Oriel Outsourcing Conference 1 December 2010 Adrian ... · PDF fileOriel Outsourcing...

Oriel Outsourcing Conference 1 December 2010

Adrian Ringrose, Chief Executive

2 The Trusted Partner

Agenda

• Our support services business & market positioning

• UK outsourcing market opportunities

• Middle East outsourcing market opportunities

3

A Leading Support Services Business


65%2%

33%Public

Privatised

Private

0

200

400

600

800

1,000

H2 2010 2011 2012 2013 2014 2015+

£m

£2.2bn

Health

10%

Infrastructure

6%

Government

16%

Industry

4%

Defence

32%

Custodial &

police

5%

Commerce

26%

Historical profit Public / Private split H1 2010

2010 future workload @ 30.6.10Revenue by sector H1 2010

£1 billion support services division 23,500 employees

5 The Trusted Partner5 The Trusted Partner

Support Services (H1 2010 revenues £538.2m, OP £8.9m)

H1 performance affected by:• Public sector contract transition • Weak private sector• Restructuring charges

Metropolitan Police Service

Confident of improvement in performance:• Margin recovery• Attractive UK public sector outsourcing market• Leveraging our infrastructure• Middle East growth opportunities

Initial target: sustainable margins comparable to peer group

Well advanced in taking contracts to planned levels of profitability

6 The Trusted Partner6 The Trusted Partner

Productivity

Procurement &

In-sourcing

Customer Relationships

Contract Management

Market Growth The

Interserve Way

Margin improvement – key building blocks


UK market size and segmentation

Source: KPMG –

Facilities Management –2010

7.7%

59.7%

32.6%

Contracted-out

In-house TFM

118.0

92.4

97.8

101.7

105.5

110.6114.0

116.0

80

85

90

95

100

105

110

115

120

2002 2003 2004 2005 2006 2007 2008 2009

£bn

2009

• Growth market

• Total Facilities Management (TFM) penetration opportunity


Spending Review implications

• Much as we expected -

Continue to engage in constructive discussions with government on how we can support public sector cost savings programme

-

As previously anticipated, may result in some near-term volume pressures

• Encouragingly, it is also leading to a streamlining of procurement processes

• We expect substantial opportunities in the coming years asthe government seeks to effect structural changes in public service delivery and social infrastructure investment


Interserve Positioning

Mar

ket

pote

ntia

l

Commercial

Local Government

Retail

Central Government

Defence

Aviation

Industrial

Low

Hig

h

Low High

Health

Market sector positioningBy relative value

UK Outsourcing Market Opportunities


Future Workload

£4bn

Short list

£1.4bn

Significant opportunity pipeline feeding the division’s future workload

Long list

£2.2bnTargeted £2.5bn

• >£6bn opportunity pipeline, in addition to division’s future workload of £4bn


Major opportunities - UK pipeline

0

1

2

3

4

2007 2008 2009 2010

Total Life Value £bn

PrivateHealthLocal AuthorityCentral GovtDefence


UK opportunity characteristics

• Shortened procurement & mobilisations

• More medium-sized opportunities

• Increased service bundling

• Growth in Local Authority market opportunities

• Office of Government Commerce (OGC) Framework -

(FM)


Structural changes to public service delivery will be necessary

Private sector share in selected public service markets

Source: CBI, November 2010

•

Defence (e.g. operational support)

• Justice (e.g. avoiding recidivism)

• Health (e.g. GP/PCT support)

•

Education (e.g. academies/free schools)

•

Local Government (e.g. estate rationalisation)

Middle East Outsourcing Market Opportunities


Our support services presence in the Middle East

•

Madina acquisition in 2007―

Engineering & fabrication services and HSE training for the Qatari petrochemical industry

•

OTI acquisition in 2010―

Training and consultancy services to the petrochemical industry in Oman

•

Organic development of regional FM activities from late 2009―

First major support services contract in UAE awarded early 2010


Serving the vast, growing Middle East petrochemical industry

Qatar

•

World’s 3rd

largest natural gas reserves (330 year

reserve life), world’s leading LNG producer

•

Gas production set to rise from 107bcm to 180 bcm

pa from 2009 to 2019

Oman

•

Govt

targeting increase in oil production from 870k

b/d in 2010 to 1m b/d in 2015

Abu Dhabi

•

Geographic expansion opportunity

•

Oil production to rise from 2.65mn b/d to 3.5mn

b/d from 2009 to 2019, alongside increase in gas

production from 50bcm pa to 120bcm pa over same

period


Contract example - Qatar Shell GTL project

Shell’s largest GTL project in the world at Ras Laffan, Qatar

•

5 year, £30m services contract

•

The provision of qualified personnel to deliver training

programs for the Shell Pearl GTL Project

•

Managing a purpose-built & fully resourced central training

facility

•

Programs cover health, safety, vocational environment &

management training

•

100,000+ personnel passed through the training centre to-date

•

Subsequently added infrastructure maintenance contract

•

Opportunity to grow with major international client


Middle East FM market

• Less mature market

• Relationship development

• Limited competition

• Attractive margins

8%

14%

20%

16%

42% Secured

Bidding

Pre‐qualify

Pipeline

Long‐term

Middle East FM opportunity pipeline £300m total life


Middle East Support Services – Our USP

Local Partner Associate Companies•

Infrastructure•

20,000 employees• Reputation•

Local Relationships/Understanding


Summary

• We are a leading player in the outsourcing market

• UK public sector: medium-term opportunities, particularly LA’s

• OGC framework: delivering many good medium-sized opportunities

• Private sector outsourcing: solid pipeline

• Middle East support services market: positioned for growth

Questions

Matt Jones, Head of Investor Relations

0118 960 2280

[email protected]

Investor relations contact

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