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Market conditions

Market conditions were largely stable in northern Europe and North America during 2011. However, they became increasingly challenging in Ireland and the Southern European economies of Spain, Portugal and Greece, reflecting the economic crisis in the Eurozone. The South Africa, East Africa and Caribbean markets were also largely stable, although with a softening in H2. Due to the political crisis in the Middle East, the division’s operations in Libya were suspended in early 2011 but the first steps in restarting our commercial operations were taken in Q4. In Q3 Pest Control entered two new developing and high-growth economies of Turkey and Mexico through the July acquisition of NB Turkey and the September acquisition of Mexican pest control company Tetengo.

 
  Fourth Quarter
 
  Full Year
 
£m
At 2010 constant exchange rates:
2011 2010 change   2011 2010 change
Revenue 143.8 138.2 4.1%   581.3 579.5 0.3%
Adjusted operating profit (before amortisation and impairment of intangible assets,1 reorganisation costs and one-off items) 27.9 26.4 5.7%   112.4 108.6 3.5%
At actual exchange rates:              
Adjusted operating profit (before amortisation and impairment of intangible assets,1 reorganisation costs and one-off items) 27.3 26.4 3.4%   112.2 108.6 3.3%
    1 Excluding computer software
 
 

Performance review

Revenue for the division grew by 0.3%, up 3.1% excluding disposals and the suspension of operations in Libya in Q1. UK Pest Control grew by 11.3%, of which 6.7% is attributed to the acquisition of the pest control operations of Santia Services and, although revenue in the UK and Ireland Hygiene business fell, its rate of decline slowed to 5.7% from 9.7% in 2010. In Europe strong performances from Germany, Austria, Switzerland and the Nordics were largely offset by difficult trading conditions in Spain, Portugal and Greece, which have been impacted by the Eurozone crisis, with overall revenue growth for the region of 1.8%. North America, the division’s largest business, delivered strong growth of 5.5%.

Profit rose by 3.5%, up 4.6% excluding disposals and Libya, reflecting continued good cost management across most businesses. Notably strong profit growth performances were recorded in UK Pest (16.2%), Germany (11.4%), Austria (20.9%), Switzerland (32.9%), the Nordics (8.3%) and North America (7.9%). Profit declined in the UK Hygiene operations and the difficult markets of Spain, Portugal, Ireland and Greece.

 

2012 outlook and objectives

We expect overall market conditions to soften further in 2012, following closely those experienced in H2. Ireland and the Southern European economies we believe will continue to be severely impacted by the economic crisis, which has the potential to have broader reaching impacts in the rest of our markets, including North America.

Key objectives

  • Deployment of Programme Olympic growth initiatives to drive organic growth
  • Continued focus on cost saving in service productivity and back office administration (particularly North America)
  • Further bolt-on acquisitions in targeted regions