18:33 - ISS

Revenue 2006
Northern Europe
UNITED KINGDOM
NORWAY
DENMARK (INCL.THE
FAROE ISLANDS)
SWEDEN
FINLAND
OTHER
30%
4%
Regional development
Northern Europe
Revenue in Northern Europe increased by 13% from DKK
20.3 billion in 2005 to DKK 23.1 billion. The increase was
driven primarily by 7% growth from net acquisitions, with
all countries in Northern Europe except Russia making new
acquisitions during the year. Organic revenue growth increased
from 2% in 2005 to 6%, mainly driven by organic
growth in Norway, Sweden and the United Kingdom, and
partly offset by negative growth in Finland.
The operating profit before other items in Northern Europe
increased 12% to DKK 1.5 billion. The operating margin for
the region was in 2006 unchanged at 6.4% compared with
2005 as positive performances, particularly in Sweden and
the United Kingdom, were offset by negative developments in
the operating margins in Finland and Denmark. Furthermore,
the operating margin in 2005 was positively impacted by nonrecurring
income related to the settlement of a defined benefit
pension plan in Norway.
ISS UK, the second largest operation in ISS, increased its
organic growth rate to 5%, which together with net acquisitive
growth of 9% increased revenue to DKK 6.9 billion. In spite
of competitive market conditions in commercial cleaning,
UK maintained its market position and made progress,
particularly in Integrated Facility Services, Landscaping
and Security Services - the latter through the acquisition
of Pegasus Security Holdings Ltd.
The operating margin increased from 6.1% in 2005 to 6.3%,
fuelled by increases in Integrated Facility Services and
16 · ANNUAL REPORT 2006 | COMPANY REPORT
21%
14%
16%
15%
Northern Europe:
> United Kingdom
> Norway
> Denmark
> Sweden
> Finland
> Ireland
> Iceland
> Estonia
> Greenland
> Russia
> Faroe Islands
route-based services as well as a continued strong performance
in the damage control business.
In 2006, UK reported a gain of DKK 62 million on the a sale of
a PFI stake, which was offset by restructuring costs related to
the consolidation of seven properties in the south of England
and outsourcing of certain related functions. These items were
included in other income and expenses in the consolidated
financial statements.
ISS Norway achieved organic growth of 11% resulting from
investments in organic growth initiatives in 2005 and high
activity levels on contracts with oil and gas projects, where
Norway is responsible for managing employee facilities, such
as quasi hotels, delivering catering, cleaning and welfare services.
Furthermore, the damage control activities contributed
to the positive performance in organic growth. In addition
to organic growth, Norway continued to develop its Facility
Services offering through acquisitions, mainly within catering,
temporary staffing and building maintenance.
The operating margin was slightly down to 7.2% from 7.3% in
2005. This was primarily due to non-recurring income in 2005
related to the settlement of a defined benefit pension plan,
which increased the operating margin in 2005. In addition,
operating margin pressure in the cleaning and landscaping
activities were offset by cost reductions following the consolidation
of the branch structure in 2005, which was part
of the Group Restructuring Project initiated in 2005.