Untitled

Annual report

2021

ISS Global A/S

Buddingevej 197

DK – 2860 Søborg

Denmark

Tel.: +45 38 17 00 00

Fax: +45 38 17 00 11

www.issworld.com

CVR 21 40 83 95

Annual report

1 January – 31 December 2021

Approved at the annual general meeting

On 19 April 2022

Bjørn Raasteen

Chair of the annual general meeting

OVERVIEW 2

Contents

Overview

3 Key figures

4 Outlook

Our performance

5 Group results

8 Cash generation and free cash flow

9 Capital structure

10 Key account development

11 Strategic divestment programme

12 Continental Europe

12 Northern Europe

13 Asia & Pacific

14 Americas

Our business

15 Our strategy

19 Our people

21 Our business risks

Governance

24 Corporate governance

27 Our governance structure

Financial statements

28 Consolidated financial statements

101 Parent company financial statements

116 Management statement

117 Independent auditors’ report

122 Definitions

Corporate Responsibility Report

Our CR report of the ISS A/S Group as per section

99a and §107d of the Danish Financial Statements

Act is available at:

https://brand.issworld.com/web/24f976f13bb57357/

corporate-responsibility-reports/

The report also serves as ISS’s communication on

progress in implementing the ten principles of the

Global Compact.

Remuneration Report

Our remuneration policy is described in our Remu-

neration Report which is available at:

https://brand.issworld.com/m/1cb6c4270d293ad6/o

riginal/Remuneration-Report-2021.pdf

ISS Global A/S

– an integral part of the ISS A/S Group

ISS Global A/S is an indirectly, wholly owned

subsidiary of ISS A/S, a leading, global provider of

workplace and facility service solutions, listed on

Nasdaq Copenhagen. ISS Global A/S owns – di-

rectly or indirectly – the ISS Group’s operating com-

panies (together referred to as “ISS”, “the Group” or

“the ISS Global Group”). ISS Global A/S operates

as the ISS Group’s internal bank and therefore

holds the majority of the ISS Group’s external fund-

ing.

ISS Global A/S is an integral part of the ISS A/S

Group. Thus, operating, financing and investing

activities are managed for the ISS A/S Group as

a whole, rather than specifically for the ISS Global

Group.

The management team of the ISS Global Group

formally consists of the Board of Directors and

the Managing Director of ISS Global A/S. Since

ISS Global A/S has no operating activities inde-

pendently of the ISS A/S Group, the ISS Global

Group relies on the management team of ISS A/S,

which is considered the ISS Global Group’s key

management personnel.

Due to this structure, the sections “Our business”

and “Governance” of the Management review, pp.

15–27, are described in the context of the ISS A/S

Group.

OVERVIEW 3

Key figures

Financials

2021

1)

2020

2019

2)

2018 2017

Results (DKKm)

Revenue 71,383 70,767 77,715 73,623 73,617

Operating profit before other items 2,920 (2,501) 3,829 4,260 4,545

Operating profit 1,628 (4,899) 2,059 1,998 2,911

Financial expenses, net (573) (549) (695) (583) (489)

Net profit from continuing operations 496 (5,262) 798 980 1,839

Net profit from discontinued operations

3)

110 46 (46) (886) (201)

Net profit 606 (5,216) 752 94 1,638

Cash flow (DKKm)

Cash flow from operating activities 3,221 (886) 1,275 2,653 2,752

Acquisition of intangible assets and property, plant

and equipment, net

(424) (552) (897) (813) (770)

Free cash flow 1,900 (2,143) (264) 1,818 1,975

Financial position (DKKm)

Total assets 40,357 40,134 42,945 42,719 45,906

Goodwill 15,063 15,093 16,513 16,237 18,196

Additions to property, plant and equipment 308 382 673 881 738

Equity 4,246 3,195 2,711 3,403 1,956

Net debt 9,816 12,345 17,274 12,701 15,676

Ratios

2021 2020 2019 2018 2017

Financial ratios (%)

Organic growth 2.0% (6.6)% 7.1% 3.9% 2.9%

Acquisitions and divestments, net (0.5)% (0.2)% (2.2)% (0.5)% (6.9)%

Currency adjustments (0.6)% (2.1)% 0.7% (3.4)% (2.5)%

Total revenue growth 0.9% (8.9)% 5.6% 0.0% (6.5)%

Operating margin

4)

4.1% (3.5)% 4.9% 5.8% 6.2%

Equity ratio 10.5% 8.0% 6.3% 8.0% 4.3%

ESG

5)

2021 2020 2019 2018 2017

Social (%)

Full-time employees 76% 75% 77% 76% 76%

Employees end of period, number 354,394 378,724 470,806 485,676 488,722

Employees (average), number 362,554 434,664 483,296 485,682 491,633

1)

In 2021, Chile was reclassified as held for use and continuing operations. Comparative figures were restated accordingly.

2)

As of 1 January 2019, the Group implemented IFRS 16 using the retrospective approach. Comparative figures were not restated.

3)

In 2021, Brunei, the Czech Republic, Hungary, the Philippines, Portugal, Romania, Russia, Slovenia, Slovakia and Taiwan were

treated as discontinued operations. In 2020, Brazil, Brunei, the Czech Republic, Hungary, Malaysia, the Philippines, Portugal, Romania,

Russia, Slovenia, Slovakia, Taiwan and Thailand were treated as discontinued operations. In 2019, 2018 and 2017, Argentina, Brazil,

Brunei, Chile, the Czech Republic, Estonia, Hungary, Israel, Malaysia, the Philippines, Romania, Slovenia, Slovakia, Thailand and

Uruguay were treated as discontinued operations.

4)

Based on Operating profit before other items.

5)

Selected Environmental, Social and Governance data (ESG). For all ESG data for the ISS A/S Group, see the 2021 Corporate

Responsibility Report for the ISS A/S Group.

OVERVIEW 4

Outlook

ISS Global A/S is an indirectly, wholly owned subsidi-

ary of ISS A/S and an integrated part of the ISS A/S

Group.

In 2022, the execution of the OneISS strategy and

the ongoing turnaround will continue. The operational

and financial improvements achieved in 2021 provide

a solid foundation for continued progress in 2022.

The outlook for 2022 assumes a continued return to

the workplace and Covid-19 recovery. The revenue

recovery is expected to be gradual over the year as

large global companies have delayed large-scale

mandatory return-to-office due to the spreading of

Covid-19 (the omicron variant).

Organic growth

Organic growth is expected to be above 2% for 2022

(2021: 2.0%). Growth is driven by the continued

gradual recovery from Covid-19, positive effects from

management of inflation and impact from contract

wins and expansions achieved during 2021. How-

ever, we are also mindful of the sustained global un-

certainties from Covid-19, where the spreading of the

omicron variant has led to some reinforcement of re-

strictions, particularly in Asia & Pacific. A negative

impact is expected from a lower level of projects and

above-base work as well as the planned exit of the

Danish Defence contract.

Operating margin

Operating margin is expected to be above 4.5%

(2021: 4.1%). The main drivers of the increase are

continued improvement of the underperforming con-

tracts and countries, predominantly Deutsche Tele-

kom, a positive impact from Covid-19 revenue recov-

ery and continued improvement across the business

from ongoing restructuring initiatives.

Free cash flow

Free cash flow is expected to be above DKK 1.0 bil-

lion (2021: DKK 1.9 billion). The expected higher op-

erating profit before other items compared to 2021

will have a positive effect on free cash flow. Inflow

from changes in working capital is expected to be

neutral to slightly positive following the positive im-

pact in 2021. Payments related to restructuring pro-

jects initiated in 2020, including the exit fee to Danish

Defence, are expected to reduce free cash flow by

around DKK 0.5 billion.

Delivery on 2021 outlook

As a result of the significant financial progress

in 2021, we raised our outlook once and ended

the full year in line with our revised guidance, as

shown in the table above.

The outlook should be read in conjunction with “For-

ward-looking statements” on p. 122 and our expo-

sure to risk, see Our business risks on pp. 21-23.

Delivery on 2021 outlook

Annual report

2020

Interim report

H1 2021

Actual

2021

Organic growth

Positive Positive 2.0%

Operating margin

1)

Above 2.5% Above 2.5% 4.1%

Free cash flow

DKK 0 - (1.0)bn DKK 0 - 1.0bn DKK 1.9bn

OUTLOOK 2022

2)

Organic growth

Above 2%

Operating margin

1)

Above 4.5%

Free cash flow

Above DKK 1.0bn

1)

Based on Operating profit before other items

2)

Excluding any impact from acquisitions and divestments completed

subsequent to 28 February 2022 as well as currency translation effect.

OUR PERFORMANCE 5

Group results

Despite continued challenges from Covid-19

and a volatile business environment, ISS de-

livered significant financial and operational

progress in 2021. This was not least due to

improvements in our underperforming con-

tracts and countries, the impact from re-

structuring initiatives across our business

and a strong focus on serving our key cus-

tomer segments.

Group revenue

Group revenue was DKK 71.4 billion, an increase of

0.9% compared with 2020. Organic growth was 2.0%,

while currency effects as well as divestments and ac-

quisitions, net reduced revenue by 0.6% and 0.5%, re-

spectively.

In 2021, ISS continued to be adversely impacted by

Covid-19 lockdowns and revenue reductions. Organic

growth was negative in Q1 but turned positive from Q2

due to the annualisation effects of Covid-19, and the

initial signs of recovery. The positive developments

continued in Q3, as customers in some geographies

started to return to their offices, especially from Sep-

tember, and the year ended with positive organic

growth of 5.8% in Q4. As a result, organic growth for

the year was positive 2.0%.

Revenue from key accounts continued to show resili-

ence in 2021 with organic growth of 3.0% compared to

organic growth of (0.2)% for non-key accounts. Pro-

jects and above-base work grew organically by around

9%, especially due to continued solid demand for

deep cleaning and disinfection, albeit slowing down in

some countries in the later part of the year. Portfolio

revenue on the other hand showed signs of recovery

towards the end of the year to offset the significant

negative growth in Q1, ending flat for the full year of

2021 compared to 2020.

The adverse impact on revenue from Covid-19 contin-

ued to vary across service types, customer segments

and geographies. The services suffering the most

were generally those depending on our customers’

employees being on site, such as food services. In the

first six months of 2021, revenue from food services

declined 26% compared to the same period last year.

However, the initial signs of recovery in Q3 and Q4 in

some countries contributed to reducing the majority of

the decline in H1 2021, causing food services revenue

for the full year of 2021 to decline 6%. As a result, rev-

enue from food services accounted for 11% of the

Group’s 2021 revenue (2020: 11%). ISS’s largest ser-

vice line, cleaning services, has been stable through-

out the pandemic and comprised around half of the

Group’s revenue in 2021, which was in line with 2020.

All regions, except for the Americas, reported positive

organic growth in 2021, supported by Covid-19-related

projects and above-base work as well as initial portfo-

lio recovery, as tight Covid-19 restrictions were eased

across Europe towards the end of the year.

In Continental Europe, growth was driven by strong

key account performance especially in Turkey, Spain,

Switzerland, Italy and Austria as well as high cost in-

flation in Turkey being successfully passed on to cus-

tomers. In Northern Europe, projects and above-base

work in Finland, Denmark and Norway contributed the

most to growth. Asia & Pacific was mainly supported

by strong performance in Australia and Hong Kong,

whereas growth was negative or flat in the remaining

countries. In the Americas, growth was supported by

initial recovery in food services in the USA in the late

part of 2021 and the gradual start-up of the five-year

contract with a large international manufacturing cus-

tomer. However, growth was slightly negative for the

full year due to the significant Covid-19-related reve-

nue reduction in food services and the Aviation seg-

ment in the first half of the year.

Revenue

DKK million 2021 2020

Organic

Acq./

div.

FX

Growth

2021

Continental Europe 27,846 27,634 4 % (1)% (2)% 1 %

Northern Europe 23,424 22,642 1 % (0)% 2 % 3 %

Asia & Pacific 12,381 12,385 0 % (0)% 0 % (0)%

Americas 7,141 7,565 (2)% (1)% (3)% (6)%

Other countries 612 561 12 % - (3)% 9 %

Corporate / eliminations (21) (20) - - - -

Group

71,383

70,767 2.0 % (0.5)% (6.0)% 0.9 %

OUR PERFORMANCE 6

Operating profit before other items

Operating profit before other items amounted to

DKK 2,920 million for an operating margin of 4.1%

(2020: (3.5)% or around 1.5% excluding restructuring

costs and one-offs).

The operating margin increased significantly in 2021,

mainly due to improvements in underperforming con-

tracts and countries as well as the impact from the on-

going restructuring initiatives across the business, in-

cluding contract exits and cost reductions. Also, the

continuing demand for higher margin projects and

above-base work and the initial recovery of portfolio

revenue had a positive impact on margins.

All regions reported positive margins in 2021 with

Northern and Continental Europe contributing the

most to the improvement compared to 2020. Improve-

ments were seen in all countries of the two regions in

2021, but most significantly in Denmark, the UK and

Germany.

In Denmark, ISS reached an agreement with Danish

Defence to exit the partnership gradually from Novem-

ber 2021 to the end of May 2022. Danish Defence will

take over all services currently being handled by ISS.

The transition was initiated in November 2021 and is

progressing according to plan.

The turnaround initiatives in the UK led to good pro-

gress in 2021. The Country Manager, who joined in

2021, has through a number of management changes

been driving the restructuring initiatives, including

making cost reductions, portfolio trimming and improv-

ing the contract performance of key accounts.

In Germany, the execution programme for the

Deutsche Telekom contract developed in line with the

plan to improve contract performance in one of the

largest and most refined contracts in the Facility Man-

agement industry. This included significant milestones

being reached in relation to certain tailormade IT de-

velopments.

The large restructuring plan in France progressed with

cost savings starting to materialise, independently of

Covid-19 recovery. The French business has been

heavily impacted by Covid-19 restrictions, and the

pace of revenue recovery in the most severely im-

pacted customer segments remains slow.

In the Americas, the margin increase was mainly

driven by the USA due to restructuring initiatives initi-

ated in 2020, renegotiation of food services contracts

and continued cost control. Furthermore, the initial re-

covery of food services towards the end of the year

also supported the margin progression.

For Asia & Pacific, Australia and Hong Kong were the

main drivers of the improved margin due to a focus on

operational efficiencies and the impact of margin-ac-

cretive projects and above-base work.

Other income and expenses, net

Other income and expenses, net was an income of

DKK 456 million (2020: expense of DKK 626 million),

mainly due to a gain on the divestment of Kanal Ser-

vices in Switzerland and Specialized Service in the

USA, partly offset by depreciation and amortisation in

Chile for the years 2019 and 2020 triggered by the de-

cision to cease the country’s classification as discon-

tinued operations. In 2020, the net expense was

mainly the result of costs related to the IT security inci-

dent in February 2020.

Goodwill impairment

Goodwill impairment was DKK 459 million (2020:

DKK 535 million) which mainly relates to France. Turn-

around initiatives in France progressed slowly. How-

ever, rising interest rates and growing uncertainty as

to the pace of market recovery from Covid-19 within

the most impacted customer segments, led to an in-

crease in the applied WACC and thus recognition of a

goodwill impairment of DKK 459 million in June 2021.

Op erati ng p rofit b efore oth er i tems

DKK million

Continental Europe 773 2.8 % (2,030) (7.3)%

Northern Europe 1,097 4.7 % (1,200) (5.3)%

Asia & Pacific 735 5.9 % 646 5.2 %

Americas 393 5.5 % 262 3.5 %

Other countries 19 3.0 % 20 3.6 %

Corporate / eliminations (97) - (199) -

Gro up 2,920 4.1 % (2,501) (3.5)%

2021

2020

OUR PERFORMANCE 7

Operating profit

Operating profit was DKK 1,628 million (2020: DKK

(4,899) million).

Financial income and expenses, net

Financial income and expenses, net was an expense

of DKK 573 million (2020: DKK 549 million). The in-

crease was mainly due to a premium of DKK 90 mil-

lion related to the repurchase of EUR 200 million of

the total of EUR 500 million outstanding EMTN bonds

maturing in 2024.

Income tax

The effective tax rate was 52.9% (2020: 3.4%) calcu-

lated as Income tax of DKK 559 million divided by

Profit before tax of DKK 1,055 million. The effective

tax rate was adversely impacted by non-tax-deductible

impairment in France and valuation allowances on de-

ferred tax assets, mainly in France and Germany. Fur-

thermore, non-tax-deductible costs, including interest

limitation, impacted negatively.

Net profit from discontinued operations

Net profit from discontinued operations was DKK 110

million (2020: DKK 46 million), including a net gain of

DKK 77 million mainly relating to the six countries di-

vested in 2021, most significantly Slovakia and the

Czech Republic.

In December 2021, management decided to cease the

held for sale classification of Chile. As a result, Chile

was reported as part of the continuing operations for

the full year of 2021. Comparative figures have been

restated accordingly.

Net profit

Net profit was DKK 606 million (2020: DKK

(5,216) million).

Subsequent events

In February 2022, a war in Ukraine broke out following

a Russian invasion of the country. We are monitoring

the developing humanitarian crisis, and our priority is

the safety and wellbeing of our people and our cus-

tomers. ISS has no material activities in Ukraine, and

our business in Russia has been classified as held for

sale and discontinued operations since December

2020 and recognised at an immaterial amount.

It is management’s assessment that the outbreak of

the war has no impact on recognition and measure-

ment at 31 December 2021, and further that it will not

have a material impact on the results of the Group’s

operations and financial position in 2022.

Other than set out above or elsewhere in these con-

solidated financial statements, we are not aware of

events subsequent to 31 December 2021, which are

expected to have a material impact on the Group’s an-

nual report.

OUR PERFORMANCE 8

Cash generation and free cash flow

Cash flow from operating activities

Cash flow from operating activities was DKK 3,221

million (2020: DKK (886) million), an increase of DKK

4,107 million, predominantly stemming from in-

creased operating profit before other items. This was

mainly the result of improvements in underperforming

contracts and countries, the impact of ongoing re-

structuring initiatives and initial Covid-19 recovery in

certain countries.

Changes in working capital were an inflow of DKK

1,039 million (2020: DKK 1,007 million) mainly due to

a strong focus on working capital management. Addi-

tionally, employee-related accruals increased follow-

ing the pick-up in activity as a result of the initial

Covid-19 recovery. Further, working capital was sup-

ported by improved payment terms for ISS and in-

creased customer prepayments following the exten-

sion of a global key account contract. Utilisation of

factoring increased slightly to DKK 1.1 billion (2020:

DKK 1.0 billion).

Changes in provisions was an outflow of DKK 407

million, mainly due to payments related to restructur-

ing projects initiated in 2020.

Income tax paid was DKK 443 million (2020: DKK

389 million) mainly resulting from payment on ac-

count for 2021 and final payments related to 2020.

Payments were positively impacted by utilisation of

tax losses carried forward from prior years, including

2020.

Cash flow from investing activities

Cash flow from investing activities was a net inflow of

DKK 235 million (2020: net outflow of DKK 197 mil-

lion).

The successful execution of our divestment pro-

gramme in 2021, led to an inflow of DKK 1,191 million

from divestment of businesses, most significantly re-

lated to the divestment of Kanal Services in Switzer-

land and Specialized Services in US.

Acquisition of businesses was an outflow of DKK 526

million for the acquisition of Rönesans Facility Man-

agement Company in the healthcare segment in Tur-

key, where we will be providing services to four newly

built hospitals.

Investments in intangible assets and property, plant

and equipment, net, of DKK 424 million (2020: DKK

552 million), represented 0.6% (2020: 0.8%) of total

revenue (including discontinued operations), and

mainly reflected continued strict investment discipline

during Covid-19 and fewer new contracts being tran-

sitioned.

Cash flow from financing activities

Cash flow from financing activities was a net outflow

of DKK 2,994 million (2020: inflow of DKK 1,499 mil-

lion).

Repayment of bonds led to a cash outflow of DKK

1,577 million due to the repurchase of EUR 200 mil-

lion of the total outstanding EUR 500 million EMTN

bonds maturing in 2024. The early redemption was

enabled by the strong liquidity position in 2021 result-

ing from the solid operational improvement and suc-

cessful execution of the strategic divestment pro-

gramme.

Repayment of lease liabilities of DKK 935 million was

broadly in line with last year (2020: DKK 1,005 mil-

lion).

Other financial payments, net was an outflow of DKK

431 million stemming from working capital facilities,

though reduced by loan proceeds of approximately

DKK 450 million from a local facility established for

the purpose of the acquisition in Turkey.

Transactions with non-controlling interests was an in-

flow of DKK 164 million stemming from the sale of a

minority share in ISS Turkey to Actera and the Turk-

ish management team as an integrated part of the ac-

quisition of Rönesans in Turkey.

Free cash flow

Free cash flow amounted to DKK 1,900 million (2020:

DKK (2,143) million), an increase of DKK 4,043 mil-

lion compared to 2020. The significant improvement

was driven by operating profit before other items and

strong working capital performance. Lease additions

amounted to DKK 867 million, which was broadly in

line with 2020.

OUR PERFORMANCE 9

Capital structure

The ISS Global Group is indirectly wholly owned by

ISS A/S and is therefore part of the ISS A/S Group.

Group Treasury manages financing activities and

capital structure centrally for the ISS A/S Group as a

whole. The ISS Global Group’s financing activities

and capital structure are not assessed independently

of the ISS A/S Group.

In 2021, ISS delivered solid improvements in opera-

tional performance and strong execution of the di-

vestment programme. Based on the strong liquidity

position, ISS cancelled the EUR 700 million backup

credit facility in May 2021. The facility was estab-

lished in Q2 2020 in response to Covid-19 related un-

certainties. Further, in December 2021, we repur-

chased EUR 200 million of the total of EUR 500 mil-

lion outstanding EMTN bonds maturing 2024, thereby

reducing gross debt levels. The Group’s liquidity re-

serves at 31 December 2021 are described in note

4.6 to the consolidated financial statements.

ISS has no unaddressed material debt maturities until

2024 onwards. We are committed to our Financial

Policy of maintaining an investment grade profile and

ISS A/S currently holds corporate credit ratings of

BBB-/ Negative outlook assigned by S&P and Baa3/

Stable outlook assigned by Moody’s.

At 31 December 2021, net debt had decreased to

DKK 9.8 billion (2020: DKK 12.3 billion) due to the

strong free cash flow performance and the divest-

ment programme generating significant proceeds.

Equity

At 31 December 2021, equity was DKK 4,245 million

(2020: DKK 3,195 million), equivalent to an equity ra-

tio of 10.5% (2020: 8.0%). The increase was mainly a

result of net profit of DKK 606 million and currency

adjustments of foreign entities (net of hedges) of DKK

106 million. Transactions with non-controlling inter-

ests added DKK 350 million due to the sale of a mi-

nority share of ISS Turkey to Actera and the Turkish

management team.

Furthermore, actuarial gains amounted to DKK 1,145

million due to strong asset returns on plan assets,

generally increasing interest rates and updated mor-

tality assumptions, mainly in Switzerland. This was

offset by the change in asset ceiling of DKK 1,080

million related to surplus restrictions in Switzerland.

For further details, see note 5.4 to the consolidated fi-

nancial statements.

OUR PERFORMANCE 10

Key account development

Key account revenue accounted for 69% of Group

revenue (2020: 67%) and generated organic growth

of 3.0%, which was slightly better than the Group’s

organic growth. As such, demand from key accounts

showed resilience, despite Covid-19 lockdowns and

restrictions, with continued high demand for projects

and above-base work, mainly deep cleaning and dis-

infection. In the second half of 2021, growth was also

supported by some recovery of our portfolio revenue,

as several countries experienced gradual, albeit slow,

signs of recovery linked to gradual normalisation of

occupancy rates at our customers’ office sites.

The launch of a few large contracts also contributed

to the organic growth in 2021, most significantly the

commencement of Iberdrola in Spain, the launch of a

Hospital Authority contract in Hong Kong and the

gradual start-up of the IFS contract with a large inter-

national manufacturing customer in the Americas.

Further, in Norway the below-mentioned contract

with Equinor commenced in Q4.

Covid-19 continued to impact the number of contracts

won in 2021, though with activity picking up towards

the end of the year. ISS secured a few significant

contract wins and continued to proactively work with

customers to ensure renewals. This led to several ex-

tensions and expansions in 2021.

In Norway, ISS won a five-year contract with Equinor,

with a possible five-year extension option. ISS also

extended the global contract with Barclays by five

years and the Rolls Royce contract by two years. Ad-

ditionally, we expanded the global contract with Philip

Morris to include workplace services in 31 countries

from Q1 2022. In the UK, contract extensions were

signed with a retail and wholesale customer and a

customer in the transportation and infrastructure seg-

ment. We also extended the long-standing partner-

ship with HPE, our first-ever global key account, for

another five years. ISS will continue to deliver a wide

range of IFS to HPE’s offices and production sites un-

til August 2027. Finally, in February 2022 we renewed

the existing contract with a global pharmaceutical

customer for five years. The annual revenue of the

contract is above 1% of Group revenue.

In terms of contract exits in 2021, ISS entered into an

agreement with Danish Defence to exit the partner-

ship agreement gradually from November 2021 to the

end of May 2022.

Contract maturity

The majority of our key account contracts have initial

terms of three to five years. A significant share of rev-

enue is therefore up for renewal every year. To miti-

gate this risk, we have a strong focus on customer

satisfaction and proactively work with our customers

to seek renewals. In 2021, despite Covid-19-related

revenue reductions, our key account retention rate

increased slightly to 94% (2020: 93%).

In 2021, revenue from large key accounts (> DKK

200 million) was DKK 20.9 billion, or 29% of Group

revenue. Going into 2022, no large key accounts

have been lost, but customer contracts representing

revenue of DKK 3.4 billion (5% of Group) are up for

renewal in 2022 (excluding signed renewals up until

February 2022).

OUR PERFORMANCE 11

Strategic divestment programme

Our strategic divestment programme en-

joyed strong momentum in 2021 with six

countries and six business units being di-

vested.

Countries divested in 2021 were Slovakia, the

Czech Republic, Romania, Hungary, the Philip-

pines and Slovenia. In terms of business units, the

most significant divestments in 2021 were Special-

ized Services in the USA and Kanal Services in

Switzerland. Subsequently, the Waste Manage-

ment business in Hong Kong was also divested in

January 2022.

By the end of 2021, 13 out of 18 countries in scope

for the programme had been divested. Additionally,

in January 2022 we signed an agreement to divest

our activities in Taiwan with expected completion in

Q1 2022.

In 2021, Chile (being one of the 18 countries in

scope) developed positively, both financially and

strategically, as demonstrated by the wins of a few

large key account contracts. Based on the positive

developments and improved strategic fit, manage-

ment decided to take Chile off the divestment pro-

gramme and cease the classification as a discontin-

ued operation in December 2021.

Rescoping of the programme

With the significant progress made in 2021, the di-

vestments signed or completed in January 2022,

and Chile being reclassified to continuing opera-

tions, the divestment programme is nearing com-

pletion.

As a result, ISS announced in January 2022 that

the programme scope had been updated to com-

prise the remaining three countries, i.e. Brunei, Por-

tugal and Russia, and only two additional business

units for which sales processes have not yet been

initiated.

Divestment proceeds

In 2021, total net proceeds secured from the divest-

ment programme amounted to approximately DKK

1.8 billion (including divestments signed or com-

pleted in January 2022). Despite the rescoping of

the programme, ISS continues to target around

DKK 2 billion in total net proceeds for 2021 and

2022.

Financial impact in 2021

At 31 December 2021, five businesses (2020: 14

businesses) were classified as held for sale, which

comprised the discontinued operations in Brunei,

Portugal, Russia and Taiwan as well as the Waste

Management business in Hong Kong (divested in

January 2022). Assets and liabilities held for sale

amounted to DKK 493 million (2020: DKK 1,816

million) and DKK 280 million (2020: DKK 838 mil-

lion), respectively.

In 2021, completed divestments and fair value re-

measurements resulted in a net gain before tax of

DKK 605 million (2020: loss of DKK 59 million) of

which DKK 77 million (2020: DKK 61 million) was

recognised in Net profit from discontinued opera-

tions, see note 3.2 to the consolidated financial

statements.

As a result of the reclassification of Chile to contin-

uing operations, depreciation and amortisation

amounting to DKK 59 million for the years 2019 and

2020 were recognised in Other income and ex-

penses, net in 2021.

OUR PERFORMANCE 12

Continental Europe

The market

Continental Europe is our largest region, compris-

ing a number of key markets, where we hold lead-

ing market positions, including Switzerland, Ger-

many and Spain. Most of the markets are devel-

oped, but with significant differences in IFS market

maturity and macroeconomic environment. Key

customer segments are Business Services & IT, In-

dustry & Manufacturing, Public Administration,

Healthcare and Pharmaceuticals.

Financial update

Revenue increased to DKK 27,846 million in 2021

(2020: DKK 27,634 million). Organic growth was

4.4%, while divestments and acquisitions, net and

currency effects reduced revenue by 0.8% and

2.9%, respectively.

In 2021, the region remained impacted by Covid-19

lockdowns and revenue reductions, resulting in

negative organic growth in Q1, especially in Bel-

gium and the Netherlands due to broad exposure to

food services. With the annualisation of the year-

over-year impact, growth turned positive from Q2,

further supported by slowly improving business fun-

damentals over the rest of 2021.

For the full year, the positive growth was driven by

strong performance in Turkey, Spain, Switzerland,

Italy and Austria, albeit from a low comparison base

in 2020. In Turkey, growth was supported by price

increases from significant cost inflation successfully

passed on to customers, and continued growth

from new hospital contracts launched in H2 2020.

In Spain and Italy, growth was mainly driven by

contract launches and expansions with key ac-

counts along with high demand for projects and

above-base work, especially deep cleaning and dis-

infection, which also lifted growth in Switzerland

and Austria.

Projects and above-base work grew organically by

12.9% to account for 18% of revenue for 2021

(2020: 17%). Despite selective contract exits in

Germany and the Netherlands, and a negative

year-over-year impact from lockdowns in Q1 2021,

portfolio revenue grew organically by 2.7% in 2021.

During Q2-Q4 2021, most countries experienced

signs of recovery, albeit slow, linked to gradual nor-

malisation of occupancy rates at our customers’ of-

fice sites.

Commercially, our key account focus secured new

wins and several extensions resulting in a strong

retention rate of 96% (2020: 93%).

Operating profit before other items was DKK 773

million (2020: (2,030) million) for an operating mar-

gin of 2.8% (2020: (7.3)% or around 0.5% adjusted

for restructuring and one-off costs). Most countries

contributed to the improvement, led by Spain and

Switzerland. Across the region, restructuring initia-

tives, portfolio trimming, focus on Covid-19 recov-

ery, together with strong demand for projects and

above-base work, impacted the margins positively.

In Germany, the execution programme for the

Deutsche Telekom contract developed in line with

the plan to improve contract performance in one of

the largest and most refined contracts in the Facility

Management industry.

The restructuring plan in France progressed with

cost savings slowly materialising. However, the

French business was heavily impacted by Covid-19

restrictions and the pace of revenue recovery within

the most affected customer segments remains

slow. The related uncertainties led to a goodwill im-

pairment of DKK 459 million in H1 2021. Despite

improvements compared to 2021, operating margin

for the region was below Group margin due to oper-

ational challenges in France and on the Deutsche

Telekom contract.

Northern Europe

The market

ISS holds a market-leading position across the re-

gion where markets are generally mature, competi-

tive and with a relatively high outsourcing rate. The

region holds the Group’s highest key account share

of 75%. The largest country in the region is the UK,

contributing around 45% of revenue. Key segments

are Business Services & IT, Healthcare and Public

Administration.

Financial update

Revenue increased to DKK 23,424 million in 2021

(2020: DKK 22,642 million). Organic growth was

1.3% and currency effects increased revenue by

2.4%.

In 2021, the region remained impacted by Covid-19

lockdowns and revenue reductions, among others

due to a relatively large exposure to food services.

In Q1, organic growth was negative with Norway

OUR PERFORMANCE 13

and the UK the most significantly impacted. Or-

ganic growth turned positive from Q2, when signs

of recovery began to appear and as a result of the

annualisation of the year-over-year impact. This

was supported by improved performance in most

countries, due to Covid-19 recovery and contract

start-ups in Q4.

For the full year, the positive organic growth across

the region was driven by a partial Covid-19 recov-

ery, despite some delays in the commercial pipe-

line, and high demand for projects and above-base

work, mainly deep-cleaning and disinfection. All

countries contributed to the positive organic growth.

In Denmark and Norway, growth was mainly driven

by projects and above-base work, though Norway

was also supported by the start-up of Equinor in

Q4. In the UK, food recovery and projects and

above-base work, mainly in the healthcare seg-

ment, were the main drivers.

Portfolio revenue declined by 0.5%, negatively im-

pacted by Covid-19 restrictions, partly due to the

relatively large exposure to food services. Revenue

from projects and above-base work increased or-

ganically by 7.6% (2020: 22%), reaching 24% of

revenue for the region in 2021.

Commercially, our key account focus secured both

new sales and extensions resulting in a key ac-

count retention rate of 93% (2020: 94%). In Nor-

way, ISS won a five-year contract with Equinor with

a five-year extension option.

Operating profit before other items was DKK

1,097 million (2020: DKK (1,200) million), for an op-

erating margin of 4.7% (2020: (5.3)% or around

(0.5)% adjusted for restructuring and one-off costs).

All countries contributed to the margin improvement

through a continued focus on cost control and initial

recovery from Covid-19. The turnaround initiatives

in the UK have been very effective, and good pro-

gress was seen in 2021. The Country Manager,

who joined in 2021, has been driving a restructuring

of the organisation in accordance with the OneISS

blueprint, eliminating overhead costs, portfolio trim-

ming and improving the contract performance of

key accounts.

In Denmark, ISS entered into an agreement with

Danish Defence to exit the partnership gradually

from November 2021 to the end of May 2022. The

transition is progressing according to plan.

Asia & Pacific

The market

The region comprises a mix of developed markets

such as Australia, Hong Kong and Singapore and

developing markets, such as China, India and Indo-

nesia. ISS has a strong presence in the region and

holds a market-leading position in several coun-

tries. Key customer segments are Business Ser-

vices & IT, Industry & Manufacturing, Healthcare

and Public Administration.

Financial update

Revenue amounted to DKK 12,381 million in 2021

(2020: DKK 12,385 million). Organic growth was

flat, while divestments and acquisitions, net and

currency effects reduced revenue by 0% and 0%,

respectively.

In 2021, Covid-19 continued to impact the region

both positively and negatively given its diverse ef-

fects across the portfolio. Generally, a sequential

improvement was seen throughout the year, as or-

ganic growth started out in negative territory, im-

proved each quarter, and ended the year in positive

territory at 1.6% in Q4.

Return to work has been volatile and highly de-

pendent on many of the countries in the region en-

forcing tougher restrictions (compared to Europe)

around office work throughout the year. Many coun-

tries remain at reduced office work capacity and

most countries only began reopening their borders

in November and December.

India, Indonesia and Singapore were most signifi-

cantly affected by lockdowns resulting in negative

organic growth in both portfolio and non-portfolio

revenue. On the other hand, despite challenging

Covid-19 lockdowns, Australia and Hong Kong

were favourably impacted by strong demand for

projects and above-base work, including deep

cleaning and disinfection. In Australia, growth was

further supported by several smaller key account

contract launches offsetting the negative impact

from Covid-19 in the Aviation segment.

Across the region, projects and above-base work

grew 9% organically, largely due to demand for

deep cleaning and disinfection, to account for 18%

of revenue. This mitigated the impact of negative

portfolio growth.

Commercially, Covid-19 continued to influence the

number of contracts won in 2021. Although con-

tracts won declined compared to previous years,

OUR PERFORMANCE 14

we still managed to secure a number of important

new contracts and extend one large key account

contract with an airport customer in Australia. As

such, our key account retention rate was 93%

(2020: 94%).

Operating profit before other items increased to

DKK 735 million (2020: DKK 646 million), for an op-

erating margin of 5.9% (2020: 5.2%). The region

thereby continued to show resilient and stable mar-

gin levels above group margins, reflecting the

strong operational platform in the region. Australia

and Hong Kong increased their operating margins

in 2021 due to improved operational efficiency and

strong demand for margin-accretive projects and

above-base work. In India, the improvement com-

pared to last year was mainly due to global key ac-

count project work. On the other hand, Singapore

was adversely affected by a few large contract

losses and reduced government support schemes.

In Indonesia, the operating margin was negatively

impacted by one-off labour-related costs.

Americas

The market

The Americas consists of the mature North Ameri-

can market as well as Mexico and Chile. North

America is the world’s largest FM market, account-

ing for around 30% of the global outsourced FM

market. Food services account for a significantly

larger share of revenue than in other regions. Key

customer segments are Business Services & IT, In-

dustry & Manufacturing, Pharmaceuticals, Trans-

portation & Infrastructure and Food & Beverage.

Financial update

Revenue decreased to DKK 7,141 million in 2021

(2020: DKK 7,565 million). Organic growth was

(1.6)% and currency effects as well as divestments

and acquisitions, net, reduced revenue by 2.6%

and 1.4%, respectively.

In 2021, organic growth continued to be highly im-

pacted by Covid-19 due to large exposure to food

services and the Aviation segment. Revenue from

food services declined 17% to account for 23% of

the region’s revenue (2020: 26%) compared to 11%

for the Group (2020: 11%).

Organic growth was negative in Q1, but with the

annualisation of the Covid-19 impact and signs of

recovery, growth improved during the year and

turned positive in Q3 and ended as high as 19.4%

for Q4.

For the full year, the negative organic growth was

driven entirely by the USA due to Covid-19 related

revenue reductions in food services and the Avia-

tion segment at the beginning of the year. The neg-

ative impact was, significantly reduced by the par-

tial recovery and growth in Q3 and Q4, where reve-

nue from food services increased as customers

gradually returned to office. The gradual transition

of the five-year IFS contract with a large interna-

tional manufacturing customer also helped to miti-

gate the negative impact from Covid-19.

Mexico recorded strong growth in 2021, primarily

due to new sales to key accounts. In December

2021, Chile was reclassified to continuing opera-

tions and thus returned to being reported as part of

the Americas. Chile generated revenue of DKK

1,003 million in 2021 (2020: DKK 930 million).

Across the region, demand from key accounts was

more robust and resilient than from other custom-

ers. As such, organic growth from key accounts

was positive at 6.2% in 2021 (2020: (8.1)%) and

the retention rate was 91% (2020: 94%).

Commercially, Covid-19 affected contract wins

mainly due to delayed commercial processes. How-

ever, several smaller contracts were won. Addition-

ally, we extended the long-standing partnership

with our first ever global key account HPE.

As part of the strategic divestment programme, the

USA divested its Single Service Cleaning business.

The divestment will secure a sharper focus on key

accounts in our strategic customer segments and

IFS opportunities.

Operating profit before other items was DKK 393

million (2020: DKK 262 million) for an operating

margin of 5.5% (2020: 3.5%). The increase was

mainly driven by restructuring initiatives in the USA

initiated in 2020, renegotiation of food services con-

tracts to “cost-plus” contracts to stabilise margins at

reduced volumes, continued cost control and initial

revenue recovery. Mexico and Chile delivered solid

operating margins supported by new sales to key

account customers.

OUR BUSINESS 15

Our strategy

In December 2020, we launched our re-

freshed strategy, OneISS. The strategy

confirms the long-term attraction of key

accounts and our IFS business model.

Acknowledging that our execution in recent years

had proven unsatisfactory, OneISS outlines the

strategic direction with dual priorities of delivering

short-term turnaround, while at the same time en-

suring long-term improvement of the global operat-

ing model.

The turnaround includes recovery of our four under-

performing contracts (Deutsche Telekom and Dan-

ish Defence) and countries (the UK and France)

and sharpening our strategic focus through our di-

vestment programme.

Our new global operating model will further

strengthen our ability to be a strategic workplace

partner to our customers and consistently deliver

high quality outcomes. With OneISS, we are build-

ing the right foundation to become global leader in

IFS and #1 globally in cleaning.

We have made significant steps in 2021 and will

build on that foundation as we continue the execu-

tion in 2022 and towards achievement of our 2025

ambition.

Divestment programme

Our divestment programme had strong momentum

in 2021 with seven countries and seven business

units being divested (including the divestments

signed or completed in January 2022).

Since programme inception we have divested oper-

ations in 14 out of the 18 countries in the pro-

gramme scope (up until January 2022) – in addition

to divesting several non-core business units. Fur-

thermore, Chile was descoped from the divestment

programme in December 2021 following encourag-

ing strategic and financial development.

With the significant progress made in 2021, and

Chile being descoped, the divestment programme

is nearing its completion, which is expected in

2022. For further details, see Strategic divestment

programme, p. 11.

OUR BUSINESS 16

Turnaround 2021-2022

Our turnaround programme 2021-2022 is outlining

a healthy recovery of our business with focus on

profitability and cash generation. Initiatives in the

short-term focus on the recovery of our four under-

performing contracts and countries, recovery from

Covid-19 in addition to the divestment programme.

Although there is still significant work to be done in

2022, we made good progress in 2021 with finan-

cial run-rate improvements compared to 2020, see

status below. As such, we reached our turnaround

target for 2022 already by the end of 2021 for Dan-

ish Defence, where we will exit the contract gradu-

ally.

In terms of recovery from Covid-19, we saw initial

signs of recovery in our portfolio revenue as cus-

tomers started to return to office in some geogra-

phies, especially from Q3 2021. This also led to an

encouraging pick-up in food services revenue in the

second half of 2021, especially in the USA and the

UK.

We also saw a positive impact from the restructur-

ing initiatives initiated in 2020 across the business

in response to Covid-19, see Group results, p. 5.

Underperforming contracts and countries

OUR BUSINESS 17

Strengthened global operating model

OneISS will deliver a new, globally aligned operat-

ing model with shared structured processes that will

prove more effective at supporting countries and

unleashing the full potential of ISS’s global scale.

Our new operating model will further strengthen our

ability to be a strategic workplace partner to our

customers and consistently deliver high quality out-

comes.

Being the global leader in IFS for key accounts is a

challenging ambition – hence we need to build the

best customer offering and internal operating model

as ONE enterprise – OneISS.

With our new operating model, we will develop our

services and underlying tech-enabled platform re-

quired to operate thousands of customer sites

across the world in a consistent manner. Also, we

will strengthen our commercial capabilities and

build the right culture to support the execution of

our strategy.

In 2021, we initiated the journey towards a signifi-

cantly improved global operating model and made

good progress, particularly by establishing the core

foundation of the future model.

OUR BUSINESS 18

Strategic priorities for 2022

Given the significant progress we made in 2021 in

relation to our global operating model, going into

2022 we have updated our strategic priorities to

support and strengthen the next stage in our

OneISS journey.

We will focus on five key areas, where we believe,

that we will achieve a lasting impact on the busi-

ness and which will bring us closer to our 2025 am-

bition and realising our vision. The five updated

strategic priorities will provide our key accounts

with a market-leading service offering and delivery

globally:

1 Commercial momentum and segment leadership

We will plan in advance the customer relationships

we want to build, developing the right customer

knowledge and segment focus to maintain long-

term strategic relationships. We are continually im-

proving and strengthening our bid-process, leverag-

ing cross-country community support to bring the

very best reference cases and expertise to new

bids and renewals.

2 Brilliant operating basics

Process efficiency and controls is at the very core

of our success. With Brilliant Operating Basics, we

will drive the next wave of process efficiency ena-

bled by technology and with a focus on the core,

high-volume processes.

3 Service products built on leading technology plat-

forms

We will offer standard service products under-

pinned by best practices to ensure high quality,

consistent delivery, coupled with the latest innova-

tions in technology. This will unlock not only greater

efficiencies, but also improve the customer experi-

ence and enhance sustainability practices.

4 Environmental sustainability

Our ambition is to have a positive impact on the

planet, people and communities we operate in. Fur-

ther, we have an ambition of making a significant

positive impact on our customers’ sustainability ef-

forts, which represents a significant business op-

portunity. To show our commitments, in January

2022, we announced our target of Net Zero emis-

sions by 2040 in all 3 scopes, and will set and ap-

prove our Science- Based Targets in 2022.

5 Safe, diverse and inclusive workplaces (social

sustainability)

We have a 120-year legacy as a people company –

social sustainability has always been in our DNA –

with safety for our people being the first priority. ISS

is built on a foundation of equity, inclusion, fairness,

and respect for all individuals. We have a strong

drive to act as social incubators and make a true

difference for our employees, our customers and

the communities in which we operate. Also we will

continue to strengthen learning opportunities to pro-

mote social mobility for all placemakers.

OUR BUSINESS 19

Our people

Investing in our people will be essential to

our 2025 ambition of achieving industry-

leading customer and employee engage-

ment. Our people will play a key role by

demonstrating the right behaviours, the

right values and by embracing the unified

mindset required to deliver on our strategy

and achieve our purpose.

Our leadership is essential to shaping a culture that

will allow us to deliver on our strategy. We deploy

our leadership model, develop and align global

training processes and implement common stand-

ards to drive the capabilities needed to consistently

deliver on our customer value proposition.

Our five ISS values, which are the cultural drivers

behind OneISS, guide our people to be great ser-

vice professionals and responsible citizens. Along-

side the values of Honesty, Responsibility, Entre-

preneurship and Quality, we launched Unity in

2021. Unity is closely linked to our strategic focus

on promoting diversity, inclusion and belonging and

highlights the sense of trust and empowerment that

diverse teams feel within ISS. As a result, we also

strengthened our diversity agenda further in 2021,

and launched our global Diversity & inclusion strat-

egy.

Developing strong leaders

We launched our new Leadership Model to develop

our leaders in 2021. We have updated our learning

offering to ensure that we equip our leaders with

capabilities to deliver on the leadership behaviours

supporting our culture. By the end of Q1 2022, all

our Country Leadership Teams will have completed

leadership workshops in our new leadership model

and will have clear plans for the way they will em-

bed our new leadership behaviours.

At the same time, we will launch our renewed flag-

ship leadership development programme which will

facilitate clear and structured feedback allowing

leaders to gain insights into their personal leader-

ship style, strengths, and development areas – in

line with the core behaviours central to delivering

OneISS. We will deliver this to our senior leaders

and mid-management across countries. Our ambi-

tion is that all direct reports to Country Leadership

Team members will have graduated from the pro-

gramme by the end of 2022. Key accounts continue

to be key to our strategy.

The Key Account Manager Certification (KAMC)

programme is therefore crucial to ensuring that we

develop leaders able to retain and grow our key ac-

count customers. The programme contains detailed

training sessions in account operation, retention,

and growth. Our Key Account Managers are certi-

fied when they have demonstrated the necessary

understanding of customer needs and priorities to

engage with them in a way that will lead to higher

customer satisfaction and profitable growth.

In 2021, we updated the KAMC programme in line

with OneISS. Deployment will begin in Q1 2022

and our aim is to deploy the programme across all

of our global key accounts and more than 550 local

key accounts by the end of 2022.

Similarly, our site managers play an important role

in the day-to-day operation of our key accounts. We

run a Site Manager Programme, which equips our

site-managing leaders with business acumen and

leadership skills that help them manage effective

customer relationships and build engaged teams.

We are also focused on standardising our onboard-

ing approach and on engaging with our new joiners

in the most effective way. Our onboarding frame-

work supports every new colleague through a holis-

tic journey covering a three-month period. The pur-

pose is to provide support and learning, aligned

with our values, which delivers excellence in cus-

tomer experience, increases compliance and

boosts employee engagement and retention.

Our service culture

Service with a human touch (SWAHT) is the pro-

gramme which for years has translated our culture

into concrete service behaviours bringing our value

proposition to life. This year, we launched the

Placemaker’s Path, our updated service culture

programme replacing SWAHT. For our customer-

facing employees – who we call our placemakers –

the Placemaker’s Path is a career-long learning

and development programme. Deployment of the

programme began in 2021 and our target is to de-

ploy the Placemaker’s Path in all global key ac-

counts and more than 450 local key accounts by

the end of 2022.

OUR BUSINESS 20

Our gratitude to our placemakers for their dedica-

tion throughout the turbulence of Covid-19 cannot

be overstated. Every year, at our annual Global

Leadership Conference, we give the “Employee of

the year” award also called the Apple Award of the

Year, to one of our colleagues who has gone above

and beyond to serve our customers. However, in

2021, we did not hand out any individual awards

simply because it would have been impossible to

do in a fair and respectful way. Instead, we decided

to recognise every placemaker by organising a con-

cert by a legendary British musician in tribute to all

our placemakers.

Digitalisation

We acknowledge that technology is a key enabler

for delivering on our strategy – also in our people

processes. In 2021, we continued the implementa-

tion of People@ISS – our global people system.

Thanks to this initiative, we are enabling a data-

driven approach to our people and compliance

agenda.

We have also identified the potential to use IT to

automate our recruitment process. For example,

through IRIS – a virtual hiring assistant able to an-

swer common candidate questions in over 100 lan-

guages, 24 hours a day. We are piloting IRIS in the

USA to explore opportunities to improve efficiency

for new hires and hiring managers.

This year, we have taken the decision to invest in a

global employee platform to amplify our ability to

listen to and engage with our placemakers, as part

of a digital place providing access to ‘quality of life’

functionalities (expected to include integrations with

local rostering, payroll and leave request systems

where possible). Integrated listening capabilities will

provide our employees with the opportunity to make

their voices heard, while accessing business and

self-service tools, to make their working lives eas-

ier. This will give ISS stronger insights into em-

ployee engagement and the ability to recognise im-

provement opportunities in an agile and proactive

way.

We continued to develop our global learning man-

agement system, MyLearning. It is a multi-function

platform, which supports the deployment and track-

ing of over 2,000 global and country-specific e-

learning modules along with over 800 training vid-

eos available in 27 languages and is accessible to

all ISS employees. Since its formal launch in 2015,

the use of MyLearning across the organisation has

continued to grow. In 2017, approximately 100,000

e-learning modules were completed; this figure now

stands at over 5.3 million to date, with over 800,000

completions in 2021.

Employee retention

We operate in a marketplace where levels of em-

ployee churn are inherently high. To reach our

2025 ambition of achieving industry-leading em-

ployee engagement, we are targeting a structural

improvement in our employee retention. Higher em-

ployee retention underpins a more consistent,

higher quality of service and reduces the costs as-

sociated with attracting, recruiting and onboarding

new colleagues.

During 2021, Covid-19 continued to impact our em-

ployee turnover, especially in Asia. However, our

persistent push for retention initiatives in countries,

e.g. improved labour conditions relative to the mar-

ket in certain countries resulted in a global em-

ployee turnover of 30% in 2021, continuing the pos-

itive trend from previous years. The trend is also

driven by our key account focus, including the dis-

continuation of high-churn, non-key account con-

tracts and not least divestment of businesses in

countries with relatively high employee turnover.

2022 people priorities

Looking ahead to 2022, we will work towards our

2025 ambitions through focusing on the deploy-

ment of our updated leadership development and

service culture programmes, supporting OneISS.

We will continue to roll out People@ISS to support

compliance in our people processes and begin the

pilot deployment of the global employee platform to

amplify our ability to engage with our employees in

a number of additional countries in 2022. As per

our core values, we will also explore opportunities

to continuously integrate Diversity, Inclusion and

Belonging into our learning and development pro-

grammes.

OUR BUSINESS 21

Our business risks

Risk management is an integral part

of our service performance and value

creation. We do, however, experience

incidents. Therefore, our main focus is

to build a business resilience to both

existing operational risks and external

events, including market changes.

Risk management in 2021

In 2020, we saw two significant risk events, Covid-

19 and the IT security incident. These events and

the launch of the OneISS strategy in December

2020, set the tone for our risk management activi-

ties in 2021 through three areas.

1 Stronger governance

Our risk governance centres around bi-annual risk

assessment procedures that provide bottom-up risk

assessments country-by-country to support our top-

down risk assessment anchored with the Executive

Group Management (the EGM) and the Board of

Directors (the Board). Functional risk committees

(chaired by EGM members) serve as the integra-

tion point where bottom-up and top-down perspec-

tives meet.

2 Simpler processes

The two major risk events in 2020 clearly indicated

a too optimistic view on the probability of such

events occurring. As a result, we have simplified

our approach by moving away from a probability-

based risk assessment towards a more holistic vul-

nerability measure. This, we believe, is more opera-

tional and action orientated, and thus simpler to

work with on a daily basis.

3 Closer community

We also established a new and strengthened risk-

management function in our second Group HQ lo-

cation in Warsaw. Our risk management activities

are now operated by this team in close cooperation

with local country risk management resources. Fur-

ther, we have strengthened our finance blueprint

organisation by defining Risk Management as a

mandatory function and built a stronger cooperation

between risk management and our operational

functions. With these initiatives, we are enabling a

strong collaboration with risk owners across cus-

tomer accounts and functions.

Group risks review

As part of our bi-annual process, we reviewed the

Group’s key risks to reflect the main exposures in

achieving our strategic objectives. The key risks

and mitigation measures identified in 2021 are de-

scribed on the following pages. We do not consider

macro-economic risks as company specific risks

that can impact our competitive advantage or mar-

ket relevance. Nevertheless, we monitor market de-

velopments on an ongoing basis, and mitigate

any adverse impacts to the extent possible.

Market developments 2021

In 2020, the facility management industry experi-

enced an unprecedented disruption as Covid-19

impacted ways of working and workplace environ-

ments globally. The impact on our business was

material. While cleaning services have been stable

since the outbreak of the pandemic, other services

have been materially impacted, especially food ser-

vices. The impact of the pandemic has continued to

be significant in 2021, and our food service revenue

is still subdued with a large recovery potential from

a broader return to office, particularly in the USA.

The long-term implications are uncertain – with

both risks and opportunities. Covid-19 has likely ac-

celerated working-from-home trends, and some of-

fice-based customers may therefore pursue a re-

duction of their real estate footprint. This could

have a negative impact on our offerings to office-

based customers. At the same time, ISS is benefit-

ting from customers requesting higher quality offer-

ings, including increased frequency of cleaning, ad-

ditional deep cleaning and higher quality food ser-

vice solutions.

Other macro-economic risks have also played a

large role in 2021 and the beginning of 2022. In our

key markets, inflation has been rising putting pres-

sure on wages and cost of goods. We have a struc-

tured approach to inflation risk, as even low infla-

tion scenarios can impact margin significantly, if not

appropriately managed. On the customer side, we

generally include pass-on clauses in our contracts.

Also, our scale and broad service scope often al-

lows us to drive efficiencies through scope changes

that can limit inflation impact for the customer. In

terms of cost of goods, our efforts to centralise

spend with fewer suppliers allows the same benefit

of leveraging supplier scale to manage cost in-

creases. Wage inflation is to a large extent a result

OUR BUSINESS 22

of collective bargaining agreements or legislation

and as such difficult to impact directly.

Demand for labour is high and in several countries

we have in 2021 experienced hiring challenges. In

some cases, we incentivise new joiners through

ash benefits, but generally we rely on our large net-

work and solid employer reputation.

2022 risk priorities

A key priority for 2022, is to make sure that we

have technology in place which will further enhance

risk management and compliance. In 2022, we will

finalise the implementation of a new IT platform

across risk management, information security and

data privacy (GDPR) that will drive better transpar-

ency and insight into risk and compliance areas.

Corporate responsibility, including Environmental,

Social and Governance (ESG), will also continue to

be a priority – both as a risk and a strong oppor-

tunity for making a real impact directly through our

business performance and indirectly through en-

gagement with our stakeholders. We acknowledge

that this agenda is only continuing to grow in im-

portance which is also why two of our five strategic

priorities for 2022 are within ESG.

OUR BUSINESS 23

GOVERNANCE 24

Corporate governance

Transparency, constructive stakeholder di-

alogue, sound decision-making processes

and controls are key aspects of our corpo-

rate governance for the benefit of ISS and

our stakeholders.

The management team of the Group formally con-

sists of the Board of Directors and the Managing Di-

rector of ISS Global A/S. Since ISS Global A/S has

no operating activities of its own, the Group relies on

the management team of ISS A/S, the ultimate par-

ent company in Denmark. As a subsidiary of ISS A/S,

ISS Global A/S is subject to the same corporate gov-

ernance policies applicable in ISS A/S. Corporate

governance of the ISS Global Group is therefore built

on corporate governance of the ISS A/S Group, in-

cluding the management team, and descriptions in

this chapter should be seen in this context.

Framework

The Board of Directors (the Board) regularly reviews

the Group’s corporate governance framework and

policies in relation to the Group’s activities, business

environment, corporate governance recommenda-

tions and statutory requirements; and continuously

assesses the need for adjustments.

The rules on the governance of ISS A/S, including

share capital, general meetings, shareholder deci-

sions, election of members to the Board, etc., is de-

scribed in the Articles of Association.

The Board reviews the Group’s share and capital

structure on an ongoing basis. The Board believes

the present share and capital structure serves the

best interests of both the shareholders and ISS as it

gives ISS the flexibility to pursue strategic goals, thus

supporting long-term shareholder value combined

with short-term shareholder value by way of ISS’s

dividend policy.

Governance structure

Shareholders

The shareholders of ISS A/S exercise their rights

at the general meeting, which is the supreme govern-

ing body of ISS.

Management

Management powers are distributed between our

Board and our Executive Group Management Board

(the EGMB). No person serves as a member of both

of these corporate bodies. Our EGMB carries out the

day-to-day management, while our Board supervises

the work of our EGMB and is responsible for the

overall management and strategic direction.

The members of the EGMB are the Group CEO and

the Group CFO. Together, they form the manage-

ment registered with the Danish Business Authority.

The Group has a wider Executive Group Manage-

ment (the EGM), whose members are ten Corporate

Senior Officers in addition to the EGMB. The EGM

has a number of committees including a Sustainabil-

ity Committee addressing ESG-related matters which

are reported and reviewed by the EGM and the

Board as required.

In the review of our governance structure on p. 27,

we have outlined the primary responsibilities of the

Board and the EGM as well as 2021 activity by Board

committees.

Strengthening the EGM

In 2021, we strengthened our EGM and made neces-

sary organisational changes to support our execution

of the OneISS strategy even more.

GOVERNANCE 25

On 1 May 2021, Liz Benizon took up the position as

Country Manager of ISS UK & Ireland and joined the

Executive Group Management.

On 1 June 2021, Markus Sontheimer took up the po-

sition as Chief Information and Digital Officer and

joined the Executive Group Management.

On 1 January 2022, Carl-Fredrik Langard-Bjor took

up the position as CEO Northern Europe and Celia

Liu the position as CEO Central & Southern Europe.

On 31 December 2021, Pierre-François Riolacci

stepped down as Group CEO Europe.

Composition of the Board

The Board consists of ten members, seven elected

by the general meeting and three elected by and

among the employees. Board members elected by

the general meeting stand for election each year.

Niels Smedegaard and Kelly Kuhn were appointed

as new members of the Board at the annual general

meeting on 13 April 2021 where the previous Chair of

the Board Lord Allen of Kensington and board mem-

ber Claire Chiang stepped down. The Board consti-

tuted itself by electing Niels Smedegaard as Chair

and Henrik Poulsen as Deputy Chair.

Employee representatives are elected on the basis of

a voluntary arrangement regarding Group represen-

tation for employees of ISS World Services A/S as

further described in the Articles of Association. Em-

ployee representatives serve for terms of four years.

The current employee representatives joined the

Board after the annual general meeting held in April

2019.

Board evaluation

In 2021, the Board performed its annual evaluation of

the Board’s performance with assistance by an exter-

nal advisor. The evaluation included Board composi-

tion, individual performance at meetings and prepa-

ration, cooperation between the Board and the

EGMB, the leadership of the Board Chair, committee

structure and work as well as the organisation of

work and quality of Board material. All members of

the Board, CEO, CFO and the General Counsel an-

swered bespoke online questionnaires and partici-

pated in in-depth personal interviews. The result of

the Board evaluation was subsequently presented

and discussed at a Board meeting.

Overall, the Board was evaluated by the external ad-

visor to be well-functioning and with a diverse com-

position. Under challenging circumstances, with new

members and few opportunities to meet in person,

1

In respect of the specific target for ISS Global A/S cf. 99b of the Danish

Financial Statements Act, the target to increase the number of women on

the Board of Directors (Board) to at least one member by the annual gen-

eral meeting in 2021 has been reached as the Board of ISS Global A/S cur-

rently consists of one woman and four men.

the board had worked well together. The evaluation

identified a few focus areas to improve the Board’s

performance and value-add during 2022: i) ensuring

the right balance between reviewing progress on

turnaround plans and ensuring long-term, profitable

growth, ii) reviewing integration of and follow-up on

environmental and social goals in general and lever-

aging the opportunity to become a societal role

model in particular and iii) strengthening the Board

as a team.

For further details, please see response to recom-

mendation 3.5.1 of the 2021 Statutory report on Cor-

porate Governance.

Competencies and diversity

The Board and the EGM recognise the importance of

promoting diversity at management levels and have

implemented policies regarding competencies and di-

versity in respect of Board and EGMB nominations

according to which we are committed to selecting the

best candidate. Emphasis is placed on:

• experience and expertise;

• diversity of gender and in broader terms; and

• personal characteristics matching ISS’s values

and leadership principles.

In 2021, we launched our global Diversity &

Inclusion (D&I) strategy. As part of the strategy, we

have defined a target of achieving at least 40% gen-

der balance at all corporate leadership levels by

2025. Gender balance at all leadership levels re-

mains a focus area in 2022.

Board gender balance

The Board’s gender target of having at least 40%

women elected by the general meeting on the Board

by 2020

1

was met with 43%. Including employee rep-

resentatives, 50% of our Board is women.

Assurance

The Group’s external financial reporting is audited by

the independent auditors.

Group Internal Audit (GIA) is responsible for provid-

ing an objective and independent assessment of the

effectiveness and quality of the internal controls in

accordance with the internal audit plan approved by

the Audit and Risk Committee (ARC). GIA operates

under a charter approved by the Board.

Although the travel ability of GIA continued to be im-

pacted by Covid-19, audit programmes have been

adjusted to accommodate remote testing allowing for

The Board has set a new target to further increase the number of female

board members to at least one third by the annual general meeting in

2025 although ISS remains committed to always selecting the best candi-

date for the Board based on competencies, experience and diversity. As

ISS Global A/S does not have any employees and no defined other man-

agement levels, a policy and targets for promoting gender diversity at

other management levels has not been adopted.

GOVERNANCE 26

GIA to continue to provide assurance over the oper-

ating effectiveness of internal controls.

In 2021, focus has been on:

• establishment of regional based GIA in Asia &

Pacific and the strengthening of the GIA team

through recruitment of new members in the

newly established corporate hub in Warsaw;

• development of new audit working programme to

provide assurance around effectiveness of inter-

nal controls in our Partnership countries;

• continued implementation of a structured and

formalised Internal Control Framework for Finan-

cial Reporting (ICOFR). The status of selected

controls and on the implementation of key pro-

cesses and systems is reported separately for

each country as part of a Group initiative on Top

10 Controls; and

• reducing the number of open audit recommen-

dations and ensuring timely closure of audit rec-

ommendations. The Group’s external financial

reporting is audited by the independent auditors.

Speak up (whistleblower)

The Group’s Speak Up Policy is implemented

through a reporting tool operated by GotEthics, which

is available in 21 languages via ISS’s website and lo-

cal ISS country websites enabling employees of ISS,

business partners and other stakeholders to report

serious and sensitive concerns anonymously.

All business integrity and ethics issues identified

through Speak Up or other sources are handled by

the Business Integrity Committee (BIC) that is com-

posed of the Group CFO, the Group General Coun-

sel, the Group People and Culture Officer and the

Head of Group Internal Audit. The BIC reports to the

ARC on all matters that have been subject to investi-

gation.

Over 2021, the accessibility and awareness of Speak

Up has been strengthened through the ongoing im-

plementation of a manned phone hotline to supple-

ment the reporting tool and updates of the ISS web-

site with a new section on Responsible Business

Conduct & Speak Up.

Data ethics

ISS’s focus on safe and ethical processing of data

has been strengthened by the adoption of the ISS

Data Ethics Policy. The purpose of the policy is to

ensure transparency and accountability in ISS’s man-

agement and processing of data. The policy is based

on the principles of the Charter of Fundamental

Rights of the European Union and emphasises ISS’s

commitment to responsible, fair and progressive data

handling as well as ISS’s dedication to diversity and

inclusion. The Data Ethics Policy as per section 99d

in the Danish Financial Statements Act has been

adopted by the EGM and the Board and is subject to

annual review in line with ISS’s policy standards. The

policy is available at:

https://brand.issworld.com/m/7718dae21a3a6761/ori

ginal/ISS-Data-Ethics-Policy-20211215-_Final.pdf

GOVERNANCE 27

Our governance structure

FINANCIAL STATEMENTS 28

Primary statements

Consolidated statement of profit or loss 29

Consolidated statement of comprehensive income 30

Consolidated statement of cash flows 31

Consolidated statement of financial position 32

Consolidated statement of changes in equity 33

Section 1 Operating profit and tax

1.1 Segment information 34

1.2 Revenue 37

1.3 Other income and expenses, net 40

1.4 Income tax 41

1.5 Deferred tax 43

Section 2 Operating assets, liabilities and free cash flow

2.1 Property, plant and equipment and leases 45

2.2 Trade receivables and credit risk

48

2.3 Other receivables

50

2.4 Other liabilities

51

2.5

Changes in working capital 51

2.6

Provisions 52

2.7 Free cash flow 55

Section 3 Strategic divestments and acquisitions

3.1 Discontinued operations 56

3.2 Assets and liabilities held for sale 58

3.3 Divestments 60

3.4 Acquisitions 62

3.5 Pro forma revenue and operating profit 64

3.6 Intangible assets 65

3.7 Goodwill impairment 67

3.8

Impairment tests 67

Section 4 Capital structure

4.1 Equity 71

4.2 Loans and borrowings 72

4.3 Financial income and expenses 74

4.4 Financial risk management 74

4.5 Interest rate risk

75

4.6 Liquidity risk 76

4.7 Currency risk 78

Section 5 Remuneration

5.1

81

5.2 Staff costs and average number of employees 81

5.3 Share-based payments 82

5.4 Pensions and similar obligations 87

Section 6 Other required disclosures

6.1 Contingent liabilities 91

6.2 Government grants 91

6.3 Related parties 92

6.4 Fees to auditors 93

6.5 Subsequent events 93

Section 7 Basis of preparation

7.1 Significant accounting estimates and judgements 94

7.2 Change in accounting policies 94

7.3 General accounting policies 95

7.4 New standards and interpretations not yet implemented 98

7.5 Group companies 99

Remuneration to the Board of Directors and the Executive

Group Management

Consolidated

financial

statements

FINANCIAL STATEMENTS 29

Consolidated statement of profit or loss

1 January – 31 December

(DKKm) 2021 2020

Revenue 1.1, 1.2 71,383 70,767

Staff costs

5.2, 5.3 (45,602)

(46,009)

Consumables

(5,020)

(5,750)

Other operating expenses (16,276) (19,820)

Depreciation and amortisation

1)

2.1, 3.6 (1,565) (1,689)

Operating profit before other items 1.1 2,920 (2,501)

Other income and expenses, net 1.3 456 (626)

Royalty

(1,225)

(1,148)

Goodwill impairment 3.7

(459)

(535)

Amortisation/impairment of brands and customer contracts

3.6 (64) (89)

Operating profit 1.1 1,628

(4,899)

Financial income

4.3 110 64

Financial expenses 4.3 (683) (613)

Profit before tax 1,055 (5,448)

Income tax 1.4, 1.5 (559) 186

Net profit from continuing operations 496 (5,262)

Net profit from discontinued operations

3.1

110 46

Net profit 606 (5,216)

Attributable to:

The owner of ISS Global A/S 584 (5,226)

Non-controlling interests

22 10

Net profit 606 (5,216)

1)

Excluding Goodwill impairment and Amortisation/impairment of brands and customer contracts.

Note

FINANCIAL STATEMENTS 30

Consolidated statement of comprehensive income

1 January – 31 December

(DKKm) Note 2021 2020

Net profit

606 (5,216)

Other comprehensive income

Actuarial gains/(losses) 5.4 1,145 (127)

Impact from asset ceiling regarding pensions 5.4 (1,080) (21)

Tax 1.5 (11)

29

Net total, that will not be reclassified to profit or loss in subsequent periods 54 (119)

Foreign exchange adjustments of foreign entities 4.1 174 (622)

Fair value adjustments of net investment hedges

4.1 (191)

180

Recycling of accumulated foreign exchange adjustments on country exits

4.1

15

1

Tax 42 (40)

Net total, that may be reclassified to profit or loss in subsequent periods 40

(481)

Other comprehensive income 94 (600)

Comprehensive income 700 (5,816)

Attributable to:

The owner of ISS Global A/S 693 (5,821)

Non-controlling interests 7 5

Comprehensive income 700 (5,816)

FINANCIAL STATEMENTS 31

Consolidated statement of cash flows

At 31 December

(DKKm) Note 2021 2020

Operating profit before other items 2,920 (2,501)

Operating profit before other items from discontinued operations 3.1 87 86

Depreciation and amortisation 2.1, 3.6 1,565 1,704

Share-based payments 34

11

Changes in working capital

2.5 1,039

1,007

Changes in provisions, pensions and similar obligations

(407)

1,494

Other expenses paid (50) (325)

Interest received from companies within the ISS Group 65 13

Interest received, external 40 71

Interest paid to companies within the ISS Group - (8)

Interest paid, external (472) (513)

Income tax paid 1.4 (443) (389)

Payments related to royalties (1,157) (1,536)

Cash flow from operating activities 3,221 (886)

Acquisition of businesses 3.4 (526)

(102)

Divestment of businesses 3.3 1,191 505

Acquisition of intangible assets and property, plant and equipment

(466)

(583)

Disposal of intangible assets and property, plant and equipment 42 31

Acquisition of financial assets, net (6) (48)

Cash flow from investing activities 235 (197)

Proceeds from bonds 4.2 - 3,694

Repayment of bonds 4.2 (1,577)

(2,234)

Repayment of lease liabilities

4.2 (935) (1,005)

Other financial payments, net 4.2 (431) 709

Capital increase from ISS World Service A/S - 5,000

Payments (to)/from companies within the ISS Group, net (215) (4,665)

Transactions with non-controlling interests 3.4 164 -

Cash flow from financing activities (2,994)

1,499

Total cash flow 462

416

Cash and cash equivalents at 1 January 2,741

2,669

Total cash flow 462 416

Foreign exchange adjustments 224 (344)

Cash and cash equivalents at 31 December 4.6 3,427 2,741

Free cash flow 2.7 1,900 (2,143)

FINANCIAL STATEMENTS 32

Consolidated statement of financial position

At 31 December

(DKKm) Note 2021 2020

Assets

Intangible assets 3.6, 3.8 16,055 15,910

Property, plant and equipment and leases 2.1 3,273 3,456

Receivables from companies within the ISS Group 3,164

3,116

Deferred tax assets

1.5 790

818

Other financial assets

451

351

Non-current assets 23,733 23,651

Inventories 177 175

Trade receivables 2.2 10,406 9,861

Tax receivables 164 163

Receivables from companies within the ISS Group 466 291

Other receivables 2.3 1,491 1,436

Cash and cash equivalents 4.6 3,427 2,741

Assets held for sale 3.2 493 1,816

Current assets 16,624 16,483

Total assets 40,357

40,134

Equity and liability

Equity attributable to the owner of ISS Global A/S 4,039 3,166

Non-controlling interests 3.4 206 29

Total equity 4.1 4,245

3,195

Loans and borrowings 4.2 16,032

17,236

Pensions and similar obligations 5.4 1,351

1,480

Deferred tax liabilities

1.5 378 345

Provisions

2.6 755

624

Non-current liabilities 18,516 19,685

Loans and borrowings 4.2 866 1,264

Trade and other payables 5,566

4,839

Tax payables 174

103

Other liabilities 2.4 9,749 8,908

Provisions 2.6 961 1,302

Liabilities held for sale

3.2 280 838

Current liabilities 17,596 17,254

Total liabilities 36,112 36,939

Total equity and liabilities 40,357 40,134

FINANCIAL STATEMENTS 33

Consolidated statement of changes in equity

1 January – 31 December

(DKKm)

Note

Share

capital

Retained

earnings

Trans-

lation

reserve

1)

Total

Non-con-

trolling

interests

Total

equity

2021

Equity at 1 January

180 3,998 (1,012) 3,166 29 3,195

Net profit -

584 - 584 22 606

Other comprehensive income - 54 55 109 (15) 94

Comprehensive income - 638 55 693 7 700

Transactions with non-controlling interests 3.4 180 - 180 170 350

Transactions with the owner - 180 - 180 170 350

Changes in equity - 818 55 873 177

1,050

Equity at 31 December 180 4,816 (957) 4,039

206 4,245

2020

Equity at 1 January

180 3,043 (536) 2,687 24 2,711

Net profit -

(5,226)

-

(5,226) 10 (5,216)

Other comprehensive income -

(119) (476) (595) (5) (600)

Comprehensive income -

(5,345) (476) (5,821) 5 (5,816)

Capital increase 0

6,300

-

6,300

-

6,300

Transactions with the owner 0

6,300

-

6,300

-

6,300

Changes in equity

0

955 (476) 479 5 484

Equity at 31 December

180 3,998 (1,012) 3,166 29 3,195

Attributable to the owner of ISS Global A/S

1)

At 31 December 2021, DKK 39 million (2020: DKK 22 million) of accumulated foreign exchange gains related to discontinued operations.

FINANCIAL STATEMENTS 34

SECTION 1

Operating profit and tax

1.1 Segment information

(DKKm)

Con-

tinental

Europe

Northern

Europe

Asia &

Pacific

Americas

4)

Other

countries

Total

segments

Unallo-

cated

5)

Elimi-

nations

6)

Total

Group

2021

Revenue

1)

27,846 23,424 12,381

7,141 612 71,404 - (21)

71,383

Depreciation and amortisation

2)

(676) (563)

(214)

(109) (2) (1,564) (1)

- (1,565)

Operating profit

before other items

773 1,097 735 393

19 3,017 (97) -

2,920

()

Operating margin 2.8% 4.7% 5.9% 5.5% 3.1% 4.2% -

- 4.1%

Other income and expenses, net 445 1 (2) 78 - 522 (66) - 456

Royalty (459) (438) (188) (131) (9) (1,225) - - (1,225)

Goodwill impairment (459) -

- - - (459) - - (459)

Amortisation/impairment of

brands and customer

(11) (21) (7) (26) - (65) 1 - (64)

Operating profit 288 639 539 314

10

1,790 (162) -

1,628

Total assets 15,446 14,098 7,698 4,811

752 42,805 20,997 (23,445)

40,357

Hereof assets held for sale - - 158 -

335 493 - -

493

Additions to non-current assets

3)

1,188 420 115 91

3 1,817 26 - 1,843

Total liabilities 9,597 10,047

3,341 3,341 457 26,783 32,765 (23,436) 36,112

Hereof liabilities held for sale - - 33 - 247 280

- - 280

ISS is a leading, global provider of workplace and facility service solutions operating in 30+ countries. Operations are generally

managed based on a geographical structure in which countries are grouped into regions. The regions have been identified based

on a key principle of grouping countries that share market conditions and cultures. Countries where we do not have a full country

support structure, which are managed by Global Operations, are combined in a separate segment “Other countries”. An overview

of the grouping of countries into regions is presented in 7.5, Group companies.

In December 2021, ISS announced a reorganisation of the European business. Effective 1 January 2022, Europe will be segmented

into Northern Europe and Central & Southern Europe consistent with the Group's internal management and reporting structure

going forward. As a result, the Netherlands, Belgium, Poland and Lithuania will move from currently Continental Europe to

Northern Europe. Asia & Pacific and Americas remain unchanged.

1)

Including internal revenue which due to the nature of the business is insignificant and therefore not disclosed.

2)

Excluding Goodwill impairment and Amortisation/impairment of brands and customer contracts.

3)

Comprise additions to Intangible assets and Property, plant and equipment and leases, including from Acquisitions.

4)

In 2021, the classification of Chile as discontinued operations ceased, and Chile was presented as part of the Americas. Comparative figures were

restated accordingly.

5)

Unallocated relates to the Group’s holding companies and comprises mainly internal and external loans and borrowings, cash and cash equivalents

and intra-group balances.

6)

Eliminations relate to intra-group balances.

FINANCIAL STATEMENTS 35

1.1 Segment information (continued)

(DKKm)

Con-

tinental

Europe

4)

Northern

Europe

Asia &

Pacific

Americas

Other

countries

Total

segments

Unallo-

cated

4)

Elimi-

nation

5)

Total

Group

2020

Revenue

1)

27,634

22,642

12,385

7,565 561 70,787 - (20) 70,767

Depreciation and amortisation

2)

(781)

(618)

(188)

(101)

(1)

(1,689) - - (1,689)

Operating profit

before other items

(2,030)

(1,200)

646

262

20 (2,302) (199)

-

(2,501)

Operating margin (7.3)%

(5.3)%

5.2%

3.5% 3.7%

(3.3)% - - (3.5)%

Other income and expenses, net (430)

(120)

(53) - (1) (604) (22) - (626)

Royalty (456)

(379)

(207) (102) (4) (1,148) - - (1,148)

Goodwill impairment (517)

- (18) - - (535) - - (535)

Amortisation/impairment of

brands and customer

(11) (27) (25) (26) - (89) - - (89)

Operating profit (3,444) (1,726) 343 134 16 (4,677) (222)

- (4,899)

Total assets

15,109 13,813 7,059

4,206 1,145 41,332

21,241

(22,439) 40,134

Hereof assets held for sale

336 -

114 744 622 1,816

-

- 1,816

Additions to non-current assets

3)

641 536 138 40 13 1,368 - - 1,368

Total liabilities 9,326 10,255 3,272

3,018 690 26,561 32,806

(22,428) 36,939

Hereof liabilities held for sale 150 -

32 239 417 838

- - 838

1)

Including internal revenue which due to the nature of the business is insignificant and therefore not disclosed.

2)

Excluding Goodwill impairment and Amortisation/impairment of brands and customer contracts.

3)

Comprise additions to Intangible assets and Property, plant and equipment and leases, including from Acquisitions.

4)

Unallocated relates to the Group’s holding companies and comprises mainly internal and external loans and borrowings, cash and cash equivalents

and intra-group balances.

5)

Eliminations relate to intra-group balances.

FINANCIAL STATEMENTS 36

1.1 Segment information (continued)

Revenue by country – more than 5% of Group revenue

(DKKm)

2021 2020

UK & Ireland

10,634

10,290

Germany

5,429 5,493

USA & Canada 5,298

5,882

Switzerland 5,212

5,286

Spain 4,420

4,221

Australia & New Zealand

4,349

3,968

Denmark (country of domicile) 3,673 3,593

Other countries

1)

32,368 32,034

Total 71,383 70,767

1)

Including unallocated items and eliminations.

Non-current assets

1)

by country – more than 5% of Group revenue

(DKKm)

2021 2020

UK & Ireland

2,334 2,265

USA & Canada

2,362

2,203

Denmark (country of domicile) 1,549 1,575

Switzerland 1,399 1,440

Australia & New Zealand 1,246 1,219

Spain 1,007 1,101

Germany 915

955

Other countries

2)

12,131 12,075

Total

22,943

22,833

1)

Excluding deferred tax assets.

2)

Including unallocated items and eliminations.

FINANCIAL STATEMENTS 37

1.2 Revenue

Performance obligations

Disaggregation of revenue

(DKKm)

2021

2020

Customers

Key accounts 49,258 47,093

Large and medium 17,958 19,582

Small and route-based

4,167 4,092

Total

71,383

70,767

Projects and above-base work (e.g. capital projects) comprise revenue that is not necessarily contractually agreed at inception (not

committed), but requested and agreed with the customer and thus provided on a non-recurring basis.

Revenue is split into portfolio and projects and above-base work and the vast majority arises from portfolio.

Portfolio comprises revenue from contracts with customers that is contractually agreed (committed) at inception and relates to

services that we are obligated to deliver on a recurring basis over the term of the contract.

Revenue is generated from rendering of workplace and facility service solutions. Our services are provided to the customer on a

daily basis continuously over the term of the contract. The customer simultaneously receives and consumes the benefits provided

by the Group. Thus, the performance obligations are satisfied over time.

We disaggregate revenue based on customer type and geographical region as we believe that these best depict how the nature,

amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Disaggregation of revenue based

on geographical region is disclosed in 1.1, Segment information.

FINANCIAL STATEMENTS 38

1.2 Revenue (continued)

Revenue backlog

(DKKm)

Key

account

customers

Large and

medium

customers

Total

2021

< 1 year 14,792 5,518 20,310

1-2 years 10,042 3,086 13,128

2-3 years

6,219 1,544

7,763

3-4 years 4,560 801 5,361

4-5 years 3,857 477 4,334

> 5 years 9,464 684 10,148

Total 48,934 12,110 61,044

2020

< 1 year

14,083

5,064 19,147

1-2 years 9,003 2,768 11,771

2-3 years 6,013 1,263 7,276

3-4 years 3,763 592 4,355

4-5 years 2,989 313 3,302

> 5 years 10,871 506 11,377

Total

46,722 10,506

57,228

Our revenue base consists of a mix of yearly contracts, which are renewed tacitly, and thousands of multi-year contracts, the

majority of which have an initial term of three to five years. Depending on the size and complexity of the contract, the transition

and mobilisation period is normally between six and twelve months for our key accounts. Contracts regularly include options for

the customer to terminate for convenience within three to nine months. However, we maintain a high retention rate, both for key

accounts and overall, supporting that these options are rarely exercised.

As described in Performance obligations on p. 37, the vast majority of our revenue is portfolio revenue and the remaining part is

non-recurring in the form of projects and above-base work. Since projects and above-base work is not committed as part of the

main customer contract it is excluded from the transaction price to be allocated to the remaining performance obligation (revenue

backlog). At 31 December, the revenue backlog (including contracts won but not yet started) was as follows:

In estimating the revenue backlog, the Group has applied the exemptions of IFRS 15 and does not disclose revenue backlog for

contracts:

• with an original duration of less than 12 months; and

• invoiced based on time incurred, i.e. contracts where the Group invoices a fixed amount for each hour of service provided.

Committed savings glidepaths are taken into consideration whereas future inflation is excluded from the estimates.

For our key accounts and large and medium customers, a significant number of contracts in terms of value are descoped based

on a term of less than 12 months (due to termination for convenience clauses) and some contracts are descoped on the basis that

they are invoiced based on time incurred.

In terms of our small and route-based customers, the vast majority is descoped based on either of the two exemptions. The

remaining customers in scope comprise less than 1% of Group revenue and due to immateriality revenue backlog is therefore not

disclosed.

In conclusion, the amounts disclosed in the maturity profile above are significantly lower than reported revenue and will likely not

reflect the degree of certainty in future revenue (and cash inflows) to the Group – both due to the exemptions and due to non-

portfolio revenue not being considered part of the revenue backlog.

FINANCIAL STATEMENTS 39

1.2 Revenue (continued)

Significant accounting judgements

Accounting policy

Judgements, estimates and assumptions mainly related to assessment of the impact on revenue from:

1. customers reducing their demand for services (contract modifications);

2. utilisation of government support schemes;

3. variable consideration, e.g. revenue contingent on the achievement of certain contractual KPIs; and

4. continuing service delivery to customers despite collectibility concerns.

In 2021, the Group’s revenue continued to be significantly impacted by Covid-19 due to lockdowns and other restrictions, which

caused customers across the globe to reduce building occupancy and reduce their request for services accordingly.

During the pandemic, we have recalibrated service solutions to the needs and interests of customers as well as ISS, and to support

our employees to the extent possible. This has resulted in increased uncertainty and in management making various judgements,

estimates and assumptions in relation to recognition and measurement of the Group’s revenue, that could result in outcomes that

require adjustments to recognised revenue in future periods.

Revenue excludes amounts collected on behalf of third parties, e.g. VAT and duties.

The input method is used to measure progress towards complete satisfaction of the service due to the direct relationship between

labour hours and costs incurred, and the transfer of services to the customer. The Group recognises revenue on the basis of the

labour hours and costs expensed relative to the total expected labour hours and costs to complete the service.

Variable consideration

For key accounts and other large contracts, the transaction price may include variable consideration based

on achievement of certain key performance indicators. Management estimates variable consideration based on the most likely

amount to which it expects to be entitled on a contract by contract basis. Management makes a detailed assessment of the

amount of revenue expected to be received and the probability of success in each case. Variable consideration is included in

revenue as services are performed to the extent that it is highly probable that the amount will not be subject to significant reversal.

Modifications Key account contracts are often modified in respect of service requirements. Generally, modifications are agreed

with the customer in accordance with a specified change management procedure and accounted for going forward with no

impact on recognised revenue up to the date of modifications.

Contract modifications are generally agreed with the customer in accordance with a specified change management procedures

and accounted for going forward. However, the current situation has necessitated flexibility from both sides and required

continuous assessments by management, among others in relation to how quickly ISS would be able to implement service

changes. Likewise, when certain government support schemes have been utilised, management has assessed the extent to which

such support should be passed on to customers and reduce revenue accordingly.

Finally, for variable consideration, assessments have been made as to Covid-19 impacting achievement of contractual KPIs and

thus reducing revenue.

Gross or net presentation of revenue Management uses judgement to determine whether the nature of ISS’s promise is to

provide the specified services (ISS is the principal), or to arrange for another party to provide the services (ISS is acting as an

agent). This assessment is based on an evaluation of whether ISS controls the specified services before transfer to the customer.

The Group has concluded that as a main rule it is the principal in its revenue arrangements, because it typically controls the

services before transferring them to the customer, and consequently as a main rule recognises revenue on a gross basis.

Revenue from contracts with customers is recognised when control of the services is transferred to the customer at an amount

that reflects the consideration to which the Group expects to be entitled in exchange for those services. Control is transferred over

time as the customer simultaneously receives and consumes the benefits provided by the Group. Services are invoiced on a

monthly basis.

FINANCIAL STATEMENTS 40

1.3 Other income and expenses, net

(DKKm) 2021 2020

Gain on divestments

621 22

IT security incident 7 -

Other income 628 22

Loss on divestments (34) (107)

Carrying amount adjustment re. ceased held for sale classification (59) -

Acquisition costs (77) (6)

IT security incident - (516)

Winding up of businesses - (18)

Other (2) (1)

Other expenses (172) (648)

Other income and expenses, net 456 (626)

Accounting policy

Other income and expenses, net consists of recurring and non-recurring items that management does not consider to be part of

the Group’s ordinary operations, i.e. gains and losses on divestments, remeasurement of disposal groups classified as held for

sale, carrying amount adjustments regarding ceased held for sale classification, the winding-up of operations, disposal of

property and acquisition and integration costs.

Winding up of businesses in 2020 related to the Open Space business in Australia.

IT security incident in 2020 comprised unavoidable incremental costs incurred as a consequence of the IT security incident,

including writedown of impaired assets, non-chargeable costs due to lack of documentation and certain customer claims and

penalties.

Gain on divestments mainly related to the divestment of Kanal Services in Switzerland and Specialized Services in the USA. In

2020, the gain related mainly to the divestment of the Pest control business in Singapore.

Loss on divestments mainly related to adjustments to prior years’ divestments and the divestment of Fruit Baskets business in

Sweden. In 2020, the loss mainly comprised adjustments to prior years’ divestments, most significantly the Hygiene & Prevention

business in France.

Acquisition costs

related to the acquisition of Rönesans Facility Management Company in Turkey. The majority of these costs

comprised transaction incentives to management in ISS Turkey. In addition, fees to external advisors were included.

Carrying amount adjustment re. ceased held for sale classification comprised depreciation and amortisation for the years 2019

to 2020 recognised following the decision to cease the held for sale classification of Chile in December 2021.

FINANCIAL STATEMENTS 41

1.4 Income tax

(DKKm) 2021 2020

Current tax 509

242

Deferred tax 5 (426)

Prior year adjustments, net 45 (2)

Income tax 559

(186)

Effective tax rate (ETR)

Group 2021 2020

Statutory income tax rate, Denmark 22.0 % 22.0 %

Foreign tax rate differential, net (14.3)% 5.8 %

Total 7.7 % 27.8 %

Non-tax-deductible expenses less non-taxable income 7.9% 0.2%

Non-tax-deductible impairment 12.0% (3.1%)

Prior year adjustments, net 4.2 % 0.0 %

Change in valuation of tax assets, net 17.2 % (20.3)%

Changes in tax rates (0.7)% (0.1)%

Other taxes

4.6% (1.1)%

Effective tax rate

52.9% 3.4%

By country

1)

2021 2021

2020

3)

Australia 30.0% 30.2% 30.0%

Denmark (incl. HQ)

2)

22.0% (15.0)% 37.8%

Finland 20.0% 25.9% (988.7)%

France

2)

27.5% (10.9)%

0.6%

Germany

2)

30.3% 0.0% (5.9)%

Norway 22.0% 22.6% 28.3%

Spain 25.0% 21.9% 4.6%

Switzerland 18.0% 7.5% 18.2%

UK 19.0% 122.7% 19.4%

USA 21.0% 21.4% 29.3%

Other - n/a n/a

ETR

1)

Calculated based on IFRS reporting standards.

2)

Profit before tax was negative in 2021.

3)

Profit before tax was negative in all countries except for Switzerland.

Statutory

income tax

rate

The Group’s effective tax rate in 2021 was adversely impacted by a few major items, namely non-tax-deductible impairment,

valuation allowances on deferred tax assets and non-tax-deductible costs, mainly interest limitation. In 2020, the effective tax rate

was significantly impacted by the negative profit before tax.

FINANCIAL STATEMENTS 42

1.4 Income tax (continued)

Accounting policy

Other taxes mainly comprised withholding tax, e.g. in Denmark, and Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) in

France.

For further details:

ISS Tax Policy, see https://brand.issworld.com/m/530c5e0919524b04/original/Group-Tax-Policy.pdf

Cross-border and intercompany transactions mainly comprise royalty payments, management fees and financing. Such

transactions are conducted based on arm’s length principles and in accordance with current OECD principles in setting internal

transfer prices.

Our approach to tax and tax risks

We are committed to comply with applicable tax rules and regulations in the countries where we operate. We also have an

obligation to optimise the return for our shareholders by managing and planning tax payments effectively. As a good corporate

citizen, we will pay applicable taxes, and at the same time ensure a competitive effective tax rate and strive to limit double taxation

to the extent possible.

We have zero-tolerance towards evasion of taxes, social charges or payroll taxes. For the benefit of society, our employees and

customers, we support governmental and industry specific initiatives that introduce tighter controls and sanctions to ensure that

companies in our industry play by the rules.

Income tax comprises current tax and changes in deferred tax, including changes due to a change in the tax rate, and is

recognised in profit or loss or other comprehensive income.

Tax receivables and payables are recognised in the statement of financial position as tax computed on the taxable income for the

year, adjusted for tax on the taxable income prior years and tax paid on account.

Prior year adjustments, net related to adjustments in the final tax returns for 2020, mainly in the UK. In 2020, the adjustment

mainly related to settlement of tax audit in Finland.

Change in valuation of tax assets, net comprised valuation allowances on deferred tax assets, primarily in Germany and France in

2021. In 2020, the change mainly related to Germany, France, Spain and the Netherlands.

Non-tax-deductible expenses less non-taxable income

comprised various income and expenses across the Group. In Denmark,

interest limitation tax rules, including impact from the refinancing of bonds, had a negative impact on the effective tax rate. France

also contributed due to the tax credit CICE, whereas the non-taxable divestment of Kanal Services in Switzerland and Covid-19

subsidies impacted positively.

Non-tax-deductible impairment related to goodwill impairment in France.

Foreign tax rate differential, net was impacted by significant tax losses in countries with a higher corporate income tax rate than

22%, primarily France and Germany.

Changes in tax rates in 2021 was mainly driven by the increase in the income tax rate in the UK from 19% to 25% effective from

2023 and a reduction of the corporate tax rate in France from 33% to 25% over the period 2018-2022.

2021 Corporate Responsibility Report: https://brand.issworld.com/web/24f976f13bb57357/corporate-responsibility-reports/

FINANCIAL STATEMENTS 43

1.5 Deferred tax

Development in deferred tax

(DKKm)

2021 2020

Deferred tax liabilities, net at 1 January

(473) (89)

Prior year adjustments, net 25 41

Foreign exchange adjustments (25) 23

Acquisitions and divestments, net 72 -

Other comprehensive income 11 (29)

Reclassification to Assets/(Liabilities) held for sale (27) 7

Tax on profit before tax

5 (426)

Deferred tax liabilities, net at 31 December (412) (473)

Deferred tax specification

(DKKm)

2021 2020 2021 2020

Tax losses carried forward 336 466 - -

Goodwill 4 4 412 372

Brands - -

1 3

Customer contracts

8 13 141

69

Property, plant and equipment

125

86 374

378

Provisions and other liabilities 1,062 861 331

312

Pensions 158 177 22 -

Set-off within legal tax units and jurisdictions (903) (789) (903) (789)

Total 790 818 378 345

Unrecognised deferred tax assets

Uncertain tax positions

Prior year adjustments, net in 2021 and 2020 were mainly related to adjustment of tax deductions (temporary differences) in the

final tax returns.

Acquisitions and divestments, net in 2021 related to the acquisition of Rönesans Facility Management Company in Turkey.

Other comprehensive income comprised tax on actuarial gains on pensions.

Deferred tax assets

Deferred tax liabilities

At 31 December 2021, the Group had unrecognised deferred tax assets which comprised tax losses carried forward and other

deductible temporary differences of DKK 1,871 million (2020: DKK 1,688 million) for continuing operations primarily relating to

Germany, France, the Netherlands and Spain.

At 31 December 2021, DKK 0 million (2020: DKK 15 million) of the total unrecognised deferred tax assets related to discontinued

operations.

Unrecognised tax losses can be carried forward indefinitely in the individual countries, except for China, where tax losses can be

carried forward for 5 years.

Uncertain tax positions include ongoing disputes with tax authorities in certain jurisdictions and have been provided for in

accordance with the accounting policies. Management believes that the provisions made are adequate. However, the actual

obligations may deviate as they depend on the result of litigations and settlements with the relevant tax authorities. The final

outcome of some of the ongoing disputes is expected to be determined in 2023.

FINANCIAL STATEMENTS 44

1.5 Deferred tax (continued)

Significant accounting estimates

Accounting policy

Deferred tax assets and liabilities are offset if the Group has a legal right to offset these, intends to settle these on a net basis or to

realise the assets and settle the liabilities, simultaneously.

Deferred tax assets

relating to tax losses carried forward are recognised, when management assesses that these can be offset

against positive taxable income in the foreseeable future. The assessment is made at the reporting date taking into account the

impact from limitation in interest deductibility and local tax restrictions in utilisation of tax losses. The assessment of future taxable

income is based on financial budgets approved by management and expectations on the operational development, mainly in

terms of organic growth and operating margin in the following five years as well as planned adjustments to capital structure in

each country.

Uncertain tax positions

As part of operating a global business, disputes with tax authorities around the world may occur.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is

subject to interpretation and considers whether it is probable that a tax authority will accept an uncertain tax treatment. The

possible outcome of uncertain tax positions are measured based on management’s best estimate of the amount required to settle

the obligation and recognised in deferred tax or income tax depending on the tax position.

Deferred tax

is provided using the liability method on temporary differences between tax bases of assets and liabilities and their

carrying amounts. Deferred tax is not recognised on temporary differences relating to goodwill which is not deductible for tax

purposes and other items where temporary differences, apart from in business combinations, arose at the time of acquisition

without affecting either Net profit or taxable income. Where alternative taxation rules can be applied to determine the tax base,

deferred tax is measured according to management’s intended use of the asset or settlement of the liability. Deferred tax is

measured according to the taxation rules and tax rates in the respective countries applicable at the reporting date when the

deferred tax becomes current tax.

Deferred tax assets, including the tax base of tax loss carryforwards, are recognised in non-current assets at the expected value of

their utilisation: either as a set-off against tax on future income or as a set-off against deferred tax liabilities in the same legal tax

entity and jurisdiction.

Management made a reassessment of the probability that future taxable profit will be available in the foreseeable future (5 years)

against which the Group can utilise tax losses (i.e for current year and those carried forward from prior years (valuation

allowances). The assessment is based on the cash flow projections made for the purpose of the Group’s impairment tests, see 3.8,

Impairment tests, and represents management’s best estimate, but is naturally associated with significant uncertainty.

FINANCIAL STATEMENTS 45

SECTION 2

Operating assets, liabilities and free cash flow

2.1 Property, plant and equipment and leases

(DKKm)

Properties Vehicles

Other

Total Total

2021

Cost at 1 January 2,313 1,301 673 4,287 3,568 7,855

Prior year adjustments (117) (203) (94) (414) - (414)

Foreign exchange adjustments 51 17 (46) 22 45 67

Additions 347 369 140 856 308

1,164

Acquisitions - - 6 6 27

33

Divestments - - - -

(122)

Disposals

(127) (195) (96) (418)

(489)

(907)

- (8) - (8) 8 -

Reclass (to)/from Assets held for sale 17

15

(6) 26 36 62

Cost at 31 December 2,484

1,296 577 4,357 3,381

7,738

Depreciation at 1 January

(819)

(682) (353) (1,854) (2,545)

(4,399)

Prior year adjustments

117

203 94 414 -

414

Foreign exchange adjustments (18) (12)

21 (9) (57) (66)

Impairment (32) - - (32) (5)

(37)

Depreciation (402) (365) (141) (908) (419) (1,327)

Divestments - - - -

109 109

Disposals 126

195 95 416

456 872

- 7 - 7

(7) -

Reclass (to)/from Assets held for sale

(10) (9)

5

(14) (17) (31)

Depreciation at 31 December

(1,038) (663)

(279) (1,980) (2,485) (4,465)

Carrying amount at 31 December 1,446 633 298 2,377 896

3,273

2020

Cost at 1 January 2,239

1,157 641 4,037 4,363 8,400

Foreign exchange adjustments (44)

(32) (57) (133)

(160) (293)

Additions 298

314 126

738

382 1,120

Divestments (0)

(5)

(0) (5) (11) (16)

Disposals (73) (24) (19) (116) (551)

(667)

Reclass - (10)

(6) (16) 4 (12)

Reclass (to)/from Assets held for sale (107) (99) (12) (218) (459) (677)

Cost at 31 December 2,313 1,301 673 4,287 3,568

7,855

Depreciation at 1 January (444) (374) (234) (1,052) (2,939)

(3,991)

Foreign exchange adjustments 16 13

21 50 114 164

Impairment (2) (0) - (2) (74) (76)

Depreciation (432) (374) (154)

(960) (488) (1,448)

Divestments - 3

0 3 8 11

Disposals 16 8 13 37 524 561

Reclass - 5 (2) 3 (1)

2

Reclass (to)/from Assets held for sale 27 37 3 67 311 378

Depreciation at 31 December

(819) (682) (353) (1,854) (2,545) (4,399)

Carrying amount at 31 December 1,494 619 320 2,433 1,023 3,456

Leases

(right-of-use assets)

Property,

plant and

equipment

Reclass

FINANCIAL STATEMENTS 46

2.1 Property, plant and equipment and leases (continued)

Lease liability

Lease-related costs recognised in profit or loss

(DKKm)

2021 2020

Depreciation of right-of-use assets 908

960

Interest expenses on lease liabilities 67

78

Short-term leases 168

166

Leases of low value assets

88

91

Variable lease payments 13 11

Recognised in profit or loss 1,244 1,306

Hereoff cash outflow 336 346

Significant accounting judgement

The carrying amount of lease liabilities and the movements in the year are disclosed in 4.2, Loans and borrowings. The maturity

profile is disclosed in 4.6, Liquidity risk.

Lease term

Several of ISS’s lease contracts (office buildings) have no contractual fixed lease term or contains an extension option.

Management exercises judgement in determining whether these extension options are reasonably certain to be exercised.

Management considers all relevant facts and circumstances that create an economic incentive for the Group to exercise the

extension option.

The lease term for contracts without an end date is set to ten years for head office and accessory buildings, whereas all other

leases with no definite end date are set to five years.

FINANCIAL STATEMENTS 47

2.1 Property, plant and equipment and leases (continued)

Accounting policy

Properties 5-10 years

Cars 3-5 years

Other equipment 2-5 years

Plant and equipment 3-10 years

Leasehold improvements (the lease term) 3-10 years

Buildings 20-40 years

Land is not depreciated.

Depreciation methods, useful lives and residual values are reassessed at each reporting date and adjusted prospectively, if

appropriate.

Right-of-use assets are recognised at the commencement date of the lease. Right-of-use assets are measured at cost less

accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities, including extension

options.

Cost comprises the amount of lease liabilities recognised, initial direct costs and dismantling and restoration costs incurred and

lease payments made at or before the commencement date less any lease incentives received.

Gains and losses arising on the disposal or retirement of property, plant and equipment are measured as the difference between

the selling price less direct sales costs and the carrying amount, and are recognised in Other operating expenses in the year of

sale, except gains and losses arising on disposal of property, which are recognised in Other income and expenses, net.

Depreciation is based on the cost of an asset less its residual value. When parts of an item of property, plant and equipment have

different useful lives, they are accounted for separately. The estimated useful life and residual value are determined at the

acquisition date. If the residual value exceeds the carrying amount depreciation is discontinued.

Right-of-use assets are depreciated on a straightline basis over the shorter of the lease term and the estimated useful life of the

asset.

Certain leases have lease terms of 12 months or less or are leases of low-value assets, such as smaller cleaning equipment, IT

equipment and office furniture. The “short-term lease” and “lease of low-value assets” recognition exemptions are applied for

these leases, i.e. lease payments are recognised in Other operating expenses on a straight-line basis over the lease term.

Property, plant and equipment is measured at cost, less accumulated depreciation and impairment losses.

Cost comprises the purchase price and costs directly attributable to the acquisition until the date when the asset is ready for use.

The net present value of estimated liabilities related to dismantling and removing the asset and restoring the site on which the

asset is located is added to the cost.

Subsequent costs, e.g. for replacing part of an item, are recognised in the cost of the asset if it is probable that the future

economic benefits embodied by the item will flow to the Group. The carrying amount of the item is derecognised when replaced

and transferred to profit or loss. All other costs for common repairs and maintenance are recognised in profit or loss when

incurred.

Estimated useful life

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.

FINANCIAL STATEMENTS 48

2.2 Trade receivables and credit risk

2021 2020

(DKKm)

Gross

Loss

allowance

Carrying

amount

Gross

Loss

allowance

Carrying

amount

Continental Europe

5,134 (67) 5,067 5,097 (141) 4,956

Northern Europe 2,527 (34) 2,493 2,816 (57) 2,759

Asia & Pacific 1,852 (49) 1,803 1,688 (83) 1,605

Americas 964

(12)

952 496 (18) 478

Other countries

91

-

91 63 - 63

Total

10,568 (162) 10,406 10,160

(299)

9,861

2021

2020

(DKKm)

Gross

Loss

allowance

Carrying

amount

Gross

Loss

allowance

Carrying

amount

Not past due 9,418 (4) 9,414 8,827 (5) 8,822

Past due 1 to 60 days 866 (6) 860 889 (5)

884

Past due 61 to 180 days 138 (12) 126 176 (36)

140

Past due 181 to 360 days 37

(34) 3 118 (111) 7

More than 360 days 109 (106) 3 150 (142)

8

Total

10,568 (162)

10,406 10,160 (299) 9,861

Exposure to credit risk

In 2021, trade receivables increased slightly to DKK 10,406 million (2020: DKK 9,861 million). The initial recovery from Covid-19 and

resulting positive growth in the later part of the year were the main drivers of the increase. At 31 December 2021, utilisation of

factoring was DKK 1.1 billion (31 December 2020: DKK 1.0 billion).

The Group’s exposure to credit risk is inherently low due to its business model and strategic choices leading to a diversified

customer portfolio, both in terms of geography, industry sector, customer size and service types. Also, our strategic divestment

programme has contributed to the low risk assessment as it has led to higher-risk countries and business units being sold off.

The Group has considered the impact of Covid-19 on credit risk in general and the resulting impact on expected credit losses on

its trade receivables, including an assessment of current and forward-looking reasonable and supportable information.

The maximum credit risk exposure at the reporting date by reportable segments is shown above.

Generally, the Group does not hold collateral as security for trade receivables.

It is management’s assessment that the general credit risk continues to be elevated, though somewhat less than in 2020 following

the initial recovery from Covid-19 in some countries towards the end of 2021. As a result, realised losses (write-offs) decreased

slightly in 2021 to DKK 64 million (2020: DKK 77 million) in relation to insolvent customers and changed customer agreements.

Additionally, we reversed DKK 120 million of expected credit losses provisioned in prior years, partly due to the improved credit

environment but also due to our own collection efforts focused on aged receivables.

FINANCIAL STATEMENTS 49

2.2 Trade receivables and credit risk (continued)

Allowance for expected credit losses

(DKKm)

2021

2020

Loss allowance at 1 January (299) (182)

Foreign exchange adjustments 3 17

Acquisitions (2) -

Divestments 0 1

Provision for expected credit losses (45) (244)

Expected credit losses reversed 120 0

Write-off 64 77

Reclassification to Assets held for sale (3) 32

Loss allowance at 31 December (162) (299)

Significant accounting estimates

Accounting policy

Management has considered the impact of Covid-19 on credit risk in general and the resulting impact on expected credit losses

on its trade receivables, including assessment of current and forward-looking reasonable and supportable information. See

further under Exposure to credit risk, p. 48.

Exposure to credit risk on trade receivables and expected credit losses are managed locally in the operating entities and credit

limits are set as deemed appropriate taking into account the customer’s financial position and the current market conditions.

Trade receivables comprise invoiced and unbilled revenue. Trade receivables are recognised initially corresponding to the

transaction price and subsequently measured at amortised cost. Generally, due to the short-term nature of trade receivables,

amortised cost will equal the invoiced amount less loss allowance for expected credit losses.

Generally, trade receivables are written off if they are past due for more than 180 days or when there is no reasonable expectation

of recovery. Impairment losses on trade receivables are presented as net impairment losses within operating profit before other

items. Subsequent recovery of amounts previously written off are credited against the same line item. Reversal of expected credit

losses is recognised in Other operating expenses.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The

provision rates are based on days past due for groupings of various customer segments with similar loss patterns, i.e. by

geographical region, and customer type and rating. The calculation reflects the probability-weighted outcome, the time value of

money and reasonable and supportable information that is available at the reporting date about past events, current conditions

and forecasts of future economic conditions.

The provision matrix is initially based on the Group’s historical observed default rates. At every reporting date, the historical

observations are updated and changes in the forward-looking estimates are analysed. For instance, if forecast economic

conditions are expected to deteriorate over the next year, this is taken into consideration.

FINANCIAL STATEMENTS 50

2.3 Other receivables

(DKKm)

2021

2020

Prepayments to suppliers

282 262

Supplier rebates and bonuses 352 287

Receivable divestment proceeds 155 19

Sign-on fees 134 133

Securities 103 76

Pass-through costs 48 72

Transition and mobilisation costs 62 115

Currency swaps - 5

Other 355 467

Total 1,491 1,436

Significant accounting judgements

Accounting policy

Transition and mobilisation costs

comprised directly related costs incurred to fulfil the performance obligations under certain

large contracts. The decrease in 2021 was due to ordinary amortisation, mainly in Norway, the UK, Denmark and the USA.

Prepayments to suppliers comprised various payments related to ongoing projects and above-base work (where revenue has not

yet been recognised) as well as utilities, insurance and licenses.

Supplier rebates and bonuses comprised volume related discounts obtained from suppliers and reflects the Group’s efforts to

consolidate the number of suppliers and drive synergies and cost savings. The increase in 2021 related mainly to increased activity

levels following the initial recovery from Covid-19 as well as timing of settlement of such rebates and bonuses.

Sign-on fees

comprised upfront discounts to certain large customers, most significantly in the UK and on certain global key

accounts.

Other comprised refunds from customers, VAT, accrued interests and other recoverable amounts, including Covid-19-related

government subsidies.

Capitalisation of transition and mobilisation costs involves management’s judgement to assess if the criteria for capitalisation are

fulfilled. Management uses judgement to determine if the costs relate directly to the contract and are incurred in order for ISS to

be able to fulfil the contract. In addition, management determines if the costs generate resources that will be used in satisfying the

performance obligation and are expected to be recovered, i.e. reflected in the pricing of the contract.

Transition and mobilisation costs (costs to fulfil a contract) comprise costs directly related to launching certain large contracts such

as transfer of employees from previous suppliers, site due diligence, planning and developing service plans. The cost includes

internal direct costs and external costs e.g. to consultants. Transition and mobilisation costs are capitalised and amortised over the

initial secured contract term consistent with ISS’s transfer of the related services to the customer. Bid-related costs, including costs

relating to sales work and securing contracts, are expensed as incurred.

Other receivables are recognised initially at cost and subsequently at amortised cost, except for securities and currency swaps,

which are recognised at fair value. Due to the short-term nature of other receivables, amortised cost will equal the cost.

Receivable divestment proceeds mainly related to the divestment of Specialized Services in the USA, where part of the

consideration is subject to customer consent being achieved.

Sign-on fees comprise upfront discounts to certain large customers incurred in the ordinary course of business. Sign-on fees are

capitalised and amortised over the initial secured contract term consistent with ISS’s transfer of the related services to the

customer.

FINANCIAL STATEMENTS 51

2.4 Other liabilities

(DKKm)

2021 2020

Accrued wages, pensions and holiday allowances 4,616 4,050

Tax withholdings, VAT etc. 2,211 2,118

Debt to companies within the ISS Group 1,245 1,149

Prepayments from customers 868 560

Contingent consideration and deferred payments 31 133

Other 778 898

Total 9,749 8,908

2.5 Changes in working capital

(DKKm)

2021 2020

Changes in inventories 4 89

Changes in receivables (136) 2,784

Changes in payables 1,171 (1,866)

Total 1,039 1,007

Other comprised customer discounts, accrued interests, etc.

In 2021, other liabilities increased DKK 841 million mainly due to initial recovery from Covid-19, leading to an increase in activity

and a resulting increase in tax withholdings, VAT, accrued wages and bonuses and related social costs. Furthermore, prepayments

from customers increased following the extension of a global key account contract, which also led to improved payment terms.

FINANCIAL STATEMENTS 52

2.6 Provisions

(DKKm)

Legal and

labour-related

cases

Self-

insurance

Restruc-

turings

Onerous

contracts

Other

Total

2021

Provisions at 1 January 133 261 787 285 460

1,926

Foreign exchange adjustments (6) 15 4 6

7

26

Additions

141

225 7 73

45

491

Used during the year (62)

(232)

(373)

(21) (11) (699)

Unused amounts reversed (55)

(2)

(52) (16) (10) (135)

Reclass (to)/from other liabilities 84

(5)

1 3 24 107

Provisions at 31 December 235

262

374 330 515 1,716

Non-current 121

127

142 78 287 755

Current 114 135 232 252 228 961

2020

Provisions at 1 January 71

239 1 31 224 566

Foreign exchange adjustments (6)

(13) (0) (3) (6)

(28)

Additions 86

204 1,174 265 385

2,114

Used during the year (10)

(147)

(383) (6) (136)

(682)

Unused amounts reversed (9) (22) - (2) (3) (36)

Reclass (to)/from other liabilities 1 0 (5) - (4) (8)

Provisions at 31 December 133 261 787 285 460

1,926

Non-current

19 122

199 219 65 624

Current

114 139 588 66 395 1,302

FINANCIAL STATEMENTS 53

2.6 Provisions (continued)

Provision

Legal and

labour-related

• Hong Kong:

• UK:

• Australia:

• USA:

Re-

structurings

Onerous

contracts

Other

Comprised various cases, mainly redundancy-related disputes in France and Spain as well as employee-related

risks in the UK.

Furthermore, the provision included liability not insured under the global general liability insurance with a self-

insured level of DKK 7.4 million (2020: DKK 7.5 million) worldwide, except for the USA where the self-insurance

level is DKK 6.6 million (2020: DKK 6.1 million) per claim. Obligations and legal costs in relation to various

insurance cases, if not covered by the insurance, were also included in the provision.

Nature and extent

Self-

insurance

The Group carries insurance provisions on employers’ liability and/or workers compensation in the countries

listed below.

We are continuously reviewing our business platform to ensure the right basis for execution of our strategy. In

2020, restructurings were initiated in several countries to adjust our cost structure to the lower activity level

following Covid-19. The initiatives included termination of employees, contract exits and overhead reductions.

Execution of the restructuring projects is ongoing, which led to payments of DKK 373 million in 2021, mainly in

France, Germany and Spain.

The provision for onerous contracts related to Danish Defence in Denmark, a key account contract in Hong Kong

and various smaller contracts in a number of countries. For Danish Defence, the provision was recognised in

2020 and covers exit-related costs and operation until full exit in May 2022, as per the agreement with the

customer.

Comprised various obligations, primarily related to complex customer and contract-related risks and disputes in

the major markets in which we operate. Furthermore, guarantee reserves, dismantling costs and closure of

contracts were included in this item.

DKKm 25.2 (2020: DKKm 23.4) yearly

DKKm 26.6 (2020: DKKm 24.7) yearly aggregated limit and DKKm 4.4 (2020: DKKm 4.1) per claim

DKKm 3.6 (2020: DKKm 5.8) per claim

DKKm 3.3 (2020: DKKm 3.3) per claim

FINANCIAL STATEMENTS 54

2.6 Provisions (continued)

Significant accounting estimates and judgement

Accounting policy

Decommissioning liability If the Group has a legal obligation to dismantle or remove an asset or restore a site or leased facilities

when vacated, a provision is recognised corresponding to the present value of expected costs to settle the obligation. The present

value of the obligation is included in the cost of the relevant tangible or right-of-use asset and depreciated accordingly. The

estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future

costs, or in the discount rate applied, are added to or deducted from the cost of the relevant asset.

Onerous contracts An onerous contract is a contract under which the unavoidable costs of meeting the obligations under the

contract exceed the economic benefits expected to be received under it. A provision is recognised in respect of the Group’s

onerous contracts at the lower of the costs to fulfil the obligations under the contract and the costs of exiting the contract.

Management assesses whether contracts may be onerous by estimating the expected future profitability. This involves estimating

total contract revenue and the unavoidable costs of meeting the performance obligations under the contract, including any

transition and mobilisation costs incurred. In estimating the expected future profitability management makes judgements. Certain

contracts are complex facility management partnerships. In estimating unavoidable costs in relation to such contracts,

management applies assumptions as to future realisation of costs driven by efficiencies and optimisations to be gained over the

contract term as well as the effect of performance improvement initiatives. While ISS has inherent risk in this respect, ISS is by

nature also dependent on aligning interest with the customer within the framework of the agreement for the benefit of both

parties. Further, management makes judgements related to the contract term, taking any termination and extension options into

consideration.

Restructurings

and

other provisions

Management makes judgements related to various other matters and obligations, which

primarily relates to planned/initiated restructurings, and complex customer and contract-related risks and disputes, including

ongoing lawsuits. For large and complex contracts, the outcome may vary significantly should the assumptions and judgements

applied not be realised as expected by management in their assessment of the risks and/or disputes. In assessing the likely

outcome of lawsuits, tax disputes, etc., management bases its assessment on external legal assistance and established

precedents.

Provisions are recognised when the Group, as a result of a past event, has a present legal or constructive obligation, it is probable

that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of

the obligation. The costs required to settle the obligation are discounted using the entity’s average borrowing rate, if this

significantly impacts the measurement of the liability.

Customer and contract-related disputes The Group recognises provisions related hereto when, based on an assessment of

available facts and circumstances in respect of the specific risks or disputes, it is deemed that a contractual, non-contractual or

constructive obligation exists, and it is probable that this will lead to an outflow of economic resources from the Group.

For large and complex contracts, the outcome may vary significantly should the assumptions and judgements applied not be

realised as expected by management in their assessment of onerous contracts.

Restructurings A provision is recognised when a detailed, formal restructuring plan is announced to the affected parties on or

before the reporting date. The plan must identify the business concerned, the location and number of employees affected, and a

detailed estimate of the associated costs, as well as the timeline must be in place.

Onerous contracts

Our strategy to focus on large key accounts will increasingly lead to a customer base comprising large, more

complex contracts. The size and complexity of such contracts will often require us to incur significant transition and mobilisation

costs before service delivery commences in order to fulfill the performance obligations under the contract and could also require

us to do restructurings, that will be recognised as restructuring provisions, subject to fulfilment of requirements under IAS 37.

Legal and labour-related cases The Group recognises a provision for e.g. lawsuits and redundancy-related disputes based on

external legal assistance and established precedents.

Self-insurance The Group recognises a provision on employers’ liability and/or workers compensation based on valuations from

external actuaries.

FINANCIAL STATEMENTS 55

2.7 Free cash flow

(DKKm)

2021 2020

Cash flow from operating activities 3,221 (886)

Acquisition of intangible assets and property, plant and equipment (466) (583)

Disposal of intangible assets and property, plant and equipment 42

31

Acquisition of financial assets, net

1)

(30)

(19)

Addition of right-of-use assets, net

2)

(867)

(686)

Free cash flow 1,900

(2,143)

The free cash flow measure should not be considered a substitute for those measures required by IFRS and may not be calculated

by other companies in the same manner. As such, reference is made to the IFRS measures included in the consolidated statement

of cash flows of the consolidated financial statements.

1)

Excluding investments in equity-accounted investees which in 2021 was DKK (24) million (2020: DKK 28 million).

2)

Including DKK 13 million (2020: DKK 27 million) related to discontinued operations, cf. 2.1, Property, plant and equipment and leases.

Free cash flow as defined by management, cf. p. 122, is summarised below. Free cash flow is not a financial performance measure

established by IFRS. Accordingly, the measure and its calculation is presented as it is used by management as an alternative

performance measure in managing the business.

FINANCIAL STATEMENTS 56

SECTION 3

Strategic divestments and acquisitions

3.1 Discontinued operations

Impact on profit or loss

Discontinued operations

- presented in separate profit or loss line

Net profit/(loss) from discontinued operations

(DKKm)

2021 2020

Revenue 1,231 3,289

Expenses

1)

(1,144)

(3,203)

Operating profit before other items 87 86

Other income and expenses, net

2)

94 176

Royalty (35) (70)

Goodwill impairment

2)

(17) (116)

Operating profit 129 76

Financial income/(expenses), net 0 (12)

Net profit before tax 129 64

Income tax (19) (18)

Net profit from discontinued operations 110 46

1)

Including depreciation and amortisation of DKK 0 million (2020: DKK 15 million).

Our strategic divestment programme had strong momentum in 2021 with six countries being divested, i.e. the Czech Republic,

Hungary, the Philippines, Romania, Slovakia and Slovenia.

Chile developed positively in 2021, both financially and strategically, as demonstrated by the wins of a few large key account

contracts. On that basis, management decided to cease the held for sale classification in December 2021. The carrying amounts

were adjusted for depreciation and amortisation, that would have been recognised had the business not been classified as held

for sale. The adjustment of DKK 59 milllion was recognised in Other income and expenses, net in December 2021 and related to

the years 2019-2020. As a result of the changed classification, Chile was reported as part of continuing operations for the full

year of 2021, including depreciation and amortisation for the year. Comparative figures were restated accordingly.

With the significant progress made in 2021, and Chile being reclassified to continuing operations, the divestment programme is

nearing its completion, which is expected in 2022.

At 31 December 2021, four countries (2020: 11 countries), continued to be classified as discontinued operations and assets held

for sale.

2)

Including the combined net gain of DKK 77 million from divestments and fair value remeasurements,

including recycling of accumulated foreign exchange adjustments, see 3.2, Assets and liabilities held for sale.

Gains/losses related to the divestments and countries being held for sale at 31 December 2021 are specified in 3.2, Assets and

liabilities held for sale.

2021: Brunei, the Czech Republic, Hungary, the Philippines, Portugal, Romania, Russia, Slovenia, Slovakia and Taiwan

2020: Brazil, Brunei, the Czech Republic, Hungary, Malaysia, the Philippines, Portugal, Romania, Russia, Slovenia, Slovakia, Taiwan

and Thailand

Net profit from discontinued operations is attributable to the shareholder of ISS Global A/S.

FINANCIAL STATEMENTS 57

3.1 Discontinued operations (continued)

Cash flow from discontinued operations

DKK million

2021 2020

Cash flow from operating activities 36 48

Cash flow from investing activities (83) (150)

Cash flow from financing activities (16) (197)

Accounting policy

The accounting policies and significant accounting estimates and judgements for discontinued operations are described

together with accounting policies for assets held for sale in 3.2, Assets and liabilities held for sale.

FINANCIAL STATEMENTS 58

3.2 Assets and liabilities held for sale

Businesses classified as held for sale

Statement of financial position

(DKKm)

2021

2020

Goodwill

126

547

Customer contracts

- 14

Other non-current assets 165 574

Current assets 202 681

Assets held for sale 493 1,816

Non-current liabilities 36 164

Current liabilities 244 674

Liabilities held for sale 280 838

Profit or loss effect

(DKKm)

2021

Kanal Services, Switzerland 467

Specialized Services, USA 138

Other minor business units, net (18)

Chile (ceased held for sale classification) (59)

Other income and expenses, net (gain) 528

Slovakia 73

Czech Republic 26

Romania 17

Slovenia (11)

Other countries (28)

Discontinued operations (gain) 77

Total net gain 605

At 31 December 2021, five businesses (2020: 14 businesses) were classified as held for sale comprising four countries

(discontinued operations) and the Waste Management business in Hong Kong. The latter was subsequently divested in January

2022.

In 2021, our divestment programme resulted in recognition of a net gain of DKK 605 million in the profit or loss as a result of

completed divestments, fair value remeasurements and carrying amount adjustments regarding ceased asset held for sale

classification. The net gain is specified below and was recognised in:

• Other income and expenses, net, DKK 528 million (gain)

• Net profit from discontinued operations, DKK 77 million (gain)

In 2021, we divested six countries (discontinued operations) and two of the three business units classified as held for sale when

entering the year, i.e. Kanal Services in Switzerland and Specialized Services in the USA. Furthermore, management decided to

cease the held for sale classification of Chile.

Recycling of accumulated foreign exchange adjustments recognised in equity had a positive impact on the total net gain of DKK 15

million.

FINANCIAL STATEMENTS 59

3.2 Assets and liabilities held for sale (continued)

Significant accounting estimates and judgement

Accounting policy

Non-current assets and disposal groups are classified as held for sale when management assesses that their carrying amounts will

be recovered through a sale within one year rather than continuing use. Management assesses whether the sale is highly

probable and the asset or disposal group is available for immediate sale in its current condition. Actions required to complete the

sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn.

If a sale has not been concluded within one year, the period is extended if management assesses that the above criteria continue

to be fulfilled.

On classification management estimates the fair value (the final sales price and expected costs to sell). Depending on the nature

of the non-current assets and the disposal group’s activity, assets and liabilities, the estimated fair value may be associated with

uncertainty. Measurement of the fair value is categorised as Level 3 in the fair value hierarchy as it is not based on observable

market data.

Management considers intangible assets relating to the disposal groups, taking into consideration how to separate the net assets

(including intangible assets) relating to the disposal group from the Group’s assets in the continuing business. Impairment of

these intangibles, both on initial classification as held for sale and subsequently, is considered. The estimation uncertainty relating

to impairment of intangibles is described in 3.8, Impairment tests.

Assets held for sale comprise non-current assets and disposal groups held for sale. Liabilities held for sale are those directly

associated with the assets held for sale and disposal groups. Immediately before classification as held for sale, they are

remeasured in accordance with the Group’s accounting policies. Thereafter, they are measured at the lower of their carrying

amount and fair value less costs to sell. Any impairment loss is first allocated to goodwill, and then pro rata to remaining assets,

except that no loss is allocated to inventories, financial assets, deferred tax assets or employee benefit assets, which continue to

be measured in accordance with the Group’s accounting policies. Once classified as held for sale, assets are not amortised or

depreciated.

Impairment losses on initial classification as held for sale, and subsequent gains and losses on remeasurement are recognised in

profit or loss and disclosed in the notes.

If the held for sale criteria is no longer met, the classification as held for sale ceases. At the date of cessation, the non-current

asset or disposal group is measured at the lower of its carrying amount before classification as held for sale adjusted for

depreciation and amortisation, that would have been recognised had the non-current asset or disposal group not been classified

as held for sale. Any adjustments are presented in Other income and expenses, net.

A disposal group is presented as discontinued operations if it is a geographical area, i.e. a CGU (country exits), that either has

been disposed of, or is classified as held for sale.

Discontinued operations are presented separately as Net profit from discontinued operations and specified in the notes.

Comparatives are restated.

Cash flows from discontinued operations are included in cash flow from operating, investing and financing activities together with

cash flows from continuing operations, but specified in 3.1, Discontinued operations.

Assets and liabilities of discontinued operations are presented similar to other assets held for sale. Comparative figures are not

restated.

Assets held for sale are presented in separate lines of the statement of financial position and specified in the notes. Comparatives

are not restated.

FINANCIAL STATEMENTS 60

3.3 Divestments

The Group completed 12 divestments in 2021 (2020: eight):

Company/activity Country

Service

type

Excluded

from P/L

Interest

Annual revenue

(DKKm)

1)

Employees

(Number)

1)

Fruit Baskets Sweden Food

February Activities 17 19

Indoor Plants Sweden Technical February Activities 23 35

ISS Slovakia Slovakia

Country exit

2)

April 100% 102 831

ISS Czech Republic Czech Republic

Country exit

2)

April 100% 262 1,698

ISS Romania Romania

Country exit

2)

April 100% 88 934

ISS Hungary Hungary

Country exit

2)

May 100% 55 439

Kanal Services Switzerland Technical May 100% 339 280

Restoration division UK Technical June 100% 23 36

ISS Philippines Philippines

Country exit

2)

October 100% 173 5,391

ISS Slovenia Slovenia

Country exit

2)

October 100% 86 593

Food Service business Spain Food November Activities 330 1,215

Specialized Services USA Cleaning December Activities 1,077 -

Total 2,575

11,471

1)

Unaudited

2)

Presented as discontinued operations

Divestment impact

(DKKm)

2021 2020

Goodwill 360 118

Customer contracts 5 11

Other non-current assets 337 79

Current assets 504

569

Non-current liabilities

(43) (66)

Loans and borrowings (134) (29)

Current liabilities (239) (272)

Net assets disposed 790 410

Gain/(loss) on divestment, net 683 224

Divestment costs 175 144

Consideration received 1,648

778

Cash in divested businesses (130) (154)

Consideration received, net 1,518 624

Contingent and deferred consideration (130)

54

Divestment costs paid (197) (173)

Divestment of businesses (cash flow) 1,191 505

FINANCIAL STATEMENTS 61

3.3 Divestments (continued)

Divestments subsequent to 31 December 2021

Accounting policy

Gain or loss on disposal of an operation that is part of a CGU, includes a portion of the related goodwill allocated to that CGU.

Goodwill related to the disposed operation is measured based on the fair value of the disposed operation relative to the fair value

of the entire CGU.

On 31 January 2022, we completed the divestment of Waste Management in Hong Kong, a company providing waste management

services with an annual revenue of approximately DKK 131 million and 232 employees.

The Group signed or completed no further divestments from 1 January to 28 February 2022.

On 31 January 2022, we signed an agreement to divest our activities in Taiwan (presented as discontinued operations) with an

annual revenue of approximately DKK 457 million and 3,046 employees.

FINANCIAL STATEMENTS 62

3.4 Acquisitions

Rönesans Facility Management Company in Turkey

Acquisition impact

(DKKm)

ISS Turkey

(original acq.)

Rönesans

Total

Customer contracts - 428 428

Other non-current assets - 26 26

Trade receivables - 184 184

Other current assets - 105 105

Non-current liabilities -

(112) (112)

Current liabilities

- (194)

(194)

Fair value of net assets

- 437

437

Goodwill (32) 129 97

Consideration transferred (32) 566 534

Cash in acquired business - (97) (97)

Consideration transferred, net (32) 469 437

Contingent and deferred consideration 111

(22) 89

Acquisition of businesses (cash flow) 79

447 526

Acquisitions subsequent to 31 December 2021

The Group completed no acquisitions from 1 January to 28 February 2022.

On 28 September 2021, ISS acquired 100% of the shares in Rönesans Facility Management Company (Rönesans İşletme Hizmetleri

Danışmanlığı A.Ş.) in Turkey from Renaissance Healthcare (Rönesans Sâglik Yatirim), a Turkish contracting company owned by

Rönesans Holding. With the acquisition, ISS will provide facility management services in a Public-Private-Partnership at four

hospitals until 2045. The agreement builds on an already successful partnership, as ISS Turkey is currently operating two (Adana

and Elazig) of the four hospitals as subcontractor.

Trade receivables The fair value of trade receivables was DKK 184 million, equaling the gross amount. Management expects that

the full contractual amount can be collected.

The purchase consideration amounted to DKK 566 million. Based on provisionally determined fair values of net assets, goodwill

amounted to DKK 129 million. The acquisition impact is specified in the table to the right.

The acquisition will strengthen our leadership position in the strategically important healthcare segment in Turkey and supports

the OneISS strategy to focus on key accounts in our prioritised segments. The acquisition will add annual revenue of approximately

DKK 500 million and 1,500 employees (estimated based on unaudited financial information).

Goodwill is attributable mainly to: 1) expertise and know-how in the healthcare segment, 2) synergies, 3) platform for growth, and

4) assembled work force, and is not deductible for tax purposes.

During the period 28 September to 31 December 2021, Rönesans contributed revenue of DKK 150 million.

Contingent and deferred consideration related to the settlement of a put option during 2021 in relation to ISS Turkey (original

acquisition), and a deferred payment subject to finalisation of closing accounts for Rönesans. The latter was settled in January

2022.

FINANCIAL STATEMENTS 63

3.4 Acquisitions (continued)

Minority shareholders in ISS Turkey

Transactions with non-controlling interests

(DKKm)

2021

Consideration received 324

Transaction costs (26)

Capital injection 113

Contingent and deferred consideration (214)

Transactions with other non-controlling interests (33)

Cash flow impact 164

(DKKm)

2021

Consideration received 324

Transaction costs (26)

Capital injection

78

Transactions with other non-controlling interests (26)

Equity impact 350

Accounting policy

Subsequent fair value adjustments of put options held by non-controlling interests relating to business combinations effected on

or after 1 January 2010 are recognised directly in equity. Subsequent fair value adjustments of put options held by non-controlling

interests related to business combinations effected prior to 1 January 2010 are recognised in goodwill. The effect of unwind of

discount is recognised in Financial expenses.

After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing,

goodwill acquired in a business combination is allocated to each of the Group’s cash-generating units (CGUs) that are expected to

benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Written put options held by non-controlling shareholders are accounted for in accordance with the anticipated acquisition method,

i.e. as if the put option has been exercised already. Such options are recognised as Other liabilities initially at fair value. Fair value is

measured at the present value of the exercise price of the option.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of

the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in

the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at

fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred

in Other income and expenses, net.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date.

If uncertainties exist at the acquisition date regarding identification or measurement of assets, liabilities and contingent liabilities,

initial recognition is based on provisionally determined fair values. Changes to fair values are adjusted against goodwill up until 12

months after the acquisition date and comparative figures are restated accordingly. Thereafter no adjustments are made to

goodwill, and changes in fair values are recognised in Other income and expenses, net.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount

recognised for Accounting policy non-controlling interests) and any previous interest held over the net identifiable assets acquired

and liabilities assumed.

As part of the acquisition of Rönesans, ISS agreed to partner with Actera, a large leading Turkish private equity company, to

support and partly fund the acquisition. Actera has in-depth expertise in the Turkish market, a strong operational track record and

became minority shareholder owning 39.9% of the shares in ISS Turkey. Furthermore, Management of ISS Turkey acquired 10% of

the shares in ISS Turkey, while ISS continued to be the controlling shareholder. The impact of the transactions are specified below.

FINANCIAL STATEMENTS 64

3.5 Pro forma revenue and operating profit

(DKKm)

2021 2020

Revenue as reported 71,383 70,767

Pro forma revenue 70,296 70,738

Operating profit before other items as reported 2,920 (2,501)

Pro forma operating profit before other items 2,875 (2,500)

Pro forma revenue and operating profit before other items are presented for informational purposes and does not represent the

results the Group would have achieved had the acquisitions and divestments during the year occurred on 1 January. The

information should therefore not be used as the basis for or prediction of any annualised calculation.

Pro forma revenue and operating profit before other items include adjustments relating to acquisitions and divestments

estimated by local ISS management at the time of acquisition and divestment or actual results where available. The estimates are

based on unaudited financial information.

Assuming all acquisitions and divestments in the year were included/excluded as of 1 January, the effect on recognised revenue

and operating profit before other items is estimated as follows:

FINANCIAL STATEMENTS 65

3.6 Intangible assets

(DKKm)

Goodwill Brands

Customer

contracts

Software

and other

Total

2021

Cost at 1 January 17,065 49 3,669 1,495 22,278

Foreign exchange adjustments 282 4 11 19 316

Additions 97 - 428 7

532

Acquisitions - - - 114

114

Divestments (19) - (106)

(1)

(126)

Disposals

- - (12)

(174)

(186)

Reclass to Assets held for sale 67

-

49 (15) 101

Cost at 31 December 17,492

53

4,039 1,445 23,029

Amortisation and impairment losses at 1 January (1,972)

(36) (3,345) (1,015) (6,368)

Foreign exchange adjustments 2 (3) (117) (15) (133)

Amortisation - (10) (54) (180) (244)

Impairment (459) - - (23) (482)

Divestments - - 101 1 102

Disposals - - 12 169 181

Reclass to Assets held for sale - - (39) 9 (30)

Amortisation and impairment losses at 31 December

(2,429)

(49)

(3,442)

(1,054) (6,974)

Carrying amount at 31 December

15,063 4 597 391

16,055

2020

Cost at 1 January 18,007 55 3,870 1,604

23,536

Foreign exchange adjustments (551) (6) (161) (43) (761)

Acquisitions 87 - -

- 87

Additions

- - - 160

160

Divestments

(41) - (11)

- (52)

Disposals -

- - (225)

(225)

Reclass (to)/from Property, plant and equipment - - - 12

12

Reclass to Assets held for sale (437) - (29) (13) (479)

Cost at 31 December 17,065 49 3,669 1,495 22,278

Amortisation and impairment losses at 1 January (1,494) (30) (3,453) (1,012) (5,989)

Foreign exchange adjustments 18 4 133

24

179

Amortisation -

(10) (79) (162)

(251)

Impairment (631)

- - (98)

(729)

Divestments 22 - 11 - 33

Disposals - - - 222 222

Reclass to/(from) Property, plant and equipment - - - (2)

(2)

Reclass to Assets held for sale 113 - 43 13 169

Amortisation and impairment losses at 31 December (1,972) (36) (3,345) (1,015) (6,368)

Carrying amount at 31 December 15,093 13 324 480 15,910

FINANCIAL STATEMENTS 66

3.6 Intangible assets (continued)

Accounting policy

Brands (finite useful life) 2-5 years

Customer contracts 10-24 years

Software and other intangible assets

5-10 years

Impairment of goodwill

comprised losses identified in impairment tests related to France of DKK 459 million (2020: DKK 500

million), see 3.8, Impairment tests.

Impairment of software in 2020 mainly related to a non-cash write-down of impaired assets following the IT security incident, see

1.3, Other income and expenses, net.

Amortisation methods and useful lives are reassessed at the reporting date and adjusted prospectively, if appropriate.

Estimated useful life

Goodwillis initially recognised at cost and subsequently at cost less accumulated impairment losses. Goodwill is not amortised.

Goodwill relates mainly to assembled workforce, technical expertise and technological knowhow.

Acquisition-related brands and customer contractsare recognised at fair value at the acquisition date. Subsequently, brands with

indefinite useful lives are measured at cost less accumulated impairment losses. Brands with finite useful lives and customer

contracts are measured at cost less accumulated amortisation and impairment losses.

Acquired

software and other intangible assets

are measured at cost less accumulated amortisation and impairment losses. The

cost of software developed for internal use includes external costs to consultants and software as well as internal direct and

indirect costs related to the development. Other development costs for which it cannot be rendered probable that future

economic benefits will flow to the Group are recognised in profit or loss as and when incurred.

Amortisation of intangible assets with finite useful lives is calculated on a straight-line basis over the estimated useful lives except

for certain customer contracts where the unit of production method better reflects the expected pattern of consumption.

FINANCIAL STATEMENTS 67

3.7 Goodwill impairment

(DKKm)

2021

2020

Identified in impairment tests

459 500

Loss on divestments - 35

Total 459 535

3.8 Impairment tests

Cash-generating units (CGUs)

Measuring recoverable amounts (general assumptions)

Covid-19 impact on risk assessment

Identified in impairment tests in 2021 and 2020 related to goodwill impairment in France, see 3.8, Impairment tests.

Derived from divestments In 2020, the loss related to Parking Management in Indonesia and the Healthcare Catering Business in

Poland.

While 2021 continued to be impacted by Covid-19, the visibility around recovery improved during the year, especially in the later

part of 2021, when signs of recovery appeared in a number of countries. As a result, the specific Covid-19 risk premium has been

removed in the impairment test for 2021.

Impairment tests are generally carried out per country as this represents the lowest level of CGUs to which the carrying amounts

of intangibles, i.e. goodwill and customer contracts, can be allocated and monitored with any reasonable certainty. This level of

allocation and monitoring of intangibles should be seen in light of the Group’s strategy to integrate acquired companies as

quickly as possible in order to benefit from synergies. Management of certain countries has been combined to take advantage of

similarities in terms of markets, shared customers and cost synergies. In such exceptional cases, the countries are regarded as

one CGU when performing the impairment tests.

The recoverable amount of each CGU is determined on the basis of its value-in-use, calculated using certain key assumptions per

CGU, i.e. revenue growth, operating margin and discount rate.

Value-in-use cash flow projections for the individual CGUs are based on financial budgets for the following year as approved by

management. Assumptions applied in the short to medium term (forecasting period of five years) generally reflect management’s

expectations considering all relevant factors, including the Group’s strategic initiatives, local initiatives, past experience and

external sources of information, where possible and relevant.

Management has ensured that financial budgets, forecasts and underlying assumptions applied in the impairment tests reflect

the expected impact from Covid-19, including expected future revenue recovery. Despite continued uncertainty, visibility has

generally improved during 2021 – though with a few exceptions. Expected impacts from OneISS and our strategic priorities have

also been considered, especially around sharpened focus on key accounts, the strategic divestment programme and investments

in technology and the global operating model. Our underperforming contracts (Deutsche Telekom and Danish Defence) and

countries (the UK and France) have also been carefully considered to ensure, that expected turnaround is properly reflected in

determining the key assumptions for the specific CGUs. Where relevant, initiated restructurings and other actions, mainly in

response to Covid-19, have been taken into consideration when estimating the expected future performance and cash flows.

In 2020, Covid-19 had a significant adverse impact on the Group’s performance and cash flows and led to increased uncertainty

in relation to prospects for, and timing of, future recovery. To appropriately reflect the increased estimation uncertainty, a

separate risk premium related to Covid-19 was introduced and added to the WACC.

FINANCIAL STATEMENTS 68

3.8 Impairment tests (continued)

Key assumptions

(per CGU)

Revenue growth

(forecasting period)

Revenue growth

(terminal period)

Operating margin

Discount rates

(net of tax)

30 June 2021

31 December 2021

An impairment loss of DKK 459 million was recognised in France following an update of the business

case and an increase in the applied WACC.

During the first six months of 2021, transparency around the recoverability from Covid-19 improved. It

also became clearer, that the pace of recovery within the most impacted customer segments would

remain slow. Accordingly, the risk reflected in the applied WACC was increased. Combined with

increasing interest rates, this led to a higher applied WACC at 30 June 2021. Additionally, compared to

previous assessments, management lowered the growth and margin expectations in 2023-2025, while

assumptions for the terminal period remained unchanged.

Based on the impairment tests performed, no further impairment losses were recognised. Except for

France, it is management’s opinion that excess values are fairly resilient to any likely and reasonable

deteriorations in the key assumptions applied.

In 2021, France continued to be heavily impacted by Covid-19 restrictions and slow recovery in the most

impacted customer segments, despite progress on the restructuring plan. As a result, excess value in the

impairment test for France was limited at 31 December 2021.

Description

Result of the impairment tests 2021

• Budgeted growth for year 1

• Subsequent years based on expected market development, including recovery from Covid-19, taking

market maturity and general macroeconomic environment into consideration

• Impacts from local and Group strategic initiatives are considered, including our key account focus and

the strategic divestment programme

• Does not exceed the expected long-term average growth rate for the country, including inflation

• Budgeted margin for year 1

• Impacts from local and Group strategic initiatives are considered, including our key account focus, the

strategic divestment programme and investments in technology and the global operating model

• Initiated restructurings, actions in response to Covid-19 and operational challenges are considered,

where relevant

• Based on a country-specific 10-year government bond

• Premium added to adjust for the inconsistency of applying government bonds with a short-term

maturity when discounting cash flows with infinite maturity

• Premium added to reflect the specific risk associated with each CGU, reflecting uncertainties regarding

past performance and possible variations in the amount or timing of the projected cash flows

• Equity risk premium: 6.5% (2020: 6.5%)

• Debt/equity target ratio (market values): 25/75 (2020: 25/75)

FINANCIAL STATEMENTS 69

3.8 Impairment tests (continued)

Carrying amounts and key assumptions

(DKKm)

Goodwill

Customer

contracts

Total

Growth

(avg.)

Margin

(avg.)

2)

Growth Margin

2)

Net of

tax

Pre-

tax

2021

USA & Canada 2,068 161 2,229 13.1 % 6.8 % 3.0 % 6.8 % 9.0 % 11.6 %

UK & Ireland 1,807 121

1,928

3.9 %

4.6 % 2.5 % 6.0 % 8.7 % 11.3 %

Finland 1,653 -

1,653

1.7 % 6.4 % 2.0 % 6.5 % 7.3 % 9.1 %

Australia & NZ 1,324

4 1,328 2.2 % 6.1 % 2.5 % 6.1 % 8.7 %

12.3 %

Switzerland 1,159 -

1,159

1.5 %

7.1 % 1.5 % 7.1 % 6.3 % 7.6 %

Spain 1,005

1 1,006 0.4 % 5.9 % 2.0 % 6.5 %

7.7 %

10.2 %

France

936

- 936 1.4 % 3.3 % 2.0 %

5.0 %

8.9 %

13.7 %

Sweden 807

- 807 3.3 % 5.5 % 2.0 % 6.2 % 8.0 % 10.0 %

Belgium & Lux. 788 - 788 3.6 % 5.7 % 2.0 % 6.0 % 7.3 % 9.8 %

Other 3,516 310 3,826 - -

-

- -

Total 15,063 597 15,660

2020

USA & Canada 1,865 163 2,028

13.4 % 5.9 % 3.0 % 6.0 % 9.4 % 11.9 %

UK & Ireland 1,687 132 1,819

4.7 % 4.4 % 2.5 % 6.0 %

8.4 % 10.0 %

Finland 1,653 - 1,653 2.4 % 5.7 % 2.0 % 6.5 % 7.0 % 8.5 %

France

1,396 - 1,396

3.1 % 3.1 % 2.0 % 5.0 % 7.3 %

10.4 %

Australia & NZ 1,289 8 1,297 0.9 %

4.6 % 2.5 % 4.6 % 8.3 %

11.7 %

Switzerland 1,147 - 1,147 2.3 %

7.0 % 1.5 % 7.2 % 6.0 %

7.3 %

Spain 1,021 11 1,032 3.8 % 6.0 % 2.0 % 6.5 % 7.7 % 10.1 %

Sweden 823 - 823

3.3 % 4.7 % 2.0 % 6.2 % 7.4 % 9.0 %

Belgium & Lux. 788 -

788

3.9 % 5.2 % 2.0 % 6.0 % 7.2 % 9.3 %

Other

3,424 10 3,434

- - -

Total 15,093

324 15,417

Significant accounting estimates

The carrying amounts of intangibles and key assumptions

1)

for CGUs representing more than 5% of intangibles, or CGUs

considered to be at high risk of impairment or having incurred recent impairment losses, are disclosed below.

1)

The key assumptions applied in the impairment tests are used for accounting purposes and should not be considered a

forward-looking statement within the meaning of the US Private Securities Litigation Act of 1995 and similar laws in other countries regarding

expectations to the future development.

2)

Excluding allocated corporate costs and royalty.

Carrying amount

Terminal period

Applied

discount rate

Forecasting period

In performing the impairment test, management assesses whether the CGU to which the intangibles relate will be able to generate

positive net cash flows sufficient to support the value of intangibles and other net assets. This assessment is based on estimates of

expected future cash flows (value-in-use) as described in “Measuring recoverable amounts”.

In 2021, Covid-19 continued to impact estimation uncertainty, particularly in relation to future expectations and prospects for

recovery, though visibility improved especially in the later part of the year.

FINANCIAL STATEMENTS 70

3.8 Impairment tests (continued)

Sensitivity analysis

Avg.

rate

Allowed

decrease

Avg. rate

Allowed

decrease

Long-

term rate

Allowed

decrease

Long-

term rate

Allowed

decrease

Rate

Allowed

increase

2021

USA & Canada 13.1 % >13.1 % 6.8 %

>6.8 %

3.0 %

>3.0 % 6.8 % 4.6 % 9.0 % 8.7 %

UK & Ireland 3.9 % >3.9 % 4.6 %

>4.6 %

2.5 % >2.5 % 6.0 % 4.7 % 8.7 % >8.7 %

Finland 1.7 % >1.7 % 6.4 %

>6.4 %

2.0 % >2.0 % 6.5 % 2.9 % 7.3 % 3.5 %

Australia & NZ 2.2 % >2.2 % 6.1 %

>6.1 % 2.5 % >2.5 % 6.1 % 4.1 % 8.7 % >8.7 %

Switzerland 1.5 % >1.5 % 7.1 %

>7.1 % 1.5 % >1.5 % 7.1 % 6.2 % 6.3 % >6.3 %

Spain 0.4 % >0.4 % 5.9 % >5.9 % 2.0 % >2.0 % 6.5 % 3.1 % 7.7 % 4.3 %

France 1.4 % 0.2 % 3.3 % 0.2 % 2.0 % 0.1 % 5.0 % 0.1 % 8.9 % 0.1 %

Sweden 3.3 %

>3.3 % 5.5 % >5.5 % 2.0 % >2.0 % 6.2 % 5.5 % 8.0 % >8.0 %

Belgium & Lux. 3.6 %

>3.6 % 5.7 %

>5.7 % 2.0 % >2.0 % 6.0 % 3.6 % 7.3 % 6.4 %

2020

USA & Canada 13.4 %

>13.4 % 5.9 % >5.9 % 3.0 %

>3.0 % 6.0 % 4.2 % 9.4 %

8.4 %

UK & Ireland 4.7 % >4.7 % 4.4 % >4.4 % 2.5 % >2.5 % 6.0 % 4.9 % 8.4 % >8.4 %

Finland 2.4 % >2.4 % 5.7 % >5.7 % 2.0 % >2.0 % 6.5 % 3.7 % 7.0 % 4.8 %

France 3.1 % 2.0 % 3.1 % 2.0 % 2.0 % 0.6 % 5.0 % 0.5 %

7.3 % 0.5 %

Australia & NZ 0.9 % >0.9 % 4.6 %

4.6 % 2.5 % >2.5 % 4.6 %

1.4 %

8.3 % 2.1 %

Switzerland

2.3 % >2.3 % 7.0 %

>7.0 % 1.5 % >1.5 % 7.2 %

6.6 %

6.0 % >6.0 %

Spain

3.8 % >3.8 % 6.0 % >6.0 % 2.0 %

>2.0 % 6.5 % 3.5 % 7.7 %

4.7 %

Sweden 3.3 % >3.3 % 4.7 % 4.7 % 2.0 %

>2.0 % 6.2 % 5.3 % 7.4 %

>7.4 %

Belgium & Lux. 3.9 % >3.9 % 5.2 % >5.2 % 2.0 % >2.0 % 6.0 % 3.9 % 7.2 % 6.7 %

1)

Excluding allocated corporate costs and royalty.

Accounting policy

An impairment loss is recognised in the statement of profit or loss in a separate line if the carrying amount of an asset or its CGU

exceeds its estimated recoverable amount.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses are only reversed if there

has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent

that the carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and

amortisation, if no impairment loss had been recognised.

The carrying amount of goodwill is tested for impairment together with the other non-current assets in the CGU to which goodwill

is allocated.

Intangible assets with an indefinite useful life, i.e. goodwill, are subject to impairment testing annually or when circumstances

indicate that the carrying amount may be impaired. The carrying amount of other non-current assets is tested annually for

indications of impairment.

If an indication of impairment exists, the recoverable amount of the asset is determined, i.e. the higher of the fair value of the asset

less anticipated costs of disposal and its value-in-use. The value-in-use is calculated as the present value of expected future cash

flows from the asset or the CGU to which the asset belongs.

A sensitivity analysis on the key assumptions in the impairment testing is presented below. The allowed change represents the

percentage points by which the value assigned to the key assumption can change, all other things being equal, before the CGU’s

recoverable amount equals its carrying amount.

Growth

Margin

1)

Growth

Margin

1)

Forecasting period

Terminal period

Discount

rate, net of tax

FINANCIAL STATEMENTS 71

SECTION 4

Capital structure

4.1 Equity

Capital management

Share capital

Dividend

Translation reserve

(DKKm)

Net investment

hedges

Subsidiaries

Total

Translation reserve at 1 January 2021 (3) (1,009) (1,012)

Foreign exchange adjustments of subsidiaries (ISS Global A/S's share)

- 189 189

Recycling of accumulated foreign exchange adjustments on country exits - 15 15

Fair value adjustments of net investment hedges, net of tax (149) -

(149)

Translation reserve at 31 December 2021

(152) (805) (957)

Accounting policy

On full realisation of a foreign entity where control is lost the accumulated foreign exchange adjustments are transferred to profit

or loss in the same line item as the gain or loss.

At 31 December 2021, ISS Global A/S’s share capital comprised a total of DKK 180,200 shares (2020: 180,200) with a nominal value

of DKK thousand 1 each. All shares were fully paid and freely transferable.

ISS Global A/S has one class of shares, and no shares carry special rights. Each share gives the holder the right to one vote at our

general meetings.

In 2021 and 2020, no dividend to ISS World Services A/S (ultimately ISS A/S) were approved.

The ISS Global Group is indirectly wholly owned by ISS A/S and is therefore part of the ISS A/S Group. Group Treasury manages

financing activities and capital structure centrally for the ISS A/S Group as a whole. The ISS Global Group's financing activities and

capital structure are not assessed independently of the ISS A/S Group.

The Group monitors the capital structure and evaluates the need for adjustments on an ongoing basis. The Group's objectives for

managing capital and what is managed as capital are described in note 4.6, Liquidity risk. The dividend policy and payment of

dividend is made subject to the necessary consolidation of equity and the Group's continuing expansion and profitability.

ISS Global A/S (the Group's parent) is a holding company, and its primary assets are shares in subsidiaries, receivables from its

subsidiaries and cash in its bank accounts. ISS Global A/S has no revenue generating operations of its own, and therefore ISS

Global A/S’s cash flow and ability to service interdebtness, will primarily depend on the operating performance and financial

condition of its operating subsidiaries, and the receipt by ISS Global A/S of funds from its subsidiaries.

Retained earningsis the Group’s free reserves, which includes share premium. Share premium comprises amounts above the

nominal share capital paid by shareholders when shares are issued by ISS Global A/S.

Translation reserve comprises foreign exchange differences arising from the translation of financial statements of foreign entities

with a functional currency other than DKK as well as from the translation of non-current balances which are considered part of the

investment in foreign entities and fair value adjustments of net investment hedges.

FINANCIAL STATEMENTS 72

4.2 Loans and borrowings

(DKKm)

2021

2020

Issued bonds 14,064 15,537

Lease liabilities

1)

2,464

2,481

Debt to companies within the ISS Group 9 2

Bank loans 340

474

Derivatives 21

6

Total 16,898

18,500

Non-current liabilities

16,032

17,236

Current liabilities 866 1,264

Loans and borrowings 16,898 18,500

Cash and cash equivalents and other financial items

2)

(7,082)

(6,155)

Net debt

9,816

12,345

1)

Right-of-use assets are presented in 2.1, Property, plant and equipment and leases.

Refinancing

Acquisition of Rönesans, Turkey

Financing fees

Fair value

2)

Includes securities of DKK 103 million (2020: DKK 76 million), certain receivables from companies within the ISS Group of DKK 3,552 million

(2020: DKK 3,330 million). In 2020, as a positive value of currency swaps and net investment hedges was also included amounting to DKK 5 million

and DKK 3 million, respectively.

In May 2021, as a result of the strong liquidity position and increased visibility on Covid-19, ISS cancelled the EUR 700 million

backup facility, which was established in 2020. In addition, in December 2021, ISS repurchased EUR 200 million of the total

outstanding EUR 500 million EMTN bonds maturing December 2024, thereby reducing gross debt levels.

In 2021, financing fees amounting to DKK 3 million (2020: DKK 33 million) have been recognised in loans and borrowings while

financing fees of DKK 28 million (2020: DKK 22 million) were amortised and recognised in financial expenses. Accumulated

financing fees recognised in loans and borrowings at 31 December 2021 amounted to DKK 79 million (2020: DKK 104 million).

The fair value of loans and borrowings was DKK 17,441 million (2020: DKK 19,027 million). The fair value of bonds is based on the

quoted market price on the Luxembourg Stock Exchange and measurement is categorised as Level 1 in the fair value hierarchy.

For the remaining loans and borrowings, fair value is equal to the nominal value as illustrated in 4.5, Interest rate risk.

ISS established a local facility of DKK 303 million (TRY 617 million) maturing in December 2026 for the purpose of the acquisition of

Rönesans in Turkey. The facility has semi-annual amortisation profile and is subject to certain covenants.

FINANCIAL STATEMENTS 73

4.2 Loans and borrowings (continued)

Changes in loans and borrowings

(DKKm)

1 January FX

Cash

flow

Divest-

ments

Lease

addition

1)

FV

adj.

Other

1)

31

December

2021

Issued bonds

15,537 (6) (1,577) - -

-

110

14,064

Lease liabilities 2,481

27

(935)

- 856 - 35 2,464

Debt to companies within the ISS Group 2

-

7

-

- - - 9

Bank loans 474

(131)

(431)

- - 185 243 340

Derivatives 6

-

- - - 15 - 21

Total 18,500

(110) (2,936) - 856 200 388 16,898

2020

Issued bonds 14,123 (63) 1,460 - - - 17 15,537

Lease liabilities 2,982 (78) (1,005) (19) 738 - (137) 2,481

Debt to companies within the ISS Group 2,686 - (1,322) - - - (1,362) 2

Bank loans 247 (50) 709 (10) - (221) (201)

474

Derivatives 1 - - - - 5

-

6

Total 20,039 (191)

(158) (29) 738 (216) (1,683) 18,500

1)

Includes lease liabilities and bank loans reclassified to liabilities held for sale of DKK (24) million/DKK 0 million (2020: DKK (125) million/DKK 0 million).

Accounting policy

Issued bonds and bank loans are recognised initially at fair value net of directly attributable transaction costs and subsequently at

amortised cost using the effective interest method. Any difference between the proceeds initially received and the nominal value is

recognised in Financial expenses over the term of the loan.

Amortisation of financing fees At the date of borrowing, financing fees are recognised as part of loans and borrowings.

Subsequently, financing fees are amortised over the term of the loan and recognised in Financial expenses.

Lease liabilities At the commencement date, the Group recognises lease liabilities at the present value of the lease payments to be

made over the lease term. Lease payments include fixed payments less any incentive payments, variable lease payments that

depend on an index or rate, e.g. when a minimum indexation is applied, and amounts expected to be paid under residual value

guarantees. Lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group

and payment of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The

present value is calculated using the Group’s incremental borrowing rate if the interest rate implicit in the lease is not readily

determinable.

Subsequently, the lease liability is measured at amortised cost using the effective interest method. The liability is increased to

reflect the accretion of interest and reduced for the lease payments made. The liability is remeasured due to a modification, a

change in lease term or a change in the assessment to purchase the underlying asset. Also, the liability is remeasured due to a

change in future lease payments (e.g. a change in an index or rate) or due to a change in the Group’s estimate of the amount

expected to be payable under a residual guarantee.

FINANCIAL STATEMENTS 74

4.3 Financial income and financial expenses

(DKKm)

2021

2020

Interest income on cash and cash equivalents

41 31

Interest income from companies within the ISS Group 69 5

Foreign exchange gains - 28

Financial income 110 64

Interest expenses on loans and borrowings (388) (431)

Redemption premium, bonds (90) -

Interest expenses on lease liabilities (67) (78)

Bank fees (52) (52)

Net interest on defined benefit obligations (17) (17)

Forward premiums, currency swaps (29) (15)

Interest expenses to companies within the ISS Group (18)

(10)

Other (12)

(10)

Foreign exchange losses (10)

-

Financial expenses

(683)

(613)

4.4 Financial risk management

Interest expenses on loans and borrowings comprised mainly interest on issued bonds. In addition, commitment fees and

amortisation of financing fees amounting to DKK 89 million (2020: DKK 75 million) were included. The decrease in 2021 was due to

the reduction in net debt as a result of strong cash flow development and liquidity position.

Forward premiums on currency swaps ISS uses currency swaps to hedge the exposure to currency risk primarily arising from

intercompany loans. The cost of hedging in 2021 increased compared to 2020, primarily driven by the hedging of TRY exposure.

The Group is exposed to a number of financial risks arising from its operating and financing activities, mainly interest rate risk,

liquidity risk, currency risk and credit risk.

The Group’s objectives and policies for measuring and managing risk exposure are explained in:

It is the Group’s policy to mitigate risk exposure derived from its business activities. Group policy does not allow taking speculative

positions in the financial markets.

Redemption premium, bonds related to the repurchase of EUR 200 million of the total outstanding EUR 500 million EMTN bonds

maturing 2024.

The Group has not identified additional financial risk exposures in 2021 compared to 2020.

Financial risks are managed centrally by Group Treasury based on the Financial Policy, which is reviewed and approved annually by

the Board of Directors of ISS A/S. It is considered on an ongoing basis if the financial risk management approach appropriately

addresses the risk exposures.

• 4.5, Interest rate risk;

• 4.6, Liquidity risk; and

• 4.7, Currency risk.

• 2.2, Trade receivables and credit risk.

At 31 December 2021, the exposure to credit risk related to cash and cash equivalents and other financial items was DKK 7,082

million (2020: DKK 6,155 million). It is the Group’s policy to transact only with financial institutions with at least A-1/P-1 credit

ratings. Group Treasury monitors credit ratings on an ongoing basis and approves exceptions to credit rating requirements.

Credit risk on trade receivables is described in:

FINANCIAL STATEMENTS 75

4.5 Interest rate risk

Exposure towards interest rates

2021 2020

(DKKm)

Nominal

interest rate

Currency Maturity

Nominal

value

Carrying

amount

Carrying

amount

Issued bonds (fixed interest rate)

EMTNs (EUR 300 million) 2.125% EUR 2024 2,231

2,226 3,709

EMTNs (EUR 500 million)

1.250% EUR 2025 3,718

3,695 3,690

EMTNs (EUR 500 million)

0.875% EUR 2026 3,718 3,695

3,690

EMTNs (EUR 600 million) 1.500% EUR 2027 4,462 4,448

4,448

14,129 14,064 15,537

Bank loans (floating interest rate)

Acquisition facility, Turkey

TLFREF

+3.25%

TRY - 303 300 -

Bank loans and overdrafts - Multi - 51 40 474

354 340

474

Intra-group (floating interest rates)

Debt to companies within the ISS Group Cibor+0.5% DKK 2024 9 9 2

9 9

2

Interest rate sensitivity

The estimate was based on the Group’s floating rate loans and borrowings, i.e. disregarding cash and cash equivalents, as the level

at 31 December is typically the highest in the year and not a representative level for the purpose of this analysis. The analysis

assumes that all other variables remain constant.

An increase in relevant interest rates of 1%-point would have decreased net profit by DKK 4 million (2020: decreased by DKK 5

million).

• At least 50% of the Group’s bank loans and issued bonds must carry fixed interest rates directly or through derivatives

• Duration of gross debt (fixed-rate period) shall be 2-6 years

• Currently, the Group does not use nterest rate swaps

• The balance between fixed and variable interest rates and gross debt duration (fixed-rate period) is measured on a monthly basis

Mitigation

Exposure to interest rate risk

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial

instruments. Exposure relates to bank loans with floating interest rates.

Risk management policy

• 98% of the Group’s bank loans and bonds carried fixed interest rates at 31 December 2021 (2020: 97%)

• Duration of gross debt (fixed-rate period) of 4.3 years was at 31 December 2021 (2020: 5.1 years)

• Exposure was primarily related to EUR denominated bank loans with floating rates

Low risk

FINANCIAL STATEMENTS 76

4.6 Liquidity risk

Exposure to liquidity risk

Liquidity reserves

(DKKm) 2021

2020

Cash and cash equivalents 3,427 2,741

Restricted cash (31) (37)

Unused revolving credit facilities 7,312 12,380

10,708 15,084

Not readily available

1,061 1,026

Readily available liquidity 9,647

14,058

Liquidity risk results from the Group’s potential inability or difficulty in meeting the contractual obligations associated with its

financial liabilities due to insufficient liquidity.

Low risk

• No short-term maturities

• No financial covenants in our main Group facilities (certain covenants apply to the Turkish facility)

• Diversified funding; bonds and bank loans

• Maintain an appropriate level of shortand long-term liquidity reserves (liquid funds and committed credit facilities)

• Maintain a smooth maturity profile in terms of different maturities

• Maintain access to diversified funding sources

• Raising capital is managed centrally in Group Treasury to ensure efficient liquidity management

• Group Treasury monitors the risk of insufficient liquidity position on a daily basis

• Liquidity is transferred to/from ISS Global A/S, which operates as the Group’s internal bank

• For day-to-day liquidity management cash pools have been established in the majority of the local entities

Mitigation

Risk management policy

Liquidity reserves

Unused revolving credit facilities The Group has a EUR 1 billion revolving credit facility maturing in November 2024. In May 2021,

the additional backup credit facility of EUR 700 million was cancelled leading to the decrease compared to 2020.

In addition to the unused revolving credit facilities at Group level, local credit facilities are available in countries, which are not

considered part of the readily available liquidity. At 31 December 2021, these amounted to DKK 1.1 billion of which all was unused

(2020: DKK 0.9 billion of which DKK 0.4 billion was unused).

Not readily available Cash is considered readily available for upstreaming to the parent company (ISS A/S) within five days. In a

number of countries, transfer to ISS A/S is assessed to take more than five days due to local administrative processes, and thus is

not deemed readily available.

Cash and cash equivalent

at DKK 3,427 million reflects the strong liquidity position of the Group. The level is typically highest at

31 December and not a representative level for the rest of the year.

Restricted cash DKK 31 million of the total cash and cash equivalents at 31 December 2021 was placed on blocked or restricted

bank accounts due to legal cases and tax-related circumstances.

FINANCIAL STATEMENTS 77

4.6 Liquidity risk (continued)

Contractual maturities

(DKKm)

Carrying

amount

Contractual

cash flows

< 1 year 1-2 years 2-3 years 3-4 years 4-5 years > 5 years

2021

Loans and borrowings, excl. lease

1)

14,425 15,472 309 311 2,537 3,930 3,879 4,506

Lease liabilities 2,464 2,579 774 549 406 277 185

388

Debt to companies within the ISS Group 9 9 9 - - -

-

Trade payables and other

2)

3,627 3,627 3,627 - - -

-

Total financial liabilities

20,525 21,687 4,719 860 2,943

4,207

4,064

4,894

2020

Loans and borrowings, excl. lease

1)

16,017 17,270 691

232

234

3,956 3,845 8,312

Lease liabilities 2,481

2,592

830 641 442 268 179

232

Debt to companies within the ISS Group 2 2 2 - - - -

-

Trade payables and other

2)

3,737 3,737 3,628 21 88 -

- -

Total financial liabilities 22,237 23,601

5,151 894 764 4,224

4,024 8,544

1)

Excluding debt to companies within the ISS Group

The risk implied from the values reflects the one-sided scenario of cash outflows only. Trade payables and other financial liabilities

are mainly used to finance assets such as trade receivables and property, plant and equipment.

2)

Including payable royalties and management fees to ISS World Services A/S

The contractual maturities of financial liabilities, based on undiscounted contractual cash flows, are shown in the table. The

undiscounted contractual cash flows include expected interest payments, estimated based on market expectations at 31

December.

FINANCIAL STATEMENTS 78

4.7 Currency risk

Risk management policy

Loans and borrowings – foreign currency sensitivity

The analysis is based on the Group’s internal monitoring of currency exposure on loans and borrowings, intercompany loans,

external longterm receivables, cash and cash equivalents as well as accrued royalties (Group internal).

A change in relevant currencies, with all other variables held constant, would have impacted profit or loss with the amounts below.

Currency risk is the risk that arises from changes in exchange rates, and affects the Group’s result, investments or value of financial

instruments.

Low risk

The Group generally benefits from a natural hedge in having costs, investments and income in the same functional currency

country by country. Currency risk therefore predominantly arises from funding and investments in subsidiaries.

• 97.7% of the Group’s loans and borrowings (external) were denominated in EUR/DKK at 31 December 2021 (2020: 97.1%)

• Including the impact of net investment hedges, 78.8% (2020: 80.9%) of the Group’s external borrowings were denominated in

EUR

Exposure to currency risk

• It is Group policy to pool funding activities centrally and fund investments in subsidiaries through a combination of intercompany

loans and equity

• Currency risk on intercompany loans is as a main policy hedged against DKK or EUR when exposure exceeds DKK 5 million. Some

currencies cannot be hedged within a reasonable price range in which case correlation to a proxy currency is considered and, if

deemed appropriate, proxy hedging is applied

• Currency risk on net investments are as a main policy hedged against DKK or EUR when annual EBITDA of the relevant functional

currency corresponds to 5% or more of Group EBITDA up to an amount of 3-5x EBITDA in the relevant functional currency and

adjusted as appropriate to relevant market entry and exit risk

• Exposure to EUR is monitored but not hedged due to the fixed rate exchange policy between DKK/EUR

• Our currency hedging exposes us to interest spread risk, see sensitivity analysis in 4.5, Interest rate risk

• Currency swaps are used to hedge the exposure to currency risk on loans and borrowings (external), intercompany balances and

long-term receivables (external)

• Exposure on loans and borrowings, intercompany balances and cash and cash equivalents are measured at least on a weekly

basis to evaluate the need for hedging currency positions

• Currency swaps (net investment hedges) or debt is used to hedge the currency exposure to investments in subsidiaries (other

than for EUR).

Mitigation

FINANCIAL STATEMENTS 79

4.7 Currency risk (continued)

Currency

exposure

(nominal)

Currency

swaps

(contractual)

Exposure,

net

Increase

in FX

Profit

or loss

2021

EUR/DKK (17,799) 6,864 (10,935) 1% (109)

USD/DKK 1,435 (1,555) (120) 10%

(12)

Other/DKK (1,721) 1,163 (558) 10% (56)

Total (18,085) 6,472 (11,613)

2020

EUR/DKK (18,415)

6,854

(11,561)

1% (116)

USD/DKK 1,561

(1,636)

(75) 10% (8)

Other/DKK (184)

(246)

(430) 10% (43)

Total (17,038)

4,972 (12,066)

Net investment hedges – foreign currency sensitivity

(DKKm)

Net

investment

Hedging of

investment

Exposure,

net

Average

price

Change

in fair value

Fair

value

Maturity

2021

GBP

1,492 1,285 207 9 (100)

(18) March 2022

USD 1,093

722 371 7

(60) 3

March 2022

CHF 1,847

718 1,129 7 (31) (4)

March 2022

Total 4,432 2,725 1,707 - (191) (19)

2020

GBP 1,302 1,236 66

8 119

(9) March 2021

USD 804 666 138

6 58

6 March 2021

CHF 1,265

685 580 7

3 6

March 2021

Total 3,371

2,587 784 - 180 3

Translation and operational currency risk

Sensitivity

A 10%-change in currencies, with all other variables held constant, would have changed the fair value recognised in Other

comprehensive income of GBP with DKK 20 million, of USD with DKK 37 million and of CHF with DKK 113 million.

The effect of translation of net assets in foreign subsidiaries before the effect of net investment hedges increased equity by DKK

174 million (2020: a decrease of DKK 622 million) primarily related to Turkey, the USA and the UK.

The Group is, however, exposed to risk related to translation into DKK of profit or loss and net assets of foreign subsidiaries,

including intercompany items such as loans, royalties, management fees and interest payments between entities with different

functional currencies, since a significant portion of the Group’s revenue and operating profit is generated in foreign entities. The

exposure to translation of net assets of foreign subsidiaries is described above.

The Group’s exposure to currency risk on transaction level is low since services are produced, delivered and invoiced in the same

local currency as the functional currency of the entity delivering the services.

FINANCIAL STATEMENTS 80

4.7 Currency risk (continued)

Foreign currency sensitivity

(DKKm)

Revenue

Operating

profit before

other items

Royalty

GBP 1,010 30

19

CHF

521

39

10

USD 513

26 10

AUD 413 27 8

NOK 318 23 6

SEK 279 18 5

TRY 272 22 3

EUR 233 4 4

Other 1,116 58 21

Total 4,675 247 86

Impact on profit or loss

2020 to

2021

2019 to

2020

GBP 3.2% (1.5)%

CHF

(1.2)%

3.7%

USD (3.8)% 2.0%

AUD 4.8% (2.8)%

NOK 5.1% (8.1)%

SEK 3.1% 0.8%

TRY

(22.9)%

(20.0)%

EUR

(0.2)% (0.2)%

( ) = Weakened against DKK

Accounting policy

Net investment hedges Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognised in

other comprehensive income while gains or losses relating to the ineffective portion are recognised in profit or loss and included

in financial income or financial expenses. On disposal of the foreign operation, the cumulative value of any such gains or losses

recognised in equity is transferred to profit or loss.

Derivative financial intruments are initially recognised at fair value at the trade date and subsequently remeasured at fair value.

Derivatives are included in Other receivables when the fair value is positive and ind Other liabilities when the fair value is negative.

Fair value measurement take into account current market data. The Group uses valuation techniques that are appropriate in the

circumstances and for which sufficient data are available to measure fair value. Measurement is categorised as Level 2 in the fair

value hierarchy as it is not based on observable market data.

Currency swaps are used to hedge the exposure to currency risk on loans and borrowings (external) and intercompany balances.

As changes in the fair value of both the hedged item and the currency swap are recognised in profit or loss, hedge accounting is

not applied.

Currency swaps (net investment hedges) or debt is used to hedge the currency exposure to investments in subsidiaries (other

than for EUR).

In 2021, changes in weighted average exchange rates resulted in a decrease in Group revenue of DKK 420 million or 0.6% (2020:

decrease of 2.1%) and a decrease of the Group’s operating profit before other items of DKK 92 million or 1.2% (2020: increase of

3.5%).

Change in average FX rates

A 10%-change (EUR: 1%-change) in relevant currencies, with all other variables held constant, would have impacted revenue and

operating profit before other items with the amounts below.

FINANCIAL STATEMENTS 81

SECTION 5

Remuneration

5.1 Remuneration to the Board of Directors and the Executive Group Management

DKK thousand

Board

EGMB

Corporate

Senior

Officers

Board

EGMB

Corporate

Senior

Officers

Base salary and non-monetary benefits 8,724 21,842 39,172 8,008 16,678

34,637

Annual bonus -

12,007 18,739 - 7,461 12,163

Share-based payments

1)

- (3,794) 11,695 -

8,349 2,649

Severance pay

-

14,280 - - 17,799

14,629

Total remuneration

8,724 44,335 69,606 8,008 50,287 64,078

5.2 Staff costs and average number of employees

The management team of the ISS Global Group formally consists of the Managing Directors and the Board of Directors. Members

of the management team are not separately remunerated for their duties performed in the ISS Global Group.

Remuneration to key management personnel of the ISS A/S Group is specified below:

As the ISS Global Group has no significant operating activities independently of the ISS A/S Group, it relies on the management

team of the ISS A/S Group who has the authority and responsibility for planning, implementing and controlling the ISS Global

Group's activities. Consequently, key management personel of the ISS A/S Group is also considered key management personnel of

ISS Global Group.

EGM

2020

2021

Remuneration policy is described in the Remuneration report which is available at:

https://brand.issworld.com/m/1cb6c4270d293ad6/original/Remuneration-Report-2021.pdf

At 31 December 2021, staff costs amounted to DKK 45,602 million (2020: DKK 46,009 million) and comprised mainly wages and

salaries. In 2021, staff costs was positively impacted by a refund of collective insurance premiums paid in prior years in Sweden

(DKK 78 million).

The total number of employees is expected to be around 345,000 once the strategic divestment programme is completed.

At 31 December 2021, total number of employees was 354,394 (31 December 2020: 378,724) with an average number of

employees in 2021 of 362,554 (2020: 434,664). Number of employees included both the continuing and discontinued operations.

1)

Share-based payments to the EGMB was an income of DKK 3,794 million and included an income of DKK 8,035 million due to forfeited PSUs and

RSUs under the LTIP programmes and the Retention 2020 programme as the CEO Europe left ISS in December 2021.

The decrease in 2021 was mainly the result of divestments completed in 2021. Contract losses contributed further to the reduction.

FINANCIAL STATEMENTS 82

5.3 Share-based payments

Long-term incentive programme

Accounting policy

In 2021, share-based payment costs amounted to DKK 63 million of which DKK 2 million were recognised in ISS A/S and DKK 27

million were recognised in ISS World Services A/S.

Subject to certain criteria, the PSUs will vest after three years. The vesting criteria are total shareholder return (TSR) and earnings

per share (EPS). For LTIP 2021, TSR and EPS weighted 40%, respectively, and the remaining 20% related to service-based objectives.

For LTIP 2020 and LTIP 2019, TSR and EPS were equally weighted. TSR peers are the Nasdaq Copenhagen OMX C25 and a peer

group of comparable international service companies.

To drive delivery of short- and long-term financial results, retention of leaders and alignment to shareholder value creation, the

Group has implemented two types of equity-settled sharebased incentive programmes:

• a long-term incentive programme (LTIP); and

• a special incentive programme (SIP).

On initial recognition, an estimate is made of the number of PSUs and RSUs expected to vest. The estimated number is

subsequently revised for changes in the number of PSUs and RSUs expected to vest due to non-market based vesting conditions.

Upon vesting, each PSU entitles the holder to receive one share at no cost. Participants are compensated for any dividend

The value of services received in exchange for granted performance-based share units (PSUs) and restricted share units (RSUs) are

measured at fair value at the grant date and recognised in staff costs over the vesting period with a corresponding increase in

debt to ISS A/S.

The fair value of granted PSUs under the long-term incentive programme is measured using a generally accepted valuation model

taking into consideration Accounting policy the terms and conditions upon which the PSUs were granted including market-based

vesting conditions (TSR condition).

Members of the EGM (EGMB and Corporate Senior Officers of the Group), and other senior officers of the Group, are granted a

number of performance share units (PSUs).

FINANCIAL STATEMENTS 83

5.3 Share-based payments (continued)

Fair value and profit or loss impact LTIP 2018 LTIP 2019 LTIP 2020 LTIP 2021

PSUs and participants (number)

Maximum PSUs under the programme at grant date 869,112 928,367 1,785,896 1,349,521

Total PSUs granted 767,447 813,090 1,473,659 1,240,947

Participants 152 142 120 140

Fair value (DKKm)

PSUs expected to vest at grant date 100 101 74 94

PSUs expected to vest at 31 December 2021 - 24 52 74

Profit or loss impact (DKKm)

Recognised in 2021 2 8 20 22

Not yet recognised (PSUs expected to vest) - 1 22

57

Assumptions at the time of grant LTIP 2018 LTIP 2019 LTIP 2020 LTIP 2021

Share price, DKK 228 207 98 111

Expected volatility

1)

29.0% 26.6% 29.1% 47.2%

Expected life of grant, years 3 3 3 3

Risk-free interest rate

1)

0.5%-2.4% (0.3)%-2.7% (0.4)%-1.9% (0.6)%-0.9%

1)

Based on observable market data for peer groups.

LTIP – vested programmes

In March 2021, the LTIP 2018 programme vested. Based on the annual EPS and TSR performances for 2018, 2019 and 2020, 0%

of the granted PSUs vested. After this vesting, no further PSUs are outstanding under the LTIP 2018 and the programme has

Furthermore, in March 2022, the PSUs granted under LTIP 2019 will vest with 0% based on the annual EPS and TSR

performances for 2019, 2020 and 2021.

FINANCIAL STATEMENTS 84

5.3 Share-based payments (continued)

LTIP – outstanding PSUs

LTIP 2018 (vested)

EGMB

Corporate

Senior

Officers

Other

senior

officers

Total

Outstanding at 1 January 2020 88,503 87,410 489,381 665,294

Transferred (50,033) (18,817) 68,850 -

Cancelled - - (41,435) (41,435)

Outstanding at 31 December 2020 38,470 68,593 516,796 623,859

Forfeited (38,470) (68,593) (516,796) (623,859)

Outstanding at 31 December 2021 - - - -

LTIP 2019

Outstanding at 1 January 2020 109,369 115,075 540,174 764,618

Granted (66,786) (32,060) 98,846 -

Cancelled - - (78,569) (78,569)

Outstanding at 31 December 2020 42,583 83,015 560,451

686,049

Cancelled

(35,686) (6,370) (23,034)

(65,090)

Outstanding at 31 December 2021

6,897

76,645 537,417 620,959

LTIP 2020

Granted 218,564 224,231 1,030,864 1,473,659

Transferred (85,931) (46,232) 132,163

-

Cancelled - -

(33,673)

Outstanding at 31 December 2020

132,633 177,999 1,129,354

1,439,986

Cancelled (72,864)

- (104,144) (177,008)

Outstanding at 31 December 2021 59,769 177,999 1,025,210 1,262,978

LTIP 2021

Granted 201,828 176,746 862,373 1,240,947

Transferred (53,531)

- (89,652) (143,183)

Outstanding at 31 December 2021 148,297

176,746 772,721 1,097,764

EGM

FINANCIAL STATEMENTS 85

5.3 Share-based payments (continued)

Special incentive programmes

Fair value and profit or loss impact

Retention

2020

Special

Incentive

2020-2022

Special

Incentive

2020-2023

RSU and participants (number)

Maximum RSUs under the programme at grant date 145,729 64,159

246,767

Total RSUs granted 145,729 50,698

232,730

Participants

1

9

36

Fair value (DKKm)

RSUs expected to vest at grant date 14 6 24

RSUs expected to vest at 31 December 2021 - 6 23

Profit or loss impact (DKKm)

Recognised in 2021

(5) 5

10

Not yet recognised (RSUs expected to vest) - 1 10

Retention

2020

Special

Incentive

2020-2022

Special

Incentive

2020-2023

Share price, DKK

98 101

101

Expected life of grant, years 2 2 3

The RSUs granted under the Retention 2020 programme in 2020 was forfeited in 2021 as the participant left ISS and vesting of

the programme was subject to continued employment. Thereafter the programme has lapsed.

Assumptions at the time of grant

There are currently two different incentive plans with duration between two and three years. Restricted share units (RSUs)

granted under the programmes in 2020 and 2021 will vest in either 2022 or 2023, subject to achievement of individual service or

performance criteria. Upon vesting, each RSU entitles the holder to receive one share at no cost.

FINANCIAL STATEMENTS 86

5.3 Share-based payments (continued)

Special incentive programmes – outstanding RSUs

Retention 2020 EGMB

Corporate

Senior

Officers

Other

senior

officers

Total

-

Granted 145,729 - -

145,729

Cancelled - -

-

Outstanding at 31 December 2020

145,729 -

-

145,729

Cancelled (145,729)

- - (145,729)

Outstanding at 31 December 2021 - - - -

Special incentive 2020-2022

Granted - - 22,296

22,296

Outstanding at 31 December 2020

- -

22,296

Granted - 26,619 1,783 28,402

Cancelled - - (6,513)

(6,513)

Outstanding at 31 December 2021 - 26,619 17,566

44,185

Special incentive 2020-2023

Granted - - 204,223 204,223

Outstanding at 31 December 2020 - - 204,223 204,223

Granted - 26,619 1,888

28,507

Cancelled - -

(12,853)

Outstanding at 31 December 2021

- 26,619 193,258

219,877

EGM

FINANCIAL STATEMENTS 87

5.4 Pensions and similar obligations

Defined contribution plans

The majority of the Group’s pension schemes are defined contribution plans where contributions are paid to publicly or privately

administered pension plans. The Group has no further payment obligations once the contributions have been paid. In 2021,

contributions amounted to DKK 1,186 million (2020: DKK 1,203 million), corresponding to 86% of the Group’s pension costs (2020:

84%).

Defined benefit plans

The Group has a number of defined benefit plans where the responsibility for the obligation towards the employees rests with the

Group. The largest plans are in Switzerland and the UK accounting for 86% (2020: 86%) of the Group’s obligation (gross) and 97%

(2020: 97%) of its plan assets.

The plans are primarily based on years of service, and benefits are determined on the basis of salary and rank. The Group assumes

the risk associated with future developments in salary, interest rates, inflation, mortality and disability etc.

The majority of the obligations are funded with assets placed in independent pension funds. In some countries, primarily Sweden,

France, Turkey and Hong Kong, the obligation is unfunded. For these unfunded plans, obligation amounted to DKK 788 million or

9% of the present value of the gross obligation (2020: DKK 843 million or 10%).

Switzerland

Participants are insured against the financial consequences of retirement, disability and death. The pension plans

guarantee a minimum interest credit and fixed conversion rates at retirement and include a risk-sharing element between ISS and

the plan participants. Contributions are paid by both the employee and the employer. The plans must be fully funded. In case of

underfunding, recovery measures must be taken, such as additional financing from the employer or from the employer and

employees, reduction of benefits or a combination of both.

The UK Participants are insured against the financial consequences of retirement and death, and do not provide any insured

disability benefits. The pension plans guarantee a defined benefit pension at retirement on a final salary basis. The majority of the

plans does not include a risk-sharing element between ISS and the plan participants.

Developments in 2021

Actuarial (gain)/loss, including return on plan assets, was a gain of DKK 1,145 million (2020: loss of DKK 127 million). Impact from

asset ceiling was a loss of DKK 1,080 million (2020: loss of DKK 21 million). Consequently, the net impact recognised in other

comprehensive income in 2021 was a gain of DKK 65 million (2020: loss of DKK 148 million).

In 2021, we saw strong asset returns, mainly in Switzerland (accounts for 80% of the Group’s plan assets). The assets are primarily

placed in listed shares (40%), bonds (25%) and real estate (15%), and the market conditions, especially for shares and real estate,

led to the significant return on plan assets. Furthermore, changes to actuarial assumptions (increased discount rates and updated

mortality rates) led to a reduction in the gross obligation and a resulting actuarial gain, predominantly in Switzerland.

As a result of the strong asset returns and development in actuarial assumptions, a significant increase in the surplus on the major

plans in Switzerland was realised. However, due to surplus restrictions (ISS does not have access to the overfunding), a resulting

increase in the asset ceiling was recognised. As such, by the end of 2021, the accumulated impact from the asset ceiling was DKK

1,253 million (2020: DKK 163 million).

FINANCIAL STATEMENTS 88

5.4 Pensions and similar obligations (continued)

Significant accounting estimates

Actuarial calculations and valuations are performed annually for all major plans. The present value of defined benefit obligations is

determined on the basis of assumptions about the future development in variables such as salary levels, interest rates, inﬂation and

mortality. Applied actuarial assumptions vary from country to country due to local conditions. All assumptions are assessed at the

reporting date. Changes in these assumptions may significantly affect the liabilities and pension costs under defined benefit plans.

The range and weighted average of these assumptions as well as sensitivities on key assumptions are disclosed in this note.

The discount rates used for calculating the present value of expected future cash flows are based on the market yield of high

quality corporate bonds or government bonds with a maturity approximating to the terms of the defined benefit obligations.

ISS participates in multi-employer pension schemes that by nature are defined benefit plans. Some funds are not able to provide

the necessary information in order for the Group to account for the schemes as defined benefit plans and these schemes are

therefore accounted for as defined contribution plans. There is a risk that the plans are not sufficiently funded. However,

information on surplus or deficit in the schemes is not available.

Accounting policy

Contributions to defined contribution plans are recognised in Staff costs when the related service is provided. Any contributions

outstanding are recognised in Other liabilities.

Defined benefit plans The Group’s net obligation is calculated by a qualified actuary using the projected unit credit method,

separately for each plan by estimating the amount of future benefits that employees have earned in return for their service in the

current and prior periods. The present value less the fair value of any plan assets is recognised in Pensions and similar obligations.

When the calculation results in a potential asset, recognition is limited to the present value of economic benefits available in the

form of future refunds from or reductions in future contributions to the plan. To calculate the present value, consideration is given

to applicable minimum funding requirements.

Pension costs are calculated based on actuarial estimates and financial expectations at the beginning of the year. Service costs are

recognised in Staff costs and net interest is recognised in Financial expenses. Differences between the expected development in

pension assets and liabilities and the realised amounts at the reporting date are designated actuarial gains or losses and

recognised in other comprehensive income.

When the benefits are changed or a plan is curtailed, the resulting change in benefits that relates to past service or the gain or loss

on curtailment is recognised in Staff costs. Gains and losses on settlement is recognised when incurred.

Other long-term employee benefits are recognised as defined pension plans, except that actuarial gains and losses are recognised

in Staff costs. Other long-term employee benefits comprise jubilee benefits, long-service or sabbatical leave etc.

FINANCIAL STATEMENTS 89

5.4 Pensions and similar obligations (continued)

2021 2020

(DKKm)

Present

value of

obligation

Fair value

of plan

assets

Obliga-

tion, net

Present

value of

obligation

Fair value

of plan

assets

Obliga-

tion, net

Carrying amount at 1 January 8,684 7,796 888 8,394 7,542 852

Current service costs 187 - 187 174 -

174

Interest on obligation/plan assets 45 28 17 61 44

17

Past service costs 32 - 32 59

-

59

Recognised in profit or loss 264 28 236 294 44 250

Actuarial (gain)/loss, demographic assumptions (256) - (256) (10) -

(10)

Actuarial (gain)/loss, financial assumptions (209) - (209) 290 -

290

Actuarial (gain)/loss, experience adjustments 67 - 67 27

-

27

Return on plan assets excl. interest income

- 747 (747) -

180

(180)

Impact from asset ceiling - (1,080) 1,080 - (21) 21

Recognised in other comprehensive income (398) (333) (65) 307 159

148

Foreign exchange adjustments 386 414 (28) (115)

(93)

(22)

Acquisitions and divestments, net -

0

(0)

(3)

(0) (3)

Additions from new contracts, net - - - - 35

(35)

Employee contributions 141 141 - 135

135 -

Employer contributions - 199 (199) -

195 (195)

Benefits paid

(266) (174) (92) (313)

(234) (79)

Impact from asset ceiling -

1,080

(1,080) - 21

(21)

Reclassification to Liabilities held for sale (186)

(154) (32) (15) (8)

(7)

Other changes 75 1,506 (1,431) (311) 51 (362)

Carrying amount at 31 December 8,625 8,997 (372) 8,684 7,796 888

Other long-term employee benefits 470 429

Accumulated impact from asset ceiling

1,253 163

Pensions and similar obligations at 31 December

1,351 1,480

Major categories of plan assets 2021 2020

Listed shares 40% 35%

Corporate bonds 20% 24%

Property 15% 15%

Government bonds 4% 4%

Cash and cash equivalents 3% 3%

Other 18% 19%

Total 100% 100%

FINANCIAL STATEMENTS 90

5.4 Pensions and similar obligations (continued)

Actuarial assumptions

2021

2020

CHF GBP EUR

Other

currencies

CHF GBP EUR

Other

currencies

Discount rates 0.3%

2.0 % 0.35-1.0% 0.2-19.3% 0.1% 1.5% 0.35-0.75%

0.2-15.4%

Salary increase 1.0%

0.0-2.65% 0-3.5% 0-15.0% 1.0% 0.0-2.19% 0.0-3.5% 0.0-10.0%

Pension increase

0.0% 2.65-3.20% 0-0.64% 0-2.0% 0.0% 2.2-3.0%

0.0-2.0% 0.0-1.75%

Sensitivity analysis

2021 2020

(DKKm)

+0.5%

-0.5% +0.5% -0.5%

Discount rate

(490)

545 (535) 598

Price inflation 165 51 121 (103)

Salary increase 132 4 74 (69)

Pension increase 302 (85) 314 (78)

+1 year -1 year +1 year -1 year

Life expectancy

212 (182)

203 (197)

The estimated weighted average duration of the defined benefit obligation was 12 years (2020: 13 years) and is split into:

Years

2021 2020

Active employees

8 13

Retired employees

15

Deferred vested

1)

6

14

Total employees 12 13

The table below illustrates the sensitivity related to significant actuarial assumptions used in the calculation of the defined benefit

obligation recognised at the reporting date. The analysis is based on changes in assumptions that the Group considered to be

reasonably possible at the reporting date. It is estimated that the relevant changes in assumptions would have

increased/(decreased) the defined benefit obligation by the amounts shown below:

1)

The impact from deferred vested on total estimated weighted average duration is minor due to the fact that deferred vested make up less

than 2% of the participants, and do not exist in many of the shorter duration plans.

FINANCIAL STATEMENTS 91

SECTION 6

Other required disclosures

6.1 Contingent liabilities

Type

Guarantee

commitments

Performance

guarantees

Divestments

Legal

proceedings

Restructuring

projects

6.2 Government grants

The Group received government grants in the form of wage subventions, which have been recognised as a reduction of staff costs.

The grants compensate the Group for staff costs primarily related to social security and wage increases as well as hiring certain

categories of employees such as trainees, disabled persons, long-term unemployed and employees in certain age groups.

Restructuring projects are being undertaken on an ongoing basis across different geographies and

service areas, currently mainly in Germany, France and Spain. Labour laws especially in Europe include

restrictions on dismissals and procedural rules to be followed. The procedures applied by ISS could be

challenged in certain jurisdictions resulting in liabilities. Management believes that this would not have a

material impact on the Group’s financial position beyond the assets and liabilities already recognised in

the statement of financial position at 31 December 2021.

Nature and extent

Indemnity and guarantee commitments (mainly towards public authorities and insurance companies) at

31 December 2021 amounted to DKK 479 million (31 December 2020: DKK 426 million).

The Group has issued performance guarantee bonds for service contracts amounting to DKK 3,580

million (31 December 2020: DKK 3,305 million) of which DKK 1,761 million (31 December 2020: DKK 1,454

million) were bank-guaranteed performance bonds. Such performance bonds are issued in the ordinary

course of business in the service industry to guarantee towards our customers satisfactory completion of

work in accordance with service contracts.

The Group makes provisions for claims from purchasers or other parties in connection with divestments

and representations and warranties given in relation to such divestments. Management believes that

provisions made at 31 December 2021 are adequate. However, there can be no assurance that major

claims will not arise out of the Group’s divestments and adversely affect the Group’s profit or loss and

financial position.

In addition, in some cases the Group’s divestment activities give rise to possible obligations, whose

existence will only be confirmed by the occurrence or non-occurrence of one or more future events, not

wholly within ISS’s control, e.g. labour-related obligations, including relating to multi-employer plans. In

such cases, the occurrence of future events may adversely affect the Group’s profit or loss and financial

position.

The Group is party to certain legal proceedings. Management believes that these proceedings (many of

which are disputes with customers and labour-related cases incidental to the business) will not have a

material impact on the Group’s financial position beyond the assets and liabilities already recognised in

the statement of financial position at 31 December 2021.

FINANCIAL STATEMENTS 92

6.2 Government grants (continued)

Covid-19 related

grants

(DKKm)

2021 2020

Wage subvention 415 1,321

Sick pay compensation 11 15

Social security contribution 6 12

Recognised in Staff costs 432 1,348

10 118

6.3 Related parties

Parent and ultimate controlling party

Key management personnel

Other related party transactions

Directorship and external executive positions of management

A description of directorship and external executive positions of management at 31 December 2021 are available here:

https://www.issworld.com/about/global-management-and-organisation/leadership-and-structure

In 2021, the Group had the following transactions with other related parties, which were all made on market terms:

The Board of Directors of ISS A/S and the Executive Group Management of ISS A/S are considered the Group's key management

personnel as defined in 5.1, Remuneration to the Board of Directors and the Executive Group Management.

Apart from remuneration, including share-based incentive programmes, there were no significant transactions with members of

the Board and the EGM in 2021.

The Group received Covid-19 related grants to compensate costs related to e.g. employees on furlough, social security

contribution and sick pay compensation mainly in the UK, Hong Kong and Switzerland. As the grants compensate costs already

incurred, they are recognised as a reduction of staff costs. Depending on the specific commercial model, customers were

appropriately and accordingly compensated.

Hereof included in Other receivables

• The Group was charged royalty and management fee from ISS World Services A/S amounting to DKK 1,260 million

(2020: DKK 1,218 million) of which DKK 35 million (2020: DKK 89 million related to discontinued operations);

• The Group received/paid interest from/to companies within the ISS Group, see 4.3, Financial income and expenses;

• The Group's receivable from ISS A/S amounted to DKK 3,164 million (2020: debt of DKK 3,116 million) at 31 December 2021;

• The Group's net receivable from ISS World Services A/S amounted to DKK 424 million (2020: debt of DKK 211 million) at

31 December 2021.

The sole shareholder of ISS Global A/S, ISS World Services A/S, has controlling influence in the Group and is wholly owned by ISS

A/S (the ultimate parent).

FINANCIAL STATEMENTS 93

6.4 Fees to auditors

(DKKm)

2021

2020

Statutory audit

62 68

Tax and VAT advisory services 6 6

Other services 8 10

Total 76 84

6.5 Subsequent events

Other than set out above or elsewhere in these consolidated financial statements, we are not aware of events subsequent to 31

December 2021, which are expected to have a material impact on the Group’s financial position.

Other services

comprised among other things work related to acquisitions and divestments, such as financial and tax due

diligence.

Tax and VAT advisory services mainly related to tax compliance services.

In February 2022, a war in Ukraine broke out following a Russian invasion of the country. We are monitoring the developing

humanitarian crisis, and our priority is the safety and wellbeing of our people and our customers. ISS has no material activities in

Ukraine, and our business in Russia has been classified as held for sale and discontinued operations since December 2020 and

recognised at an immaterial amount.

It is management’s assessment that the outbreak of the war has no impact on recognition and measurement at 31 December

2021, and further that it will not have a material impact on the results of the Group’s operations and financial position in 2022.

FINANCIAL STATEMENTS 94

SECTION 7

Basis of preparation

7.1 Significant accounting estimates and judgements

Note

Item Estimates Judgements

1.2

Revenue x x

1.5 Deferred tax x x

2.1 Right-of-use assets x

2.2

Trade receivables and credit risk x

2.3 Other receivables x

2.6 Provisions x x

3.1 Discontinued operations x x

3.2 Assets and liabilities held for sale x x

3.6 Intangible assets x x

3.8

Impairment tests x

5.4

Pensions and similar obligations x

7.2 Change in accounting policies

• Amendments to IFRS 7, IFRS 9 and IAS 39 and IFRS 16: Interest Rate Benchmark Reform – Phase 2.

The preparation of the Group’s consolidated financial statements required management to make judgements, estimates and

assumptions that affected the reported amounts of assets, liabilities, income and expenses, the accompanying disclosures,

including contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a

material adjustment to the carrying amount of assets or liabilities in future periods.

Estimates and assumptions are reviewed on an ongoing basis and have been prepared taking macroeconomic developments into

consideration, but still ensuring that one-off effects which are not expected to exist in the long term do not affect estimation and

determination of these key factors, including discount rates and expectations for the future.

From 1 January 2021, the Group has adopted the below standards and interpretations with no significant impact on recognition

and measurement:

In 2021, Covid-19 continued to have an adverse impact on our business, although to a lesser extend than in 2020, including the

Group’s operating performance and cash flows in 2021 and our financial position at 31 December 2021.

Items being subject to significant estimates and judgements are described in the notes listed below.

FINANCIAL STATEMENTS 95

7.3 General accounting policies

Basis of preparation

Fair value measurement and disclosure

Climate change

Going concern

The consolidated financial statements of ISS Global A/S for the year ended 31 December 2021 comprise ISS Global A/S and its

subsidiaries (collectively, the Group). Significant subsidiaries are listed in 7.5, Group companies.

The 2021 Annual Report for ISS Global A/S was discussed and approved by the Managing Director and the Board of Directors (the

Board) on 17 March 2022 and issued for approval at the subsequent annual general meeting on 19 April 2022.

The consolidated financial statements of the Group have been prepared in accordance with IFRS as adopted by the EU and

additional requirements of the Danish Financial Statements Act. In addition, the consolidated financial statements have been

prepared in compliance with the IFRSs issued by the IASB.

The Board and the EGMB have during the preparation of the consolidated financial statements of the Group assessed the going

concern assumption. The Board and the EGMB have concluded that it is reasonable to apply the going concern concept as

underlying assumption for the consolidated financial statements of the Group.

In reaching this conclusion, the Board and the EGMB have considered all available information, including existing and anticipated

impacts of Covid-19 and other relevant events and conditions, up until the date on which the consolidated financial statements

are issued. Further, the conclusion is based on knowledge of the Group, the estimated economic outlook and identified risks and

uncertainties in relation hereto. This includes review of budgets, expected development in available liquidity and capital, current

credit facilities and their contractual and expected maturities.

The consolidated financial statements have been prepared on a historical cost basis, except for assets and liabilities held for sale,

derivative financial instruments and contingent consideration that have been measured at fair value.

The assets and liabilities above for which the fair value is measured are categorised within the fair value hierarchy and disclosed in

the relevant notes.

For the purpose of fair value disclosures, management has assessed that the fair values of cash and cash equivalents, trade

receivables, contingent consideration, trade payables and other current and non-current financial assets and liabilities

approximates their carrying amount largely due to the short-term maturities of these instruments. The fair value of loans and

borrowings, including methods and assumptions used to estimate the fair value, are disclosed in 4.2, Loans and borrowings.

In preparing these consolidated financial statements management has considered the impact of climate change, which did not

have a material impact on the estimates and judgements in these consolidated financial statements. In addition, it is

management assessment that climate change is not expected to have a significant impact on the Group’s going concern

assessment, or in the long-term (next five years).

The Group’s significant accounting policies and accounting policies related to IAS 1 minimum presentation items are described in

the relevant notes to the consolidated financial statements or otherwise stated below. A list of the notes is shown on p. 28.

All amounts have been rounded to nearest DKK million, unless otherwise stated.

ISS Global A/S is indirectly wholly owned by ISS A/S and is therefore part of the ISS A/S Group. ISS Global A/S has no operating

activities independently of ISS A/S and the ISS Global Group's financing activities and capital structure are not assessed

independently of the ISS A/S Group, but managed centrally for the ISS A/S Group as a whole by Group Treasury. Due to this

structure, going concern is assessed for the ISS Group as a whole by the Board of Directors (Board) and Executive Group

Management (EGMB) of ISS A/S.

FINANCIAL STATEMENTS 96

7.3 General accounting policies (continued)

Defining materiality

Basis of consolidation

Foreign currency

On consolidation all intra-group assets and liabilities, equity, income, expenses and cash flow relating to transactions between

members of the Group are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated

against the investment to the extent of the Group’s interest in the investment. Unrealised losses are eliminated in the same way

as unrealised gains, but only to the extent that there is no evidence of impairment.

The non-controlling interest’s share of net profit and equity of subsidiaries, which are not wholly-owned, are included in the

Group’s net profit and equity, respectively, but disclosed separately. By virtue of agreement certain non-controlling shareholders

are only eligible of receiving benefits from their non-controlling interest when ISS as controlling shareholder has received their

initial investment and compound interest on such. In such instances the subsidiaries’ result and equity are fully allocated to ISS

until the point in time where ISS has recognised amounts exceeding their investment including compound interest on such.

A change in ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction.

The consolidated financial statements comprise Global A/S and entities controlled by Global A/S. Control is achieved when the

Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those

returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial

statements from the date on which control commences until the date on which control ceases.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling

interest and other components of equity, while any resultant gain or loss is recognised in Other income and expenses, net. Any

investment retained is recognised at fair value on initial recognition.

The consolidated financial statements are presented in Danish kroner (DKK), which is ISS Global A/S’s functional currency.

Transactions in currencies other than the functional currency of the respective Group companies are considered transactions

denominated in foreign currencies.

On initial recognition, these are translated to the respective functional currencies of the Group companies at the exchange rates

at the transaction date. Foreign exchange adjustments arising between the exchange rates at the transaction date and at the

date of payment are recognised in Financial income or Financial expenses. Receivables, payables and other monetary items

denominated in foreign currencies are translated at the exchange rates at the reporting date. The difference between the

Receivables, payables and other monetary items denominated in foreign currencies are translated at the exchange rates at the

reporting date. The difference between the exchange rates at the reporting date and at the date of transaction or the exchange

rate in the latest financial statements is recognised in Financial income or Financial expenses.

Explanatory disclosure notes related to the consolidated financial statements are presented for individually significant items.

Where separate presentation of a line item is made solely due to the minimum presentation requirements in IAS 1, no further

disclosures are provided in respect of that line item.

The consolidated financial statements separately present items that are considered individually significant, or are required under

the minimum presentation requirements of IAS 1. In addition, information that is considered material, either individually or in

combination with other information, is disclosed.

In determining whether an item is individually significant, or information is material, ISS considers both quantitative and

qualitative factors. If the presentation or disclosure could reasonably be expected to influence economic decisions made by

primary users, the information is considered material.

FINANCIAL STATEMENTS 97

7.3 General accounting policies (continued)

Segment reporting

Reporting under the ESEF regulation

Foreign exchange adjustments of balances with foreign entities which are considered part of the investment in the entity are

recognised in other comprehensive income and presented in equity under a separate translation reserve.

When presenting geographical information, segment revenue and non-current assets are based on the geographical location of

the individual subsidiary from which the sales transaction originates.

On recognition in the consolidated financial statements of Group companies with a functional currency other than DKK, the

statements of profit or loss and statements of cash flows are translated at the exchange rates at the transaction date and the

statements of financial position are translated at the exchange rates at the reporting date. An average exchange rate for the

month is used as the exchange rate at the transaction date to the extent that this does not significantly deviate from the

exchange rate at the transaction date. Foreign exchange adjustments arising on translation of the opening balance of equity of

foreign entities at the exchange rates at the reporting date and on translation of the profit or loss statements from the exchange

rates at the transaction date to the exchange rates at the reporting date are recognised in other comprehensive income and

presented in equity under a separate translation reserve. However, if the foreign entity is a non-wholly owned subsidiary, the

relevant proportion of the translation difference is allocated to the non-controlling interest.

The accounting policies of the reportable segments are the same as the Group’s accounting policies described throughout the

notes. Segment revenue, costs, assets and liabilities comprise items that can be directly referred to the individual segments.

Unallocated items mainly consist of revenue, costs, assets and liabilities relating to the Group’s Corporate functions (including

internal and external loans and borrowings, cash and cash equivalents and intra-group balances) as well as Financial income,

Financial expenses and Income tax.

The segment reporting is prepared in a manner consistent with the Group’s internal management and reporting structure and

excludes discontinued operations.

For the purpose of segment reporting, segment profit has been identified as Operating profit. Segment assets and segment

liabilities have been identified as Total assets and Total liabilities, respectively.

As we are a Group with securities listed on a regulated market within the EU, we are from 2021 required to prepare our Annual

Report using a combination of the XHTML format and to tag the primary consolidated financial statements using iXBRL (Inline

eXtensible Business Reporting Language).

The Annual Report submitted to the Danish Financial Supervisory Authority (the Officially Appointed Mechanism) are included in

the zip file ISS-Global-2021-12-31-en.zip.

The Group’s iXBRL tags have been prepared in accordance with the ESEF taxonomy, which is included in the ESEF regulation and

developed based on the IFRS taxonomy published by the IFRS Foundation.

The line items in the consolidated financial statements are tagged to elements in the ESEF taxonomy. For financial line items that

are not directly defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to

elements in the ESEF taxonomy, except for extensions that are subtotals.

Transactions between reportable segments are made on market terms.

FINANCIAL STATEMENTS 98

7.4 New standards and interpretations not yet implemented

Based on the current business setup and level of activities, none of these standards and interpretations are expected to have a

material impact on the recognition and measurement in the consolidated financial statements.

IASB has published certain new standards, amendments to existing standards and interpretations that are not yet mandatory for

the preparation of the consolidated financial statements of the Group at 31 December 2021.

• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current;

• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies;

• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;

• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction;

• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts – Costs of Fulfilling a

Contract.

None of these new standards, amendments to existing standards and interpretations are adopted by the EU at 31 December

2021.

The Group expects to adopt the new standards and interpretations when they become mandatory. The standards and

interpretations that are approved with different effective dates in the EU than the corresponding effective dates under IASB will

be early adopted so that the implementation follows the effective dates under IASB.

FINANCIAL STATEMENTS 99

7.5 Group companies

Continental Europe

Austria Turkey

ISS Austria Holding GmbH 100%

ISS Hazir Yemek Üretim ve Hizmet A.Ş.

50,1%

2)

ISS Facility Services GmbH 100%

ISS Proser Koruma ve Güvenlik Hizmetleri A.Ş.

50,1%

2)

ISS Ground Services GmbH

51%

ISS Tesis Yönetim Hizmetleri A.Ş.

50,1%

2)

ISS İşletme Hizmetleri A.Ş (Rönesans)

50,1%

2)

Belgium & Luxembourg

ISS Catering N.V.

100%

Northern Europe

ISS Facility Services N.V.

100%

ISS Facility Services S.A.

100% Denmark (ISS A/S's country of domicile)

ISS Facility Services A/S 100%

France ISS Finance B.V. 100%

GIE ISS Services 100%

ISS Global Management A/S 100%

ISS Facility Management SAS 100%

ISS Holding France A/S 100%

ISS Holding Paris SAS 100% ISS Lending A/S 100%

3)

ISS Logistique et Production SAS

100%

Finland

Germany ISS Palvelut Holding Oy 100%

ISS Automotive Services GmbH 100% ISS Palvelut Oy 100%

ISS Facility Services Holding GmbH 100%

ISS Integrated Facility Services GmbH 100%

Norway

ISS Pharma Services GmbH

100% ISS Holding AS 100%

ISS Energy Services GmbH 100% ISS Management AS 100%

ISS Communication Services GmbH 100% ISS Facility Services AS 100%

ISS Serveringspartner AS 100%

Italy ISS Service Management AS 100%

ISS Facility Services S.r.l. 100%

Sweden

Netherlands

ISS Facility Services Holding AB 100%

ISS Catering Services B.V. 100% ISS Facility Services AB 100%

ISS Holding Nederland B.V. 100% ISS Palvelut Holding AB 100%

ISS Integrated Facility Services B.V. 100%

ISS Nederland B.V. 100% UK & Ireland

ISS Security & Services B.V. 100%

ISS UK Holding Limited 100%

ISS UK Limited 100%

Poland ISS Facility Services Ltd. 100%

ISS Facility Services Sp. Z o.o. 100% ISS Mediclean Limited 100%

ISS World Services Poland Sp. Z.o.o

100% ISS Damage Control (Scotland) Ltd. 100%

ISS Ireland Ltd. 100%

Spain

Integrated Service Solutions, S.L. 100%

ISS Facility Services, S.A. 100%

ISS Soluciones De Seguridad, S.L. 100%

UTE-HOSPITALES S.A.S 65%

1)

Switzerland

ISS Facility Services AG 100%

ISS Schweiz AG 100%

Below the Group's significant subsidiaries and joint ventures are presented per region. Together these are referred to as

"Companies within the ISS Group".

FINANCIAL STATEMENTS 100

7.5 Group companies (continued)

Americas

Asia & Pacific (continued)

Chile Hong Kong

Apunto Servicios de Alimentacion S.A. 100%

Hung Fat Cleaning Transportation Co., Ltd. 100%

ISS Chile S.A. 100%

ISS Adams Secuforce Ltd. 100%

ISS Facility Services S.A. 100% ISS China Holdings Ltd. 100%

ISS Servicios Generales Ltda. 100%

ISS China Holdings I Ltd. 100%

ISS Servicios Integrales Ltda. 100%

ISS EastPoint Properties Ltd. 100%

ISS EastPoint Property Management Ltd. 100%

Mexico

ISS Environmental Services (HK) Ltd. 100%

ISS Centro América, S. de R.L. de C.V. 100%

ISS Facility Services Ltd. 100%

ISS Facility Services, S.A. de C.V. 100%

ISS Greater China Ltd. 100%

ISS Servicios Integrales, S. de R.L. de C.V. 100%

ISS Mediclean (HK) Ltd. 100%

ISS Pan Asia Security Services Ltd. 100%

USA & Canada

JSL Ltd. 100%

ISS Facility Services Holding, Inc

100%

Silvertech E&M Engineering Co., Ltd. 100%

ISS Management and Finance Co, Inc 100%

ISS Facility Services, Inc (US) 100% India

Guckenheimer Enterprises Inc 100%

Innovative and Payroll Advisory Services Pvt. Ltd.

46%

2)

ISS C&S Building Maintenance Corporation 100%

ISS Facility Services India Pvt. Ltd.

100%

ISS Facility Services California, Inc 100%

ISS SDB Security Services Pvt. Ltd.

46%

2)

ISS Holding Inc 100%

Modern Protection & Investigations Pvt. Ltd.

46%

2)

ISS TMC Services, Inc 100%

ISS Support Services Pvt. Ltd.

100%

ISS Uniguard Security Inc. 100%

ISS Facility Services Inc. (CA)

100%

Indonesia

PT ISS Facility Services 49%

2)

Asia & Pacific PT ISS Indonesia 100%

PT ISS Jasa Fasilitas 0%

2)

Australia & New Zealand

ISS Facility Management Pty Limited 100% Singapore

ISS Facility Services Australia Ltd. 100%

ISS Catering Services Pte. Ltd. 100%

ISS Facility Services Pty Ltd.

100% ISS Facility Services Pte. Ltd. 100%

ISS Health Services Pty Ltd. 100% ISS Hydroculture Pte. Ltd. 100%

ISS Hospitality Pty Limited 100% ISS M&E Pte. Ltd. 100%

ISS Integrated Services Pty Ltd. 100%

ISS Property Services Pty Ltd. 100% Discontinued operations

ISS Security Pty Ltd. 100%

Pacific Invest December 2004 Pty Ltd. 100%

Brunei

Pacific Service Solutions Pty Ltd. 100% ISS Facility Services Sdn. Bhd. 50%

2)

ISS Facilities Services Ltd. 100%

ISS Holdings NZ Ltd. 100% Portugal

ISS Facility Services G. eM de E., Lda 100%

China

ISS Facility Services (Shanghai) Ltd. 100% Russia

ISS Hongrun (Shanghai) Cleaning Services Limited 100% Facility Services RUS LLC 100%

Shanghai B&A Property Management Co., Ltd. 100%

Shanghai B&A Security Co., Ltd. 100%

Taiwan

Shanghai ISS Catering Management Ltd. 100%

ISS Facility Services Ltd. 100%

ISS Security Ltd. 100%

Notes

1)

Joint venture

2)

By virtue of the governance structure, the Group has the power to govern the financial and operating policies of the company.

Consequently, the company is consolidated as a subsidiary.

3)

ISS Lending A/S applies §78a of the Danish Financial Statements Act. Consequently, their annual report is prepared in accordance with the

requirements for Class B companies. ISS Global A/S is liable for all ISS Lendings A/S's current and future obligations.

PARENT COMPANY FINANCIAL STATEMENTS 101

102

103

104

105

1

Significant accounting policies

106

2

Significant accounting estimates and judgements

106

3

Other operating income and expenses, net

106

4

Fees to auditors

107

5

Other expenses

107

6

Financial income and expenses

107

7

Income tax

108

8

Investments in subsidiaries and joint ventures

108

9

Deferred tax 110

10

Loans and borrowings 110

11

Remuneration to the Board of Directors and the Executive

Group Management

111

12

Contingent liabilities 111

13

Financial risk management 112

14

Interest rate risk 112

15

Liquidity risk 113

16

Currency risk 113

17

Related parties 114

18

New standards and interpretations not yet implemented 115

19

Subsidiaries and joint ventures 115

Primary statements

Other required disclosures

Accounting policies

Statement of profit or loss

Statement of financial position

Statement of profit or loss

Statement of comprehensive income

Statement of cash flows

Statement of financial position

Statement of changes in equity

Parent

company

financial

statements

PARENT COMPANY FINANCIAL STATEMENTS 102

Statement of profit or loss

1 January – 31 December

(DKKm) Note 2021

2020

Other operating income and expenses, net 3, 4 25 35

Operating profit before other items 25

35

Other income and expenses, net 5 (52)

(5)

Operating profit (27)

30

Income from subsidiaries and joint ventures 8 (22)

(1,762)

Financial income 6 547 911

Financial expenses 6 (975) (932)

Profit before tax

(477) (1,753)

Income tax

7

(4) 10

Net profit (481) (1,743)

1 January – 31 December

(DKKm)

2021 2020

Net profit (481) (1,743)

Comprehensive income

(481) (1,743)

Statement of comprehensive income

PARENT COMPANY FINANCIAL STATEMENTS 103

Statement of cash flows

1 January – 31 December

(DKKm) Note 2021 2020

Operating profit before other items 25 35

Changes in working capital

(84)

(43)

Other expenses paid

(11) (5)

Interest received from companies within the ISS Group

259 206

Interest received, external

3 0

Interest paid to companies within the ISS Group

(87) (43)

Interest paid, external

(284)

(356)

Income tax and joint taxation contribution received/(paid), net (1) 10

Cash flow from operating activities (180) (196)

Payment of earn-out (76) (99)

Capital increase in subsidiaries and joint ventures

8

(586) (3,107)

Divestment and liquidation of subsidiaries and joint ventures

8 283 623

Dividends received from subsidiaries and joint ventures

8 241 611

Cash flow from investing activities

(138)

(1,972)

Repayment of bonds

10

(1,577) (2,234)

Other financial payments, net

10 (130)

118

Capital increase

-

5,000

Payments (to)/from companies within the ISS Group, net

2,144

(53)

Cash flow from financing activities 437 2,831

Total cash flow 119 663

Cash and cash equivalents at 1 January

796 133

Total cash flow

119 663

Foreign exchange adjustments

- -

Cash and cash equivalents at 31 December 915 796

PARENT COMPANY FINANCIAL STATEMENTS 104

Statement of financial position

At 31 December

(DKKm) Note 2021 2020

Assets

Investments in subsidiaries and joint ventures 8 22,676 22,188

Receivables from companies within the ISS Group 8,196 8,521

Other financial assets

118

-

Deferred tax assets 9 12 10

Non-current assets 31,002 30,719

Receivables from companies within the ISS Group 2,914 3,181

Other receivables 180

163

Cash and cash equivalents 915 796

Investments in subsidiaries and joint ventures held for sale 8 150 459

Current assets 4,159 4,599

Total assets 35,161 35,318

Equity and liability

Equity

9,215 9,696

Loans and borrowings 10

14,067 15,537

Non-current liabilities 14,067 15,537

Loans and borrowings 10 11,692 9,694

Other liabilities 187 391

Current liabilities 11,879 10,085

Total liabilities 25,946 25,622

Total equity and liabilities 35,161 35,318

PARENT COMPANY FINANCIAL STATEMENTS 105

1 January – 31 December

(DKKm)

Note

Share

capital

Retained

earnings

Total

2021

Equity at 1 January

180

9,516

9,696

Net profit

-

(481)

Comprehensive income

- (481) (481)

Changes in equity -

(481)

Equity at 31 december 180 9,035

9,215

2020

Equity at 1 January

180 4,959 5,139

Net profit - (1,743) (1,743)

Comprehensive income

- (1,743) (1,743)

Capital increase - 6,300 6,300

Transactions with the owner

- 6,300 6,300

Changes in equity - 4,557 4,557

Equity at 31 December

180 9,516

9,696

Statement of changes in equity

PARENT COMPANY FINANCIAL STATEMENTS 106

1 Significant accounting policies

The financial statements of ISS Global A/S have been prepared in accordance with IFRS as adopted by the EU and additional

requirements of the Danish Financial Statements Act. In addition, the financial statements have been prepared in compliance with

the IFRSs issued by the IASB.

Changes in accounting policies are described in 7.2 to the consolidated financial statements.

Accounting policies

With the exception of the items described below, the accounting policies for ISS Global A/S are identical to the Group's accounting

policies, which are described in the notes to the consolidated financial statements.

Income from subsidiaries and joint ventures comprises dividends, impairment losses, reversal of prior years' impairment losses

and gains and losses on divestment and liquidation of subsidiaries and joint ventures. Dividends are recognised in the income

statement in the financial year in which the dividend is declared. If dividends declared exceed the total comprehensive income for

the year, an impairment test is performed.

Investments in subsidiaries and joint ventures are measured at cost, which comprises consideration transferred measured at fair

value and any directly attributable transaction costs. If there is indication of impairment, an impairment test is performed as

described in the accounting policies in 3.8 to the consolidated financial statements. Where the recoverable amount is lower than

the cost, investments are written down to this lower value. An impairment loss is reversed if there has been a change in the

estimates used to determine the recoverable amount, but only to the extent that the recoverable amount does not exceed the

original cost.

Tax As required by Danish legislation ISS Global A/S is jointly taxed with all Danish resident subsidiaries. Joint taxation contributions

to/from jointly taxed companies are recognised in the income statement in Income tax and in the statement of financial position in

Receivables from or Debt to companies within the ISS Group.

Companies which utilise tax losses in other companies pay joint taxation contribution to ISS A/S (the administration company)

equivalent to the tax base of the tax losses utilised. Companies whose tax losses are utilised by other companies receive joint

taxation contributions from ISS A/S equivalent to the tax base of the tax losses utilised (full absorption).

Derivative financial intruments are initially recognised at fair value at the trade date and subsequently remeasured at fair value.

The fair value of derivative financial instruments is calculated on the basis of current market data and in accordance with generally

accepted valuation methods. Measurement is categorised as Level 2 in the fair value hierarchy as it is not based on observable

market data.

For derivative financial instruments used as net investment hedges at Group level, changes in the fair value are recognised in

Financial income or Financial expenses.

The fair value of derivative financial instruments is presented in Other receivables or Loans and borrowings.

2 Significant accounting estimates and judgements

Significant accounting estimates and judgements relating to the applied accounting policies for ISS Global A/S are the same as for

the Group to the extent of similar accounting items, see 7.1 to the consolidated financial statements for a description. The specific

risks for ISS Global A/S are described in the notes to the financial statements of the parent company.

Investments in subsidiaries and joint ventures are tested for impairment when there is an indication that the investments may be

impaired. The assessment of whether there is an indication of impairment is based on both external and internal sources of

information such as performance of the subsidiaries and joint ventures, significant decline in market values etc.

3 Other operating income and expenses, net

Other operating income and expenses, net mainly comprise procurement bonuses and revaluation of receivables from companies

within the ISS Group.

Basis of preparation

Changes in accounting policies

PARENT COMPANY FINANCIAL STATEMENTS 107

4 Fees to auditors

(DKKm)

2021

2020

Statutory audit 0 0

Other assurance services 1

1

Total 1

1

5 Other income and expenses, net

(DKKm)

2021

2020

Other (52) (5)

Other expenses (52) (5)

6 Financial income and expenses

(DKKm)

2021 2020

Interest income on cash and cash equivalents 10 0

Interest income from companies within the ISS Group 260 200

Fair value adjustments of net investment hedges - 180

Foreign exchange gains

277 531

Financial income

547 911

Interest expenses on loans and borrowings (271) (336)

Redemption premium, bonds (90) -

Forward premiums, currency swaps (15) (15)

Fair value adjustments of net investment hedges (191) -

Interest expenses to companies within the ISS Group (87) (63)

Amortisation of financing fees (non-cash) (25)

(22)

Bank fees

(9) (11)

Foreign exchange losses (287)

(485)

Financial expenses (975) (932)

Other assurance services

comprised work related to interim financial statements and other assurance services.

Forward premiums on currency swaps ISS uses currency swaps to hedge the exposure to currency risk primarily arising from

intercompany loans. The cost of hedging in 2021 increased compared to 2020, primarily driven by the hedging of TRY exposure.

Foreign exchange gains and losses mainly related to exchange rate movements on intercompany loans to foreign subsidiaries as

well as on external loans and borrowings denominated in currencies other than DKK. In addition, fair value adjustments of

currency swaps were included.

Interest expenses on loans and borrowings

comprised mainly interest on issued bonds. In addition, commitment fees and

amortisation of financing fees amount to DKK 85 million (2020: DKK 75 million) were included. The decrease in 2021 was driven by

a lower utilisation than in 2020.

Other related to the Group's acquisition of Rönesans Facility Management Company in Turkey and comprised transaction

incentives to management in ISS Turkey and fees to external advisors. In 2020, other comprised divestment-related costs in

connection with the divestment of the indirectly owned subsidiary in Israel.

Redemption premium, bonds related to the repurchase of EUR 200 million of the total outstanding EUR 500 million EMTN bonds

maturing 2024.

PARENT COMPANY FINANCIAL STATEMENTS 108

7 Income tax

(DKKm)

2021

2020

Current tax

4

9

Deferred tax

(1) (2)

Prior year adjustments, net

1

(17)

Income tax

4

(10)

In % 2021 2020

Statutory income tax rate in Denmark 22.0 % 22.0 %

Income from subsidiaries and joint ventures (1.0)% (24.9)%

Non-tax deductible expenses less non-taxable income (22.0)% 2.5 %

Prior year adjustments, net

0.2 % 1.0 %

Effective tax rate

(0.8)% 0.6 %

8 Investments in subsidiaries and joint ventures

(DKKm)

Continuing

operations

Assets held for

sale

Continuing

operations

Assets held for

sale

Cost at 1 January

30,634 954 27,815

2,137

Additions

1)

932 22 2,989 221

Disposals

(355)

(578)

(0) (1,574)

Reclassification to assets held for sale

191 (191) (170)

170

Cost at 31 December

31,402

207

30,634 954

Revaluation at 1 January

(8,446) (495)

(5,986)

(1,533)

Impairment losses

(400) -

(2,596)

(181)

Reversal of prior years' impairment losses

120 81 - 15

Disposals

- 357 - 1,340

Reclassification to assets held for sale

- - 136

(136)

Revaluation at 31 December (8,726) (57) (8,446) (495)

Carrying amount at 31 December 22,676

150 22,188 459

1)

In 2021, DKK 368 million was related to non-cash transactions (2020: DKK 103 million).

Effective tax rate

Additions

In 2021, ISS Global A/S made capital increases mainly in subsidaries in Germany of DKK 483 million, ISS Holding France

A/S of DKK 400 million, Chile of DKK 65 million and Hungary of DKK 13 million. Furthermore, a capital increase was made in

Portugal (held for sale) of DKK 24 million, partly offset by a capital repayment in Hungary of DKK 2 million.

2021

2020

PARENT COMPANY FINANCIAL STATEMENTS 109

8 Investments in subsidiaries and joint ventures (continued)

(DKKm)

Impairment

losses 2021

Recoverable

amount

Applied

discount rate,

net of tax

Investments in subsidiaries and joint ventures (Continuing operations)

France

1)

400 (649) -

Impairment losses

400

Income from subsidiaries and joint ventures

(DKKm)

2021 2020

Received dividends

1)

241

611

Proceeds from divestment and liquidation of subsidiaries and joint ventures 512 623

Carrying amount of disposed subsidiaries and joint ventures (576) (234)

Impairment losses

(400) (2,777)

Reversal of prior years' impairment losses 201 15

Income from subsidiaries and joint ventures (22) (1,762)

Subsidiaries and joint ventures

For a list of significant directly owned subsidiaries and joint ventures, see note 19, Subsidiaries and joint ventures.

Disposals In 2021, ISS Global A/S sold their subsidaries (assets held for sale) in Slovakia, the Czech Republic, Hungary, Slovenia and

the Philippines. Furthermore, as part of the Group's acquisition of the Rönesans Facility Management Company in Turkey, ISS

Global A/S sold a minority shareholding in their Turkish subsidary to Actera (39.9%) and local Management (10.0%). In total the

divestments resulted in a net loss of DKK 64 million (2020: net gain of DKK 389 million).

The investment in France was impaired by DKK 400 million mainly driven by a decrease in the recoverable amount of the French

activities due to a reassessment of the business case and an increase in the applied WACC. During the first six months of 2021,

transparency around the recoverability from Covid-19 improved. It also became clearer, that the pace of recovery within the most

impacted customer segments would remain slow. Accordingly, the risk reflected in the applied WACC was increased. Combined

with increasing interest rates, this led to a higher applied WACC at 30 June 2021. Additionally, compared to previous assessments,

management lowered the growth and margin expectations in 2023-2025, while assumptions for the terminal period remained

unchanged.

Reversal of prior years' impairment losses In 2021, losses of DKK 120 million on the investment in ISS Lending A/S (continuing

operations), DKK 79 million in Portugal (asset held for sale) and DKK 2 million in Hungary (asset held for sale) were reversed. In

2020, losses of DKK 15 million were reversed in Hungary (asset held for sale) in connection with repayment of part of their capital.

1)

The French activities are owned through a holding company, ISS Holding France A/S. The recoverable amount is based on the equity at 31 December

2021 in this holding company.

Reclassification to assets held for sale In 2021, it was decided to descope Chile from the divestment programme and cease the

classification as asset held for sale. Chile is owned directly by ISS Global A/S and consequently the subsidiary has been reclassified

to continuing operations.

1)

In 2021, dividends of DKK 0 million were received from subsidaries classified as held for sale (2020: DKK 64 million).

Impairment losses The recoverable amount of investments in subsidiaries and joint ventures is determined on the basis of the

value-in-use adjusted for net debt. Value-in-use applied in the impairment test is equal to value-in-use established for the Group,

see 3.8 to the consolidated financial statements. Subsidiaries classified as held for sale are measured at the lower of their carrying

amount and fair value less costs to sell. Impairment losses recognised in 2021, see below.

PARENT COMPANY FINANCIAL STATEMENTS 110

9 Deferred tax

Development in deferred tax

(DKKm)

2021 2020

Deferred tax assets/(liabilities) at 1 January 10

(15)

Prior year adjustments, net 1 23

Tax on profit before tax 1 2

Deferred tax assets at 31 December 12

10

10 Loans and borrowings

2021 2020

Issued bonds 10,369 11,847

Bank loans (14)

(17)

Debt to companies within the ISS Group 15,389 13,401

Derivatives

15 -

Total

25,759 25,231

Non-current liabilities 14,067 15,537

Current liabilities 11,692 9,694

Loans and borrowings 25,759

25,231

Cash and cash equivalents and other financial items

1)

(12,025) (12,503)

Net debt 13,734 12,728

Changes in loans and borrowings

(DKKm)

1 January FX

Cash

flow

FV adj. Other

31

December

2021

Issued bonds 11,847 (5) (1,577) -

104 10,369

Debt to companies within the ISS Group 13,401 (156) 2,144 - - 15,389

Bank loans and other (17) - (130) 186 (53) (14)

Derivatives - -

- 15 - 15

Total 25,231 (161) 437 201 51 25,759

2020

Issued bonds 14,123 (56) (2,234) - 14 11,847

Debt to companies within the ISS Group

1)

11,497 (156)

3,390 - (1,330) 13,401

Bank loans and other (7) -

118 (216) 88 (17)

Total 25,613 (212) 1,274 (216) (1,228) 25,231

1)

Other includes conversion of intercompany loan from ISS World Services A/S of DKK 1,300 million.

Deferred tax assets include provisions for uncertain tax positions. ISS Global A/S has no recognised or unrecognised deferred tax

assets regarding tax losses carried forward.

1)

Includes certain receivables from companies within the ISS Group of DKK 11,110 million (2020: DKK 11,702 million) and value of currency

swaps of DKK 0 million (2020: DKK 5 million). The average interest rate related to receivables from companies within the ISS Group was 2.05%

(2020: 1.90%).

PARENT COMPANY FINANCIAL STATEMENTS 111

10 Loans and borrowings (continued)

Fair value

Financing fees

11 Remuneration to the Board of Directors and the Executive Group Management

12 Contingent liabilities

Senior facility agreement

EMTNs (EUR 500 million) maturing in 2025

ISS Global A/S and certain Danish Group companies are jointly registered for VAT and are jointly liable for the payment hereof.

The fair value of loans and borrowings amounted to DKK 26,088 million (2020: DKK 25,538 million). The fair value of bonds is based

on the quoted market price on the Luxembourg Stock Exchange and measurement is categorised as Level 1 in the fair value

hierarchy. For the remaining part of the loans and borrowings fair value is equal to the nominal value as illustrated in note 13,

Financial risk management.

In 2021, financing fees amounting to DKK 0 million (2020: DKK 33 million) have been recognised in loans and borrowings while

financing fees of DKK 25 million (2020: DKK 22 milllion) have been amortised and recognised in financial expenses. Accumulated

financing fees recognised in loans and borrowings on 31 December 2021 amounted to DKK 56 million (2020: DKK 104 million).

Key management personnel of the Group as defined in 5.1 to the consolidated financial statements are also considered key

management personnel of the parent.

Remuneration to key management personnel is specified in 5.1 to the consolidated financial statements.

VAT

ISS Global A/S guarantees the borrowings under the unsecured senior facility agreement.

Parent company guarantees

ISS Global A/S has credit facilities in place totalling DKK 300 million (2020: DKK 300 million) which can be used to issue guarantees

for subsidiaries' local bank overdrafts. As per 31 December 2021, DKK 26 million was utilised (2020: DKK 50 million). Furthermore,

ISS Global A/S has issued parent guarantees and performance bonds for various subsidiaries' current and future financial liabilities

and obligations under customer contracts amounting to DKK 7.5 billion (2020: DKK 8.0 billion). These financial liabilities are

primarily local bank overdrafts, bank guarantee lines and pension liabilities.

Withholding taxes

ISS Global A/S is jointly taxed with all Danish resident subsidiaries. ISS Global A/S and the companies within the joint taxation have

a joint and unlimited liability of Danish corporate and withholding taxes related to dividends, interests and royalties. As per 31

December 2021 Danish corporate and withholding taxes within the joint taxation amounted to DKK 0 million (2020: DKK 0 million).

Any subsequent adjustments to Danish withholding taxes may change this joint and unlimited liability.

ISS Global A/S guarantees the EMTN bonds for a principal amount of EUR 500 million maturing in 2025 issued by ISS Finance B.V.,

a 100% owned subsidiary.

PARENT COMPANY FINANCIAL STATEMENTS 112

13 Financial risk management

Credit risk

14 Interest rate risk

2021 2020

Nominal

interest rate

Currency

Year of

maturity

Nominal

value

Carrying

amount

Carrying

amount

Issued bonds (fixed interest rate)

EMTNs (EUR 300 million) 2.125% EUR 2024 2,231 2,226

3,709

EMTNs (EUR 500 million) 0.875% EUR 2026 3,718 3,695

3,690

EMTNs (EUR 600 million) 1.500% EUR 2027 4,462 4,448

4,448

10,411

10,369 11,847

Bank loans (floating interest rate)

Revolving Credit Facility (EUR 1,000 million) Libor + 1.75%

1)

Multi 2024 -

(14) (17)

- (14) (17)

Intra-group (floating interest rate)

- Multi 2024 15,389 15,389 13,401

15,389 15,389

13,401

The estimate was based on ISS Global A/S's floating rate loans and borrowings, i.e. disregarding cash and cash equivalents, as the

level at 31 December is typically the highest in the year and not a representative level for the purpose of this analysis. The analysis

assumes that all other variables remain constant.

Interest rate sensitivity

An increase in relevant interest rates of 1%-point would have decreased net profit by DKK 143 million (2020: decreased by DKK 125

million).

ISS Global A/S's financial risks are managed centrally by Group Treasury based on the treasury policy approved by the Board of

Directors of ISS A/S. The objectives and policies for measuring and managing exposure to financial risks is described in 4.4 to the

consolidated financial statements. The risks specific to ISS Global A/S related to interest rate risk, liquidity risk and currency risks

are described below in note 14, 15 and 16, respectively.

Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial

instruments. Exposure relates to bank loans with floating interest rates. ISS Global A/S's exposure towards interest rates is

illustrated below, where a breakdown of ISS Global A/S's loans and borrowings in floating and fixed rates is provided. The interest

rate exposure to floating interest rates is primarily in EUR.

(DKKm)

Debt to companies within the ISS Group

1)

In addition, a utilisation fee applies based on the actual level of utilisation.

The interest rate risk is measured by the duration of the gross debt (fixed-rate period). As at 31 December 2021, the duration of

gross debt was approximately 1.9 years (2020: 2.6 years).

At 31 December 2021, the exposure to credit risk related to cash and cash equivalents, loans to companies within the ISS Group

and other financial items was DKK 12,025 million (2020: DKK 12,503 million), see note 10, Loans and borrowings. Exposure to credit

risk on loans to companies within the ISS Group is managed at Group level. As these loans are controlled by the Group and part of

the Group’s capital management, expected credit losses are considered to be insignificant.

PARENT COMPANY FINANCIAL STATEMENTS 113

15 Liquidity risk

Liquidity reserves

Contractual maturities of financial liabilities

(DKKm)

Carrying

amount

Contractual

cash flows

< 1 year

1-2 years 2-3 years 3-4 years 4-5 years > 5 years

2021

Issued bonds and bank loans 10,355 11,073 147 147

2,374

99

3,800 4,506

Debt to companies within the ISS Group 15,389

15,602

11,789 46 46 3,721 -

-

Other financial liabilities 96 96 96 - - - - -

Total financial liabilities

25,840 26,771 12,032 193 2,420 3,820 3,800 4,506

2020

Issued bonds and bank loans 11,830 12,841 179

179 179 3,892 100

8,312

Debt to companies within the ISS Group

13,401

13,825 9,943 46 46

46

3,744 -

Other financial liabilities

263 263

154 21 88 - - -

Total financial liabilities 25,494 26,929

10,276 246 313 3,938

3,844 8,312

16 Currency risk

Currency risk is the risk that arises from changes in exchange rates and affects ISS Global A/S's result, investment or value of

financial instruments.

To a limited extent ISS Global A/S is exposed to currency risk on loans and borrowings (external) that are denominated in

currencies other than DKK as well as intercompany loans to foreign subsidiaries as these are typically denominated in the

functional currency of the subsidiary.

At 31 December 2021, 83.2% (2020: 87.2%) of ISS Global A/S's loans and borrowings were denominated in EUR or DKK.

The contractual maturities of financial liabilities, based on undiscounted contractual cash flows, are shown in the table. The

undiscounted contractual cash flows include expected interest payments, estimated based on market expectations at 31

December. The risk implied from the values in the maturity table below reflects the one-sided scenario of cash outflows only.

Liquidity risk results from ISS Global A/S's potential inability or difficulty in meeting the contractual obligations associated with its

financial liabilities due to insufficient liquidity.

ISS Global A/S's liquidity reserves mainly consist of funds (cash and cash equivalents less not readily available or restricted cash)

and unused credit facilities. The level of cash and cash equivalents is typically highest at 31 December and not a representative

level for the rest of the year. As at 31 December 2021, ISS Global A/S's liquid reserves consisted of readily available liquid funds of

DKK 915 million (2020: DKK 796 million) and unused revolving credit facilities of DKK 7,312 million (2020: DKK 12,380 million) where

the majority is available for drawing until 3 November 2024.

PARENT COMPANY FINANCIAL STATEMENTS 114

16 Currency risk (continued)

(DKKm)

Exposure,

net

Net

profit

2021

EUR/DKK (14,821)

6,864

(7,957) 1% (80)

GBP/DKK (188) (1,099) (1,287) 10% (129)

USD/DKK 1,435 (2,259) (824) 10% (82)

CHF/DKK (935) 218 (717) 10% (72)

Other/DKK (691) 827 136 10%

14

Total (15,200) 4,551 (10,649)

2020

EUR/DKK (15,752) 6,854 (8,898) 1% (89)

GBP/DKK

291

(1,516)

(1,225)

10% (123)

USD/DKK 1,561 (2,314) (753) 10% (75)

CHF/DKK (294) (389)

(683) 10% (68)

Other/DKK (493) 695

202 10% 20

Total

(14,687) 3,330 (11,357)

Net investment hedges

17 Related parties

Loans and borrowings – foreign currency sensitivity

Increase

in FX

Currency

swaps

(contractual)

Currency

exposure

(nominal)

A change in relevant currencies, with all other variables held constant, would have impacted net profit with the amounts below.

The analysis is based on the ISS Group's internal monitoring of currency exposure on loans and borrowings, intercompany loans

and cash and cash equivalents.

Sensitivity

Net investment hedges at Group level are disclosed in note 4.7 to the consolidated financial statements. At Group level changes

in the fair value of derivative financial instruments designated as net investment hedges are recognised in Other comprehensive

income. In ISS Global A/S the change in fair value is recognised in the income statement.

• ISS Global A/S received dividends in total of DKK 241 million (2020: DKK 611 million) from companies within the ISS Group,

see note 8, Investments in subsidiaries and joint ventures.

• ISS Global A/S increased the share capital in seven subsidiaries by DKK 986 million (2020: DKK 2,967 million in five subsidiaries)

and founded no new subsidiaries (2020: founded three subsidaries for DKK 22 million), see note 8, Investments in subsidiaries

and joint ventures.

In addition to the description in note 6.3 to the consolidated financial statements of related parties and transactions with these,

related parties of ISS Global A/S comprise ISS World Services A/S and its subsidiaries, associates and joint ventures, see 7.5 to the

consolidated financial statements.

• ISS Global A/S received/paid interest from/to companies within the ISS Group, see note 6, Financial income and expenses.

• ISS Global A/S paid joint taxation contribution equal to 22% of taxable income to jointly taxed Danish resident subsidiaries.

In 2021, ISS Global A/S had the following transactions with other related parties, which were all made on market terms:

• Debt to companies within the ISS Group is disclosed in note 10, Loans and Borrowings.

• ISS Global A/S's short-term receivable from subsidiaries was DKK 2,914 million (2020: DKK 3,181 million).

PARENT COMPANY FINANCIAL STATEMENTS 115

18 New standards and interpretations not yet implemented

19 Subsidiaries and joint ventures

Directly owned subsidiaries and joint ventures

ISS Facility Services Australia Ltd. Australia

100%

Pacific Invest December 2004 Pty Ltd. Australia 100%

ISS Austria Holding GmbH Austria 100%

ISS N.V. Belgium 100%

ISS Chile S.A. Chile 100%

ISS Greater China Ltd. China 100%

ISS Facility Services A/S Denmark 100%

ISS Global Management A/S Denmark 100%

ISS Holding France A/S Denmark 100%

ISS Lending A/S Denmark 100%

Signal Arkitekter ApS Denmark 100%

ISS Palvelut Holding Oy Finland

100%

ISS Facility Services GmbH Germany 100%

ISS Facility Services India Pvt. Ltd. India 100%

PT ISS Indonesia Indonesia

100%

PT ISS Catering Services Indonesia 49%

ISS Ireland Holding Limited. Ireland 100%

ISS Facility Services S.r.l. Italy 100%

Nihon ISS KK Japan 100%

ISS Lietuva UAB Lithuania 100%

ISS Centro América, S de RL de CV Mexico 100%

ISS Holding Nederland B.V. Netherlands 100%

ISS Finance B.V. Netherlands 100%

ISS Holdings NZ Ltd. New Zealand

100%

ISS Holding AS Norway 100%

ISS Facility Services Sp. Z.o.o. Poland 100%

ISS Asia Pacific Pte. Ltd. Singapore 100%

ISS Facility Services Pte. Ltd. Singapore 100%

ISS Facility Services (Pty) Limited South Africa 100%

Integrated Service Solutions S.L. Spain 100%

ISS Facility Services Holding AB Sweden 100%

ISS Holding AG Switzerland

100%

ISS Tesis Yönetim Hizmetleri A.Ş.

Turkey 50%

ISS UK Holding Limited. United Kingdom 100%

Directly owned subsidiaries and joint ventures classified as held for sale

ISS Facility Services Sdn. Bhd. Brunei 100%

ISS Facility Services, Lda. Portugal 100%

FS East Oy Russia 100%

New standards and interpretations not yet implemented are described in 7.4 to the consolidated financial statements.

FINANCIAL STATEMENTS 116

Management statement

Copenhagen, 17 March 2022

The Board of Directors and the Executive Group

Management Board have today discussed and ap-

proved the annual report of ISS Global A/S for the

financial year 2021.

The annual report has been prepared in accordance

with International Financial Reporting Standards as

adopted by the EU and additional requirements of

the Danish Financial Statements Act.

It is our opinion that the consolidated financial state-

ments and the Parent company financial statements

give a true and fair view of the Group’s and the Par-

ent company’s financial position at 31 December

2021 and of the results of the Group’s and the Par-

ent company’s operations and cash flows for the fi-

nancial year 1 January – 31 December 2021.

In our opinion, the Management review includes a

fair review of the development in the Group’s and

the Parent company’s operations and financial con-

ditions, the results for the year, cash flows and fi-

nancial position as well as a description of the most

significant risks and uncertainty factors that the

Group and the Parent company face.

In our opinion, the annual report of ISS Global A/S

for the financial year 2021 identified as ISS-Global-

2021-12-31-en.zip has been prepared, in all mate-

rial respects, in compliance with the ESEF-regula-

tion.

We recommend that the annual report be approved

at the annual general meeting.

Managing Director

Kristoffer Lykke-Olesen

Board of Directors

Jacob Aarup-Andersen

Chair

Kasper Fangel

Corinna Refsgaard

Bjørn Raasteen

FINANCIAL STATEMENTS 117

Independent auditors’ report

To the shareholder of ISS Global A/S

Opinion

We have audited the consolidated financial state-

ments and the parent company financial statements

of ISS Global A/S for the financial year 1 January –

31 December 2021, pp. 28-115, which comprise

statement of profit or loss, statement of comprehen-

sive income, statement of cash flows, statement of fi-

nancial position, statement of changes in equity and

notes, including accounting policies for the Group

and the Parent Company. The consolidated financial

statements and the parent company financial state-

ments are prepared in accordance with International

Financial Reporting Standards as adopted by the EU

and additional requirements of the Danish Financial

Statements Act.

In our opinion, the consolidated financial statements

and the parent company financial statements give a

true and fair view of the financial position of the

Group and the Parent Company at 31 December

2021 and of the results of the Group’s and the Parent

Company’s operations and cash flows for the finan-

cial year 1 January – 31 December 2021 in accord-

ance with International Financial Reporting Stand-

ards as adopted by the EU and additional require-

ments of the Danish Financial Statements Act.

Our opinion is consistent with our long-form audit re-

port to the Audit and Risk Committee and the Board

of Directors.

Basis for opinion

We conducted our audit in accordance with Interna-

tional Standards on Auditing (ISAs) and additional re-

quirements applicable in Denmark. Our responsibili-

ties under those standards and requirements are fur-

ther described in the “Auditor’s responsibilities for the

audit of the consolidated financial statements and the

parent company financial statements” (hereinafter

collectively referred to as “the financial statements”)

section of our report. We believe that the audit evi-

dence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with

the International Ethics Standards Board for Account-

ants’ Code of Ethics for Professional Accountants

(IESBA Code) and additional requirements applica-

ble in Denmark, and we have fulfilled our other ethi-

cal responsibilities in accordance with these rules

and requirements.

To the best of our knowledge, we have not provided

any prohibited non-audit services as described in ar-

ticle 5(1) of Regulation (EU) no. 537/2014.

Appointment of auditor

Subsequent to ISS Global A/S being listed on Bourse

de Luxembourg, we were initially appointed as audi-

tor of ISS Global A/S on 1 April 2003. We have been

reappointed annually by resolution of the general

meeting for a total consecutive period of eighteen

years up until the financial year 2021.

Key audit matters

Key audit matters are those matters that, in our pro-

fessional judgement, were of most significance in our

audit of the financial statements for the financial year

2021. These matters were addressed during our au-

dit of the financial statements as a whole, and in

forming our opinion thereon. We do not provide a

separate opinion on these matters. For each matter

below, our description of how our audit addressed

the matter is provided in that context.

We have fulfilled our responsibilities described in the

“Auditor’s responsibilities for the audit of the financial

statements” section of our report, including in relation

to the key audit matters. Accordingly, our audit in-

cluded the design and performance of procedures to

respond to our assessment of the risks of material

misstatement of the financial statements. The results

of our audit procedures, including the procedures

performed to address the matters below, provide the

basis for our audit opinion on the financial state-

ments.

Revenue from contracts with customers, including

cut-off and accrual of revenue and onerous contracts

Revenue from contracts is recognised as the ser-

vices are rendered to the customers. Some contracts

require the Group to incur significant transition and

mobilisation costs at contract inception which are

capitalised and amortised over a multi-annual con-

tract term. Accordingly, appropriate cut-off and ac-

crual of revenue and capitalisation and amortisation

of transition and mobilisation costs is critical and in-

volve management judgement, especially in relation

to the more integrated and complex facility service

FINANCIAL STATEMENTS 118

contracts. Further, the assessment of whether a con-

tract may be considered onerous involves manage-

ment judgement in making accounting estimates

about future contract profitability, including the deter-

mination of the total contract revenue, contract period

and the unavoidable costs of meeting the obligations

under the contract.

Due to the inherent uncertainty involved in the cut off

and accrual of revenue, the assessment of whether

transition and mobilisation costs meet the criteria to

be capitalised and the determination of the contract

period and the future contract profitability, including

the uncertainty relating to estimating the impact from

Covid-19, we considered the accounting for revenue

from contracts with customers, including cut-off and

accrual of revenue and onerous contracts, to be a

key audit matter.

For details on revenue from contracts with custom-

ers, transition and mobilisation costs and provisions

for onerous contracts, reference is made to notes

1.2, 2.2, 2.3 and 2.6 in the consolidated financial

statements.

In response to the identified risks, our audit proce-

dures included, among others:

•

Test on a sample basis of accrued revenue (un-

billed receivables) to supporting documentation,

including procedures such as: Inspection of proof

of work done, review of contracts with customers,

comparison of amounts accrued to subsequent in-

voices and cash receipts.

•

Test on a sample basis of capitalised transition

and mobilisation costs, including procedures such

as: Inspection of proof of costs incurred, review of

contracts with customers, evaluation of manage-

ment’s assessment of costs meeting the criteria to

be recognised.

•

Evaluation of management’s process to identify

and quantify onerous contracts. Our evaluation in-

cluded inquiries to local management responsible

for carrying out the identification process at coun-

try level, review of documentation of manage-

ment’s analysis as well as our own analytical pro-

cedures over contract margins.

•

Test on a sample of provisions for onerous con-

tracts, including procedures such as: Review of

the relevant contract and management’s estimate

of the future contract revenue and unavoidable

cost, assessment of the assumptions applied by

management to estimate the future contract reve-

nue, including the expected Covid-19 impact, con-

tract term including termination and extension op-

tions and unavoidable cost, comparison of the rev-

enue assumptions used to the services and fees

specified in the contract, comparison of unavoida-

ble cost assumptions used to underlying cost pro-

jections and actual costs incurred historically as

well as testing the completeness and accuracy of

the underlying cost projections.

Valuation of intangible assets

The carrying amounts of goodwill and customer con-

tracts related to prior years’ acquisitions comprise a

significant part of the consolidated statement of fi-

nancial position. The cash-generating units in which

goodwill and customer contracts are included are im-

pairment tested by Management on an annual basis.

The impairment tests are based on Management’s

estimates of among others future profitability,

long-term growth and discount rate. Due to the inher-

ent uncertainty involved in determining the net pre-

sent value of future cash flows, including the uncer-

tainty relating to estimating the impact from Covid-19,

we considered these impairment tests to be a key

audit matter. For details on the impairment tests per-

formed by Management reference is made to notes

3.6, 3.7 and 3.8 in the consolidated financial state-

ments.

In response to the identified risks, our audit proce-

dures included, among others, testing the mathemati-

cal accuracy of the discounted cash flow model and

comparing forecasted profitability to board approved

budgets. We evaluated the assumptions and meth-

odologies used in the discounted cash flow model, in

particular those relating to the forecasted revenue

growth and operating margin, including comparing

with historical growth rates and assessed impact of

Covid-19. We compared the assumptions applied to

externally derived data as well as our own assess-

ments in relation to key inputs such as projected eco-

nomic growth and discount rates. Further, we evalu-

ated the sensitivity analysis on the key assumptions

applied. Our audit procedures primarily focused on

cash generating units where likely changes in key as-

sumptions could result in impairment. We further

evaluated the adequacy of disclosures provided by

Management in the financial statements compared to

applicable accounting standards.

Assets and liabilities held for sale and discontinued

operations

When classifying businesses as held for sale and as

discontinued operations in the consolidated financial

statements, Management makes judgments and esti-

mates, including assessment of impairment of the net

assets. Due to the materiality of Management’s dis-

posal plans and inherent uncertainty involved in clas-

sifying and assessing assets and liabilities held for

sale and discontinued operations, we considered

these judgments and estimates as a key audit mat-

ter. For details on the assets and liabilities held for

FINANCIAL STATEMENTS 119

sale and discontinued operations reference is made

to note 3.1 and note 3.2 in the consolidated financial

statements.

In response to the identified risks, our audit proce-

dures included, among others, agreeing the carrying

amounts of the assets and liabilities held for sale to

underlying accounting records, considered Manage-

ment’s criteria for classification of businesses as held

for sale and discontinued operations and reading

draft agreements where relevant, including reviewing

minutes and other relevant documentation of the

sales processes and board decisions. We considered

the impairment assessment made by Management,

including assessment of key assumptions applied

and evaluation of the explanations provided by com-

paring key assumptions to market data, where avail-

able. We further evaluated the adequacy of disclo-

sures provided by Management in the financial state-

ments compared to applicable accounting standards.

Income tax and deferred tax balances

The Group’s operations are subject to income taxes

in various jurisdictions having different tax legislation.

Management makes judgments and estimates in de-

termining the recognition of income taxes and de-

ferred taxes. Given the inherent uncertainty involved

in assessing and estimating the income tax and de-

ferred tax balances, including tax exposures and

write-down of deferred tax assets and given the un-

certainty estimating the impact from Covid-19 on fu-

ture taxable income, we considered these balances

as a key audit matter.

For details on the income tax and deferred tax bal-

ances reference is made to notes 1.4 and 1.5 in the

consolidated financial statements and notes 7 and 9

in the Parent company financial statements.

In response to the identified risks, our audit proce-

dures included review of tax computations in order to

assess the completeness and accuracy of the

amounts recognised as income taxes and deferred

taxes, as well as assessment of correspondence with

tax authorities and evaluation of tax exposures as

well as write-down of deferred tax assets. In respect

of the deferred tax assets recognised in the state-

ment of financial position, we assessed Manage-

ment’s assumptions as to the probability of recover-

ing the assets through taxable income in future years

and available tax planning strategies. We further

evaluated the adequacy of disclosures provided by

Management compared to applicable accounting

standards.

Valuation of investments in and receivables from sub-

sidiaries

The investments in and receivables from subsidiaries

comprise a significant part of the statement of finan-

cial position of the parent company. The valuation of

investments in and receivables from subsidiaries is

based on Management’s assessment of whether in-

dications or objective evidence of impairment exists.

This assessment is based on an assessment of the

net present value of the expected future cash flows

generated by the subsidiaries which is determined on

the basis of, among others, the expected future prof-

itability, long-term growth and discount rate for each

subsidiary. Due to the inherent uncertainty involved

in determining the net present value of expected fu-

ture cash flows, we considered the valuation of in-

vestments in and receivables from subsidiaries to be

a key audit matter. For details on the valuation of in-

vestments in subsidiaries reference is made to note 8

in the parent company financial statements.

In response to the identified risks, our audit proce-

dures included, among others, testing the mathemati-

cal accuracy of the discounted cash flow model and

comparing forecasted profitability to board approved

budgets. We evaluated the assumptions and meth-

odologies used in the discounted cash flow model, in

particular those relating to the forecasted revenue

growth and operating margin, including comparing

with historical growth rates and results as well as as-

sessed impact of Covid-19. We compared the as-

sumptions applied to externally derived data as well

as our own assessments in relation to key inputs

such as projected economic growth and discount

rates. Further, we evaluated the sensitivity analysis

on the key assumptions applied. Our audit proce-

dures primarily focused on investments, where likely

changes in key assumptions could result in impair-

ment. We further evaluated the adequacy of disclo-

sures provided by Management in the parent com-

pany financial statements compared to applicable ac-

counting standards.

Statement on the Management’s review

Management is responsible for the Management’s

review, pp. 2-27.

Our opinion on the financial statements does not

cover the Management’s review, and we do not

express any form of assurance conclusion thereon.

In connection with our audit of the financial state-

ments, our responsibility is to read the Manage-

ment’s review and, in doing so, consider whether the

Management’s review is materially inconsistent with

the financial statements or our knowledge obtained

during the audit, or otherwise appears to be materi-

ally misstated.

FINANCIAL STATEMENTS 120

Moreover, it is our responsibility to consider whether

the Management’s review provides the information

required under the Danish Financial Statements Act.

Based on the work we have performed, we conclude

that the Management’s review is in accordance with

the financial statements and has been prepared in

accordance with the requirements of the Danish Fi-

nancial Statements Act. We did not identify any ma-

terial misstatement of the Management’s review.

Management’s responsibilities for

the financial statements

Management is responsible for the preparation of

consolidated financial statements and parent com-

pany financial statements that give a true and fair

view in accordance with International Financial Re-

porting Standards as adopted by the EU and addi-

tional requirements of the Danish Financial State-

ments Act and for such internal control as Manage-

ment determines is necessary to enable the prepara-

tion of financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, Management

is responsible for assessing the Group’s and the Par-

ent Company’s ability to continue as a going con-

cern, disclosing, as applicable, matters related to go-

ing concern and using the going concern basis of ac-

counting in preparing the financial statements unless

Management either intends to liquidate the Group or

the Parent Company or to cease operations, or has

no realistic alternative but to do so.

Auditor’s responsibilities for the audit

of the financial statements

Our objectives are to obtain reasonable assurance

as to whether the financial statements as a whole are

free from material misstatement, whether due to

fraud or error, and to issue an auditor’s report that in-

cludes our opinion.

Reasonable assurance is a high level of assurance,

but is not a guarantee that an audit conducted in ac-

cordance with ISAs and additional requirements ap-

plicable in Denmark will always detect a material mis-

statement when it exists. Misstatements can arise

from fraud or error and are considered material if, in-

dividually or in the aggregate, they could reasonably

be expected to influence the economic decisions of

users taken on the basis of the financial statements.

As part of an audit conducted in accordance with

ISAs and additional requirements applicable in Den-

mark, we exercise professional judgement and main-

tain professional scepticism throughout the audit. We

also:

•

Identify and assess the risks of material misstate-

ment of the financial statements, whether due to

fraud or error, design and perform audit proce-

dures responsive to those risks and obtain audit

evidence that is sufficient and appropriate to pro-

vide a basis for our opinion. The risk of not detect-

ing a material misstatement resulting from fraud is

higher than for one resulting from error, as fraud

may involve collusion, forgery, intentional omis-

sions, misrepresentations or the override of inter-

nal control.

•

Obtain an understanding of internal control rele-

vant to the audit in order to design audit proce-

dures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion

on the effectiveness of the Group’s and the Parent

Company’s internal control.

•

Evaluate the appropriateness of accounting poli-

cies used and the reasonableness of accounting

estimates and related disclosures made by Man-

agement.

•

Conclude on the appropriateness of Manage-

ment’s use of the going concern basis of account-

ing in preparing the financial statements and,

based on the audit evidence obtained, whether a

material uncertainty exists related to events or

conditions that may cast significant doubt on the

Group’s and the Parent Company’s ability to con-

tinue as a going concern. If we conclude that a

material uncertainty exists, we are required to

draw attention in our auditor’s report to the related

disclosures in the financial statements or, if such

disclosures are inadequate, to modify our opinion.

Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report.

However, future events or conditions may cause

the Group and the Parent Company to cease to

continue as a going concern.

•

Evaluate the overall presentation, structure and

contents of the financial statements, including the

note disclosures, and whether the financial state-

ments represent the underlying transactions and

events in a manner that gives a true and fair view.

•

Obtain sufficient appropriate audit evidence re-

garding the financial information of the entities or

business activities within the Group to express an

opinion on the consolidated financial statements.

We are responsible for the direction, supervision

and performance of the group audit. We remain

solely responsible for our audit opinion.

We communicate with those charged with govern-

ance regarding, among other matters, the planned

scope and timing of the audit and significant audit

findings, including any significant deficiencies in in-

ternal control that we identify during our audit.

FINANCIAL STATEMENTS 121

We also provide those charged with governance with

a statement that we have complied with relevant ethi-

cal requirements regarding independence, and to

communicate with them all relationships and other

matters that may reasonably be thought to bear on

our independence, and where applicable, related

safeguards.

From the matters communicated with those charged

with governance, we determine those matters that

were of most significance in the audit of the consoli-

dated financial statements and the parent company

financial statements of the current period and are

therefore the key audit matters. We describe these

matters in our auditor’s report unless law or regula-

tion precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine

that a matter should not be communicated in our re-

port because the adverse consequences of doing so

would reasonably be expected to outweigh the public

interest benefits of such communication.

Copenhagen, 17 March 2022

EY Godkendt Revisionspartnerselskab

CVR no. 30 70 02 28

Torben Bender

Claus Kronbak

State Authorised

Public Accountant

State Authorised

Public Accountant

mne21332

mne28675

DEFINITIONS 122

Definitions

1)

Based on management’s expectations at the acquisition date.

2)

Includes the effect stemming from exclusion of currency effects from

the calculation of organic growth and acquisition/divestment growth,

net.

3)

Based on estimated or actual revenue where available at the divest-

ment date.

4)

Implies the exclusion of changes in revenue attributable to acquisi-

tions/divestments, net and the effect of changes in foreign exchange

rates. In order to present comparable revenue and thereby organic

growth excluding any effect from changes in foreign currency exchange

rates, comparable revenue in the prior year is calculated at the current

year’s foreign currency exchange rates. Acquisitions are treated as

having been integrated into ISS upon acquisition, and ISS’s calculation

of organic growth includes changes in revenue of these acquisitions

compared with revenue expectations at the date of acquisition.