Asia Pacific
MARKET CONDITIONS
The markets for all services remained favourable in 2006 reflecting the general growth in the economies in the Asia Pacific region as well as an increased focus on health and safety issues.
2006 REVIEW
All the division’s businesses increased revenue in 2006, with strong double digit growth achieved in the largest markets of Australia, New Zealand, Indonesia, Singapore, Malaysia and Thailand, assisted by acquisition activity. Adjusted operating profit performance also improved in most markets including Australia, New Zealand, Singapore, Malaysia, Thailand, Indonesia and Hong Kong.
2006 saw a great deal of activity in Asia Pacific in terms of both building the management team and acquisitions. The division welcomed a number of new senior members of the team, which is now at full strength.
A total of 25 acquisitions were completed in the region during 2006 for a total consideration of £46.9 million. The largest transactions were Pink Healthcare (an Australian washroom business) and the pan-regional CWS branded washroom and dustmat business. Other notable acquisitions included the number one pest control player in Taiwan, various pest control and tropical plants businesses in New Zealand and market entry acquisitions in Vietnam and electronic security in Singapore.
The one-off items incurred in 2006 reflected significant management and business restructuring activities in Australia, New Zealand, Indonesia, Singapore, Malaysia, Hong Kong and Thailand, from which we are already seeing benefits.
2007 PREVIEW
The Asia Pacific division will move ahead in many markets during 2007 and we expect good organic growth in all our operations in the region as we realise the benefits of the acquisitions made in 2006. We have strong management in all our businesses to manage our growing activities and an experienced divisional team to support them.
In Australia, having turned the washroom services business around and integrated Pink Healthcare, good growth is expected in 2007. The acquisition of Campbell Brothers in January 2007 has provided an entry into the Australian residential pest control market, which makes up half of the pest control market in that country.
2007 will be an important year in the huge market of China with investment anticipated in both pest control and washroom services. We will also look to re-enter the pest control market in Japan and enter that market in Korea.
Productivity initiatives will be introduced in all our operations in Asia Pacific during 2007 which will increase operating efficiency. We will also be pursuing cost savings and efficiencies with regional procurement and IT.
