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Oriel Outsourcing Conference 1 December 2010 Adrian ... · PDF fileOriel Outsourcing...
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Oriel Outsourcing Conference 1 December 2010
Adrian Ringrose, Chief Executive
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2 The Trusted Partner
Agenda
• Our support services business & market positioning
• UK outsourcing market opportunities
• Middle East outsourcing market opportunities
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3
A Leading Support Services Business
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4 The Trusted Partner
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
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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
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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
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7 The Trusted Partner
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
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8 The Trusted Partner
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
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9 The Trusted Partner
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
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UK Outsourcing Market Opportunities
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11 The Trusted Partner
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
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12 The Trusted Partner
Major opportunities - UK pipeline
0
1
2
3
4
2007 2008 2009 2010
Total Life Value £bn
PrivateHealthLocal AuthorityCentral GovtDefence
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13 The Trusted Partner
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)
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14 The Trusted Partner
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)
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Middle East Outsourcing Market Opportunities
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16 The Trusted Partner
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
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17 The Trusted Partner
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
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18 The Trusted Partner
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
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19 The Trusted Partner
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
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20 The Trusted Partner
Middle East Support Services – Our USP
Local Partner Associate Companies•
Infrastructure•
20,000 employees• Reputation•
Local Relationships/Understanding
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21 The Trusted Partner
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
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Questions