CATERING group Compass reported a weak performance in its school meals division yesterday, as students continue to shun healthier food.

The company, which has its North-East regional office in Newton Aycliffe, County Durham, reported a six per cent increase in pre-tax profits to £363m during the year to September 30, as revenues grew seven per cent to £10.8bn.

Compass has been rebuilding after a profits warning caused by weak performance in UK school meal contracts and poor summer trading in Europe.

In March, Compass said the state education sector remained the most testing, as clients came under pressure to overhaul school menus.

Yesterday, a company spokesperson said: "Parts of the education sector continue to remain challenging, with organic revenue declining four per cent overall.

"This is largely a result of reduced participation, particularly in state secondary schools, as the take-up of healthier options remains slow."

The Surrey-based company expects business to remain challenging next year - particularly in the education sector - but said it was already making cost efficiencies.