I. Table of Contents - ISS

tatiana\Bank Book\Public Bank Book\FINAL ISS PUBLIC Bank IM - Press Release to EMTN_1.doc 9 Nov 2005 10:32 58/91
A. Strategy
58
Business Strategy
In April 2005 ISS announced its current business strategy, named "Route 101" which sets out the
objective of achieving revenues of DKK 101 billion. Route 101 comprises a number of initiatives aimed
at developing the Company, i.e. continue to train staff and continue to invest in group-wide systems
and tools to support, whilst adhering to certain operational objectives. The plan does not contain a
defined period of time for achieving DKK 101 billion revenue target.
Consistent with this strategy, ISS intends to: (i) continue to focus on operational efficiency to maintain
or improve its competitive position; (ii) increase its ability to deliver integrated facility services
throughout its operations; (iii) continue to make selective acquisitions; and (iv) focus on reducing the
Group’s financial leverage on a multiple basis. The principal elements of this strategy include the
following:
� Continue to focus on operational efficiency. ISS will seek to maintain and enhance operational
efficiency by continuing its focus on three well-established and prioritized operational objectives for
its local managers: (i) cash flow; (ii) operating margin; and (iii) profitable organic growth.
— Cash flow. ISS’s first operational objective is to continue to maintain a relatively high rate of
cash conversion 8 by operating in a manner that optimizes working capital. Through this
approach, ISS expects to continue to generate positive Free Operating Cash Flow and ISS
believes that, in a typical year, it should be able to achieve a target cash conversion ratio of
between 90% and 95%.
— Operating margin. ISS’s second operational objective is to maintain or increase its operating
margin through continuous focus on costs. To reduce costs, ISS will seek to generate
operational efficiencies by increasing its local market shares and operational densities, as well
as through the implementation of company-wide best practices. Consistent with this approach,
ISS has increased its operating margin, which ISS defines as operating profit before other
income and expenses and income from associates divided by revenue, from 5.1% in 2000 to
5.6% in 2004.
— Profitable organic growth. ISS’s third operational 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 has introduced a wide range of initiatives, including
dedicated management of key accounts and additional training of sales staff, to increase
customer retention rates. ISS will also continue to focus on the cross-selling of related services,
such as pest control and washroom services, to existing customers. Additionally, ISS has
established a market presence and operating platforms in, and will seek to leverage the growth
potential of, selected high-growth economies, such as Brazil, Russia, India and China.
� Increase integrated facility services capabilities. ISS also intends to continue to broaden its
service offering in order to eventually offer a full range of facility services in each of its markets,
primarily through the introduction of additional services and by acquiring companies with additional
competencies. ISS believes that integrated facility services strengthen customer relationships
through ISS’s on-site management. In addition, integrated facility services offer the opportunity to
reduce customers’ overhead costs and for ISS to leverage operational synergies.
� Continue disciplined acquisition process. ISS expects to continue its well-established
acquisition process to facilitate its strategy of increasing local scale, broadening its local service
offering and accessing new markets. ISS will continue to focus primarily on smaller acquisitions,
which it believes will reduce the integration risks relating to individual acquisitions and enable it to
leverage the experience of local management teams throughout its countries of operation. To
access new geographic markets, ISS intends to establish operating platforms in higher growth
markets, including through acquisitions.
� Reduce financial leverage on a multiple basis. The Group intends to reduce the financial
leverage, in terms of debt to EBITDA, resulting from the acquisition financing, primarily through
growth in operating profit. The Group intends to increase its operating profit through its continued
focus on operational efficiency, organic growth and acquisitions.
8 The cash conversion ratio, as calculated by ISS, represents Free Operating Cash Flow as a percentage of profit before goodwill
amortisation under Danish GAAP, or profit before goodwill impairment and write-down and amortisation of customer contracts under
IFRS.