Solid delivery in 2023 – ISS initiates a share buyback programme of DKK 1 billion

Company Announcement

Copenhagen, 22 February 2024
No. 3/2023

ISS today announces its full year 2023 financial results

Highlights

• Business momentum was maintained during the last part of 2023, with organic growth of 7.1% in Q4 2023 (Q4 2022: 10.1%) and 9.7% for the full-year 2023 (2022: 8.4%), primarily driven by price increases and underlying volume growth. Total revenue for the quarter amounted to DKK 20.4 billion.
• The underlying operating margin (excl. impact of hyperinflation in Türkiye) improved to 4.6% for the full-year 2023 (2022: 4.0%) and 5.5% in H2 2023 (H2 2022: 4.8%). One-off costs of DKK 233 million related to the review of OneISS initiatives were recognised in H2 2023, resulting in a reported operating margin of 4.3% for 2023.
• ISS secured a new key account IFS contract with the Danish Building and Property Agency as well as several smaller and mid-sized IFS key account contracts across the Group. In the beginning of 2024, the global contracts with Nordea and an Industry & Manufacturing customer were extended, supporting a continued strong customer retention rate of 95%.
• An agreement to divest the French business has been signed and the divestment process is progressing as planned with expected completion in H1 2024. The integration of Grupo Fissa in Spain is completed, and synergies are as planned expected to be realised in 2024.
• Free cash flow amounted to DKK 1.8 billion for the full year 2023 (2022: DKK 1.7 billion) positively impacted by increased operating profit and inflow from changes in working capital.
• At the end of 2023, financial leverage was 2.2x (2022: 2.6x), which is within the targeted range of 2.0-2.5x. Based on the financial results for 2023, the Board of Directors will at the annual general meeting propose a dividend of 20% of adjusted net profit for 2023, corresponding to a dividend per share of DKK 2.3. In addition, ISS will today initiate a share buyback programme of DKK 1 billion to be executed over a 12-months period.
• For 2024, organic growth is expected to be 4 – 6%. The operating margin is expected to be above 5%. The expectation for free cash flow is based on an underlying free cash flow of above DKK 2.4 billion, equalling a cash conversion of above 60%. However, in 2024 free cash flow is expected to be above DKK 1.8 billion (2023: DKK 1.8 billion), adversely impacted by timing effects including certain payments being withheld by Deutsche Telekom as described on page 18 in the annual report.

Kasper Fangel Group CEO, ISS A/S, says:

"In 2023, we continued the positive development from previous years, reflected in solid performance, on strategic, operational, and financial levels. We took several steps to enhance the potential of the OneISS strategy, including a review and prioritisation of our strategic initiatives to further build a stronger and value-creating enterprise. We also made good progress on our ambition to become the Company of Belonging and reduce our environmental impact. We are in a favorable position, and it gives us the ability to reward shareholders with both an increasing dividend payment and the initiation of a share buyback programme. This has been achieved thanks to the efforts of our more than 350,000 dedicated and passionate placemakers, and I firmly believe that we are well underway in realising the full potential of ISS.”

About ISS

ISS is a leading, global provider of workplace and facility service solutions. In partnership with customers, ISS drives the engagement and well-being of people, minimises the impact on the environment, and protects and maintains property. ISS brings all of this to life through a unique combination of data, insight and service excellence at offices, factories, airports, hospitals and other locations across the globe. ISS has more than 350,000 employees around the globe, who we call "placemakers”. In 2023, Group revenue was DKK 78.7 billion. For more information on the ISS Group, visit www.issworld.com.

ISS A/S, ISIN DK0060542181, ISIN US4651472056, ISS Global A/S, ISIN XS2013618421, ISIN XS1145526825, ISIN XS1673102734, ISS Finance B.V., ISIN XS2199343513

Attachments

• ISS AS H2 2023
• AR2023_Final
• ISS-2023-12-31-en