Having delivered what it described as ‘a year of solid organic growth’, ISS has announced its intention to launch an initial public offering (IPO).
Highlights of ISS’ 2013 financial results included organic growth reaching 4.3% for FY 2013 (2012: 1.7%); an operating margin of 5.5% for FY 2013 (2012: 5.6%); and a profit before goodwill impairment/amortisation etc. increased to AUD 210 million (DKK 1,026 million) for FY 2013 (2012: AUD 86 million, DKK 421 million).
“We further focused our business in 2013, which supported our delivery of solid financial results. Despite challenging economic conditions, we delivered higher organic growth. This was mainly driven by the commencement of some of our strategically important IFS contracts with major international customers and we have recently extended our large global IFS contract with HP until 2018,” stated ISS group CEO Jeff Gravenhorst.
“During 2013 and in early 2014, we have successfully divested a number of non-core activities, which has further focused our business platform. In combination with our strong cash conversion, the divestment proceeds have significantly reduced our debt. We are well positioned and ready for continued and accelerated execution of our strategy in 2014.”
The ISS report noted that, ‘Group revenue amounted to DKK 78.5 billion (AUD 16 billion) and organic growth was a robust 4.3% compared with 1.7% in 2012. Organic growth was driven by both developed and emerging markets. All regions but one delivered positive organic growth rates. Western Europe, our largest region, delivered strong organic growth of 5% and Asia delivered double-digit organic growth rates for the 34th consecutive quarter. Organic growth for Q4 2013 was 5.0% compared with 1.9% for the same period in 2012.
‘Total Group revenue was down 1.3% compared with 2012 as the organic growth was more than offset by the successful strategic divestment of non-core activities and a negative effect from exchange rate movements which decreased revenue by 2% and 3%, respectively.
‘Operating profit before other items decreased by 2.2% to DKK 4,315 million (AUD 881 million), and was negatively affected by both the successful divestments of non-core activities and currency effects.
‘The operating profit before other items as a percentage of revenue, i.e. the operating margin, decreased to 5.5% from 5.6% in 2012. Operating margin for Q4 2013 was 6.2% compared with 6.0% for the same period in 2012. The operating margin was in line with expectations. The divestment of the large and margin accretive pest control business in May 2013 negatively affected the operating profit margin. Adjusted for the divestment of the pest control activities, the operating margin was slightly improved from 2012 to 2013.
‘Operating profit increased by 3% to DKK 4,215 million (AUD 861 million) in 2013 from DKK 4,103 million (AUD 836 million) in 2012.’
Emerging markets
Emerging markets (comprising Asia, Eastern Europe, Latin America, Israel, South Africa and Turkey) now represent 23% of ISS’ total group revenue, 55% of total organic growth in 2013 and 56% of ISS’ employee base. The emerging markets delivered organic growth of 11% and in addition to significantly increasing the Group’s organic growth, these markets delivered an operating margin of 6.3% in 2013 (2012: 5.8%).
In 2012, ISS won some of the largest contracts in its history, including Barclays, Novartis and Citi APAC. By the end of 2013, all three contracts were fully operational in all key geographies.
In 2013, ISS signed major IFS contracts with H.J. Heinz and Nordea Bank.
ISS intends to launch an IPO
In connection with the release of the 2013 preliminary results, ISS announced its intention to launch an initial public offering (IPO) of its shares and to list on NASDAQ OMX Copenhagen.