Iss A/s · OMXCOP:ISS
Iss A/s — FY2008 Earnings Presentation
34 slides from Iss A/s's earnings presentation, Feb 26, 2009
Slide 1: Investor Presentation - Full Year 2008 Results
Investor Presentation - Full Year 2008 Results - 26 February 2009
Slide 2: Forward-looking Statements
Forward-looking Statements Forward-looking statements This presentation may contain forward-looking statements. Statements herein, other than statements of historical fact, regarding future events or prospects, are forward-looking statements. The words ‘‘may’’, “will”, “should”, ‘‘expect’’, ‘‘antici
Slide 3: Strategy Update
Strategy Update Jørgen Lindegaard, Group CEO
Slide 4: ISS in 2008
ISS in 2008 Performance in line with expectations Launched the updated strategy – The ISS Way Introduced a stronger organisational structure Regional Structure Business Development Won the largest contract ever – HP Continued business platform building Added 66 acquisitions with a revenue of DKK 3.9
Slide 5: Industry Development
Industry Development 80’s 90’s 2000+ In house In house In house • Real Estate Management FM • FM FM • Key Service Provisions Individual service Individual service providers Integrated Facility Services providers Key trends: • In house service providers and FM managers disappearing • Consolidation of
Slide 6: Outsourcing Trend is Prevailing
Outsourcing Trend is Prevailing The outsourcing trend will continue Cost reductions + cost flexibility/scalability Access to economics of scale Access to talent/expertise Companies focus on core business Other trends which will influence outsourcing Sustainability (Green/LEED) Internationalisation H
Slide 7: Market Impact of Economic Downturn
Market Impact of Economic Downturn Facility Services market has mitigating characteristics towards general economic slow-down Industry characteristics ISS characteristics Recurring demand for provision Highly diversified on services, of facility services geographies (50 countries) and customer segme
Slide 8: Market Attractiveness
Market Attractiveness Huge and highly fragmented market Attractive growth rates Outsourcing trend continues Public sector opportunities Somewhat resilient to economic climate Increased internationalisation Consolidation trend continues Drive towards professionalized market conditions Drive towards b
Slide 9: ISS' Competitiveness
ISS’ Competitiveness Strong service mix and the ability to self-deliver Aptitude in excellence and efficiency First mover advantage in international IFS integration Strong market positions nationally and internationally Robust management structure Experience in optimising labour intensive, semi-skil
Slide 10: Lead Facility Services Globally
Our Vision Lead Facility Services Globally …By leading Facility Services Locally Lead globally with presence in all main regions and countries. Lead locally with leading positions in all established markets and the ambition to quickly achieve this position in new markets. Lead the industry by offeri
Slide 11: Cornerstone 1: Service Excellence
Cornerstone 1: Service Excellence Service Excellence: Prospecting Solution Negotiation Transition Operation Is the foundation for successful IFS service delivery Cleaning Services Drives knowledge sharing and Office best practise Support Property Sets minimum standards and Services share strategic i
Slide 12: Cornerstone 2: IFS Strategy
Cornerstone 2: IFS Strategy Our key strategic focus: Continued development towards being able to deliver IFS in the markets where we operate Building the ISS House as a prerequisite to perform IFS (management capability) Level of self delivery and sub- contracting is determined by local market condi
Slide 13: Cornerstone 3: Portfolio Based Business
Cornerstone 3: Portfolio Based Business Portfolio based business means: Key Accounts Recurring revenue and operational visibility Focus on site-based services Large Route-based services to support site-based organisations Medium Establishing critical mass in our delivery to Route drive out cost syne
Slide 14: Cornerstone 4: Multi-local Approach
Cornerstone 4: Multi-local Approach Our Country Management structure provides the platform: Strong local leadership, autonomy and clear accountabilities Act quickly to local market opportunities and changes Expand model into regional and international market offerings Alignment and knowledge sharing
Slide 15: Annual Results 2008
Annual Results 2008 Jakob Stausholm, Group CFO
Slide 16: The Key Priorities: Continued Delivery
The Key 4 Priorities: Continued Delivery Priority 1: Cash Conversion Priority 2: Operating Margin 120 6.2% 6.0% 100 108 5.9% 102 99 103 6.0% 5.8% 80 91 5.7% 5.8% 5.6% 60 5.6% 40 20 5.4% 0 5.2% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Priority 3: Organic Growth DKK Acquisitive Growth % of re
Slide 17: Key Figures - Strong Performance
Key Figures - Strong Performance DKKm 2008 2007 Revenue 68,829 63,922 - Organic growth 5.3% 6.0% - Acquisition growth 8% 10% Growth from continuing business 13% 16% - Currency exchange growth (3)% (0)% - Divestment growth (2)% (1)% Total growth 8% 15% Operating profit before other items 4,061 3,835
Slide 18: Solid Revenue Growth
Solid Revenue Growth 50% Organic 101% 94% Acquisition, net Total, incl. currency 40% 36% 31% 30% 27% 19% 20%18% 20% 17% 14% 10% 9% 9% 8% 7% 5% 6% 5% 4% 4% 3% 1% 1% 0%1% 0% Nordic Western Central Eastern Asia LatAm USA Pacific Europe Europe Europe FX: -2% 0% -6% 8% -7% -4% -13% -6% Effect of currency
Slide 19: Organic Growth in Emerging Markets
Organic Growth in Emerging Markets Revenue: DKK 68.8bn Organic Growth: DKK 3.3bn 2008 2008 3% 4% 2% 7% 5% Rest of Group 14% Asia Latin America Eastern Europe 75% 90% 19
Slide 20: Portfolio Share %
Portfolio Share % Positive trend in portfolio share - underpins degree of stability and resilience in business profile 100% 90% 80% 70% 76.0 72.3 71.6 71.6 73.6 60% 50% 40% 30% 20% 10% 0% 2004 2005 2006 2007 2008 20
Slide 21: Operating Margin (before other items)
Operating Margin (before other items) 10% 2007 2008 8% 7.4%7.4% 7.0%7.0% 6.7% 6.6% 6.4%6.4% 6.4% 6.3% 6.0%5.9% 5.8% 6.1% 5.8% 5.8% 6.0% 6% 5.6% 4% 2% 0% Nordic Western Central Eastern Asia LatAm USA Pacific Group Europe Europe Europe Revenue share: 25% 31% 26% 2% 5% 3% 3% 5% 100% 21
Slide 22: Acquisitions
Acquisitions
Slide 23: Acquisitions 2008
Acquisitions 2008 Revenue, DKKm(1) Platform Developers Adams Secuforce (Security) Hong Kong 111 Kfir (Security, Office Support) Israel 268 Strata (Security) UK 152 BGM Industries (Security, Cleaning) USA 510 Aspis (Security) Greece 216 Sardunya (Catering) Turkey 298 Topic Catering (Catering) Austral
Slide 24: Acquisitions 2008
Acquisitions 2008 Acquired Revenue By Service (1) 22% 27% Cleaning Office support Property 14% Catering 25% 12% Security Acquired Revenue By Geography (1) 4% 6% Nordic 13% 16% Western Europe Central Europe 7% Asia 9% Pacific 31% LatAm 14% USA Eastern Europe Note: (1) Unaudited approximate figures ba
Slide 25: Pricing Discipline of Acquisitions
Pricing Discipline of Acquisitions 9,000 14 8,000 12 7,000 9.8x 10.0x 9.4x 10 6,000 8.2x 8.3x 8.0x (DKK million) 7.7x 7.6x 5,000 7.2x 6.8x 8 8.3x 7.8x 7.3x 7.2x 4,000 7.0x 6.9x 6.8x 6.8x 6 6.4x 6.2x 3,000 4 2,000 2 1,000 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Q4 '08 Revenue acquired (lhs)
Slide 26: Other Financial Measures
Other Financial Measures
Slide 27: Other Financial Measures
Other Financial Measures Pro Forma Adjusted EBITDA Pro Forma calculation(1) DKKm 12 months ended December 31, 2008 Adjusted EBITDA 4,930 Estimated PF adjusted EBITDA of acquired and divested businesses 134 Estimated PF Adjusted EBITDA 5,064 Note: (1) The calculations of pro forma adjusted EBITDA are
Slide 28: Other Financial Measures (cont.)
Other Financial Measures (cont.) Pro Forma Capital Structure – December 31, 2008 Capitalisation (1) DKKm (2) % of Total Cash and securities (3,047) (10%) Other Indebtedness 368 1% Senior Facilities 17,649 59% EMTNs 7,155 24% Total Net Senior Debt 22,125 74% Second Lien 4,470 15% Senior Subordinated
Slide 29: Pro Forma Credit Ratios
Pro Forma Credit Ratios CAPITALISATION (DKKm) H1 2008 Q3 2008 Q4 2008 Total Net Cash Pay Debt 31,472 31,956 29,978 U Working Capital YTD 2008 (910) (1,360) - U Working Capital LTM 140 80 - = Seasonality Adj. Pro Forma Net Debt 30,702 30,676 29,978 PF Adjusted EBITDA 5,064 5,038 5,064 Seasonality Adj
Slide 30: Deleveraging on a Multiple Basis
Deleveraging on a Multiple Basis Net Debt / Pro Forma Adj. EBITDA 7.50x 7.42x 7.28x 7.26x 7.25x 7.28x 7.28x 7.09x 7.00x 7.10x 6.74x 6.75x 6.88x 6.68x 6.57x 6.50x 6.59x 6.54x 6.31x 6.34x 6.40x 6.25x 6.21x 6.27x 6.16x 6.00x 6.14x 6.06x 6.09x 5.92x 5.75x Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07
Slide 31: Pro Forma Credit Ratios
Pro Forma Credit Ratios Pro Forma Credit Ratios Q4 2008 PF Net Cash Pay Debt / PF EBITDA 5.92 Seasonality adj. PF Net Cash Pay Debt/ PF EBITDA 5.92 PF Net Senior Debt (incl. EMTNs) / PF EBITDA 4.37 PF Net Senior Debt (excl. EMTNs) / PF EBITDA 2.96 31
Slide 32: Maturity Profile
Maturity Profile 18.000 16.000 14.000 12.000 DKK millions 10.000 8.000 6.000 4.000 2.000 0 2009 2010 2011 2012 2013 2014 2015 2016 Senior EMTNs Second Lien High Yield 32
Slide 33: Outlook
Outlook The outlook set out below should be read in conjunction with ”Forward-looking statements” on page 2 of this presentation The Group will continue focusing on Strengthening single service excellence Key operational objectives Cash flow Operating margin Profitable organic growth Implementation
Slide 34: Investor Presentation - Full Year 2008 Results
Investor Presentation - Full Year 2008 Results - 26 February 2009