Support services are becoming an ever more important part of our business. The delivery of multi services, that is bundled food and support services, now accounts for 18% of Group revenues (comprising 5% foodservice and 13% support services). Our support services offer, which originated in the Defence, Offshore & Remote site sector, has now extended to the Healthcare sector and, increasingly, to the Business & Industry sector where the outsourcing of support services is growing quickly. In 2009, we signed over £200 million of new multi service Business & Industry contracts, more than half coming from cross-selling to existing clients. For example, earlier in the year, we extended our international contract with Royal Dutch Shell plc (‘Shell’) across Europe and we have now further extended our contract to include the Americas. Furthermore, we were delighted that in June, jointly with Shell, we won the ‘Partners Across Borders’ category of the prestigious European FM Awards. The Compass Service Framework, our platform to deliver support services across all our major countries, is widely acclaimed by our clients. Continuous investment in developing this platform, both organically and through selected acquisitions, should deliver significant future growth.
MAP has brought real discipline to the way we evaluate infill acquisitions. We have a very rigorous process that covers strategic, financial and management criteria. Our recent acquisitions: Professional Services and Medi-Dyn, two healthcare support services businesses in the USA; Kimco, a support services business within Business & Industry in the USA; a number of McColls retail outlets in the UK; and Plural, a support services business in Germany, have been successfully integrated and have delivered (or are on target to deliver) against the Group’s strict criteria. We now have increasing financial headroom to acquire both food and support service businesses in our core countries as well as continuing to build on our existing presence in emerging markets.
Over the past three years we have delivered 200 basis points of margin growth across all five MAP components. We believe we have significant further potential from the continued application of best practice across the business. Whilst we have made good progress to date, there is still much more to go for.
The Group’s core strategy remains focused on food and, increasingly, support services. Whilst in 2010, the prevailing economic conditions are expected to lead to broadly flat organic revenue growth, we are very encouraged by the pipeline of new business. In the medium-term, the Group is set to enjoy the combination of structural growth in outsourcing and, as the global economies recover, a cyclical upswing in demand. In parallel, the continuing management of the flexible cost base and the ongoing focus on MAP should deliver further cost efficiencies and margin progression. In addition to this, the strength of the cash flow and balance sheet is enabling us to continue to reward shareholders and to accelerate growth through value creating infill acquisitions.
Richard Cousins
Group Chief Executive
25 November 2009
MAP is fundamental to driving consistent performance across the Group and the discipline it brings to the way we manage the business puts us in a strong position to meet the challenges in the year ahead.
Client sales and marketing
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