18:33 - ISS

In a multi service outsourcing the customer achieves the same
benefits as single service outsourcing only for each outsourced
service area as well as benefits of service integration where
possible.
In an Integrated Facility Services solution ISS takes over all or
most of the service functions at the customer’s premises, provided
the services are within the pillars of the IFS house. The
customer thereby receives the full potential of single service
outsourcing and benefits from an ISS on-site management solution
that exploits the synergy potential, and as a result provides
the customer with an integrated and cost effective solution.
Through the acquisitions of broad-ranged service companies
in Germany, Switzerland and the United Kingdom, ISS is able
to provide management of Facility Services. The acquired
capabilities have provided an approach to clients where ISS is
able to offer management of services, delivered either through
subcontracting or through own service provisions depending
on the preference of the client.
An IFS implementation team was established in 2006 with
the primary focus of accelerating the IFS implementation in
selected countries. The team consists of four experienced
specialists with an overlying mission of providing operational
support in winning, bidding, transitioning and operating the
first IFS contract within a country. The prioritised countries in
2006 were Spain, Belgium and Switzerland. In 2007, the prioritised
countries are Germany, the Netherlands and Australia.
Single service excellence
The foundation for being the leading Facility Services company
is a continuous focus on delivering service excellence in
every service area. Going forward, ISS will continue to focus
heavily on developing single service excellence and spreading
it throughout the organisation.
Operational efficiency
ISS will seek to maintain and enhance operational efficiency by
retaining its focus on three well-established and prioritised opera-
26 · ANNUAL REPORT 2006 | STRATEGY
tional objectives for its local managers: (i) cash flow; (ii) operating
margin; and (iii) profitable organic growth. In addition, ISS will
focus on reducing the financial leverage on a multiple basis.
Cash flow
ISS’s first objective is to continue to maintain a relatively high
rate of cash conversion primarily by operating in a manner
that optimises working capital. Through this approach, ISS
expects to continue to generate a positive free cash flow.
Operating margin
ISS’s second objective is to maintain or improve its operating
margin, which increased from 5.1% in 2000 to 5.8% in 2006.
ISS will seek to generate operational efficiencies by increasing
its local market positions and operational densities, as well as
through the implementation of company-wide best practices.
Profitable organic growth
ISS’s third objective is to continue to leverage its international
market position and service offering in order to increase its
local market positions and drive organic growth. To do this,
ISS established a Sales Excellence Centre in 2006 to create
sales systems and to promote benchmarking and the sharing of
best practices between countries. ISS continues to work with
a wide range of initiatives to: (i) attract new customers; (ii)
increase customer retention rates, including through the
establishment of dedicated key account teams; and (iii) crosssell
related services, such as pest control and washroom services,
to existing customers. Additionally, ISS has established
a market presence and operating platforms in selected highgrowth
economies, particularly in Latin America and Asia.
Reduce financial leverage
Following the acquisition of ISS A/S by FS Funding A/S, ISS
is determined also to seek to reduce, on a multiple basis, the
financial leverage of the FS Funding Group, which increased
as a result of the acquisition. This is expected to be achieved
primarily through growth in ISS’s operating profit through
a continued focus on cash flow, operating margin, organic
growth and acquisitions. However, as a result of this growth