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 69/91
A. Introduction
69
Historical Financial Information
The consolidated financial statements for the fiscal years 2000 to 2004 of ISS included in this
document have been prepared in accordance with the provisions of the Danish Financial Statements
Act, and the regulations for companies listed on the Copenhagen Stock Exchange, in accordance to
Danish GAAP. However, as required by EU regulations, ISS will prepare its consolidated financial
statements for the year ended 31 December 2005 in accordance with IFRS.
As required by EU regulations, ISS will prepare its consolidated financial statements for the year
ended 31 December 2005 in accordance with IFRS. Un-audited results for the year ended December
31, 2004, which have been adjusted to reflect the expected application of IFRS, are included in section
F to demonstrate the expected impact of ISS's transition to IFRS. The unaudited financial information
prepared on the basis of the expected application of IFRS included in this document are preliminary in
nature and may not fully reflect IFRS as finally implemented by ISS.
The consolidated results of ISS for the nine months ended September 30, for 2004 and for 2005
respectively, are un-audited and adjusted to reflect the expected application of IFRS.
The following definitions of certain financial measures should be noted:
Revenues (“Revenues”), which are recorded net of VAT, duties and discounts, are comprised of the
value of services provided. ISS recognizes revenue as services are performed for maintenance and
service contracts. Additionally, ISS utilizes the percentage-of-completion method of accounting for
installation contracts. Under this method, Revenues are recognized according to the ratio of costs
incurred to estimated total contract costs. Changes in job performance, job conditions, estimated
profitability, anticipated contract losses and final contract settlements may result in revisions to costs
and income and are recognized in the period in which the revisions are determined.
EBITDAR (“EBITDAR”) represents Earnings before interest, taxes, depreciation, amortization, Other
Income and Expenses, Income from Associates, and rent.
EBITDA (“EBITDA”), as calculated by ISS, represents operating profit before other income and
expenses and associates, depreciation and amortization under Danish GAAP, or operating profit
before other items, depreciation and amortization under IFRS. By using operating profit before other
income and expenses and associates under Danish GAAP, or operating profit before other items
under IFRS, as a starting point for the calculation of EBITDA instead of operating profit, ISS excludes
from the calculation of EBITDA those items recorded under the line item ‘‘other income and expenses,
net’’, in which ISS includes income and expenses that it believes do not form part of ISS’s normal
ordinary operations, such as gains and losses arising from divestments, the winding-up of operations
and disposals of property, as well as integration costs relating to acquisitions.
EBITA (“EBITA”) represents Earnings before Interest, Taxes, Amortization, Other Income and
Expenses, and Income from Associates. Amortization represents only the amortization of intangible
assets and software. Further amortization, which is not included herein, is amortization of goodwill.
Free Operating Cash Flow (“Free Operating Cash Flow”), as calculated by ISS, represents cash flow
from operating activities less investments in intangible assets and property, plant and equipment.
Intangible assets does not include goodwill and customer contract portfolios and related customer
relationships.
The cash conversion ratio (“Cash Conversion” or “Cash Conversion Ratio”), as calculated by ISS,
represents Free Operating Cash Flow as a percentage of profit before goodwill amortization under
Danish GAAP, or profit before goodwill impairment and write-down and amortization of customer
contracts under IFRS.