Business review
Ambius
Market conditions
Growth slowed in 2008 and demand for products and services softened in the US and the UK, principally the result of challenging economic conditions. The main markets of operation are at different stages of development with the US and the Netherlands more developed than the UK. All markets are highly fragmented with a large number of small operators, although the larger companies have a competitive advantage in terms of route density. Ambius currently has approximately 60,000 customers over 13 countries.
Key performance indicators
| £m | Change vs 2007 | |
|---|---|---|
| Revenue | 108.7 | +1.2% |
| Organic revenue growth | 0.0% | |
| Operating profit | 7.6 | -12.6% |
| Adjusted operating profit | 7.6 | -12.6% |
| Net adjusted margin | 7.0% | -1.1% |
| Contract portfolio gain | 0.4 | -77.8% |
| New business wins | 6.8 | -5.6% |
| Net additions/reductions | 3.2 | -5.9% |
| Acquisitions | 2.0 | +17.6% |
| Terminations | (11.6) | -10.5% |
| Retention rate | 86.6% | -1.0% |
2008 review
Ambius, our tropical plants division, delivered a solid performance from its European businesses in 2008 but overall divisional performance was held back by a weak performance in North America, where poor levels of new business and increasing terminations can be directly attributed to the challenging US economy. Divisional revenue rose by 1.2% but profit declined by 12.6%. Retention rate declined from 87.5% in 2007 to 86.5%, driven largely by contract terminations in the US and the exit from a large but unprofitable contract in Sweden in Q3.
Operational improvements during 2008 included the completion of the Ambius re-branding exercise which commenced in 2007. A number of service extensions, including ambient scenting and fresh fruit delivery, were launched in Europe and latterly in the US and these now account for 5.8% of total contract sales during 2008. Debtors performance remains excellent despite softening market conditions.
In Europe the portfolio increased by 3.3% and job revenues were up 9.5%. During the year European sales of new brand extension services accounted for 10.6% of portfolio sales. The UK business has continued to show signs of operational improvement in both sales and terminations following two difficult years, though it was adversely affected by the economic downturn in Q4.
In Q4, Ambius North America revenue fell by 2.5%. Holiday sales fell 3.3% year-on-year. Brand extensions will continue to play a key role in development of the business and a full line of brand extensions including art, ambient scenting and interior/exterior living wall displays will be rolled out progressively throughout the business.
Back to top2009 preview
Trading for Ambius in 2009 is anticipated to be challenging in all markets, particularly in North America. We will attempt to maintain our current levels of profitability through good cost control and implementing savings initiatives.