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 70/91 B. Income Statement 70 Historical Financial Information ISS has enjoyed almost uninterrupted revenue and EBITA growth over the last six years. Focusing on a strategy of increasing its international presence and increasing its breadth of services, ISS has grown revenues by a 9% CAGR between 2000 and 2004. In addition, the ability to control operating costs has allowed the Company to increase EBITDA margins from 6.7% in 2000 to 7.2% in 2004. Table 30: Consolidated Income Statement Danish GAAP IFRS DKK million 2000 2001 2002 2003 2004 9M 2004 9M 2005 Net Revenues 28,719 34,852 37,984 36,165 40,355 29,398 34,157 Growth Rate % 45.0% 21.4% 9.0% (4.8)% (3) 11.6% Staff Costs (20,457) (24,365) (25,705) (24,414) (26,577) (19,547) (22,673) Cost of Goods Sold (1,670) (2,422) (2,825) (2,686) (3,146) (2,234) (2,681) Other (4,670) (5,881) (6,841) (6,446) (7,736) (5,509) (6,377) Total Operating Expenses (26,797) (32,668) (35,371) (33,546) (37,459) (27,290) (31,731) Whereof Operational Leasing Costs (1) 503 768 1,121 1,154 1,272 na na EBITDAR 2,425 2,952 3,734 3,773 4,168 na na EBITDAR % 8.4% 8.5% 9.8% 10.4% 10.3% na na Whereof Operational Leasing Costs (1) (503) (768) (1,121) (1,154) (1,272) na na EBITDA 1,922 2,184 2,613 2,619 2,896 2,108 2,426 EBITDA % 6.7% 6.3% 6.9% 7.2% 7.2% 7.2% 7.1% Depreciation and Amortisation (2) (468) (551) (603) (587) (617) 444 482 EBITA 1,454 1,633 2,010 2,032 2,279 1,664 1,944 EBITA % 5.1% 4.7% 5.3% 5.6% 5.6% 5.7% 5.7% Other Income and Expenses (3) (24) 5 (75) (69) (18) (19) Note: (1) Operational leasing costs available at fiscal year end only. (2) The amounts exclude amortisation of goodwill. (3) Please note that the organic growth rate was flat, assuming no contract trimming would have occurred in 2003. Source: ISS Revenue Growth The revenue growth from 2000 to 2004 was to a large extent driven by acquisitions. However, organic growth was also a reliable source of growth, apart from in 2003 when revenues declined by 4.8%. The decline in 2003 is explained by the divestment of the Elderly Care business and Aviation business in 2002, engagement in an active contract trimming program to terminate unprofitable contracts, currency fluctuations and overall challenging market conditions. Table 38 below provides further explanation on the breakdown of Revenues growth attributed to acquisitions, foreign exchange movements, organic growth, and contract trimming. Table 31: Breakdown of Revenue Growth 2000 2001 2002 2003 2004 Total revenue growth % 45% 21% 9% (5)% 12% � Foreign Exchange 3% (1)% 0% (3)% (0)% � Acquisitions, net 35% 18% 8% (0)% 11% � Organic Growth 7% 4% 1% (2)% 1.5% Source: ISS In general, the company experienced an overall positive development in organic growth rates in 2004 vs. 2003. Negative organic growth continued in Germany (13)% and the Netherlands (5)% during 2004, due to a combination of reasons including company specific issues and general market pricing competition.
tatiana\Bank Book\Public Bank Book\FINAL ISS PUBLIC Bank IM - Press Release to EMTN_1.doc 9 Nov 2005 10:32 71/91 71 Historical Financial Information The two major revenue contributing countries the UK (14% of 2004 revenues) and France (19% of 2004 revenues), both had positive organic growth in 2004 of 5% and 6% respectively. Figure 17: 2004 Organic Growth and Operating Margin (1) by Country 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 10% 8.0% Finland 8% Spain 5.7% 6% 6.8% 6.6% 5% 5.9% 6.6% 6.8% 6.2% 2% 0% France UK Organic Growth EBITA Margin Belgium & Luxembourg Note: (1) EBITA Margin in accordance with the expected application of IFRS (2) Sweden organic growth and EBITA Margin includes Health Care operations Source: ISS Operating Costs Operating expenses as a percentage of revenues have remained fairly stable in the period of 2000- 2004, accounting for 93% to 94% of revenue. ISS’s cost base is flexible, as in 2004 approximately 71% of total operating costs constituted staff costs, including salaries and wages, pensions, and other employee-related expenses. In 2004, 57% of the personnel were full time employees 10 . Furthermore, according to EU law, when facility services contracts are lost to a competitor, the former provider may under certain circumstances be able to pass on-site staff to the new provider, an option which provides additional operational flexibility. Staff costs have declined steadily during the period from 71.2% in 2000 to 65.9% of Revenues in 2004. The development is mainly explained by a change in mix of services offered by ISS, resulting in subcontracting of some services, thereby decreasing staff cost but increasing cost of goods sold. In 2004, staff costs increased by 8.9% to DKK 26,577 million compared to 2003. This increase was primarily attributable to an increase in the average number of employees of 21,206 (or 8.6%). Cost of goods sold increased from 5.8% in 2000 to 7.8% of Revenues in 2004. Other operating expenses have increased from 16.3% of Revenues in 2000 to 19.2% in 2004, principally due to the increased cost in connection with operating leases. Over the last few years ISS has actively strived to shift from capex to operational leases (which consist of leases and rentals of properties, cars - and other equipment), which are included in the operating expenses. Other operating expenses also include expenses for detergents, uniforms, expensed service equipment, subcontractor costs as well as other selling, distribution and administrative expenses, including management salaries, clerical and administrative overhead, professional services, costs associated with marketing and Revenues efforts and costs associated with the Company’s information systems. 10 Works more than 25 hours a week. Denmark -1% Norway -5% The Netherlands -6% (2) Sweden 4.7% -13% Germany 1.7%
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I. Table of Contents - ISS

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