Investor Presentation - Full Year 2008 Results - 26 February 2009

Transcription

1 Investor Presentation - Full Year 2008 Results - 26 February 2009

2 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, anticipate, believe, estimate, plan, "predict," intend or variations of these words, as well as other statements regarding matters that are not historical fact or regarding future events or prospects, constitute forward-looking statements. ISS has based these forward-looking statements on its current views with respect to future events and financial performance. These views involve a number of risks and uncertainties, which could cause actual results to differ materially from those predicted in the forward-looking statements and from the past performance of ISS. Although ISS believes that the estimates and projections reflected in the forward-looking statements are reasonable, they may prove materially incorrect, and actual results may materially differ, e.g. as the result of risks related to the facility service industry in general or ISS in particular including those described in the annual report 2007 of ISS Holding A/S and other information made available by ISS. As a result, you should not rely on these forward-looking statements. ISS undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. The Annual Report 2007 of ISS Holding A/S is available from the Group s website, 2

3 Strategy Update Jørgen Lindegaard, Group CEO

4 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 bn 4

5 Industry Development 80 s 90 s Real Estate Management FM In house Key Service Provisions Individual service providers In house FM Individual service providers FM In house Integrated Facility Services Key trends: In house service providers and FM managers disappearing Consolidation of service segments continues Both service providers and FM companies moving towards integrated solution Clients move towards national/regional/global solutions 5

6 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 How outsourced employees are treated is increasingly becoming a key decision criteria Staff take-over HR and CSR 6

7 Market Impact of Economic Downturn Facility Services market has mitigating characteristics towards general economic slow-down Industry characteristics Recurring demand for provision of facility services Customers can achieve cost savings and increase cost base flexibility by Outsourcing to specialized providers Bundling of outsourced services Higher propensity to outsource in a tougher economic climate ISS characteristics Highly diversified on services, geographies (50 countries) and customer segments Low customer concentration Broad range of services provides cross-selling opportunities and efficiency gains through service integration Recurring portfolio business (75% of revenue) Flexible cost base 7

8 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 buying criteria focusing on more than price 8

9 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-skilled services Ability to handle different cultures and levels of education Experienced know how in controlling large operations 9

10 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 offering best-in-class single services and integrated facility services (IFS). 10

11 Cornerstone 1: Service Excellence Service Excellence: Prospecting Solution Negotiation Transition Operation Is the foundation for successful service delivery IFS Drives knowledge sharing and best practise Cleaning Services Office Support Sets minimum standards and share strategic initiatives Property Services Catering Services Is a key requirement for ISS University and Knowledge Forums Security Services 11

12 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 subcontracting is determined by local market conditions Long term aspiration is to self deliver IFS 12

13 Cornerstone 3: Portfolio Based Business Portfolio based business means: Recurring revenue and operational visibility Focus on site-based services Route-based services to support site-based organisations Establishing critical mass in our delivery to drive out cost synergies Key Accounts Large Medium Route based 13

14 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 to strengthen cross boarder value creation Tight financial monitoring and control 14

15 Annual Results 2008 Jakob Stausholm, Group CFO

16 The Key 4 Priorities: Continued Delivery Priority 1: Cash Conversion Priority 2: Operating Margin % 6.0% 5.8% 5.6% 5.4% 5.2% 6.0% 5.9% 5.8% 5.7% 5.6% % 6% 4% 2% Priority 3: Organic Growth 5.5% 6.0% 3.4% 1.5% 5.3% 10 DKK bln Acquisitive Growth % of revenue 20% 15% 10% 5% 0% Where relevant ISS A/S is used for 2005, otherwise ISS Holding A/S 0% 16

17 Key Figures - Strong Performance DKKm 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 - Operating margin before other items 5.9% 6.0% Debtor days Pro Forma Net Debt 29,978 29,981 Pro Forma adjusted EBITDA 5,064 4,866 PF Net Debt / PF EBITDA 6.16x

18 Solid Revenue Growth 50% 40% Organic Acquisition, net Total, incl. currency 36% 101% 94% 30% 31% 27% 20% 19% 20% 18% 17% 14% 10% 0% 5% 1% 4% Nordic 1% 1% 0% Western Europe 9% 8% 7% Central Europe 9% Eastern Europe Effect of currency adjustments is not shown separately, but included in Total 6% 5% 4% 3% Asia LatAm USA Pacific FX: -2% 0% -6% 8% -7% -4% -13% -6% 18

19 Organic Growth in Emerging Markets Revenue: DKK 68.8bn 2008 Organic Growth: DKK 3.3bn % 3% 2% 7% 4% Rest of Group Asia 14% Latin America Eastern Europe 75% 90% 19

20 Portfolio Share % 100% 90% 80% Positive trend in portfolio share - underpins degree of stability and resilience in business profile 70% % 50% 40% 30% 20% 10% 0%

21 Operating Margin (before other items) 10% % 6% 7.0% 7.0% 7.4% 7.4% 6.7% 6.6% 6.4% 6.3% 6.4% 6.4% 5.8% 6.1% 5.8% 6.0% 5.8% 5.6% % 5.9% 4% 2% 0% Nordic Western Europe Central Europe Eastern Europe Asia LatAm USA Pacific Group Revenue share: 25% 31% 26% 2% 5% 3% 3% 5% 100% 21

22 Acquisitions

23 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) Australia 184 Loghis Logistica (Office Support) Brazil 108 Golden Mind (Office Support) Thailand 204 Manchester (Security) New Zealand 132 Others, incl. small and medium Total of 56 acquisitions 1,704 Total - 66 acquisitions 3,887 Note: (1) Unaudited approximate figures based on information available at the time of acquisition. 23

24 Acquisitions 2008 Acquired Revenue By Service (1) 22% 27% Cleaning Office support Property 25% 14% Catering 12% Security Acquired Revenue By Geography (1) 7% 9% 13% 14% 4% 6% 16% 31% Nordic Western Europe Central Europe Asia Pacific LatAm USA Eastern Europe Note: (1) Unaudited approximate figures based on information available at the time of acquisition. 24

25 Pricing Discipline of Acquisitions 9, , (DKK million) 7,000 6,000 5,000 4,000 3,000 2, x 6.4x 8.2x 6.2x 9.4x 7.2x 7.0x 6.9x 10.0x 7.8x 8.3x 8.3x 7.7x 7.3x 8.0x 6.8x 7.6x 7.2x 6.8x 6.8x , Q4 '08 0 Revenue acquired (lhs) All acquisitions Price/EBITA Bolt-On acquisitions Price/EBITA 25

26 Other Financial Measures

27 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 based in part on management estimates and the unaudited internal management accounts of the acquired businesses. These numbers have not been, and cannot be, audited. The Pro Forma EBITDA is based on Last Twelve Months figures. 27

28 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 Notes 3,383 11% Total Net Cash Pay Debt 29, % Notes: (1) This Capitalisation table reflects the Capitalisation Table included in ISS Holding A/S s Preliminary Annual Results (2) Converted to DKK as per exchange rate of December 31,

29 Pro Forma Credit Ratios CAPITALISATION (DKKm) H Q Q Total Net Cash Pay Debt 31,472 31,956 29,978 Working Capital YTD 2008 (910) (1,360) - Working Capital LTM = Seasonality Adj. Pro Forma Net Debt 30,702 30,676 29,978 PF Adjusted EBITDA 5,064 5,038 5,064 Seasonality Adjusted PF Net Cash Pay Debt / PF EBITDA 6.06x 6.09x 5.92x 29

30 Deleveraging on a Multiple Basis Net Debt / Pro Forma Adj. EBITDA 7.50x 7.25x 7.00x 6.75x 7.42x 7.28x 7.26x 7.28x 7.28x 7.09x 7.10x 6.88x 6.74x 6.68x 6.57x 6.50x 6.25x 6.00x 6.59x 6.54x 6.40x 6.27x 6.16x 6.31x 6.34x 6.21x 6.14x 6.06x 6.09x 5.92x 5.75x Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Net Debt / PF Adj. EBITDA Seasonality Adj. Net Debt / PF Adj. EBITDA 30

31 Pro Forma Credit Ratios Pro Forma Credit Ratios Q PF Net Cash Pay Debt / PF EBITDA Seasonality adj. PF Net Cash Pay Debt/ PF EBITDA PF Net Senior Debt (incl. EMTNs) / PF EBITDA 4.37 PF Net Senior Debt (excl. EMTNs) / PF EBITDA

32 Maturity Profile DKK millions Senior EMTNs Second Lien High Yield 32

33 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 of The ISS WAY the strategy plan Refinancing of the 2010 EMTN s Outlook (1) Revenue is expected to continue to grow organically, however at lower levels than in 2008, supplemented by selective acquisitions The operating margin is expected to be around the current level in 2009 ISS is determined to continue reducing the financial leverage on a multiple basis (1) See the Outlook section on page 8 of the Preliminary announcement of the annual results for

34 Investor Presentation - Full Year 2008 Results - 26 February 2009