Iss A/s · OMXCOP:ISS
Iss A/s — Investor Day (September 2017)
73 slides from Iss A/s's investor day presentation, Sep 12, 2017
Slide 1: Capital Markets Seminar
Capital Markets Seminar 12 September 2017
Slide 2: Capital Markets Seminar: Agenda
Capital Markets Seminar: Agenda 16.00 Jeff Gravenhorst: Group CEO 16.20 Martin Gaarn Thomsen: Group COO 16.40 Jacob Götzsche: Regional CEO, Central Europe 17.00 Break 17.10 Dan Ryan: Regional CEO, Americas 17.30 Pierre-François Riolacci: Group CFO 17.45 Q&A 18.30 Drinks 19.15 Dinner 2
Slide 3: Jeff Gravenhorst: Group CEO
Jeff Gravenhorst: Group CEO THE POWER OF THE HUMAN TOUCH
Slide 4: Creating value for shareholders remains our priority
Creating value for shareholders remains our priority 1) Maximise growth and sustainability of Shareholder cash flow Returns 2) Selective and value-accretive investment Cash Flow • service enhancements Growth • restructuring/ efficiency initiatives • acquisitions 3) Shareholder returns Investment • t
Slide 5: Our strategy – The ISS Way – has choice-making at its core
Our strategy – The ISS Way – has choice-making at its core Customers Strategic choices… Services Geographies The ISS Way has underpinned our financial performance since its launch in 2008 5
Slide 6: Strategic choices: Customers
Our strategy – The ISS Way – has choice-making at its core • A growing focus on Key Accounts within our target industry segments • Business Services & IT • Industry & Manufacturing Customers • Public Administration • Healthcare 52% of 2016 revenue generated by Key Account customers Strategic choices
Slide 7: Strategic choices: Services
Our strategy – The ISS Way – has choice-making at its core • People-intensive, capex-light • Of a recurring nature • Predominantly site-based • Suitable for integration into IFS • Can be performance-based (output)… • …with an end-user focus (outcome) Strategic choices… Services The ISS Way has under
Slide 8: Strategic choices: Geographies
Our strategy – The ISS Way – has choice-making at its core • We want to follow our target customers… • …covering a high proportion of global GDP • We are present in the major markets and in the vast majority of future mega-cities ISS self-delivers in 32 of the top 40 global GDP countries Strategic c
Slide 9: ISS's competitive positioning within Global Facility Management
ISS’s competitive positioning within Global Facility Management Clients’ real estate priorities will influence which operating model is best suited • A service-led • A real estate operating model advisory led Owner occupier or with high self- Multi-tenant Occupancy model… single tenant delivery… • …
Slide 10: Country organisations now support our Key Account focus
Country organisations now support our Key Account focus… The ISS organisational blueprint for countries GREAT restructuring Expected status end 2017 UK & Ireland Switzerland France USA & Canada Iberia Norway Australia & NZ Finland Sweden Denmark Turkey Belgium & Lux Germany Hong Kong Singapore Israe
Slide 11: Maximise our value-add at the site level
…allowing us to maximise our value-add at the site level… Examples include… GLOBE • Procurement and Supply Chain REGION Volume • Business Process Outsourcing COUNTRY DIVISION • Transition • Operating Processes • Account Development SITE Concepts • Technology • Workplace Management & Design • Workpla
Slide 12: Optimising synergies across and within customer sites
…optimising synergies across and within customer sites Facility Management Facility Management Cleaning Support Property Catering Security Services Services Services Services Facility Management Services Cleaning Support Property Catering Security Services Services Services Services Facility Managem
Slide 13: Our Key Account focus will drive our organic growth
Our Key Account focus will drive our organic growth… 2016 retention rates (%) 2016 ‘above base’ revenue(1) (%) Organic growth (%) 2016 H1 2017 100 20 5 15 4 90 3 10 2 80 5 1 89.9 92.7 13.1 15.9 3.4 5.1 1.8 4.4 70 0 0 ISS Group Key Account Segments (1) Above base includes revenue generated from portf
Slide 14: Support margin improvement
…and support margin improvement… Country operating profit margins vs Key Account exposure, 2016(1,2) (%) 9.0 8.5 8.0 operating profit margin (%) 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 0 20 40 60 80 100 % of country revenue from Key Account Segments (1) Anaysis shown for ISS’s 13 largest countries by revenu
Slide 15: Engaged employees and satisfied customers
…underpinned by engaged employees and satisfied customers Employee Net Promoter Score(1) Customer Net Promoter Score(1) (eNPS) (cNPS) 59.2 43.2 60 60 50 50 40 40 30 30 20 20 10 10 0 0 2013 2014 2015 2016 2013 2014 2015 2016 We have an intense focus on employee engagement and customer satisfaction ac
Slide 16: ISS Sweden: Challenges faced and actions taken
ISS Sweden: Challenges faced and actions taken Sweden vs. the rest of Challenges faced Actions taken Northern Europe • High level of lost contracts within Cleaning • Key Accounts New pan-Northern Europe Cleaning 59% • High exposure to public sector Excellence team to drive best practice and 41% cont
Slide 17: Global Key Accounts – a source of very strong growth
Global Key Accounts(1) – a source of very strong growth… 11 Revenue from Global Key Accounts(1), DKK m • Currently 14 customers… 10 As a % of group total (left-axis) • …with an estimated annual FM 9 spend of DKK 40 billion… 9.0 8 • …implying ISS has a 23% share 8.3 of wallet(2) 7 6.8 6 6.5 Global Ke
Slide 18: Prospective Global Key Accounts offer huge potential
…and prospective Global Key Accounts offer huge potential 200 existing or potential customers of ISS where we see a strong opportunity to drive growth • Customers with global real estate portfolios… The ISS • …within our focus sectors… ‘G200’ • …with a stated wish to increase outsourcing in a manner
Slide 19: ISS Executive Group Management Team
ISS Executive Group Management Team CEO Jeff Gravenhorst Eastern Europe, Northern Europe Central Europe Western Europe Americas Asia Pacific Middle East & Africa Troels Bjerg Jacob Götzsche Richard Sykes Dan Ryan Dane Hudson Henrik Langebæk Global Operations Martin Gaarn Thomsen Commercial Andrew Pr
Slide 20: Martin Gaarn Thomsen: Group COO
Martin Gaarn Thomsen: Group COO
Slide 21: Martin Gaarn Thomsen
Martin Gaarn Thomsen Career history and education Career History • ISS: Group Chief Operating Officer (since February 2016) and member of the Executive Group Management • Previous roles at ISS (joined 1999): • Country Manager, ISS Denmark • Regional CEO, Western Europe • Regional CEO, Asia Pacific •
Slide 22: Video
Video Cognitive Intelligence bringing the workplace into the future
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Slide 24: An introduction to Global Operations
An introduction to Global Operations CEO Jeff Gravenhorst Eastern Europe, Northern Europe Central Europe Western Europe Americas Asia Pacific Middle East & Africa Troels Bjerg Jacob Götzsche Richard Sykes Dan Ryan Dane Hudson Henrik Langebæk Global Operations Martin Gaarn Thomsen Commercial Andrew P
Slide 25: Global Key Accounts
Global Key Accounts(1,2) We currently have 14 Global Key Accounts which we split into 4 sub-segments… Growth Banking Pharma IT Accounts (1) Also referred to as Global Corporate Clients, or GCC (2) Includes two additional, undisclosed customers 25
Slide 26: Global Key Accounts
Global Key Accounts(1,2) …and whom we serve across the globe Eastern Northern Central Western Europe, Americas Asia Pacific Europe Europe Europe Middle East & Africa (1) Also referred to as Global Corporate Clients, or GCC (2) Includes two additional, undisclosed customers 26
Slide 27: Service Excellence: Volumes, Concepts and Talent
Service Excellence: Volumes, Concepts and Talent Country Manager Commercial People & Culture Finance Service Specialised Key Accounts Direct Excellence Services 27
Slide 28: Bringing excellence to life
Bringing excellence to life Critical Energy & Capital Catering Cleaning Security Environments Sustainability Projects Management Strategic Workspace Workplace Management & Design Workplace Experience Processes & Performance Transition Excellence Procurement & Supply Chain Operating Process Framework
Slide 29: Case Study: Catering
Case Study: Catering ISS core catering team (1) Employed within Global Operations team (2) e.g. Technology, Procurement, etc. 29
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Slide 32: Case Study: Critical Environments
Case Study: Critical Environments How important are 3 What do our clients need? What is a critical 1 2 critical environments environment? • Maximum uptime, no unplanned downtime to ISS? • A clear and documented policy, strict procedures, tools and templates • We manage or serve more than with consis
Slide 33: Technology is enhancing our integrated, self-delivery model
Technology is enhancing our integrated, self-delivery model • Our integrated business intelligence platform • Provides customers with a single, global portal • Enables users to make and track Helpdesk requests… FMS • …and to deliver work order / asset management • Now based on IBM’s TRIRIGA platform
Slide 34: An introduction to Integration@ISS
An introduction to Integration@ISS What? How? • An account management • Optimises tasks and shifts Tasks Staff Site (employee numbers per (service details, site tool designed to optimise by fully levering our on- (type, skills required, time needed, recurrence, time service line, skills, description
Slide 35: Integration@ISS – Development roadmap
Integration@ISS – Development roadmap 1 2 3 4 5 Capacity Shift SLA(1) Up-Skilling Connect Planning Planning Optimisation • Reorganise and reallocate • Identify what extra skills in each • Analyse shift changes, adapted • Accounts now able to “play” • ‘Connect’ will allow the same tasks to the right
Slide 36: Integration@ISS – Development roadmap contd.
Integration@ISS – Development roadmap contd. 2017: Pilots 2017: Beyond the pilots 2018 and beyond • Roll-out of the Capacity Planning phase now targeted at a further 82 • 5 pilot sites chosen at 5 separate sites • Accelerated roll-out across Key Key Account customers… • This will include sites for a
Slide 37: Jacob Götzsche: Regional CEO, Central Europe
Jacob Götzsche: Regional CEO, Central Europe
Slide 38: Jacob Götzsche
Jacob Götzsche Career history and education Career History • ISS: Regional CEO Central Europe (since July 2008) and member of the Executive Group Management • Previous roles at ISS (joined 1999): • COO Central Europe • Regional Director and International Business Director • Previously at Pricewaterh
Slide 39: An introduction to ISS Central Europe
An introduction to ISS Central Europe 2016 revenue by country 2010-16 revenue (DKKm) and organic growth Organic growth DKK 5,251m Revenue (DKKm) DKK 2,783m 5% 10% 7% 11% 6% 12% 7% 10,699 11,172 11,440 12,300 12,237 14,277 14,543 DKK 2,474m 2010 2011 2012 2013 2014 2015 2016 DKK 1,824m % revenue from
Slide 40: ISS Switzerland: Making the right choice of customer
ISS Switzerland: Making the right choice of customer ISS Switzerland constant currency revenue change by 1. Industry Focus: industry (2009-16) Key drivers of success 2009 CHF 536m Pharmaceuticals Identification of those industries and customers where our value proposition resonates (e.g. service q
Slide 41: ISS Switzerland: People at the core of what we do
ISS Switzerland: People at the core of what we do ISS Switzerland employee net promoter score, eNPS, 2. Talent Focus: and customer net promoter score, cNPS (2009-16) Key drivers of success 76 ISS core values (honesty, entrepreneurship, responsibility, quality) not just ‘on the walls of the 70 offi
Slide 42: ISS Switzerland: Outstanding financial performance
ISS Switzerland: Outstanding financial performance ISS Switzerland: Revenue (DKK m), Organic Growth (%), and Retention Rate (%) Revenue by delivery type 19 Single 5,000 93.6 96.7 Multi IFS 4,000 94.3 98.4 2016 96.4 11 3,000 96.8 96.4 95.1 2,000 Cleaning Revenue by service Support 1,000 4 4 Property
Slide 43: ISS Austria: From single service to IFS / Key Account
ISS Austria: From single service to IFS / Key Account ISS enters Austria via Launch of Security services Contract launch with Immuno Further bolt-on acquisitions broaden acquisition of Otto Marischka (Shire) geographical Cleaning coverage The early years… (1971-2004) 1971 1980 1982 2002 2004 Acquisi
Slide 44: ISS Austria: Annual revenue and KPIs
Multi- Annual revenue (Austria) Single Services Full IFS Service (Cleaning, (18 KPIs 2016 (vs. Group average) (Cleaning) Reception, services) only Grounds , • Self-delivery: >75% Security) • LTIF: 4.0 (4.7) • eNPS: 86.8 (59.2) • cNPS: 100 (43.2) 1982-2014 2015-2016 2017 Shire Manufacturing Facility
Slide 45: ISS Germany: From good to GREAT
ISS Germany: From good to GREAT Acquisition Divestment Acquisition Acquisitions and divestments Key customer wins ISS voted #1 FM 2,580 provider in 2,406 2,417 2,435 2,474 2,235 2,334 Germany (2017) 1,984 1,791 1,842 1,855 1,847 Revenues (DKK m) Organic growth (%) (9) (5) (4) 4 (7) 7 17 5 7 (0) 35 2
Slide 46: ISS Germany: Today's organisational structure
ISS Germany: Today’s organisational structure Regional CEO Central Europe Jacob Götzsche Country Manager Germany Alexander Granderath Commercial Finance Lean & Transition Tom Dreiner Martin Geisel Joachim Schneider People & Culture Corinna Reefsgaard KEY ACCOUNTS Business Services Specialised Pharma
Slide 47: ISS Germany: Significant growth potential
ISS Germany: Significant growth potential 2016 market shares within Germany’s EUR 50 bn facility services market(1) 0.7% 19.9% 0.9% 1.0% 1.1% 1.1% 1.1% Germany’s 1.3% 13 largest 1.3% facility 1.8% services companies 2.0% account for 2.0% less than 20% of the 2.8% total German market 2.9% (1) Source:
Slide 48: ISS Central Europe: Conclusions
ISS Central Europe: Conclusions The region comprises… • Developed Markets (e.g. Switzerland, Germany, Austria)… 1 Our markets • …and high growth Emerging Markets (e.g. Turkey) • IFS adoption and our Key Account focus is typically higher within Developed Markets • We have a leading market position in
Slide 49: Break
Break THE POWER OF THE HUMAN TOUCH
Slide 50: Dan Ryan: Regional CEO, Americas
Dan Ryan: Regional CEO, Americas
Slide 51: Dan Ryan
Dan Ryan Career history and education Career History • ISS: Regional CEO Americas (since February 2016) and member of the Executive Group Management • G4S: Regional CEO Asia & Middle East and member of the Group Executive Committee • NOL: Various senior management positions and member of the Executi
Slide 52: An introduction to ISS Americas
An introduction to ISS Americas 2016 revenue by country 2010-16 revenue (DKKm) and organic growth(1) Organic growth DKK 4,680m Revenue (DKKm) 10,185(2) DKK 1,038m 13% 27% 2% 4% 5% 2% 6% 5,695 7,018 7,359 7,167 7,074 7,770 7,885 DKK 979m 2010 2011 2012 2013 2014 2015 2016 DKK 649m % revenue from IFS
Slide 53: Three overarching priorities for ISS Americas
Three overarching priorities for ISS Americas North America Brazil 1 2 Continued execution of our shrink- Increase penetration and to-grow strategy, exiting non- market share within our chosen strategic parts of the business and services, industries/customers restoring organic growth elsewhere and g
Slide 54: ISS North America: Timeline
ISS North America: Timeline Revenue(1) and organic growth Revenue breakdown by service type 2010 2016 pro forma(1) 8,000 40 ISS enters North 7,000 America via 3 35 acquisitions: • Sanitors Inc (2007) 30 6,000 GREAT • BGM Industries (2008) strategy 25 • CPS (2009) launched 5,000 20 4,000 15 3,000 10
Slide 55: ISS North America: The FM market
ISS North America: The FM market Size ISS market share G200(2) presence % of global, outsourced FM market(1) ISS % market share of outsourced FM market(1) Estimated North American FM wallet of the G200(2) (DKK bn) North America 27 Northern Europe 4.3 Financial Services 24 Western Europe 21 Asia 1.7
Slide 56: ISS North America: Challenges and actions taken
ISS North America: Challenges and actions taken Challenges… 1 2 3 Whitespots within our self-delivery A complex customer portfolio with a Leadership challenges with scope to capabilities and a lack of reference long tail of non-strategic customers strengthen the adoption of ISS’s culture cases Actio
Slide 57: ISS North America: Guckenheimer
ISS North America: Guckenheimer Guckenheimer: Core Values A strong fit for ISS North America’s strategic direction • High-end service delivery 1 • Outstanding brand reputation • Strong management team • Consolidated customer portfolio (187) 2 • Strong references with a number of blue chip clients •
Slide 58: ISS North America: Guckenheimer contd.
ISS North America: Guckenheimer contd. Integration to-date Focus areas Comments We are less than 5 months into the • Significant and larger-than-expected opportunities being process but the performance to-date is pursued ahead of our expectations Procurement • Strong collaboration between Guckenheim
Slide 59: The Guckenheimer view
The Guckenheimer view My first impressions are that we have incredible talent in the Core Catering Team leveraged across each country. I was fascinated to see the impressive work of the different catering teams in country – from the meticulous food delivery for the airline operation in Israel to the
Slide 60: ISS Americas: Conclusions
ISS Americas: Conclusions • Whilst the outsourcing of FM services in North America is well established… • …the integrated, self-delivery model (IFS) is less evolved than in Europe 1 Our markets • We believe this is changing and our G200 analysis indicates significant potential • Brazil, Chile and Me
Slide 61: Video: Guckenheimer
Video Guckenheimer THE POWER OF THE HUMAN TOUCH
Slide 62: LCi
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Slide 63: Pierre-François Riolacci: Group CFO
Pierre-François Riolacci: Group CFO
Slide 64: Pierre-François Riolacci
Pierre-François Riolacci Career history and education Career History • ISS: Group CFO (since November 2016) and member of the Executive Group Management • Air France-KLM: Chief Financial Officer • Veolia: Chief Financial Officer, member of the Executive Committee and various other roles including Ad
Slide 65: Organic growth and the impact from portfolio adjustments
Organic growth and the impact from portfolio adjustments Organic growth, 2010-H117 Comments (%) 7.0 • This analysis illustrates ISS’s organic growth as 6.0 reported and on an adjusted basis 5.0 • The adjusted analysis removes the contribution to group organic growth for the entire period from those
Slide 66: Strong conversion of EBITDA into operating cash flow
Strong conversion of EBITDA into operating cash flow Conversion of EBITDA to Operating Cash Flow, 2010-16 Conversion of EBITDA to Operating Cash Flow, 2010-LTM (EBITDA indexed at 100) (%) 100.0 0.7 Average, 2010-16 (97.2%) 95.0 100.0 (3.4) 90.0 97.2 85.0 80.0 EBITDA before Share based Changes in Ope
Slide 67: Long-term track record of strong working capital management
Long-term track record of strong working capital management Average Net Working Capital as a % of Revenue, 2010-LTM(1) Cash Flow: Changes in Working Capital, 2010-LTM (%) (DKK m) 3.0 200 110 100 105 2.0 0 100 1.0 -100 95 0.0 -200 90 -1.0 -300 85 -2.0 -400 80 2010 2011 2012 2013 2014 2015 2016 LTM -3
Slide 68: Our business model remains capital-light
Our business model remains capital-light Non-acquisition related intangibles and PPE, 2010-16 Cash Flow: Capital expenditure, 2010-LTM (DKK m) (DKK m) 3,000 40 0 1.4 35 -200 2,500 1.3 30 2,000 -400 25 1.2 1,500 20 -600 15 1.1 1,000 -800 10 500 -1,000 1.0 5 0 0 -1,200 0.9 2010 2011 2012 2013 2014 201
Slide 69: Disciplined M&A and restructuring
Disciplined M&A and restructuring Cash Flow: Restructuring & integration costs versus Comments Acquisitions & divestments, net, 2010-LTM (DKK m) 2,500 • DKK 4.5 billion of net proceeds realised from 2,000 acquisitions & divestments over 2010-16 1,500 1,000 • Some of these proceeds have been reinvest
Slide 70: Efficient tax and balance sheet structure
Efficient tax and balance sheet structure Cash Flow: Income taxes paid, 2010-LTM Cash Flow: Net interest paid, 2010-LTM (DKK m) (DKK m) 0 70 0 -200 60 -500 50 -400 40 -600 -1,000 30 -800 20 -1,500 -1,000 10 -2,000 -1,200 0 2010 2011 2012 2013 2014 2015 2016 LTM -2,500 Income taxes paid, DKK m (left-
Slide 71: Strong free cash generation
Strong free cash generation Free Cash Flow(1) Comments 3,000 Pre-IPO (March 2014) • Strong working capital management (ISS cash conversion of 99% and 98%) • Lower capital expenditure 2,500 • Lower taxation • ISS cash conversion of 92%, expected to 2,000 improve in H2 2017 • Normalised capital expend
Slide 72: Creating value for shareholders remains our priority
Creating value for shareholders remains our priority 1) Maximise growth and sustainability of Shareholder cash flow Returns 2) Selective and value-accretive investment Cash Flow • service enhancements Growth • restructuring/ efficiency initiatives • acquisitions 3) Shareholder returns Investment • t
Slide 73: Q&A
Q&A THE POWER OF THE HUMAN TOUCH