----------- ----------- --------------
Loans receivable (*)
Cost 7,5 (1,3) (0,1) 6,1
Diminutions in value (0,1) (0,1)
--------------- ------------- ----------- ----------- --------------
Net book value 7,4 (1,3) 0,0 (0,1) 6,0
--------------- ------------- ----------- ----------- --------------
Deposits and other (*)
Cost 12,9 (0,8) 0,4 (0,5) 12,0
Diminutions in value 0,0 0,0
--------------- ------------- ----------- ----------- --------------
Net book value 12,9 (0,8) 0,4 (0,5) 12,0
Total financial investments
Cost 77,4 (0,8) 0,0 (2,1) 74,5
Diminutions in value (10,0) (1,4) 0,0 0,5 (10,9)
--------------- ------------- ----------- ----------- --------------
Net book value 67,4 (2,2) 0,0 (1,6) 63,6
=============== ============= =========== =========== ==============
(*)These items are included in working capital in the cash flow
statement.
Principal Investment Securities
As of August 31, 2003, investment securities principally include a EUR
3 million investment in Stadium Australia Management, in which the
Group owns 15.8% of the shares, a EUR 3 million investment in Leoc
Japan Co (previously, Sodex Japan Company Ltd), of which it owns 9.3%,
and a EUR 1 million investment in Societe Privee de Gestion, in which
the Group owns 10.7% of the shares.
Note 8) - Equity Method Investees
Companies accounted for under the equity method are listed in
chapter 5 - Consolidation scope.
Current Changes Translation Gross
year net Current in adjustments balance,
August 31, income year consolidation and other August 31,
2002 (loss) distribution scope (*) 2003
Equity method
investees 10.9 4.3 (3.3) 1.0 6.4 19.3
(*) EUR 7.6 million was classified as provisions as of August 31, 2003 with
respect to our negative investment in three equity method investees.
Note 9) - Inventories and work in progress
Inventories principally comprise food and other consumable items
with a high turnover rate and are valued on a first in first out
basis. As of August 31, 2003, the gross value of inventories
amounted to EUR 172 million.
Note 10) - Prepaid Expenses, Other Receivables and Other Assets
Gross value, Diminutions Gross value, Diminutions
in value, in value,
August 31, August 31, August 31, August 31,
2003 2003 2002 2002
Advances 8 10
Other operating receivables 265 (1) 238 (2)
Investment receivables 3 1
Financing receivables 2 1
--------------- -------------- --------------- --------------
Total other receivables 278 (1) 250 (2)
Prepaid expenses 70 64
Deferred financing charges 22 29
Other deferred charges (*) 170 155
Deferred tax asset 98 110
--------------- -------------- --------------- --------------
Total 638 (1) 608 (2)
=============== ============== =============== ==============
(*) This item is classified as fixed assets in the cash flow
statement.
Note 10-1) - Accounts and Other Receivables
Net book Due from Net book
value, one to value,
Gross values, Diminutions in value, August 31, Due within five Due after August 31,
August 31, 2003 August 31, 2003 2003 one year years five years 2002
Accounts
receivable 1,447 (64) 1,383 1,378 5 0 1,456
Other receivables.. 278 (1) 277 248 29 0 248
Prepaid expenses... 70 0 70 68 1 1 64
The allowance for doubtful accounts represents 4.4% of accounts receivable
as of August 31, 2003.
Concentration of credit risk within accounts receivable is limited because
of the large customer base. The Group generally does not require collateral
or specific guarantees.
Note 10-2) - Deferred Charges
Due from
August 31, Due within one to five Due after August 31,
2003 one year years five years 2002
Deferred financing costs 22 6 15 1 29
Deferred charges 170 40 86 44 155
Deferred financing costs are amortized over the maturity period of the
related debt.
Included in deferred charges are investments in client facilities in
the U.S., which are amortized over the related contract term, totaling
EUR 124 million as of August 31, 2003 as well as EUR 20 million of bid
costs on long term contracts, which are amortized over the shorter of
their estimated useful life and 10 years.
Note 11) - Deferred taxes
August 31, 2003 August 31, 2002
Deferred tax assets 98 110
Deferred tax liabilities (17) (18)
Net deferred tax assets 81 92
As of August 31, 2003, deferred tax assets which were not recorded because
their realization was not considered probable totaled EUR 25 million.
Breakdown of deferred taxes:
Deductible temporary differences
- Employee benefits liabilities 94
- Other temporary differences (22)
Net operating loss carry forwards 9
---------------
TOTAL 81
===============
Note 12) - Deposits and marketable securities
Deposits and marketable securities include 2,528,062 shares in
Sodexho Alliance purchased for a total amount of EUR 89 million.
These shares are to be used to fulfill our obligation with
respect to several stock option plans within the Group.
Deposits and marketable securities represent short-term cash
investments and are stated at the lower of cost or net realizable
value.
The fair values of deposits and marketable securities are shown
in note VII 18.
Note 13) - Restricted cash
Restricted cash consists of funds set aside in order to comply
with regulations governing the issuance of restaurant vouchers in
France (EUR 154 million) and as a guarantee for certain
commitments entered into by Mexican affiliates (EUR 12 million).
Note 14) - Shareholders' Equity
(in millions of Additional Foreign Group
euros except for Shares Common paid-in Retained currency Treasury net Shareholders'
number of shares) outstanding stock capital earnings translation shares income equity
Shareholders'
equity, August
31, 2001 157,559,654 630 1,141 441 86 (31) 138 2,405
Share capital
increase 1,461,762 6 50 56
Dividend payments by
the holding company
(net of dividends on
treasury shares) 51 (138) (87)
Net income for the
period 183 183
Foreign currency
translation 3 (162) (159)
adjustment
------------- -------- --------- ------------ ----------- ---------- --------- -------------
Shareholders' 159,021,416 636 1,191 495 (76) (31) 183 2,398
equity, August
31, 2002
Share capital
increase 149 0
Reclassification
(deferred tax on
the charges for an
increase in share
capital) (5) 5 0
Dividend payments by
the holding company
(net of dividends on
treasury shares) 88 (183) (95)
Net income for the 162 162
period
Foreign currency (215) (1) (216)
translation
adjustment and other
changes
------------- -------- --------- ------------ ----------- ---------- --------- -------------
Shareholders'
equity, August 31,
2003 159,021,565 636 1,186 588 (291) (32) 162 2,249
============= ======== ========= ============ =========== ========== ========= =============
Indirectly Held Treasury shares:
As of August 31, 2003, Sofinsod had a 5.56% indirect interest in
Sodexho Alliance through its 14.4% interest in the capital of
Bellon SA, which in turn holds 38.63% of Sodexho Alliance.
As of August 31, 2003, Sofinsod had a 1.58% indirect interest in
Sodexho Alliance, through its 100% interest in La Societe
Financiere De La Porte Verte, which in turn owns 4.1% of Bellon
S.A., which in turn holds 38.63% of Sodexho Alliance.
Note 15) - Minority Interests
Changes in minority interests are as follows:
August 31, 2003 August 31, 2002
Minority interests, beginning of year 73 131
Share capital increase 0 0
Dividends paid (11) (15)
Net income for the period 9 13
Change in consolidation scope (2) (54)
Currency translation and other (3) (2)
Minority interests, end of year 66 73
Note 16) - Provisions for Contingencies and Losses
Release
without Translation Change in
August 31, corresponding Differences consolidation August 31,
2002 Increase Release charge and other scope 2003
Sodexho Inc. acquisition
provisions 5 (1) 4
Payroll and other taxes 39 7 (4) (4) (2) 1 37
Contract termination costs 22 3 (10) (5) 1 11
Client and supplier litigation 5 3 (3) 5
Employee litigation 18 8 (7) (1) (2) 16
Large repairs 6 3 (3) (1) 5
Equity method investees 8 8
Other 4 3 (1) (1) (1) (1) 3
------- ------ ------- ------ ------ ----- -----
99 27 (28) (6) (4) 1 89
======= ====== ======= ====== ====== ===== =====
The following table summarizes the net impact to the income statement
line items of the increases and releases to provisions for
contingencies and losses as of August 31, 2003:
Increase Release
Operating 14 (21)
Financial 0 0
Exceptional 13 (13)
-------- --------
27 (34)
======== ========
Note 17) - Borrowings and Financial Debt
Less More
than one One to five than five Year ended Year ended
year years years August 31, 2003 August 31, 2002
Bonds
Euro 341 1 300 1,641 1,642
----------- ------------- ------------- ------------------ ------------------
341 0 1 300 1,641 1,642
Bank borrowings(1)
US dollars 157 795 1 953 1,175
Euro (126) (324) 62 (388) (501)
Pounds Sterling 86 (1) 85 224
Other currencies 31 14 45 41
----------- ------------- ------------- ------------------ ------------------
148 484 63 695 939
Capital lease obligations
US dollars 3 4 7 12
Euro 15 19 4 38 36
Other currencies 3 3 4
----------- ------------- ------------- ------------------ ------------------
18 26 4 48 52
Other borrowings
Euro 3 1 4 5
Other currencies 1 1
----------- ------------- ------------- ------------------ ------------------
1 3 1 5 5
Bank overdraft balances
Eur 25 25 18
Pound Sterling 70 70 31
Other currencies 4 4 6
----------- ------------- ------------- ------------------ ------------------
99 0 0 99 55
----------- ------------- ------------- ------------------ ------------------
Total 607 513 1 368 2,488 2,693
=========== ============= ============= ================== ==================
(1) Includes Impact of swaps; see note 18 for further information.
Note 17-1) - Bond Issues
August Increase August 31,
31, 2002 differences Repayments Translation 2003
1996 bond issue - FRF 2,000,000,000
Principal 305 305
Accrued interest 4 4 4 4
----------- -------------- --------------- ----------- -------------
Total 309 4 4 0 309
Number of securities 400,000 400,000
1999 bond issue - EUR 300,000,000
Principal 300 300
Accrued interest 7 6 7 6
----------- -------------- --------------- ----------- -------------
Total 307 6 7 0 306
Number of securities 300,000 300,000
2002 bond issue - EUR 1,000,000,000
Principal 1,000 1,000
Accrued interest 26 26 26 26
----------- -------------- --------------- ----------- -------------
Total 1,026 26 26 0 1,026
----------- -------------- --------------- ----------- -------------
Total 1,642 36 37 0 1,641
=========== ============== =============== =========== ==============
EUR 305 million bond issue
On May 22, 1996, Sodexho Alliance issued 400,000 bonds with a nominal
value of FRF 5,000 each (EUR 762.25) representing a total of FRF 2
billion (EUR 305 million). The bonds are redeemable at par on June 7,
2004 and bear interest at 6 percent per annum, which is payable on
June 7 annually. Each bond carried a warrant, entitling the bearer to
purchase one Sodexho Alliance share prior to June 7, 2004 for FRF
2,700, with a current exercise price of EUR 24.71 per share. There
were 374 773 warrants and 400,000 bonds outstanding as of August 31,
2003.
EUR 300 million bond issue
On March 16, 1999, Sodexho Alliance issued 300,000 bonds of EUR 1,000
each for total proceeds of EUR 300 million. The bonds will be fully
redeemable at par on March 16, 2009. The bonds carry interest at 4.625
percent per annum, which is payable on March 16 annually. There were
300,000 bonds outstanding at August 31, 2003.
EUR 1 billion bond issue
On March 25, 2002, Sodexho issued bonds totaling EUR 1 billion,
maturing on March 25, 2009, and carrying interest of 5.875 percent
payable on March 25 annually.
Note 17-2) - Other Borrowings
As of August 31, 2003, portions of the three tranches of the April
2001 credit facility negotiated with a syndicate of banks and
guaranteed by Sodexho Alliance have been reimbursed as follows:
- Tranche A totaling EUR 1,932 million, was fully reimbursed as at
August 31, 2002;
- Tranche B totaling US dollars 930 million, with quarterly repayments
over the next five years, was reimbursed for an amount of US dollars
232 million (pursuant to the swap agreement described in note 18 below
the US dollar variable LIBOR-based rate on this debt has largely been
swapped for a fixed rate) ; and
- Tranche C totaling US dollars 150 million, to be utilized for
short-term financing, working capital needs and for bank guarantees
and reimbursable in full in five years, of which U.S. $ 20 million was
utilized as of August 31, 2003.
Covenants
The EUR 305 million and EUR 300 million bond issues, redeemable on
June 7, 2004 and March 16, 2009, respectively, are not subject to any
financial covenants.
The credit facilities arranged in April 2001 with a syndicate of banks
amounted to US dollars 718 million as of August 31, 2003 and include
accelerated repayment conditions typical of this type of arrangement.
Also included in the terms are various specific covenants related to
the level of ownership in Sodexho Alliance by Bellon S.A., which is
not permitted to be lower than 33.3%, as well as to ratios pertaining
to the Group's consolidated net debt, its EBITA, and its net financial
expense. These ratios, which are evaluated at each half-year point and
calculated based on a rolling 12 months, are as follows:
August 31, 2003
Net debt / EBITDA* < 2,25
EBITA / financial expense* > 3,5
* These four items are defined in the credit agreement. These
definitions differ in several respects from accounting definitions.
For example, in the definition provided in the covenants, net debt
does not included restricted cash. As such, the financial covenants
cannot be recalculated from the published financial statements.
The Group was in compliance with the above requirements as of August
31, 2003. Should a covenant requirement not be met, the credit
facilities agent or the banks representing more than two thirds of the
credit facilities are authorized to require accelerated repayment of
the balance of the credit facilities. Accelerated repayment of the
credit facilities gives the holders of the EUR 1 billion bond issue
the right to demand repayment of the bonds.
Interest rates
As of August 31, 2003, 91% of borrowings were at fixed rates and the
average interest rate for fiscal 2003 year was 5.50%.
In accordance with Group policy, the majority of variable rate
borrowings are swapped to fixed interest rates. If borrowings are
arranged other than in local currency, a currency swap agreement is
negotiated.
Note 18) - Financial Instruments
The table below summarizes the impact on the financial statements
of the financial instruments described in note 17:
in millions of euro Note Borrowings Borrowings Borrowings Borrowings in other
in euro in USD in GBP currencies TOTAL
a) Borrowings subject
to cross currency agreements:
UK borrowings - GBP 60 million (1)
Due to the bank
GBP 60 million*1,44383 86 86
Due from the bank
EUR 93,26 million (93) (93)
- Sxo Scandinavia swaps
(150 millions sek) (2)
Due to the bank
SEK 150 million*0,108342 16 16
Due from the bank EUR
16,7 million (17) (17)
- Sodexho Inc. swaps
(US dollar 300
million) (3)
Due to the bank
US $300 million*0,915174 275 275
Due from the bank
EUR 338,5 million (339) (339)
- other subsidiaries swaps :
Due to the banks 9 9
Due from the banks (7) (1) (8)
b) Borrowings subject to
interest rate swap agreements 68 593 0 0 661
c) Borrowings not subject
to hedging arrangements 0 85 0 20 105
-------- ------- ------- ----- ------
Total borrowings (388) 953 85 45 695
a) Cross currency swaps
1) In order to match the cash flows on debt repayments with the
currency of an operating subsidiary in Great Britain (the acquisition
of the Gardner Merchant Group in 1995 was made in pounds sterling), in
October 1999, the Group negotiated a cross currency swap (capped LIBOR
in pounds sterling against 5.25% in pounds sterling against euro) on
an intercompany loan of EUR 93 million. The decrease in the value of
the pound sterling against the euro decreased borrowings as converted
to euro by EUR 7 million related to this instruments as of August 31,
2003.
2) In June 1999, a cross currency swap was negotiated on a loan of EUR
50.1 million (EUR 39 million as of August 31, 2002) to Sodexho
Scandinavia Holding AB (4.15% against a variable interest rate in
Swedish crowns). The related debt at the swapped rate totaled EUR 16.7
million. The swap terminates in August 2004.
3) In March 2002, a cross currency swap was negotiated on an
inter-company loan of US dollar 309 million to Sodexho, Inc. (6.325%
against 6.5775% and in euro against US dollars) reimbursable on March
25, 2007. As of August 31, 2003, the debt at the swapped rate totaled
EUR 339 million. The decrease in the dollar against the euro led to a
decrease in the debt as converted to euro of EUR 64 million.
b) Interest Rate Swaps
Several interest rate swaps (2.1% to 5.9% against US dollar LIBOR)
with the following maturities were negotiated in order to convert
variable rate interest to fixed on US dollar 698 million (equivalent
to EUR 639 million) drawn on Tranche B of the credit facility
described above. Following are the maturities of the underlying
notional amounts.
Fiscal year 2003-2004 2004-2005
Interest rate swaps (in millions of US$) 328 370
Interest rate swaps (in millions of EUR) 300 339
In October 1999, the Group negotiated an interest rate swap maturing
in 2004 on a notional amount of EUR 68 million, which converted fixed
rate debt at 5.2% to EURIBOR.
Fair Values of Financial Instruments
In Millions of Euro August 31, 2003
ASSETS Net book value Fair value Difference
Financial fixed assets
Investments 11 11 0
Receivables from investees 14 14 0
Loans receivables 6 6 0
Other long-term investments 21 21 0
Other financial fixed assets 12 12 0
o Total financial fixed assets 64 64 0
o Equity method investees 19 19 0
Marketable securities and other
Cash 45 45 0
Term deposits 133 133 0
Debt securities 114 114 0
Mutual funds -SICAV 149 149 0
Listed securities 0 0 0
Mutual funds - other 12 12 0
------- ------ -------
o Total 453 453
Sodexho Alliance shares (*) 89 65 (24)
o Total marketable
securities and other 542 518 (24)
o Restricted cash 166 166 0
------- ------ -------
Total assets 791 767 (24)
======= ====== =======
LIABILITIES
Bonds
2002 EUR 1 billion bond issuance 1,026 1,096 70
1999 EUR 300 million bond issuance 306 304 (2)
1996 EUR 305 million bond issuance 309 314 5
------- ------ -------
o Total 1,641 1,714 73
Bank debt
Sodexho, Inc. borrowings 663 672 9
Swap on intercompany loan with (6) (7) (1)
Sodexho Holdings Ltd
Swap on intercompany loan with (64) (68) (4)
Sodexho, Inc
Other bank debt 102 102 0
------- ------ -------
o Total bank debt 695 699 4
o Bank overdrafts 99 99 0
o Other borrowings 53 58 5
o Total borrowings 2,488 2,570 82
o Other liabilities
Debt on acquisition
of 53% of Sodexho, Inc.(*) 35 11 (24)
------- ------ -------
Total Liabilities 2,523 2,581 58
(*) Part of the acquisition debt for the remaining Sodexho Marriott
Services, Inc. shares acquired in June 2001 was payable in the equivalent
of Sodexho Alliance shares; the debt has been revalued using the price paid
by Sodexho to purchase its own shares on the open market. As of August 31,
2003, the fair value of the Sodexho Alliance shares was EUR 24 million
lower than its net book value; the fair value of the related debt was EUR
24 million lower than its net book value.
Note 19) - Other liabilities
August 31, 2003 August 31, 2002
Advances from clients 171 130
Tax and employee liabilities 974 985
Other operating
liabilities 59 81
Other non-operating
liabilities 38 55
Deferred revenues 35 29
Deferred tax liabilities 17 18
------ -------
Total 1,294 1,298
Note 20) - Statement of Cash Flows - Additional Information
The table below provides additional information on the balance
sheet line items impacting the cash flow statement, excluding
exchange rate variations, changes in consolidation scope, or
other variations not impacting cash flows.
Note 20-1) - Changes in Working Capital
Total
Assets Liabilities Change
Inventories 9
Accounts receivable, net of
allowance for doubtful accounts (5)
Other operating receivables (1)
Advances 8
Accounts payable 6
Vouchers payable 43
Taxes and social charges payable 36
Other operating payables 26
Deferred revenues 0
------- -------- -------
Change in working capital from
operating activities 11 111 100
Investment related receivables 2
Investment related payables (17)
------- -------- -------
Change in working capital
from investment activities 2 (17) (19)
Financing related receivables 22
Financing related payables (1)
------- -------- -------
Change in working capital
from financing activities 22 (1) (23)
======= ======== =======
Note 20-2) - Acquisitions and Disposals of Tangible and Intangible Assets
and Subsidiaries
Acquisitions Disposals Net
Tangible and intangible assets (239) 14 (225)
Variation in financial assets (2) 1 (1)
Total change in tangible and
intangible assets (241) 15 (226)
Acquisitions (disposals) of
subsidiaries (37) 2 (35)
Less: capital gains taxes 0
Less: cash in acquired and
disposed of companies, net 3 (1) 2
Total change in consolidation
scope (34) 1 (33)
------- ------- -------
TOTAL (275) 16 (259)
Note 21 - Commitments
Note 21a) - Off balance sheet commitments
August 31, 2003 August 31, 2002
Due Due from Due after
within one to five
one year five years years Total Total
o Financial guarantees to third parties 14 45 0 59 41
o Performance bonds on operating leases 13 20 0 33 62
o Client performance bonds 0 39 9 48 22
o Other commitments 0 10 0 10 18
--------- ----------- ---------- ------- ------------
Total 27 114 9 150 143
========= =========== ========== ======= ============
To our knowledge, with respect to the above table, there are
no other significant off balance sheet commitments.
* Sureties:
In connection with its Service Vouchers and Cards activity,
Sodexho Alliance and its subsidiaries have secured cash
amounts with different financial institutions, totaling EUR
18 million as of August 31, 2003. Other surety arrangements
(security granted over equipment or buildings used for
collateral) agreed to by Sodexho Alliance and its
subsidiaries in fiscal 2003 were not significant.
Note 21b) - Commitments to purchase or sell shares in companies
Commitments made:
Patriot Medical Technologies, Inc.
The Group has entered into a put agreement with the minority
shareholders of Patriot Medical Technologies, Inc.
("Patriot"), to acquire the remaining shares outstanding
during the period from March 3, 2003 to March 3, 2004 for a
total of U.S. $ 234,000 (EUR 0.2 million). As of August 31,
2003, a portion of the put option had already been
exercised, in the amount of U.S. $ 100,000 (EUR 0.1
million).
Medcheque
The Group, through its Service Vouchers and Cards subsidiary
in Brazil, has entered into a put agreement with the
minority shareholders of Medcheque to acquire the remaining
35% of the shares outstanding during the period from July
2004 to July 2006 for a total price of between EUR 7.7
million (minimum assuming purchase is made in July 2004) and
EUR 9.8 million (maximum assuming purchase is made in August
2006).
Abra (subsidiary of Sodexho Scandinavian Holding AB)
The Group, through its Sodexho Scandinavian Holding AB
subsidiary, has entered into a put agreement with the
minority shareholders of Abra (located in Norway) to acquire
the remaining 15% of the shares outstanding by November
2005, at the latest, for a price based upon a profit
multiple. The minimum purchase price amounts per the
agreement is EUR 1.3 million and it is estimated at EUR 2.3
million, based on current projections.
Altys Multiservice
The Group has entered into a put agreement to acquire 1.5%
of the shares of Altys Multiservice from the minority
shareholders between October 1 and November 30, 2007 for a
purchase price based on a multiple of the average economic
profits as defined contractually in the year of exercise
with an adjustment based on the following year's results.
Sodexho Italia
The Group has entered into a put agreement to acquire the
remaining 2% of the shares of Sodexho Italia from the
minority shareholders on July 1, 2010 at the latest for a
purchase price based on a multiple of the average economic
profits as defined contractually.
Baren Menu
The Group has entered into a put agreement to acquire the
remaining 5% of the shares of Baren Menu in Germany from the
minority shareholders on July 1, 2010 at the latest for a
purchase price estimated at EUR 0.25 million.
Sodexho MM Catering
The Group has entered into a put agreement to acquire the
remaining 9.5% of the shares of Sodexho MM Catering from the
minority shareholders at any time for a purchase price based
on a multiple of the average economic profits as defined
contractually for a minimum amount of EUR 0.2 million.
Commitments received:
Patriot Medical Technologies, Inc. The minority shareholders
of Patriot Medical Technologies, Inc have entered into a
call agreement with the Group, which allows the Group,
during the period from September 3, 2003 and September 3,
2005, to acquire the remaining outstanding shares of Patriot
Medical Technologies, Inc, if any, for the greater of US
dollar 2 million and five times Patriot Medical
Technologies, Inc's EBITDA, reduced by adjustments defined
in the contract between the parties.
Medcheque
The minority shareholders of Medcheque have entered into a
call agreement to sell the remaining shares to the Group in
accordance with the terms described above.
Abra (subsidiary of Sodexho Scandinavian Holding AB)
The minority shareholders of Abra have entered into a call
agreement to sell the remaining shares to the Group in
accordance with the terms described above, in November 2005
at the latest.
Sodexho Italia
The minority shareholder of Sodexho Italia has entered into
a call agreement to sell the remaining shares to the Group
in accordance with the terms described above, on July 1,
2010 at the latest.
Altys Multiservice
The minority shareholders of Altys Multiservice have entered
into a call agreement to sell the remaining shares to the
Group (18.5% as of August 31, 2003) between October 1, 2005
and November 30, 2005 for a purchase price based on a
multiple of the average economic profits as defined
contractually in the year of exercise with an adjustment
based on the following year's results.
Note 21c) - Other commitments
Securitization
Our food service subsidiaries in Great Britain have
securitized without recourse a portion of their client
receivables for an amount of EUR 82 million as at August 31,
2003 .
Note 21d) - Commitments for stock options in Sodexho Alliance
Shares:
The Group has the following stock option commitments:
2,518,517 Sodexho Alliance shares to employees of Sodexho,
Inc. at an average price of U.S. $ 26.35 in connection with
the acquisition of 53% of the shares of Sodexho Marriott
Services in June 2001. These shares are deliverable as
follows:
- As from August 31, 2003 until August 31, 2011 at the
latest: 1,651,722 shares
- As from August 31, 2004 until August 31, 2011 at the
latest: 648,256 shares
- As from August 31, 2005 until August 31, 2011 at the
latest: 218,539 shares
5,085,838 Sodexho Alliance shares granted by the Board of
Directors to employees of the Group in connection with
various stock option plans. These shares are deliverable as
follows:
- From January 2004 to January 2009 : 744,262 shares at an
exercise price of EUR 24.00
- From March 2004 to January 2005 : 223,246 shares at an
exercise price of EUR 39.86
- From January 2005 to January 2009 : 744,263 shares at an
exercise price of EUR 24.00
- From March 2005 to January 2006 : 319,135 shares at an
exercise price of EUR 48.42
- From January 2006 to October 2007: 432,790 shares at an
exercise price of EUR 21.87 and EUR 47.00
- From January 2006 to January 2009: 744,262 shares at an
exercise price of EUR 24.00
- From January 2006 to March 2008: 1,133,617 shares at an
exercise price of EUR 47.00
- From January 2007 to January 2009: 744,263 shares at an
exercise price of EUR 24.00
In connection with its acquisition of Sogeres, the Group
committed to maintain Sogeres' stock option plan dated
August 1, 1997. The Group committed to acquire the Sogeres
shares from the optionees through September 2004 and has
recorded a related liability in its accounts. As of August
31, 2003 this liability totals EUR 0.7 million. A second
stock option plan was established for which the Group has
committed to increase the capital of Sogeres for the benefit
of the optionees and to buy their shares no later than
February 20, 2008. In connection with this agreement, a
provision of EUR 3.5 million was recorded in the
consolidated financial statements as of August 31, 2003.
Note 21e) - Commitments for operating leases
The future payment commitments for operating leases are as
follows:
- Less than one year EUR 65 million
- Between one and five years : EUR 119 million
- More than five years : EUR 36 million
Operating lease commitments primarily relate to central
kitchens under tri-partite agreements for EUR 40 million and
rent for office space and various equipment.
Note 22 - Retirement and Other Commitments
The following table presents defined benefit obligations by geographic
zones:
Great
Britain Continental August 31, August 31,
and Ireland Europe Others 2003 2002
Benefit obligation to employees 341 131 5 477 468
Liability recorded 0 75 5 80 84
Fair value of assets 228 41 0 269 261
Obligations recorded in the balance sheet
Obligations recorded as a liability in the balance sheet relate to
retirement indemnities and related payments totaling EUR 80 million.
Other obligations
As of August 31, 2003, obligations which were not recorded as a
liability in the balance sheet totaled EUR 397 million.
Great Britain and Ireland
In Great Britain and Ireland, the retirement plan obligations for
which there is an external fund relate to a complementary retirement
plan based on a percentage of ending salary (affected personnel
working in the private sector) or based on comparable payments in the
public sector (affected personnel working in the public sector).
The obligations have been calculated using the projected unit credit
valuation method using the following assumptions:
o Discount rate 5,30 %
o Rate of salary increase 3,90 %
o Inflation rate 2,60 %
o Rate of return on plan assets 6,30 %
It was decided during fiscal 2003 to close the plan to new employees
effective July 1, 2003 and to increase the contributions to the funds,
which should allow for full coverage of the obligation at the end of a
period of eight years.
Continental Europe
In Continental Europe the main defined benefit plan is in the
Netherlands, where retirement plan indemnities are provided to certain
employees. The obligations are calculated using the projected unit
credit valuation method with the following assumptions:
o Discount rate 5,75 %
o Rate of salary increase 3,00 %
o Inflation rate . 2,00 %
o Rate of return on plan assets 5,90 %
United States
Our subsidiaries in the United States do not have significant defined
benefit plans. Defined contribution plans are in place for certain
members of local management.
Note 23 - Other Information
Note 23.1 -
Compensation, Advances, Loans and Retirement Plan Commitments made to
Members of the Sodexho Alliance Board of Directors (for their duties
as Directors)
o Compensation EUR 0.12 million
o Advances and loans None
o Defined contribution retirement plan EUR 0.03 million
Note 23.2 - Related parties
Bellon SA holds 38.63% of the capital of Sodexho Alliance.
Pursuant to an agreement between Bellon SA and Sodexho Alliance,
Bellon SA invoiced Sodexho Alliance EUR 2.4 million for consulting
and advisory services during fiscal 2003.
Sodexho Alliance paid dividends of EUR 37.5 million to Bellon SA
during fiscal 2003.
Note 23.3 - Group employees
As of August 31, 2003, the employees of the Group were as
follows:
o Executives and middle management 6,137
o Site managers and supervisory staff 33,173
o Front line service staff and other 269,075
---------
Total 308,385
Note 23.4 - Litigation
Sodexho Pass Lebanon
In connection with the expansion of its activities in Lebanon,
Sodexho Pass International SA (SPI), a subsidiary of Sodexho
Alliance SA, acquired 40% of the share capital of Sodexho Pass
Lebanon. Prior to the commencement of operating activities, SPI
exerted its right to cancel the agreement due to a
misunderstanding with one of the partners, the manager of Sodexho
Pass Lebanon. The Lebanon partners claimed damages up to $27
million from SPI. On February 10, 2003, the arbitration court
ordered Sodexho Pass International pay USD 2,000,000. This ruling
was final and not subject to appeal. The amount paid was expensed
as an exceptional item during fiscal 2003.
Mc Reynolds vs. Sodexho Marriott Services, Inc.
On March 8, 2001, ten current and former employees of Marriott
Management Services, Inc., which later became Sodexho Marriott
Services, Inc. and is now Sodexho, Inc., filed a lawsuit alleging
that they and other African-American salaried employees were
discriminated against on the basis of their race. The plaintiffs'
complaint alleges unspecified damages on behalf of a class of
over 2,600 current and former employees of Sodexho, Inc. relating
to the period commencing March 27, 1998, as well as reimbursement
of plaintiffs' costs and attorneys' fees. Sodexho has denied the
plaintiffs' allegations, believed to be unfounded, and is
vigorously defending the lawsuit.
On June 25, 2002, the district court certified the case as a
class action for purposes of determining liability. Sodexho,
Inc.'s request to appeal this decision was denied by both the
Court of Appeals and the Supreme Court.
The parties to this litigation are currently engaged in
discovery.
A resolution of plaintiffs' claims in their favor could have a
material effect on our net income.
In fiscal 2002, a provision of USD 10 million (approximately EUR
9 million as of August 31, 2003) was recorded for defense costs
anticipated in connection with this lawsuit.
To our knowledge at this time, no other exceptional events or
legal proceedings are pending or considered probable of occurring
or having occurred, which would have a material impact on the
financial position, the activities, the net worth or the net
income of Sodexho Alliance or the Group.
Note 24 - Subsequent Events
There have been no significant events arising subsequent to
August 31, 2003.
VIII Consolidation scope
The activities of the SODEXHO GROUP are carried out autonomously in
different subsidiaries in each country where the Group has a presence.
Under the control of the Executive Committee, each subsidiary has an
independent organizational structure with its own Board, operating, human
resources and financial and administrative management.
Companies managed by SODEXHO have been fully consolidated. Companies over
which SODEXHO is able to exercise significant influence have been accounted
for by the equity method.
All fully consolidated companies that do not have an August 31 year-end are
consolidated on the basis of financial statements prepared as at August 31
and for the twelve months then ended (fiscal year-end of SODEXHO ALLIANCE).
A number of companies having minimal impact on the true and fair view of
Group's consolidated financial statements have been excluded from
consolidation, notably those having revenues of less than EUR 2 million,
net income or less of EUR 0.1 million and total assets of less than EUR 2
million.
The information on Group companies is limited to what is given in the table
below, since further disclosure would be detrimental to the Group's
interests.
A list of subsidiaries and the Group's percentage interest and the
percentage of voting rights held is provided below. Unless indicated
otherwise by a percentage, the Group owns 97% or more of the outstanding
shares of the subsidiary.
The annotation "N" denotes the nineteen companies consolidated for the
first time in fiscal 2002. Two of these companies were acquired during the
year, and the remainder were newly created entities or previously
consolidated companies which had been deconsolidated and have now been
reconsolidated.
The annotation "EM" denotes the eleven companies accounted for by the
equity method. All other companies are fully consolidated.
% interest % voting Principal Country
rights activity
France
Societe Francaise de Restauration FMS France
Comrest FMS France
Sofomedi FMS France
Sorescom FMS France
Sorepar FMS France
Altys Multiservice 80 % 80 % FMS France
Altys Gestion FMS France
EM Saggel Holding 30 % 30 % FMS France
Societe Francaise de Services FMS France
Societe Francaise de Restauration et Services FMS France
Societe Marseillaise de Restauration et Services FMS France
Societe de Developpement des Services de 92 % 92 % FMS France
Proximite
Sodequip FMS France
Societe Havraise de Restauration et Services FMS France
N O.L. Restauration 70 % 70 % FMS France
Ecorest 51 % 51 % FMS France
Sodexho Prestige FMS France
S.I.R FMS France
C.I.R. FMS France
Siges FMS France
La Normande SA FMS France
La Normande Sarl FMS France
Hedelrest FMS France
R.G.C. FMS France
Sogerest FMS France
Sagere FMS France
Societe Bretonne de Restauration et Services FMS France
Societe Thononaise de Restauration et Services FMS France
Sogeres (sub consolidation) FMS France
Bateaux Parisiens (sub consolidation) FMS France
Armement Lebert Buisson FMS France
Societe des Thermes de Neyrac-les-bains FMS France
Emis FMS France
Catesco FMS France
Sodexho Cheques et Cartes de Services SVC France
Sodexho Pass International HOL France
Sodexho France HOL France
Universal Sodexho SA HOL France
Sofinsod HOL France
Etinbis HOL France
Etin HOL France
Gardner Merchant Groupe HOL France
Loisirs Developpement HOL France
Holding Altys HOL France
Astilbe 86 % 86 % HOL France
Holding Sogeres HOL France
N Sodexho Amerique du Sud HOL France
N Sodexho Management HOL France
N Sodexho Europe Continentale HOL France
N Sodexho Asie Oceanie HOL France
Sodexho I.S & T. HOL France
Siges Guyane FMS France
Societe Hoteliere de Tourisme de Guyane FMS France
Sodex'Net FMS France
Guyane Proprete FMS France
La Salamandre FMS France
Societe Guyanaise de Protection et Gardiennage FMS France
Sodexho Antilles FMS France
Universal Sodexho Afrique FMS France
Universal Sodexho North Africa FMS France
% interest % voting Principal Country
rights activity
Americas
Sodexho, Inc. (sub consolidation) FMS USA
N Patriot Medical Technologies, Inc 91 % 91 % FMS USA
N Sodexho Vending Services 51 % 51 % FMS USA
Spirit Cruises FMS USA
Delta Catering Management 49 % 49 % FMS USA
Universal Sodexho USA, Inc. HOL USA
Universal Sodexho Partnership FMS USA
Universal Sodexho Enterprises LLC FMS USA
Sodexho Pass USA SVC USA
Energy Catering Services LLC FMS USA
Universal Sodexho Empresa de servicios y
Campamentos FMS Venezuela
Universal Sodexho Services de Venezuela FMS Venezuela
Universal Sodexho do Brazil Ltda FMS Brazil
Sodexho Do Brazil 90 % 90 % FMS Brazil
Sodexho Argentina FMS Argentina
Sodexho Colombia 65 % 65 % FMS Columbia
Sodexho Venezuela Alimentacion y Servicios 70 % 70 % FMS Venezuela
Sodexho Costa Rica FMS Costa Rica
Sodexho Mexico FMS Mexico
Doyon Universal Services JV 50 % 50 % FMS USA
Sodexho Peru FMS Peru
Sodexho Sitios Remotos Peru FMS Peru
EM BAS 33 % 33 % FMS Chile
N, EM BAS II 33 % 33 % FMS Chile
Siges Chile FMS Chile
Sodexho Chile (sub consolidation) FMS Chile
Sodexho Servicios de Personal FMS Mexico
Sodexho Mantenimiento y Servicios FMS Mexico
Sodexho Pass do Brazil HOL Brazil
Medcheque 65 % 65 % SVC Brazil
Cardapio Informatica SVC Brazil
National Administracao de Restaurentes SVC Brazil
Sodexho Pass do Brazil Comercial e Servicio SVC Brazil
Sodexho Pass Chile SVC Chile
Sodexho Pass Venezuela 64 % 64 % SVC Venezuela
Sodexho Pass de Colombia 51 % 51 % SVC Columbia
Luncheon Tickets 60 % 60 % SVC Argentina
Prestaciones Mexicanas SA de CV SVC Mexico
Sodexho Servicios Operativos SVC Venezuela
% % voting Principal Country
interest rights activity
Africa
Universal Sodexho Nigeria FMS Nigeria
Universal Sodexho Gabon 90 % 90 % FMS Gabon
N Sodexho Angola FMS Angola
Sodexho Pass Tunisie 49 % 49 % SVC Tunisia
Sodexho Maroc SVC Morocco
Universal Sodexho Ecuatorial Guinea 70 % 70 % FMS Equatorial
Guinea
Sodexho Cameroon 70 % 70 % FMS Cameroon
Universal Sodexho Congo FMS Congo
Sodexho Southern Africa (sub consolidation) 55 % 55 % FMS South Africa
Sodexho Investments Ltd. HOL South Africa
Sodexho Tanzania FMS Tanzania
% interest % voting Principal Country
rights activity
Europe
Sodexho Monaco FMS Monaco
Sodexho Belgique FMS Belgium
Altys Belgique FMS Belgium
Restaura FMS Belgium
N Altys Suisse FMS Switzerland
N Altys Deutschland FMS Germany
Sodexho Luxembourg (sub consolidation) FMS Luxembourg
Sodexho Italia (sub consolidation) FMS Italy
Sodexho D.O.O. FMS Slovenia
Sodexho Oy FMS Finland
N Coffee Queen Oy 92 % 92 % FMS Finland
Sodexho Scandinavian Holding AB (sub consolidation) FMS Sweden
Sodexho Espana (sub consolidation) FMS Spain
Sodexho Portugal II Restauracao e Servicios 90 % 90 % FMS Portugal
Sodexho Portugal Catering FMS Portugal
Sodexho Hellas 51 % 51 % FMS Greece
Sodexho Catering & Services GmbH FMS Germany
Eiring S.C.S. Catering GmbH FMS Germany
Plauen Menu 90 % FMS Germany
Baren Menu GmbH 95 % 95 % FMS Germany
Sodexho A.O. FMS Russia
N Sodexho Euroasia FMS Russia
Imagor Services HOL Belgium
Sodexho Catering Spol Sro FMS Czech
Republic
Sodexho Skolni Hidelny Sro FMS Czech
Republic
Sodexho Spolocne FMS Slovakia
Sodexho Magyarorszag Kft FMS Hungary
Zona Vendeglato Kft FMS Hungary
Sodexho Toplu Yemek FMS Turkey
Sodexho Polska Sp. Zoo FMS Poland
Sodexho MM Catering GmbH 91 % 91 % FMS Austria
EM Agecroft Prison Management 50 % 50 % FMS United
Kingdom
Sodexho Services Group Ltd HOL United
Kingdom
EM HPC Limited 25 % 25 % FMS United
Kingdom
Sodexho International Holdings Ltd HOL United
Kingdom
Keyline Travel Management FMS United
Kingdom
Sodexho Limited FMS United
Kingdom
Sodexho Prestige Limited FMS United
Kingdom
Universal Sodexho Scotland FMS United
Kingdom
Harmondsworth Detention Services Ltd 51 % 51 % FMS United
Kingdom
UKDS FMS United
Kingdom
Tillery Valley Foods Limited FMS United
Kingdom
Rugby Hospitality 2003 Ltd 55 % 55 % FMS United
Kingdom
Sodexho Defence Services Limited FMS United
Kingdom
Sodexho Land Technology Limited FMS United
Kingdom
N Sodexho Investment Services Limited FMS United
Kingdom
N, EM Peterborough Prison Management Limited 33 % 33 % FMS United
Kingdom
N, EM Ashford Prison Services Limited 33 % 33 % FMS United
Kingdom
Sodexho Holdings Ltd HOL United
Kingdom
Sodexho Education Services Ltd FMS United
Kingdom
Sodexho Management Services Ltd FMS United
Kingdom
Sodexho Healthcare Services Ltd FMS United
Kingdom
Sodexho Support Services HOL United
Kingdom
Universal Sodexho Norway FMS Norway
Universal Sodexho Holdings Ltd FMS United
Kingdom
Universal Services Europe Ltd FMS United
Kingdom
FMS United
Universal Sodexho The Netherlands BV FMS Netherlands
Primary Management Aldershot 60 % 60 % FMS United
Kingdom
EM Mercia Healthcare Holdings Ltd 25 % 25 % FMS United
Kingdom
EM South Manchester Healthcare Ltd 25 % 25 % FMS United
Kingdom
Sodexho Holdings - Ireland Ltd HOL Ireland
Sodexho Ireland Limited FMS Ireland
Sodexho BV FMS Netherlands
Sodexho Nederland BV FMS Netherlands
Sodexho Prestige BV FMS Netherlands
Sodexho Pass Belgique SVC Belgium
Special Event 70 % 70 % SVC Belgium
Sodexho Pass Luxembourg SVC Luxembourg
Sodexho Pass GmbH SVC Germany
Sodexho Card Services GmbH SVC Germany
Sodexho Pass srl SVC Italy
Sodexho Pass Espana 95 % SVC Spain
Ticket Menu 95 % 95 % SVC Spain
Sodexho Pass Austria GmbH SVC Austria
Sodexho Pass Limited SVC United
Kingdom
Sodexho Pass Hungaria Kft SVC Hungary
N Sodexho Pass Bulgaria SVC Bulgary
Sodexho Pass Ceska Republika SVC Czech
Republic
Sodexho Pass Slovak Republic SVC Slovakia
Sodexho Pass Polska SVC Poland
Sodexho Restoran Servisleri AS 80 % 80 % SVC Turkey
Sodexho Pass Romania SVC Roumania
Catamaran Cruisers FMS United
Kingdom
Compagnie Financiere Aurore International HOL Belgium
Pakzon HOL Switzerland
% % voting Principal Country
interest rights activity
Asia - Pacific, Middle East
Kelvin Catering Ltd 49 % 49 % FMS United Arab
Emirates
Teyseer Services Company 49 % 49 % FMS Qatar
Socat LLC 50 % 50 % FMS Oman
N.C.M.S. 50 % 50 % FMS Saudi Arabia
Abbar & Zainy 50 % 50 % FMS Saudi Arabia
SISA llc FMS United Arab
Emirates
Restauration Francaise (New Caledonia) 72 % 72 % FMS France
Sodexho Nouvelle Caledonie 54 % 54 % FMS France
SRRS (La Reunion) FMS France
Sodexho Singapore FMS Singapore
Sodexho Malaysia FMS Malaysia
Sodexho Hong Kong Ltd FMS Hong Kong
Sodexho Korea Co Ltd FMS Korea
Universal Sodexho Eurasia FMS United
Kingdom
Aims Corporation FMS Australia
Universal Remote Site Services FMS Singapore
PT Universal Ogden Indonesia 50 % 50 % FMS Indonesia
Sodexho Australia FMS Australia
N Rugby Hospitality 2003 Pty 55 % 55 % FMS Australia
EM Sodexho Venues Australia Pty FMS Australia
EM Serco Sodexho Defence Services New Zealand 50 % 50 % FMS New Zealand
Minesite Catering Pty Ltd FMS Australia
Sodexho (Tianjing) Catering Company Ltd FMS China
Sodexho Services Company Ltd Shanghai FMS China
Sodexho (Suzhou) Catering Company FMS China
Beijing Sodexho Catering Services Company Ltd FMS China
Guangzhou Sodexho Management Services Ltd FMS China
Sodexho Pass Shanghai SVC China
Sodexho India FMS India
Sodexho Pass Services India 74 % 74 % SVC India
N Sodexho Services Liban 60 % 60 % FMS Liban
Sakhalin Support Services 95 % 95 % FMS Russia
Allied Support FMS Russia
FMS = Food and Management Services,
SVC = Service Vouchers and Cards, HOL = Holding Company,
--------------------------------------------------------------------------------
Statutory Auditors' Report on the Consolidated Financial Statements
for the year ended August 31, 2003
--------------------------------------------------------------------------------
Ladies and Gentlemen,
In compliance with the assignment entrusted to us by your General Meeting, we
have audited the accompanying consolidated financial statements of Sodexho
Alliance S.A. for the year ended 31 August 2003. The consolidated financial
statements have been approved by the board. Our role is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with the professional standards applicable
in France. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by the management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements give a true and fair view
of the assets, liabilities, financial position and results of the consolidated
group of companies in accordance with the accounting rules and principles
applicable in France. In accordance with article L225-235 of the French
Commercial Code resulting from the Financial Security Law (loi de securite
financiere), it is the duty of the auditors to justify their assessments in the
context of their opinion. In the absence of guidance from our professional body,
we draw attention to the following matters:
- The valuation of intangible assets relating to acquisitions (contract
portfolios representing market share and goodwill) was performed in accordance
with the Group accounting policies. In addition, as described in paragraph V-8
of the notes to the consolidated financial statements, this valuation was
corroborated by a discounted cash flow calculation. We consider that the
approach taken is appropriate.
- Provisions for risk and charges, given the information provided in paragraphs
VII-16 and VII-23-4 of the notes to the consolidated financial statements,
appear to be appropriate at this stage.
- The accounting change described in paragraph V of the notes to the
consolidated financial statements complies with the presentation recommended by
the Conseil National de la Comptabilite (National Accounting Board)
We have also verified the information given in the group management report. We
have no comments as to its fair presentation and conformity with the
consolidated financial statements.
Paris and Paris La Defense, November 13, 2003
Statutory Auditors
PricewaterhouseCoopers KPMG Audit
Gerard Dantheny Hubert Toth Patrick-Hubert Petit
This is a free translation of the original French text for information purposes
only.
I Additional information regarding the consolidated financial statements
1 Financial ratios
As of the As of the As of the
year ended year ended year ended
August 31, August 31, August 31,
2003 2002 2001
Long-term debt
Financial independence ______________________________________________ 0.8 1.0 0.9
Shareholders' equity and minority interests
Permanent capital
Financing ______________________________________ 0.9 1.0 0.9
Long-term assets
Borrowings
Debt coverage (in years) _______________________________________ 6.4 6.9 6.8
Cash provided by operating activities
Group net income
Return on equity _________________________________________________________ 7.8 8.3 6.1
Group shareholders' equity (before Group net
income for the year)
EBITA
Interest cover ________________________ 3.6 3.8 4.7
Net financial expense
2 Exchange rates as of and for the year ended August 31, 2003
Country Currency Unit EUR Closing EUR Average
Rate Rate
August 31, 2003 August 31, 2003
Euro Zone (1) EURO 1 EUR = 1,000000 1,000000
AFRICA C.F.A (thousands) 1 CFA = 1,524490 1,524490
ALGERIA DINAR (thousands) 1 DZD = 11,787421 11,784824
ARABIA RIAL 1 SAR = 0,244010 0,249485
ARGENTINA PESO 1 ARS = 0,309933 0,295281
AUSTRALIA DOLLAR 1 AUD = 0,587820 0,559876
BRAZIL REAL 1 BRL = 0,307201 0,284631
CANADA DOLLAR 1 CAD = 0,655179 0,629497
CHILE PESO (thousands) 1 CLP = 1,308524 1,300046
CHINA YUAN 1 CNY = 0,110566 0,113040
COLOMBIA PESO (thousands) 1 COP = 0,322866 0,327071
COSTA RICA COLON (thousands) 1 CRC = 2,260091 2,434781
CZECH REPUBLIC CROWN (thousands) 1 CZK = 30,826141 31,856872
DENMARK CROWN 1 DKK = 0,134660 0,134618
HONG KONG DOLLAR 1 HKD = 0,117341 0,119969
HUNGARY FORINT (thousands) 1 HUF = 3,884099 4,045103
ICELAND ICELAND CROWN 1 ISK = 0,011362 0,011722
INDIA ROUPIE (thousands) 1 INR = 20,036065 19,704248
JAPAN YEN (thousands) 1 JPY = 7,857929 7,812040
KOREA WON (thousands) 1 KRW = 0,776717 0,778432
LIBAN POUND LIB. (thousands) 1 LBP = 0,608132 0,621036
MALAYSIA RINGGIT 1 MYR = 0,241243 0,246300
MEXICO PESO 1 MXN = 0,082869 0,089459
MOROCCO DIRHAM 1 MAD = 0,093045 0,093560
NEW ZEALAND DOLLAR New Zealand 1 NZD = 0,525873 0,501081
NIGERIA NAIRA (thousands) 1 NGN = 7,160759 7,405265
NORWAY CROWN 1 NOK = 0,121256 0,130248
OMAN RIAL 1 OMR = 2,38039 2,434294
PERU SOL 1 PEN = 0,262957 0,266693
POLAND ZLOTY 1 PLN = 0,229410 0,237618
POLYNESIA C.F.P 1 XPF = 0,008380 0,008380
QATAR RIAL 1 QAR = 0,251421 0,257035
ROMANIA LEU (thousands) 1 ROL = 0,026882 0,028200
RUSSIA ROUBLE (thousands) 1 RUB = 30,120391 29,915226
SINGAPORE DOLLAR 1 SGD = 0,521866 0,533018
SLOVAKIA SLOVAKIAN CROWN (thousands) 1 SKK = 23,806690 24,007200
SLOVENIA TOLAR (thousands) 1 SIT = 4,253419 4,319642
SOUTH AFRICA RAND 1 ZAR = 0,124942 0,110929
SWEDEN CROWN 1 SEK = 0,108342 0,109115
SWITZERLAND SWISS FRANC 1 CHF = 0,650660 0,670614
TANZANIA SHILLING (thousands) 1 TZS = 0,878117 0,925079
TUNISIA DINAR 1 TND = 0,698763 0,707619
TURKEY POUND (millions) 1 TRL = 0,654022 0,597695
UNITED ARAB EMIRATES DIRHAM 1 AED = 0,249196 0,254771
UNITED KINGDOM POUND 1 GBP = 1,44383 1,492321
UNITED STATES OF AMERICA DOLLAR 1 USD = 0,915164 0,935650
VENEZUELA BOLIVAR (thousands) 1 VEB = 0,575695 0,611411
(1) Germany, Austria, Belgium, Spain, Finland, France, Greece, Ireland,
Italy, Luxembourg, Netherlands, Portugal, Spain
3 Five year financial summary
(in millions of euro) August 31, August 31, August 31, August 31, August 31,
2003 2002 2001 2000 1999
SHAREHOLDERS' EQUITY
Group 2,249 2,398 2,405 1,411 1,279
Minorities 67 73 131 525 333
----------- -------- --------- -------- ---------
2,316 2,471 2,536 1,936 1,612
BORROWINGS
Long-term debt 1,881 2,420 2,174 1,830 1,741
Short-term debt 607 273 607 179 306
NET FIXED ASSETS
(including deferred charges, excluding
loans and other financial assets) 4,792 5,140 5,284 4,065 3,667
CASH AND CASH EQUIVALENTS, RESTRICTED CASH
AND MARKETABLE SECURITIES (BEFORE PROVISIONS) 1,286 1,330 1,213 896 759
NET DEBT 1,202 1,363 1,568 1,113 1,288
REVENUE 11,687 12,612 11,943 10,505 9,032
EBITA 514 528 586 539 453
Consolidated net income (before
minority interests and goodwill
amortization) 233 263 249 185 216
Minority interests 9 13 67 69 56
Goodwill amortization 62 67 44 31 28
GROUP NET INCOME 162 183 138 85 132
Average number of shares(1) 159,021,546 158,814,504 138,180,536 134,262,484 133,873,969
Earnings per share (in euro)(2) 1.02 1.15 1.00 0.63 0.98
Dividends per share (in euro)(2) 0.61 0.61 0.56 0.56 0.45
Share price at August 31, (in euro)(2) 26.68 29.90 53.00 44.10 38.88
Highest share price during fiscal year(2) 30.83 55.75 60.10 48.75 50.00
Lowest share price during fiscal year(2) 17.95 25.10 42.00 32.05 33.20
(1) Represents the arithmetic average of the average number of shares per
month. The number of shares in the first two fiscal years have been
restated in order to reflect the March 7th, 2001 four-for-one stock split.
(2) Restated amounts as per note (1)
4 Audit Fees
The audit fees for the Group are the following :
In thousands of euro
Service PricewaterhouseCoopers KPMG (1)
Amount % Amount %
2002 2001 2002 2001 2002 2001 2002 2001
-2003 -2002 -2003 -2002 -2003 -2002 -2003 -2002
Audit Services
Audit of Statutory accounts and
consolidation pack 4,536 4,578 66 % 11 % 1,013 n/a 94 % n/a
Other audit related services 240 655 4 % 2 % 54 n/a 5 % n/a
-------- ------- ------ ------ ------- ------ ------ -------
Subtotal of audit services 4,776 5,233 70 % 13 % 1,067 99 %
Other Services
Legal and/or compensation
related, tax fees 1,853 2,935 28 % 7 % 9 n/a 1 % n/a
Information technology 14 31,373 0 % 79 % 0 n/a 0 % n/a
Other 140 221 2 % 1 % 1 n/a 0 % n/a
-------- ------- ------ ------ ------- ------ ------- -------
Subtotal of other services 2,007 34,529 30 % 87 % 10 1 %
TOTAL GENERAL 6,783 39,762 100 % 100 % 1,077 100 %
======== ======= ====== ====== ======= =======
(1) KPMG was named auditor of Sodexho Alliance at the Annual Shareholders'
Meeting on February 4, 2003.
The audit fees for the audit of the statutory accounts and consolidation forms
performed by audit firms other than PricewaterhouseCoopers and KPMG for the
Group subsidiaries totalled EUR 766K for the year ended August 31, 2003.
5 Reconciliation of French GAAP financial statements to U.S. GAAP The
Group's consolidated financial statements have been prepared in
accordance with French GAAP (accounting principles generally accepted
in France in accordance with CRC no. 99-02, issued June 22, 1999)
which, as applied by the Group, differs in certain significant
respects from accounting principles generally accepted in the United
States of America ("U.S. GAAP"). The effects of the application of
U.S. GAAP to net income and shareholders' equity are set forth in the
tables below. An explanation of the main differences follows:
Reconciliation of consolidated net income (loss)
For the year ended August 31,
2003 2002 2001
(in millions of euros, except per-share amounts)
Net income, as reported under French GAAP 162 183 138
U.S. GAAP adjustments:
Business combinations (a) (39) (100) (135)
Stock-based compensation (b) 5 (10) (2)
Pensions and postretirement benefits (c) (27) (3) 2
Investments in marketable equity securities (d) - - (35)
Detachable stock purchase warrants (e) (6) (7) (6)
Derivative financial instruments (f) 22 (6) 9
Treasury shares (g) 4 19 -
Other, net (h) (2) (4) (22)
Deferred income tax effect (i) 29 45 27
Land Technology restatement, net of taxes (j) - 19 (10)
--------- ---------- -----------
Total U.S. GAAP adjustments (15) (47) (172)
Net income (loss), as determined under U.S. GAAP 147 136 (34)
========= ========== ===========
Reconciliation of consolidated shareholders' equity
August 31,
2003 2002
(in millions of euros)
Shareholders' equity, as reported under French GAAP.. 2,249 2,398
U.S. GAAP adjustments:
Business combinations (a) (352) (337)
Stock-based compensation (b) 4 (1)
Pensions and postretirement benefits (c) (63) (26)
Detachable stock purchase warrants (e) 5 12
Derivative financial instruments (f) 6 (16)
Treasury shares (g) (78) (100)
Other, net (h) 12 15
Deferred income tax effect (i) (47) (65)
-------- -------
Total U.S. GAAP adjustments (513) (518)
Shareholders' equity, as determined under U.S. GAAP 1,736 1,880
======== ========
Condensed U.S. GAAP statement of operations
For the year ended August, 31
2003 2002 2001(1)
(in millions of euros)
Revenues 11,690 12,618 7,557
Other operating income 57 78 24
Operating expenses, excluding
goodwill and intangible
assets amortization (11,232) (12,166) (7,284)
Goodwill and intangible assets (115) (126) (144)
amortization
---------- --------- ----------
Operating income 400 404 153
Interest expense (158) (203) (109)
Equity in income (loss)
of investees 4 6 2
Other non-operating income
(expense) 16 33 (7)
---------- --------- ----------
Income before income taxes,
minority interest and
extraordinary item 262 240 39
Income tax expense (105) (91) (61)
Minority interest in net
income of consolidated
subsidiaries (9) (13) (9)
Income (loss) before
extraordinary item 147 136 (31)
Extraordinary loss on
extinguishment of debt - - (3)
--------- --------- ---------=
Net income (loss) 147 136 (34)
========= ========= ==========
(1) For fiscal 2001, the most significant differences between the amounts
reported in accordance with French GAAP and those reported under US GAAP
relate to the accounting for Sodexho, Inc. (formerly, Sodexho Marriott
Services, Inc.), which was recorded under the equity method of accounting
for U.S. GAAP until the purchase of the 53% of the shares held by third
parties on June 20, 2001.
Notes to reconciliation of consolidated net income and consolidated
shareholders' equity
(a) Business combinations
Under French GAAP, all of the Group's business combinations are accounted
for as purchases. The cost of an acquired company is assigned to the
tangible and intangible assets acquired and liabilities assumed on the
basis of their fair values at the date of acquisition.
Market shares
Where the Group has established a strong presence in a geographic market
through an acquisition, an additional intangible asset, market share, is
recorded in the allocation of purchase price. Market share has been
recorded with respect to the acquisitions of Sodexho Inc., Wood Dining
Services, Sogeres, Sodexho Services Group Ltd., Sodexho Scandinavian
Holding AB and Universal Services, and corresponds to the significant
market share these companies have in their principal markets (United
States, France, Great Britain, Ireland, the Netherlands, Australia and
Sweden). The criteria used in the valuation of the market share are the
revenues and EBITA achieved in the principal markets. Market share
intangible assets are not amortized in the consolidated financial
statements. However, they are evaluated for impairment at each year end. In
cases where there is a significant decline in value for more than two
consecutive years, as calculated by comparing actual results to the
original computation, the market share intangible asset is provisioned. The
impairment evaluation is further supported by a calculation of the fair
value of the assets as of August 31, 2003 as determined based on the
discounted future cash flows.
Goodwill
Any excess of purchase price over the fair value of the tangible and
intangible assets acquired, including market share, is allocated to
goodwill, which is amortized over its estimated useful life, which in most
cases, has been determined to be thirty years, given the stable nature of
the markets in which the Group operates.
Deferred taxes are not recorded with respect to goodwill under French GAAP.
Under U.S. GAAP, all of the Group's business combinations are accounted for
as purchases. In accordance with SFAS 141, "Business Combinations", and
related interpretations (APB 16 prior to July 1, 2001), the cost of an
acquired company is assigned to the tangible and identifiable intangible
assets acquired and liabilities assumed on the basis of their fair values
at the date of acquisition. In accordance with U.S. GAAP, customer
relationships, trademarks, workforce (prior to July 1, 2001 only), and
software intangible assets were identified with respect to the Group's
acquisitions. As a result, part of what was allocated to market share and
goodwill under French GAAP is reallocated to these identified intangible
assets for U.S. GAAP. The remaining excess of cost over fair value of the
net assets acquired is recorded as goodwill. In accordance with SFAS 142
(APB 17 prior to September 1, 2001) all intangible assets acquired,
including customer relationships, trademarks and software, are amortized
over their estimated useful lives. In accordance with APB 17, goodwill and
assembled workforce were amortized through fiscal 2001; thereafter
assembled workforce has been reclassified to goodwill, which is no longer
amortized. A deferred tax liability is recorded with respect to all
intangible assets except goodwill. Generally, the amount assigned to
goodwill is increased by an amount equal to the deferred taxes recorded.
(b) Stock option and stock purchase plans
Stock option plans
The Group has historically granted certain employees options to purchase
common shares of Sodexho Alliance. Under French GAAP, these transactions
have no impact on the income statement. For U.S. GAAP, the Group has
elected to account for its stock-based compensation plans in accordance
with the intrinsic value method prescribed by APB Opinion No. 25 which
requires that companies recognize total compensation cost equal to the
excess, if any, of the market price of the share over the exercise price of
the option on the measurement date. The measurement date is defined as the
first date on which the number of shares the employee is entitled to
receive and the exercise price are known. Option grants for which both the
number of shares an employee is entitled to receive and the exercise price
are known on the date of grant are referred to as "fixed" stock option
grants. All other grants are considered to be "variable" stock option
grants. Compensation expense for both fixed and variable option grants is
recognized over the employee service period, which is generally the vesting
period of the option. Total compensation expense recognized under U.S. GAAP
with respect to these stock options was EUR 0.3 million, EUR 0.8 million
and EUR 1.2 million and for each of the years ended August 31, 2003, 2002
and 2001, respectively.
Other stock-based compensation
In addition to traditional stock option plans, certain of the Group's
subsidiaries have stock-based compensation plans where under an employee is
granted a number of hypothetical shares in the subsidiary ("phantom
shares"). The employee is entitled to any appreciation in the value, as
determined by application of a formula based on a multiple of adjusted
EBITA, of those phantom shares. The employee's interest in that
appreciation vests 100% after completion of a service period (generally,
between four and five years). For French GAAP, compensation expense is
recognized currently for the amount of the total appreciation in the value
of the phantom shares (or change in value in subsequent periods) as
computed based on the contractual formula. For U.S. GAAP, the total
compensation expense is computed in the same manner; however, the expense
is recognized ratably over the service period. Total compensation expense
recognized under U.S. GAAP with respect to these plans was EUR 1.4 million
and EUR 1 million for the years ended August 31, 2003 and 2001 compared to
EUR 3.4 million and EUR 0.5 million recognized under French GAAP for the
same years. There was no compensation expense recognized under U.S. GAAP
with respect to these plans for the year ended August 31, 2002.
Stock purchase plans
For the year ended August 31, 2002, the adjustment for stock option
purchase plans mainly related to the accounting for the Sodexho Alliance
International Employee Stock Ownership Plan. On October 18, 2001, the Board
of Directors issued 1,385,848 shares at an issue price of EUR 44.10 per
share for United States employees and EUR 41.51 for other employees. Under
French GAAP, these transactions are recorded directly in equity upon
issuance. Under US GAAP, the plan is considered compensatory and,
therefore, results in the recognition of compensation expense for the
difference, if any, between the fair value, as determined on the
measurement date, and the purchase price of the shares. Total compensation
expense recognized under US GAAP with respect to this plan was EUR 11
million for the year ended August 31, 2002.
(c) Pensions and postretirement benefits
For funded plans to which the subsidiary makes a contribution, the amount
of the contribution is recorded as the annual expense of the plan.
Otherwise the Group's benefit obligations relating to defined benefit
pension and retirement indemnity plans are recorded as a liability in the
balance sheet.
Under U.S. GAAP, the Group accounts for its pension plans in accordance
with SFAS 87, "Employers' Accounting for Pensions." Transition obligations
have been calculated as of September 1, 1999 as permitted for companies
outside the United States and have been amortized over a period of 15 years
from the initial implementation date of SFAS 87 in 1989 for pensions and of
SFAS 106 in 1995 for other post retirement benefits. For the funded plans
where the accumulated benefit obligation exceeded the fair value of the
plan assets as of August 31, 2003 and 2002, an additional minimum liability
has been recorded, with a corresponding entry recorded net of tax as other
comprehensive income, a component of shareholders' equity. For the funded
plans which were in a net asset position as of August 31, 2001, the amount
of expense computed under SFAS 87 was lower than that recorded by the Group
subsidiary.
(d) Investments in marketable equity securities
The adjustment for investments in marketable equity securities relates
principally to the Group's investment in Corrections Corporation of America
("CCA"). Under French GAAP, this investment was considered an investment in
a non-consolidated company. Due principally to the uncertainty of the
outcome of litigation between CCA and some of its shareholders, the
investment was fully provisioned in fiscal 2000. During fiscal 2001,
Sodexho Alliance received EUR 11 million in dividends from CCA and sold its
investment, which generated an additional loss of EUR 3 million, net of
taxes.
The Group's investment in CCA is considered available-for-sale under U.S.
GAAP. Accordingly, under U.S. GAAP the Group's investment in CCA was
written down to its market value as of August 31, 2000 which resulted in a
lower write-down than under French GAAP in that year. The decline was
considered other than temporary and, therefore, was recognized in earnings
of the period. During fiscal 2001, when the investment was sold, an
additional charge was recorded under U.S. GAAP to reflect the incremental
decline in value from the August 31, 2000 until the sale date. Under U.S.
GAAP, the Group wrote down its investment in CCA to its quoted market value
of EUR 35 million as of August 31, 2000 resulting in the recognition of a
loss amounting to EUR 32 million for U.S. GAAP for the year ended August
31, 2000. Under French GAAP, the Group recorded a provision and
corresponding loss of EUR 72 million for the year ended August 31, 2000. In
addition to the EUR 3 million loss described above, which was recognized
under French and U.S. GAAP for the year ended August 31, 2001, the Group
also recorded an additional loss for U.S. GAAP in fiscal 2001 of EUR 35
million related to the carrying value of the Group's investment in CCA
which remained in the U.S. GAAP balance sheet as of August 31, 2000
compared to the French GAAP balance sheet. As of August 31, 2001, the Group
had divested its entire investment in CCA.
(e) Detachable stock purchase warrants
Under French GAAP, detachable stock purchase warrants issued in connection
with the issuance of debt obligations are not separated and accounted for
apart from the related debt instrument. Under U.S. GAAP, proceeds received
for debt obligations issued with detachable stock purchase warrants are
required to be allocated between the debt obligation and the stock purchase
warrants. Amounts allocated to the stock purchase warrants are accounted
for as additional paid in capital and debt discount. The debt discount is
required to be amortized to interest expense over the life of the debt
obligation by the effective interest method.
(f) Derivative financial instruments
Under French GAAP, the Group's derivative financial instruments, which
primarily include interest rate and cross-currency swap agreements on debt
instruments, are considered to hedge the underlying debt. Any interest rate
differential is recognized as an adjustment to interest expense over the
term of the related underlying debt. For swaps negotiated on inter-company
debt, the difference between the amount of the debt at the period end rates
and the swapped rates is recorded as debt.
Under U.S. GAAP, the Group has accounted for all of its derivative
financial instruments (other than those of Sodexho, Inc.) both prior and
subsequent to the adoption of SFAS No. 133 at fair value with changes in
fair value of instruments recognized currently in earnings. The aggregate
adjustment reflected in the reconciliation of consolidated shareholders'
equity and consolidated net income (loss) as of August 31, 2003, 2002 and
for the years ended August 31, 2003, 2002 and 2001 for "Derivative
financial instruments" is comprised entirely of derivative financial
instruments accounted for at fair value.
Under U.S. GAAP, Sodexho, Inc.'s interest rate agreements have been
designated as cash flow hedges in accordance with SFAS No. 133. As of
August 31, 2003 and 2002, and for the fiscal years ended August 31, 2003,
2002, 2001, these cash flow hedges were determined to be effective hedges,
and accordingly, changes in fair value are reflected in the statement of
comprehensive income, a component of shareholders' equity.
(g) Treasury shares
Under French GAAP, treasury shares are recorded, at cost, as an asset in a
company's balance sheet when re-purchased for re-issuance in connection
with stock-based compensation plans. A provision is recorded when the
shares are expected to be re-issued at below their recorded cost. If the
number of shares is less than the number of stock options granted, a
liability is recorded, calculated as the difference between the share price
as of August 31 and its exercise price, multiplied by the number of shares
remaining to be purchased.
Under U.S. GAAP, treasury shares are recorded, at cost, as a reduction of
shareholders' equity. Any difference between the recorded cost and proceeds
received on a subsequent issuance of the shares is also reflected directly
in equity.
(h) Other, net
Other consists of the impacts on net income (loss) and shareholders' equity
for the differences between U.S. GAAP and French GAAP summarized in the
table below:
Net Income (Loss)for the year ended August 31 Shareholders' Equity as
of August 31,
2003 2002 2001 2003 2002
Foreign currency transactions - - (8) - -
Provisions for contingencies and
losses (3) (4) (1) 3 5
Leases 1 (1) (3) (6) (6)
Scope of consolidation - - (1) (1) (1)
Organization costs - 1 (1) - -
Indirectly-held treasury shares - - - 31 31
- - (8) (15) (14)
Deferred charges and other ------ ------ ------- ------- --------
Total - Other, net (2) (4) (22) 12 15
====== ====== ======= ======= ========
Provisions for contingencies and losses
Provisions for contingencies and losses are recorded when it is probable
that there exists a legal, equitable or constructive obligation to
sacrifice economic benefits to a third party in the future without an
expectation of receiving proceeds of a similar amount from the third party.
Under U.S. GAAP, provisions for contingencies and losses (liabilities) are
recognized for specific existing risks when the related loss is both
estimable and probable and subject to additional criteria in certain
situations, such as business combinations and restructurings.
Leases
Under French GAAP, leases that transfer substantially all of the risks and
rewards of ownership to the lessee are accounted for as capital leases. All
other leases are accounted for as operating leases.
Under U.S. GAAP, lease accounting is based on a series of established
quantitative criteria. These criteria are: (i) the lease automatically
transfers ownership of the asset to the lessee at the end of the lease,
(ii) the lease contains a bargain purchase option exercisable by the
lessee, (iii) the term of the lease is equal to or greater than 75% of the
estimated useful life of the leased asset at lease inception and (iv) the
present value of the future minimum lease payments to be made pursuant to
the lease agreement represents 90% or more of the fair value of the leased
asset at inception of the lease. A lease meeting any one of these criteria
is required to be accounted for as a capital lease by the lessee. All other
leases are required to be accounted for as operating leases.
The aggregate impact of the capitalization of leases for U.S. GAAP on total
assets is an increase of EUR 61 million and EUR 67 million as of August 31,
2003 and 2002, respectively. The aggregate impact on total liabilities
(debt) is an increase of EUR 64 million and EUR 71 million as of August 31,
2003 and 2002, respectively.
Consolidation
Under French GAAP, the Group does not consolidate certain insignificant
subsidiaries. Under U.S. GAAP, the Group consolidates all subsidiaries
which it has the ability to control regardless of significance. The net
impact on the Group financial statements of consolidating these
subsidiaries in U.S. GAAP was not material in any of the periods presented.
Organization costs
Under French GAAP, certain organization costs (company formation costs) are
capitalized and amortized over a period not exceeding five years. Under
U.S. GAAP, organization costs are required to be expensed as incurred.
Indirectly-held treasury shares
As of August 31, 2003, Sofinsod indirectly held 5.56% of Sodexho Alliance,
through its interest in 14.4% of the capital of Bellon SA, which held
38.63% of Sodexho Alliance.
As of August 31, 2003, Sofinsod indirectly held 1.58% of Sodexho Alliance,
through its 100% ownership of the Societe Financiere de la Porte Verte,
which held 4.1% of the capital of Bellon SA.
Under French GAAP, these outstanding common shares which are indirectly
owned by consolidated subsidiaries of the Group are considered treasury
shares. A portion of the Group's investment in these subsidiaries is
reclassified and treated as a reduction of equity in the consolidated
French GAAP financial statements. Under U.S. GAAP, these indirectly-held
shares are not considered treasury shares because the subsidiaries of the
Group do not control the entity which actually owns the shares in the
Group. Therefore, no such reclassification between investments and
shareholders' equity is made under U.S. GAAP. Indirectly-held treasury
shares are considered outstanding for purposes of computing
earnings-per-share under French and U.S. GAAP.
Deferred charges and other
Under French GAAP, certain costs, such as contract mobilization costs, can
be capitalized and amortized over their estimated useful lives of three to
five years, if the cost is expected to provide a future benefit. U.S. GAAP
requires that such costs be expensed as incurred.
(i) Deferred income tax effect of U.S. GAAP adjustments
This reconciliation item includes the tax effects of the U.S. GAAP
adjustments reflected in the reconciliations of shareholders' equity and
net income (loss) except for the fiscal 2001 adjustment related to SMS,
which is reflected net of taxes in the business combinations adjustment.
(j) Land Technology restatement
French GAAP requires the correction of an error to be recorded in the year
in which the error is detected. U.S. GAAP requires all prior years affected
by the error to be restated. In accordance with U.S. GAAP, the effect of
the error with respect to the Land Technology subsidiary, where assets
related to revenues for which realization was uncertain were recorded
during the period from 1999 through February 28, 2002, has been reflected
in each of the years presented.
6 Capital Spending Strategy
Sodexho's capital spending strategy objective is to develop the group's
activity, focusing on organic growth and client investments.
(in millions of euro)
Year ended, Year ended, Year ended,
August 31, 2003 August 31, 2002 August 31, 2001
Aquisitions of property, plant and
equipment and intangibles 239 297 233
Acquisitions of equity interests 37 107 1,767
7 Risk management
The group has long established clear guidelines to manage and assess risks
at the appropriate level within the organization. A "Group Financial
Policies" handbook is widely distributed, and is supported by clear
internal delegation limits which all managers formally agree to with their
hierarchical superior.
This means, for example :
- all new contracts with annual sales exceeding EUR 5 million must be
approved by a member of the Executive Committee ;
- development projects - whether involving capital or revenue expenditure
or commitments in excess of EUR 350,000, the creation of new subsidiaries,
joint ventures or partnership arrangements - are discussed with the Group
Investment Committee, which comprises members of the Executive Committee
and meets monthly ;
- international supply agreements are approved by the International
Purchasing Manager ;
- only the Chairman and Chief Executive Officer is empowered by the Board
of Directors to give Sodexho Alliance financial guarantees and performance
bonds. Guarantees given by Group subsidiaries require prior approval by the
Group Chief Financial Officer.
- the Group has established procedures in order to insure the exactitude,
consistency and completeness of its commitments, these procedures include:
- the periodic review of the minutes of subsidiaries' Annual Shareholders'
Meetings and Board of Directors Meetings for contractual agreements,
ongoing litigation, and the authorizations to purchase or sell assets ;
- review of risk management with internal managers and other external
insurance company brokers with whom the company has contracted in order to
determine that all operational risks are adequately covered;
- the review with banks and financial institutions all sureties and
guaranty issues;
- review with inhouse and external legal counsel all pending and potential
litigation and claims in Court or arbitration, and all pending related
liabilities;
- review related party transactions concerning guarantees and other
commitments given or received.
For three years, there has been considerable IT investment in the Group
reporting systems. This investment, which is intended to provide our teams
with management tools, allows the hierarchy to maintain appropriate control
and managers to monitor their income statements, balance sheets and cash
flows. Monthly reporting allows Group management to control and manage the
risks.
Moreover, the risk and legal managers at local and Group level work
up-front with operational teams. They seek to ensure that contractual
negotiations are conducted equitably ; that risks are limited to
contractual service obligations with a cap and a deadline ; that the
appropriate risk cover is in place and that all other adequate measures are
taken to transfer the risk.
7.1 Risk Factors
A) Social risks
As far as we are aware, the Group is not exposed to any
particular labor risks other than those in the normal course of
business for an international company of its size.
Moreover, the Group follows a prevention and security policy.
B) Environmental risks
Sodexho is perfectly aware of the impact its business can have on
the environment. Far from minimizing its importance, the Group
does its utmost to control these impacts in order to be able to
reduce them as much as possible.
The environmental impact of Sodexho's activity in relation to its
customers is comparable with that of private individuals and
mainly results from: - water and energy that is used for
operating our restaurants, for preparing meals and cleaning ; and
- waste accumulated from the preparation of meals and cleaning
(packaging, organic matter, grease and soap residue).
o Water and Energy Consumption
The energy we use is provided by our clients and can be
electricity or natural gas, or the two combined. Concerned about
the increasing scarcity of fossil fuel and drinking water
reserves, Sodexho actively tries to identify means for reducing
water and energy consumption in our units.
To this effect, Sodexho's engineering services provide their
expertise and actively participate in the reduction of water and
energy consumption by : - selecting cooking and cleaning
equipment which function with a reduced level of water and/or
energy ; - systematically using devices which automatically limit
the use of resources (programs, timers, etc.) ; and - using
heating pumps and recuperating residual water
This equipment is properly and regularly maintained to prolong
its useful life in an optimal operational state, actively
contributing towards preserving the environment.
Unit management educates its team members on the proper use of
equipment, which significantly reduces the consumption of water
and energy used in units.
Wastewater is treated before being disposed of either by using
automatic dispensers for cleaning products or different retention
systems for separating grease, starchy products, etc. once the
water has been used. These methods are regularly applied,
optimizing both their efficiency and facilitating the treatment
of disposed wastewater for the local water department.
o Waste treatment
Waste produced by Sodexho is essentially a result of products
used in the preparation of meals and corresponding residue, as
well as from the different types of cleaning.
Waste from packaging is almost equivalent to that of organic
matter (the two combined represent 95% of the overall waste, the
remainder being comprised of waste from grease and soap residue).
Packaging is essentially paper, cardboard, plastic, glass, metal
and wood.
The past few years, Sodexho has done its utmost to systematically
comply with waste removal plans. Increasingly, however,
environmental concerns have pushed Sodexho to encourage partners
and suppliers to : - significantly reduce their inner and outer
packaging ; - give priority to recyclable or recycled supplies ;
and - recuperate deposits (palettes, crates, etc.).
For all Sodexho units in France, oil waste is collected and
recycled by a single, referenced service provider registered with
the State.
Locally, whenever possible, Sodexho disposes of its organic
matter for it to be used for composting or processed using the
waste methanization process.
Moreover, Sodexho is committed to analyzing and reducing the
following types of pollution that may be caused by its activities
:
- noise pollution
- visual pollution
- olfactory pollution
Given the issues involved in protecting the environment, Sodexho
does its utmost to continually identify and reduce risks related
to our activity, as well as provide concrete solutions for our
clients and the public in general.
These measures for preserving the environment have been given
significant recognition. Sodexho received official sponsorship
from the Secretary of State for Sustainable Development following
certification awarded by the Regional Environmental Department of
the Southeast region of France during the recent Sustainable
Development week.
In addition, Sodexho is proud to be one of the main private
partners of the Eco Maires, a mayors' association dedicated to
the environment and sustainable development.
The Group continues to develop a policy of environmental risk
prevention and is committed on behalf of our clients, notably by
our involvement in Sustainable Development, to preserving the
natural sites where they operate.
Moreover, the Group limits its contractual risks by incorporating
clauses which limit our responsibilities or the transfer of
risks.
C) Legal risks
The nature of the Group's activities and its international
presence subject us to numerous regulations : labor, competition,
company environmental, health and safety laws.
The Group has set up the required frameworks to ensure that we
abide by these laws. Moreover, these rules may have a direct
impact on services. For example, our Service Vouchers and Cards
activity is subject to national tax and labor laws. Important
changes in the laws permitting the issue of vouchers and cards
can create new contractual opportunities or can jeopardize
existing contracts.
The Group's activity is not dependant on any patents or brand
licenses for which it is not the rightful owner.
D) Risks related to our business
Types of contracts in the Food and Management Services activity :
In the Food and Management Services activity, contractual
relations may be divided into two main categories: Profit and
Loss Contracts and Management Fee contracts. These two contract
types are differentiated by the level of commercial risk involved
taken by the service provider.
For Profit and Loss contracts, the service provider receives a
set fee for services provided and is responsible for the cost of
services provided. Management fee contracts generally include
clauses for periodic indexation.
For Management Fee contracts, clients are responsible either
directly or by reimbursement, for aggregate cost for services
provided, irrespective of customer frequency. Fixed or variable
commissions are paid to the service provider.
In practice, our contracts include characteristics from both of
these categories. We estimate that more than 60% of our contracts
have similar characteristics to profit and loss contracts.
E) Exchange and interest rate risk
Sodexho Alliance uses derivative instruments to manage risks
related to interest rates and foreign exchange rate volatility.
Policies developed by the Board of Directors, the Chairman and
Chief Executive Officer and the Chief Financial Officer are
designed to avoid speculative risk and :
- hedge a significant majority of debt to fix interest rates ;
- cover foreign exchange volatility on borrowings by any
subsidiary expressed in foreign currencies ;
- manage and spread counterparty risk. Transactions can only be
entered into with counterparties that have an ISDA master
agreement or equivalent in place with the group company concerned
;
- limit the maturity of individual transactions to the
contractual term of the underlying borrowings being hedged ;
- limit forward currency purchasing agreements to cover food and
supply procurement costs (relevant in the remote site business)
to a maximum period of twelve months.
A description of all proposed transactions supported by a
financial and business analysis is submitted to the Chairman and
Chief Executive Officer and Group Chief Financial Officer, and as
appropriate, the Board of Directors. The Group's use of exchange
rate instruments are provided in the Consolidated Financial
Statements (Note 18).
o Sensitivity Analysis
A change in the value of the US dollar against that of the euro
of 10 % would have the following impact:
- EUR 563 million on Group revenues
- EUR 25 million on Group EBITA
- EUR 10 million on Group net income
A change in the value of Pound Sterling by 10 % against that of
the euro would have the following impact:
- EUR 149 million on Group revenue
- EUR 2 million on Group EBITA
- EUR (4) million on Group net income
7.2 Insurance and risk coverage
Sodexho Alliance applies an active policy for managing our risks
with the objective of reinforcing the protection of our
employees, our clients and preserving the Group's and our
shareholders' interests.
This strategy is comprised of the following priorities:
- Identify and evaluate risks associated with our various
activities,
- Develop a policy for reducing contractual risks by using
clauses that limit responsibility
- Take out insurance coverage, mainly for risks due to legal
liability for operations and products, as well as for accidents
in the workplace, particularly in North America.
These financial coverage programs are provided by highly rated
insurance companies.
Considering the financial risks and insurance coverage conditions
available, the amounts for guarantees and insurance are the same
as those granted to other companies of a similar size and with
similar activities to Sodexho.
The global cost for the principal insurance programs and risk
coverage for the Group is approximately EUR 95 million, of which
EUR 58 million is to cover risks for accidents in the workplace
(Workers Compensation) in the United States, Canada and
Australia.
Excluding " Workers Compensation," the global expense is EUR 37
million, or 0.32% of the consolidated revenues for fiscal 2003.
8 Social information
Following is social information pertaining to Sodexho's Food and Management
Services activity in France.
o Employment
As of August 31, 2003, employees for the Food and Management Services
activity totaled 29,382.
[OBJECT OMITTED]
Women represent 55 % of total employees.
Recruitments during the fiscal year, both through direct recruitment and
the transfer from fixed-term contracts to indefinite-term contracts, is
moving toward parity between women and men in the different employment
categories:
[OBJECT OMITTED]
The average age of employees is 40 years.
[OBJECT OMITTED]
Sodexho pursues an active policy of recruiting young employees in order to
facilitate their integration into the workforce by offering them the
possibility of joining an organization whose size can allow them to quickly
take on responsibility. Nearly half of the employees recruited during the
year were less than 30 years of age (49%) and 45% of the managers who were
less than 30 years of age were women.
o Recruiting
3,585 recruitments took place during fiscal 2003 : 1,560 were direct
recruitments with indefinite-length contracts, 1,030 were transfers from
fixed-term contracts to indefinite-length contracts and 995 employees were
transferred. In our field of activity, the transfer of employment contracts
is characteristic when the management of a unit is handed over from one
service provider to another. During the same period, 740 employees were
transferred to another service provider.
[OBJECT OMITTED]
As of August 31, 2003, 11 % of employees had indefinite-term contracts:
For the entire fiscal year, fixed-term contracts represents only 16% of
hours worked and temporary help 2%. This type of employment essentially
corresponds to temporary replacements and occasional increases in activity.
30,000 overtime hours were paid during the year which corresponds to 0.1%
of hours worked.
Employment protection
During the fiscal year, 789 dismissals were carried out of which 78 were
for financial reasons. In this second case, a Plan for Employment
Protection (PSE) was created during the final closing of two units (Matra
in Romorantin - Loir and Cher and AXA Training Center in Cantenac -
Gironde), as well as for the redeployment of activities at Carreau de
Rungis - Val de Marne.
These plans for employment protection helped 33 employees who might have
been dismissed for financial reasons, to accept a new position within the
company and 8 other employees were found positions elsewhere.
These plans for employment protection comprise of several measures,
notably:
- internal measures for avoiding dismissals: creating a center for internal
mobility, financial aid for geographic mobility, training new positions;
- outplacement support: creating a center for external mobility managed by
a specialized organization, financial aid for geographic mobility, for the
creation of a company or for voluntary departure;
- a specific measure for employees of 50 years of age and older: an
agreement with the Fonds National de l'Emploi.
o Working hours
In the largest Food and Management Services subsidiaries in France, as of
January 2000, a work week is composed of 34.87 hours.
31 % of the total employment is part-time:
[OBJECT OMITTED]
The average absenteeism rate based on the number of days absent is 9.9% for
all employees.
The top three reasons are illness (55%), unpaid vacation granted to
employees (12%) and work related or travel related accidents (9%).
o Compensation
The average salary of a full-time employee for the "Other staff" category
is EUR 17,213, which is 25 % higher than the minimum wage1. Following six
months of employment, no full-time employee receives less than EUR 14,854
per year, which is 8% higher than the minimum wage.
Compensation progressed 9% on average over the past three years for all
employees, which is an average 3% increase each year. In January 2000,
although all of our employees reduced their work time to a 35 hour week,
their salary continued to be based on a 39 hour week.
In terms of equality in the workplace, average compensation for women
employed full-time is equal to:
92.5 % compared with male managers 100 % compared with male supervisors
96.5 % compared with qualified, male staff 98.1 % compared with male
restaurant staff
Employee profit-sharing (chapter IV of volume IV of the French labor code)
Employee profit-sharing exists within the different subsidiaries of Sodexho
in France. The aggregate amount of employee profit-sharing granted during
fiscal 2003 is EUR 4.7 million. No other employee profit-sharing agreements
exist within the different subsidiaries of Sodexho in France.
Social security charges
As of August 31, 2003, for the category "Other staff", social security
charges for employees represented 21.66 % of compensation and employer
related social security charges equaled 39.42%.
o Collective agreements
Annual salary negotiations with union organizations are managed by
Sodexho's Food and Management Services segments in France.
In the Healthcare segment in France, an agreement was signed May 21, 2003
with union organizations in order to set up a "collective plan for required
healthcare expenses for `staff' employees" (additional clause number 8 in
the company agreements of December 18, 1990, registered with the
Departmental Division of Employment on August 8, 2003.)
o Hygiene and security
The frequency rate for work related accidents is 34.32; the rate of
severity is 1.43.
Handling and stock activities, as well as travel-related accidents are the
cause of one out of two work related accidents. One out of ten result from
a fall due to uneven flooring. The frequency rate for work related
accidents resulting from cooking equipment, pressurized equipment, electric
installations and hand held appliances is minimal.
In terms of our general security obligations :
- All new recruits receive initial training to learn about their position,
possible activity risks and measures that should be taken in the event of
an accident,
- As a service provider working on the client's premises, a Prevention Plan
is established with the client to evaluate risks and possible connections
between the two activities,
- A document entitled, "Professional Risk Evaluation", identifies possible
dangers, analyzes risks and presents preventative actions.
o Training
The total amount of expenses incurred for training for Sodexho's Food and
Management Services' subsidiaries in France represents 4% of aggregate
employee earnings4. Approximately 5,000 employees, which translates to more
than one employee out of five on average, are trained each year for a
duration of two days.
Professional training5 for women is proportional to their representation in
the employee population.
[OBJECT OMITTED]
Priority is given to using internal trainers, specifically for improving
our teams' skills in our different business. More than 100 managers and
supervisors regularly conduct training sessions (trainers, training
managers, functional or operational managers) as often as possible on site.
o Employment and placement of the disabled in the workforce
Sodexho's Food and Management Services' subsidiaries in France employee 510
disabled employees, of which 10 are managers and 50 are supervisors. The <<
Socio-Medical Establishments >> division manages and trains 200 disabled
employees in 40 units throughout France. These employees are officially
employed by either the Help Center for Work (Centre d'Aide pour le Travail)
or by a Protected Workshop (Atelier Protege).
o Workers' Council
0.52% of gross employee earnings is contributed to the Workers' Councils of
each legal entity in France.
9 Employee Profit Sharing
For the last five years, the Group has paid the following amounts as
employee profit sharing (expressed in millions of euro) :
2002-2003 2001-2002 2000-2001 1999-2000 1998-1999
8.3 8.1 8.0 6.2 5.1
--------------------------------------------------------------------------------
SODEXHO ALLIANCE
Statutory Financial Statements
--------------------------------------------------------------------------------
I INCOME STATEMENT
Year ended Year ended Year ended
August 31, August 31, August 31,
(In thousands of euro) 2003 2002 2001
REVENUES 65,742 81,445 77,091
Other income 62,599 46,409 55,272
Purchases (2,935) (2,622) (1,251)
Employee costs (16,699) (22,035) (23,416)
Other external charges (56,319) (60,966) (118,117)
Taxes, other than income taxes (3,528) (2,048) (3,479)
Depreciation and increase in provisions (3,939) (7,334) (5,680)
------- ------ --------
EARNINGS BEFORE INTEREST, EXCEPTIONAL ITEMS AND INCOME TAXES 44,921 32,849 (19,580)
Financial expense, net (973) (1,713) 139,678
Exceptional (expense)/income, net 14,162 (7,222) 715,887
Income taxes 21,152 34,846 19,092
------- ------ --------
NET INCOME 79,262 58,760 855,077
======= ====== ========
II balance sheet
ASSETS (in thousands of euro) August 31, 2003 August 31, 2002 August 31, 2001
FIXED AND INTANGIBLE ASSETS, NET
Intangible assets 3,484 16,314 20,121
Property, plant and equipment 6,013 6,733 7,539
Financial investments 4,246,367 4,158,957 3,619,380
------------- ------------ -------------
o Total fixed and intangible
assets, net 4,255,864 4,182,004 3,647,040
CURRENT AND OTHER ASSETS
Accounts receivable, net 23,869 35,758 30,290
Prepaid expenses, other
receivables and other assets 159,671 92,133 64,056
Marketable securities 84,080 140,864 46,479
Cash 15,530 21,425 158,892
------------- ------------ -------------
o Total current and other assets 283,150 290,180 299,717
TOTAL ASSETS 4,539,014 4,472,184 3,946,757
============= ============ ==============
SHAREHOLDERS' EQUITY AND LIABILITIES August 31, 2003 August 31, 2002 August 31, 2001
(in thousands of euro)
SHAREHOLDERS' EQUITY
Common stock 636,086 636,086 630,239
Additional paid in capital 1,185,728 1,185,725 1,137,052
Consolidated reserves 897,649 914,818 943,860
------------- ------------ -------------
o Total shareholders' equity 2,719,463 2,736,629 2,711,151
o Provisions for contingencies
and losses 12,709 16,602 10,497
LIABILITIES
Borrowings 1,763,450 1,644,563 1,155,948
Accounts payable 7,619 11,541 22,199
Other liabilities 35,773 62,849 46,962
------------- ------------ -------------
o Total liabilities 1,806,842 1,718,953 1,225,109
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES 4,539,014 4,472,184 3,946,757
============= ============ ==============
III STATEMENT OF CASH FLOW
(in thousands of euro) Fiscal year Fiscal year Fiscal year
2002-2003 2001-2002 2000-2001
OPERATING ACTIVITIES
Net income 79,262 58,760 855,077
Noncash items: depreciation
and provisions 19,288 37,330 (66,634)
Losses (gains) on disposals
and other, net of tax (28,784) (5,755) (717,362)
---------- -------- -----------
o Cash provided by operating
activities 69,766 90,735 71,081
Change in working capital
from operating activities (85,439) (32,825) (5,582)
---------- -------- -----------
o Net cash flow provided by (15,673) 57,910 65,499
operating activities
INVESTING ACTIVITIES
Tangible and intangible
fixed assets (158,156) (543,026) (2,189,748)
Fixed asset disposals 46,174 8,236 1,131,639
Change in other financial assets 0 456 230
Change in working capital from (2,414) (371) 536
investing activities
--------- ----------- -------------
o Net cash used in investing (114,396) (534,705) (1,057,343)
activities
FINANCING ACTIVITIES
Dividends paid to parent company
shareholders (96,431) (87,802) (74,886)
Increase in shareholders'
equity 4 54,520 1,014,305
Proceeds from borrowings 120,000 1,072,570 537,576
Repayment of borrowings 0 (610,146) 0
Change in bank overdrafts (1,113) 449 2,312
Change in working capital
from financing activities 31,499 18,877 (301,423)
--------- ----------- -------------
o Net cash provided by (used in)
financing activities 53,959 448,468 1,177,884
(DECREASE) INCREASE IN NET CASH,
CASH EQUIVALENTS AND MARKETABLE
SECURITIES (76,110) (28,327) 186,040
Net cash, cash equivalents
and marketable securities
as of beginning of period 162,291 205,371 19,559
Add: opening provisions 14,981 228 0
Net cash, cash equivalents
and marketable securities
as of end of period 99,610 162,291 205,371
Add: closing provisions 1,552 14,981 228
(DECREASE) INCREASE IN NET
CASH, CASH EQUIVALENTS AND
MARKETABLE SECURITIES (76,110) (28,327) 186,040
Notes to Statutory Financial Statements
IV SIGNIFICANT EVENTS DURING THE YEAR
Management companies
Between September 1, 2002 and March 1, 2003, Sodexho Alliance reorganized
its structure such that each business unit or activity is managed by a
dedicated management company.
This resulted in a transfer of personnel (120 employees), contracts and
fixed assets to the following management companies : Sodexho Continental
Europe, Sodexho Asia Pacific, Sodexho South America, Sodexho IS&T and
Universal Sodexho SA.
Purchase price complement from the sale of C.C.A.
Sodexho Alliance received a purchase price complement of EUR 28.6 million
in May 2003 in connection with the sale of its shares in Corrections
Corporation of America (C.C.A.) in fiscal 2001.
Share capital increase - Sodexho Holdings Limited
Sodexho Alliance made two capital contributions to its subsidiary Sodexho
Holdings Limited by converting two intercompany loans into equity. The two
transactions totaled EUR 125 million for 86,146,500 shares and occurred in
July and August 2003.
V SUMMARY OF SIGNIFICANT ACCOUNTING AND VALUATION POLICIES
The financial statements have been prepared in accordance with accounting
and valuation policies and standards specified in the 1999 general
accounting plan in accordance with rule 99-03 of the Comite de la
Reglementation Comptable.
The financial statements have been prepared using the same valuation and
presentation methods as in the prior year. However, the provision for
treasury shares of EUR 14,147,000 recorded during the prior year in
financial income has been released through exceptional income as an offset
to the losses recorded on our stock option transactions, in conformity with
the CNC opinion.
The financial statements are prepared using the historical cost method.
Amounts in the tables in the notes to the financial statements are
expressed in thousands of euro.
Amounts in the exceptional result are items which are not related to
ordinary activities, as well as certain items which are exceptional by
their nature but which relate to ordinary activities.
The balance sheet and income statement of Sodexho Alliance include amounts
for branches in France and French overseas territories and departments.
1 Fixed Assets
Fixed assets are valued either at their acquisition cost or at the
contribution value.
Depreciation is calculated using the straight line method based on the
asset's useful life. The straight line method is considered to
appropriately reflect the decline in the economic value of the assets.
Intangible fixed assets
Software is amortized between 4 to 5 years, based on its useful life.
Tangible fixed assets
The following straight line depreciation rates are used:
o Buildings 5%
o Facilities and fixtures 10% and 20%
o Plant and machinery between 10% and 25%
o Vehicles 25%
o Office and computer equipment 20% and 25%
o Other fixed assets 10%
Financial Investments
Shares in companies and other financial investments are recorded at their
acquisition cost or at the contribution value. At the end of the fiscal
year, a provision for depreciation is made when market value is less than
the value in the balance sheet.
The investment's market value is determined through considering the
revalued net equity, profitability, future prospects and utility value of
the subsidiary. The estimated market value may be higher than the net book
value of the share of net assets.
Receivables from investees are valued at face value and a diminution in
value is recorded when the market value is less than the book value.
2 Inventories
The value of raw materials and consumable items is based on
acquisition cost using the first in first out method. (If necessary,
inventories are provisioned in order to reflect their current value.)
3 Accounts receivable
Accounts receivable are valued at their nominal value, and are written
down when their market value is less than their gross book value.
4 Foreign currency transactions
Revenue and expenses incurred in foreign currencies are recorded at
the rate in effect on the transaction date. Foreign currency debts,
accounts receivable and cash recorded in the balance sheet are valued
at the closing rate of the fiscal year, with the exception of hedged
items. Unrealized exchange gains and losses resulting from conversion
of debts and accounts receivable are included in the balance sheet in
other assets and other liabilities. A provision for contingencies and
losses is recorded with respect to the unrealized exchange losses.
5 Retirement plan obligations
Retirement plan obligations pertaining to pensions or supplementary
retirement plans are included in the off-balance sheet commitments.
6 French tax consolidation
Sodexho Alliance is the holding company for French tax consolidation
purposes for our eligible French companies. Sodexho Alliance is the
only company liable for tax with respect to all of the French
subsidiaries. The subsidiaries calculate tax payable as if there were
no tax consolidation. Any tax savings or expense arising from the tax
consolidation is recorded in the accounts of Sodexho Alliance.
VI Analysis of net revenues
By activities (in thousands of euro)
o Food and management services 18,449
o Holding Company Services 42,534
o Other 4,759
---------
65,742
By geographic area
o Mainland France 55,666
o French Overseas Departments
and Territories 10,076
---------
65,742
VII Exceptional income
Sale of fixed assets 28,782
Intercompany receivables waiver (14,260)
Transactions involving stock option plans (6,937)
Other 6,577
---------
TOTAL 14,162
VIII Analysis of income taxes
Earnings before Income taxes Earnings after
income taxes income taxes
Operating profit 44,921 (16,229) 28,692
Net financial (expense)/income (973) 20,464 19,491
Net exceptional (expense)/income 14,162 16,917 31,079
------- ---------- ---------
Total 58,110 (1) 21,152 79,262
======= ========== =========
(1) This amount principally includes French group relief of EUR 19 million.
IX TANGIBLE AND INTANGIBLE FIXED ASSETS
Additions Disposals
August 31, during the during the August 31,
2002 fiscal year fiscal year 2003
o Intangible fixed assets 23,529 4,477 22,755 * 5,251
o Tangible fixed assets 13,541 669 1,527 * 12,683
o Financial investments
Investments 3,826,501 153,052 958 3,978,595
Loans related to investments 379,360 12,110 43,612 347,858
Other long-term investments 2,047 24 26 2,045
----------- ------------ ------------- -------------
o Total financial
investments 4,207,908 165,186 44,596 4,328,498
TOTAL 4,244,978 170,332 68,878 4,346,432
=========== ============ ============= ==============
* Assets sold to management companies, created during the fiscal year,
were recorded using the utility value.
Investments
Creation and acquisition of subsidiaries
During the fiscal year, Sodexho Alliance created the following
subsidiaries:
- Sodexho Management and Sodexho Polynesia, wholly owned by Sodexho
Alliance.
- Sodexho Euroasia of which 49% is owned by Sodexho Alliance and 51%
by Sodexho AO (Russia).
On December 18, 2002, Sodexho Alliance purchased 0.1364% of Sodexho
D.O.O. (Slovenia). As a result of this transaction, Sodexho Alliance
now holds 99.82% of this company.
On December 20, 2002, Sodexho Alliance acquired 9.95% of Sodexho
Portugal II Restauracao e Servicios from a third party, increasing its
investment in the company from 80.10% to 90.05%. On the same day,
Sodexho Alliance also increased its investment in Sodexho Sitios
Remotos de Peru to 99.99% by creating 531,300 shares and acquiring
180,377 shares.
On January 6, 2003, Sodexho Alliance purchased 26,500 shares from a
third party and now wholly owns Sodexho Scandinavian Holding AB.
On June 30, 2003, Sodexho Alliance purchased 161,966 shares of Sodexho
Maroc, which represents 99.99% of its capital, from Sodexho Pass
International.
Capital contributions
Sodexho Alliance made two capital contributions to its subsidiary
Sodexho Holdings Limited, through the conversion of its loan
receivable from the subsidiary. The two transactions totaled EUR 125
million for 86,146,500 shares and took place in July and August 2003.
Sodexho Alliance increased the share capital of the following
subsidiaries:
- Sodexho Australia, in November 2002, January and August 2003 for a
total of 4,000 shares.
- Universal Sodexho SA, in January 2003 for 70,472 shares.
- Sodexho Mexico, in February 2003 for 36,000,000 shares.
- Sodexho Chile, in July 2003 for 14,900 shares.
- Sodexho Venues Australia, in August 2003 for 3,500 shares.
The only variance in the percentage of shares held was for Sodexho
Chile which was increased from 99.44% to 99.61%.
Loans related to investments
Sodexho Alliance transferred the loan granted to Agecroft Prison
Management to Sodexho Holdings Limited for EUR 5,190,000.
Other decreases in loans related to investments are mainly loan
reimbursements from subsidiaries, notably Sodexho Inc. and Sodexho
Holdings Limited.
X DEPRECIATION AND AMORTIZATION
Depreciation & Depreciation &
amortization, Increase/expense amortization on amortization,
August 31, 2002 in fiscal year disposals August 31, 2003
Intangible fixed assets 7,215 963 6,411 1,767
Tangible fixed assets 6,808 1,340 1,478 6,670
--------- -------- --------- ----------
TOTAL 14,023 2,303 7,889 8,437
========= ======== ========= ==========
XI MATURITIES OF RECEIVABLES AND OTHER assets
RECEIVABLES AND OTHER ASSETS
Depreciation
Gross Less than More than and
amounts 1 year 1 year provisions Net Amount
Investments 3,978,595 0 3,978,595 81,512 3,897,083
Loans related to investments 347,858 2,204 345,654 481 347,377
Other investments 215 0 215 138 77
Loans 1,140 229 911 0 1,140
Deposits and guarantees 690 0 690 0 690
Sub-total of other financial assets 2,045 229 1,816 138 1,907
------------ -------- ------------ --------- ------------
TOTAL FINANCIAL ASSETS 4,328,498 2,433 4,326,065 82,131 4,246,367
Trade receivables and related accounts 24,072 24,072 0 203 23,869
Inventory 203 203 0 0 203
Advances and payments on account 238 238 0 0 238
Other operating receivables 3,150 3,150 0 191 2,959
Amounts owed to subsidiaries 141,849 141,849 0 2,257 139,592
Investments 12,438 12,438 0 0 12,438
Prepaid expenses 1,364 1,220 144 0 1,364
Deferred charges 6,533 4,747 1,786 3,929 2,604
Unrealized exchange rate difference 273 273 0 0 273
------------ -------- ------------ --------- ------------
Sub-total Prepaid expenses and other
receivables 166,048 160,189 1,930 6,377 159,671
------------ -------- ------------ --------- ------------
TOTAL 4,518,618 186,694 4,331,924 88,711 4,429,907
============ ======== ============ ========= ============
There are no bills of exchange included in receivables.
XII DEFERRED CHARGES
Deferred charges are comprised of:
DEFERRED CHARGES Accumulated
Gross amounts amortization Net amounts
August 31, 2003 August 31, 2003 August 31, 2003
Costs relating to the development
of the Sodexho Intranet
DURATION : 3 Years 590 582 8
Financing fees
DURATION : 5 Years 2,161 1,659 502
Costs for the 1999 bond issuance
DURATION : 10 Years 3,782 1,688 2,094
--------- --------- ---------
TOTAL 6,533 3,929 2,604
========= ========= =========
XIII ACCRUED INCOME
Financial investments 1,742
Trade receivables and related accounts 2,216
Other operating receivables 148
---------
Total 4,106
=========
XIV provisions
August 31, 2002 Charge in fiscal Release in August 31, 2003
year fiscal year
o Provisions for contingencies
and losses 16,602 6,419 10,312 12,709
o Provisions for diminution in
value
- of tangible fixed assets 0 0 0 0
- of financial investments 48,951 45,491 12,311 82,131
- Other 17,523 1,197 14,516 4,204
o Total provisions for
diminution in value
--------- --------- --------- --------
TOTAL 83,076 53,107 37,139 99,044
Nature of charges and releases :
- operating 634 457
- financial 46,483 27,422
- exceptional 5,990 9,260
At August 31, 2003, the principal provisions are:
o Net equity risk of subsidiaries 5,606
o Provision for the acquisition of treasury shares 3,302
o Provision for miscellaneous risks 2,354
o Provision for exchange losses 273
o Other (inferior to EUR 400,000) 1,174
o Provision for contingencies and expenses 12,709
Provision for treasury shares acquisition
As of August 31, 2003, 2,980,200 stock options have an exercise price
inferior to the quoted market price. Sodexho Alliance held 969,740 shares
at this date. A provision was therefore recorded in order to reflect
Sodexho Alliance's obligations relating to these stock option plans. The
provision represents the difference between the exercise price of the
options and the quoted market price for the Sodexho Alliance share as of
August 31, 2003 for the remaining shares to be purchased.
This provision amounts to EUR 3,301,681.
o Provision for investments and related loans:
Sodexho Awards Company 39,679
Sodexho Venues Australia 14,054
Sodexho Australia 5,029
Gardner Merchant Groupe France 3,899
Sodexho Mexico 3,140
Sodexho Prestige 2,645
Stadium Australia Management Limited 2,562
Other (inferior to EUR 2,000,000) 11,123
Provisions for financial investments 82,131
o Provision for depreciation of current assets:
Amounts owed by subsidiaries 1,794
Provision for mutual funds 935
Provision for treasury shares 617
Other (inferior to EUR 900,000) 858
Other provisions 4,204
XV Deposits and marketable securities
Marketable securities include :
- Mutual funds at their acquisition value amounting to EUR 61,743,000.
Their value, based on the market price on August 31, 2003 is EUR
60,808,000. A total amount of EUR 935,000 was therefore provisioned on
August 31, 2003.
- 969,740 treasury shares held by Sodexho Alliance in connection with the
stock option plans and having an historical value of EUR 23,889,000. A
total of EUR 617,000 was provisioned and corresponds to the difference
between the exercise price of the option and the shares' historical value
in the accounts.
- Table of treasury share movements for the fiscal year
August 31, 2002 Acquisitions Disposals August 31, 2003
Number of treasury shares 937,740 969,740 (937,740) 969,740
Acquisition value / Sale value 40,455 23,889 (40,455) 23,889
The capital loss on the sale of the shares was partially compensated by the
release of the provision recorded in fiscal 2002.
XVI prepaid expenses
Prepaid expenses are as follows :
Insurance 736
Rent and related charges 228
Fees 169
Equipment rental 124
Other 107
-------
Total 1,364
=======
XVII UNREALIZED EXCHANGE DIFFERENCES Fully provided unrealized losses
amount to EUR 273,000.
Unrealized gains amount to EUR 216,000.
The unrealized exchange loss has been fully provisioned.
XVIII SHAREHOLDERS' EQUITY
7 Common stock
Number of shares Amount in euro
As of August 31, 2002 159,021,416 636,085,664
o Conversion of 9 of the 1996 warrants 149 596
--------------- ---------------
As of August 31, 2003 159,021,565 636,086,260
=============== ===============
At August 31, 2003, the common stock totaled EUR 636,086,260 and included
11,339,209 shares with double voting rights.
8 Change in shareholders' equity
(in thousands of euro)
o Shareholders' equity at close
of previous fiscal year 2,736,629
o Share capital increase 3
o Dividend payments (97,003)
o Dividend paid on treasury shares 572
o Net income for the year 79,262
---------
Shareholders' equity at close of fiscal year 2,719,463
=========
XIX maturities of liabilities
BORROWINGS AND OTHER LIABILITIES
Gross Amounts From 1 to 5 years More than 5 years
Bonds 1,641,386 341,386 1,300,000
Bank borrowings 2,050 2,050
Investment debt 120,000 120,000
Other financial debt 14 0 14
------------ ---------- -------------
Sub-total of borrowings 1,763,450 463,436 1,300,014
Accounts payable 7,619 7,619
Client advances 1,619 1,619
Other payables 23,264 23,264
Amounts owed to subsidiaries 8,599 8,599
Fixed assets payable 1,961 1,961
Income tax 29 29
Deferred income 85 85
Unrealized foreign exchange 216 216
rate difference
------------ ----------
Sub-total of other liabilities
and adjustment accounts 35,773 35,773
TOTAL 1,806,842 506,828 1,300,014
=========== ========= ===========
There are no bills of exchange included in payables.
XX Bonds
1996 Bonds
On May 22, 1996, SODEXHO ALLIANCE issued 400,000 bonds with a nominal
value of EUR 762.25 each, representing a total of EUR 304,898,000 (FRF
2 billion). Each bond carries one warrant, which after the share
capital increases in December 1997 and April 1998, entitles the bearer
to purchase 16.88 shares for EUR 411.61 (FRF 2,700).
The bonds will be fully redeemable at par on June 7, 2004. The bonds
carry interest at six percent per annum, which is payable in full on
June 7 annually. There were 400,000 bonds and 374,773 warrants
outstanding at August 31, 2003.
March 1999 Bonds
On March 16, 1999, SODEXHO ALLIANCE issued 300,000 fixed-rate bonds
with a nominal value of EUR 1,000 each, representing a total of EUR
300 million.
The bonds will be fully redeemable at par on March 16, 2009.The bonds
carry interest at 4.625% per annum, which is payable in full on March
16 annually, and commenced on March 16, 2000.
There were 300,000 bonds outstanding at August 31, 2003.
March 2002 Bonds
On March 25, 2002, SODEXHO ALLIANCE issued fixed rate bonds with
nominal values of EUR 10,000 and EUR 100,000, representing a total of
EUR 1 billion.
The bonds carry interest at 5.875% per annum, which is payable in full
on March 25 annually, commencing on March 25, 2003.
The bonds will be fully redeemable at par on March 25, 2009.
XXI Market quotes
(in euro) August 31, 2003 August 31, 2002
Shares 26.68 29.90
6% bonds - June 1996 786.58 788.64
1996 warrants - June 1996 63.10 145.80
4.625% bonds - March 1999 1,014.11 974.19
5.875% bonds - March 2002 (1) 107.00 % 102.70 %
(1) amount expressed as a percentage of the nominal value of the shares (EUR
10,000 or EUR 100,000), excluding accrued coupons interest.
XXII ACCRUED EXPENSES
Debt 36,488
Accounts payable 2,252
Tax, payroll and social security payables 8,174
Other payables 46
----------
Total 49,960
==========
XXIII deferred income Deferred income of EUR 85,000 represents services to be
rendered.
XXIV Capital leases
Construction Other tangible Total
fixed assets
Original cost 9,942 2,453 12,395
Acquisitions 176 1,207 1,383
Disposals 0 (309) (309)
---------- ---------- ----------
o Total 10,118 3,351 13,469
DEPRECIATION
Accumulated depreciation
August 31, 2002 3,070 2,013 5,083
Disposals 0 (309) (309)
Charge for the
fiscal year 917 842 1,759
------- --------- ---------
o Total 3,987 2,546 6,533
LEASE PAYMENTS SETTLE TO DATE
Accumulated depreciation
August 31, 2002 5,011 2,224 7,235
Disposals 0 (353) (353)
Charge for the period 1,541 908 2,449
------- --------- ---------
o Total 6,552 2,779 9,331
OUTSTANDING LEASE PAYMENTS
Less than one year 3,000 461 3,461
More than one year
and less than five
years 4,736 367 5,103
More than five years 0 0 0
------- --------- ---------
o Total 7,736 828 8,564
RESIDUAL VALUES
Less than one year 0 1 1
More than one year 0 0 0
and less than
five years
More than five years 0 0 0
o Total 0 1 1
------- --------- ---------
AMOUNT EXPENSED DURING
THE YEAR 1,537 901 2,438
======= ========= =========
XXV Related company information
Subsidiaries Associated and Non-associated
non-consolidated companies
companies
ASSETS - Gross amounts
Investments 3,967,920 10,675 0
Loans related to investments 347,858 0 0
Other investments 76 0 139
Down-payments from clients 3 0 0
Trade receivables and related accounts 17,654 238 0
Other operating receivables 70 0 0
Amounts owed by subsidiaries 132,423 528 0
Investments 0 0 0
LIABILITIES
Payments received on accounts 0 0 0
Accounts payable 2,873 0 0
Other operating payables 0 0 0
Other non-operating payables 0 0 0
Amounts owed to subsidiaries 18,439 2 0
INCOME STATEMENT
Financial income 118,867 1,475 0
Financial expense 49,799 1,264 0
Subsidiaries : fully consolidated subsidiaries.
Associated and non-consolidated companies : companies consolidated using the
equity method and non-consolidated subsidiaries held at between 10% and 50%.
Non-associated companies : other companies with a holding of less than 10 %.
XXVI financial commitments
Commitments given by Sodexho Alliance
August 31, 2003 August 31, 2002
Commitments relating to operating agreements 263,671 101,647
Commitments relating to indebtedness 963,359 1 198,885
Pension commitments 582 819
Other commitments 930 2,130
Almost all commitments relating to indebtedness are for financial guarantees
granted to Sodexho Alliance subsidiaries.
Pledged shares
Sodexho Alliance pledged 207,056,801 of its ordinary shares in Sodexho Holdings
Limited to the company Astilbe S.A.S. to secure loans granted by this subsidiary
to Sodexho Holdings Limited and Sodexho Services Group limited. As of August 31,
2003, these ordinary shares have a net book value of EUR 276.9 million.
August 31, 2003 August 31, 2002
Commitments received by
Sodexho Alliance 1,604,898 1,607,523
Sodexho, Inc. has guaranteed certain of Sodexho Alliance's financial borrowings.
Financial instrument commitments
No new financial commitments were contracted by Sodexho Alliance during the
fiscal year. On-going commitments are:
Swap
Interest Interest Swap Market
Nature Effective Maturity Notional rate rate exchange value August
date date Amount paid received rate 31, 2003
Interest rate swap October 1999 August 2004 EUR 68,000,000 Libor 6 months 5.20 % - EUR 1,927,000
Cross-currency swap
on a loan for Sodexho, March 2003 March 2007 $291,700,000 6.5775 % 1.129(euro)/$ EUR 67,876,000
Inc. over 5 years. EUR 329,493,000 6.325 %
Cross-currency swap on
a loan between two (pound) 60,000,000 6.925 % - 1.554(euro)/(pound) EUR 7,003,000
subsidiaries.(1) October 1999 August 2004 EUR 93,240,000 (structured) 5.25 %
(1) A mirror swap was arranged based on the same conditions with Sodexho
Holdings Limited.
XXVII Principal deferred tax assets and liabilities
Liabilities
o Deferred charges 2,604
o Share of expenses on parent company dividends receivable 16
Assets
o Provision for bad debts 14
o Other provisions not currently deductible 4,526
The deferred tax asset arising from this deferred tax base is EUR 680,000.
XXVIII Pension commitments
SODEXHO ALLIANCE has no commitments in relation to pensions, supplementary
retirement payments and other related payments to its employees.
Upon the retirement of an employee, the company pays the amounts agreed in
the company agreement.
Amounts payable on retirement have been calculated based on the amounts
earned as of the end of the fiscal year, including consideration of assumed
final salaries and assumptions with respect to discounting and the
employees' term of employment with the company.
These commitments, which have not been provided for in the statutory
financial statements, are evaluated at EUR 582,000.
This is lower than the amount disclosed as of August 31, 2002 and is a
result of the transfer of Sodexho Alliance employees to the management
companies during the fiscal year.
XXIX COMPENSATION of Directors
The amount allocated as attendance fees to directors during the fiscal year is
EUR 118,000.
XXX French tax consolidation
As holding company of a group of French companies, SODEXHO ALLIANCE elected
to follow the French tax regime on August 30, 1988.
The subsidiaries calculate tax payable as if there were no tax
consolidation.
Within the tax consolidation agreement between SODEXHO ALLIANCE and its
subsidiaries, the tax savings arising from tax losses of the subsidiaries
are refunded to the subsidiary if utilized before the end of the loss
carry-forward period.
The amount of losses at August 31, 2003 for fiscal 2003 was EUR 22,423,000,
resulting in refundable tax of EUR 7,920,000.
Losses imputed to and utilized by subsidiaries in fiscal 2003 amounted to
EUR 2,958,000, corresponding to a tax credit of EUR 1,023,000.
Losses which can no longer be utilized amounted to EUR 2,696,000.
Outstanding unutilized losses at August 31, 2003 amounted to EUR
65,134,000, corresponding to a tax credit of EUR 23,054,000.
XXXI Average number of employees during fiscal year
Managers 103
Supervisors 44
Other staff 117
Apprentices 3
-------
Total 267
=======
The average number of employees during the fiscal year is based on the
average number of employees present at the end of each quarter.
XXXII Consolidation
SODEXHO ALLIANCE is consolidated in the accounts of BELLON SA, which has
its headquarters at 5, place de la Joliette in Marseilles.
XXXIII TABLE OF SUBSIDIARIES AND ASSOCIATES
The exchange rates used in the table of subsidiaries and associates are the
following:
Country Currency Unit = Average rate Euro
AFRICA CFA franc (thousands) 1 CFA = 1.5245 1.5245
ALGERIA Dinar (thousands) 1 DZD = 11.7848 11.7874
ARGENTINA Peso 1 ARS = 0.2953 0.3099
AUSTRALIA Dollar 1 AUD = 0.5599 0.5878
CHILE Peso (thousands) 1 CLP = 1.3000 1.3085
CZECH REPUBLIC Czech crown 1 CZK = 31.8569 30.8261
HUNGARY Forint (thousands) 1 HUF = 4.0451 3.8841
JAPAN Yen (thousands) 1 JPY = 7.8120 7.8579
KUWEIT Dinar 1 KWD = 3.1219 3.0750
MALAYSIA Ringgit 1 MYR = 0.2463 0.2412
MexiCO Peso 1 MXN = 0.0895 0.0829
NIGERIA Naira (thousands) 1 NGN = 7.4053 7.1608
POLAND Zloty 1 PLN = 0.2376 0.2294
POLYNESIA CFP franc 1 XPF = 0.00838 0.00838
QATAR Rial 1 QAR = 0.2570 0.2514
SAUDI ARABIA Rial 1 SAR = 0.2495 0.2440
SINGAPORE Dollar 1 SGD = 0.5330 0.5219
SLOVENIA Tolar (thousands) 1 SIT = 4.3196 4.2534
SOUTH AFRICA Rand 1 ZAR = 0.1109 0.1249
SWEDEN Crown 1 SEK = 0.1091 0.1083
TANZANIA Shilling (thousands) 1 TZS = 0.9251 0.8781
UNITED KINGDOM Pound 1 GBP = 1.4923 1.4438
UNITED STATES
OF AMERICA Dollar 1 USD = 0.93565 0.9152
EURO AREA Euro 1 EUR = 1.0000 1.0000
(In thousands of euro)
Profit
Percent- Loans Revenues from Dividends
Other age and Amount from most most received
share- of advances of recent recent during
Common holders' shares Book value of given, guarantees fiscal fiscal fiscal
stock equity* held investment net given year* year* year
Net book
Cost value
DETAILED INFORMATION
o French
subsidiaries
ASTILBE 302,488 (3,182) 85.71 % 259,275 259,275 8,642 9,751 9,161
UNIVERSAL
SODEXHO SA 31,712 20,596 99.99 % 31,400 31,400 (1,092)
GARDNER MERCHANT
GROUPE 34,330 (33,906) 99.99 % 12,348 8,449 3 17 279
HOLDING ALTYS 8,016 5,989 100.00 % 8,016 8,016 4,095
HOLDING SOGERES 6,098 7,454 100.00 % 107,277 107,277 7,595 (246)
SODEXHO IS&T 6,500 (21) 100.00 % 6,500 6,500 413
SOCIETE FRANCAISE DE
RESTAURATION 10,643 (2,125) 93.49 % 12,553 12,553 463,786 11,871 5,286
SOCIETE FRANCAISE DE
RESTAURATION ET
SERVICES 1,899 825 86.20 % 9,649 9,649 180,049 561
SOFINSOD 21,111 63,402 99.99 % 71,765 71,765 13,052 14,012
SODEXHO PASS
INTERNATIONAL 87,780 (28,239) 88.24 % 77,458 77,458 13,690 223 27,075 16,557
o French equity
investees
SOGERES 1,932 135,412 39.98 % 72,570 72,570 947 329,217 7,305 2,484
o Foreign subsidiaries
SODEXHO HOLDINGS
LIMITED 451,630 298,959 75.39 % 433,176 433,176 (22,943)
CIE FINANCIERE AURORE
INTERNATIONAL 58,007 86,586 99.99 % 68,918 68,918 449 6,200
SODEXHO SCANDINAVIAN
HOLDING AB 57,421 (22,555) 100.00 % 86,089 86,089 63,108 346,643 4,168
SODEXHO ESPANA 3,467 1,387 98.86 % 26,804 26,804 87,998 (474)
SODEXHO CATERING
& SERVICES GMBH 1,022 3,523 100.00 % 37,507 37,507 2,560 109,931 2,983
UK DETENTION SERVICES 22 5,807 100.00 % 9,430 9,430 73,346 22,324 1,779 2,640
SODEXHO BELGIQUE 4,299 8,561 92.84 % 26,887 26,887 171,580 3,935 3,195
SODEXHO VENUES
AUSTRALIA PTY 16,404 (8,307) 100.00 % 20,088 6,034 7,506 (1,562)
SODEXHO AUSTRALIA 28,077 (4,395) 100.00 % 36,378 31,349 11,169 49,466 (332)
SODEXHO, INC. 2 1,444,772 100.00 % 2,377,539 2,377,539 330,929 867,977 5,362,413 102,521 13,785
SODEXHO CHILE 9 8 99.61 % 10,911 10,911 3,544 107,965 262
SODEXHO MEXICO 10,192 (5,052) 99.99 % 8,673 5,533 18,852 225
SODEXHO AWARDS 20 36,255 100.00 % 83,997 44,318 (1,125)
-------- -------- ---------- ---------- ---------- -------- ----------- ----------- -------------- ----------
TOTAL
o Other French subsidiaries 11,404 8,169 128,927 1,989 10,670
o Other foreign
subsidiaries and French
Overseas Departments and
Territories 62,185 52,649 762 36,467 11,068
o Other French associates 382
o Other foreign associates
and French Overseas
Departments and Territories 9,798 6,858 128 152,729 103
----------- ----------- --------- ----------- ----------
TOTAL 3,978,595 3,897,083 476,986 1,227,908 95,161
* Based on the Group's consolidated accounts.
--------------------------------------------------------------------------------
Statutory Auditor's Report
on the Financial Statements
--------------------------------------------------------------------------------
General report
Ladies and Gentlemen,
In compliance with the assignment entrusted to us by your General Meeting we
hereby report to you, for the year ended 31 August 2003 on:
- the audit of theaccompanying financial statements of Sodexho Alliance S.A.,in
euro,
- the specific verifications and information required by law.
These financial statements have been approved by the Board. Our role is to
express an opinion on these financial statements based on our audit.
1. Opinion on the financial statements
We conducted our audit in accordance with the professional standards applicable
in France. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements give a true and fair view of the
company's financial position and its assets and liabilities as of 31 August
2003, and of the results of its operations for the year then ended in accordance
with the accounting rules and principles applicable in France.
In accordance with article L225-235 of the French Commercial Code resulting from
the Financial Security Law (loi de securite financiere), it is the duty of the
auditors to justify their assessments in the context of their opinion. In the
absence of guidance from our professional body, we draw attention to the
following matters:
- The assets of your company being primarily composed of financial investments,
we ensured that the market values were at least equal to their carrying values
appearing in the balance sheet. We consider that the criteria selected to
determine market values, in accordance with the accounting policy set out in
paragraph V-1 of the notes to the financial statements, are relevant.
- The accounting change described in paragraph V of the notes to the
consolidated financial statements complies with the presentation recommended by
the Conseil National de la Comptabilite (National Accounting Board).
2. Specific verifications and information
We have also performed the specific verifications required by law in accordance
with the professional standards applicable in France. We have no comments as to
the fair presentation and the conformity with the financial statements of the
information given in the management report of the Board of Directors, and in the
documents addressed to the shareholders with respect to the financial position
and the financial statements.
In accordance with the law, we verified that the management report contains the
appropriate disclosures as to the percentage interests and votes held by
shareholders and disclosures as to the acquisition of shares and controlling
interests.
Paris and Paris La Defense, November 13, 2003
Statutory Auditors
PricewaterhouseCoopers KPMG Audit
Department of KPMG SA
Gerard Dantheny Hubert Toth Patrick-Hubert Petit
This is a free translation of the original French text for information purposes
only.
Special Report
Ladies and Gentlemen,
In our capacity as Statutory Auditor, we hereby report to shareholders on
regulated agreements.
In accordance with Article L. 225-40 of the Commercial Code, we have been
informed of the following agreements authorized by the Board of Directors.
Our responsibility does not include identifying any undisclosed agreements. We
are required to report to shareholders, based on the information provided, about
the main terms and conditions of agreements that have been disclosed to us,
without commenting on their relevance or substance. Under the provisions of
Article 92 of the March 23, 1967 decree, it is the responsibility of
shareholders to determine whether the agreements are appropriate and should be
approved.
We have not been informed of any new agreement designated in Article L.225.38 of
the Commercial CODE.
In application of the decree of March 23, 1967, we were also advised of the
following agreements entered into in prior years, which remained in force during
the year..
>> Contract for assistance and advisory services between Bellon S.A. and Sodexho
Alliance. Directors concerned: Pierre Bellon, Remi Baudin, Bernard Bellon,
Francois-Xavier Bellon, Sophie Clamens, Nathalie Szabo and Astrid Bellon. During
2002-2003, Bellon S.A. invoiced Sodexho Alliance EUR 2,428,000 excluding VAT.
>> An agreement between Sodexho Alliance and Patrice Douce, Director, concerning
the management of seminars organized by Sodexho Management Institute. Payments
by Sodexho Alliance to Patrice Douce under this agreement for 2002-2003 amounted
to EUR 32,260.
In respect of the sale agreement of C.C.A. shares to Latonia SA, a subsidiary of
Rolaco of which Mr. Paul Jeanbart is board member, approved in 2000-2001,
Sodexho Alliance received EUR 28,600,000 related to a surplus of the price as
agreed in the above-mentioned agreement.
We conducted our review in accordance with the professional standards applied in
France. Those standards require that we carry out the necessary procedures to
verify the consistency of the information disclosed to us with the source
documents.
November 13, 2003
The Statutory Auditors
PricewaterhouseCoopers KPMG Audit
Gerard Dantheny Hubert Toth Patrick-Hubert Petit
This is a free translation of the original French text for information purposes
only.
ADDITIONAL INFORMATION regarding the statutory financial statements
1 Company five year financial summary
(in euro) 2003 (1) 2002 2001 2000 1999
SHARE CAPITAL AT CLOSE OF FISCAL YEAR
Common stock 636,086,260 636,085,664 630,238,616 537,400,464 535,931,152
Number of ordinary shares outstanding 159,021,565 159,021,416 157,559,654 33,587,529 33,495,697
Number of preferred shares outstanding - - - -
(without voting rights)
Maximum number of potential additional
common shares
o Through conversion of bonds - - - -
o Through exercise of warrants and
options
- Warrants 6,243,718 6,243,868 6,297,613 1,619,042 1,619,058
- Options 93,248 107,563 162,221 202,512 222,928
ACTIVITY AND RESULTS OF OPERATIONS FOR THE FISCAL YEAR
Revenues 65,741,805 81,445,451 77,091,292 80,619,887 82,542,128
Earnings before income tax, employee
profit sharing and increase in
amortization and provisions 77,398,525 61,644,829 769,352,263 72,493,446 126,963,010
Income tax 21,151,093 (34,846,665) (19,090,835) (288,736) (1,163,064)
Employee profit sharing - - - - -
Earnings after income tax, employee
profit sharing and increase in
amortization and provisions 79,261,607 58,760,428 855,076,573 (15,222,658) 114,772,060
Distributed net income 97,003,155 97,003,064 89,009,481 75,236,065 59,622,338
EARNINGS PER SHARE
Earnings after income tax and employee 0.62 0.61 5.00 2.17 3.83
profit sharing but before increase in
amortization and provisions
Earnings after income tax and employee 0.50 0.37 5.43 (0.45) 3.43
profit sharing and increase in
amortization and provisions
Net dividend per share (in euro) 0.61 0.61 0.56 2.24 1.78
EMPLOYEES
Average number of employees during the 267 333 300 340 536
fiscal year
Salaries paid in fiscal year 11,939,190 15,786,029 16,444,883 16,523,680 22,300,872
Amounts paid during the year for social 4,759,799 6,249,154 6,971,470 6,890,952 8,687,036
charges
(1) Subject to shareholder approval at the Annual Meeting on February 3, 2004.
2 Distribution of earnings
As of and for the year ended August
(in thousands of euro) 2003 (1) 2002 2001 2000 1999
Net income 79,262 58,760 855,077 (15,223) 114,772
Unallocated earnings brought forward 701,934 739,555 13,194 103,531 54,120
Unallocated retained earnings brought 573 1,207 (2) 350 (2) 122 (2) 0
forward
Increase in legal reserve 0 (585) (40,056) 0 (5,739)
Increase in long-term capital gains 0 0 0 0 0
reserve
Decrease in long-term capital gains 0 0 0 0 0
reserve
DISTRIBUTABLE EARNINGS 781,769 798,937 828,565 88,430 163,153
Payment of net dividend 97,003 97,003 89,010 75,236 59,622
Distribution tax 0 0 0 0 0
Reserves 0 0 0 0 0
Retained earnings 684,766 701,934 739,555 13,194 103,531
NUMBER OF COMMON SHARES 159,021,565 159,021,416 157,559,654 33,587,529 33,495,697
NUMBER OF SHARES WITH DIVIDEND RIGHTS 159,021,565 159,021,416 158,945,502(3) 33,587,529 33,495,697
EARNINGS PER SHARE (in euro) 0.50 0.37 5.43 - 3.43
(1)Subject to shareholder approval at the Annual Meeting on February 3, 2004.
(2) Dividends received on Sodexho Alliance treasury shares during the fiscal
year
(3) Includes 1,385,848 shares created after the balance sheet date for the
Alliance International Employee Stock Option Plan and carrying dividend rights
from September 1, 2000
3 Related Party Transactions
Two existing contracts were continued during fiscal 2003:
- Contract for assistance and advisory services between Bellon S.A. and Sodexho
Alliance. Directors concerned: Pierre Bellon, Remi Baudin, Bernard
Bellon, Francois-Xavier Bellon, Sophie Clamens, Nathalie Szabo and Astrid
Bellon. During fiscal 2003, Bellon S.A. invoiced Sodexho Alliance EUR 2,428,000
excluding VAT.
- An agreement was concluded between Sodexho Alliance and Patrice Douce,
Director, concerning the management of seminars organized by Sodexho Management
Institute. Payments by Sodexho Alliance to Patrice Douce under this agreement
for fiscal 2003 amounted to EUR 32,260 excluding VAT.
In addition, pursuant to the agreement to sell C.C.A. shares to LATONIA SA, a
subsidiary of ROLACO of which Mr. Paul JEANBART is a director, authorized during
fiscal 2001, SODEXHO ALLIANCE received a purchase price complement of EUR 28.6
million during fiscal 2003.
General information about SODEXHO ALLIANCE and its issued capital
--------------------------------------------------------------------------------
1 General information about SODEXHO ALLIANCE
--------------------------------------------------------------------------------
1.1 Legal name, headquarters
Legal name: Sodexho Alliance SA
Registered office: 3 Avenue Newton, 78180 Montigny-le-Bretonneux, France
1.2 Legal form
Sodexho Alliance is a societe anonyme (joint-stock corporation), governed by
articles L.210-1 to L.247-9 of the French Commercial Code and by Decree 67-236
of March 23, 1967.
1.3 Nationality
French
1.4 Duration (article 5 of the bylaws)
"The Company's duration is 99 years from December 31, 1974, subject to extension
or earlier winding up."
Term: December 30, 2073.
1.5 Purpose (article 2 of the bylaws)
"The purpose of the Company shall be, in France, in the overseas territories and
abroad, directly or indirectly, either on behalf of others, or on its own or
through partnerships with others,
- the study and carrying out of all services to be performed in connection with
contract catering,
- running all restaurants, bars, hotels and in general all business related to
catering, hostelry, tourism, leisure and services, their property and financing,
- providing all or part of the relevant services connected with cleaning and
management of sites, or office, commercial, industry, leisure, health and
education buildings, and services connected with cleaning and management of all
or part of facilities included in the buildings hereof,
- providing installation, maintenance, repair and replacement services related
to any type of facilities,
- the economic, financial and technical study of all projects and services
connected with the performance, organization and operation of the above defined
businesses and specifically, all transactions involving building and all
opinions and assistance connected hereof, - the creation of all new companies
and the holding in any manner in any company, whatever purpose they have, - and
in general all civil, commercial, industrial, financial and property
transactions (movable and immovable) directly or indirectly related to the
aforementioned purposes."
1.6 Registration
Sodexho Alliance is registered in Versailles under no. 301 940 219.
1.7 Business identifier code (APE): 741 J
1.8 Consultation of legal documents
The bylaws, minutes of Annual Meetings, Auditors' Reports and other legal
documents concerning the Company are available for consultation (preferably by
appointment) at the Company's registered office, located at 3 Avenue Newton,
78180 Montigny-le-Bretonneux, France.
1.9 Fiscal year (article 17 of the bylaws)
"The fiscal year starts on September 1 of each year and ends on August 31 of the
following year."
Distribution of the profits (except from article 18 of the bylaws)
"(...) 2 "Out of the net profits, reduced by prior losses if there are any,
there must first be set aside at least 5% to form the reserve fund stipulated by
law; this appropriation ceases to be obligatory when the reserve fund has
reached a sum equal to one tenth of the registered capital. It is resumed if,
for any reason whatever, the reserve has dropped below one tenth of the
registered capital
3 The distributable profit is constituted by the net profit of the fiscal year,
reduced by previous losses, and by the amount set aside for the legal reserve if
required, and increased by the credit balances carried forward to the next
account.
Out of the distributable profit, the following amounts are successively
appropriated:
a) any sum which the Annual Shareholders' Meeting - on proposal of the
Board of Directors - will decide to carry forward to the following fiscal
year or to assign to the creation of any extraordinary or special reserve
funds, any provident or other funds with a special assignment or not.
b) the surplus is distributed among the shareholders (...)".
1.10 Shareholders' Meetings (excerpt from article 16 of the bylaws)
1. "Shareholders' Meetings are convened and discuss business under the
conditions provided for by law. They take place at the head office or at
any other place specified in the call to meeting.
Shareholders who participate in a Shareholders' Meeting through
videoconferencing or other telecommunications technology enabling their
identification, as defined and described in prevailing legislation, are
considered as present for the calculation of the Meeting's quorum and
voting majority requirements.
2. All shareholders of record, or who supply evidence of the deposit of
their bearer shares two days before the Meeting (or on or by such record
date nearer the meeting as the Board may fix) are entitled to attend
Shareholders' Meetings in person or by proxy and to vote thereat, however
many shares they hold, provided that all payments called up on their shares
have been timely made.
The right to attend or to be represented by proxy at the shareholders
annual general meeting is subordinated to :
- the registration of the shareholder when they are owners of registered
shares,
- the justification of the locking up of their shares when they are holders
of bearer shares.
These formalities have to be carried out two days before the shareholders
annual general meeting. However, the Board of Directors has the ability to
reduce this delay. The Board of Directors may issue personal,
non-transferable admission cards to the shareholders:
During a Shareholders' Meeting, the personal attendance of the shareholder
cancels all proxies or previous votes exercised by mail.
Any vote made by mail shall be deemed as valid if received by the Company
at least three days prior to the date of the Meeting. In case of conflict
between these two ways of voting, the proxy shall prevail, subject to the
votes made by mail.
3. Shareholders' Meetings are chaired by the Chairman of the Board of
Directors or, in his absence, by the Vice-Chairman if any or else by the
senior director present at the Meeting.
4. If no senior director is present, the Meeting itself elects a Chairman."
1.11 Double voting rights (excerpt from article 16 of the bylaws)
"A right to a double vote, in addition to that conferred to the other shares,
with regard to the proportion of the issued capital they represent, is
conferred:
- upon all fully discharged shares for which a registered inscription will have
been valid for a period of four years at least in the name of the shareholder
himself,
- upon registered shares conferred freely upon a shareholder, in the case of a
share issue paid up by capitalizing reserves, at the rate of former shares for
which the shareholder profits from this right."
1.12 Disclosure thresholds (excerpt from article 9 of the bylaws)
- If a shareholder owns directly or indirectly a number of shares representing
2.5% of the capital or any multiple thereof, he must inform the Company by
registered mail within fifteen days or the shares exceeding the portion that
should have been declared may be deprived of the voting right. Shareholders must
also inform the Company if they cross one of the above-mentioned thresholds as a
result of reducing their holdings.
--------------------------------------------------------------------------------
2 General information concerning the issued capital
--------------------------------------------------------------------------------
2.1 There are no bylaws concerning changes in the issued capital and voting
rights
2.2 Five-year summary of shares and share equivalents
2003 2002 2001 2000 1999
CAPITAL AT AUGUST 31
Issued capital EUR EUR EUR EUR EUR
636,086,260 636,085,664 30,238,616 537,400,464 535,931,152
Common shares outstanding
159,021,565 159,021,416 157,559,654 33,587,529 33,495,697
Non-voting preferred shares outstanding
Potential additional shares to be 0 0 0 0 0
created through: 0 0 0 0 0
- conversion of bonds
- exercise of warrants and stock
options :
exercise of warrants 374,773 374,782 378,008 396,824 396,828
stock options 93,248 107,563 162,221 202,512 222,928
Five-year summary of changes in issued capital
Date Type of transaction Shares Aggregate par Additional paid-in Shares New issued
created value of new capital (FRF until outstanding capital (FRF until
shares (FRF Aug. 31, 1999) after new Aug. 31, 1999)
until Aug. 31, issue
1999)
Aug. 31, 1998 Exercise of warrants 28,022 FRF 2,802,200 FRF 3,358,287.65 33,465,942 FRF 3,346,594,200
(1,546) and stock
options (26,476)
Feb. 23, 1999 Exercise of warrants 143 14,300 80,319.25 33,466,085 FRF 3,346,608,500
(143)
June 10, 1999 Exercise of warrants
(9) and stock options
(224)
Cash increase in issued
capital before its
conversion into euro
(FRF 165,762,689.01) 233 23,300 28,508.59 33,466,318 EUR 535,461,088
Aug. 31, 1999 Exercise of warrants
(38) and stock options
(29,224) 29,379 EUR 470,084 EUR 451,836.64 33,495,697 EUR 535,931,152
Exercise of warrants
Dec. 9, 1999 (4) and stock options
(71,468) 71,484 EUR 1,143,744 EUR 1,178,109.76 33,567,181 EUR 537,074,896
Aug. 31, 2000 Exercise of stock
options (20,348) 20,348 EUR 325,568 EUR 1,068,228.90 33,587,529 EUR 537,400,464
Oct. 13, 2000 Exercise of stock 1,552 EUR 24,832 EUR 58,950.13 33,589,081 EUR 537,425,296
options (1,552)
Dec. 6, 2000 Exercise of stock
options (18,020) 18,020 EUR 288,320 EUR 591,737.50 33,607,101 EUR 537,713,616
March 7, 2001 Exercise of warrants
(22) and stock options
(72,624) Four for one
stock split 101,112,159 EUR 1,163,724 EUR 2,091,163.19 134,719,260 EUR 538,877,040
May 14, 2001 Exercise of warrants
(16,062) and stock
options (6,256)
ESOP (4,728) 273,116 EUR 1,092,464 EUR 5,844,314 134,992,376 EUR 539,969,504
July 4, 2001 Issue of new shares 22,498,729 EUR 89,994,916 EUR 922,447,889 157,491,105 EUR 629,964,420
Aug. 31, 2001 Exercise of warrants
(2,732) and stock
options (23,034) 68,549 EUR 274,196 EUR 1,349,699.44 157,559,654 EUR 630,238,616
Oct. 18, 2001 International ESOP 1,385,848 EUR 5,543,392 EUR 51,985,486.89 158,945,502 EUR 635,782,008
Jan. 11, 2002 Exercise of warrants
(150) and stock options
(12,353) 14,852 EUR 59,408 EUR 314,564.28 158,960,354 EUR 635,841,416
Aug. 31, 2002 Exercise of warrants
(3,076) and stock
options (9 816) 61,062 EUR 244,248 EUR 1,287,974.68 159,021,416 EUR 636,085,664
Aug. 31, 2003 Exercise of warrants 149 EUR 596 EUR 3,082.05 159,021,565 EUR 636,086,260
(9)
2.3 Share equivalents
- Bonds with warrants
The Extraordinary Meeting of February 13, 1996 authorized the Board to
issue bonds with equity warrants without pre-emptive subscription
rights, whose aggregate par value is not to exceed EUR 304,898,000. On
May 21, 1996, the Board acted on this authorization and approved the
issue of EUR 304,898,000 worth of bonds with warrants attached. Each
of the 400,000 bonds had a par value of EUR 762 and carried a warrant
giving the right to subscribe one share of Sodexho common stock at a
price of EUR 412 until June 7, 2004.
Following the capital increase in December 1997, each warrant gave the
right to subscribe 1.02 shares at a price of EUR 412.
The parity was further adjusted following the April 1998 bonus share
issue, to 4.08 shares per warrant. The price was unchanged at EUR 412.
Lastly, following the four-for-one stock split on March 7, 2001, each
warrant now gives the right to subscribe 16.66 shares at a price of
EUR 412.
Number of warrants issued: 400,000
Warrants outstanding as of August 31, 2003 : 374,773
Warrants outstanding as of November 15, 2003 : 374,773
- Employee stock subscription options
The Extraordinary Meeting of February 13, 1996 authorized the Board of
Directors to grant stock subscription options. A total of 93,248
options were outstanding as of August 31, 2003, representing an
aggregate amount of EUR 2,954,879. This authorization was renewed by
shareholders at the Extraordinary Meeting of February 4, 2003.
- Employee stock purchase options
The Annual Meeting of February 26, 2001 authorized the Board of
Directors to purchase Sodexho Alliance shares on the open market to
grant to employees under the Company's stock purchase option plans.
This authorization was renewed by shareholders at the Annual Meeting
of February 4, 2003.
A total of 5,085,838 options were outstanding as of August 31, 2003,
representing an aggregate amount of EUR 169,342,272.
No other share equivalents are outstanding.
2.4 Un-issued authorized capital
The Extraordinary Meeting of February 4, 2003 authorized the Board of Directors
to increase the share capital, on one or several occasions through the issuance
of shares and share equivalents, to be paid in cash or by capitalizing the
paid-in surplus, retained earnings or otherwise. The aforementioned transactions
may be effected with or without preemptive rights and, in the second case, with
a priority right. All transactions must comply with the following limitations :
Type of capital increase Maximum aggregate par Authorization Expiration
value authorized for date date
issued capital
Authorization with preemptive rights
- Issuance of shares, in cash, or through
warrants or securities EUR 175 million (1) February 4, 2003 April 4, 2005
- Issuance of debt securities EUR 1.2 billion (1) February 4, 2003 April 4, 2005
Authorization without preemptive rights
- Issuance of shares, in cash, through
warrants or securities EUR 175 million (1) February 4, 2003 April 4, 2005
- Issuance of debt securities
Authorizations to issue employee
shares EUR 1.2 billion (1) February 4, 2003 April 4, 2005
- Options to subscribe or purchase shares (2) February 4, 2003 April 4, 2006
- In accordance with art. L 225-138
c.com and L 443-5 c.trav (3) February 4, 2003 April 4, 2005
- In connection with the Employee
Stock Purchase Plan EUR 40 million February 4, 2003 February 4, 2008
(1) These amounts may not be accumulated
(2) The maximum number of exercisable options may not exceed the limit of share
subscriptions or purchases specified in article 174-17 of the March 23, 1967
decree
(3) Capital increases, in favor of employees, may not exceed 1% of the actual
increase mentioned above
2.5 Shareholder structure
Issued capital
At August 31, 2003, Sodexho Alliance had issued capital of EUR 636,086,260,
divided into 159,021,565 shares of common stock with a par value of EUR 4 each,
all in the same class and fully paid.
Holders of fully paid shares may elect to hold them in registered or bearer form
identifiable under laws and regulations prevailing in France, and in particular
under article L.228-2 of the French Commercial Code.
The most recent Euroclear survey found 42,440 holders of bearer shares and 1,114
holders of registered shares.
2.6 Shareholder structure at August 31, 2003
Known shareholders
Shareholder Number of shares % shares % voting rights
Bellon SA 61,437,269 38.63 39.23
Employees 2,653,648 1.67 2.31
Societe Generale (Geneval and Sivalparts) 2,434,978 1.53 1.90
Caisse des Depots et Consignations 8,317,051 5.23 6.65
Public 81,650,557 51.35 49.91
Sodexho Alliance 2,528,062 1.59 0
------------ --------- --------
Total 159,021,565 100.00 100.00
There is no shareholders' pact.
2.7 Changes in shareholder structure
Aug. 31, 2003 Aug. 31, 2002 Aug. 31, 2001 Aug. 31, 2000
Shareholder % shares % voting % shares % voting % shares % voting % shares % voting
rights rights rights rights
Bellon SA 38.63 39.23 38.69 39.77 39.85 38.13 40.81 39.40
Employees 1.67 2.31 1.63 2.30 0.84 1.60 1.18 2.24
Societe Generale 1.53 1.90 1.89 1.79 2.60 4.20 2.92 2.81
(Geneval and Sivalparts)
Caisse des Depots et 5.23 6.65 4.68 6.21 3.21 4.89 3.47 5.05
Consignations
Public 51.35 49.91 51.41 49.93 53.09 51.18 51.42 50.50
Sodexho Alliance 1.59 0 1.70 0 0.41 0 0.20 0
2.8 Disclosure thresholds
If a shareholder owns directly or indirectly a number of shares representing
2.5% of the capital or any multiple thereof, he or she must inform the Company
by registered mail within fifteen days or the shares exceeding the portion that
should have been declared may be deprived of the voting right. Shareholders must
also inform the Company if they cross one of the above-mentioned thresholds as a
result of reducing their holdings.
The only shareholder other than Bellon SA which has declared that it holds more
than 2.5% of the capital is Caisse des Depots et Consignations, with a 5.23%
interest.
2.9 Information about shareholders
Pursuant to the law, the Company is entitled to obtain information about the
holders of shares and share equivalents conferring on their holders the
immediate or ultimate right to vote at Shareholders' Meetings.
2.10 Employee stock ownership
- Share issues in connection with the Group Employee Stock Ownership Plan.
The Extraordinary Meeting of February 4, 2003 renewed the authorizations
given to the Board at the February 23, 1993, February 13, 1996 and February
21, 2000 Extraordinary Shareholders' Meetings to issue new Sodexho Alliance
SA shares to Group employees in France through the employee stock ownership
plan.
The Board of Directors has acted on this authorization as follows:
- On October 8, 1993, a total of 88,000 new shares were subscribed at a price of
EUR 120.
- On October 7, 1994, a total of 25,000 new shares were subscribed at a price of
EUR 112.
- On October 23, 1995, a total of 48,697 new shares were subscribed at a price
of EUR 148.
- On June 14, 1996, the Board approved the creation of a new employee stock
ownership plan through the purchase of Sodexho SA shares on the Paris Bourse.
Payments into the plan allowed for the acquisition of 16,856 shares.
- On October 23, 1997, the Board approved the creation of another new employee
stock ownership plan through the purchase of Sodexho Alliance shares on the
Paris Bourse. Payments into the plan allowed for the acquisition of 16,420
shares,
- On October 22, 1998, the Board approved the creation of another new employee
stock ownership plan through the purchase of Sodexho Alliance shares on the
Paris Bourse. Payments were made into the plan in December 1998.
- On October 21, 1999, the Board approved the creation of another new employee
stock ownership plan through the purchase of Sodexho Alliance shares on the
Paris Bourse. Payments were made into the plan in December 1999.
- On December 6, 2000, the Board approved the creation of a new employee stock
ownership plan through the subscription of Sodexho Alliance shares. Payments
into the plan allowed for the issue of 4,728 shares.
Acting on the authorization granted by shareholders at the Extraordinary Meeting
of December 18, 2000, the Board offered an International Employee Stock
Ownership Plan (ESOP) to 150,000 employees in 22 countries. On October 18, 2001,
the Board of Directors placed on record the resulting purchase by 18,726
employees of 1,385,848 shares, each with a par value of EUR 4. The subscription
price was EUR 44.10 per share in the United States and EUR 41.51 per share in
all other countries. The International ESOP is described on page 78 of the
Financial Review in the fiscal 2001 Annual Report.
--------------------------------------------------------------------------------
3 Stock market data
--------------------------------------------------------------------------------
3.1 The SODEXHO ALLIANCE share
The Sodexho Alliance share is listed on the Euronext Paris First Market,
where it is traded in lots of one under Euroclear code FR 0000121220.
18-month trading data
Date rice (in euro) Avg. daily
trading volume
High Low Average (1) (in thousands of euro)
2002
May 43.90 36.63 39.76 31,626
June 38.40 32.84 35.89 25,127
July 38.24 25.10 30.86 24,924
August 31.15 26.05 28.04 17,699
September 30.83 18.25 25.19 19,820
October 25.00 18.11 21.15 18,886
November 26.90 20.75 24.17 16,901
December 26 .85 21.50 23.55 13,334
2003
January 26.35 21.80 24.17 16,457
February 24.30 20.20 22.82 12,980
March 22.49 17.95 20.16 13,838
April 22.00 18.25 20.01 20,774
May 22.56 19.48 20.52 20,985
June 24.49 20.88 23.25 19,148
July 25.70 23.06 24.35 17,171
August 27.36 24.46 25.62 15,186
September 28.15 23.00 25.30 18,949
October 24.50 21.68 22.90 17,972
(1) Average monthly closing prices.
3.2 Equity warrants
The equity warrant attached to the bonds issued on May 22, 1996 is listed
on the Euronext Paris Official Market, where it is traded under Euroclear
code FR 0000273559. Following the December 1997 share issue, the April 1998
bonus share issue and the four-for-one stock split on March 7, 2001, each
warrant now gives the right to subscribe 16.66 shares at a price of EUR 412
until June 7, 2004.
18-month trading data
Date Average daily
trading volume
Price (in euro) (in thousands of euro)
High Low Average (1)
2002
May 359 247 291.45 57
June 260 185 220.42 40
July 245 106 154.97 503
August 149 108 124.63 29
September 146 38 95.28 76
October 71 33 45.54 26
November 88 50 71.83 39
December 91 50 69.31 19
2003
January 84 55 69.38 30
February 69 48 60.37 13
March 51 35 42.23 7
April 53 33 42.08 8
May 45 32 36.43 16
June 54 35 47.44 24
July 63 45 53.27 20
August 69 52 57.26 12
September 75 41 56.59 22
October 47 26 34.04 21
(1) Average monthly closing prices.
--------------------------------------------------------------------------------
Resolutions to be Presented at the Annual
Shareholders' Meeting of February 3, 2004
--------------------------------------------------------------------------------
1 Annual Meeting
- First Resolution
(Approval of the financial statements - Discharge to directors)
The Shareholders' Meeting, having heard the reports of the Board of
Directors and the Auditors, approves the statutory financial
statements of Sodexho Alliance for the year ended August 31, 2003, as
presented by the Board of Directors, which show net income for the
year of EUR 79,261,606.86. The meeting also approves the consolidated
financial statements for the year, showing consolidated net income of
EUR 162 million.
The Shareholders' Meeting acknowledges that the Directors have
discharged their duties for the year ended August 31, 2003.
- Second resolution
(Income appropriation)
In accordance with the proposal made by the Board of Directors, the
Shareholders' Meeting resolves:
To appropriate net income for the year ended August 31, 2003
in the amount of: EUR 79,261,606.86
plus retained earnings brought
forward from the prior year of: EUR 702,506,930.37
Representing total income available
for distribution of: EUR 781,768,537.23
As follows:
- Legal reserve to raise this
reserve to 10% of the new capital EUR 59.60
- Net dividend EUR 97,003,154.65
(Dividends on the 159,021,565 shares in issue, representing EUR 0.61 per
share, giving rise to a tax credit of EUR 0.305)
Retained earnings EUR 684,765,322.98
Total: EUR 781,768,537.23
The dividend will be paid as from March 4, 2004.
Dividends paid by the Company the last three years were as follows:
2001-2002 2000-2001 1999-2000
Number of qualifying shares 159,021,416 158,945,502 33,587,529
Dividend before tax credit 0.61 0.56 2.24
Tax credit 0.305 0.28 1.12
Dividend including tax credit 0.915 0.84 3.36
- Third Resolution
(Approval of agreements involving directors)
Having heard the Auditors' special report on agreements governed by
Article L.225-38 of the Commercial Code, the Shareholders' Meeting
approves this report and the agreements referred to therein.
- Fourth Resolution
(Authorization to trade in the Company's shares)
Having heard the report of the Board of Directors and reviewed the
information contained in the prospectus approved by the Commission des
Operations de Bourse, the Shareholders' Meeting authorizes the Board
of Directors and any duly authorized representative of the Board to
trade in the Company's shares on the stock market in accordance with
the provisions of articles L.225-209 et seq. of the Commercial Code.
This authorization, which is given for a period of eighteen months, is
designed to allow the Company to:
- Stabilize the Sodexho share price by buying or selling shares on the
open market, trading against the underlying trend.
- Optimize the financial management of the Company and the management
of its assets and liabilities.
- Make stock awards to employees, in connection with profit-sharing
programs, stock option plans, Employee Stock Ownership Plans or any
other program or plan provided for by law.
- Grant shares to senior managers, as compensation, based on their
performance.
- Remit shares in payment or exchange for shares or assets of another
company, in connection with an acquisition or otherwise.
- Cancel the shares.
- Hold the shares in treasury stock, or exchange, sell, contribute or
transfer them.
The shares may be purchased, sold, exchanged or transferred by any
appropriate method, on the stock market or over-the-counter or by
means of derivatives. The total number of shares covered by the
authorization may be purchased or transferred in a single block
purchase or transfer.
The shares may be purchased, sold, exchanged or transferred at any
time, subject to compliance with regulatory limits.
The maximum number of shares that may be acquired under this
authorization is restricted to 10% of the Company's issued and
outstanding share capital, currently 15,902,156 shares. The aggregate
price paid to acquire the shares may not exceed EUR 636 million.
The Shareholders' Meeting resolves that shares purchased or sold in
order to stabilize the market price of Sodexho shares may not be
acquired at a price in excess of EUR 40 per share. This maximum price
will be adjusted in the case of any transactions that have a dilutive
effect on the Company's capital.
Full powers are given to the Board of Directors and any duly
authorized representative of the Board to act on this authorization
and to:
- Place any and all buy or sell orders and enter into agreements for
the keeping of records of share purchases and sales as well as any and
all other appropriate agreements.
- Carry out any and all filing and other formalities and generally do
whatever is necessary.
This authorization cancels and replaces all earlier authorizations to
the same effect, including that given in the fourth resolution of the
Annual Shareholders' Meeting of February 4, 2003.
- Fifth Resolution
(Re-election as director of Pierre Bellon)
The Shareholders' Meeting re-elects Pierre Bellon, whose term has
expired, for a three-year term expiring at the Annual Shareholders'
Meeting to be called to approve the accounts for the year ending
August 31, 2006.
- Sixth Resolution
(Re-election as director of Remi Baudin)
The Shareholders' Meeting re-elects Remi Baudin, whose term has
expired, for a three-year term expiring at the Annual Shareholders'
Meeting to be called to approve the accounts for the year ending
August 31, 2006.
- Seventh Resolution
(Re-election as director of Astrid Bellon)
The Shareholders' Meeting re-elects Astrid Bellon, whose term has
expired, for a three-year term expiring at the Annual Shareholders'
Meeting to be called to approve the accounts for the year ending
August 31, 2006.
- Eighth Resolution
(Re-election as director of Francois-Xavier Bellon)
The Shareholders' Meeting re-elects Francois-Xavier Bellon, whose term
has expired, for a three-year term expiring at the Annual
Shareholders' Meeting to be called to approve the accounts for the
year ending August 31, 2006.
- Ninth Resolution
(Re-election as director of Sophie Clamens)
The Shareholders' Meeting re-elects Sophie Clamens, whose term has
expired, for a three-year term expiring at the Annual Shareholders'
Meeting to be called to approve the accounts for the year ending
August 31, 2006.
- Tenth Resolution
(Re-election as director of Nathalie Szabo)
The Shareholders' Meeting re-elects Nathalie Szabo, whose term has
expired, for a three-year term expiring at the Annual Shareholders'
Meeting to be called to approve the accounts for the year ending
August 31, 2006.
- Eleventh Resolution
(Directors' fees)
The Shareholders' Meeting resolves to award total annual fees of EUR
300,000 to the directors for the year ending August 31, 2004.
- Twelfth Resolution
(Authorization to issue EUR 1.2 billion in debt securities)
At the Board of Directors' motion, the Shareholders' Meeting
authorizes the Board to issue bonds in an aggregate nominal amount not
to exceed EUR 1.2 billion or the equivalent in foreign currencies or
monetary units, as determined based on the exchange rate ruling on the
date of issue.
The Shareholders' Meeting gives full powers to the Board of Directors
to:
- Carry out one or several bond issues within a period of five years
from the date of this meeting. The timing and amounts of said issues
will be decided at the Board's discretion, subject to compliance with
the aggregate ceiling specified above.
- Select the payment currency, the life, interest rate and other terms
and conditions of the bonds, including the issue and redemption
prices, the repayment terms, the circumstances in which the bonds may
be bought back on the open market or redeemed in advance and any
conversion rights to be attached to the bonds allowing holders to
acquire new debt securities not carrying any future rights to acquire
shares.
- Enter into any and all underwriting and placement agreements with
any and all banks or other institutions, take any and all necessary
measures to permit the placement of the bonds and generally do
whatever is necessary.
This authorization cancels and replaces the authorization to the same
effect given by the Annual Shareholders' Meeting of February 4, 2003.
Extraordinary Meeting
- Thirteenth Resolution
(Blanket authorization to issue shares and share equivalents with
pre-emptive subscription rights, to be paid up in cash or by
capitalizing premiums, retained earnings or otherwise)
The Shareholders' Meeting, having heard the report of the Board of
Directors and the Auditors' special report, resolves, pursuant to
article L.225-129-III subparagraph 3 of the Commercial Code and the
other relevant provisions of company law:
1. To grant the Board of Directors the necessary powers to increase
the share capital, on one or several occasions, in amounts and on
dates to be determined at the Board's discretion:
a) By issuing common shares, warrants and/or securities
convertible, redeemable, exercisable or otherwise exchangeable
for common shares immediately or in the future, at any time or on
a fixed date, denominated in euro or foreign currencies.
b) And/or by issuing bonus shares or raising the par value of
existing shares, to be paid up by capitalizing the paid-in
surplus or retained earnings or otherwise, pursuant to the
provisions of the law and the Company's bylaws.
2. To grant said authorization for a period of 26 months from the date
of this Meeting.
3. To limit the aggregate value of the issues that may be carried out
pursuant to this authorization as follows:
- In the case of capital increases carried out pursuant to the
authorization given in paragraph 1 a) above:
a) The aggregate par value of the common shares that may be
issued either directly or upon conversion, redemption,
exercise or exchange of debt securities and other share
equivalents may not exceed EUR 63 million or the equivalent
in foreign currency or monetary units determined by
reference to a basket of currencies, as calculated on the
date of issue of the securities. The aggregate par value of
any common shares to be issued to protect the rights of
existing shareholders pursuant to the law as well as any
shares issued pursuant to the fourteenth resolution of this
Meeting shall be included within this ceiling.
b) The aggregate face value of debt securities representing
share equivalents that may be issued pursuant to this
authorization may not exceed EUR 570 million or the
equivalent in foreign currency. The aggregate face value of
any debt securities issued pursuant to the fourteenth
resolution of this Meeting shall be included within this
ceiling.
- In the case of capital increases paid up by capitalizing the
paid-in surplus, retained earnings or otherwise, the aggregate
par value of the common shares that may be issued pursuant to
this authorization may not exceed the aggregate amount of the
qualifying paid-in surplus, retained earnings and other sums.
Said issues shall not be included in the ceiling specified in
paragraph 3 a) above.
4. That, for any issues decided by the Board pursuant to paragraph 1
a) of this resolution:
- Shareholders shall have a pre-emptive right to subscribe such
issues, pro rata to their existing shareholdings.
- The Board of Directors may offer shareholders a pre-emptive
right to subscribe any securities not taken up by other
shareholders as provided for above.
- If any shares or share equivalents are not taken up by
shareholders exercising their pre-emptive rights as provided for
in the above two subparagraphs, the Board of Directors may take
any or all of the following measures, in any order, subject to
compliance with the law:
- Limit the capital increase to the amount of the
subscriptions received, provided that at least three
quarters of the issue has been taken up.
- Freely allot all or some of the unsubscribed shares or
share equivalents.
- Offer all or some of the issued, unsubscribed shares for
subscription by the public, on the French and/or
international market.
- By virtue of this authorization, in the case of issue of
share equivalents, the shareholders automatically waive their
pre-emptive right to subscribe the shares to be created upon
conversion, redemption, exercise or exchange of said share
equivalents in favor of the holders thereof.
- The proceeds per share to be received by the Company in
connection with any and all issues of shares and share
equivalents carried out pursuant to this authorization shall be
at least equal to 80% of the average of the opening prices of the
Company's stock quoted on the Euronext Paris market on 10
consecutive trading days selected from among the 20 trading days
immediately preceding the issue date of the shares or share
equivalents, as adjusted for any difference in cum dividend
dates.
5. That the Board of Directors shall be fully empowered to act on this
authorization subject to compliance with the law and to delegate such
powers to the Chairman pursuant to the law. In particular, the Board
of Directors shall be empowered to:
- Determine the terms and conditions of issue of common shares or
share equivalents.
- Determine the dates and methods of issue and the nature and
form of the securities, including, at the Board's discretion,
subordinated and unsubordinated fixed term and perpetual bonds or
notes.
- Fix the terms at which the Company may be authorized to
purchase shares or share equivalents on the stock market, for
cash or in exchange for other securities, and authorize such
purchases at any time or during fixed periods.
- Authorize the Company to suspend the exercise of the rights
attached to the share equivalents, if necessary, for a period not
to exceed three months.
- Charge the share issuance costs against the related paid-in
surplus, together with any amounts required to raise the legal
reserve to an amount corresponding to 10% of the new capital
following each share issue, without seeking the prior
authorization of the shareholders.
- Pursuant to the exception allowed under article L.225-149 of
the Commercial Code, decide that in the case of a share issue
paid up by capitalizing the paid-in surplus or retained earnings,
rights to fractions of shares will not be transferable. In this
case, the corresponding shares will be sold and the proceeds from
the sale will be allocated to the holders of these rights within
30 days of the date on which the whole number of shares allotted
to them is recorded in their share account.
- Enter into any and all agreements, take any and all measures
and carry out any and all formalities in connection with the
issue and servicing of the shares and share equivalents issued
pursuant to this authorization and the exercise of the rights
attached thereto.
6. By virtue of this authorization, shares and share equivalents with
pre-emptive subscription rights, are to be paid in cash or by
capitalizing premiums, retained earnings or otherwise, without
effecting the validity of any issues carried out pursuant to said
previous authorizations prior to the date of the Meeting.
- Fourteenth Resolution
(Blanket authorization to issue shares and share equivalents without
pre-emptive subscription rights)
The Shareholders' Meeting, having heard the report of the Board of
Directors and the Auditors' special report, resolves, pursuant to
articles L.225-129-III subparagraph 3, L.225-148, L.225-150 and
L.228-93 of the Commercial Code and the other relevant provisions of
company law:
1. To grant the Board of Directors the necessary powers to
increase the share capital, on one or several occasions, in
amounts and on dates to be determined at the Board's discretion,
by issuing, on the French or international stock market, common
shares, warrants and/or securities convertible, redeemable,
exercisable or otherwise exchangeable for common shares
immediately or in the future, at any time or on a fixed date,
denominated in euro or foreign currencies. This authorization
shall also cover the issue of shares or share equivalents in
payment for securities acquired in connection with a public
tender offer that fulfill the conditions laid down in article
L.225-148 of the Commercial Code.
2. To grant said authorization for a period of 26 months from the
date of this Meeting.
3. To limit the aggregate value of the issues that may be carried
out pursuant to this authorization as follows:
a) The aggregate par value of the common shares that may be
issued either directly or upon conversion, redemption,
exercise or exchange of debt securities and other share
equivalents may not exceed EUR 63 million or the equivalent
in foreign currency or monetary units determined by
reference to a basket of currencies, as calculated on the
date of issue of the securities.
b) The aggregate par value of any common shares to be issued
to protect the rights of existing shareholders pursuant to
the law as well as any shares issued pursuant to the
thirteenth resolution of this Meeting shall be included
within this ceiling.
c) The aggregate face value of debt securities representing
share equivalents that may be issued pursuant to this
authorization may not exceed EUR 570 million or the
equivalent in foreign currency. The aggregate face value of
any debt securities issued pursuant to the thirteenth
resolution of this Meeting shall be included within this
ceiling.
4. To waive the shareholders' pre-emptive right to subscribe any
securities issued pursuant to this authorization by the Company
or any subsidiary thereof that is more than 50%-owned, directly
or indirectly. However, the Board will be required to grant
shareholders a non-transferable priority right to subscribe all
or part of such issues, pro rata to the number of shares held, on
terms and for a period to be decided by the Board. At the Board's
discretion, this priority right may be extended to include shares
or share equivalents not taken up by other shareholders. Any
securities not subscribed by shareholders during the priority
subscription period will be placed among the public.
5. That, by virtue of this authorization, in the case of issue of
share equivalents, the shareholders automatically waive their
pre-emptive right to subscribe the shares to be created upon
conversion, redemption, exercise or exchange of said share
equivalents in favor of the holders thereof.
6. That the proceeds per share to be received by the Company in
connection with any and all issues of shares and share
equivalents carried out pursuant to this authorization shall be
at least equal to the average of the opening prices of the
Company's stock quoted on the Euronext Paris market on 10
consecutive trading days selected from among the 20 trading days
immediately preceding the issue date of the shares or share
equivalents, as adjusted for any difference in cum dividend
dates.
7. That the Board of Directors shall be fully empowered to act on
this authorization subject to compliance with the law and to
delegate such powers to the Chairman pursuant to the law. In
particular, the Board of Directors shall be empowered to:
- Determine the terms and conditions of issue of common shares or
share equivalents, with the agreement of the Boards of the
companies concerned, where applicable.
- Determine the dates and methods of issue and the nature and
form of the securities, including, at the Board's discretion,
subordinated and unsubordinated fixed term and perpetual bonds or
notes.
- Authorize the Company to suspend the exercise of the rights
attached to the share equivalents, if necessary, for a period not
to exceed three months.
- In the case of issuance of shares or share equivalents in
payment for securities acquired in connection with a public
tender offer:
- Draw up the list of securities tendered for exchange.
- Fix the terms of issue, the exchange parity and the amount
of any cash payment to be made.
- Determine the method of issue in connection with a paper
bid, a cash or paper bid or a paper bid with a cash
alternative.
- Charge the share issuance costs against the related paid-in
surplus, together with any amounts required to raise the legal
reserve to an amount corresponding to 10% of the new capital
following each share issue, without seeking the prior
authorization of the shareholders.
- Enter into any and all agreements, take any and all measures
and carry out any and all formalities in connection with the
issue and servicing of the shares and share equivalents issued
pursuant to this authorization and the exercise of the rights
attached thereto.
8. By virtue of this authorization, shares and share equivalents
without pre-emptive subscription rights, are to be paid in cash or by
capitalizing premiums, retained earnings or otherwise, without
effecting the validity of any issues carried out pursuant to said
previous authorizations prior to the date of the Meeting.
- Fifteenth Resolution
(Stock options)
The Shareholders' Meeting, having heard the report of the Board of
Directors and the Auditors' special report, resolves, in accordance
with Articles L.225-177 to L.225-185 of the Commercial Code and the
other relevant provisions of the Code:
1. To authorize the Board of Directors to grant stock options, on
one or several occasions, to the following categories of persons,
said options being exercisable either for new shares issued for
this purpose or for shares purchased by the Company on the market
in accordance with the law.
2. That this authorization shall be valid for a period of
thirty-eight months from the date of this Meeting.
3. That the options may be granted to:
- employees, or selected employees or certain categories of
employees,
- "mandataires sociaux" (executive directors), as defined by
law, or selected mandataires sociaux of the Company or the
French or foreign companies or "groupements d'interet
economique" (intercompany partnerships) that are directly or
indirectly related to the Company, within the meaning of
Article L 225-180 of the Commercial Code.
4. That the total number of exercisable options granted for
subscription or purchase may not exceed 3% of the share capital.
5. That the exercise price of options to subscribe new shares
will be set on the date of grant of the options by the Board of
Directors, and may not represent less than 80% of the average of
the opening prices quoted for the Company's shares on the
Euronext Paris market over the 20 trading days preceding the date
of grant.
6. That the exercise price of options to purchase existing shares
will be set on the date of grant of the options by the Board of
Directors, and may not represent less than 80% of the average of
the opening prices quoted for the Company's shares on the
Euronext Paris market over the 20 trading days preceding the date
of grant or 80% of the average price paid for the shares held by
the Company pursuant to Article L.225-208 and/or Article
L.225-209 of the Commercial Code. No options to subscribe new
shares or purchase existing shares may be granted (i) within the
period of 20 trading days following the date on which the shares
go ex-dividend, or ex-rights in the case of a rights issue, (ii)
during the 10 trading days before and after the date of
publication of the financial statements of the Group or, failing
that, of the Company, (iii) between the date on which the Board
of Directors becomes aware of information which, if it were
publicly disclosed, could have a material impact on the Company's
share price, and the end of a period of 10 trading days after the
day on which this information is made public.
7. That, in accordance with Article L.225-178 of the Commercial
Code, shareholders shall automatically waive their pre-emptive
right to subscribe any shares issued on exercise of the options
granted under this authorization.
8. That the Board of Directors shall have full powers to
implement this authorization, in accordance with the law, and:
- To set the terms and conditions of grant of the options,
to draw up the list of grantees or categories of grantees,
as provided for above, and to determine the circumstances in
which the option exercise price and the number of shares
acquired may be adjusted, in particular in the cases dealt
with in Articles 174-8 to 174-16 of Decree no. 67-236 of
March 23, 1967.
- To fix the option exercise period or periods, provided
that the life of the options does not exceed a period of
eight years from the date of grant.
- To provide for the temporary suspension of the right to
exercise the options, for a maximum period of three months,
in the case of any financial transactions involving the
exercise of any rights attached to the Company's shares.
- To carry out, directly or through a representative, all
actions and formalities required to implement any capital
increase or increases carried out pursuant to this
authorization, amend the bylaws to reflect the new capital
and generally do whatever is necessary.
- At the Board's sole discretion and if appropriate, to
charge the share issuance costs against the related premium
and deduct from the premium the amount necessary to raise
the legal reserve to one-tenth of the new capital after each
capital increase.
9. The Shareholders' Meeting notes that this authorization
supersedes all earlier authorizations to grant stock options
given to the Board of Directors, to the extent that these
authorizations have been used.
- Sixteenth Resolution
(Authorization to carry out employee share issues governed by article
L.225-138 of the Commercial Code and article L.443-5 of the Labor Code)
The Shareholders' Meeting, having heard the report of the Board of
Directors and the Auditors' special report, resolves, in accordance with
articles L.225-138 and L.225-129-VII of the Commercial Code, to authorize
the Board of Directors and any duly authorized representative of the
Board to carry out employee share issues governed by article L.225-138 of
the Commercial Code and article L.443-5 of the Labor Code. The shares may
be offered to employees of the Company and those of related companies,
within the meaning of the law, who are members of an Employee Stock
Ownership Plan or a voluntary share-save scheme. The number of shares
offered may not exceed 1% of the capital increase carried out pursuant to
the authorizations given in the thirteenth, fourteenth and fifteenth
resolutions of this Meeting.
- Seventeenth Resolution
(Employee share issues)
The Shareholders' Meeting, having heard the report of the Board of
Directors and the Auditors' special report, resolves, in accordance with
Article L 225-180 of the Commercial Code and the other relevant
provisions of the Code, and Articles L.443-1 et seq. of the Labor Code:
- To cancel the authorization given to the Board of Directors by the
Extraordinary Shareholders' Meeting of February 4, 2003 to increase
the capital, on one or several occasions over a five-year period from
the date of the Meeting, by a maximum amount of EUR 40 million,
through the issuance of a maximum of 10 million new EUR 4 par value
shares.
- To authorize the Board of Directors to increase the capital, on one
or several occasions over a five-year period from the date of this
Meeting, by a maximum amount of EUR 40 million, through the issuance
of a maximum of 10 million new EUR 4 par value shares.
- That the aggregate number of shares held, directly or indirectly, by
employees at any time under the Group's employee stock ownership
plan(s) may not exceed 5% of the Company's capital stock.
- That shareholders shall automatically waive their pre-emptive right
to subscribe the shares to be issued to employees by virtue of this
authorization.
- To give full powers to the Board of Directors to:
a) Decide, at the time of each share issue, whether the shares
are to be subscribed directly by employees who are members of the
Group employee stock ownership plan or indirectly, through a
corporate mutual fund or otherwise.
b) Set the date and the terms and conditions of the share issues
carried out under this authorization, including the
period-of-service requirement to be met by eligible employees;
the period allowed for employees to exercise their rights; the
issue price of the new shares, which may not be less than 20% of
the opening price average quoted for Sodexho Alliance shares over
the 20 trading days preceding the date of the Board of Directors'
decision to carry out the employee share issue; the opening and
closing dates of the subscription period; the date from which the
new shares will carry dividend rights, which may be set
retroactively; the period allowed for paying up the new shares,
not to exceed three years; and, if appropriate, the maximum
number of shares that may be subscribed per employee and per
issue.
c) Place on record the capital increases corresponding to the
number of shares actually subscribed.
d) Carry out any and all necessary formalities, directly or
through a representative.
e) Amend the bylaws to reflect the new capital, after each
capital increase.
f) Charge the share issuance costs against the related premium
and deduct from the premium the amount necessary to raise the
legal reserve to one-tenth of the new capital after each capital
increase.
g) Generally do whatever is necessary.
- Eighteenth Resolution
(Powers to carry out formalities)
The Shareholders' Meeting grants full powers to the bearer of a copy or
extract of the minutes of this Meeting to carry out all necessary
formalities.
--------------------------------------------------------------------------------
Auditors' Special report
--------------------------------------------------------------------------------
On the issuance of shares and share equivalents
Ladies and Gentlemen,
We present our report on the transactions submitted to shareholders for
approval.
1. Blanket authorization to issue shares and share equivalents with
pre-emptive subscription rights, to be paid up in cash or by capitalizing
premiums, retained earnings or otherwise (thirteenth resolution)
As the company's Statutory Auditors and in accordance with our duties as
defined by Articles L. 225-135 and L. 228-92 of the French Commercial Code,
we present our report on the planned capital increase on one or several
occasions, in amounts and on dates to be determined at the Board's
discretion by issuing common shares, warrants and/or securities
convertible, redeemable, exercisable or otherwise exchangeable for common
shares immediately or in the future, at any time or on a fixed date,
denominated in euro or foreign currencies and/or by issuing bonus shares or
raising the par value of existing shares, to be paid up by capitalizing the
paid-in surplus or retained earnings or otherwise, pursuant to the
provisions of the law and the Company's bylaws. The aggregate par value of
the common shares that may be issued either directly or indirectly through
debt securities or other share equivalents may not exceed EUR 63 million or
the foreign currency equivalent. It should also be noted that the aggregate
par value of any common shares issued pursuant to the fourteenth resolution
of this Meeting shall be taken into account for the calculation of the
aggregate par value of the common shares that may be issued.
The aggregate face value of debt securities representing share equivalents
that may be issued may not exceed EUR 570 million or the foreign currency
equivalent. It should also be noted that the aggregate face value of any
debt securities issued pursuant to the fourteenth resolution of this
Meeting shall be taken into account for the calculation of the aggregate
face value of debt securities that may be issued. The Board of Directors,
following the issuance of its report, requests the authorization to
approve the terms and conditions of this transaction for a period of 26
months from the date of this Meeting, with a right to sub-delegate to the
President.
We performed our procedures in accordance with the professional standards
applicable in France. Those standards require us to perform procedures on
the basis of calculation of the issue price. Since the issue price of
capital stock has not yet been set, we are not in a position to comment on
the final terms under which the issue will take place, nor , consequently
on the proposal that you relinquish your preferential subscription rights,
the principle of which is, however, in line with the objectives of the
transaction that is subject to your approval.
In accordance with Article 155-2 of the decree of March 23, 1967, we will
issue an additional report once the capital increase is carried out by the
Board of Directors.
2. Blanket authorization to issue shares and share equivalents without
pre-emptive subscription rights (fourteenth resolution)
As the company's Statutory Auditors and in accordance with our duties as
defined by Articles L. 225-135 and L. 228-92 of the French Commercial Code,
we present our report on the planned capital increase on one or several
occasions, in amounts and on dates to be determined at the Board's
discretion, by issuing, on the French or international stock market, common
shares, warrants and/or securities convertible, redeemable, exercisable or
otherwise exchangeable for common shares immediately or in the future, at
any time or on a fixed date, denominated in euro or foreign currencies.
The aggregate par value of the common shares that may be issued either
directly or though debt securities or other share equivalents may not
exceed EUR 63 million or the equivalent in foreign currency or monetary
units determined by reference to a basket of currencies, as calculated on
the date of issue of the securities, which includes the aggregate par value
of any common shares to be issued to protect the rights of existing
shareholders pursuant to the law.
It should also be noted that the aggregate par value of any common shares
issued pursuant to the thirteenth resolution of this Meeting shall be taken
into account for the calculation of the aggregate par value of the common
shares that may be issued.
The aggregate face value of debt securities representing share equivalents
that may be issued may not exceed EUR 570 million or the equivalent in
foreign currency. It should also be noted that the aggregate face value of
any debt securities issued pursuant to the thirteenth resolution of this
Meeting shall be taken into account for the calculation of the aggregate
face value of debt securities that may be issued. The Board of Directors,
following the issuance of its report, requests the authorization to
approve the terms and conditions of this transaction for a period of 26
months from the date of this Meeting, and the cancellation of your
preferential subscription right.
We performed our procedures in accordance with the professional standards
applicable in France. Those standards require us to perform procedures in
order to verify the basis of calculation of the issue price. Since the
issue price of capital stock has not yet been set, we are not in a position
to comment on the final terms under which the issue will take place, nor,
consequently on the proposal that you relinquish your preferential
subscription rights, the principle of which is, however, in line with the
objectives of the transaction that is subject to your approval.
In accordance with Article 155-2 of the decree of March 23, 1967, we will
issue an additional report once the capital increase is carried out by the
Board of Directors.
3. Stock options grant (fifteenth resolution)
As the company's Statutory Auditors and in accordance with our duties as
defined by Article L. 225-177 of the French Commercial Code and Article
174-19 of the decree of March 23, 1967, we present our report on stock
options that may be granted to employees or executive directors.
It is the duty of the Board of Directors to prepare a report on the
background to the stock option grant and the proposed terms and conditions
for the determination of the exercise or purchase price. It is our duty to
report on the proposed basis for calculation of the exercise or purchase
price.
We performed our procedures in accordance with the professional standards
applicable in France. These standards require us to verify that the terms
and conditions for the determination of the exercise or purchase price are
documented in the report prepared by the Board of Directors, are in
accordance with the current regulation, provide meaningful information to
shareholders and ensured that there was no materially inappropriate
disclosure. We have nothing to report regarding the proposed terms.
4. Authorization to issue employee shares (sixteenth resolution)
As the company's Statutory Auditors and in accordance with our duties as
defined by Article L. 225-135 of the French Commercial Code, we present our
report on the planned capital increase reserved for employees who are
members of an Employee Stock Option Plan or a voluntary share-save scheme
within the limit of 1% of the capital increase carried out pursuant to the
authorizations given in the thirteenth, fourteenth and fifteenth
resolutions of this Meeting. This project is submitted to you for approval
pursuant to the provisions of Article L. 225-129 of the French Commercial
Code and Article L. 443-5 of the French Labor Code.
The Board of Directors, following the issuance of its report, requests
the authorization to approve the terms and conditions of this transaction,
with a right to sub-delegate to the President.
We performed our procedures in accordance with the professional standards
applicable in France. Those standards require us to perform procedures in
order to verify the basis of calculation of the issue price detailed in the
Board of Directors' report.
Subject to further examination of the final conditions of this issue, we
have no comment to make with respect to the terms and conditions of the
issue price of capital stock as disclosed in the Board of Directors report.
Since the issue price of capital stock has not yet been set, we are not in
a position to comment on the final terms under which the issue will take
place, nor, consequently on the proposal that you relinquish your
preferential subscription rights, the principle of which is, however, in
line with the objectives of the transaction that is subject to your
approval.
In accordance with Article 155-2 of the decree of March 23, 1967, we will
issue an additional report once the capital increase is carried out by the
Board of Directors.
5. Authorization to issue employee shares (seventeenth resolution)
As the company's Statutory Auditors and in accordance with our duties as
defined by Article L225-135 of the French Commercial Code, we present our
report on the planned capital increase reserved for employees, on one or
several occasions over a five-year period from the date of the Meeting, by
a maximum amount of EUR 40 million, through the issuance of a maximum of
10 million new EUR 4 par value shares. The proposed capital increase is
submitted to you for approval pursuant to the provisions of Article L.
225-129 of the French Commercial Code and Article L. 443-5 of the French
Labor Code.
The Board of Directors, following the issuance of its report, requests the
authorization to approve the terms and conditions of this transaction and
proposes the cancellation of your preferential subscription right. We
performed our procedures in accordance with the professional standards
applicable in France. These standards require us to perform procedures in
order to verify the basis of calculation of the issue price detailed in the
Board of Directors' report.
Subject to further examination of the final conditions of this issue, we
have no comment to make with respect to the terms and conditions of the
issue price of capital stock as disclosed in the Board of Directors report.
Since the issue price of capital stock has not yet been set, are not in a
position to comment on the final terms under which the issue will take
place, nor, consequently on the proposal that you relinquish your
preferential subscription rights, the principle of which is, however, in
line with the objectives of the transaction that is subject to your
approval.
In accordance with Article 155-2 of the decree of March 23, 1967, we will
issue an additional report once the capital increase is carried out by the
Board of Directors.
Paris 13 November 2003
PricewaterhouseCoopers Audit KPMG Audit
Department of KPMG S.A.
Gerard Dantheny Hubert Toth Patrick-Hubert Petit
This is a free translation of the original French text for information purposes
only.
--------------------------------------------------------------------------------
2 - Responsibility for the Annual Report and the Audit
--------------------------------------------------------------------------------
Supervisor of the annual report registered as "Document de Reference" under
French law
The Chairman and Chief Executive Officer of Sodexho Alliance, Mr Pierre Bellon.
"To our knowledge, the information provided in this "Document de Reference" is
in accordance with the reality ; it includes all necessary information to allow
investors to make their own assessment about the patrimony, the activity, the
financial situation, the profits and the outlook of the Company ; there is no
omission that would impact this information."
The Chairman of the Board of Directors
[OBJECT OMITTED]
Pierre Bellon
Supervisors of the audit of the accounts
Auditors First appointed Term Appointment
expires
Staturory auditors
o PricewaterhouseCoopers Audit February 22, 1994 6 years At the General Meeting in
32, rue Guersant 2005 to approve the fiscal
75017 Paris 2004 accounts
R.C.S. Paris B 622 014 454
o KPMG Audit February 4, 2003 6 years At the General Meeting in
2 bis, rue de Villiers 2009 to approve the fiscal
F-92309 Levallois-Perret Cedex 2008 accounts
R.C.S. Nanterre 775 726 417
First appointed Term Appointment
expires
Alternate auditors
o Patrick Frotiee February 25, 1997 6 years At the General Meeting in
32, rue Guersant 2005 to approve the fiscal
75017 Paris 2004 accounts
o Didier Thibaut De Menonville February 4, 2003 6 years At the General Meeting in
2 bis, rue de Villiers 2009 to approve the fiscal
F-92309 Levallois-Perret Cedex 2008 accounts
3 - Statutory Auditors' report on the "Document de Reference"
Ladies and Gentlemen,
In our capacity as auditors of SODEXHO ALLIANCE and in application of COB
regulation 98-01, we have verified, in accordance with the professional
standards applied in France, the financial information relating to the statutory
financial statements of SODEXHO ALLIANCE contained in this "Document de
Reference."
Mr. Pierre Bellon is responsible for the preparation of this document. Our
responsibility is to report on the fairness of the financial information
included in this document with respect to the financial position and the
financial statements of SODEXHO ALLIANCE.
Our procedures were conducted in accordance with professional standards applied
in France, and included an assessment of the fairness of the information
presented relating to the financial position and the financial statements and
its consistency with the financial statements on which we have issued a report.
Our procedures also included reading the other information appearing in this
document, in order to identify material inconsistencies with the information
relating to the financial statements and to report any apparent misstatement of
facts that we may have detected in reading the other information based on our
general knowledge of the company obtained during the course of our engagement.
In reading the forward looking information, which was determined through a
structured process, we considered the assumptions used by management and the
amounts obtained by applying these assumptions.
The financial statements and the consolidated financial statements as of August
31, 2001 and 2002 that have been approved by the Board of Directors, were
audited by PricewaterhouseCoopers Audit, in accordance with professional
standards applied in France. Unqualified audit opinions were issued.
The financial statements and the consolidated financial statements as of August
31, 2003 that have been approved by the Board of Directors, were audited by
PricewaterhouseCoopers Audit and KPMG Audit, in accordance with professional
standards applied in France. We issued an unqualified audit opinion.
We have no observations to make regarding the fairness of this information or
its consistency with the consolidated financial statements.
Paris, November 27, 2003.
Statutory auditors
PricewaterhouseCoopers Audit KPMG Audit
Gerard Dantheny Hubert Toth Patrick-Hubert Petit
This is a free translation of the original French text for information purposes
only.
--------------------------------------------------------------------------------
4 - Cross-reference table
--------------------------------------------------------------------------------
In order to make it easier to read the Annual Report, which serves as the
Reference Document, the table below provides cross references to the main
sections of the instructions for the application of Regulation 98-01 of the
French Commission des Operations de Bourse.
REFERENCE PAGES
RESPONSIBILITY FOR THE ANNUAL REPORT 263
- Opinion of persons responsible for the Document de Reference 263
- Opinion of the Auditors 264
- Investor information 104
GENERAL INFORMATION 240
ISSUED CAPITAL 244
- Special clauses 244
- Un-issued authorized capital 247
- Share equivalents 246
- Five-year summary of changes in issued capital 244
STOCK MARKET 250
- 18-month trading data 250
- Dividends 141
ISSUED CAPITAL AND VOTING RIGHTS 248
- Shareholder structure and voting rights 248
- Summary of changes in shareholder structure 248
- Shareholder agreement 248
PRESENTATION OF THE ACTIVITIES 147
- Corporate organization 234
- Key figures 4
- Information on operating activities and geographic information 159
- Market and competitive positioning 31
- Capital spending strategy 203
- Performance indicators 7
RISK MANAGEMENT 204
Risk factors 205
- Exchange and interest rate risk 207
- Activity risks 206
- Legal risks 206
- Environmental risks 205
Insurance and risk coverage 208
ASSETS, FINANCIAL STATEMENTS AND INCOME 151
- Consolidated Financial Statements and notes 151
- Commitments 178
- Auditors' fees 195
- Statutory Financial Statements and notes 214
CORPORATE GOVERNANCE 90
- Operating procedures of the Board of Directors 92
- Operating procedures of the committees 90
- Board members and corporate officers 92
- Attributed and exercised options for the
10 employees who hold the largest number of options 103
- Related party transactions
239
RECENT CHANGES AND OUTLOOK
- Recent changes 183
- Outlook 143