Tag Archives: Facility Services

Continued solid growth for first nine months of 2018 reported by ISS Group

ISS, the global provider of facility services, has published its interim financial report for the first nine months of 2018. Organic growth stands at 3.2% in the first nine months and 3.4% in Q3 (Q2 2018: 3.2%), supported by contract launches and the expansion of global key account contracts as well as continued demand for non-portfolio services.

Total revenue decreased by 0.9% in the first nine months and 0.7% in Q3 (Q2 2018: 1.6%). The decrease in the first nine months was driven by negative currency effects of 4.1% partly offset by organic growth, while effects from acquisitions and divestments were flat for the first nine months.

Operating margin of 4.9% in the first nine months (2017: 5.4%) and 6.1% in Q3 (Q3 2017: 6.3%) reflects contracts phasing in and out, albeit less than for previous quarters. The net impact of acquisitions and divestments as well as currency translation effects was negative by 3 bps for the first nine months and positive by 6 bps for Q3.

Operating profit before other items amounted to DKK 2,901 million in the first nine months (2017: DKK 3,203 million), including negative currency translation effects of DKK 132 million, and DKK 1,189 million in Q3 (Q3 2017: DKK 1,249 million).

JeffGravenhorstISS

Jeff Gravenhorst

Net profit (adjusted) decreased to DKK 1,387 million in the first nine months of 2018 (2017: DKK 1,820 million), mainly due to lower operating profit before other items, higher other income and expenses, net and higher financial income and expenses, net.

Net profit was DKK 437 million in the first nine months (2017: DKK 1,501 million) mainly as a consequence of goodwill impairment due to re-measurement of businesses classified as held for sale in the Netherlands, Argentina and Uruguay as well as France.

Cash conversion

Cash conversion over the last 12 months is 91% (Q2 2018: 97%) due to the mobilisation of Deutsche Telekom and the timing of collections and payments. Excluding the mobilisation of Deutsche Telekom, the cash conversion was 95%.

Free cash flow was an outflow of DKK 960 million for the first nine months (2017: an inflow of DKK 2 million), mainly driven by changes in working capital and lower cash flow from operating activities including the mobilisation of Deutsche Telekom and negative currency translation effects.

Net debt was DKK 13,971 million at 30 September 2018 (30 September 2017: DKK 13,913 million). Leverage at 30 September 2018 was 2.9x (30 September 2017: 2.7x), impacted by lower operating profit before other items mainly driven by negative currency translation effects. Capital allocation and leverage objectives for the business remain unchanged.

Revenue from key accounts amounts to 56% of Group revenue in the first nine months (H1 2018: 53%). Revenue from global key accounts decreased by 3% in constant currency in the first nine months and represents 13% of Group revenue (H1 2018: 12%).

Revenue generated from IFS increased by 9% in constant currency in the first nine months of 2018 leading to a total share of 40% of Group revenue (H1 2018: 39%).

The Group is committed to maintain a nominal ordinary dividend paid in 2019 at least equal to 2018.

Comment from the Group CEO

Jeff Gravenhorst, Group CEO at ISS, said: “We continued to deliver solid organic growth supported by contract launches and expansions within our strategic segments. In Q3, we extended our contract with Nordea for five years. In addition, we won TSB Bank in the UK and successfully expanded the Post Nord contract across the Nordics. Our margins are in line with expectations and slightly lower compared to last year due to contract rotation. We continue to increase our focus on key accounts and refine our portfolio in line with our strategy. Our pipeline is good which, together with the launch of Deutsche Telekom, will support organic growth for the organisation going into 2019.”

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ISS Q1 2014 results: ‘Solid performance in line with expectations’

Facility services giant ISS has posted its Q1 2014 results, describing the figures therein as a “solid performance in line with expectations”.

Financial highlights
• Organic growth for the first three months of 2014 amounted to 2.8% (2013: 2.8%)
• Operating margin was 4.3% for the first three months of 2014 (2013: 4.4%). Adjusted for the impact of the divestment of the pest control activities in 2013, the margin increased from 4.2% in Q1 2013 to 4.3% in Q1 2014
• Profit before goodwill impairment and amortisation/impairment of brands and customer contracts was DKK 73 million. Adjusted for costs related to the IPO and the refinancing, this amounted to DKK 329 million (2013: DKK 234 million)
• Net loss in the first three months of 2014 was DKK 33 million, and adjusted for costs related to the IPO and the refinancing the net profit for the first three months of 2014 amounted to DKK 223 million (2013: DKK 71 million)
• The LTM (last twelve months) cash conversion for March 2014 was 98% (2013: 99%)
• Outlook for 2014 remains unchanged

Jeff Gravenhorst: Group CEO at ISS

Jeff Gravenhorst: Group CEO at ISS

Business highlights
• ISS successfully listed its shares on NASDAQ OMX Copenhagen on 13 March 2014
• Following completion of the IPO, ISS was upgraded to Investment Grade by two rating agencies
• The global IFS contract with HP was extended for an additional three years until the end of 2018
• Significant contract wins in the quarter included a large contract within the resources segment in Australia as well as a large IFS contract with a luxury superyacht hotel in London
• Significant divestments completed in the first quarter of 2014 included the landscaping activities in France and the commercial security activities in both Australia and New Zealand
• Refinancing of debt was completed and proceeds from the new unsecured senior facilities and certain of the net proceeds from the IPO were used to fully repay ISS’ senior secured facilities on 18 March 2014

Comment from the Group CEO

Speaking about this latest set of company results, Jeff Gravenhorst (Group CEO, ISS A/S) said: “ISS continued the solid performance in the first quarter of 2014. The organic growth, operating margin and cash conversion were in line with our expectations for 2014. We have been able to improve the underlying margin to 4.3% in 2014 from 4.2% in 2013 adjusted for the effect of the divestment of the pest control activities, continuing the trend from Q4 2013.”

Gravenhorst added: “We continued executing our strategy, and in the quarter we completed five divestments of non-core activities. Following the successful IPO we have completed the refinancing and significantly reduced our debt. Furthermore, we have won contracts with several new local and regional customers, and we also extended our largest global contract delivering integrated facility services to HP until 2018.”

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