Iss A/s · OMXCOP:ISS
Iss A/s — Debt Investor Presentation (November 2004)
45 slides from Iss A/s's debt investor presentation, November 2004
Slide 1: ISS Global A/S Eurobond Roadshow Presentation
ISS Global A/S Eurobond Roadshow Presentation November 2004
Slide 2: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements within the meaning of US Private Securities Litigation Act of 1995 and similar laws and regulations in other countries regarding expectations to the future development, in particular future sales, operating efficiencies
Slide 3: Agenda
Agenda • Introduction to ISS • ISS A/S Interim results, January – September 2004 • The Offering • Appendices 3
Slide 4: Basic ISS facts
Basic ISS facts • ISS is a leader within the Facility Services industry as well as in most countries where active • Turnover of DKK 36 bn in 2003 (∼ € 4.8 bn ) • ISS is a publicly held company with its shares listed in Copenhagen (market capitalisation of DKK 14.7 bn ∼ €2.0 bn as of 17 November 2004
Slide 5: ISS Today
ISS Today ISS countries: Argentina Australia Austria Belgium/Luxembourg Brazil Brunei Chile China and Hong Kong Croatia Czech Republic Denmark/Greenland/Iceland Finland France Germany Greece Hungary Indonesia Ireland Israel Italy Japan Malaysia The Netherlands Norway Poland Portugal Romania Singapor
Slide 6: Key credit considerations
Key credit considerations • A leading provider of Facility Services • Strong competitive position in a growing industry • Solid brand recognition, particularly in Europe • Strong credit profile • Resilient business model • Flexible cost structure • Diversified customer base across geographies and in
Slide 7: 2003 turnover DKK 36 bn (~ € 4.8 bn)
2003 turnover DKK 36 bn (~ € 4.8 bn ) Turnover by Business Build Turnover by region Food Hygiene Overseas 3% Health Care 5% 2% Damage Control 5% Northern Continental Europe Europe 46% 49% Facility Services 90% 7
Slide 8: Logic of Facility Services
Logic of Facility Services Customer Synergies Key Account manager Service Integration (FS Manager) Cleaning Property Canteen Office Growth Services Services Services Support Services opportunities Hospital catering Building & Tech. Internal Services BtoB Catering Platform DOC Landscaping Mat service
Slide 9: Acquisition strategy
Acquisition strategy • Services and competencies • Filling competencies gap country by country • Geographies • Existing markets • New markets (e.g. the Baltic region, Russia, New Zealand) • Size • Bolt-on acquisitions (each acq. < 5% of Group turnover) • Low execution risk • Low quality, low margin
Slide 10: Acquisitions January 2004 – November 2004
Acquisitions 1 January 2004 – 18 November 2004 • 86 acquisitions • Approximately DKK 5.6 billion annual turnover Acquired turnover Acquisitions by segment YTD Business Builds Other FS 8,000 60% FM 7,000 50% 6,000 Catering 40% 5,000 4,000 30% Cleaning 3,000 20% 2,000 10% 1,000 0 0% Property Services
Slide 11: UK – Development of Facility Services
UK – Development of Facility Services FM Cleaning Property Catering Office 2000 2001 2002 2003 2004 Strong position Critical mass Established Not present Note: MediClean not depicted 11
Slide 12: Grupo Unica of Spain
Grupo Unica of Spain ISS Facts: • Turnover: Estimated 1.2 billion (2004) • Employees: Approximately 23,000 Unica • Business focus: Cleaning Strategic rationale: • Establish geographical platform with Combined full coverage for growth of Facility Services in Spain Strong Limited presence presence 12
Slide 13: Engel Group of Finland
Engel Group of Finland ISS Finland Facts: Turnover, DKK million • Turnover: Estimated 1.4 billion (2004) 1,600 1,520 • Employees: Approximately 6,600 1,200 1,251 1,374 1,104 1,021 • Business focus: Cleaning and 800 759 CAGR = 16% 620 Property Services 400 1997 1998 1999 2000 2001 2002 2003 Strategic
Slide 14: Integration of acquisitions
Integration of acquisitions Grupo Unica: Engel Group: • Turnover: Estimated 1.2 billion (2004) • Turnover: Estimated 1.4 billion (2004) • Employees: Approx. 12,200 • Employees: Approx. 6,600 • Business focus: Cleaning • Business focus: Cleaning and Property Services Integration progress: Integration
Slide 15: Credit ratios
Credit ratios FFO to net debt Interest cover Net debt to equity 50% 14 175% 12 150% 40% 10 125% 30% 8 100% 20% 6 75% 4 50% 10% 2 25% 0% 0 0% 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 Lease adjusted* Before lease adjustment * Lease adjusted according to
Slide 16: Funding strategy
Funding strategy Commitment curve • Ensure sufficient financial flexibility 31 December 2003 to support create2005 16 14 • Secure access to various sources of 12 financing 10 • Equity markets 8 6 • Core bank group 4 – Consists of 12 international banks 2 – Principle: Projected net debt must stay 0 b
Slide 17: ISS shareholders
ISS shareholders United States 28% ISS has one class of Denmark shares with no 37% restrictions, ie. 100% free float. The ISS share is listed on the Copenhagen Stock Exchange Europe 11% United Kingdom 24% Institution % of capital and votes Fidelity Investments 9% ATP, The Danish Labour Market Supple
Slide 18: Agenda
Agenda • Introduction to ISS • ISS A/S Interim results, January – September 2004 • The Offering • Appendices 18
Slide 19: Q3 2004 – Key figures
Q3 2004 – Key figures Amounts in DKK Q3 2004 Growth Growth % Organic 2 Turnover 10,411m +17% Currency - Organic growth 2% Acquisitions, net 15 Total 17 Operating profit 1) 657m +17% Q3 operating profit development Operating margin 1) 6.3% 700 DKK million 657 Ordinary profit before other fin. 600 584
Slide 20: 9M 2004 – Key figures
9M 2004 – Key figures Amounts in DKK 9M 2004 Growth Growth % Organic 1 Turnover 29,398m +9% Currency (1) Organic growth 1% Acquisitions, net 9 Total 9 Operating profit 1) 1,661m +10% Operating margin 1) 5.6% 9M operating profit development 1,800 DKK million Ordinary profit before other fin. 1,600 1,
Slide 21: 9M 2004 and consensus estimates
9M 2004 and consensus estimates *) DKKm Actual Consensus Diff. Turnover 29,398 29,287 0.4% Operating profit 1,661 1,655 0.3% Operating margin 5.65% 5.65% 0.0pp Financial expenses, net (238) (238) 0% Ordinary profit before goodwill amortisation 975 983 -0.8% EPS before goodwill amortisation, DKK 22.1
Slide 22: 9M 1998 – 9M 2004 – Key figures
9M 1998 – 9M 2004 – Key figures Amounts in DKK 9M 1998 9M 2004 CAGR Turnover 9,937m 29,398m +20% Operating profit 1) 498m 1,661m +22% Operating margin 1) 5.0% 5.6% Ordinary profit before gw. 330m 975m +20% EPS 2) 11.1 22.1 +12% 1) Before other income and expenses 2) Earnings per share before goodwil
Slide 23: Business report
Business report
Slide 24: 9M 2004 – Facility Services
9M 2004 – Facility Services • Development of Facility Services • Service scope expansion • Organisational alignment • Integration of acquisitions • Realisation of synergies • Push for organic growth • Focus on new sales 24
Slide 25: Organic growth
Organic growth Country Organic growth Portugal 19% Austria 13% Spain 12% Israel 12% Finland 9% Ireland 6% France 5% UK 5% South America 4% Australia 3% Central Europe 3% Asia 2% Belgium 1% Denmark 0% Switzerland -2% Norway -4% Sweden -5% The Netherlands -7% More than 1 percentage point negative Germ
Slide 26: 9M 2004 – Business Builds
9M 2004 – Business Builds • Food Hygiene: • Leverage of international concepts • Damage Control: • Operation brought closer to the FS-organisation • Impacted by low damage activity • Health Care: • Downsizing – adapting to market conditions 26
Slide 27: 9M 2004 – Business issues
9M 2004 – Business issues • 40 countries – 5 issues • Denmark • Switzerland • Health Care • Germany • Damage Control Norway 27
Slide 28: Operations by business area
Operations by business area Business area T/O Growth Organic Operating margin DKKbn growth 9M 2004 9M 2003 Facility Services 27.0 10 % 1% 6.13 % 6.10 % Damage Control 1.2 (9)% (6)% 3.3 % 3.6 % Food Hygiene 0.7 9% 5% 6.4 % 6.4 % Health Care 0.4 10 % (1)% 9.7 % 11.5 % Corporate - - - (0.4)% (0.4)% Gro
Slide 29: Operations by region
Operations by region Region T/O Growth Organic Operating margin DKKbn growth 9M 2004 9M 2003 Northern Europe 13.6 10 % 0.5 % 6.4 % 6.1 % Continental Europe 14.3 10 % 1% 5.8 % 6.0 % Overseas 1.5 7% 4% 5.3 % 5.7 % Corporate - - - (0.4)% (0.4)% Group 29.4 9% 1% 5.6 % 5.6 % 29
Slide 30: 2004 – Agenda
2004 – Agenda • Develop Facility Services • Service expansion (acquisitive and organic) • Organisational alignment to deliver integrated services • Maintain • Margin focus • Solid cash conversion (can not reach 150% again!) • Accelerate organic growth • Structured approach (new sales & customer rete
Slide 31: Outlook 2004
Outlook 2004 Please refer to “Forward-looking statements” on page 2 • Including acquisitions/divestments announced prior to 18 November 2004: • Turnover to exceed DKK 40 billion • Ordinary profit before goodwill amortisation (after tax) to exceed DKK 1.3 billion 31
Slide 32: FINANCIALS
FINANCIALS
Slide 33: Profit and loss
Profit and loss DKKm 9M 2004 9M 2003 Change 2003 Turnover 29,398 26,861 +9% 36,165 Operating profit 1,661 1,511 +10% 2,032 Operating margin 5.6% 5.6% 5.6% Other income and expenses, net (33) (25) (75) Associates 21 4 7 Financial expenses, net (238) (196) (265) Other financial income, net - 33 33 Tax
Slide 34: Cash flow statements
Cash flow statements DKKm 9M 2004 9M 2003 2003 Operating profit 1,661 1,511 2,032 Depreciation 444 430 587 Working capital / provisions (622) (366) 283 Interest payments (261) (172) (215) Tax paid (355) (195) (323) Other items (43) (8) (19) Cash flow from operations 824 1,200 2,345 Investment in int
Slide 35: Balance sheet
Balance sheet DKKm 30.09.04 30.06.04 Ratio Goodwill 15,269 13,015 117 Software and other intangible assets 158 157 101 Tangible fixed assets 1,683 1,564 108 Financial fixed assets 826 704 117 Debtors & Stocks 7,934 7,246 109 Liquid funds and securities 2,271 2,175 104 Total assets 28,141 24,861 113
Slide 36: Agenda
Agenda • Introduction to ISS • ISS A/S Interim results, January – September 2004 • The Offering • Appendices 36
Slide 37: The Offering
The Offering Issuer ISS Global A/S Status Senior, unsecured Amount € 500 million + Maturity 10 years Rating BBB+/stable (Standard & Poor’s) Use of Proceeds Refinancing and general corporate purposes Documentation / Listing EMTN Programme / Luxembourg Bookrunners Deutsche Bank, Nordea and SocGen 37
Slide 38: Agenda
Agenda • The ISS Strategy • ISS A/S Interim results, Janauary – September 2004 • The Offering • Appendices 38
Slide 39: Facility Services operating model
Facility Services operating model Facility Services Manager Cleaning Services Canteen Services Office Support Property Services 3rd party suppliers • Daily Office Cleaning • Catering Services • Reception & • Building Maintenance • Manpower • Indoor Air Quality Call-Centre • Building Control & • Invo
Slide 40: Historic development in key figures
Historic development in key figures Turnover Operating profit (CAGR=21%) (CAGR=23%) DKKbn DKKm 40 2,500 35 2,000 30 25 1,500 20 15 1,000 10 500 5 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 Cash flow from operating CEPS activities (CAGR=28%) (CAGR=23%) DKKm DKK 2,500 50 45 2,000 40 3
Slide 41: Cumulative cash flow from 1999 – H1 2004
Cumulative cash flow from 1999 – H1 2004 Cash from operations Proceeds from issuance of share capital Debt increase Sale of intangible and tangible assets Other Dividends and share buy- backs Purchase of intangible and tangible assets Acquisitions -15,000 -10,000 -5,000 0 5,000 10,000 41
Slide 42: Financial risk management
Financial risk management • The Group’s financial risk management • Policies approved by the Board of Directors • Policies specifying guidelines and risk limits • All hedging of financial risks are managed centrally at corporate level • Interest risk • Measured and managed on the Groups net debt pos
Slide 43: Legal and financing structure
Legal and financing structure - Stocklisted - CSE - Debt free and free of ISS A/S any financial liabilities - Wholly owned subsidiary - Does not guarantee of ISS A/S the obligations of ISS - Issuer on the EMTN Global A/S (the Issuer) Programme in respect of the bond - Owner of ISS’ operating issue I
Slide 44: Analysts
Analysts Equity analysts Credit analysts Broker Analyst Broker Analyst Alm. Brand Børs Michael D. Jørgensen ABN Amro Richard Morawetz Carnegie Carsten Leth Danske Bank Thomas Hovard Danske Bank Lars Heindorff Deutsche Bank James Maxwell Enskilda Securities Jeff Saul HSBC Simon Cowie GP Børsmæglersel
Slide 45: Contacts
Contacts • Bredgade 30 DK-1260 Copenhagen K Denmark www.issworld.com • IR contacts: Thyge Boserup, Vice President Phone: +45 38 17 64 65 e-mail: ir@group.issworld.com 45