Facilities Management - UK - October 2019

OVERVIEW
What you need to know
Covered in this Report
EXECUTIVE SUMMARY
The market
Underlying growth
Figure 1: Potential market for facilities management services, 2015-19
Strong further potential
Figure 2: Segmentation of the potential market for facilities management, by type of contract, 2015-19
A wide variety of services
Figure 3: Segmentation of the total facilities management and contracted-out services, by sector of service, 2015-19
Margin pressure in soft services
Technology and green issues to add value
Growth prospects
Figure 4: Forecast segmentation of the potential market for facilities management, 2020-24
Companies and brands
Scale – a threat and opportunity
Figure 5: UK facilities management M&A activity by target sector, 2018
Specialisation very different to other corporates
What we think
ISSUES AND INSIGHTS
The National Living Wage price war
The facts
The implications
Technology as a differentiator
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Limits are few and far between
Market growth
Brexit
MARKET SIZE
Slow growth in opportunity
Figure 6: Potential market for facilities management services, 2015-19
The contracted-out market
Figure 7: Actual outsourced services typically defined as facility management, 2015-19
Integrated facilities management
Figure 8: Actual market for integrated facilities management, 2015-19
MARKET SEGMENTATION
Integrated, bundled, single contract and in-house
Figure 9: Segmentation of the potential market for facilities management, by type of contract, 2015-19
Figure 10: Comparative growth of integrated facilities management, contracted-out and internal services, 2015-19
Individual markets
Figure 11: Segmentation of the total facilities management and contracted-out services, by sector of service, 2015-19
MARKET FORECAST
A highly developed market
The Brexit issue
The expectation
Figure 12: Forecast market for integrated facilities management services, 2020-24
Figure 13: Forecast segmentation of the potential market for facilities management, 2020-24
Figure 14: Forecast segmentation of the total facilities management and contracted-out services, by sector of service, 2020-24
THE IMPACT OF THE ECONOMY
GDP
Figure 15: Quarterly GDP development, Q1 2015-Q2 2019
Figure 16: GDP quarterly development, by sector, 2004-19
Figure 17: Forecast GDP development, 2019-23
MARKET TRENDS
Employment costs squeezing margins
National Minimum Wage and National Living Wage
Figure 18: The development of the NMW and NLW, 1999-2019 (£s per hour rate)
Apprenticeship Levy
Workplace pensions
Figure 19: Composition and progression of workplace pension contributions, 2012-19 (% of earnings)
The outsourcing evolution
Moving beyond the cost benefit
Sustainability – not just buildings
MARKET DRIVERS
Repair and maintenance activity
Figure 20: Housing repair and maintenance expenditure by sector, 2014-18 actual and 2019-24 forecast
Figure 21: Infrastructure repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
Figure 22: Private industrial and commercial repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
Figure 23: Public non-residential repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
Mechanical and electrical contracting
Figure 24: M&E contracting market, 2014-18 actual and 2019-24 forecast
Distribution of workplaces
Figure 25: Number of PAYE/VAT-registered business establishments, by industry, 2015-19 (000s)
Figure 26: Number of PAYE/VAT –registered business establishments, by industry and turnover with a turnover over £2 million, 2019
PFI and PF2 projects
Figure 27: Capital costs of current PPP projects, 2018
Figure 28: Unitary payments of current PPPs, 1997-2050
Contract catering
Figure 29: Contract catering market, 2014-18 actual and 2019-23 forecast
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Specialisation
The margin issue
The scale issue
Technology to provide value added
INDUSTRY STRUCTURE
Wide range of services
Figure 30: Development of the facilities management sector, 2015-19
Figure 31: Size of facilities management sites, 2019 (number)
Figure 32: Turnover analysis of the facilities management sector, 2019 (number)
M&A driven by variety of services
Fragmented and competitive
COMPETITIVE STRATEGIES
Few common themes
Technology to drive sustainable margins
Sector consolidation and M&A
Figure 33: UK facilities management M&A activity by target sector, 2018
COMPANY PROFILES
CBRE GWS
Activity
Performance
Figure 34: Financial summary of CBRE GWS in the UK, 2013-17 (£ million)
Strategy
Compass Group
Activity
Performance
Figure 35: Financial summary of Compass Group, 2014-18 (£ million)
Strategy
G4S
Activity
Performance
Figure 36: Financial summary of G4S, 2014-18 (£ million)
Strategy
ISS Facility Services
Activity
Performance
Figure 37: Financial summary of ISS Facility Services, 2014-18 (£ million)
Strategy
Interserve Group
Activity
Performance
Figure 38: Financial summary of Interserve Group, 2014-18 (£ million)
Strategy
Mitie
Activity
Performance
Figure 39: Financial summary of Mitie, 2015-19 (£ million)
Figure 40: Turnover segmentation of Mitie, 2019 (£ million)
Strategy
Serco Group
Activity
Performance
Figure 41: Financial summary of Serco Group, 2014-18 (£ million)
Figure 42: Geographic turnover analysis of Serco Group, 2018 (£ million)
Figure 43: Service turnover analysis of Serco Group, 2018 (£ million)
Strategy
Sodexo
Activity
Performance
Figure 44: Financial summary of Sodexo, 2014-18 (£ million)
Strategy
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Methodology
FURTHER SOURCES AND CONTACTS
Trade associations
Trade magazines