We are establishing a global competence in the £200 billion soft support services market. In the year to 30 September 2009, multi services had grown to 18% of Group revenue at £2.5 billion. Including acquisitions, this is equivalent to a growth rate of 20% per annum over the last three years. In the first half of the year multi services revenue has continued to grow strongly. Building on the Defence, Offshore & Remote site model, we now deliver support services in the Healthcare, Business & Industry and Education sectors. The internally developed ‘Compass Service Framework’ is our industry leading model to deliver support services. Increasingly we are bolting on excellent infill acquisitions which are adding to our scale and competence. For example, the acquisition of Clean Mall and FB Facility marks our entry into the large support services market in Brazil. The success we have had in winning new business with major national and international organisations, for example, Shell, Coca-Cola and Microsoft, underlines the strength of our offer.
Compass is a truly international business with 88% of revenue generated from outside the UK. Having exited some 40 countries which did not meet our investment criteria, we are now focused on a core 50. The USA continues to offer excellent growth opportunities and we have considerable opportunity to increase our presence in the core developed economies around the globe. We are now increasing our focus on the emerging countries, which account for almost 10% of Group revenue. Brazil is our eighth largest business accounting for 4% of Group revenue and is growing quickly. Whilst currently small, our operations in Russia, India and China have excellent growth potential and we are actively investing to develop these important opportunities.
In summary, our business model is to drive strong organic revenue growth whilst delivering sustainable profit and margin improvement. In combination with disciplined capital spend and tight control over working capital, this should result in continued strong cash flow. We will continue to reward shareholders through the distribution of a healthy dividend and to reinvest in future growth both organically and in value creating infill acquisitions. This will deliver real value to our shareholders.
Whilst economic conditions are likely to remain challenging in the second half of the year, the combination of a strong new business pipeline and a stabilisation in like for like volume is expected to deliver modest organic revenue growth. In combination with this, our continued focus on operating efficiency should enable us to make further progress in the margin in the second half of the year, compared to the same period last year.
In the medium-term the Group is set to benefit from the combination of structural growth in outsourcing, further cost efficiencies and margin progression. Our operating efficiency allows us to invest in business development, and drive competitiveness. In addition, the strength of the cash flow and balance sheet is enabling us to reward shareholders and to accelerate growth through value creating infill acquisitions.
Richard Cousins
Group Chief Executive
12 May 2010
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 period ahead.
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