We have a regional structure based upon five strong regions.

Regional performance

North America

In North America Ongoing Revenue grew by 11.4% to £1,040.3m ($1,385.8m), of which 6.9% was growth through acquisition and 4.5% was Organic (in line with our Organic growth target of 4% to 5% p.a.). Pest Control grew 11.9% (+4.4% Organic), improving on the 3.8% Organic growth in 2018, but performance for the year was held back by unusually wet weather conditions in certain parts of the country in the second quarter. Ongoing Operating Profit growth of 15.3% reflects the combined impact from higher revenues and acquisitions. 14 pest control and two Ambius businesses were acquired in the region in 2019 – including Florida Pest Control, a top 20 pest control company in the US,– with combined annualised revenues of c.$135m (c.£101m) in the year prior to purchase, considerably ahead of c.$53m (c.£41m)revenues acquired during 2018.

Our stated ambition for our North America business is for it to become a $1.5bn revenue business by the end of 2020 and to deliver18% Net Operating Margin by the end of 2021.This year has seen very good progress towards our revenue target as noted above and, given our progress in Organic growth and acquisitions in 2019, we remain confident in achieving our $1.5bn revenue target in 2020.We are making good progress towards our target of 18% Net Operating Margin in North America by the end of 2021.Net Operating Margin improved by 50basis points in 2019 to 14.2%, supported by stronger Organic Revenue growth, synergies from acquisitions beginning to flow through and savings in property and procurement from our Best of Breed cost savings programme, partially offset by a greater mix of lower margin product sales. 

As we have previously discussed, in addition to operational leverage from increased density, a key dependency for delivery of this margin target is the re-platforming of our IT infrastructure. The key first step in our IT programme is creating a consistent platform across the country. We transferred all of our data from the business into the cloud in 2019 and the large majority of the business is now on a standard operating system. We also migrated 16 acquisitions onto our core operating system in 2019. Having data in one place and a consistent infrastructure delivers cost benefits in its own right through reduced back office costs and more effective management. 

The re-platforming also critically allows us to deploy our Group applications across the North America region in the key areas of service, sales and customer communications over the next 12 to 18 months. The implementation of these applications enables the delivery of Best of Breed margin benefits in 2020 and 2021 meaning that our journey to 18% margin by 2021 is weighted towards the end of this period.

Europe

Ongoing revenue for Europe rose by 7.1% (+4.8% Organic), reflecting an excellent performance in Germany (+12.6%), continued strong growth in southern Europe (+4.6%) and an improved performance in Benelux and France, which grew by 6.2% and 4.6% respectively. Latin America, which is reported within the Europe region, once again performed well with Ongoing Revenue growth of 20.5%. Ongoing Revenue from our European Hygiene operations grew by 5.2% (3.2% Organic), benefiting from strong performances across the region. Ongoing Revenue from our Pest Control businesses grew by 11.3%, reflecting a 4.6% uplift in growth from acquisitions and strong Organic growth of 6.7%, attributable to a particularly strong performance from our German operations. Ongoing Operating Profit for the Europe region grew by 8.3%, with strong growth in southern Europe, Germany and Benelux. Net Operating Margins for the Europe region increased by 20 basis points to 19.3%. The region acquired 11 businesses in Europe and Latin America in the period (three in Hygiene and eight in Pest Control) with total combined annualised revenues of c.£13m in the year prior to purchase.


UK and Rest of World

The UK & Rest of World region delivered a very strong performance, with an overall increase in Ongoing Revenue of 6.3%, comprising acquisition growth of 1.5% and Organic Revenue growth of 4.8%. The region delivered continued excellent growth from UK Pest Control and Hygiene, which grew organically by 6.3% and 7.9% respectively, with Pest Control benefiting from large contract wins, high levels of customer service, improved customer retention and one-off contracts. The Rest of World operations delivered good Ongoing Revenue growth of 7.0% with contributions across all of its regional clusters in the Nordics, Caribbean, Sub-Saharan Africa and MENAT. Overall Ongoing Operating Profit for the region grew by 9.3%, reflecting the higher revenues. Net Operating Margins for the UK & Rest of World region were 0.6% points higher at 22.0%, reflecting profit improvements in UK Property Care. During the year the region acquired three hygiene, two pest control and one Ambius business with total acquired annualised revenues in the 12 months prior to acquisition of c.£3m. 

Asia

The Asia region has once again performed well in 2019 with Ongoing Revenue increasing by 11.1% (+4.7% Organic Revenue growth) with both Pest Control and Hygiene trading well. Our operations in Indonesia delivered an outstanding performance, with Ongoing Revenue growth of 40.3% (Pest Control: 58.2%, Hygiene: 19.7%) and Organic Revenue growth of 14.1% (Pest Control: 20.1%, Hygiene 7.2%). Acquisitions contributed 26.2% of growth. Ongoing Operating Profit in Asia grew by 11.1%. Progress on the integration of Pest Control Private Limited (PCI), our 2017 acquisition in India, has been steady although the leverage on the combined business has been lower than we would have expected at this stage. We are confident that a strong platform for growth has now been established for 2020 and beyond. Asia Net Operating Margins were in line with prior year at 10.3%, held back by margins in Singapore which were adversely impacted by wage inflation, a slowdown in jobbing work and key accounts negotiations. Four pest control businesses and two hygiene businesses were acquired in 2019 in Indonesia, Malaysia, Sri Lanka and Thailand, with combined annualised revenues of c.£17m. 

Pacific

In the Pacific region Ongoing Revenue grew by 2.6%, (+2.3% Organic), driven by solid performances across our core Pest Control and Hygiene categories. Our Hygiene operations in Australia delivered a notably good performance in the period, reflecting the impact of new customer wins in 2018 and 2019. However, Pest Control was impacted by a decline in fumigation activity – in part due to a change in fumigation regulations which now means that inbound shipments are increasingly being treated at the point of their departure instead of on arrival into the region – along with a consolidation of operating centres. Ongoing Operating Profit in the region grew by 2.5% and Net Operating Margins declined by 0.1% points reflecting fumigation impacts. Two small pest control businesses were acquired in Australia with annualised revenues of c.£2m in the year prior to acquisition.