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 76/91
Capex and Operating Leases
76
Historical Financial Information
As illustrated in Figure 20, capital expenditures have averaged 1.3% of Revenues between 2000 and
2004.
Figure 20: Capex 2000-2004
DKK million
700
600
500
400
300
200
100
0
Source: ISS
1.4%
391
1.3%
452
1.4%
525
1.1%
403
1.4%
2000 2001 2002 2003 2004
Capex Capex as % of Revenues
Please see below for a summary of operating leasing payments and maintenance Capex from 2000-
2004. ISS has certain off-balance sheet liabilities, primarily contingent liabilities relating to operating
leases, which consist of leases and rentals of properties, vehicles (primarily cars) 15 and other
equipment. On January 1, 2005 ISS entered into a new global car fleet lease framework agreement for
three years, including an option for extension for a subsequent three-year term. The framework
agreement contains an option for ISS to terminate the underlying country agreement or the entire
global commitment upon four weeks’ notice prior to the end of a calendar quarter and subject to ISS’s
payment of a termination fee. The majority of the underlying agreements have a duration of three to
five years. The disclosed contingent liability includes ISS’s total leasing commitment assuming no
early termination of the agreement. The total expenses under operating leases in the income
statement amounted to DKK 1,272 million in 2004 compared to DKK 1,154 million in 2003.
Table 34: Historical Overview of Operational Leases
DKK million 2000 2001 2002 2003 2004
Operational Leasing Expenses 503 768 1,121 1,154 1,272
Operational Leasing as % of Revenue 1.8% 2.2% 3.0% 3.2% 3.2%
Capex 391 452 525 403 583
Capex as % of Revenue 1.4% 1.3% 1.4% 1.1% 1.4%
Source: ISS
Working Capital
In recent years, there has been an increased focus on the optimisation of working capital with
particular emphasis on the reduction of outstanding debtors as expressed in average receivable days
for a given period and reporting entity. The Company has been and will continue to be focused on
creating a faster and more effective process in all of its operations; from the time the initial contact with
the customer is established until the customer's payment is registered in the Group's bank account.
This is achieved through the improvement of internal paper-flows, the use of information technology
and the optimisation of procedures for following up on outstanding debtors. This has resulted in a
reduction in receivable days for the Group as a whole every fiscal year since the end of fiscal year
2001 which has been the key driver behind the Cash Conversion reaching consistently more than
15 The company has the ability to terminate its vehicle leases with six months notice in each individual country.
583
1.6%
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
% of Net Revenues