I. Table of Contents - ISS

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tatiana\Bank Book\Public Bank Book\FINAL ISS PUBLIC Bank IM - Press Release to EMTN_1.doc 9 Nov 2005 10:32 18/91 18 Executive Summary � Integrated Facility Services (“IFS”), which represented approximately 3% of 2004 revenue, consist of the provision of multiple facility services with on-site management and a single point of contact for the customer. In recent years, ISS has increasingly offered its customers integrated facility services. By providing onsite management, integrated facility services are intended to relieve a customer from the need to supervise and manage various suppliers of facility services and to reduce its overhead costs. Integrated facility services allows ISS to leverage on-site labour synergies. 2. Operations ISS maintains a decentralized organizational structure in which the chief executive officer of each country’s operations typically reports directly to the ISS head office in Copenhagen. Each of the country organizations is separately organized and acts independently in its local market. ISS’s head office performs certain centralized functions, including procurement, risk management, finance, legal, treasury, information technology, human resources, marketing, international sales and key account management and supervision of mergers and acquisitions. � Northern Europe; comprising the United Kingdom, Denmark, Norway, Sweden, Finland, Ireland, Iceland, Russia, and Estonia. � Continental Europe; comprising France, the Netherlands, Belgium and Luxembourg, Spain, Germany, Switzerland, Austria, Central and Eastern Europe (the Czech Republic, Slovenia, Slovakia, Hungary, Croatia and Romania), Portugal, Greece, Italy, Poland and Turkey. � Overseas; comprising Israel, China, Hong Kong, Brazil, Singapore, Australia, Thailand, India, Indonesia, Malaysia, Argentina, Chile, Sri Lanka, Brunei, Uruguay and New Zealand. In 2004, Northern Europe, Continental Europe and Overseas represented 46%, 49% and 5% of revenues respectively. ISS employed more than 305,000 employees as of September 30, 2005, of which 91 employees were in its operational head office. Figure 3: Geographical Breakdown of Revenues in 2004 Germany 4% Spain 4% Belgium and Luxembourg 5% The Netherlands 8% Finland 6% Other 14% Norway 8% Denmark 9% France 19% UK 14% Sweden (excluding Health Care operations) 9% Figure 4: Geographical Breakdown of EBITA in 2004 Sweden (excluding Health Care operations) 5% Belgium and Luxembourg 5% Other 2% Switzerland 3% Austria 4% Spain 5% Finland 9% Norway 9% France 23% Denmark 10% The Netherlands 9% Note: (1) EBITA represents Earnings before Interest, Taxes, Amortization, Other Income and Expenses, and Income from Associates. Further amortization, which is not included herein, is amortization of goodwill under Danish GAAP or amortization of customer contracts under IFRS. Source: ISS UK 16%
tatiana\Bank Book\Public Bank Book\FINAL ISS PUBLIC Bank IM - Press Release to EMTN_1.doc 9 Nov 2005 10:32 19/91 3. Acquisitions 19 Executive Summary Consolidation of the industry is an integral part of ISS’s strategy and consequently ISS makes a large number of acquisitions every year in its key business areas to strengthen competencies, enhance service offerings or establish critical mass. During the last 5 years ISS has expanded primarily by acquiring a large number of smaller companies. Since January 2000, ISS has acquired and integrated 375 companies in 30 countries for a total consideration of more than DKK 15 billion (EUR 2.0 billion) adding more than DKK 23 billion (EUR 3.1 billion) of revenues. Most of these acquisitions have been of relatively small companies, typically with annual revenues of less than DKK 100 million (EUR 13 million). Acquisitions have been made in the following segments; Figure 5: Historical Overview of Acquisitions 2000 – 9M 2005 (Approximate Acquired Full Year Revenues) DKK million 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Source: ISS 0 6,363 4,384 1,930 1,280 6,095 3,150 2000 2001 2002 2003 2004 9M 2005 Cleaning Property Catering Office Support Integrated Facilities Services Other 4. Customers and Contracts As of September 30, 2005, ISS had more than 100,000 public and private sector customers, and in 2004, the revenue derived from its ten largest customers was less than 5% of its total revenue. In 2004, no more than 19% of ISS’s 2004 revenue was generated in any one country, with France being the largest contributor to revenue. ISS’s customers operate in a number of industries, and ISS does not believe that its business is dependent on any particular industry segment in the private sector or particular authority in the public sector. ISS’s commercial customers range in size from small firms requiring a single service employee to large, multinational organizations seeking integrated facility services. ISS is focused on developing larger accounts, particularly European multinational companies, with the goal of becoming their provider of integrated facility services. In addition, ISS believes that these customers may be more likely to require integrated facility services. The terms of ISS’s customer contracts vary widely by country and customer segment due to different customer requirements and applicable legislation. However, ISS typically provides services under multi-year contracts with a stated term of between two and five years and reciprocal termination rights upon three to 12 months’ prior written notice. ISS’s commercial customer contracts typically provide for automatic renewal in the absence of a party’s notice to terminate the contract. For larger contracts, the quality of ISS’s services is often measured against defined quality benchmarks stipulated in service level agreements with the customer.
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