Annual report
2022
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 2022
Approved at the annual general meeting
On 18 April 2023
Bjørn Raasteen
Chair of the annual general meeting
OVERVIEW 2
Content
1)
Key figures ....................................................................... 3
Outlook ............................................................................. 4
Group results .................................................................. 5
Cash generation and free cash flow.......................... 8
Capital structure ............................................................. 9
Commercial development......................................... 10
Northern Europe ......................................................... 12
Central & Southern Europe ...................................... 13
Asia & Pacific ................................................................ 14
Americas ........................................................................ 15
OneISS strategy ........................................................... 16
Sustainability ................................................................ 19
Company of Belonging .............................................. 21
Our business risks ...................................................... 24
Corporate governance .............................................. 27
Our governance structure ........................................ 31
Consolidated financial statements ......................... 32
Parent company financial statements ................. 107
Management statement.......................................... 122
Independent auditors’ report ................................ 123
Forward looking statement and ESEF .................. 128
1)
Management review comprises ISS at a glance, our performance, Our
business and Our governance
2022 Sustainability Report
Our 2022 Sustainability Report of the ISS A/S
Group as per section 99a and 107d of the Danish
Financial Statements Act is available here:
https://brand.issworld.com/m/32c9943bd0e4b01
5/original/Sustainability-Report-2022.pdf
2022 Remuneration Report
Our remuneration policy is described in our 2022
Remuneration Report which is available here
ISS Global A/S
–
an integral part of the ISS A/S Group
ISS Global A/S is an indirectly, wholly owned sub-
sidiary 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
companies (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 ex-
ternal funding.
As part of its financing function ISS Global has
entered into the Euro Medium Term Programme
(EMTN Programme) whereunder the ISS Global A/
S Group may from time to time issue notes to
raise funding. Notes under the programme have
been admitted to trading on the Luxembourg
Stock Exchange’s regulated market. The aggre-
gated nominal amount of Notes outstanding will
not at any time exceed €3.000.000.000. No up-
dates to the EMTN programme have occurred in
2022.
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 OneISS strat-
egy, Sustainability, Company of Belonging, Our
business risks, Corporate governance and Our
governance structure of the Management review,
pp. 16–31, are described in the context of the ISS
A/S Group.
OVERVIEW 3
Key figures
Financials 2022
1)
2021 2020 2019
2)
2018
Results
(DKKm)
Revenue 76,558 71,383 70,767 77,715 73,623
Operating profit before other items, excl. IAS 29 3,769 2,920 (2,501) 3,829 4,260
Operating profit before other items 3,740 2,920 (2,501) 3,829 4,260
Operating profit 2,475 1,628 (4,899) 2,059 1,998
Financial expenses, net (318) (573) (549) (695) (583)
Net profit from continuing operations 1,796 496 (5,262) 798 980
Net profit from discontinued operations 159 110 46 (46) (886)
Net profit 1,955 606 (5,216) 752 94
Cash flow (DKKm)
Cash flow from operating activities 3,020 3,221 (886) 1,275 2,653
Acquisition of intangible assets and property, plant
and equipment, net
(587) (424) (552) (897) (813)
Free cash flow, excl. IAS 29
1,608
1,900
(264)
1,818
Free cash flow
1,616
1,900
(2,143)
(264)
1,818
Financial position
(DKKm)
Total assets
43,564
40,357
40,134
42,945
42,719
Goodwill
15,853
15,063
15,093
16,513
16,237
Additions to property, plant and equipment
344
308
382
673
881
Equity
7,026
4,246
3,195
2,711
3,403
Net debt
8,050
9,816
12,345
17,274
12,701
Ratios
Financial ratios
Operating margin, excl. IAS 29
4.9
%
4.1
%
(3.5)%
4.9
%
5.8
%
Operating margin
4.9
%
4.1
%
(3.5)%
4.9
%
5.8
%
Equity ratio
16.1
%
10.5
%
8.0
%
6.3
%
8.0
%
Organic growth
7.8
%
2.0
%
(6.6)%
7.1
%
3.9
%
Acquisitions and divestments, net
(1.7)%
(0.5)%
(0.2)%
(2.2)%
(0.5)%
Currency adjustments 1.2 % (0.6)% (2.1)% 0.7 % (3.4)%
Total revenue growth
7.3
%
0.9
%
(8.9)%
5.6
%
0.0
%
ESG
Social data
Full-time employees, %
77%
76%
75%
77%
76%
Employees end of period, number
350,793
354,394
378,724
470,806
485,676
Employees (average), number
352,540
362,554
434,664
483,296
485,682
1)
Effective 1 January 2022, ISS Turkey was restated for hyperinflation in accordance with IAS 29, cf. 7.2, Hyperinflation in Turkey.
2)
As of 1 January 2019, the Group implemented IFRS 16 using the retrospective approach. Comparative figures were not restated.
For definitions, see note 8.5, Definitions.
OVERVIEW 4
Outlook
Outlook 2023
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, ISS took significant steps in executing the
OneISS strategy. The financial turnaround targets
were delivered as planned, the issues in the four
defined hotspots were addressed, and revenue was
recovered to above pre-Covid-19 level. The opera-
tional and financial improvements achieved in 2022
provide a solid foundation for continued progress
in 2023.
The outlook for 2023 assumes that macroeconomic
and geopolitical uncertainties remain high. ISS has
robust operating processes and is well positioned
to operate in this environment. The execution of
the OneISS strategy will continue and enhance the
operating model, strengthen competitiveness, and
increase focus on growth initiatives. The outlook is
excluding any effects of hyperinflation (IAS 29).
Organic growth
Organic growth is expected to be 4 – 6% for 2023
(2022: 7.8%). Growth will be driven by price in-
creases to offset cost inflation as the tight manage-
ment of inflation will be maintained. In addition, un-
derlying volume growth from annualisation of the
return-to-office trend and continued customer in-
vestments in workplaces and services are expected,
as well as positive contribution from contract wins
and expansions. A negative impact is expected from
a lower level of projects and above-base work.
Operating margin
Operating margin is expected to be 5.0 – 5.5%
(2022: 4.9%). The main drivers of the year-on-year
increase are continued improvement in the previ-
ous hotspots; UK, France and on the Deutsche Tele-
kom contract, positive impact from OneISS efficien-
cies and cost initiatives, as well as operating lever-
age from higher revenue.
Free cash flow
Free cash flow is expected to be around DKK 1.7 bil-
lion (2022: DKK 1.6 million). The increase will be
driven by the expected higher operating profit be-
fore other items and the absence of payments re-
lated to restructuring projects initiated in 2020.
Changes in working capital are expected to be neg-
ative driven by revenue growth and customer
prepayments made in 2022, while capital
expenditures are expected in line with depreciation
and amortisation.
Expected revenue impact from divestments, acqui-
sitions and foreign exchange rates in 2023
Acquisitions and divestments completed by 28 Feb-
ruary 2023 (including in 2022) are expected to have
a positive impact on revenue growth in 2023 of
around 0.5%-point.
Based on the current exchange rates, a negative
impact on revenue growth of 2 – 3%-points
1)
is ex-
pected in 2023 from the development of foreign ex-
change rates, excluding any effects of hyperinfla-
tion (IAS 29).
Delivery on 2022 outlook
As a result of the significant financial progress in
2022, 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
“Forward-looking statements” on p. 128 and our ex-
posure to risk, see Our business risks on pp. 24–26.
1)
The forecasted average exchange rates for the financial year 2023 are calcu-
lated using the realised average exchange rates for the first month of 2023
and the average forward exchange rates (as of 13 February 2023) for the re-
maining eleven months of 2023.
1)
Based on Operating profit before other items
2)
Excluding any impact from acquisitions and divestments completed
subsequent to 28 February 2023 as well as currency translation effects.
Outlook 2023
2)
Organic growth 4-6%
Operating margin
1)
5.0-5.5%
Free cash flow Around DKK 1.7bn
Annual
report
2021
Interim
report
H1 2022
Annual
report
2022
Organic growth 2.0% Above 5.0% 7.8%
Operating margin
1)
4.1% Above 4.75% 4.9%
Free cash flow
DKK 1.9bn
Above DKK 1.0bn
DKK 1.6bn
Delivery on 2022 outlook
OUR PERFORMANCE 5
Group results
Despite a challenging macroeconomic environ-
ment, ISS improved its financial results during
2022. The recovery from Covid-19 continued
and revenue was above the pre-Covid-19 level
as the business benefited from return-to-office
trends, customer's investments in upgrading
workplaces and service offerings, and price in-
creases implemented across the portfolio. The
financial turnaround targets were achieved with
improvements in the underperforming coun-
tries and contracts, predominately in the UK
and on the Deutsche Telekom contract.
Group revenue
Group revenue in 2022 was DKK 76.6 billion, an in-
crease of 7.3% compared with 2021. Organic growth
was 7.8% and the impact from acquisitions and di-
vestments, net was (1.7)%. Currency effects increased
revenue by 1.2%, including the impact of hyperinfla-
tion in Turkey of 0.2%.
Organic growth accelerated throughout 2022 from
5% in Q1 to 9% in Q4, driven by return-to-office
trends as Covid-19 restrictions were lifted, customers’
investments in upgrading their workplaces and ser-
vice offerings, and price increases. As a result, portfo-
lio revenue grew organically by 10%.
Portfolio revenue development was positively im-
pacted by return-to-office trends, particularly for the
services that depend on workplace occupancy and
especially food services. These service lines were also
the ones being negatively affected by the Covid-19
pandemic. Revenue from food services increased by
around 35%, mainly driven by more than 70% growth
in the US where our food services offerings are pre-
dominantly office-based.
OUR PERFORMANCE 6
Food services accounted for 13% of Group revenue
in 2022 (2021: 11%). Furthermore, employees in-
creasingly demanded flexibility and opportunities for
remote working and customers responded by invest-
ing in upgrading workplaces and service offerings to
create an environment suitable for the post-Covid-19
ways of working. In 2022, revenue was 3% higher
than before the pandemic in 2019, excluding the im-
pact of currency effects and acquisitions and divest-
ments despite customers not being fully back to the
offices.
Across the Group, price increases were implemented
to mitigate impact of increasing cost inflation in line
with the terms of contractual agreements with our
customers. This had a positive contribution to or-
ganic growth of just below 3%-points, of which
around 1.5%-points related to Turkey. This was par-
tially offset by slightly negative organic growth im-
pact from projects and above-base work of around
0.3%-points. The demand for projects and above-
base revenue changed during the year, as declining
revenue from Covid-19 related deep cleaning and
disinfection services was almost offset by increased
revenue related to traditional above-base services
and project work.
All regions contributed positively to organic growth in
2022. The Americas region reported the highest or-
ganic growth at 27%, driven by new contract wins
and the combined impact of return-to-office trends
and the region’s relatively higher exposure to office-
based food services. During the year, the organic
growth in the Asia-Pacific region improved due to
higher activity level and new contracts wins, while the
European regions reported solid organic growth.
Operating profit before other items
Operating profit before other items excluding the ef-
fect from hyperinflation amounted to DKK 3,769 mil-
lion corresponding to an operating margin of 4.9%
(2021: 4.1%). Including hyperinflation, operating
profit before other items was DKK 3,740 million for
an operating margin of 4.9%.
The improvement of the operating margin in 2022
was driven by the successful execution of the finan-
cial turnaround, which improved underperforming
countries and contracts,
predominately the UK and the Deutsche Telekom
contract. Furthermore, leverage from higher revenue
impacted the operating margin positively. This was,
however, partly offset by additional costs related to
mobilisation of new contract wins and commercial in-
vestments, mainly in the US, and a higher-than-nor-
mal sickness rate in the year.
The cost base was adversely impacted by the increas-
ing rates of inflation in 2022. ISS has strong and well-
embedded processes in place, and inflation is man-
aged tightly through price increases and operational
efficiencies. As a result, the operating margin was
generally unaffected by inflation. From a regional
perspective, the margin improvement was most sig-
nificant in the European regions. In Northern Europe,
the improvement was fuelled by the turnaround in
the UK, while the improvement on the Deutsche Tele-
kom contract was the primary driver in the Central &
Southern European region. The Asia & Pacific region
also improved the operating margin, while the oper-
ating margin decreased slightly in Americas. Solid un-
derlying operational improvements and leverage
from higher revenue drove the development in Asia
& Pacific, while additional mobilisation costs related
to new contract wins and commercial investments
were the main reasons for the slight margin decline
in the Americas region.
As part of the OneISS strategy announcement in De-
cember 2020, we identified operational hotspots, i.e.
the UK, France, and the contracts with Deutsche Tele-
kom and Danish Defence. Together with general effi-
ciencies, Covid-19 revenue recovery and execution of
the financial turnaround related to the operational
hotspots brought the run-rate operating margin
above 4% at the end of 2022, as targeted.
In the UK, the strong strategic execution continued
following country management changes in 2021, and
the country’s turnaround target of a low single-digit
run-rate operating margin was achieved in Q1 2022.
OUR PERFORMANCE 7
The simplification and streamlining of the organisa-
tional structure in line with the OneISS blueprint had
a positive impact on productivity and financial perfor-
mance at both contract and country levels.
In France, the implementation of the planned re-
structuring programme was completed in 2022.
However, the run-rate profitability was lower than an-
ticipated, in part due to exposure to certain industry
segments with slower than expected Covid-19 recov-
ery and muted commercial momentum. In the sec-
ond half of 2022, the organisation was strengthened
with a new country manager who has recruited com-
mercial and operational resources to execute an
updated business improvement plan.
The execution of the comprehensive restructuring
and gap closing programme for the Deutsche Tele-
kom contract continued and the operational and fi-
nancial performance improved accordingly. The op-
erating margin improved throughout 2022 and
reached the turnaround target of a breakeven level
at the end of the year. The contract continues to be
structurally challenging. Following an agreed dispute
resolution mechanism, certain contractual disagree-
ments are subject to arbitration proceedings initiated
by ISS.
In Denmark, the contract with the Danish Defence
was successfully exited during the first half of the
year according to the agreement with the Danish
Ministry of Defence Estate Agency. The transition was
executed gradually with the last part of the contract
being exited in May 2022.
Other income and expenses, net
Other income and expenses, net was an income of
DKK 78 million (2021: income of DKK 456 million),
mainly due to a gain on the divestment of a waste
management business in Hong Kong and partly off-
set by recognition of a pension withdrawal liability
arising from the divestment of Specialized Service in
the US. In 2021, the net income was mainly due to a
gain on the divestment of Kanal Services in Switzer-
land and Specialized Service in the US.
Operating profit
Operating profit was DKK 2,475 million (2021: DKK
1,628 million).
Financial income and expenses, net
Financial income and expenses, net was in 2022 an
expense of DKK 318 million (2021: DKK 573 million)
including adjustments from hyperinflation of DKK
148 million. The decrease was mainly a result of the
hyperinflation adjustments in Turkey, and the pre-
mium in 2021 of DKK 90 million related to the repur-
chase of EUR 200 million of the total of EUR 500 mil-
lion outstanding EMTN bonds maturing in 2024.
Income tax
Income tax was DKK 361 million (2021: DKK 559 mil-
lion) for an effective tax rate of 16.7% (2021: 52.9%).
The effective tax rate was impacted by release of val-
uation allowances on deferred tax assets and non-
taxable gains on divestments.
Net profit from discontinued operations
Net profit from discontinued operations was DKK 159
million (2021: DKK 110 million), including a net gain
of DKK 122 million mainly relating to the three coun-
tries divested in 2022, most significantly Taiwan and
Portugal.
Net profit
Net profit was DKK 1,955 million (2021: DKK 606 mil-
lion).
Subsequent events
On 6 February 2023, two earthquakes caused large
scale devastation and loss of thousands of lives in
Turkey and Syria. ISS is one of the largest private em-
ployers in Turkey and approximately 4,500 of our
placemakers service workplaces for around 100 of
our customers, including two hospitals, in the im-
pacted areas of Turkey. Tragically, three of our place-
makers were fatally injured, several are in medical
treatment and even more suffered loss of immediate
family members and housing. Our teams on the
ground in Turkey have since the earthquakes focused
on ensuring the safety and welfare of our people and
customers who are facing unimaginable challenges
and devastation.
ISS has not suffered material damage to its assets in
Turkey. Furthermore, the impacted areas account for
less than 1% of ISS’s global activities and the vast ma-
jority of our customers’ operations continue or will
continue after repairs. Consequently, it is manage-
ment’s assessment that the earthquakes will not
have a material impact on the results of the Group’s
operations and financial position in 2023.
Other than set out above or elsewhere in this Annual
Report, we are not aware of events subsequent to 31
December 2022, which are expected to have a mate-
rial impact on the Group’s financial position.
OUR PERFORMANCE 8
Cash generation and free cash flow
Cash flow from operating activities
Cash flow from operating activities was DKK 3,020
million (2021: DKK 3,221 million), a decrease of DKK
201 million driven by changes in working capital.
Changes in working capital were an inflow of DKK
407 million (2021: DKK 1,039 million). Despite the
higher revenue, changes in working capital were
positive as the tight management of working capital
was maintained. Increases in trade receivables were
more than offset by prepayments from customers
relating to 2023 and higher levels of trade payables,
mainly related to the growth in food services where
suppliers typically have longer payment terms. Utili-
sation of factoring increased slightly to DKK 1.3 bil-
lion (2021: DKK 1.1 billion) as a result of the higher
revenue from key account customers, where in-
voices are eligible for factoring as per group policy.
Depreciation and amortisation was DKK 1,386 mil-
lion (2021: DKK 1,565 million). Due to the pandemic,
capital investments in 2021 and 2020 were lower re-
flecting the lower activity levels and therefore, in
combination with optimisation of property needs,
depreciation and amortisation was lower in 2022.
Changes in provisions, pensions and similar obliga-
tions were an outflow of DKK 665 million (2021: DKK
407 million), mainly due to payments related to re-
structuring projects initiated in 2020, defined bene-
fit obligations and other provisions.
Income tax paid was an outflow of DKK 338 million
(2021: DKK 443 million) equal to a cash tax rate of
15.7%.
Cash flow from investing activities
Cash flow from investing activities was a net outflow
of DKK 356 million (2021: net inflow of DKK 235 mil-
lion).
The divestment programme was successfully com-
pleted in 2022 and generated an inflow of DKK 587
million (2021: DKK 1,191 million) primarily related to
divestment of the waste management business in
Hong Kong and operations in Portugal.
Acquisition of businesses was an outflow of DKK 325
million (2021: DKK 526 million), primarily related to
the acquisition of Livit FM Services AG in Switzer-
land. The acquisition enables ISS to expand and de-
velop its service delivery to the real estate segment.
Investments in intangible assets and property, plant
and equipment, net, of DKK 588 million (2021: DKK
424 million) was equal to 0.8% (2021: 0.6%) of total
revenue (including discontinued operations) and
mainly reflected the increased activity level com-
pared to the period during Covid-19.
Cash flow from financing activities
Cash flow from financing activities was a net outflow
of DKK 855 million (2021: net outflow of DKK 2,994
million due to early redemption of outstanding
bonds).
The cash outflow was predominately related to re-
payment of lease liabilities of DKK 850 million which
was a slight decline compared with last year (2021:
DKK 935 million).
Free cash flow
Free cash flow amounted to DKK 1,616 million
(2021: DKK 1,900 million). The operating profit be-
fore other items improved, but the positive effect
was largely offset by lower working capital inflow
and additional outflow related to other provisions.
Furthermore, the net effect of depreciation, amorti-
sation and investments in intangible assets and
property, plant and equipment and additions to
right-of-use assets was neutral compared to an in-
flow in 2021.
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 indepen-
dently of the ISS A/S Group.
In 2022, ISS A/S achieved its financial turnaround
targets and the divestment programme was com-
pleted. This led to an improvement of the capital
structure and liquidity reserves. The Group’s liquidity
reserves at 31 December 2022 of more than DKK 11
billion (2021: DKK 9.6 billion) are described in note
4.6 to the consolidated financial statements.
ISS has no material debt maturities until 2024 on-
wards. As part of our capital allocation policy, we are
committed to maintaining an investment grade pro-
file and ISS A/S currently holds corporate credit rat-
ings of BBB-/Stable outlook assigned by S&P and
Baa3/Stable outlook assigned by Moody’s.
At 31 December 2022, net debt amounted to DKK
8.1 billion (2021: DKK 9.8 billion), a decrease of DKK
1.7 billion due to the strong free cash flow genera-
tion and proceeds from the divestment programme.
Equity
At 31 December 2022, equity was DKK 7,026 million
(2021: DKK 4,245 million), equivalent to an equity ra-
tio of 16.1% (2021: 10.5%). The increase was mainly
a result of net profit of DKK 1,955 million and hyper-
inflation restatement of equity in Turkey at 1 January
2022 of DKK 814 million.
OUR PERFORMANCE 10
Commercial development
In 2022, the commercial momentum improved,
and we benefitted from our strategic focus on
engaging deeply with our customers. As such,
we successfully extended all global key account
contracts up for renewal, HPE, a large global
pharmaceutical customer, and Danske Bank.
We also extended and expanded several key
account contracts and as a result, customer re-
tention for 2022 was historical high reaching
94%, excluding the exit of the Danish Defence
contract (93% incl. exit).
The pipeline of new businesses within our prioritised
segments showed solid progress in 2022, and our
enhanced and strengthened commercial process
yielded results. This was exemplified by the win of a
5-year IFS contract with a major retailer in the US
with revenue of around 1% of Group revenue, and
the award of a new contract with a regional bank in
Australia. In the beginning of 2023, we extended the
contract with a major technology customer in the
US and signed new partnership with a healthcare
company. In 2022, commercial processes were more
complex than pre-Covid-19, likely as the geopolitical
and macroeconomic uncertainties delayed cus-
tomer’s long-term decisions. In the commercial pro-
cesses, we are maintaining strong pricing discipline
and are not accepting any uncapped inflation risk.
An important driver of the revenue development in
2022, was the gradual return-to-office seen globally
due to Covid-19 restrictions being lifted. This mainly
had a positive effect on services that were most se-
verely affected by the pandemic, predominately food
services. In parallel, customers increased invest-
ments in their workplaces to create an environment
suitable for the post-Covid-19 way of working.
In 2022, revenue from key account customers com-
prised 71% of Group revenue (2021: 69%) and grew
organically by 8.4%, which was better than the
Group’s organic growth, and thereby this segment
contributed positively to the overall development.
Contract maturity
The majority of our key account contracts have initial
terms of three to five years. A significant share of
revenue is therefore up for renewal every year.
In 2022, revenue from large key accounts was DKK
23.7 billion, or 31% of Group revenue. Going into
2023, no large key accounts have been lost, but con-
tracts revenue of DKK 3.1 billion (4% of Group) are
up for renewal in 2023 (excl. signed renewals up un-
til February 2023).
OUR PERFORMANCE 11
OUR PERFORMANCE 12
Northern Europe
The market
ISS holds a market-leading position across the re-
gion where markets are generally mature, com-
petitive and with a relatively high outsourcing rate.
The largest country in the region is the UK, con-
tributing around 34% of revenue. Key segments
are Business Services & IT, Healthcare and Public
Administration.
Financial update
Revenue increased to DKK 28,694 million in 2022
(2021: DKK 27,675 million). Organic growth was
4.0% and the effect from currency was neutral.
In 2022, the region was positively impacted by in-
creased activity levels due to strong return-to-of-
fice trends, among others within food services
where the region has a relatively large exposure.
In addition, price increases implemented across
the portfolio to offset the increasing cost inflation
supported the growth, while the revenue from
projects and above-base work declined mainly
due to reduced demand for Covid-19 related deep
cleaning and disinfection services.
The majority of countries generated positive
growth, with several countries reporting double
digit organic growth. Norway contributed signifi-
cantly to the organic growth due to contract wins,
customers returning to offices and increasing ac-
tivity levels, especially within the Hotels segment.
Belgium & Luxembourg and The Netherlands
both delivered double digit organic growth, pri-
marily driven by strong effects from return-to-of-
fice, high customer retention levels and a high
level of project and above-base work in Belgium &
Luxembourg. Organic growth was negative in
Denmark due to the exit of the contract with the
Danish Defence in May 2022 and in the UK mainly
as a result of reduced above-base work.
Portfolio revenue grew organically by 6.7%, posi-
tively impacted by the continued return-to-office
trends, price increases and contract wins, however
partly offset by exit of the Danish Defence con-
tract. Revenue from projects and above-base work
declined by 5.4% and accounted for 20% (2021:
22%) of revenue for the region in 2022, due to the
above-mentioned lower demand for Covid-19 ser-
vices.
Commercially, our strategic focus on IFS and key
account customers secured both new sales and
extensions resulting in a continued improved cus-
tomer retention rate. The majority of the large key
accounts with expiry dates in 2022 were success-
fully extended and expanded. In addition, ISS was
awarded and mobilised a new key account con-
tract with a large manufacturing customer in Swe-
den. The commercial pipeline continues to be
solid across the region.
Operating profit before other items was DKK
1,519 million (2021: DKK 1,290 million), for an op-
erating margin of 5.3% (2021: 4.7%).
Across the region the leverage from higher reve-
nue and solid cost control impacted the operating
margin positively, while costs related to a higher
than-normal sickness rate in the first half of the
year and a lower level of projects and above-base
work partly offset the positive margin develop-
ment. The margin improvement was primarily
driven by the UK, where strong execution of the fi-
nancial turnaround improved the operating mar-
gin, and the turnaround target of a low-single
digit run-rate margin was achieved already by the
end of Q1 2022.
OUR PERFORMANCE 13
Central & Southern Europe
The market
Central and Southern Europe comprises a number
of key markets, where we hold leading market po-
sitions, including Switzerland, Germany and Spain.
Most of the markets are developed, but with sig-
nificant differences in IFS market maturity and
macroeconomic environment. Key customer seg-
ments are Business Services & IT, Industry & Man-
ufacturing, Public Administration, Healthcare and
Pharmaceuticals.
Financial update
Revenue increased to DKK 24,538 million in 2022
(2021: DKK 23,585 million). Organic growth was
7.9%, while currency effects impacted revenue
negatively by 3.8%. The net impact from hyperin-
flation was 0.5%. Including the impact of hyperin-
flation, revenue amounted to DKK 24,692 million.
Organic growth for the region was positive
throughout the year driven by price increases and
contract wins and, to a limited extent, effects from
return-to-office trends as the region has relatively
lower exposure to food services.
The organic growth in the region was mainly
driven by strong growth in Turkey both as result
of price increases successfully implemented to off-
set the effects from high cost inflation and under-
lying growth in the healthcare segment. Austria,
which accounts for 9% of the regions’ revenue, re-
ported double digit organic growth driven by
start-up of contracts, primarily with Vienna Airport
and additional key account customers.
Portfolio revenue grew organically by 9.3% and or-
ganic growth for projects and above-base work
was 2.1% and accounted for 18% of the revenue
in the region (2021: 24%). Demand for Covid-19
related disinfection and deep cleaning services
declined throughout the year, but this develop-
ment was more than offset by an increase in tradi-
tional project work.
Switzerland strengthened their market position
with the acquisition of Livit FM Services AG. The
acquisition will enable ISS to expand and develop
its service delivery to the real estate industry seg-
ment, as Livit FM Services AG provides services for
a large portfolio of Swiss Life properties in Switzer-
land. As part of the transaction, ISS Switzerland
took over 670 employees and key account con-
tracts within cleaning and technical services, rep-
resenting around 0.5% of ISS Group revenue.
Operating profit before other items excluding the
impact of hyperinflation was DKK 1,108 million
(2021: DKK 584 million) corresponding to an oper-
ating margin before other items of 4.5% (2021:
2.5%). The main contribution to the improvement
came from the execution of the comprehensive
restructuring and gap closing programme for the
Deutsche Telekom contract in Germany. At the
end of 2022, the contract reached the turnaround
target with a break-even run-rate margin. In
France, the implementation of the planned re-
structuring programme was completed in 2022.
However, the run-rate profitability was lower than
anticipated, in part due to exposure to certain in-
dustry segments with slower than expected Covid-
19 recovery and muted commercial momentum.
In the second half of 2022, the organisation was
strengthened with a new country manager who
has recruited commercial and operational re-
sources to execute an updated business improve-
ment plan. Across the region, focus remained on
return-to-office and the implementation of effi-
ciency and cost reduction measures following
Covid-19 which together with continued strong
demand for projects and above-base work, im-
pacted the operating margin positively. Including
the effect of hyperinflation, operating profit before
other items amounted to DKK 1,079 million, corre-
sponding to a margin of 4.4%.
OUR PERFORMANCE 14
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 In-
donesia. ISS has a strong presence in the region
and holds a market-leading position in several
countries. Key customer segments are Business
Services & IT, Industry & Manufacturing, Transpor-
tation & Infrastructure, Healthcare, and Public Ad-
ministration.
Financial update
Revenue increased to DKK 14,012 million in
2022 (2021: DKK 12,381 million). Organic growth
was 6.3% (2021: 0.0%) and the effect from acquisi-
tions and divestments, net was (1.0)%, while cur-
rency effects contributed positively by 7.9%.
Across the region, Covid-19 impacted the coun-
tries differently. Overall, organic growth was
driven by increased activity levels from return-to-
office trends as Covid-19 restrictions were gradu-
ally lifted during the year. The strongest growth
was seen in India and in Australia due to custom-
ers returning to office and start up of new con-
tract wins. The growth was particularly strong
within the Transport and Infrastructure segment
as air traffic picked up. In Hong Kong which saw
much stricter Covid-19 restrictions, organic
growth was driven by strong demand for deep
cleaning and disinfection services and other
above-base projects. However, the market for new
business in these countries was generally slow
due to market uncertainties. Price increases were
implemented to offset the effects of cost inflation
and had a positive impact across the region. Port-
folio business grew organically by 8.5% while or-
ganic growth for projects and above-base work
was negative at (4.0)%, and accounted for 16%
(2021: 18%) of the revenue in the region.
During the year, the execution of the OneISS strat-
egy made solid progress with continuing improve-
ments in our commercial processes and the oper-
ating model. Improved commercial processes
drove both contract wins and retention of con-
tracts with existing customers. As such, despite
the delays in some new business, we won a num-
ber of contracts in 2022. We also saw robust and
improving customer retention rates, and we suc-
cessfully retained and further expanded a number
of key account contracts.
Operating profit before other items increased to
DKK 882 million (2021: DKK 735 million), corre-
sponding to an operating margin of 6.3% (2021:
5.9%). The improvement was driven by the gen-
eral lifting of Covid-19 restrictions and solid un-
derlying operational improvements across the re-
gion. Australia in particular benefitted from the
higher activity level and operating leverage. The
positive impact was partly offset by lower margin
in Singapore due to contract losses and reduced
government support schemes.
OUR PERFORMANCE 15
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 increased to DKK 8,585 million in 2022
(2021: DKK 7,141 million). Organic growth was
26.5%, the effect from acquisitions and divest-
ments, net was (13.8)%, while currency effects im-
pacted growth positively by 7.0%.
In 2022, the organic growth was mainly driven by
food services as customers returned to the of-
fices. Revenue from food services increased more
than 70% and accounted for around 35% of the
region’s revenue (2021: 23%) compared to 13%
for the Group (2021: 11%). In addition, the mobili-
sation of contracts won during 2021 and 2022
contributed positively. Across the region, price in-
creases were implemented to offset the effects of
increasing cost inflation. Organic growth was
highly positive in all quarters but slowed slightly
down in Q4 reaching 21%, as Q4 2021 also bene-
fitted from accelerated return-to-office activity.
The development across the region was strong
with all countries reporting solid positive organic
growth. Portfolio revenue increased organically by
29.2% driven by return-to-office within food ser-
vices. Despite lower demand for deep cleaning
and disinfection services, organic growth for pro-
jects and above-base work was 9.2%, due to gen-
erally higher levels of activity and was 12% of total
revenue in the region.
The strategic focus on IFS and key account cus-
tomers progressed and demand from key ac-
counts was more robust and resilient compared
to the rest of the customer base. Furthermore,
across the entire region, there was a good com-
mercial momentum. In June we were awarded a
new five-year IFS contract with a large interna-
tional retail customer, and the contract was gradu-
ally ramped-up in second half of 2022. In addition,
several contract wins were recorded across the
countries in the region.
Operating profit before other items was DKK 445
million (2021: 393 DKK million) for an operating
margin of 5.2% (2021: 5.5%). The decrease in op-
erating margin was mainly driven by investments
in the commercial model to support the strong
development, additional costs related to start-up
and mobilisation of contract wins in the US and a
lower revenue from margin enhancing Covid-19
related deep cleaning and disinfection services.
The negative effects were partly offset by em-
ployee tax credits under the US Employee Reten-
tion Credit scheme and timing effects in the sec-
ond half of the year. The strong revenue recovery
in food delivered broadly the same margin com-
pared to last year as most contracts were renego-
tiated to cost plus commercial models during
Covid-19. Besides the US, Mexico and Chile deliv-
ered solid operating margins supported by con-
tract wins and non-portfolio revenue.
OUR BUSINESS 16
OneISS strategy
In 2022, we delivered on our turnaround tar-
gets and our strategic journey is progressing
to a new phase of strong growth at sustaina-
ble and attractive margins.
Our strategic ambition is to become the global
leader in Integrated Facility Services (IFS) and to
drive our bespoke value propositions towards
key accounts in three prioritised segments, i.e.
Office-based, Production-based and Healthcare,
and to maintain our stronghold as #1 globally
in cleaning. Our IFS offering is focused on four
core services, i.e. Cleaning, Technical, Food and
Workplace, that are critical to IFS contracts.
We continue to see strong demand for IFS.
Key account customers are consolidating their
supply chains to focus on their core business and
they need a strategic partner to drive user experi-
ence, efficiency and consistency with solutions
that are sustainable and compliant across their
portfolio of workplaces. Consequently, we expect
demand for integrated service contracts will con-
tinue to outgrow the general FM market.
To address this growth opportunity and become
the global leader in IFS for key accounts, we are
building the best customer offering based on our
global and scalable operating model.
OUR BUSINESS 17
Strengthening the global operating
model
Our global operating model gains strength
through the execution of five strategic priorities:
1. Commercial momentum and segment
leadership
2. Brilliant operating basics
3. Service products built on leading technology
platforms
4. Environmental sustainability
5. Safe, diverse and inclusive workplaces
Our five strategic priorities will enable us to oper-
ate efficiently and offer market leading service
products built on leading technology platforms.
Our service products are designed to address key
customer needs and build on knowledge devel-
oped from years of serving customers in our pri-
oritised segments.
We understand the importance of providing our
customers with a market-leading workplace expe-
rience at competitive cost while at the same time
contributing to an environmentally and socially
sustainable world.
As part of the commercial momentum priority,
and to further enhance our focus on customer re-
tention, ISS is launching the Customer for life pro-
gramme. The objective of the programme is to in-
crease value creation for all parties throughout
the lifetime of the contract and we will restructure
and strengthen our commercial mindset and
methodology to drive continued retention in our
cho sen customer segments, based on right terms
and behaviours. The programme is launched in
2023 in five countries and across our global key
accounts.
OUR BUSINESS 18
Next phase of the OneISS journey
As we turn to the next phase of the OneISS strat-
egy, we continue to execute on our strategic pri-
orities. We intend to further strengthen our global
platform through investments in technology-ena-
bled service products and commercial capabilities
and culture to support the execution of our
stratey. We will drive performance and competi-
tiveness and aim to deliver strong organic growth
at attractive and sustainable margins combined
with disciplined acquisitive revenue.
Market development
In the wake of the Covid-19 pandemic, workplace
experience has become increasingly important in
the office-based segment. The purpose of the of-
fice is changing in response to employees’ in-
creased demand and expectation for flexibility and
opportunities to work remotely. While some com-
panies choose to reduce their real-estate foot-
print, we see that the majority of companies are
investing in and upgrading their workplaces and
service offerings. They invest to attract people to
the office and foster a culture that enhances a
sense of belonging and enables innovation and
collaboration.
Operational efficiency remains a key sourcing cri-
teria of facility management across all customer
segments – especially in periods of economic re-
cession where pressure on costs forces compa-
nies to focus on their core activities. Furthermore,
demand for sustainable service solutions is in-
creasing as customers look to their service part-
ners for support to their journey to net zero.
To accommodate those needs, we are investing in
three key commercial areas which will become dif-
ferentiating factors for performance at our cur-
rent customers’ workplaces and in future cus-
tomer bids, i.e.:
operational efficiency
technology
sustainability
Operational efficiency is delivered through the en-
hanced operating model, which enables the
launch of a portfolio of scalable service products
to drive a step-change in global productivity.
The investments in technology are focused on cre-
ating value from an ecosystem of scalable plat-
forms with data and innovation. The first key appli-
cations have already been launched for customers
and placemakers to improve the service we pro-
vide across workplaces globally, e.g. MyISS, ISS
Takeaway, the Outdoor app and the ISS Work-
place app.
Finally, ISS is determined to become an industry-
leader in championing sustainable workplaces.
Through this agenda, ISS is launching an ambition
to become the global Company of Belonging. At
the same time, ISS is progressing on its own envi-
ronmental commitments while supporting our
customers’ journeys to reduce carbon emissions,
waste and the consumption of energy and materi-
als. For further details, see Company of Belonging
on p. 21 and Sustainability on p. 19.
OUR BUSINESS 19
Sustainability
Making the world work better starts with our
contribution to a fair and inclusive society
and a healthy planet. This has always been a
determining factor in the way we operate our
business and it remains a critical part of our
current strategy execution. This is also why
we carry out our sustainability efforts
through two equally important lenses:
social and environmental sustainability.
In 2022, we launched the ambition of champion-
ing sustainable workplaces, driving true sustaina-
ble change through both social and environmen-
tal sustainability. The dual focus ensures that we
can continue to strengthen our competitiveness
and support growth in our next phase of strategy
execution.
During the year, we progressed significantly on
our ambitious sustainability journey. Both within
our own enterprise and in the way we support our
customers in achieving their sustainability targets.
Within social sustainability, we launched a new
Employee Value Proposition (EVP), further devel-
oped our Diversity, Inclusion & Belonging agenda
and introduced an ambition to become the Com-
pany of Belonging. For further details, see p. 21.
Within environmental sustainability, we an-
nounced our commitment to reach full-scope net-
zero greenhouse gas emissions by 2040. Further-
more, we have been deploying monitoring and
tracking technology and integrating carbon man-
agement in our service products. We have also
committed to the science-based Targets initiative
(SBTi) and have launched specific initiatives within
food waste reductions and electrification of our
fleet globally.
Leveraging our enterprise and integrating envi-
ronmental sustainability initiatives into everything
we do, allows us to identify and drive initiatives to
reduce customer emissions through our 350,000+
onsite placemakers across the globe. Our operat-
ing model enables us to share our best practices,
ensuring that what works somewhere, we will do
everywhere. Enabling and engaging our site
teams is key for us in having an impact today – we
should not wait to have all our future solutions fi-
nalised – we can make a real difference for our
customers today.
Materiality assessment
In 2022, we conducted a materiality assessment
across our various stakeholders. The purpose of
the assessment was to anchor the sustainability
topics that are most material to our business. The
findings confirmed the importance of our people
and governance and showed that insights and
data must be at the core of ISS and integrated
across the business. The priorities include:
• environmental: carbon, energy, and waste
• social: occupational health, safety and wellbeing,
decent working conditions and a diverse and in-
clusive workplace
• governance: ethical business practices and anti-
corruption, human rights and labour standards in
the supply chain and responsible procurement
practices and supplier conduct
Governance
Our commitment to sustainability is anchored in
the Board of Directors and the Executive Group
Management. See Our governance structure on p.
31.
Our approach is based on the foundation of our
vision, core values, dynamic stakeholder engage-
ment, as well as existing and emerging sustaina-
bility trends, risks and opportunities.
The Group’s Sustainability and Corporate Strategy
Departments are responsible for updating and ex-
ecuting our sustainability efforts, with support
from in-country sustainability resources.
Corporate sustainability starts with our value sys-
tem and a principles-based approach to doing
business. This means operating in ways that, at a
minimum, meet fundamental responsibilities in
the areas of human rights, labour, environment
and anti-corruption. That is why ISS has been a
signatory to and an active member of the UN
Global Compact since 2001 and why we have in-
corporated the Ten Principles of the UN Global
OUR BUSINESS 20
Compact into our strategies, policies and proce-
dures, and thereby establishing a culture of integ-
rity that not only upholds our basic responsibilities
to people and planet, but also sets the stage for
long-term success.
Environmental sustainability
At ISS, we recognise the full scope of the climate
and environmental crisis, and we are fully commit-
ted to operating our business and delivering our
services in a sustainable way. We believe that it is
our societal responsibility and inherent our licence
to operate.
Reducing our impact on the environment is funda-
mental to our success and future growth. We aim
to create long-term value for our business and the
world around us by addressing our main environ-
mental challenges and reporting our performance
regularly and transparently.
The world is changing rapidly. With the impacts of
climate change, energy crisis, resource scarcity
and waste overload affecting all of us, ISS wants to
become the sustainability leader of our industry.
Progress on commitments
ISS’s impact on the environment primarily comes
from our supply chain, including purchased goods
and services. Therefore, collaboration with our
suppliers is key to reducing our environmental
footprint. That is why we have committed to ambi-
tious science-based and net-zero targets across
our full scopes 1, 2 and 3 emissions by 2040.
In 2022, ISS collected data regarding the level of
scopes 1, 2 and 3 emissions related to our busi-
ness activities. We used 2019 as the baseline year,
and data show that our scopes 1 and 2 emissions
account for 5% while our biggest opportunity lies
in Scope 3, which represents 95% of our total
emissions.
Our Pure Space Office product is an example of
how we systematically standardise the cleaning
methodology in office environments. The global
programme is based on best practices across ISS
and is designed to provide a workplace environ-
ment free from microorganisms with verified hy-
giene standards to minimise the risk of infection.
The methodology and choice of chemicals delivers
significant sustainability outcomes in terms of wa-
ter and chemical reductions. In 2022, the pro-
gramme reduced water consumption by 11 mil-
lion litres of water and 450 thousand litres of
chemicals. The effort is supported by global train-
ing programmes and dedicated product owner-
ship.
Another example is the energy management ser-
vice we provide across customer portfolios. A
team of ISS energy managers working in collabo-
ration with key account stakeholders and local de-
livery teams to carry out onsite optimisation to re-
duce electricity and gas consumption across an
estate. With consumption data for the sites sup-
plied, ongoing savings are calculated to quantify
the benefits being delivered. This successful ser-
vice product has provided 10%+ evidenced sav-
ings in total addressed energy consumption.
TCFD
We remain committed to implementing the rec-
ommendations of the Task Force on Climate-re-
lated Financial Disclosure (TCFD). In 2022, we
strengthened governance by building additional
sustainability capabilities across the organisation
and sharpened our strategic offering and value
proposition. Importantly, through our intensive
work on setting and submitting our science-based
targets for validation by the SBTi, we gained signif-
icant insights into our climate-related risks and
opportunities that will form part of the basis for
further implementing climate-related financial dis-
closures in 2023.
OUR BUSINESS 21
Company of Belonging
Continuous training and development as well
as creating an environment where our place-
makers can feel safe and thrive as their au-
thentic selves are not only important from a
social sustainability point of view. They are
key to delivering on our strategy and our
purpose of connecting people and places to
make the world work better.
For more than 121 years, we have been centered
around our employees. We call them our place-
makers. Every day they go above and beyond in
delivering outstanding services to our customers.
To ensure we continue to deliver on our strategic
ambitions and our purpose, we launched a new
and bold cultural ambition in 2022: to become the
global Company of Belonging.
As an employer of 350,000+ placemakers, with
more than 40,000 customers in more than 30
countries worldwide, ISS has an ever more signifi-
cant impact on people and societies. Through
building an environment where every employee
feels accepted, empowered and able to thrive as
their authentic selves, we will create better experi-
ences and more sustainable outcomes for our
placemakers, partners and their communities.
Our cultural ambition is based on a set of funda-
mental commitments, which combine in service of
our ambition, including our three signature objec-
tives, our Diversity, Inclusion & Belonging agenda
and our Employee Value Proposition (EVP) and
People standards.
In addition, we have set out three core areas to
measure success in achieving our ambition, which
are employee engagement, employee retention
and customer retention.
Our signature objectives
Our three signature objectives will accelerate us
on the journey towards becoming the Global
Company of Belonging.
Together, our signature objectives are a purpose-
ful and intentional promise to deliver better out-
comes for our placemakers, their families, our
partners and the communities in which we oper-
ate.
1. We pledge, working together with policy mak-
ers, our customers and suppliers, to increase
the implementation of living wages across our
industry
By paying a living wage, we ensure that our place-
makers earn a wage that meets their everyday
needs and enables them to afford a decent stand-
ard of living for themselves and their families. In
addition to supporting the lives of our placemak-
ers, paying a living wage has many benefits for
our customers, as greater financial recognition for
the dedicated work being performed by our place-
makers improves employee engagement and en-
hances retention, leading to higher quality service
outcomes.
2. We commit to giving 100,000+ placemakers
or their family members a recognised qualifi-
cation by end 2025
We take pride in investing in our placemakers and
currently offer multiple qualifications from courses
in competencies for frontliners to academic quali-
fications for leaders. In addition to the formal
qualifications we currently offer, our core develop-
ment programmes serve to equip all placemakers
with opportunities to grow.
Offering 100,000+ placemakers or their families a
formal qualification by end 2025, is our pledge to
be even more intentional with the development
opportunities that are available to our placemak-
ers. Offering leading career development oppor-
tunities will create happy and purpose-led place-
makers who feel motivated to provide better out-
comes for our customers and facilitate social mo-
bility.
OUR BUSINESS 22
3. We partner with all stakeholders to demon-
strate the value that all placemakers bring to
our workplaces, striving for continued recog-
nition and respect
We will play a leading role in combining the efforts
of all our stakeholders to ensure greater recogni-
tion and respect for the work that our placemak-
ers perform every day. This is our commitment to
all our placemakers. Through partnering with our
stakeholders globally, we can hugely impact the
way we recognise and show respect for those who
make the world work better.
Employee value proposition and people
standards
To underpin our commitment to our placemakers,
we launched a global employee promise and value
proposition (EVP) in September 2022: A Place To
Be You. This is closely linked to our cultural ambi-
tion of becoming the Company of Belonging.
A Place To Be You embodies our values and cul-
ture and articulates our promise to our placemak-
ers, globally. We see you, we hear you, we believe
in you and we support you. Our commitment to
fostering a culture of belonging is a great example
of our values and purpose going hand in hand
with our business needs leading us to become
recognised as an employer of choice.
Maintaining and ensuring compliance with our
Global People Standards is a cornerstone in the
way we operate as a business, but to truly make
people feel they can belong, entails safeguarding
people safety as well.
Our diversity, inclusion & belonging
agenda
ISS is built on a foundation of equity, fairness, and
respect for all individuals. Diversity, inclusion and
belonging are inherent to our DNA. Only through
intentionally nurturing a diverse and inclusive
workplace can we build and strengthen this sense
of belonging and a culture where every place-
maker feels that they can bring their best selves to
work.
Our strategic approach
Our global Diversity, Inclusion & Belonging (DIB)
strategy is driven through five dimensions of di-
versity: pride, gender, generations & age, abilities
and cultures, race & ethnicity. Through our strat-
egy we commit to taking a proactive responsibility
towards our surrounding communities and local
societies by reflecting diversity and promoting in-
clusivity.
In 2022, we took significant steps to advance this.
We defined three DIB actions in all countries, aim-
ing to drive inclusion. In addition, we finalised the
launch of five global Employee Resource Groups
(ERG) – voluntary groups of ISS employees for
each strategic dimension who work on concrete
initiatives to promote inclusion and belonging.
Status on gender balance
Ensuring the right gender balance will lead to
greater innovation, improved organisational per-
formance and better service to our customers. To
progress sustainably in this area, we focus on two
wider goals: getting more women into leadership
roles and retaining our female leaders, and build-
ing an inclusive environment where they feel they
belong.
We have defined a target to achieve 40% gender
balance across corporate leadership roles by the
end of 2025. As of 2022, the representation of
women in corporate leadership roles stood at 36%
(2021: 35%). Progress in reaching gender balance
at ISS is driven by several key levers and sup-
ported by our talent strategy to develop and re-
tain a strong pipeline of current and future female
leaders.
For a status on gender balance for the Board of
Directors and the Executive Group Management,
see p. 29.
Developing and improving the people
experience
We take pride in the way we train our placemak-
ers. Continuous upskilling and development are
absolutely key in ensuring that we meet the ex-
pectations of our customers. Throughout 2022,
we continued to strengthen the way we train and
develop both frontliners and leaders.
In 2022, our Country Leadership Teams com-
pleted leadership workshops in our leadership
model. Furthermore, our mid-level managers
started to participate in our flagship leadership
development programme – Leading OneISS –
which supports further embedding of the right
culture across the organisation. The programme
facilitates 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
OUR BUSINESS 23
OneISS. We also continued to deploy the Place-
maker’s Path – our career-long learning and devel-
opment programme – towards all global key ac-
counts and more than 450 local key accounts. The
programme (beyond equipping our people with
the right capabilities) drives the right leadership
behaviours across our sites – helping us to be-
come a Company of Belonging. We invested in
strengthening our operational capabilities with
deployment of renewed Key Account Manager
Certification programme and launching Site Man-
ager Certification programme through which we
build capabilities enabling cohesive application of
our scalable operating model.
To retain and engage our 350,000+ placemakers,
we focus on offering superior people journeys and
create an employee experience where people feel
respected, valued and empowered to make posi-
tive changes to their working environment. Our
ability to listen and respond to our placemakers is
key and the use of leading technology is a pre-
requisite to achieve it.
Our global employee platform – MyISS – serves to
digitally connect all placemakers and provides a
unified access point and self-service functionalities
to make their working lives easier. The oppor-
tunity for all placemakers to provide feedback will
be enabled and embedded into the platform.
Listening to our placemakers consistently not only
enables a culture whereby we can proactively re-
spond to our placemakers but can measure the
sense of belonging they feel within ISS. We aim to
baseline our engagement score through a global
listening survey.
Employee retention
We operate in a marketplace where levels of em-
ployee churn are inherently high. To measure suc-
cess, we are targeting a structural improvement in
our employee retention. Higher employee reten-
tion underpins a more consistent, higher quality
of service and reduces the costs associated with
attracting, recruiting and onboarding new col-
leagues.
Despite an increase from 30% in 2021 to 33% in
2022, our employee turnover rates have proven
resilient through the cycle of Covid-19. We contin-
ued to focus on retention initiatives, including im-
proved labour conditions relative to market norms
in certain countries, and we sustained the im-
proved retention levels compared to the pre-Covid
19 levels.
Health & Safety – a key priority
In line with being a diverse and inclusive work-
place and as a vital part of living up to our people
promise, our entire health and safety agenda is
pivotal for us to make our placemakers feel they
belong to a company where respect and protec-
tion of their mental and psychological wellbeing is
a key essential for everyone.
Health & Safety initiatives remain a key focus and
help us keep the wellbeing of all stakeholders,
from our placemakers to customers, suppliers,
and partners, top of minds. Safety is our highest
priority and collectively we work tirelessly to en-
sure that our placemakers go home safe to their
families after a productive working day.
Tragically in 2022, we suffered one work-related
fatality, involving a placemaker working in an in-
dustrial environment. A working group of SMEs
from across our business has been working with
the management team involved in the incident to
ensure lessons learned from the tragedy are cap-
tured in detail. The review has driven a global ac-
tion plan which will further strengthen our safety
framework.
We also have ambitious plans that will strengthen
our Health and Safety framework from 2023. They
focus on creating even safer working environ-
ments for all placemakers and stakeholders within
our business.
Lost Time Injury Frequency
LTIF differ and reflect diverse maturity levels to-
wards safety across the various cultures and ge-
ographies in which we operate. In 2020 and 2021,
ISS have completed most of its divestment pro-
gramme, which included divestment of business
units that had an aggregated lower level of LTIF
compared to the Group. This increased the
Group’s underlying LTIF by approximately 0.2 %-
points. As a consequence and also due to in-
creased Loss Time Incidents following the higher
activity levels linked to Covid-19 recovery, our LTIF
increased to 2.9 in 2022, a slight increase over
2021. The most frequent cause of Loss Time Inci-
dents relates to slips, trips and falls, and we are
launching updated campaigns and training for
managers and placemakers in 2023 to drive fur-
ther awareness on these types on incidents. We
are committed to reinforcing safety behaviour
across all sites that we operate and drive LTIF be-
low 2.5.
OUR BUSINESS 24
Our business risks
In 2022, we continued to strengthen our risk
management organisation and capabilities to
further build business resilience to both exist-
ing operational risks and external events. Our
teams responded effectively to mitigate the im-
pacts of war in Ukraine as well as step changes
in inflation rates.
Risk management in 2022
Our focus in 2021 was on strengthening govern-
ance, simplifying risk assessment processes, and
bringing the risk management community closer to-
gether. Building on those foundations, the key initia-
tives for 2022 were focused on developing risk man-
agement maturity within the organisation.
Organisation
Having strengthened our risk management founda-
tion, we are revisiting the operational risk manage-
ment framework. In September 2022, ISS estab-
lished a new Operational Risk function anchored in
our Global Operations team to further develop and
manage workplace-related risks for our customers.
As a key business partner to the majority of our cus-
tomers, we play a significant role in their overall risk
management framework. Thus, we believe that
through our services, we can continue to proactively
support our customers in enhancing their risk man-
agement agenda and capabilities.
Technology
Our efforts to leverage technology in enhancing our
risk management and compliance capabilities con-
tinued in key areas such as cybersecurity and data
privacy. Our risk assessment processes are now well
anchored within the organisation, and we take steps
to transition to a digital platform, which is a key step
towards realising our longer-term ambition of real-
time risk information tracking.
Business Continuity Management
Business Continuity Management (BCM) is an im-
portant factor in supporting ISS’s organisational re-
silience (reducing legal and financial exposure; pro-
tecting life, property, environment; safeguarding
reputation and credibility). This was emphasised by
recent significant events, including a cybersecurity
incident in 2020, the impact of the Covid-19 pan-
demic, and most recently the impact of the war in
Ukraine. As a result, we have sharpened our focus
on a transparent and standardised BCM approach
across ISS.
The solutions developed for business continuity and
recovery address several scenarios, including:
Loss or unavailability of premises, including the
inability of people to commute to their normal
work location
Mass people absence or the unavailability of key
people
IT system incidents; and
Loss of a critical vendor (e.g., incident at the
provider of an outsourced service/activity)
Group risk 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 2022 are de-
scribed on the following pages. Compared to 2021,
our assessment of the Group Key Risks reflects that
the turnaround plan has been successfully exe-
cuted. Further, we have included Macroeconomics
and Health and Safety in our assessment of Group
Key Risks, reflecting in particular the need to man-
age the step change in inflation and enhanced focus
on occupational safety.
Market developments 2022
The facility management industry experienced un-
precedented disruption in 2020 and 2021, as the
Covid-19 pandemic impacted ways of working and
workplace environments globally. The impact on our
business was material, albeit with a high degree of
stability in cleaning services and a material impact
on other services, especially food services. In 2022,
we saw continued recovery from the pandemic and
increasing levels of activity as customers returned to
offices in large markets. In certain markets, the re-
covery resulted in increased demand for labour.
Following the outbreak of war in Ukraine in 2022, we
activated our crisis management processes and es-
tablished a Group Emergency Response Organisa-
tion for real-time decision making. ISS provided sup-
port to customers and colleagues in countries
affcted by the war, both directly and indirectly.
These events fuelled a step change in inflation and
OUR BUSINESS 25
ISS stepped up its processes to manage and miti-
gate price increases in our supply chain, while also
activating commercial mechanisms in our customer
contract portfolio in response to increasing operat-
ing costs.
Sustainability
The sustainability agenda, in particular when it
comes to climate change and the journey to net-
zero carbon emissions, is moving fast and is increas-
ingly linked to our license to operate in the market.
ISS has integrated sustainability as a core strategic
priority and committed to science-based and net-
zero targets. The ability to attract talent to lead and
deliver on ISS’s and our customers’ progression to-
wards these targets is a top priority and key to com-
mercial success in the short and medium term. For
details on our commitments to the science-based
targets and net zero, see p. 20.
OUR BUSINESS 26
GOVERNANCE 27
Corporate governance
Transparency, constructive stakeholder dia-
logue, sound decision-making processes and
controls are key aspects of our corporate gov-
ernance for the benefit of ISS and our stake-
holders.
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,
including 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, gen-
eral meetings, shareholder decisions, election of
members to the Board, etc., is described in the Arti-
cles 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 com-
bined 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 su-
pervises 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 eleven Corpo-
rate Senior Officers in addition to the EGMB. The
EGM has a number of committees including a Sus-
tainability Committee addressing ESG-related mat-
ters which are reported and reviewed by the EGM
and the Board as required.
In the review of our governance structure on p. 31,
we have outlined the primary responsibilities of the
Board and the EGM as well as 2022 activity by
Board committees.
Governance report of ISS A/S
The report includes a transparent description of
our governance structure, the main elements of
our internal controls related to financial report-
ing and a detailed description of our position on
the Danish Corporate Governance Recommen-
dations. The report is available here:
https://brand.issworld.com/m/e36366e7f35d741
/original/Corporate-Governance-Report-
2022.pdf
GOVERNANCE 28
Strengthening the EGM
In 2022, our EGM was further strengthened to sup-
port our execution of the OneISS strategy.
On 1 January 2022, Celia Liu took up the posi-
tion as CEO Central & Southern Europe
On 1 January 2022, Carl-Fredrik Langard-Bjor
took up the position as CEO Northern Europe
and joined the EGM
On 1 June 2022, Sam Hockman took up the po-
sition as CEO Global Key Accounts and joined
the EGM
On 1 July 2022, Susanne Jørgensen succeeded
Dan Ryan as CEO Americas, who left ISS end of
July 2022, and joined the EGM
On 31 December 2022, Andrew Price stepped
down from the EGM
On 1 January 2023, Agostino Renna took up the
position as Chief Commercial Officer and joined
the EGM
Composition of the Board
The Board currently consists of nine members, six
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. At the annual general meeting on 7 April
2022 the following Board changes were made:
Lars Petersson was appointed as new Board
member
Previous Deputy Chair Henrik Poulsen stepped
down
The Board constituted itself by electing Niels
Smedegaard as Chair and Lars Petersson as
Deputy Chair
As of end June 2022, Valerie Beaulieu stepped
down as a member of the Board
Employee representatives are elected on the basis
of a voluntary arrangement regarding Group repre-
sentation for employees of ISS World Services A/S
as further described in the Articles of Association.
Employee representatives serve for terms of four
years, and the current term expires in April 2023. A
new election was held early 2023, and the elected
candidates will join our Board after the annual gen-
eral meeting in April 2023.
Board evaluation
In 2022, the Board evaluation was conducted as a
self-assessment. The assessment included input of
nine board members and the EGMB based on a
questionnaire, evaluating the strategy development
and implementation; risk awareness, monitoring
and reporting; cooperation with and evaluation pro-
cess of CEO and EGM; board composition and dy-
namics; on- and off- boarding; meeting structure
and operation; meeting effectiveness; stakeholder
relations; committee and Deputy Chair value contri-
bution; and evaluation of the Chair.
The result was reviewed by the Nomination Com-
mittee and discussed at a Board meeting. The indi-
vidual member’s contribution was subsequently re-
viewed as part of individual meetings held between
the Chair and each member. The outcome of the
2022 Board evaluation was a continued high level of
performance and improvement across the areas
covered by the questionnaire. Especially, strategy
development and implementation and cooperation
with management had improved. Overall, the Board
was found to achieve its mandate, fulfil its responsi-
bilities, and provide value.
The evaluation identified a few focus areas to im-
prove the Board’s value-add during 2023: i) sepa-
rate sessions on strategic and operational risks, ii)
reviewing onboarding procedure for employee
elected board members and iii) continue board vis-
its to operations.
For further details, please see response to recom-
mendation 3.5.1 of the 2022 Statutory report on
Corporate Governance.
GOVERNANCE 29
Competencies and diversity
The Board and the EGM recognise the importance
of promoting diversity at management levels and
have implemented policies regarding competencies
and diversity in respect of Board and EGMB nomi-
nations according to which we are committed to se-
lecting 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.
As part of our Diversity & Inclusion strategy, we
have defined a target of achieving at least 40% gen-
der balance at all corporate leadership levels by
2025. The strategy and our initiatives to improve
gender balance is further described on p. 22. Gen-
der balance at all leadership levels remains a focus
area in 2023.
To meet the new reporting requirements on gender
representation for the Board and other manage-
ment levels according to Danish legislation as of 1
January 2023, the Group has updated its “Compe-
tencies and diversity policy for the Board of Direc-
tors and other management levels of ISS A/S”. The
policy is available here
Board gender balance
The current gender representation among Board
members (elected by the general meeting) is 33%
women and 67% men, which is considered equal ac-
cording to the Danish Business Authority’s applica-
ble guidelines
1,2)
. With the inclusion of employee
representatives, 56% of our Board is women. The
Board aims to maintain an equal gender represen-
tation of 40/60% among elected board members in
accordance with the Danish Business Authority’s ap-
plicable guidelines.
EGM gender balance
In our EGM, the female representation increased to
31% in 2022 (2021: 25%) following changes to the
management team to support the execution of our
strategy.
1
According to the Danish Business Authority’s guidelines on target fig-
ures, policies and reporting on the gender composition of management, a
gender distribution of 40/60% or the closest number under 40% is consid-
ered equal.
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 oper-
ates under a charter approved by the Board.
Following the limited travel ability of GIA in 2021
due to Covid-19 restrictions, for 2022 on-site audits
have been prioritised although in limited circum-
stances assurance activities continue to be per-
formed through remote testing.
In 2022, focus has been on:
Continued strengthening of the GIA team
through recruitment of new members;
Implementation of a new cloud-based audit
management solution to monitor and reduce
the number of open audit recommendations;
Execution of our 2022 audit plan providing
broad country level assurance through the
Baseline audit programme and contract level
assurance on our global key accounts through
our Key Account audit programme.
2
In respect of the specific target for ISS Global A/S, cf. 99b of the Danish
Financial Statements Act, the current gender representation among Board
members (elected by the general meeting) is 25% women and 75% men,
which is considered equal according to the Danish Business Authority’s ap-
plicable guidelines. The company is exempted from setting a policy and
target figure for other management levels as ISS Global A/S has less than
50 employees and the other management levels consists of less than three
people.
GOVERNANCE 30
Speak Up (whistleblower)
The Speak Up Policy is supported by a reporting
system operated on a platform from EQS and avail-
able in 21 languages via ISS’s website and local ISS
country websites. The system enables employees of
ISS, business partners and other stakeholders to re-
port concerns anonymously to Group Internal Au-
dit.
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 Audit and Risk Committee on all matters that
have been subject to investigation. In 2022, the BIC
charter was expanded to cover compliance-related
topics along with all business integrity and ethics is-
sues.
In 2022, the awareness of the Speak Up has been
strengthened through a global communication plan
executed following an update of the Speak Up pol-
icy to align with the requirements of the EU whistle-
blower directive. In addition, the accessibility of the
Speak Up system has been strengthened through
the implementation of a manned phone hotline
providing local land line and toll-free numbers
across 35 countries giving reporters the oppor-
tunity to report to an independent third-party in
their native language.
Data ethics
ISS executed a Group Data Ethics Policy (the policy)
in 2021, to ensure compliance with Danish legisla-
tion and ISS’s commitment to secure and proper
management of data. The policy describes ISS’s ap-
proach to data ethics and aims to encourage our
employees and partners, involved in the use of data,
to have a positive and active involvement in data
ethical questions and to raise concerns ensuring
continuous development of the guiding principles
for data ethics.
ISS process data for the purpose of providing our
services, managing our workforce and properly doc-
umenting compliance and delivery to customers
and public authorities. In order to protect the data,
processes, and the persons affected by these activi-
ties, the policy is based on the Charter of Funda-
mental Rights of the European Union, addressing
self-determination, human dignity, responsibility,
equality and fairness, progressiveness, diversity and
inclusion, and accountability. The policy is manda-
tory for all ISS employees and ISS partners world-
wide.
Throughout 2022, ISS worked towards integrating
the principles of the policy in existing and new pro-
cesses. The focus has been within data analytics
and data science ensuring our use cases are pre-
pared and utilises our Data Ethics frameworks. This
ensures that use cases within analytics, data science
etc. are prepared in an ethical, responsible manner
reducing the risk of bias and minimising potential
negative impact.
Data ethics are considered in all relevant initiatives
and are included in applicable approval processes.
Awareness and training efforts will be conducted to
generate awareness. Finally, the policy also estab-
lishes governing principles for the application of
data ethics when developing and deploying data
processing technologies based on AI solutions.
These principles are implemented in order to en-
sure safe, accountable, transparent and non-dis-
criminative use of AI technology in ISS.
The 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
here:
https://brand.issworld.com/m/7718dae21a3a6761/
original/ISS-Data-Ethics-Policy-20211215-_Final.pdf
GOVERNANCE 31
Our governance structure
FINANCIAL STATEMENTS 32
Primary financial statements
Statement of profit or loss
33
Statement of comprehensive income
34
Statement of cash flows
35
Statement of financial position
36
Statement of changes in equity
37
Significant changes and events
38
Estimates and judgements
39
1 Operating profit
40
1.1
Segments
40
1.2
Revenue
42
1.3
Employee costs
45
1.4
Other income and expenses, net
46
2 Operating assets, liabilities and free cash flow
47
2.1
Trade receivables and credit risk
47
2.2
Other receivables
49
2.3
Other liabilities
50
2.4
Changes in working capital
50
2.5
Provisions, contingent assets and liabilities, and guarantees
51
2.6
Right-of-use assets and property, plant and equipment
56
2.7
Free cash flow
59
3 Strategic investments and divestments
60
3.1
Intangible assets
60
3.2
Impairment tests
63
3.3
Acquisitions
67
3.4
Divestments, assets held for sale and discontinued operations
69
4 Capital structure
72
4.1
Equity
72
4.2
Loans and borrowings
74
4.3
Financial income and expenses
76
4.4
Financial risk management
77
4.5
Interest rate risk
78
4.6
Liquidity risk
79
4.7
Currency risk
81
5 Tax
84
5.1
Income tax
84
5.2
Deferred tax
86
6 Remuneration
88
6.1
Management remuneration
88
6.2
Share-based payments
89
7 Other
93
7.1
Pensions and similar obligations
93
7.2
Hyperinflation in Turkey
97
7.3
Related parties
100
7.4
Fees to auditors
100
7.5
Subsequent events
100
8 Basis of preparation
101
8.1
General accounting policies
101
8.2
Change in accounting policies
103
8.3
New accounting regulations
103
8.4
Group companies
104
8.5
Definitions
106
Consolidated
financial
statements
FINANCIAL STATEMENTS 33
Statement of profit or loss
1 January – 31 December
(DKKm) 2022 2021
Revenue
1.1, 1.2
76,558
71,383
Employee costs
1.3
(47,533)
(45,602)
Consumables
(6,598)
(5,020)
Other operating expenses
(17,301)
(16,276)
Depreciation and amortisation 2.6, 3.1 (1,386) (1,565)
Operating profit before other items
3,740
2,920
Other income and expenses, net
1.4 78 456
Royalty
(1,274)
(1,225)
Goodwill impairment
3.2
-
(459)
Amortisation/impairment of brands and customer contracts
3.1 (69) (64)
Operating profit
1.1
2,475
1,628
Financial income
4.3
299
110
Financial expenses
4.3
(617)
(683)
Profit before tax
2,157
1,055
Income tax
5.1, 5.2
(361)
(559)
Net profit from continuing operations
1,796
496
Net profit from discontinued operations
3.4
159
110
Net profit
1,955
606
Attributable to:
The owner of ISS Global A/S
1,877
584
Non-controlling interests
78
22
Net profit
1,955 606
Note
FINANCIAL STATEMENTS 34
Statement of comprehensive income
1 January – 31 December
(DKKm)
Note
2022
2021
Net profit 1,955 606
Items that will not be reclassified to profit or loss:
Remeasurement gain/(loss), defined benefit plans
7.1
208
1,145
Asset ceiling, defined benefit plans
7.1
(43)
(1,080)
Tax
5.2 (53) (11)
Items that may be reclassified to profit or loss:
Foreign exchange adjustments of foreign entities
4.1
(31)
174
Fair value adjustments of net investment hedges
4.1, 4.7
(43)
(191)
Recycling of accumulated foreign exchange adjustments on country exits
4.1
(36)
15
Hyperinflation restatement of equity at 1 January
7.2
814
-
Tax
4.1
10
42
Other comprehensive income
826
94
Comprehensive income 2,781 700
Attributable to:
The owners of ISS Global A/S
2,385
693
Non-controlling interests
396
7
Comprehensive income
2,781
700
FINANCIAL STATEMENTS 35
Statement of cash flows
At 31 December
(DKKm) Note 2022 2021
Operating profit before other items
3,740
2,920
Operating profit before other items from discontinued operations
3.4
31
87
Depreciation and amortisation
2.6, 3.1
1,386
1,565
Non-cash items related to hyperinflation
7.2
(51)
-
Share-based payments
40
34
Changes in working capital
2.4
407
1,039
Changes in provisions, pensions and similar obligations
(665)
(407)
Other expenses paid
(31)
(50)
Interest received from companies within the ISS Group
83
65
Interest received
85
40
Interest paid to companies within the ISS Group
8
-
Interest paid
(483)
(472)
Income tax paid
5.1
(338)
(443)
Payments related to royalties
(1,192)
(1,157)
Cash flow from operating activities
3,020
3,221
Acquisition of businesses
3.3
(325)
(526)
Divestment of businesses
3.4
587
1,191
Acquisition of intangible assets and property, plant and equipment
(616)
(466)
Disposal of intangible assets and property, plant and equipment
28 42
Acquisition of financial assets, net
(30)
(6)
Cash flow from investing activities
(356)
235
Repayment of bonds
4.2 - (1,577)
Repayment of lease liabilities
4.2
(850)
(935)
Other financial payments, net
4.2
(41)
(431)
Changes in debt to companies within the ISS Group, net
4.2
40
(215)
Changes in receivables from companies within the ISS Group, net
3
-
Transactions with non-controlling interests
(7)
164
Cash flow from financing activities
(855) (2,994)
Total cash flow
1,809 462
Cash and cash equivalents at 1 January
3,427 2,741
Total cash flow
1,809 462
Foreign exchange adjustments
(70) 224
Cash and cash equivalents at 31 December
4.2 5,166 3,427
Free cash flow
2.7 1,616 1,900
FINANCIAL STATEMENTS 36
Statement of financial position
At 31 December
(DKKm) Note 2022 2021
Assets
Intangible assets
3.1, 3.2
17,246
16,055
Right-of-use assets
2.6
2,345
2,377
Property, plant and equipment
2.6
891
896
Receivables from companies within the ISS Group
3,386
3,164
Deferred tax assets
5.2
897
790
Other financial assets
449
451
Non-current assets
25,214
23,733
Inventories
231
177
Trade receivables
2.1
10,996
10,406
Tax receivables
145
164
Receivables from companies within the ISS Group
180
466
Other receivables
2.2
1,600
1,491
Cash and cash equivalents
4.6
5,166
3,427
Assets held for sale
3.4
32
493
Current assets
18,350
16,624
Total assets
43,564
40,357
Equity and liability
Equity attributable to owners of ISS A/S
6,424
4,039
Non-controlling interests
602
206
Total equity
4.1 7,026 4,245
Loans and borrowings
4.2
15,893
16,032
Pensions and similar obligations
7.1
1,185
1,351
Deferred tax liabilities
5.2
536
378
Provisions
2.5
465
755
Non-current liabilities
18,079 18,516
Loans and borrowings
4.2 1,000 866
Trade and other payables
6,757
5,566
Tax payables
172 174
Other liabilities
2.3 9,914 9,749
Provisions
2.5 606 961
Liabilities held for sale
3.4 10 280
Current liabilities
18,459 17,596
Total liabilities
36,538 36,112
Total equity and liabilities
43,564 40,357
FINANCIAL STATEMENTS 37
Statement of changes in equity
1 January – 31 December
(DKKm)
Note
Share
capital
Retained
earnings
Translation
reserve
1)
Total
Non-con-
trolling
interests
Total
equity
2022
Equity at 1 January
180 4,816 (957) 4,039 206 4,245
Net profit
-
1,877
-
1,877
78
1,955
Other comprehensive income 4.1 - 148 360 508 318 826
Comprehensive income
- 2,025 360 2,385 396 2,781
Changes in equity
- 2,025 360 2,385 396 2,781
Equity at 31 December
180 6,841 (597) 6,424 602 7,026
2021
Equity at 1 January
180 3,998 (1,012) 3,166 29 3,195
Net profit
-
584
-
584
22
606
Other comprehensive income
4.1 -
54
55
109
(15)
94
Comprehensive income
-
638
55
693
7
700
Non-controlling interests
-
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
1)
At 31 December 2022, DKK 6 million (2021: DKK 39 million) of accumulated foreign exchange gains related to discontinued operations.
Attributable to the owner of ISS Global A/S
FINANCIAL STATEMENTS 38
Significant changes and events
Divestment programme
Hyperinflation in Turkey
Effective
1
January
2022,
the
Group
implemented
IAS
29,
Financial
Reporting
in
Hyperinflationary
Economies
as
the
cumulative
three-year inflation in Turkey exceeded 100%.
In 2022, the strategic divestment programme was successfully completed as we divested Taiwan, Russia and Portugal as well as
two business units in Hong Kong and the UK. As a result, a net gain of DKK 243 million was recognised in profit or loss in 2022.
See 3.4, Divestments, discontinued operations and assets held for sale for further details.
As
a
result,
the
financial
statements
of
ISS
Turkey
for
2022
have
been
restated
based
on
changes
in
the
general
price
index
and
by
applying end-of period exchange rates. Comparative figures were not restated.
The
implementation
did
not
have
a
material
impact
on
the
Group’s
key
financial
KPIs.
Impact
and
applied
accounting
policies
are
disclosed in 7.2, Hyperinflation in Turkey.
In 2022, the Group's performance and financial position was affected by the significant changes and events highlighted below. A
detailed review of the Group's performance is provided in the Management's Review on pp. 5-15.
Macroeconomic environment
Russia-Ukraine war
In
2022,
we
saw
significant
macroeconomic
uncertainties
(among
others
due
to
the
Russia-Ukraine
war)
leading
to
increased
interest and inflation rates. These developments have impacted certain accounting estimates and judgements, including
assumptions made by management, most significantly in relation to:
In
March
2022,
we
divested
our
business
in
Russia
as
part
of
the
strategic
divestment
programme.
In
addition,
ISS
has
no
material
activities in Ukraine. Consequently, the Russia-Ukraine war did not have a material impact on the results of the Group’s operations
and financial position in 2022. However, the impact of the war led to increased operating costs due to generally increased
inflation rates which were in all material respects mitigated through price increases in our customer contract portfolio.
• Impairment tests, note 3.2
• Pensions and similar obligations, note 7.1
• Onerous contracts, note 2.5
FINANCIAL STATEMENTS 39
Estimates and judgements
Note Significant estimates and judgements
Estimate/
Judgement
Impact
1.2 Revenue • Revenue recognition – impact from contract modifications
and variable consideration
Estimate/Judgement
••
• Gross or net presentation Judgement
•
2.2 Other receivables • Capitalisation of transition and mobilisation costs Judgement
•
2.5 Provisions • Onerous contracts – future profitability Estimate/Judgement
•••
• Assumptions for claims, disputes and legal proceedings Judgements
•••
2.6 Right-of-use
assets
• Lease term, including extension options mainly related
to buildings
Judgement
••
3.1 Intangible assets • Cloud-based arrangements – assessment of control Judgement
•
• Capitalisation of configuration and customisation costs
for software
Judgement
•
3.2 Impairment
tests
• Key assumptions in impairment test of goodwill and
other intangible assets
Estimate
•••
5.2 Deferred tax • Recognition of deferred tax assets – future taxable profit
available
Estimate
•
• Uncertain tax positions – estimate of the amount required to
settle the obligation
Estimate/
Judgement
•
7.1 Pensions and similar
obligations
• Assumptions for actuarial gains and losses, e.g. inflation and
discount rates, future salary and pension increases increases
Estimate
•
• Low
•• Medium
••• High
The table below provides an overview of the Group's significant accounting estimates and judgements and the significance of
impact on the consolidated financial statements.
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.
FINANCIAL STATEMENTS 40
Operating profit
1.1 Segments
1.1.1 Operating segments
(DKKm)
Northern
Europe
Central &
Southern
Europe
Asia &
Pacific
Ameri-
cas
Other
countries
Total
seg-
ments
Unallo-
cated/
elimination
Total
Group
2022
1)
Revenue, excl. IAS 29
2)
28,694 24,538 14,012 8,585 606 76,435 (31) 76,404
Revenue
28,694
24,692
14,012
8,585
606
76,589
(31)
76,558
Depreciation and amortisation (557) (575) (147) (97) (4) (1,380) (6) (1,386)
Operating profit before other items, excl. IAS 29
2)
1,519 1,108 882 445 27 3,981 (212) 3,769
Operating profit before other items
1,519
1,079
882
445
27
3,952
(212)
3,740
Operating margin
5.3%
4.4%
6.3%
5.2%
3.1%
5.2%
-
4.9%
Operating margin, excl. IAS 29
5.3%
4.5%
6.3%
5.2%
3.1%
5.2%
-
4.9%
Other income and expenses, net
62
(13)
160
(124)
-
85
(7)
78
Royalty
(467)
(386)
(280)
(131)
(10)
(1,274)
-
(1,274)
Amortisation/impairment of
brands and customer contracts
(16) (27) (4) (22) - (69) - (69)
Operating profit
1,098
653
758
168
17
2,694
(219)
2,475
2021
Revenue
27,675
23,585
12,381
7,141
626
71,408
(25)
71,383
Depreciation and amortisation (659) (581) (212) (109) (3) (1,564) (1) (1,565)
Operating profit before other items
1,290
583
735
393
16
3,017
(97)
2,920
Operating margin
4.7%
2.5%
5.9%
5.5%
2.6%
4.2%
-
4.1%
Other income and expenses, net
(1)
447
(2)
78
-
522
(66)
456
Goodwill impairment
-
(459)
-
-
-
(459)
-
(459)
Royalty (519) (378) (188) (131) (9) (1,225) - (1,225)
Amortisation/impairment of
brands and customer contracts
(21) (11) (7) (26) - (65) 1 (64)
Operating profit
749
182
538
314
7
1,790
(162)
1,628
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.
2)
Effective 1 January 2022, ISS Turkey was restated for hyperinflation in accordance with IAS 29, cf. 7.2, Hyperinflation in Turkey.
1)
Effective 1 January 2022, the Group reorganised its European business into the regions Northern Europe and Central & Southern Europe consistent
with the Group’s internal management and reporting structure. As a result, the Netherlands, Belgium & Luxembourg, Poland and Lithuania were
moved from Central & Southern Europe (previously Continental Europe) to Northern Europe. Asia & Pacific and Americas remained unchanged.
Comparative figures for 2021 were restated accordingly.
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-based 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 8.4, Group companies.
FINANCIAL STATEMENTS 41
1.1 Segments
(continued)
1.1.2 Geographical distribution
(DKKm)
2022
2021
2022
2021
UK & Ireland
10,396
10,634
2,172
2,334
US & Canada
6,387
5,298
2,492
2,362
Switzerland
5,729
5,212
1,950
1,549
Germany
5,556
5,429
1,016
1,007
Australia & New Zealand
4,868
4,349
1,384
1,399
Spain
4,122
4,420
1,263
1,246
Norway
4,016
3,181
668
693
Denmark (country of domicile)
3,169
3,661
813
880
Other countries
2)
32,315 29,199 12,616 11,473
Total
76,558
71,383
24,374
22,943
1)
Excluding deferred tax assets.
2)
Including unallocated items and eliminations.
Accounting policy
Non-current assets
1)
Revenue
The
segmentation
is
consistent
with
the
Group’s
strategic
management
and
reporting
structure
applied
by
the
Executive
Group
Management, and excludes discontinued operations. Segments are managed primarily based on business performance measured
by Operating profit.
The geographical distribution of segment revenue and non-current assets is based on the geographical location of the individual
subsidiary from which the sales transaction originates. Significant countries are defined as countries representing more than 5% of
Group revenue as well as the domicile country, Denmark. No customer comprise more than 10% of Group revenue.
Segment
revenue
and
costs
comprise
items
that
are
directly
attributable
to
the
individual
segments.
Unallocated
items
mainly
consist of revenue and cost relating to the Group’s corporate functions. Decisions on financing (financial income and expenses) as
well as tax planning (income tax) are managed at Group level and are therefore not managed and allocated to segments.
Segment revenue is presented including internal revenue which due to the nature of the business is insignificant and therefore not
disclosed. Transactions between operating segments are made on market terms.
FINANCIAL STATEMENTS 42
1.2 Revenue
1.2.1 Performance obligations
(DKKm)
2022
2021
Portfolio revenue
62,892
57,499
Projects and above-base work
13,666
13,884
Total
76,558
71,383
1.2.2 Disaggregation of revenue
(DKKm)
2022
2021
Customer categroy
Key accounts
54,686
49,258
Large and medium
17,387
17,958
Small and route-based
4,485
4,167
Total
76,558
71,383
Customer segments
Office-based
30,667
n/a
Production-based
18,094
n/a
Healthcare
10,046
n/a
Other
17,751
n/a
Total
76,558
n/a
Core Services
Cleaning
34,697
34,419
Technical
16,644
16,229
Food
10,177
7,541
Workplace, incl. Other
15,040
13,194
Total
76,558
71,383
Disaggregation of revenue based on geographical region is disclosed in 1.1, Segments.
Aligned with our strategy to focus on key accounts in three prioritised segments, where we deliver our core services, we
disaggregate revenue based on:
• customer category;
• customer segment;
• services; and
• geographical region.
We believe that these best depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by
economic factors.
Revenue
is
generated
from
rendering
of
workplace
and
facility
service
solutions.
Our
services
are
provided
at
the
customer's
site
on a daily basis continuously over the term of the contract. The customer simultaneously receives and consumes the benefits
provided by the Group. Thus, performance obligations are satisfied over time.
Revenue is split between portfolio and projects and above-base work, with the vast majority stemming from portfolio revenue,
approx. 82% (2021: 81%).
Portfolio
revenue
comprises
revenue
from
contracts
with
customers
that
is
contractually
agreed
(committed)
at
inception
and
relates to services that we are obligated to render on a recurring basis over the term of the contract. Revenue from projects and
above-base work (e.g. capital projects) is demanded on a non-recurring basis and agreed separately with the customer.
FINANCIAL STATEMENTS 43
1.2 Revenue
(continued)
1.2.3 Costs to fulfill a contract
1.2.4 Revenue backlog
(DKKm)
2022
2021
< 1 year
34%
21,413
33%
20,310
1-5 years
54%
34,407
50%
30,586
> 5 years
12%
7,352
17%
10,148
Total
100%
63,172
100%
61,044
As
a
result,
the
amounts
disclosed
in
the
maturity
table
are
significantly
lower
than
reported
revenue
and
will
likely
not
reflect
the
degree of certainty in future revenue (and cash inflows) to the Group. As a supplement, in the management review, p. 10, a
maturity overview for our largest key accounts (> DKK 200 million of annual revenue) is presented.
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 of 94% (excl.
the exit of the Danish Defence contract), both for key accounts and overall, supporting that these options are rarely exercised.
As
described
in
1.2.1,
Performance
obligations,
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. Projects and above-base work is not committed as part of the main
customer contract and is therefore excluded from the transaction price to be allocated to the remaining performance obligation
(revenue backlog). In addition, the Group has applied the exemptions of IFRS 15, and excluded the following from the backlog:
The
size
and
complexity
of
key
account
contracts
often
requires
ISS
to
incur
significant
transition
and
mobilisation
costs
before
service delivery commences in order to be able to fulfill the performance obligations under the contracts.
Transition
and
mobilisation
costs
comprise
costs,
directly
related
to
launching
certain
large
long-term
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.
At
31
December
2022,
capitalised
transition
and
mobilisation
costs
amounted
to
DKK
36
million
(2021:
DKK
62
million).
No
significant additional costs were capitalised in 2022.
Capitalised transition and mobilisation costs are presented in 2.2, Other receivables.
• contracts with a term of less than 12 months; and
• contracts where the Group invoices a fixed amount for each hour of service provided.
FINANCIAL STATEMENTS 44
1.2 Revenue
(continued)
Significant accounting estimates and judgements
Accounting policy
1) Fixed price contracts
2) Cost-plus contracts; and
3) Cost-plus variations (typically capped)
Our
customer
contracts
are
based
on
three
different
commercial
models
requiring
varying
levels
of
management
estimates
and
judgement in determining the transaction price:
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.
For
fixed
price
contracts,
revenue
is
recognised
based
on
the
transaction
price
stated
in
the
contract,
and
thus
require
limited
judgement from management.
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 expected consideration for those services. Control is transferred over time as the customer simultaneously
receives and consumes the benefits provided by the Group.
For
key
accounts
and
other
large
contracts,
the
transaction
price
may
also
include
a
variable
consideration
based
on
achievement
of certain key performance indicators and gain share. 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.
Services are invoiced on a monthly basis at an amount corresponding to the value of the completed performance obligation.
For
cost-plus
contracts,
including
variations
e.g.
with
a
cap,
ISS’s
transaction
price
is
determined
based
on
costs
incurred
with
the
addition of an agreed markup/management fee. Determining the transaction price requires management to assess, which costs
may be included in the calculation basis and if relevant, whether within the capped maximum.
Price adjustment mechanisms in our customer contracts vary in terms of content and extent. Judgement is required by
management to determine the amount of revenue expected to be received as a result of inflationary pressure on costs of delivery.
Contract modifications regularly occur, particularly for key account customers, in order to ensure that service solutions reflect their
current needs. Such modifications are generally agreed with the customer in advance as per the contract in accordance with a
specified change management procedure and accounted for going forward with no impact on recognised revenue up to the date
of modification. Management assess how quickly ISS would be able to implement the scope changes of the service.
FINANCIAL STATEMENTS 45
1.3 Employee costs
(DKKm)
2022
2021
Wages and salaries 38,048 36,459
Social security costs
5,949
5,569
Pensions
7.1
1,448
1,376
Share-based payments
6.2
40
33
Other
2,048
2,165
Total
47,533
45,602
Average number of employees
352,540
362,554
Government grants
Our strategy is based on self-delivery of our core services by our placemakers. Our business model is asset light and therefore
employee costs is our single largest cost category.
In addition, the Group received Covid-19 grants during the pandemic to compensate costs related to e.g. employees on furlough,
social security contribution and sick pay compensation. With the cessation of the pandemic, the grants have gradually lapsed. In
2022, the Group recognised Covid-19 related grants of DKK 122 million (2021: DKK 432 million), mainly in the US, Hong Kong and
Sweden.
In
2022,
the
Group
recognised
government
grants
of
DKK
159
million
(2021:
DKK
135
million)
in
the
form
of
wage
subventions,
which have been recognised as a reduction of employee costs. The grants compensate the Group primarily for social security,
wage increases as well as employing certain categories of employees such as trainees, disabled persons, long-term unemployed
and employees in certain age groups.
Note
In 2022, employee costs comprised 65% of the total operating costs (2021: 67%) and were positively impacted by a refund of
collective insurance premiums paid in prior years in Sweden of DKK 23 million (2021: DKK 78 million).
FINANCIAL STATEMENTS 46
1.4 Other income and expenses, net
(DKKm)
2022
2021
Gain on divestments
227
621
IT security incident
-
7
Other income
227
628
Loss on divestments
(124)
(34)
Integration costs
(7)
-
Acquisition costs
(4)
(77)
Ceased held for sale classification
-
(59)
Other
(14)
(2)
Other expenses
(149)
(172)
Other income and expenses, net
78
456
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 operating activities, 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.
Gain on divestments mainly related to the Waste Management business in Hong Kong and the damage control business in the
UK. In 2021, gain on divestments mainly related to Kanal Services in Switzerland and Specialized Services in the US.
Loss
on
divestments
mainly
comprised
to
a
withdrawal
liability
on
a
multiemployer
plan
in
the
US
related
to
the
divestment
of
the
Specialized Services business in December 2021. In 2021, the loss mainly related to adjustments to prior years’ divestments and
the divestment of the Fruit Baskets business in Sweden.
Acquisition costs mainly related to the acquisition of Livit FM Services AG in Switzerland (2021: Rönesans Facility Management
Company).
Ceased
held
for
sale
classification
comprised
depreciation
and
amortisation
for
the
years
2019
to
2020
due
to
the
ceased
held
for sale classification of Chile in 2021.
Other income and expenses, net are presented separately from the Group's ordinary operating activities as management
believes that this best reflects the Group's financial performance.
Integration costs
related to the acquisition of Livit FM Services AG in Switzerland.
Other
comprised mainly costs related to winding-up of a minor business in Germany.
FINANCIAL STATEMENTS 47
SECTION 2
Operating assets, liabilities and free cash flow
2.1 Trade receivables and credit risk
2022 2021
(DKKm)
Gross
Expected
credit losses
Carrying
amount Gross
Expected
credit losses
Carrying
amount
Central & Southern Europe 4,553 (50) 4,503 4,355 (64) 4,291
Northern Europe 3,218 (24) 3,194 3,303 (37) 3,266
Asia & Pacific
2,072
(38)
2,034
1,852
(49)
1,803
Americas
1,171
(12)
1,159
964
(12)
952
Other countries
106
-
106
94
-
94
Total 11,120 (124) 10,996 10,568 (162) 10,406
Not past due
9,762
(6)
9,756
9,418
(4)
9,414
Past due 1 to 60 days
1,073
(4)
1,069
866
(6)
860
Past due 61 to 180 days
179
(14)
165
138
(12)
126
Past due 181 to 360 days 22 (20) 2 37 (34) 3
More than 360 days 84 (80) 4 109 (106) 3
Total 11,120 (124) 10,996 10,568 (162) 10,406
Expected credit losses
(DKKm)
2022
2021
At 1 January
(162)
(299)
Foreign exchange adjustments
6
1
Divestments
2
0
Additions
(59)
(45)
Unused amounts reversed
74
120
Unrecoverable amounts written off
15
64
Reclassification to Assets held for sale
-
(3)
At 31 December
(124)
(162)
Development in 2022
In 2022, trade receivables increased to DKK 10,996 million (2021: DKK 10,406 million) mainly as a result of organic growth driven by
return-to-office trends and food service recovery.
At 31 December 2022, commercial use of factoring with certain large key account customers and participation in certain
customers' supply chain finance arrangements was DKK 1.3 billion (31 December 2021: DKK 1.1 billion).
At 31 December 2022, expected credit losses were 1.1% (2021: 1.5%) of trade receivables (gross) and trade receivables not past
due was 89% of trade receivables, net (2021: 90%).
FINANCIAL STATEMENTS 48
2.1 Trade receivables and credit risk
(continued)
Exposure to credit risk
- low exposure
Risk management
Accounting policy
Factoring
and
participation
in
customers’
supply
chain
finance
arrangements
(factoring)
are
mainly
used
to
optimise
cash
collection and to finance working capital impacts related to growth with certain key account customers, including from general
pressure for longer payment terms and necessary investments in transition and mobilisation of such contracts. Trade receivables
subject to factoring agreements are derecognised once the derecognition criteria have been met and all substantial risks and
rewards have been transferred to the factor. Once the trade receivables have been derecognised, the Group does not carry any
risk and has no continuing involvement in these trade receivables.
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 services. Also, the completion of our
divestment programme has contributed to the low risk assessment as higher-risk countries and business units have been
divested.
Generally, the Group does not hold collateral as security for trade receivables.
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 grouping of customer segments with similar loss patterns, e.g. by geographical
region, customer type and rating. The calculation reflects the probability-weighted outcome, the time value of money, reasonable
and supportable information about past events, current conditions and forecasts of future economic conditions.
Trade receivables comprise invoiced and unbilled revenue. Unbilled revenue represents service deliveries where the performance
obligation has been fulfilled, but not yet invoiced.
Trade
receivables
are
generally
written
off
if
they
are
past
due
more
than
180
days
or
when
there
is
no
reasonable
expectation
of
recovery. Write-offs are presented in Other operating expenses. Subsequent recovery of write-offs or reversal of expected credit
losses are credited against the same line item.
Trade receivables are recognised initially at the transaction price and subsequently measured at amortised cost. Due to its short-
term nature, amortised cost will equal the invoiced amount less expected credit losses.
In 2022, the increased inflation rates were managed tightly through price increases. The vast majority of cost increases were
passed on to customers as per the agreed contractual terms with no increase in credit losses.
We have a strong ongoing assessment and monitoring of customers' creditworthiness and the credit limits are set as deemed
appropriate taking into account the customer’s financial position and the current market conditions.
Exposure to credit risk and expected credit losses are managed locally in the operating entities.
FINANCIAL STATEMENTS 49
2.2 Other receivables
(DKKm)
2022
2021
Supplier rebates and bonuses
424
352
Prepayments to suppliers
297
282
Receivable divestment proceeds
114
155
Sign-on fees
110
134
Securities
104
103
Government grants
103
27
Derivatives
50
-
Transition and mobilisation costs
36
62
Other
362
376
Total
1,600
1,491
Significant accounting judgement
Transition and mobilisation costs comprised directly related costs incurred to fulfill the performance obligations under certain
large contracts, cf. 1.2, Revenue. The decrease in 2022 was due to ordinary amortisation, mainly in Denmark, Sweden and the UK.
Prepayments to suppliers
comprised various payments mainly related to IT licences, utilities and insurance.
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 2022 was due to the general pick-up in
activity, especially driven by the return-to-office trends and recovery of food services.
Sign-on fees comprised upfront discounts to certain large customers, most significantly in the UK and on certain global key
accounts.
Receivable
divestment
proceeds
mainly
related
to
the
divestment
of
Specialized
Services
in
the
US,
where
part
of
the
consideration
is subject to customer consent.
Securities
related to a savings plan in the US administered by ISS on behalf of certain senior employees.
Government grants
related to various receivables, including Covid-19 related, mainly in the US, Spain and Denmark.
Other
comprised refunds from customers, accrued interest, VAT, employee-related taxes and other recoverable amounts.
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 fulfill the contract. In addition, management determines if the costs generate resources that will be used in satisfying
the performance obligations and are expected to be recovered, i.e. reflected in the pricing of the contracts.
FINANCIAL STATEMENTS 50
2.2 Other receivables
(continued)
Accounting policy
2.3 Other liabilities
(DKKm)
2022
2021
Accrued wages, pensions and holiday allowances
5,389
4,616
Tax withholdings, VAT etc.
1,666
2,211
Debt to companies within the ISS Group
1,410
1,245
Prepayments from customers
805
868
Saving plans
104
103
Contingent consideration and deferred payments
12
31
Other
528
675
Total
9,914
9,749
2.4 Changes in working capital
(DKKm)
2022
2021
Changes in inventories
(61)
4
Changes in receivables
(870)
(136)
Changes in payables
1,338
1,171
Total
407
1,039
Other
comprised comprised customer discounts, accrued interests, etc.
Transition
and
mobilisation
costs
(costs
to
fulfill
a
contract)
comprise
costs
directly
related
to
startup
of
operations
of
certain
large
contracts, e.g. transfer of employees from previous suppliers, site due diligence, planning and developing service plans. The costs
include internal direct costs and external costs e.g. to consultants.
Saving plans
related to a plan in the US which is administered by ISS on behalf of certain senior employees.
Except for the items described below, other receivables are recognised initially at cost and subsequently at amortised cost. Due to
the short-term nature of other receivables, amortised cost will equal the cost.
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.
Securities
and
derivatives
are recognised at fair value.
Other receivables comprise various items of different nature and thus different measurement methods are applied. As these items
are considered individually immaterial they are presented together as Other receivables.
Transition
and
mobilisation
costs
are
capitalised
and
amortised
over
the
initially
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.
FINANCIAL STATEMENTS 51
2.5 Provisions, contingent assets and liabilities, and guarantees
2.5.1 Provisions
Legal claims and disputes
Self-insurance
Restructuring projects
Onerous contracts
In
2022,
execution
of
the
projects
continued,
which
led
to
a
decrease
of
DKK
303
million
mainly
due
to
severance
payments
in
Germany, France and Spain.
The
provision
covers
the
unavoidable
costs
for
certain
loss-making
contracts.
The
increased
inflation
during
2022,
and
resulting
cost increases, was generally managed through price increases and cost reductions. Consequenly, inflation did not lead to
identification of any significant new onerous contracts or increased provision for contracts already recognised as onerous.
In 2022, the decrease of DKK 253 million was mainly related to the exit from the Danish Defence contract, including payment of an
exit fee, termination of lease obligations and disposal of equipment as well as utilisation of the provision for a key account contract
in Hong Kong. Furthermore, in France and the UK improvement initiatives on a few minor loss-making contracts led to reversal of
amounts provided in prior years.
At
31
December
2022,
the
remaining
provision
related
to
a
key
account
contract
in
Hong
Kong
and
a
few
minor
contracts
in
a
few
countries.
The
provision
for
self-insurance
mainly
relates
to
employers’
liability
and/or
workers
compensation
in
certain
countries
and
covers
claims by employees for medical benefits and lost wages associated with injuries/illness incurred in the course of their
employment. The relevant countries, including self-insurance limits are listed below:
• Hong Kong: DKK 26.8m (2021: DKK 25.2m) yearly
• UK: DKK 25.2m (2021: DKK 26.6m) yearly aggregated limit and DKK 4.2m (2021: DKK 4.4m) per claim
• Australia: DKK 4.7m (2021: DKK 3.6m) per claim
• US: DKK 3.5m (2021: DKK 3.3m) per claim
The
provision
also
includes
obligations
not
covered
by
the
global
general
business
liability
insurance
in
relation
to
damage
caused
in the ordinary course of service delivery, e.g. property damage and bodily injury. The Group is self-insured for claims below DKK
7.4 million (EUR 1 million per claim).
The
provision
mainly
covers
restructuring
projects
initiated
in
2020
in
several
countries.
The
purpose
was
to
adjust
our
cost
base
on the back of Covid-19 and involved overhead reductions, including termination of employees and contract exits.
ISS
is
exposed
to
various
risks
and
uncertainties,
and
party
to
certain
disputes,
claims,
investigations
and
legal
proceedings
arising
out of the normal conduct of its business. These are mainly within the following areas:
• Commercial/contractual matters
• Labour-related
• Divestments and M&A
• Tax/social regulations
Provisions
have
been
recognised
in
relation
to
such
obligations
for
probable
losses,
that
management
deems
reasonable
and
appropriate at 31 December 2022 as reflected in the table to the right.
In
addition,
ISS
is
exposed
to
possible
obligations
in
relation
hereto
as
described
below
under
2.5.2,
Contingent
assets
and
liabilities.
The provision primarily relates to labour-related claims and disputes regarding wages, overtime, holiday, severance etc. as well as
claims and disputes in relation to contractual disagreements with customers and suppliers. In addition, the provision includes
claims and disputes associated with our divestment activities. Such claims and disputes arise out of the normal conduct of
business. At 31 December 2022, the majority related to the UK, the US, France and Spain.
FINANCIAL STATEMENTS 52
2.5 Provisions, contingent assets and liabilities, and guarantees
(continued)
Other provisions
At 31 December 2022, the provision mainly related to Germany, the US, UK and France.
(DKKm)
Legal claims
and disputes
Self-
insurance
Restruc-
turings
Onerous
contracts Other Total
2022
At 1 January
235
262
374
330
515
1,716
Foreign exchange adjustments
(9)
6
-
3
4
4
Additions
109
142
6
15
99
371
Used during the year
(41)
(149)
(263)
(191)
(90)
(734)
Unused amounts reversed
(28)
(15)
(46)
(80)
(8)
(177)
Reclass (to)/from other liabilities
2
(1)
-
-
(110)
(109)
-
At 31 December
268
245
71
77
410
1,071
Non-current
47
129
-
23
266
465
Current
221
116
71
54
144
606
2021
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
-
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
2.5.2 Contingent assets and liabilities
Contractual disagreements
Other
provisions
comprise
various
other
risks
and
obligations
incidental
to
our
business,
most
significantly
related
to
divestments
and customer and contract-related risks and disputes and decommissioning liabilities.
In
2022,
the
addition
was
mainly
due
to
recognition
of
a
withdrawal
liability
on
a
multiemployer
plan
in
the
US
related
to
the
divestment of Specialized Services in 2021.
Contractual
disagreements
with
customers
arise
on
a
recurring
basis
in
the
ordinary
course
of
ISS’s
business.
While
most
are
resolved as part of the daily contract management procedures, in some cases the contractual disagreements will lead to legal
proceedings.
The
Group
is
currently
party
to
certain
disputes
and
legal
proceedings,
including
in
relation
to
the
contract
with
Deutsche
Telekom.
The contract continues to be structurally challenging. Following an agreed dispute resolution mechanism, certain contractual
disagreements are subject to arbitration proceedings initiated by ISS.
ISS is party to pending disputes, claims, investigations and litigations arising out of the normal conduct of its business and is
therefore exposed to possible obligations. Management believes that these will not have a material impact on the Group’s financial
position eyond the assets and liabilities recognised in the statement of financial position at 31 December 2022. However, the
existence of such possible obligations will only be confirmed by the occurrence of future events, not entirely within ISS’s control.
Due to the inherent uncertainty, future events may lead to material adverse effects on the Group’s profit or loss and financial
position from one or more of these possible obligations.
FINANCIAL STATEMENTS 53
2.5 Provisions, contingent assets and liabilities, and guarantees
(continued)
Labour-related risks
Divestments
Restructuring projects
2.5.3 Guarantees
(DKKm)
2022
2021
Bank-guaranteed performance bonds
1,755
1,761
Other performance bonds
1,831
1,819
Performance guarantees (service contracts)
3,586
3,580
472
479
(service contracts)
Performance guarantees
Indemnity and guarantee commitments
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 disputes and possibly liabilities.
Management believes that this would not have a material impact on the Group’s financial position beyond the assets and liabilities
already recognised at 31 December 2022.
The
Group
is
currently
party
to
certain
labourrelated
claims,
disputes
and
legal
proceedings,
e.g.
around
wages,
overtime,
holiday
and severance. Management believes that these would not have a material impact on the Group’s financial position beyond the
assets and liabilities already recognised at 31 December 2022.
The
Group
makes
provisions
for
claims
from
purchasers
or
other
parties
in
connection
with
divestments
and
the
representations
and warranties given in relation to such divestments. In addition, the Group’s divestment activities can give rise to possible
obligations, mainly labour-related, including pension plans, and related to disputes in relation to sales price.
Being
a
people
company
operating
across
different
geographies
and
service
areas
exposes
us
to
varying
and
changing
labour
laws, especially across Europe. Although we have policies and procedures in place to ensure that we comply with current
regulations, interpretations and procedures applied by ISS could be challenged in certain jurisdictions and result in disputes and
possibly liabilities.
ISS
has
issued
certain
guarantees
in
the
normal
course
of
business.
Guarantees
do
not
represent
legal
or
constructive
obligations
and are not recognised in the statement of financial position at 31 December 2022.
ISS
regularly
issues
performance
guarantees
to
customers
to
guarantee
satisfactory
completion
of
work
in
accordance
with
the
service contract. Such guarantees are issued in the ordinary course of business, either in the form of bank guarantees, parent
guarantees or insurances.
Other
guarantees
are
mainly
issued
to
insurance
companies
towards
self-insurance
liabilities
as
well
as
to
owners
of
rental
property occupied by ISS in certain countries. Furthermore, in a few instances guarantees have been issued to public authorities
towards tax withholding liabilities.
Indemnity and guarantee commitments
FINANCIAL STATEMENTS 54
2.5 Provisions, contingent liabilities and guarantees
(continued)
Significant accounting estimates and judgement
Onerous contracts 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, including in relation to termination and extension options.
Restructurings and other provisions Management makes judgements related to various other matters and obligations, primarily
relating to planned/initiated restructurings, and complex customer and contract-related risks and disputes, including ongoing
lawsuits. Management’s assessment of the likely outcome of lawsuits, tax disputes, etc., is based on external legal assistance and
established precedents.
For
large,
complex
contracts,
the
outcome
may
vary
significantly
should
the
judgements
and
assumptions
applied
by
management
in their assessment of the risks and disputes not be realised as expected.
Certain
contracts
are
large,
complex
and
longer
term
facility
service
partnerships.
In
estimating
unavoidable
costs
in
relation
to
such contracts, management makes assumptions around future realisation of costs taking estimated optimisations and efficiency
gains from improvement initiatives into consideration. 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. The outcome may
vary significantly should the assumptions and judgements applied not be realised as expected by management and applied as
basis for their assessment of whether a contract is onerous.
Our strategic choice to focus on key accounts increasingly leads to a customer case comprising large, more complex contracts in
terms of performance obligations towards our customers. Additionally, the size and complexity of such contracts often requires
ISS to incur significant transition and mobilisation costs before service delivery commences to enable fulfillment of the
performance obligations. Furthermore, complex restructuring projects may need to be initiated and recognised as a provision.
FINANCIAL STATEMENTS 55
2.5 Provisions and contingent liabilities
(continued)
Accounting policy
Provisions
Contingent assets and liabilities
Contingent liabilities comprise:
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.
Decommissioning
liability
,
if
the
Group
has
a
legal
obligation
to
dismantle
or
remove
an
asset
or
restore
a
site
or
leased
facilities
when vacated. The provision corresponds to the present value of expected costs to settle the obligation.
Onerous
contracts
,
when
the
unavoidable
costs,
including
directly
allocated
overhead
costs,
of
meeting
the
obligations
under
the
contract exceed the economic benefits expected to be received under it, corresponding to the lower of the costs to fulfil the
obligations under the contract and the costs of exiting the contract.
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
based
on
an
assessment
of
available
facts
and
circumstances
in
respect
of
the
specific
risks or disputes, when 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.
Restructurings
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.
1)
possible
obligations
that
arise
from
a
past
event
and
whose
existence
will
only
be
confirmed
by
the
occurrence
or
non-
occurrence of future events; and
2)
obligations
that
are
not
recognised
as
the
amount
cannot
be
measured
sufficiently
reliable
or
it
is
not
probable
that
economic
benefits will be required to settle the obligation.
Contingent
assets
are
possible
assets
whose
existence
will
be
confirmed
by
the
occurrence
or
non-occurrence
of
uncertain
future
events that are not wholly within the control of the entity.
Contingent assets and liabilities are not recognised, but disclosed in the notes.
Legal disputes and claims,
e.g. lawsuits and other disputes, based on external legal assistance and established precedents.
Self-insurance
on employers’ liability and/or workers compensation based on valuations from external actuaries.
FINANCIAL STATEMENTS 56
2.6 Right-of-use assets and property, plant and equipment
R
(DKKm)
Properties Vehicles Other
Total
2022
Cost at 1 January
2,484
1,296
577
4,357
3,381
Foreign exchange adjustments
4
(9)
(34)
(39)
(39)
Hyperinflation restatement
-
20
57
77
183
Additions
264
309
187
760
344
Acquisitions
5
34
-
39
7
Divestments
-
-
-
-
(16)
Disposals
(195)
(251)
(81)
(527)
(654)
Cost at 31 December
2,562
1,399
706
4,667
3,206
Depreciation at 1 January
(1,038)
(663)
(279)
(1,980)
(2,485)
Foreign exchange adjustments
(1)
7
18
24
31
Hyperinflation restatement
-
(7)
(13)
(20)
(107)
Impairment
-
-
-
-
(22)
Depreciation
(388)
(352)
(133)
(873)
(373)
Divestments
-
-
-
-
15
Disposals
195
251
81
527
626
Depreciation at 31 December
(1,232)
(764)
(326)
(2,322)
(2,315)
Carrying amount at 31 December
1,330
635
380
2,345
891
2021
Cost at 1 January
2,313
1,301
673
4,287
3,568
Prior year adjustments
(117)
(203)
(94)
(414)
-
Foreign exchange adjustments
51
17
(46)
22
45
Additions
347
369
140
856
308
Acquisitions
-
-
6
6
27
Divestments
-
-
-
-
(122)
Disposals
(127)
(195)
(96)
(418)
(489)
-
(8)
-
(8)
8
Reclass (to)/from Assets held for sale
17
15
(6)
26
36
Cost at 31 December
2,484
1,296
577
4,357
3,381
Depreciation at 1 January
(819)
(682)
(353)
(1,854)
(2,545)
Prior year adjustments
117
203
94
414
-
Foreign exchange adjustments
(18)
(12)
21
(9)
(57)
Impairment
(32)
-
-
(32)
(5)
Depreciation
(402)
(365)
(141)
(908)
(419)
Divestments
-
-
-
-
109
Disposals
126
195
95
416
456
Reclass
(10)
(2)
5
(7)
(24)
Depreciation at 31 December
(1,038)
(663)
(279)
(1,980)
(2,485)
Carrying amount at 31 December
1,446
633
298
2,377
896
Right-of-use assets
Property,
plant and
equipment
Reclass
FINANCIAL STATEMENTS 57
2.6 Right-of-use assets and property, plant and equipment
(continued)
Right-of-use assets
Property plant and equipment
Lease liability
Lease-related costs in profit or loss
(DKKm) 2022 2021
Depreciation of right-of-use assets
873
908
Interest expenses on lease liabilities
81
67
Leases of low-value assets
203
168
Short-term leases
87
88
Variable lease payments
11
13
Recognised in profit or loss
1,255
1,244
Hereoff cash outflow
382
336
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 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.
ISS
is
a
people
business
operating
based
on
an
asset
light
business
model.
Operating
assets
(leased
and
owned)
comprised
only
7% of the Group’s total assets at 31 December 2022. Our model is based on leasing, rather than owning, property, vehicles and
equipment.
At 31 December 2022, ISS was party to around 18,500 lease agreement of which the majority related to vehicles, whereas in terms
of asset value, the main part related to property.
Additions amounted to DKK 760 million in 2022, which was impacted by new country head office leases in Austria and Singapore
and extensions in a few other countries. This was slightly lower than 2021 where additions of DKK 856 million included new head
office leases in France and Norway and additional new vehicle leases due to contract wins in the UK, Germany, Norway, Mexico and
Finland.
Additions
of
DKK
344
million
in
2022
primarily
related
to
equipment
for
new
and
existing
contracts
and
was
broadly
in
line
with
2021.
FINANCIAL STATEMENTS 58
2.6 Right-of-use assets and property, plant and equipment
(continued)
Accounting policy
Properties
5-10 years
Cars
3-5 years
Other equipment
2-5 years
Plant and equipment
3-10 years
Leasehold improvements (lease term)
Buildings
20-40 years
Land is not depreciated.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.
Right-of-use assets are recognised at the commencement date of the lease and 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,
dismantling
and
restoration
costs
incurred
and
lease
payments made at or before the commencement date less any lease incentives received.
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.
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 methods, useful lives and residual values are reassessed at each reporting date and adjusted prospectively, if
appropriate.
Right-of-use
assets
are
depreciated
on
a
straight-line
basis
over
the
shorter
of
the
lease
term
and
the
estimated
useful
life
of
the
asset.
Certain
leases
have
a
term
of
12
months
or
less
or
are
leases
of
low-value
assets,
such
as
minor
cleaning
and
IT
equipment
and
office furniture. The recognition exemptions are applied for these leases and 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
parts
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
3-10 years
Estimated useful life
FINANCIAL STATEMENTS 59
2.7 Free cash flow
(DKKm)
2022
2021
Cash flow from operating activities
3,020
3,221
Acquisition of intangible assets and property, plant and equipment
(616)
(466)
Disposal of intangible assets and property, plant and equipment
28
42
Acquisition of financial assets, net
1)
(52) (30)
Addition of right-of-use assets, net
2)
(764) (867)
Free cash flow
1,616
1,900
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 2022 was DKK (22) million (2021: DKK (24) million).
2)
Including DKK 4 million (2021: DKK 13 million) related to discontinued operations, cf. 2.6, Right-of-use assets and property, plant and equipment.
Free
cash
flow
as
defined
by
management,
cf.
8.5,
Definitions,
is
summarised
below.
Free
cash
flow
is
not
a
financial
performance
measure defined 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 60
SECTION 3
Strategic investments and divestments
3.1 Intangible assets
(DKKm)
Goodwill Brands
Customer
contracts
Software
and other
Total
2022
Cost at 1 January
17,492
53
4,039
1,445
23,029
Foreign exchange adjustments
(35)
6
(47)
(8)
(84)
Hyperinflation restatement
644
-
235
5
884
Additions
-
-
-
263
263
Acquisitions
203
-
161
-
364
Divestments
(30)
-
(1)
(2)
(33)
Disposals
-
-
(93)
(116)
(209)
Cost at 31 December
18,274
59
4,294
1,587
24,214
Amortisation and impairment losses at 1 January
(2,429)
(49)
(3,442)
(1,054)
(6,974)
Foreign exchange adjustments
8
(6)
(22)
7
(13)
Hyperinflation restatement
-
-
(2)
(3)
(5)
Amortisation
-
(4)
(63)
(115)
(182)
Impairment
-
-
(2)
(3)
(5)
Divestments
-
-
1
2
3
Disposals
-
-
93
115
208
Amortisation and impairment losses at 31 December
(2,421)
(59)
(3,437)
(1,051)
(6,968)
Carrying amount at 31 December
15,853
-
857
536
17,246
2021
Cost at 1 January
17,065
49
3,669
1,495
22,278
Foreign exchange adjustments
282
4
11
19
316
Additions
-
-
-
114
114
Acquisitions
97
-
428
7
532
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
FINANCIAL STATEMENTS 61
3.1 Intangible assets
(continued)
Significant accounting
judgement
In SaaS arrangements, where the provider controls the application software, the assessment of whether configuration or
customisation of the software results in an intangible asset for the Group depends on the output of the configuration or
customisation activities performed. Part of the activities undertaken may entail the development of software code that enhances
or modifies, or creates additional capability to the existing on-premise software to enable it to connect with the cloud-based
software applications. If activities are performed on the Group’s infrastructure and applications, they likely represent assets that
the Group controls because they enhance, improve or customise existing software assets.
Hyperinflation restatement Implementation of IAS 29 in Turkey led to a significant increase of the Group’s intangible assets, in
total DKK 879 million, net. The increase related to goodwill (DKK 644 million), customer contracts (DKK 233 million) and software
(DKK 2 million). Further details are provided in 7.2, Hyperinflation in Turkey.
Cloud-based arrangement At the commencement date, management assesses whether the Group acquires an intangible asset, a
leased asset or receives a service over the term of the contract. If the Group receives a right to access the cloud provider's
application without further rights or control it is neither a lease nor an intangible asset. However, the Group may acquire an
intangible asset if the Group has the contractual right to take possession of the software during the contract period without
significant penalty and it is feasible for the Group to run the software on its own hardware or with another cloud provider.
Livit FM, Switzerland The acquisition in October 2022 added DKK 347 million to the Group’s intangibles relating to goodwill (DKK
191 million) and customer contracts (DKK 156 million). Further details are provided in 3.3, Acquisitions.
FINANCIAL STATEMENTS 62
3.1 Intangible assets
(continued)
Accounting policy
Brands (finite useful life)
2-5 years
Customer contracts
10-24 years
Software and other
5-10 years
Cloud-based arrangements Software within a cloud-based arrangement is recognised as either an intangible asset, a leased asset
or as a service received (Software as a Service) based on the contact and facts and circumstances of the software.
Software as a Service (SaaS) arrangements are service contracts providing the Group with the right to access a cloud provider's
application software over the contract period.
Costs
incurred
to
configure
or
customise,
and
the
ongoing
fees
to
obtain
access
to
the
cloud
provider’s
application
software
are
recognised as Other operating expenses when the services are received. Also, internal costs such as costs related to selection of
cloud provider, data conversion, training and testing are expensed as incurred in Other operating expenses.
In
some
arrangements,
certain
configuration
and
customisation
activities
undertaken
in
implementing
SaaS
arrangements
may
give rise to a separate asset, i.e. the development of a software code that enhances, modifies or creates additional capability to
the Group’s existing on-premise systems. Costs incurred for these activities are recognised as intangible assets if they are
identifiable and meet the recognition criteria and amortised over the useful life of the software similar to other intangible assets.
Amortisation methods and useful lives are reassessed at the reporting date and adjusted prospectively, if appropriate.
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.
Estimated useful life
Goodwill
is
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
contracts
are
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 demonstrated that future economic
benefits will flow to the Group are recognised in profit or loss as and when incurred.
FINANCIAL STATEMENTS 63
3.2 Impairment tests
3.2.1 Impairment test results
3.2.2 Goodwill and customer contracts
(DKKm)
Goodwill
Customer
contracts Total Goodwill
Customer
contracts Total
US & Canada
2,197
155
2,352
2,068
161
2,229
UK & Ireland
1,681
99
1,780
1,807
121
1,928
Finland
1,653
-
1,653
1,653
-
1,653
Switzerland
1,414
157
1,571
1,159
-
1,159
Australia & NZ
1,315
2
1,317
1,324
4
1,328
Turkey
849
434
1,283
262
295
557
Spain
1,005
1
1,006
1,005
1
1,006
France
936
-
936
936
-
936
Other
4,803
9
4,812
4,849
15
4,864
Total
15,853
857
16,710
15,063
597
15,660
Cash-generating units (CGUs)
Calculating Recoverable amounts
France is further described on p. 65.
The
impairment
tests
of
goodwill
and
customer
contracts
performed
at
31
December
2022
did
not
result
in
recognition
of
impairment losses (2021: DKK 459 million in France).
Except
for
France,
it
is
management’s
opinion
that
excess
values
in
the
Group’s
CGUs
are
fairly
resilient
to
any
likely
and
reasonable deteriorations in the key assumptions applied.
Consistent with the Group's management and reporting structure, the lowest level of CGUs is the individual countries, as cash
inflows are generated largely independent of cash inflows in other ISS countries (the majority of our contract portfolio is locally
based with no cross-border activities). Accordingly, impairment tests are carried out per country, and intangibles (i.e. goodwill and
customer contracts) are allocated to these.
The
recoverable
amount
of
each
CGU
is
calculated
on
the
basis
of
its
value-in-use
using
certain
key
assumptions
per
CGU,
i.e.
revenue growth, operating margin and discount rate as shown in the table to the right.
Value-in-use
cash
flow
projections
for
the
individual
CGUs
are
based
on
financial
forecasts
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. This also includes expected development in local markets in terms
of competition, inflation and growth.
More
specifically,
management
has
considered
the
expected
impacts
from
the
OneISS
strategic
priorities,
especially
around
continued key account focus, investments in technology and the global operating model. Where relevant, initiated restructurings
and other improvement initiatives, have also been taken into consideration when estimating the expected future performance
and cash flows.
The
carrying
amounts
of
intangibles
for
CGUs
representing
more
than
5%
of
intangibles,
or
CGUs
considered
to
be
at
high
risk
of
impairment are disclosed below.
2022
2021
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 test.
FINANCIAL STATEMENTS 64
3.2 Impairment tests
(continued)
Key
assumptions
1)
Revenue
growth
Operating
margin
Discount rates
(net of tax)
In 2022, the Group reached its turnaround target following improved financial performance in the UK, on the Deutsche Telekom
contract and with the exit from the Danish Defence contract. Management carefully considered the expected continued
improvement to ensure that it is properly reflected in determining the key assumptions for the specific CGUs.
Management
also
ensured
that
financial
forecasts
and
assumptions
applied
reflect
the
expected
macroeconomic
developments,
which in 2022 primarily related to the impact from increased interest and inflation rates. During the year, the Group
demonstrated its ability to manage and mitigate price increases in the supply chain, including activating indexation mechanisms
in the contract portfolio to pass on price increases to our customers. Furthermore, the impact from Covid-19 recovery in 2022 has
been considered.
Assumptions applied in the terminal period generally reflect management’s long-term expectations for the individual country.
Revenue growth reflects inflation and GDP growth and is determined based on input from external sources like IMF’s “World
Economic Outlook”. Operating margin reflects the expected normalised earnings level in the long term.
Corporate
costs
for
the
services
performed
by
the
Group’s
head
office
functions
for
the
benefit
of
the
CGUs
are
allocated
to
the
individual CGUs and taken into account in the calculation of the recoverable amount.
1)
The key assumptions applied 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.
Description
Year 1
• Financial forecasts as approved by management
Forecasting period (year 2-5)
• Based on expected market development, including maturity and inflation
• Impact from local and Group initiatives are considered, including key account focus
Terminal period
• Long term expectations based on IMF “World Economic Outlook”
• Not exceeding expected long-term average for the country, including inflation
Year 1
• Financial forecasts as approved by management
Forecasting period (year 2-5)
• Impact from local and Group initiatives are considered, including key account focus and investments in
technology and the global operating model
• Restructurings and other local improvement initiatives are considered
Terminal period
• Reflects the expected normalised earnings level in the long term
• Risk-free interest rate based on 10-year government bonds (country-specific)
• Premium added to adjust for the inconsistency of applying government bonds with a short-term maturity
when discounting cash flows with infinite maturity
• Country specific estimation risk premium added (to reflect possible variations in amounts/timing of the
projected cash flows)
• Equity risk premium: 6.0% (2021: 6.5%)
• Debt/equity target ratio (market values): 25/75 (2021: 25/75)
FINANCIAL STATEMENTS 65
3.2 Impairment tests
(continued)
Sensitivity analysis
(DKKm)
Carrying
amount
Avg.
Allowed
decrease
Avg.
Allowed
decrease
Rate
Allowed
decrease
Rate
Allowed
decrease
Rate
Allowed
increase
Pre-tax
rate
2022
US & Canada
2,352
6.1 %
>6.1 %
5.8 %
>5.8 %
3.0 %
>3.0 %
6.0 %
2.7 %
10.7 %
4.8 %
13.9 %
UK & Ireland
1,780
4.8 %
>4.8 %
5.1 %
>5.1 %
3.0 %
>3.0 %
6.0 %
4.1 %
10.2 %
8.7 %
12.9 %
Finland
1,653
1.9 %
>1.9 %
6.2 %
5.3 %
2.5 %
2.5 %
6.2 %
1.8 %
8.6 %
1.9 %
10.5 %
Switzerland
1,571
2.3 %
>2.3 %
7.5 %
>7.5 %
2.0 %
>2.0 %
7.5 %
6.9 %
7.0 %
>7.0 %
8.3 %
Australia & NZ
1,317
2.8 %
>2.8 %
5.6 %
>5.6 %
2.5 %
>2.5 %
5.6 %
3.7 %
9.9 %
9.6 %
14.1 %
Turkey
1,283
36.0 %
17.6 %
8.4 %
>8.4 %
10.0 %
>10.0 %
8.0 %
5.4 %
21.9 %
10.7 %
27.3 %
Spain
1,006
4.4 %
>4.4 %
6.3 %
>6.3 %
2.5 %
>2.5 %
6.5 %
4.4 %
9.0 %
8.0 %
11.5 %
France
936
1.8 %
1.8 %
0.2 %
1.2 %
2.5 %
0.7 %
5.0 %
0.4 %
9.4 %
0.6 %
11.4 %
2021
US & Canada
2,229
13.1 %
>13.1 %
6.8 %
>6.8 %
3.0 %
>3.0 %
6.8 %
4.6 %
9.0 %
8.7 %
11.6 %
UK & Ireland
1,928
3.9 %
>3.9 %
4.6 %
>4.6 %
2.5 %
>2.5 %
6.0 %
4.7 %
8.7 %
>8.7 %
11.3 %
Finland
1,653
1.7 %
>1.7 %
6.4 %
>6.4 %
2.0 %
>2.0 %
6.5 %
2.9 %
7.3 %
3.5 %
9.1 %
Australia & NZ
1,328
2.2 %
>2.2 %
6.1 %
>6.1 %
2.5 %
>2.5 %
6.1 %
4.1 %
8.7 %
>8.7 %
12.3 %
Switzerland
1,159
1.5 %
>1.5 %
7.1 %
>7.1 %
1.5 %
>1.5 %
7.1 %
6.2 %
6.3 %
>6.3 %
7.6 %
Spain
1,006
0.4 %
>0.4 %
5.9 %
>5.9 %
2.0 %
>2.0 %
6.5 %
3.1 %
7.7 %
4.3 %
10.2 %
France
936
1.4 %
0.2 %
3.3 %
0.2 %
2.0 %
0.1 %
5.0 %
0.1 %
8.9 %
0.1 %
13.7 %
Sweden
807
3.3 %
>3.3 %
5.5 %
>5.5 %
2.0 %
>2.0 %
6.2 %
5.5 %
8.0 %
>8.0 %
10.0 %
Belgium & Lux.
788
3.6 %
>3.6 %
5.7 %
>5.7 %
2.0 %
>2.0 %
6.0 %
3.6 %
7.3 %
6.4 %
9.8 %
1)
Excluding allocated corporate costs.
Discount
rate, net of tax
Growth
Margin
1)
Growth
Margin
1)
Forecasting period
Terminal period
France During 2022, the original restructuring and cost optimisation programme was finalised, though with a lower impact than
initially anticipated, in part due to exposure to certain industry segments with slow Covid-19 recovery and muted commercial
momentum. At the same time, interest rates and inflation rates increased significantly during the year. Thus, organic growth and
operating margin for the year were realised below target.
In the late part of 2022, the country leadership team was strengthened with a new country manager and enhanced commercial
and operational resources to strengthen the execution of improvement initiatives already planned and initiated. In addition, in
December 2022 the French parliament announced a gradual abolition of the CVAE (value-added tax of 1.5% of revenue) with
partial effect in 2023 and full effect from 2024.
As a result of these significant internal and external circumstances and developments in 2022, management updated the business
plan, which in general reflects a slower pace in reaching a sustainable operating margin of 5.0%. The impairment test at 31
December 2022 based on the updated business plan did not result in recognition of an impairment loss. The excess value
continues to be limited though slightly improved as a result of the gradual abolition of the CVAE tax.
A
sensitivity
analysis
on
the
key
assumptions
in
the
impairment
testing
is
presented
below.
The
allowed
change
represents
the
percentage points by which the specific key assumption can change, all other things being equal, before the CGU’s recoverable
amount equals its carrying amount.
Turkey
The
implementation
of
IAS
29
resulted
in
an
increase
in
the
carrying
amount
of
goodwill
and
customer
contracts
of
DKK
0.9
billion. The impairment test at 31 December 2022 based on the updated business plan reflecting the current inflationary
environment, did not result in recognition of an impairment loss.
FINANCIAL STATEMENTS 66
3.2 Impairment tests
(continued)
Accounting policy
Impairment
of
goodwill
is
not
reversed.
Impairment
of
other
assets
is
reversed
if
estimates
used
to
calculate
the
recoverable
amount have been changed. An impairment loss is reversed 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.
An
impairment
loss
is
recognised
in
the
statement
of
profit
or
loss
in
a
separate
line
if
the
carrying
amount
of
an
asset
or
CGU
exceeds its estimated recoverable amount.
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. The assessment is based on
estimates of expected future cash flows (value-in-use) for the individual GCU, which by nature are uncertain.
The
outcome
of
the
impairment
test
may
vary
significantly
should
the
assumptions,
estimates
and
judgements
not
be
realised
as expected and applied as basis for management’s conclusion of whether impairment of a CGU has occurred.
Significant accounting estimates
Estimates are made using financial forecasts for the following year as approved by management, and estimated discount rates,
growth and market developments. Assumptions applied in the short to medium term (forecasting period of five years)
generally reflect management’s expectations considering all relevant factors, including estimated optimisations and efficiency
gains from improvement initiatives, past experience and external sources of information, where possible and relevant.
Terminal
growth
rates
and
margins
applied
reflects
management’s
long-term
expectations
for
revenue
growth
for
the
individual CGUs, including inflation, and normalised earnings, respectively.
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 not be recoverable. Other non-current assets are 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.
FINANCIAL STATEMENTS 67
3.3 Acquisitions
3.3.1 Acquisition impact
(DKKm)
Livit FM
Prior
year adj.
2022 2021
Customer contracts
156
5
161
428
Other non-current assets
48
-
48
26
Trade receivables
10
(13)
(3)
184
Other current assets
50
-
50
105
Non-current liabilities
(76)
8
(68)
(112)
Current liabilities
(42)
(6)
(48)
(194)
Fair value of net assets
146
(6)
140
437
Goodwill
191
12
203
97
Consideration transferred
337
6
343
534
Cash in acquired business
(33)
-
(33)
(97)
Consideration transferred, net
304
6
310
437
Contingent and deferred consideration
-
15
15
89
Acquisition of businesses (cash flow)
304
21
325
526
Livit FM
Prior years adjustments
Subsequent acquisitions
3.3.2 Pro forma revenue and operating profit
On
27
October
2022,
ISS
acquired
100%
of
the
shares
in
Livit
FM
Services
AG
(Livit
FM),
a
Swiss
facility
management
company.
The
acquisition will enable us to expand and develop our service delivery to the real estate industry segment in the Swiss market, as Livit
FM services a large part of Swiss Life's properties in Switzerland.
The acquisition will add annual revenue of DKK 402 million and 670 employees (estimated based on unaudited financial
information).
During the period 27 October to 31 December 2022, Livit FM contributed revenue of DKK 66 million to the ISS Group.
Assuming
acquisitions
and
divestments
in
the
year
were
included/excluded
in
profit
or
loss
from
1
January
2022,
revenue
on
a
pro
forma basis would have been DKK 76,845 million compared to reported revenue of DKK 76,558 million. Likewise, operating profit
before other items on a pro forma basis would have been DKK 3,751 million compared to reported operating profit before other
items of DKK 3,740 million.
The
purchase
consideration
amounted
to
DKK
337
million.
Based
on
provisionally
determined
fair
values
of
net
assets,
goodwill
amounted to DKK 191 million. Goodwill is attributable mainly to: 1) expertise and know-how in the real estate industry segment, 2)
synergies, 3) platform for growth, and 4) assembled work force, and is not deductible for tax purposes.
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.
The adjustments related to the acquisition of Rönesans Facility Management Company in Turkey in 2021. The purchase price
allocation of the identified assets, liabilities and contingent liabilities was completed within 12 months of the acquisition date.
The Group completed no acquisitions from 1 January to 15 February 2023.
FINANCIAL STATEMENTS 68
3.3 Acquisitions
(continued)
Accounting policy
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.
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
and presented 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 non-controlling interests) and any previous interest held over the net identifiable assets acquired and liabilities
assumed.
FINANCIAL STATEMENTS 69
3.4 Divestments, assets held for sale and discontinued operations
3.4.1 Divestments
Profit or loss impact
Company/activity Country
Service
type
Excluded
from P/L Interest
Annual revenue
(DKKm)
1)
Employees
(number)
1)
Waste Management
Hong Kong
Technical
February
100%
134
232
ISS Russia Russia
Country exit
2)
April 100% 112 864
ISS Taiwan Taiwan
Country exit
2)
April 100% 441 3,092
Damage Control UK Technical May 100% 84 91
ISS Portugal Portugal
Country exit
2)
July 100% 386 3,843
Total
1,157
8,122
1)
Unaudited
2)
Presented as discontinued operations
Divestment impact
(DKKm) 2022 2021
Goodwill
151
360
Customer contracts
-
5
Other non-current assets
165
337
Current assets
325
504
Non-current liabilities
(24)
(43)
Loans and borrowings
(24)
(134)
Current liabilities
(251)
(239)
Net assets disposed
342
790
Gain/(loss) on divestment, net
1)
207
683
Divestment costs
128
175
Consideration received
677
1,648
Cash in divested businesses
(87)
(130)
Consideration received, net
590
1,518
Contingent and deferred consideration
49
(130)
Divestment costs paid
(52)
(197)
Divestment of businesses (cash flow)
587
1,191
In 2022, the strategic divestment programme was successfully completed as we divested our activities in three countries in the first
half of the year, i.e. Taiwan, Russia and Portugal, as well as two non-core business units, i.e. Waste Management in Hong Kong and
Damage Control in the UK.
In
November
2022,
we
also
signed
an
agreement
to
divest
our
activities
in
Brunei
–
the
last
country
included
in
the
programme.
At
31 December 2022, Brunei was therefore the only remaining country classified as held for sale and discontinued operations. The
divestment was subsequently completed on 9 February 2023.
Going
forward,
we
will
assess
the
strategic
rationale
and
fit
of
our
business
activities
on
an
ongoing
basis
as
part
of
the
Group’s
ordinary performance reviews. As a result, we may identify new non-core activities to be divested from time to time.
In
2022,
our
divestment
programme
resulted
in
recognition
of
a
net
gain
in
the
profit
or
loss
of
DKK
243
million
(2021:
DKK
668
million) of which DKK 103 million were presented in Other income and expenses (see note 1.4) and DKK 140 million were
recognised in Net profit from discontinued operations.
1)
In addition, DKK 36 million was recognised in Other comprehensive income related to recycling of accumulated foreign exchange adjustments on
country exits.
FINANCIAL STATEMENTS 70
3.4 Divestments, assets held for sale and discontinued operations (continued)
Subsequent divestment
3.4.2 Assets and liabilities held for sale
(DKKm) 2022 2021
Goodwill
11
126
Other non-current assets
12
165
Current assets
9
202
Assets held for sale
32
493
Non-current liabilities
-
36
Current liabilities
10
244
Liabilities held for sale
10
280
2022: Incudes Brunei
2021: Includes Brunei, Portugal, Russia and Taiwan
Accounting policy
On
9
February
2023,
the
Group
completed
the
divestment
of
our
activities
in
Brunei
(presented
as
assets
held
for
sale
and
discontinued operations) with an annual revenue of approximately DKK 44 million and 548 employees.
Apart from the divestment described above, the Group signed or completed no divestments from 1 January to 15 February 2023.
Divestments
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.
Cash
flows
from
discontinued
operations
are
included
in
cash
flow
from
operating,
investing
and
financing
activities
together
with
cash flows from continuing operations, but separately specified in this note.
Assets
held
for
sale
are
presented
in
separate
lines
of
the
statement
of
financial
position
and
specified
in
the
notes.
Comparatives
are not restated.
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.
A
disposal
group
is
presented
as
discontinued
operations
if
it
is
a
geographical
area,
i.e.
a
CGU
(country),
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.
FINANCIAL STATEMENTS 71
3.4 Divestments, assets held for sale and discontinued operations (continued)
3.4.3 Discontinued operations
Profit or loss
(DKKm) 2022 2021
Revenue
385
1,231
Expenses (354) (1,144)
Operating profit before other items
31
87
Other income and expenses, net 140 94
Royalty (8) (35)
Goodwill impairment
- (17)
Operating profit
163
129
Financial income/(expenses), net
-
-
Net profit before tax
163
129
Income tax
(4)
(19)
Net profit from discontinued operations
159
110
Cash flows
DKK million
2022
2021
Operating activities
23
36
Investing activities
(70)
(83)
Financing activities
8
(16)
Discontinued operations - presented in separate profit or loss line
The
total
net
divestment
gain
of
DKK
140
million
was
mainly
related
to
Taiwan
and
Portugal.
Recycling
of
accumulated
foreign
exchange adjustments previously recognised in equity had a positive impact on the net gain of DKK 36 million (2021: DKK (15)
million).
2022: Brunei, Portugal, Russia and Taiwan
2021: Brunei, Portugal, Russia, Taiwan, the Czech Republic, Hungary, the Philippines, Romania, Slovenia and Slovakia
FINANCIAL STATEMENTS 72
SECTION 4
Capital structure
4.1 Equity
Capital management
4.1.1 Share capital
4.1.2 Translation reserve
(DKKm)
Hedging
Subsidiaries
Total
At 1 January 2022
(152)
(805)
(957)
Foreign exchange adjustments of subsidiaries (ISS Global A/s's share)
-
26
26
Recycling of accumulated foreign exchange adj. on country exits
-
(36)
(36)
Hyperinflation
-
403
403
Fair value adjustments of net investment hedges, net of tax
(33)
-
(33)
At 31 December 2022
(185)
(412)
(597)
4.1.3 Dividends
Accounting policy
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.
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.
ISS Global A/S (the Group's parent) is a holding company, and its primary assets are shares in ISS World Services A/S. ISS Global
A/S has no revenue generating operations of its own, and therefore ISS A/S’s cash flow will primarily depend on the operating
performance and financial condition of ISS World Services A/S and its operating subsidiaries, and the receipt by ISS Global A/S of
funds from ISS World Services A/S and its subsidiaries.
At
31
December
2022,
ISS
Global
A/S's
share
capital
comprised
a
total
of
DKK
180,200
shares
(2021:
180,200)
with
a
nominal
value
of DKK thousand each. All shares were fully paid and freely transferable.
In 2022 and 2021, no dividend to ISS World Services (ultimately ISS A/S) were approved.
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.
Retained
earnings
is
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.
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.
FINANCIAL STATEMENTS 73
4.1 Equity
(continued)
Development in 2022
(DKKm)
Note
Retained
earnings
Translation
reserve Total
Non-
controlling
interest
Total
equity
2022
Defined benefit plans
Remeasurement gain/(loss)
7.1
253
-
253
(45)
208
Asset ceiling
7.1
(43)
-
(43)
-
(43)
Foreign exchange adjustments
Foreign entities
-
26
26
(57)
(31)
Recycling of accumulated foreign exchange adj. on country exits
-
(36)
(36)
-
(36)
Hyperinflation restatement of equity at 1 January
-
403
403
411
814
Hedging
Fair value adjustments of net investment hedging
4.7
-
(43)
(43)
-
(43)
Tax
Tax related to the items above
(62)
10
(52)
9
(43)
Total
148
360
508
318
826
2021
Defined benefit plans
Remeasurement gain/(loss)
7.1
1,145
-
1,145
-
1,145
Asset ceiling
7.1
(1,080)
-
(1,080)
-
(1,080)
Foreign exchange adjustments
Foreign entities
-
189
189
(15)
174
Recycling of accumulated foreign exchange adj. on country exits
-
15
15
-
15
Hedging
Fair value adjustments of net investment hedging
4.7
-
(191)
(191)
-
(191)
Tax
Tax related to the items above
(11)
42
31
-
31
Total
54
55
109
(15)
94
Attributable to the owners of ISS
Global A/S
4.1.4 Other comprehensive income
In 2022, other comprehensive income increased by DKK 732 million mainly as a result of hyperinflation restatement in Turkey and
remeasurement gain/losses on defined benefit plans. This was partly offset by foreign exchange adjustments of foreign entities.
FINANCIAL STATEMENTS 74
4.2 Loans and borrowings
(DKKm)
2022 2021
Issued bonds
13,973
14,064
Lease liabilities 2,400 2,464
Debt to companies within the ISS Group 49 9
Bank loans
363
340
Derivatives
108
21
Total
16,893
16,898
Non-current liabilities
15,893
16,032
Current liabilities
1,000
866
Loans and borrowings
16,893
16,898
Cash and cash equivalents and other financial items
1)
(8,843) (7,082)
Net debt
8,050
9,816
Financing fees
Fair value
1)
Includes securities of DKK 104 million (2021: DKK 103 million), certain receivables from companies within the ISS Group of DKK 3,523 million (2021:
DKK 3,552 million) and a positive value of currenct swaps of DKK 50 million (2021: DKK 0 million).
At
31
December
2022,
accumulated
financing
fees
amounted
to
DKK
57
million
(2021:
DKK
79
million).
The
decrease
compared
to
last year was due to ordinary amortisation, which was recognised in financial expenses, amounting to DKK 22 million (2021: DKK 28
million). No new financing fees were capitalised in 2022.
At 31 December 2022, the fair value of loans and borrowings was DKK 15,735 million (2021: DKK 17,441 million). The fair value of
bonds was 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 in all material respects equal to the nominal value as
illustrated in 4.5, Interest rate risk.
FINANCIAL STATEMENTS 75
4.2 Loans and borrowings
(continued)
Changes in loans and borrowings
(DKKm)
Issued
bonds
Lease
liabilities
Debt to
companies
within the
ISS Group
Bank
loans
Deriva-
tives
Total
2022
At 1 January
14,064
2,464
9
340
21
16,898
Foreign exchange adjustments
-
(13)
-
(86)
-
(99)
Cash flows
-
(850)
40
(41)
-
(851)
Acquisitions
-
40
-
-
-
40
Lease additions
-
761
-
-
-
761
Fair value adjustments
(108)
-
-
43
87
22
Other
17
(2)
-
107
-
122
At 31 December
13,973
2,400
49
363
108
16,893
2021
At 1 January
15,537
2,481
2
474
6
18,500
Foreign exchange adjustments
(6)
27
-
(131)
-
(110)
Cash flows
(1,577)
(935)
7
(431)
-
(2,936)
Lease additions
-
856
-
-
-
856
Fair value adjustments
-
-
-
185
15
200
Other
110
35
-
243
-
388
At 31 December
14,064
2,464
9
340
21
16,898
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.
At
the
date
of
borrowing,
financing
fees
are
recognised
as
part
of
loans
and
borrowings
and
subsequently
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 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 76
4.3 Financial income and expenses
(DKKm)
2022
2021
Interest income on cash and cash equivalents
69
41
Interest income from companies within the ISS Group
1)
92
69
Monetary gain on hyperinflation restatement
138
-
Financial income
299
110
Interest expenses on loans and borrowings
1)
(301)
(299)
Interest expenses on lease liabilities
1)
(81)
(67)
Interest expenses to companies within the ISS Group
1)
(9)
(18)
Bank fees
(49)
(52)
Commitment fee
(43)
(62)
Amortisation of financing fees (non-cash)
1)
(22)
(28)
Net interest on defined benefit obligations
(17)
(17)
Other
(22)
(11)
Foreign exchange losses
(73)
(39)
Redemption premium, bonds
-
(90)
Financial expenses
(617)
(683)
1)
Measurement basis amortised cost.
Monetary gain on hyperinflation restatement related to the implementation of IAS 29 "Financial Reporting in Hyperinflationary
Economies", cf. 7.2, Hyperinflation in Turkey.
Interest
expenses
on
loans
and
borrowings
comprised
mainly
interest
on
issued
bonds
and
was
in
line
with
2021.
Repurchase
of
EMTNs in December 2021 and lower interest expenses due to an interest rate swap entered into in May 2022, cf. 4.5, Interest rate
risk, were offset by increased interest expenses related to a local Turkish facility following the acquisition in 2021.
Redemption
premium,
bonds
in
2021
related
to
the
repurchase
of
EUR
200
million
of
the
total
outstanding
EUR
500
million
EMTNs
maturing 2024.
FINANCIAL STATEMENTS 77
4.4 Financial risk management
Financial
risks
Risk Basis for assessment at 31 December Note
Credit risk Low • Not past due on trade receivables is around 90% (aging analysis)
• Expected credit losses on trade receivables are less than 2% of gross receivables (credit ratings)
• The Group transacts only with financial institutions with a credit rating of at least A- (cash and cash
equivalents)
2.1
Interest rate
risk
Low • 82% of the Group's bank loans and bonds carried fixed rates (2021: 98%)
• Duration of gross debt (fixed-rate period) 2.9 years (2021: 4.3)
4.5
Liquidity risk Low • No short-term maturities of debt
• Diversified funding portfolio of debt (bonds and bank loans)
• No financial covenants in our main Group facilities (certain covenants apply to the local loan
facility in Turkey)
4.6
Currency
risk
Low • The Group benefits from a natural hedge in having income, costs and investments in the same
functional currency, country-by-country
• 97.2% of the Group's loans and borrowings (external) denominated in EUR (2021: 97.7%)
• 78.3% (2021: 78.8%) of the Group’s external borrowings were denominated in EUR, including net
investment hedges
4.7
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. It is management’s assessment that the Group’s exposure to these risks is low. The
Group has not identified additional financial risk exposures in 2022 compared to 2021.
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. Exposure to credit risk on trade receivables and expected credit losses is however managed
locally in the operating entities, cf. 2.1, Trade receivables and credit risk. 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.
An overview of financial risks and impact assessment at 31 December 2022 is provided below. The Group’s objectives and policies
for measuring and managing risk exposure are explained in the respective notes.
On an ongoing basis the Group considers whether the financial risk management approach appropriately addresses the risk
exposures.
Through our risk management procedures, financial risks are monitored and reduced to an acceptable level.
FINANCIAL STATEMENTS 78
4.5 Interest rate risk
– low exposure
Loans and borrowings
2022
2021
(DKKm)
Nominal
interest rate Currency Maturity
Nominal
value
Carrying
amount
Carrying
amount
Issued bonds
(fixed interest rate)
1)
EMTNs (EUR 300 million)
2.125%
EUR
2024
2,231
2,229
2,226
EMTNs (EUR 500 million)
1.250%
EUR
2025
3,718
3,594
3,695
EMTNs (EUR 500 million)
0.875%
EUR
2026
3,718
3,700
3,695
EMTNs (EUR 600 million)
1.500%
EUR
2027
4,462
4,450
4,448
14,129
13,973
14,064
Bank loans
(floating interest rate)
Loan facility Turkey
TLFREF
TRY
2026
192
201
300
Bank loans and overdrafts
-
Multi
-
180
162
40
372
363
340
Intra-group (floating interest rate)
Debt to companies within the ISS Group
49
49
9
49
49
9
1)
Including fair value hedge
(DKKm)
Negative
fair value
Fair value,
net
Recognised in
profit or loss Maturity
Fair value hedge
EUR
(108)
(108)
7
2025
-
Interest rate sensitivity
Accounting policy
The carrying amount of the hedged item is adjusted for fair value changes attributable to the risk being hedged and changes are
recognised in profit or loss.
An
increase
in
relevant
interest
rates
of
1%-point,
with
all
other
variables
held
constant,
would
have
decreased
net
profit
by
DKK
26 million (2021: decreased by DKK 4 million). The increase in interest rate sensitivity is a result of the interest rate swap entered
into in May 2022.
In May 2022, ISS entered into an interest rate swap in order to reduce the fixed/floating ratio on our gross debt. A principal
amount of EUR 300 million has been swapped from a fixed interest rate to a floating rate. The fair value adjustments recognised in
profit or loss at 31 December is disclosed above.
The interest rate swap qualifies as a fair value hedge as the risk being hedged is the possible change in the fair value of a
recognised liability.
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 thus not a representative for the purpose of this analysis.
• 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
• The fixed/floating ratio and gross debt duration (fixed-rate period) are measured on a monthly basis
• Interest rate swaps (fair value hedge) are used to manage the fixed/floating ratio on gross debt
Mitigation
Low interest risk exposure
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, bonds or interest rate swaps with floating interest rates.
Risk management policy
FINANCIAL STATEMENTS 79
4.6 Liquidity risk
Liquidity risk
– low exposure
4.6.1 Contractual maturities
Financial liabilities
(DKKm)
Carrying
amount
Contractual
cash flows < 1 year 1-2 years 2-3 years 3-4 years
4-5
years > 5 years
2022
Loans and borrowings, excl. lease
1)
14,444
15,333
539
2,513
3,914
3,861
4,506
-
Lease liabilities
2,400
2,533
752
564
423
259
168
367
Debt to companies within the ISS Group
49
51
51
-
-
-
-
-
Trade payables and other
2)
5,055
5,055
5,055
-
-
-
-
-
Total financial liabilities
21,948
22,972
6,397
3,077
4,337
4,120
4,674
367
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
1)
Excluding debt to companies within the ISS Group.
2)
Including payable royalties and management fees to ISS World Services A/S.
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.
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.
• Maintain an appropriate level of short- and 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 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
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 80
4.6 Liquidity risk
(continued)
4.6.2 Liquidity reserves
(DKKm)
2022
2021
Cash and cash equivalents
5,166
3,427
Restricted cash
(35)
(31)
Unused revolving credit facilities
7,276
7,312
12,407
10,708
Not readily available
1,078
1,061
Readily available liquidity
11,329
9,647
Unused revolving credit facilities The Group has a EUR 1 billion revolving credit facility maturing in November 2024. In addition to
the unused revolving credit facilities at Group level, local uncommitted credit facilities are available in countries, which are not
considered part of the readily available liquidity. At 31 December 2022, these amounted to DKK 0.9 billion of which DKK 0.2 billion
was drawn (2021: DKK 1.1 billion of which all were 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.
Liquidity reserves
Cash and cash equivalent of DKK 5,166 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 35 million of the total cash and cash equivalents at 31 December 2022 was placed on blocked or restricted
bank accounts due to legal cases and tax-related circumstances.
FINANCIAL STATEMENTS 81
4.7 Currency risk
Risk management policy
4.7.1 Loans and borrowings
Currency
exposure
(nominal)
Currency
swaps
(contractual)
Exposure,
net
Increase
in FX
Profit
or loss
2022
EUR/DKK
(17,661)
7,333
(10,328)
1%
(103)
USD/DKK
1,349
(1,491)
(142)
10%
(14)
Other/DKK
(1,991)
1,690
(301)
10%
(30)
Total
(18,303)
7,532
(10,771)
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)
Foreign currency sensitivity (loans and borrowings)
Currency risk
Mitigation
The
Group
generally
benefits
from
a
natural
hedge
in
having
income,
costs
and
investments
in
the
same
functional
currency
country by country. Currency risk therefore predominantly arises from funding and investments in subsidiaries.
Sensitivity
A
change
in
relevant
currencies,
with
all
other
variables
held
constant,
would
have
impacted
profit
or
loss
with
the
amounts
above. The analysis is based on the Group’s internal monitoring of currency exposure on loans and borrowings, intercompany
loans, external long-term receivables, cash and cash equivalents as well as accrued royalties (Group internal).
• 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
•
Currency
swaps
are
used
to
hedge
currency
risk
on
loans
and
borrowings
(external),
intercompany
balances
and
long-term
receivables (external)
• Currency exposure on loans and borrowings, intercompany balances and cash and cash equivalents is measured at least on a
weekly basis
• Currency swaps (net investment hedges) or debt are used to hedge the currency exposure to investments in subsidiaries (other
than EUR).
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 exposure
FINANCIAL STATEMENTS 82
4.7 Currency risk
(continued)
4.7.2 Net investment hedges
(DKKm)
Net
investment
Hedging of
investment
Exposure,
net
Average
price
Change
in fair value
Fair
value Maturity
2022
GBP
1,699
1,216
483
9
53
24
March 2023
USD
1,146
767
379
7
(57)
27
March 2023
CHF
1,673
755
918
8
(39)
19
March 2023
Total
4,518
2,738
1,780
-
(43)
70
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)
Foreign currency sensitivity (net investments)
Accounting policy
The
effect
of
translation
of
net
assets
in
foreign
subsidiaries
before
the
effect
of
net
investment
hedges
decreased
equity
by
DKK
31 million (2021: an increase of DKK 174 million) primarily related to Turkey, Switzerland and the UK.
A
10%
change
in
the
mentioned
currencies,
with
all
other
variables
held
constant,
would
have
changed
the
fair
value
recognised
in Other comprehensive income by DKK 48 million for GBP, by DKK 38 million for USD and by DKK 92 million for CHF.
Derivative
financial
intruments
are
initially
recognised
at
fair
value
at
the
trade
date
and
subsequently
remeasured
at
fair
value
at
the reporting date. The fair value of derivatives is presented in Other receivables when the fair value is positive and in Other
liabilities when the fair value is negative.
Fair
value
measurement
takes
current
market
data
into
account.
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).
Net
investment
hedges
Changes
in
the
fair
value
of
the
hedging
instrument
relating
to
the
effective
portion
of
the
hedge
are
recognised in other comprehensive income while fair value changes relating to the ineffective portion are recognised in financial
income or financial expenses. On disposal of the foreign operation, the cumulative fair value recognised in equity is recognised in
the statement of profit or loss when the gain or loss on disposal is recognised.
FINANCIAL STATEMENTS 83
4.7 Currency risk
(continued)
4.7.3 Translation risk
Impact on profit or loss
2021 to
2022
2020 to
2021
GBP 0.8% 3.2%
CHF
7.7%
(1.2)%
USD
12.6%
(3.8)%
AUD
3.9%
4.8%
NOK
0.7%
5.1%
SEK
(4.5)%
3.1%
TRY
(40.8)%
(22.9)%
EUR
0.0%
(0.2)%
( ) = Weakened against DKK
Foreign currency sensitivity
(DKKm) Revenue
Operating
profit before
other items Royalty
GBP
984
40
18
USD
625
31
11
CHF
573
42
11
AUD
462
33
10
NOK
402
31
7
TRY
319
24
5
SEK
298
16
5
EUR
240
9
4
Other
1,264
60
25
Total
5,167
286
96
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.
In
2022,
changes
in
weighted
average
exchange
rates
resulted
in
an
increase
in
Group
revenue
of
DKK
100
million
or
1.5%
(2021:
decrease of 0.6%) and a decrease of the Group’s operating profit before other items of DKK 89 million or 0.6% (2021: decrease of
1.2%).
Change in average FX rates
The Group’s exposure to currency risk on transaction level is low since income, costs and investments are in the same functional
currency country by country.
FINANCIAL STATEMENTS 84
SECTION 5
Tax
5.1 Income tax
Income tax in profit or loss
(DKKm)
2022
2021
Current tax
464
509
Deferred tax
(120)
5
Prior year adjustments, net
17
45
Income tax
361
559
Development in effective tax rate
Effective tax rate (ETR)
Group 2022 2021
Statutory income tax rate, Denmark
22.0 %
22.0 %
Foreign tax rate differential, net
(0.6)%
(14.3)%
Total
21.4 %
7.7 %
Non-tax-deductible expenses less non-taxable income
(2.6)%
7.9%
Non-tax-deductible impairment
0.0
%
12.0%
Prior year adjustments, net
0.8
%
4.2
%
Change in valuation of tax assets, net
(2.4)%
17.2
%
Changes in tax rates
0.5
%
(0.7)%
Hyperinflation
(1.9)%
-
Other taxes
0.9%
4.6%
Effective tax rate
16.7%
52.9%
In
2022,
the
Group’s
effective
tax
rate
decreased
to
16.7%
from
52.9%
in
2021.
Compared
to
the
statutory
income
tax
rate
of
22%
in Denmark, the effective tax rate was mainly reduced by the following three factors; release of valuation allowance on deferred tax
assets, divestment gains (non-taxable) and hyperinflation restatement in Turkey.
In
2021,
the
effective
tax
rate
was
negatively
impacted
by
recognised
valuation
allowances
on
deferred
tax
assets,
goodwill
impairment in France (non-tax deductible) and other non-taxdeductible costs, mainly interest limitation.
FINANCIAL STATEMENTS 85
5.1 Income tax
(continued)
Main countries
Statutory
income tax
2022
2021
Australia 30.0% 30.3% 30.2%
Denmark (incl. HQ)
3)
22.0% 303.5% (15.0)%
Finland 20.0% 24.5% 25.9%
France
1) 2)
25.0% (46.0)% (10.9)%
Germany
1) 2)
30.3% 40.4% 0.0%
Norway 22.0% 20.2% 22.6%
Spain 25.0% (18.9%) 21.9%
Switzerland 18.0% 18.1% 7.5%
UK 19.0% 17.1% 122.7%
US
3)
21.0% (104.2%) 21.4%
Accounting policy
Prior
year
adjustments,
net
related
to
adjustment
in
the
final
tax
returns
and
were
insignificant
in
2022.
In
2021,
the
adjustment
mainly related to the UK.
Change
in
valuation
of
tax
assets,
net
in
2022
related
to
release
of
valuation
allowances
on
tax
losses
in
Spain,
the
Netherlands
and
Germany partly offset by an increase in France. In 2021, the change mainly related to Germany and France.
Non-tax-deductible
expenses
less
non-taxable
income
comprised
various
income
and
expenses
across
the
Group.
In
2022,
non-
taxable divestment gains in Hong Kong and the UK impacted positively, partly offset by the recurring negative impacts from
Denmark due to interest limitation.
Non-tax-deductible impairment
in 2021 related to goodwill impairment in France.
Foreign
tax
rate
differential,
net
was
negligible
in
2022,
whereas
2021
was
impacted
by
tax
losses
in
countries
with
a
higher
corporate income tax rate than in Denmark, most significantly France and Germany.
1)
Profit before tax was negative in 2022.
2)
Profit before tax was negative in 2021.
3)
Based on low profit before tax for 2022.
Hyperinflation
related
to
implementation
of
IAS
29
“Financial
Reporting
in
Hyperinflationary
Economies”,
cf.
7.2,
Hyperinflation
in
Turkey, including the positive impact from change in local tax rules leading to step-up in tax bases of assets due to hyperinflation.
Changes in tax rates in 2022 was driven by changed income tax rates in Turkey from 23% to 20% (effective from 2023) and in the
UK from 19% to 25% (effective from April 2023). In 2021, the change was mainly driven by a reduction of the corporate tax rate in
France from 33% to 25% over the period 2018-2022.
Other taxes mainly comprised Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) in France.
Income
tax
comprises
current
tax
and
changes
in
deferred
tax,
including
effects
from
changes
in
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
taxable
income
for
the
year,
adjusted for tax on taxable income prior years and tax paid on account.
FINANCIAL STATEMENTS 86
5.2 Deferred tax
(DKKm)
2022
2021
2022
2021
Tax losses carried forward
482
336
-
-
Goodwill
4
4
387
412
Brands
-
-
-
1
Customer contracts
7
8
150
141
Property, plant and equipment
187
125
425
374
Provisions and other liabilities
973
1,062
394
331
Pensions
126
158
62
22
Set-off within legal tax units and jurisdictions
(882)
(903)
(882)
(903)
Total
897
790
536
378
Development in deferred tax
(DKKm)
2022
2021
Deferred tax liabilities, net at 1 January
(412)
(473)
Prior year adjustments, net
34
25
Foreign exchange adjustments
(22)
(25)
Hyperinflation restatement
62
-
Acquisitions and divestments, net
20
72
Other comprehensive income
53
11
Reclassification to Assets/(Liabilities) held for sale
24
(27)
Tax on profit before tax
(120)
5
Deferred tax liabilities, net at 31 December
(361)
(412)
Unrecognised deferred tax assets
Uncertain tax positions
Prior year adjustments, net
mainly related to adjustment of tax deductions (temporary differences) in the final tax returns.
Acquisitions and divestments, net in 2022 related to the acquisition of Livit FM Services AG in Switzerland (2021: 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 2022, the Group had unrecognised deferred tax assets which comprised tax losses carried forward and other
deductible temporary differences of DKK 1,814 million (2021: DKK 1,871 million) primarily relating to Germany, France and the
Netherlands. 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 2023-2024.
FINANCIAL STATEMENTS 87
5.2 Deferred tax
(continued)
Significant accounting estimates and judgements
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 forecasts approved by management and expectations on the operational development, mainly in
terms of organic growth and operating margin.
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
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 3.2, Impairment tests,
and represents management’s best estimate, but is by nature associated with significant uncertainty.
FINANCIAL STATEMENTS 88
SECTION 6
Remuneration
6.1 Management remuneration
(DKK thousand)
Board EGMB
Corporate
Senior
Officers
Board EGMB
Corporate
Senior
Officers
Base salary and non-monetary benefits
8,587
15,269
49,073
8,724
21,842
39,172
Annual bonus
-
11,572
28,885
-
12,007
18,739
Share-based payments
1)
-
7,310
14,381
-
(3,794)
11,695
Severance pay
-
-
-
-
14,280
-
Total remuneration
8,587
34,151
92,339
8,724
44,335
69,606
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 policy is described in the Remuneration report which is available at:
https://brand.issworld.com/m/123d6df360418716/original/Remuneration-Report_2022.pdf
1)
In 2021, share-based payments to the EGMB included an income of DKK 8 million due to forfeited PSUs and RSUs under the incentive programmes
as the CEO Europe left ISS.
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 authority and responsibility for planning, implementing and controlling the ISS Global Group’s
activities. Consequently, key management personnel of the ISS A/S Group is also considered key management personnel of the ISS
Global Group.
EGM
EGM
2021
2022
Remuneration to key management personnel of the ISS A/S Group is specified below:
FINANCIAL STATEMENTS 89
6.2 Share-based payments
6.2.1 Long-term incentive programme
TSR performance criteria
Threshold Vesting TSR
Below threshold 0% Below median of peers
Threshold 25% At median of peers
Maximum 100% At upper quartile of peers or better
Fair value and profit or loss impact LTIP 2019 LTIP 2020 LTIP 2021 LTIP 2022
PSUs and participants (number)
Maximum PSUs at initial grant date
928,367
1,785,896
1,349,527
1,509,951
Total PSUs granted
813,090
1,473,659
1,316,818
1,353,855
Participants
142
120
145
161
Fair value (DKKm)
PSUs expected to vest at grant date
101
74
94
98
PSUs expected to vest at 31 December
-
53
77
75
Profit or loss impact (DKKm)
Recognised in the year
1
22
25
24
Not yet recognised (PSUs expected to vest)
-
4
30
57
Assumptions at the time of grant
Share price, DKK
1)
207
98
111
117
Expected volatility
2)
26.6%
29.1%
47.2%
47,5%
Expected life of grant, years
3
3
3
3
Risk-free interest rate
2)
(0.3)%-2.7%
(0.4)%-1.9%
(0.6)%-0.9%
(0.1%)-1.5%
1)
Based on five-day average.
2)
Based on observable market data for peer groups.
Subject to certain criteria, the PSUs will vest after three years. The vesting criteria are total shareholder return (TSR), measured
relative to peer group performance, and earnings per share (EPS). For LTIP 2021 and LTIP 2022, 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.
• a long-term incentive programme (LTIP); and
• a special incentive programme (SIP)
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:
Members
of
the
EGM
and
other
senior
officers
of
the
Group,
are
granted
a
number
of
performance
share
units
(PSUs)
under
the
annual LTIP.
Upon
vesting,
each
PSU
entitles
the
holder
to
receive
one
share
at
no
cost.
Participants
are
compensated
for
any
dividend
distributed between time of grant and time of vesting.
In
2022,
share-based
payment
costs
amounted
to
DKK
80
million
of
which
DKK
9
million
were
recognised
in
ISS
A/S
and
DKK
29
million were recognised in ISS World Services A/S.
FINANCIAL STATEMENTS 90
6.2 Share-based payments
(continued)
Vested programmes
Outstanding PSUs
LTIP 2019 (vested in 2022)
EGMB
Corporate
Senior
Officers
Other
senior
officers Total
Outstanding at 1 January 2021
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
Transferred
6,643
(6,643)
-
Forfeited
(6,897)
(83,288)
(530,774)
(620,959)
Outstanding at 31 December 2022
-
-
-
-
LTIP 2020 (vesting in 2023)
Outstanding at 1 January 2021
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
Transferred
-
(10,382)
10,382
-
Cancelled
-
-
(31,586)
(31,586)
Outstanding at 31 December 2022
59,769
167,617
1,004,006
1,231,392
LTIP 2021 (vesting in 2024)
Granted
201,828
176,746
862,373
1,240,947
Cancelled
(53,531)
-
(89,652)
(143,183)
Outstanding at 31 December 2021
148,297
176,746
772,721
1,097,764
Granted
-
11,015
64,856
75,871
Transferred
-
9,107
(9,107)
-
Cancelled
-
(8,583)
(71,403)
(79,986)
Outstanding at 31 December 2022
148,297
188,285
757,067
1,093,649
LTIP 2022 (vesting in 2025)
Granted
139,713
265,208
948,934
1,353,855
Transferred
-
8,710
(8,710)
-
Cancelled
-
(18,233)
(115,516)
(133,749)
Outstanding at 31 December 2022
139,713
255,685
824,708
1,220,106
In
March
2022,
the
LTIP
2019
programme
vested.
Based
on
the
annual
EPS
and
TSR
performances
for
2019,
2020
and
2021,
0%
of the granted PSUs vested. After this vesting, no further PSUs are outstanding under the LTIP 2019 and the programme has
lapsed.
Furthermore,
in
March
2023,
the
PSUs
granted
under
LTIP
2020
will
vest
with
32%
based
on
the
annual
EPS
and
TSR
performances for 2020, 2021 and 2022.
EGM
FINANCIAL STATEMENTS 91
6.2 Share-based payments
(continued)
6.2.2 Special incentive programmes (SIP)
Fair value and profit or loss impact SIP 2020-2022 SIP 2020-2023
RSU and participants (number)
Maximum RSUs at initial grant date
64,159
246,767
Total RSUs granted
55,263
238,489
Participants
9
37
Fair value (DKKm)
RSUs expected to vest at grant date
6
24
RSUs expected to vest at 31 December
-
23
Profit or loss impact (DKKm)
Recognised in the year
0
8
Not yet recognised (RSUs expected to vest)
-
2
Assumptions at the time of grant
Share price, DKK
101
101
Expected life of grant, years
2
3
Vested programmes
The
Group
has
currently
one
Special
Incentive
Programme
(SIP).
Corporate
Senior
Officers
(EMG
members)
and
other
senior
officers of the Group are granted a number of Restricted Share Units (RSUs).
Upon vesting, each RSU entitles the holder to receive one share at no cost.
Furthermore,
in
March
2023,
the
RSUs
granted
under
the
SIP
2020-2023
programme
will
vest
100%
subject
to
achievement
of
individual service criteria.
Subject to individual service criteria, the RSUs will vest after three years.
In
March
2022,
the
SIP
2020-2022
programme
vested.
Based
on
individual
service
criteria,
83%
of
the
granted
RSUs
vested.
After
this vesting, no further RSUs are outstanding under the SIP 2020-2022 and the programme has lapsed.
FINANCIAL STATEMENTS 92
6.2 Share-based payments
(continued)
Outstanding RSUs
EGM
SIP 2020-2022 (vested in 2022)
Corporate
Senior
Officers
Other
senior
officers Total
Outstanding at 1 January 2021
-
22,296
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
Granted
-
4,565
4,565
Forfeited
-
(2,696)
(2,696)
Cancelled
(26,619)
(19,435)
(46,054)
Outstanding at 31 December 2022
-
-
-
SIP 2020-2023 (vesting in 2023)
Outstanding at 1 January 2021
-
204,223
204,223
Granted
26,619
1,888
28,507
Cancelled
-
(12,853)
(12,853)
Outstanding at 31 December 2021
26,619
193,258
219,877
Granted
-
5,759
5,759
Transferred
10,432
(10,432)
-
Cancelled
-
(1,462)
(1,462)
Outstanding at 31 December 2022
37,051
187,123
224,174
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.
Accounting policy
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 employee costs over the vesting period with a corresponding
increase in equity, as both of the schemes are equity-settled.
The
fair
value
of
granted
PSUs
under
the
long-term
incentive
programme
is
measured
using
a
generally
accepted
valuation
model taking into consideration the terms and conditions upon which the PSUs were granted including market-based vesting
conditions (Total Shareholder Return (TSR) condition).
FINANCIAL STATEMENTS 93
SECTION 7
Other required disclosures
7.1 Pensions and similar obligations
7.1.1 Pension schemes
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 2022,
contributions amounted to DKK 1,221 million (2021: DKK 1,186 million), corresponding to 84% of the Group’s pension costs (2021:
83%).
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% (2021: 86%) of the Group’s obligation (gross) and 97%
(2021: 97%) of its plan assets.
The
plans
are
primarily
based
on
years
of
service,
and
benefits
are
determined
on
the
basis
of
salary
and
position.
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, Hong Kong and Mexico, the obligation is unfunded. For these unfunded plans, obligation amounted to DKK 633
million or 8% of the present value of the gross obligation (2021: DKK 788 million or 9%).
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.
Multiemployer pension plans
The
Group
participates
in
multiemployer
pension
schemes
that
by
nature
are
defined
benefit
plans
in
a
few
countries.
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.
Developments in 2022
Actuarial calculations for 2022 have been obtained for all major plans. The actuarial calculations led to recognition of actuarial gains
due to increased discount rates (financial assumptions) of DKK 1,702 million, mainly in Switzerland and the UK. This was largely
offset by actuarial losses of DKK 490 million due to increased salary and inflation expectations (experience adjustments) and loss
on plan assets of DKK 997 million, both primarily related to Switzerland and the UK. The net impact on the pension obligation was a
gain of DKK 165 million recognised in other comprehensive income.
In
2021,
we
saw
strong
asset
returns
and
an
actuarial
gain,
which
led
to
a
significant
increase
in
the
surplus
on
the
major
plans
in
Switzerland. Due to surplus restrictions (ISS does not have access to the overfunding), an increase in the asset ceiling was
recognised. In 2022, market conditions for listed shares and real estate deteriorated resulting in significant losses on plan assets in
Switzerland and the UK. However, due to a larger decrease in the pension obligation the asset ceiling has further increased. As
such, by the end of 2022, the accumulated impact from the asset ceiling was DKK 1,352 million (2021: DKK 1,253 million).
FINANCIAL STATEMENTS 94
7.1 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.
When
the
Group
participates
in
multiemployer
pension
plans
being
accounted
for
as
defined
contribution
plans
due
to
unavailability of information, 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
Employee
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 Employee 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 Employee costs. Gains and losses on settlement is recognised when incurred.
The aggregated value of unfunded plans is presented as a net liability and the aggregated value of funded plans are presented as a
net asset.
Other long-term employee benefits are recognised as defined pension plans, except that actuarial gains and losses are recognised
in Employee costs.
Other long-term employee benefits comprise jubilee benefits, long-service or sabbatical leave, etc.
FINANCIAL STATEMENTS 95
7.1 Pensions and similar obligations
(continued)
7.1.2 Defined benefit plans
2022
2021
(DKKm)
Present
value of
obligation
Fair value
of plan
assets
Carrying
amount
Present
value of
obligation
Fair value
of plan
assets
Carrying
amount
At 1 January
8,625
8,997
(372)
8,684
7,796
888
Current service costs
197
-
197
219
-
219
Interest on obligation/plan assets
72
55
17
45
28
17
Past service costs
11
-
11
-
-
-
Recognised in profit or loss 280 55 225 264 28 236
Actuarial (gain)/loss:
Demographic assumptions
7
-
7
(256)
-
(256)
Financial assumptions
(1,702)
-
(1,702)
(209)
-
(209)
Experience adjustments
490
-
490
67
-
67
Return on plan assets
-
(997)
997
-
747
(747)
Asset ceiling
-
(43)
43
-
(1,080)
1,080
Recognised in other comprehensive income (1,205) (1,040) (165) (398) (333) (65)
Foreign exchange adjustments
214
295
(81)
386
414
(28)
Acquisitions and divestments, net
227
219
8
-
0
(0)
Employee contributions
154
154
-
141
141
-
Employer contributions
-
207
(207)
-
199
(199)
Benefits paid
(342)
(267)
(75)
(266)
(174)
(92)
Asset ceiling
-
43
(43)
-
1,080
(1,080)
Reclass. to Liabilities held for sale
-
-
-
(186)
(154)
(32)
Other changes
253
651
(398)
75
1,506
(1,431)
At 31 December
7,953
8,663
(710)
8,625
8,997
(372)
Recognised in the statement of financial position
(DKKm)
2022 2021
Carrying amount of defined benefit plans
(710) (372)
Accumulated impact from asset ceiling
1)
1,352 1,253
Defined benefit obligation, net
2)
642 881
Other long-term employee benefits
543 470
Pensions and similar obligations
1,185 1,351
1)
Including a foreign exchange adjustment on the opening balance of DKK 56 million.
2)
Including an asset of DKK 247 million (2021: DKK 86 million) related to defined benefit plans in the UK.
Contributions in 2023
The Group expects to contribute DKK 322 million in 2023 (2022: DKK 261 million).
FINANCIAL STATEMENTS 96
7.1 Pensions and similar obligations
(continued)
Plan assets - major categories
2022
2021
Listed shares
34%
40%
Corporate bonds
18%
20%
Property
19%
15%
Government bonds
2%
4%
Cash and cash equivalents
6%
3%
Other
21%
18%
Total
100%
100%
7.1.3 Actuarial assumptions
2022
2021
CHF GBP EUR
Other
currencies CHF GBP EUR
Other
currencies
Discount rates
2.3%
4.8%
3.70-3.75%
1.0-10.7%
0.3%
2.0%
0.35-1.0%
0.2-19.3%
Salary increase
1.3%
0.0-2.65%
2.56-3.2%
0.0-12.0%
1.0%
0.0 -2.65%
0.0-3.5%
0.0-15.0%
Pension increase
0.0%
2.65-3.15%
0.0-2.15%
0.0-2.2%
0.0%
2.65-3.20%
0.0-0.64%
0.0-2.0%
Sensitivity analysis
2022
2021
(DKKm)
+0.5%
-0.50%
+0.5%
-0.5%
Discount rate
(334)
363
(490)
545
Price inflation
74
(65)
165
(51)
Salary increase
93
(74)
132
(4)
Pension increase
248
(248)
302
(85)
+1 year
-1 year
+1 year
-1 year
Life expectancy
136
(133)
212
(182)
Duration
The estimated
Years
2022
2021
Active employees
6
8
Retired employees
11
15
Deferred vested
1)
7 6
Total employees 9 12
Below the sensitivities related to significant actuarial assumptions used in the calculation of the defined benefit obligation are
illustrated in terms of estimated increase/(decrease) in the obligation.
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.
The analysis is based on changes in assumptions, with all other variables held constant, that the Group considered to be
reasonably possible at the reporting date.
FINANCIAL STATEMENTS 97
7.2 Hyperinflation in Turkey
Impact on the consolidated financial statements
(DKKm)
YTD
(excl. IAS 29)
Non-
monetary
items
Profit
or loss
Retrans-
lation
(YE FX)
Total
adjustments
YTD
(reported)
Profit or loss
Revenue
76,404
-
580
(426)
154
76,558
Depreciation and amortisation
(1,344)
(48)
-
6
(42)
(1,386)
Other costs
(71,291)
-
(529)
388
(141)
(71,432)
Operating profit before other items 3,769 (48) 51 (32) (29) 3,740
Other income and expenses, net
79
-
(1)
-
(1)
78
Royalty
(1,274)
-
-
-
-
(1,274)
Amortisation of customer contracts
(59)
(12)
-
2
(10)
(69)
Operating profit 2,515 (60) 50 (30) (40) 2,475
Financial income
160
180
(40)
(1)
139
299
Financial expenses
(626)
-
(18)
27
9
(617)
Operating profit before tax
2,049
120
(8)
(4)
108
2,157
Income tax
(319)
(43)
8
(7)
(42)
(361)
Net profit from continuing operations
1,730
77
-
(11)
66
1,796
Net profit from discontinued operations
159
-
-
-
-
159
Net profit
1,889
77
-
(11)
66
1,955
Profit or loss
Financial expenses, net was positively impacted by DKK 148 million reflecting the restatement of non-monetary items for the
inflation development in 2022 and the offset of inflation restatement of profit or loss items in the same period.
Based on the above, and the resulting negative impact on Income tax of DKK 42 million, Net profit increased DKK 66 million for
2022.
The
implementation
of
IAS
29
did
not
have
a
material
impact
on
the
Group’s
profit
or
loss
and
cash
flow
statements
and
consequently the effect on our three KPIs was immaterial, i.e. organic growth (non-IFRS), operating margin (non-IFRS) and free
cash flow (non-IFRS). However, the restatement for inflation significantly impacted the Group’s statement of financial position,
mainly by increasing the value of goodwill and customer contracts.
Effective
1
January
2022,
the
Group
has
implemented
IAS
29
“Financial
Reporting
in
Hyperinflationary
Economies”
for
its
subsidiary
in Turkey, as the cumulative three-year inflation rate in the country exceeded the threshold of 100% in February.
The aim of IAS 29 is to ensure that consolidated financial statements reflect the current purchasing power by:
• restating reported numbers based on changes in the general price index; and
• applying end-of-period exchange rates.
The translation method as well as recognition and measurement are described under accounting policies below.
Inflation restatement
The
restatement
of
revenue
had
a
net
positive
impact
of
DKK
154
million
of
which
DKK
580
million
related
to
the
increase
in
the
price index of 21% in 2022. This was partly offset by the impact from retranslation to exchange rates at 31 December of DKK 426
million.
Operating profit before other items was negatively impacted by DKK 29 million, as the inflation restatement of right-of-use assets
and property, plant and equipment led to higher depreciation and amortisation of DKK 42 million. This more than offset the net
positive impact from inflation restatement and retranslation.
FINANCIAL STATEMENTS 98
7.2 Hyperinflation in Turkey
(continued)
(DKKm)
YTD
(excl. IAS 29)
Non-
monetary
items
Profit
or loss
Retrans-
lation
(YE FX)
Total
adjustments
YTD
(reported)
Cash flows
Operating profit before other items 3,800 (48) 51 (32) (29) 3,771
Depreciation and amortisation
1,344
48
-
(6)
42
1,386
Non-cash items related to hyperinflation
-
-
(51)
-
(51)
(51)
Other cash flow items
(2,117)
-
-
31
31
(2,086)
Cash flow from operating activities
3,027
-
-
(7)
(7)
3,020
Cash flow from investing activities
(363)
-
-
7
7
(356)
Cash flow from financing activities
(853)
-
-
(2)
(2)
(855)
Free cash flow (non-IFRS)
1,608
-
-
8
8
1,616
Financial ratios
Organic growth (non-IFRS) 7.78% - - - - 7.78%
Operating margin
4.93%
(0.07)%
0.07%
(0.04)%
(0.04)%
4.89%
Financial position
Goodwill 15,209 644 - - 644 15,853
Other intangible assets
1,169
224
-
-
224
1,393
Right-of-use assets and Property, plant and equipment
3,151
85
-
-
85
3,236
Other assets
23,082
-
-
-
-
23,082
Total assets
42,611
953
-
-
953
43,564
Other comprehensive income
12
814
-
-
814
826
Other equity elements
6,123
77
-
-
77
6,200
Total equity
6,135
891
-
-
891
7,026
Deferred tax liabilities
474
62
-
-
62
536
Other liabilities
36,002
-
-
-
-
36,002
Total equity and liabilities
42,611
953
-
-
953
43,564
Financial position
Cash flows
The impact on consolidated statement of cash flows was insignificant.
The restatement for inflation increased goodwill by DKK 644 million and Other intangible assets (customer contracts) by DKK 224
million mainly due to restatement of the fair values carried from the acquisition of Rönesans in 2021 and the original acquisition
when entering Turkey in 2005.
Right-of-use assets and property, plant and equipment increased (DKK 85 million) based on assumed average useful lives of 3-5
years. As a result, depreciation and amortisation were recalculated, which led to higher costs in profit or loss.
Equity increased by DKK 891 million mainly as a result of the opening restatement of non-monetary items of DKK 814 million and
the restatement effect from changes in the price index in 2022.
Inflation restatement
FINANCIAL STATEMENTS 99
7.2 Hyperinflation in Turkey
(continued)
Accounting policy
Inflation restatement
Price index
Retranslation from TRY to DKK
The financial statements of the Turkish subsidiary, including effects of inflation restatement, have been translated into DKK
applying the TRY/DKK exchange rate at the reporting date as opposed to the Group’s normal practice of translating the profit or
lossusing the exchange rate at the transaction date or an average exchange rate for the month. The TRY/DKK exchange rate
decreased from 50.53 at the beginning of 2022 to 37.25 at 31 December 2022. The average TRY/DKK exchange for the reporting
period was 43.00.
Non-monetary items, which are carried at historical cost, such as goodwill, customer contracts, right-ofuse assets, property, plant
and equipment and deferred tax, have been restated for the effect of inflation based on changes in the price index for the period
from initial recognition to 31 December 2022 or to the date of disposal, where relevant. The restatement was made effective from
the time, the items were initially recognised, which was no earlier than 2005, when ISS first entered Turkey through an acquisition.
The
restating
gain
or
loss
relating
to
the
change
in
the
price
index
for
the
reporting
period
has
been
recognised
in
profit
or
loss
under financial income or expenses, except for the tax effect, which has been recognised under income tax. The gain or loss
relating to the prior periods has been recognised in other comprehensive income.
Restatement
for
hyperinflation
of
the
financial
statements
of
the
Turkish
subsidiary
was
based
on
the
development
in
the
consumer price index provided by the Turkish Statistical Institute. For 2022, the inflation rate in Turkey was 64%.
Management
has
assessed
whether
the
restatement
of
non-monetary
items
represents
an
indication
of
impairment
to
ensure
that
the restated amounts do not exceed the recoverable amounts of the assets, see 3.2, Impairment tests.
Monetary items such as receivables, payables, loans and borrowings are not subject to restatement for the effects of inflation as
these items already reflect the purchasing power at the reporting date.
Equity includes the opening effect of restating non-monetary items. Further, the restatement effects of inflation based on changes
in the price index for the reporting period have been recognised in other comprehensive income with set-off within financial
income or expenses in profit or loss.
Profit or loss transactions in the period have been restated to reflect changes in the price index from the time of transaction to the
end of the reporting period, with the exception of depreciation and amortisation. The latter have been recalculated based on the
inflation-adjusted costs of intangible assets and right-of-use assets and property, plant and equipment. The recalculation has been
based on the useful lives of the relevant assets based on the Group’s accounting policy, cf. 2.6, Right-of-use assets and property,
plant and equipment.
Cash flow statement Operating profit before other items includes a non-cash effect from the inflation restatement, which has been
eliminated in the line Non-cash items related to hyperinflation.
FINANCIAL STATEMENTS 100
7.3 Related parties
Parent and ultimate controlling party
Key management personnel
7.4 Fees to auditors
(DKKm)
2022
2021
Statutory audit
61
62
Other assurance services
1
-
Tax and VAT advisory services
7
6
Other services
4
8
Total
73
76
7.5 Subsequent events
On 6 February 2023, two earthquakes caused large scale devastation and loss of thousands of lives in Turkey and Syria. ISS is one
of the largest private employers in Turkey and approximately 4,500 of our placemakers service workplaces for around 100 of our
customers, including two hospitals, in the impacted areas of Turkey. Tragically, three of our placemakers were fatally injured,
several are in medical treatment and even more suffered loss of immediate family members and housing. Our teams on the
ground in Turkey have since the earthquakes focused on ensuring the safety and welfare of our people and customers who are
facing unimaginable challenges and devastation.
ISS has not suffered material damage to its assets in Turkey. Furthermore, the impacted areas account for less than 1% of ISS’s
global activities and the vast majority of our customers’ operations continue or will continue after repairs. Consequently, it is
management’s assessment that the earthquakes will not have a material impact on the results of the Group’s operations and
financial position in 2023.
Other
than
set
out
elsewhere
in
these
consolidated
financial
statements,
we
are
not
aware
of
events
subsequent
to
31
December
2022, which are expected to have a material impact on the Group’s financial position.
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).
The
Board
of
Directors
(Board)
and
the
Executive
Group
Management
(EGM)
of
ISS
A/S
are
considered
the
Group’s
key
management personnel as defined in 6.1, Management remuneration.
Apart
from
remuneration,
including
share-based
incentive
programmes,
there
were
no
significant
transactions
with
members
of
the Board and the EGM in 2022.
Other services comprised among other things work related to acquisitions and divestments, such as financial and tax due
diligence.
Other assurance services
comprised work related to the interim financial statements and other assurance services.
Tax and VAT advisory services
mainly related to tax compliance services.
FINANCIAL STATEMENTS 101
SECTION 8
Basis of preparation
8.1 General accounting policies
Basis of preparation
Fair value measurement and disclosure
Defining materiality
The
consolidated
financial
statements
of
ISS
Global
A/S
for
the
year
ended
31
December
2022
comprise
ISS
Global
A/S
and
its
subsidiaries (collectively, the Group). Significant subsidiaries are listed in 8.4, Group companies.
The
2022
Annual
Report
for
ISS
Global
A/S
was
discussed
and
approved
by
the
Managing
Director
and
the
Board
of
Directors
(the
Board) on 14 March 2023 and issued for approval at the subsequent annual general meeting on 18 April 2023.
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 (class D). In addition, the consolidated financial statements have
been prepared in compliance with the IFRSs issued by the IASB.
All amounts have been rounded to nearest DKK million (DKKm), unless otherwise stated.
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.
Items are measured at historical cost, except for assets and liabilities held for sale, derivative financial instruments and contingent
consideration that have been measured at fair value.
Assets and liabilities measured at fair value 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.
Climate-related risks
Management has considered the impact of climate-related risks which did not have a material impact on the estimates and
judgements in these consolidated financial statements, including impairment. In addition, it is management's 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
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.
The
consolidated
financial
statements
have
been
prepared
on
the
basis
that
the
Group
will
continue
to
operate
as
a
going
concern.
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
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. A list of the notes is shown on p. 32.
FINANCIAL STATEMENTS 102
8.1 General accounting policies
(continued)
Basis of consolidation
Foreign currency
On initial recognition, except for companies operating in hyperinflationary environments, 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.
A change in ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction.
The
consolidated
financial
statements
comprise
ISS
Global
A/S
and
entities
controlled
by
ISS
Global
A/S.
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.
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.
Intra-group
balances,
income,
expenses
and
cash
flow
relating
to
transactions
between
members
of
the
Group
are
eliminated.
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.
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.
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.
On recognition in the consolidated financial statements of Group companies with a functional currency other than DKK, except for
companies operating in hyperinflationary environments, 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.
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.
FINANCIAL STATEMENTS 103
8.2 Change in accounting policies
IAS 29 Financial Reporting in Hyperinflation Economies
8.3 New accounting regulations
The Group expects to adopt the new standards and interpretations when they become mandatory.
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.
Effective 1 January 2022, the Group implemented IAS 29, Financial Reporting in Hyperinflationary Economies, as management
considered Turkey as a hyperinflationary environment. Management based its assessment on the cumulative three-year inflation,
which exceeded the threshold of 100% in February 2022. As a result, the financial statements of ISS Turkey for 2022 were restated
for hyperinflation before the reported amounts were translated to the Group's functional currency, DKK, applying the exchange
rate at the reporting date.
IASB
issued
amended
standards
and
interpretations,
which
are
not
yet
mandatory
for
the
consolidated
financial
statements
of
the
Group at 31 December 2022.
•
Amendments
to
IAS
37
Provisions,
Contingent
Liabilities
and
Contingent
Assets:
Onerous
Contracts
–
Costs
of
Fulfilling
a
Contract.
From
1
January
2022,
the
Group
has
adopted
the
below
standards
and
interpretations
with
no
significant
impact
on
recognition
and measurement:
Since
the
Group’s
functional
currency,
DKK,
is
a
non-hyperinflationary
currency,
IAS
29
does
not
require
restatement
of
comparative figures in the year of implementation. Consequently, comparative figures have not been restated.
The implementation impact and the applied accounting policies are disclosed in 7.2, Hyperinflation in Turkey.
• Amendments to IFRS 3 Business Combinations – Reference to the Conceptual Framework.
FINANCIAL STATEMENTS 104
8.4 Group companies
Northern Europe
Central & Southern Europe
Denmark (ISS A/S's country of domicile)
Austria
ISS Facility Services A/S
100%
ISS Austria Holding GmbH 100%
ISS Finance B.V.
100%
ISS Facility Services GmbH 100%
ISS Global Management A/S
100%
ISS Ground Services GmbH 51%
ISS Holding France A/S
100%
ISS Lending A/S
100%
France
GIE ISS Services
100%
Belgium & Luxembourg
ISS Facility Management SAS
100%
ISS Catering N.V.
100%
ISS Holding Paris SAS
100%
ISS Facility Services N.V.
100%
ISS Logistique et Production SAS
100%
ISS Facility Services S.A.
100%
Germany
Finland
ISS Automotive Services GmbH
100%
ISS Palvelut Holding Oy
100%
ISS Facility Services Holding GmbH
100%
ISS Palvelut Oy
100%
ISS Integrated Facility Services GmbH
100%
Suomen Laatutakuu Palvelut Oy
100%
ISS Energy Services GmbH
100%
ISS Communication Services GmbH
100%
Netherlands
ISS Building Maintenance Services B.V.
100%
Italy
ISS Catering Services B.V.
100%
ISS Facility Services S.r.l.
100%
ISS Holding Nederland B.V.
100%
ISS Integrated Facility Services B.V.
100%
Portugal
ISS Nederland B.V.
100%
ISS Tech Portugal, Unipessoal Lda.
100%
Talentgroep Montaigne Facility Management B.V.
100%
Spain
Norway
Integrated Service Solutions, S.L.
100%
ISS Holding AS
100%
ISS Facility Services, S.A.
100%
ISS Management AS
100%
ISS Soluciones De Seguridad, S.L.
100%
ISS Facility Services AS
100%
UTE-HOSPITALES S.A.S
65%
1)
ISS Serveringspartner AS
100%
ISS Service Management AS
100%
Switzerland
ISS Facility Services AG
100%
Poland
ISS Schweiz AG
100%
ISS Facility Services Sp. Z o.o.
100%
Livit FM Services AG
100%
ISS World Services Poland Sp. Z.o.o
100%
Turkey
Sweden
ISS Hazir Yemek Üretim ve Hizmet A.Ş.
50,1%
4)
ISS Facility Services Holding AB
100%
ISS Proser Koruma ve Güvenlik Hizmetleri A.Ş.
50,1%
4)
ISS Facility Services AB
100%
ISS Tesis Yönetim Hizmetleri A.Ş.
50,1%
4)
ISS Palvelut Holding AB
100%
ISS İşletme Hizmetleri A.Ş (Rönesans)
50,1%
4)
ISS Bitki Bakim ve Hasere Kontrol Hizmetleeri A.Ş. 50,1%
4)
UK & Ireland
ISS UK Holding Limited
100%
ISS UK Limited
100%
ISS Facility Services Ltd.
100%
ISS Mediclean Limited 100%
Pegasus Security Holdings Limited
100%
ISS Ireland Ltd.
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 105
8.4 Group companies
(continued)
Americas
Asia & Pacific (continued)
Chile
China
Apunto Servicios de Alimentacion S.A.
100%
ISS Facility Services (Shanghai) Ltd.
100%
ISS Chile S.A.
100%
ISS Hongrun (Shanghai) Cleaning Services Limited
100%
ISS Facility Services S.A. 100% ISS Property Management (Beijing) Co.,Ltd 100%
ISS Servicios de Limpieza Mecanizada S.A.
100%
Shanghai B&A Property Management Co., Ltd. 100%
ISS Servicios Generales Ltda.
100%
Shanghai B&A Security Co., Ltd. 100%
ISS Servicios Integrales Ltda.
100%
Shanghai ISS Catering Management Ltd. 100%
Mexico
Hong Kong
ISS Centro América, S. de R.L. de C.V.
100%
Hung Fat Cleaning Transportation Co., Ltd. 100%
ISS Facility Services, S.A. de C.V.
100%
ISS Adams Secuforce Ltd. 100%
ISS China Holdings Ltd. 100%
US & Canada
ISS China Holdings I Ltd. 100%
ISS Facility Services Holding, Inc
100%
ISS EastPoint Properties Ltd. 100%
ISS Management and Finance Co, Inc
100%
ISS EastPoint Property Management Ltd. 100%
ISS Facility Services, Inc (US)
100%
ISS Facility Services Ltd. 100%
Guckenheimer Enterprises Inc
100%
ISS Greater China Ltd. 100%
ISS C&S Building Maintenance Corporation
100%
ISS Hygiene Services (HK) Ltd. 100%
ISS Facility Services California, Inc
100%
ISS Mediclean (HK) Ltd. 100%
ISS Holding Inc
100%
ISS Pan Asia Security Services Ltd. 100%
ISS TMC Services, Inc
100%
JSL Ltd. 100%
ISS Facility Services Inc. (CA) 100% Silvertech E&M Engineering Co., Ltd. 100%
Asia & Pacific
India
Innovative and Payroll Advisory Services Pvt. Ltd.
46%
2)
Australia & New Zealand
ISS Facility Services India Pvt. Ltd.
100%
ISS Facility Management Pty Limited
100%
ISS SDB Security Services Pvt. Ltd.
46%
2)
ISS Facility Services Australia Limited
100%
Modern Protection & Investigations Pvt. Ltd.
46%
2)
ISS Facility Services Pty Ltd.
100%
ISS Support Services Pvt. Ltd.
100%
ISS Health Services Pty Ltd.
100%
ISS Holdings Pty Ltd.
100%
Indonesia
ISS Integrated Services Pty Ltd
100%
PT ISS Facility Services
99%
ISS Property Services Pty Ltd
100%
PT ISS Indonesia
100%
ISS Security Pty Ltd
100%
PT ISS Jasa Fasilitas
0%
2)
Pacific Invest December 2004 Pty Ltd.
100%
Pacific Service Solutions Pty Ltd.
100%
Singapore
ISS Facility Services Ltd.
100%
ISS Asia Pacific Pte. Ltd.
100%
ISS Holdings NZ Ltd.
100%
ISS Catering Services Pte. Ltd.
100%
ISS Facility Services Pte. Ltd.
100%
ISS Hydroculture Pte. Ltd.
100%
ISS M&E Pte. Ltd.
100%
Discontinued operations
Brunei
3)
ISS Facility Services Sdn. Bhd.
50%
2)
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)
Divested on 9 February 2023.
4)
Under certain circumstances or events, ISS may be obliged to choose to purchase other shareholders’ shareholdings or
dispose of its own shareholdings.
FINANCIAL STATEMENTS 106
8.5 Definitions
Alternative performance measures
Free cash flow
Organic growth, %
Operating margin, %
Total revenue growth, %
Financial ratios
Acquisitions, %
Currency adjustments
Divestments, %
Equity ratio, %
Net debt
ESG ratios
CO
2
emissions
Employee turnover, %
Customer retention, %
Lost Time Injury Frequency (LTIF)
Fatalities
3)
Estimated or actual revenue where available at the divestment date.
5)
AGM = Annual General Meeting
4)
Incl. the effect from exclusion of currency effects from the calculation of organic growth and acq./div., net.
1)
Comparable revenue prior year excludes impacts from changes in exchange rates and acquisitions/divestments, net as well as impact from
hyperinflation restatement. To arrive at comparable revenue, prior year’s revenue is retranslated by applying current year’s exchange rates,
divestments and impacts from hyperinflation restatements are excluded and estimated impacts from acquisitions are added.
2)
Management’s expectations at the acquisition date.
Number of employees who left in the year × 100 / Average number of employees for the year
Portfolio revenue (annual value) retained at 31 December of the portfolio at 1 January / Portfolio revenue (annual value) at 1 January
Scope 1, 2 and 3 emissions calculated in accordance with the Greenhouse Gas Protocol. For further information see the 2022
Sustainability Report pp. 42-43.
LTIF is a work-related injury preventing a person from working i.e. being unfit for at least a full working day or shift. LTIF is based on 1
million exposure hours including contractors under ISS's operational control
Measures the number of work-related fatalities
ISS uses various key figures, financial ratios and non-financial ratios, all of which provide our stakeholders with useful and necessary
information about the Group’s financial position, performance, cash flows and development in a consistent way. In relation to managing
the business, achieving our strategic goals and ultimately creating value for our shareholders, these measures are considered essential.
In addition, the Group uses alternative performance measures (APMs) to provide stakeholders with additional measures to evaluate and
analyse the Group's performance. The APMs are non-IFRS financial measures defined by the Group and thus may not be comparable with
measures provided by peers or other companies' measures.
Operating profit before other items x 100 / Revenue
Cash flow from operating activities – Acq. of intangible assets and property, plant and equipment, net – Acq. of financial assets, net (excl.
equity-accounted investees) – Addition of right-of-use assets, net
(Revenue current year – Revenue prior year) x 100 / Revenue prior year
Acquisitions are treated as having been integrated with ISS at the acquisition date. Consequently, organic growth includes changes in
revenue of such acquisitions compared with expectations at the acquisition date.
Loans and borrowings – Securities – Cash and cash equivalents – Positive fair value of derivatives
(Revenue current year excl. hyperinflation – Comparable revenue
1)
prior year) x 100 / Comparable revenue
1)
prior year
Revenue from divestments
4)
× 100 / Revenue prior year
Total equity × 100 / Total assets
Revenue from acquisitions
2)
x 100 / Revenue prior year
Total revenue growth – Organic growth – Acquisition/divestment growth, net
3)
PARENT COMPANY FINANCIAL STATEMENTS 107
108
108
109
110
111
1
Significant accounting policies
112
2
Significant accounting estimates and judgements
112
3
Other operating income and expenses, net 112
4
Fees to auditors 113
5
Other income and expenses, net 113
6
Financial income and expenses 113
7
Income tax 114
8
Investments in subsidiaries and joint ventures 114
9
Deferred tax 116
10
Loans and borrowings 116
11 Remuneration to the Board of Directors and the Executive
Group Management
117
12
Contingent liabilities 117
13
Financial risk management 118
14
Interest rate risk 118
15
Liquidity risk 119
16
Currency risk 119
17
Related parties 120
18
New standards and interpretations not yet implemented 121
19
Subsidiaries and joint ventures 121
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 108
Statement of profit or loss
1 January – 31 December
(DKKm)
Note
2022
2021
Other operating income and expenses, net
3, 4
41
25
1
1
Operating profit before other items
41
25
Other income and expenses, net
5
(9)
(52)
Operating profit
32
(27)
Income from subsidiaries and joint ventures
8
21
(22)
Financial income
6
448
547
Financial expenses
6
(698)
(975)
1
1
Profit before tax
(197)
(477)
Income tax
7
16
(4)
Net profit
(181)
(481)
1 January – 31 December
(DKKm)
2022
2021
Net profit
(181)
(481)
1
Comprehensive income
(181)
(481)
Statement of comprehensive income
PARENT COMPANY FINANCIAL STATEMENTS 109
Statement of cash flows
1 January – 31 December
(DKKm)
Note
2022
2021
Operating profit before other items
41
25
Changes in working capital
27
(84)
Other expenses paid
-
(11)
Interest received from companies within the ISS Group
304
259
Interest received, external
18
3
Interest paid to companies within the ISS Group
(151)
(87)
Interest paid, external
(223)
(284)
Income tax and joint taxation contribution received/(paid), net
37
(1)
Cash flow from operating activities
53
(180)
Payment of earn-out
-
(76)
Capital increase in subsidiaries and joint ventures
8
(2)
(586)
Divestment and liquidation of subsidiaries and joint ventures
8
163
283
Dividends received from subsidiaries and joint ventures
8
937
241
Cash flow from investing activities
1,098
(138)
Repayment of bonds
10
-
(1,577)
Other financial payments, net
10
(133)
(130)
Changes in debt to companies within the ISS Group, net
10
711
2,140
Changes in receivables from companies within the ISS Group, net
(75)
4
Cash flow from financing activities
503
437
Total cash flow
1,654
119
Cash and cash equivalents at 1 January
915
796
Total cash flow
1,654
119
Cash and cash equivalents at 31 December
2,569
915
PARENT COMPANY FINANCIAL STATEMENTS 110
Statement of financial position
At 31 December
(DKKm)
Note
2022
2021
Assets
Investments in subsidiaries and joint ventures
8
22,665
22,676
Receivables from companies within the ISS Group
8,075
8,196
Other financial assets
90
118
Deferred tax assets
9
19
12
Non-current assets
30,849
31,002
Receivables from companies within the ISS Group
2,183
2,914
Other receivables
208
180
Cash and cash equivalents
2,569
915
Investments in subsidiaries and joint ventures held for sale
8
14
150
Current assets
4,974
4,159
Total assets
35,823
35,161
Equity and liability
Equity
9,034
9,215
Loans and borrowings
10
14,194
14,067
Non-current liabilities
14,194
14,067
Loans and borrowings
10
12,355
11,692
Other liabilities
240
187
Current liabilities
12,595
11,879
Total liabilities
26,789
25,946
Total equity and liabilities
35,823
35,161
PARENT COMPANY FINANCIAL STATEMENTS 111
1 January – 31 December
(DKKm)
Note
Share
capital
Retained
earnings
Total
2022
Equity at 1 January
180 9,035 9,215
Net profit
-
(181)
(181)
Comprehensive income
-
(181)
(181)
Changes in equity
-
(181)
(181)
Equity at 31 December
180
8,854
9,034
2021
Equity at 1 January
180 9,516 9,696
Net profit
-
(481)
(481)
Comprehensive income
-
(481)
(481)
Changes in equity
-
(481)
(481)
Equity at 31 December
180
9,035
9,215
Statement of changes in equity
PARENT COMPANY FINANCIAL STATEMENTS 112
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 (class D). In addition, the financial statements have been prepared in
compliance with the IFRSs issued by the IASB.
Changes in accounting policies are described in 8.2 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 3.2 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 the Group uses ISS Global A/S as vehicle to enter into derivate financial instruments, i.e. currency
swaps and interest rate swaps.
Some
of
the
currency
swaps
qualify
as
net
investment
hedges
at
Group
level,
but
not
in
ISS
Global
A/S.
As
a
result,
changes
in
fair
value of such instruments are recognised in Financial income or Financial expenses.
Interest
rate
swaps
qualify
as
fair
value
hedges
at
Group
level,
but
not
in
ISS
Global
A/S
as
the
hedged
item
resides
in
ISS
Finance
B.V. (a wholly owned subsidiary of ISS Global A/S). As a result, changes in fair value are recognised in Financial income or Financial
expenses.
The fair value of derivative financial instruments is presented in Receivables from companies within the ISS Group 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 section "Estimates and judgements" in 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 113
4 Fees to auditors
(DKKm)
2022
2021
Statutory audit
1
1
Other assurance services
0
0
Total
1
1
5 Other income and expenses, net
(DKKm)
2022
2021
Other
(9)
(52)
Other expenses
(9)
(52)
6 Financial income and expenses
(DKKm)
2022
2021
Interest income on cash and cash equivalents
1)
26 10
Interest income from companies within the ISS Group
1)
307 260
Foreign exchange gains
115
277
Financial income
448
547
Interest expenses on loans and borrowings
1)
(145) (210)
Redemption premium, bonds
-
(90)
Forward premiums, currency swaps
(12)
(15)
Fair value adjustments, interest rate swaps
(108)
-
Fair value adjustments, currency swaps
(43)
(191)
Interest expenses to companies within the ISS Group
1)
(150) (87)
Amortisation of financing fees (non-cash)
1)
(22) (25)
Commitment fee
(43)
(61)
Bank fees
(2)
(9)
Foreign exchange losses
(173)
(287)
Financial expenses
(698)
(975)
1)
Measurement basis amortised cost.
Other assurance services comprised work related to interim financial statements and other assurance services.
Forward
premiums,
currency
swaps
ISS
uses
currency
swaps
to
hedge
the
exposure
to
currency
risk
primarily
arising
from
intercompany loans.
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.
Interest expenses on loans and borrowings decreased in 2022 due to the partial redemption of EMTNs in December 2021 and
lower interest expenses due to an interest rate swap entered into in May 2022.
Other related to remeasurement of contingent consideration for the acquisition in Turkey in 2021.
Redemption
premium,
bonds
related
to
the
repurchase
in
December
2021
of
EUR
200
million
of
the
EMTN
bonds
maturing
in
December 2024.
Fair value adjustments, interest rate swaps related to instruments used for fair value hedging at Group level, but being ineffective
hedges in ISS Global A/S.
Fair value adjustments, currency swaps related to instruments used for net investment hedging at Group level, but being
ineffective hedges in ISS Global A/S.
PARENT COMPANY FINANCIAL STATEMENTS 114
7 Income tax
(DKKm)
2022
2021
Current tax
(2)
4
Deferred tax
(5)
(1)
Other taxes
2
-
Prior year adjustments, net
(11)
1
Income tax
(16)
4
In %
2022
2021
Statutory income tax rate in Denmark
22.0 %
22.0 %
Income from subsidiaries and joint ventures
2.3 %
(1.0)%
Non-tax deductible expenses less non-taxable income
(20.8)%
(22.0)%
Other taxes
(1.0)%
0.0 %
Prior year adjustments, net
5.6 %
0.2 %
Effective tax rate
8.1 %
(0.8)%
8 Investments in subsidiaries and joint ventures
(DKKm)
Continuing
operations
Assets held
for sale
Continuing
operations
Assets held
for sale
Cost at 1 January
31,402
207
30,634
954
Additions
1)
902 - 932 22
Disposals
-
(193)
(355)
(578)
Reclassification to assets held for sale
-
-
191
(191)
Cost at 31 December
32,304
14
31,402
207
Revaluation at 1 January
(8,726)
(57)
(8,446)
(495)
Impairment losses
(1,174)
-
(400)
-
Reversal of prior years' impairment losses
261
-
120
81
Disposals
-
57
-
357
Reclassification to assets held for sale
-
-
-
-
-
Revaluation at 31 December
(9,639)
-
(8,726)
(57)
Carrying amount at 31 December
22,665
14
22,676
150
1)
In 2022, DKK 900 million was related to non-cash transactions (2021: DKK 368 million).
Effective tax rate
Additions in 2022, ISS Global A/S made a capital increase in ISS Holding France A/S of DKK 900 million and founded ISS Tech
Portugal with a capital contribution of DKK 2 million.
2022 2021
PARENT COMPANY FINANCIAL STATEMENTS 115
8 Investments in subsidiaries and joint ventures
(continued)
(DKKm)
Impairment
losses 2022
Recoverable
amount
Applied
discount rate,
net of tax
Investments in subsidiaries and joint ventures (continuing operations)
France
1)
900 (71) -
Germany
235
2,719
8.9%
Signal
39
2
-
Impairment losses
1,174
Income from subsidiaries and joint ventures
(DKKm)
2022
2021
Received dividends 937 241
Proceeds from divestment and liquidation of subsidiaries and joint ventures
133
512
Carrying amount of disposed subsidiaries and joint ventures
(136)
(576)
Impairment losses
(1,174)
(400)
Reversal of prior years' impairment losses
261
201
Income from subsidiaries and joint ventures
21
(22)
Subsidiaries and joint ventures
For a list of significant directly owned subsidiaries and joint ventures, see note 19, Subsidiaries and joint ventures.
Disposals in 2022, ISS Global A/S sold their subsidiaries (assets held for sale) in Russia and Portugal. At 31 December 2022, only
Brunei remains classified as assets held sale. The divestment of Brunei was completed 9 February 2023.
The investment in ISS Holding France was impaired by DKK 900 million mainly as a result of current and prior years' operating
losses realised in the underlying French subsidiary. In 2022, a debt conversion of DKK 900 million was made to recapitalise equity.
In Germany, the impairment loss was driven by a decrease in the recoverable amount mainly due to a decrease in the net cash
position following the payment of restructuring costs related to the Deutsche Telekom contract.
Reversal of prior years' impairment losses in 2022, losses of DKK 232 million on the investment in the Netherlands were reversed.
The Dutch operation continued to deliver in line with the business case and it has been assessed that the increase in the
recoverable amount is sustainable. Furthermore, losses of DKK 29 million in ISS Lending A/S were reversed as equity continued to
increase in 2022. In 2021, losses of DKK 120 million in ISS Lending A/S, DKK 79 million in Portugal (asset held for sale) and DKK 2
million in Hungary (assets held for sale) were reversed.
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
2022 in this holding company.
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 3.2 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 2022, see below.
PARENT COMPANY FINANCIAL STATEMENTS 116
9 Deferred tax
Development in deferred tax
(DKKm)
2022
2021
Deferred tax assets/(liabilities) at 1 January
12
10
Prior year adjustments, net
2
1
Tax on profit before tax
5
1
Deferred tax assets at 31 December
19
12
10 Loans and borrowings
2022
2021
Issued bonds
10,379
10,369
Bank loans
(9)
(14)
Debt to companies within the ISS Group
16,071
15,389
Derivatives
108
15
Total
26,549
25,759
Non-current liabilities
14,194
14,067
Current liabilities
12,355
11,692
Loans and borrowings
26,549
25,759
Cash and cash equivalents and other financial items
1)
(12,877) (12,025)
Net debt
13,672
13,734
Changes in loans and borrowings
(DKKm)
Issued
bonds
Debt to
companies
within the ISS
Group
Bank loans
and other
Derivatives
31
December
2022
1 January
10,369
15,389
(14)
15
25,759
Foreign exchange adjustments
-
(29)
-
-
(29)
Cash flows
-
711
(133)
-
578
Fair value adjustments
-
-
43
93
136
Other
10
-
95
-
105
Total
10,379
16,071
(9)
108
26,549
2021
1 January
11,847
13,401
(17)
-
25,231
Foreign exchange adjustments
(5)
(152)
-
-
(157)
Cash flows
(1,577)
2,140
(130)
-
433
Fair value adjustments
-
-
186
15
201
Other
104
-
(53)
-
51
0
Total
10,369
15,389
(14)
15
25,759
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 10,258 million (2021: DKK 11,110 million) and positive value of currency
swaps of DKK 50 million (2021: DKK 0 million). The average interest rate related to receivables from companies within the ISS Group was 4.2%
(2021: 2.0%).
PARENT COMPANY FINANCIAL STATEMENTS 117
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 25,498 million (2021: DKK 26,088 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.
At 31 December 2022, accumulated financing fees amounted to DKK 41 million (2021: DKK 56 million). The decrease compared to
last year was due to ordinary amortisation, which was recognised in financial expenses, amounting to DKK 22 million (2021: DKK 25
million). No new financing fees were capitalised in 2022.
Key management personnel of the Group as defined in 6.1 to the consolidated financial statements are also considered key
management personnel of the parent.
Remuneration to key management personnel is specified in 6.1 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 (2021: DKK 300 million) which can be used to issue guarantees
for subsidiaries' local bank overdrafts. As per 31 December 2022, DKK 77 million was utilised (2021: DKK 26 million). ISS Global A/S
has also issued parent guarantees and performance bonds for various subsidiaries' current and future financial liabilities and
obligations under customer contracts and pension liabilities amounting to DKK 6.0 billion (2021: DKK 7.5 billion). Furthermore, ISS
Global A/S has issued parent guarantees for various subsidiaries' current and future financial liabilities towards the Group's main
car fleet provider.
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 2022 Danish corporate and withholding taxes within the joint taxation amounted to DKK 0 million (2021: 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 118
13 Financial risk management
Credit risk
14 Interest rate risk
2022
2021
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
2,229
2,226
EMTNs (EUR 500 million)
0.875%
EUR
2026
3,718
3,700
3,695
EMTNs (EUR 600 million)
1.500%
EUR
2027
4,462
4,450
4,448
10,411
10,379
10,369
Bank loans (floating interest rate)
Bank loans
-
Multi
-
(9)
(9)
(14)
(9)
(9)
(14)
Intra-group (floating interest rate)
-
Multi
-
16,071
16,071
15,389
16,071
16,071
15,389
Negative fair
value
Fair value,
net
Recognised
in profit
or loss Maturity
Fair value hedge
Interest rate swap
(108)
(108)
(108)
2025
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 184 million (2021: decreased by DKK 143
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
The interest rate risk is measured by the duration of the gross debt (fixed-rate period). As at 31 December 2022, the duration of
gross debt was approximately 1.3 years (2021: 1.9 years).
At 31 December 2022, the exposure to credit risk related to cash and cash equivalents, loans to companies within the ISS Group
and other financial items was DKK 12,877 million (2021: DKK 12,025 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.
(DKKm)
In May 2022, ISS Global A/S entered into an interest rate swap in order to reduce the fixed/floating ratio on the Group’s gross debt.
A principal amount of EUR 300 million was swapped from a fixed interest rate to a floating rate. On Group level, the interest rate
swap qualifies as a fair value hedge, and hedge accounting is applied. However, as the fixed rate bond resides in ISS Finance B.V.,
the hedge is not effective in ISS Global A/S and the fair value adjustments are recognised in profit or loss.
PARENT COMPANY FINANCIAL STATEMENTS 119
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
2022
Issued bonds and bank loans
10,370
10,926
147
2,374
99
3,800
4,506
-
Debt to companies within the ISS Group
16,071
16,241
12,464
46
3,731
-
-
-
Other financial liabilities
249
249
249
-
-
-
-
-
Total financial liabilities
26,690
27,416
12,860
2,420
3,830
3,800
4,506
-
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
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 2022, 84.3% (2021: 83.2%) 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. At 31 December 2022, ISS Global A/S's liquid reserves consisted of readily available liquid funds of DKK
2,569 million (2021: DKK 915 million) and unused revolving credit facilities of DKK 7,276 million (2021: DKK 7,312 million) where the
majority is available for drawing until 3 November 2024.
PARENT COMPANY FINANCIAL STATEMENTS 120
16 Currency risk
(continued)
(DKKm)
Exposure,
net
Net
profit
2022
EUR/DKK
(12,469)
7,333
(5,136)
1%
(51)
GBP/DKK
(391)
(857)
(1,249)
10%
(125)
USD/DKK
1,349
(2,226)
(877)
10%
(88)
CHF/DKK
(451)
(302)
(754)
10%
(75)
Other/DKK
(651)
1,029
378
10%
38
-
Total
(12,613)
4,977
(7,638)
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)
Currency swaps (designated as net investment hedges at Group level)
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
ISS Global A/S has entered into certain currency swaps, which are designated net investment hedges at Group level, see note 4.7
to the consolidated financial statements. At Group level changes in the fair value of these derivative financial instruments are
recognised in Other comprehensive income. In ISS Global A/S, the hedge is not effective, and consequently the change in fair
value is recognised in the Income statement in Financial income or Financial expenses.
• ISS Global A/S received dividends in total of DKK 937 million (2021: DKK 241 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 two subsidiaries by DKK 902 million (2021: DKK 986 million in seven subsidiaries)
and founded one new subsidiary (2021: no new subsidiaries), see note 8, Investments in subsidiaries
and joint ventures.
In addition to the description in note 7.3 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 8.4 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 2022, 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 2,183 million (2021: DKK 2,914 million).
PARENT COMPANY FINANCIAL STATEMENTS 121
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 Tech Portugal Portugal 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%
New standards and interpretations not yet implemented are described in 8.3 to the consolidated financial statements.
FINANCIAL STATEMENTS 122
Management statement
Copenhagen, 14 March 2023
The Board of Directors and the Managing Director
have today discussed and approved the annual re-
port of ISS Global A/S for the financial year 2022.
The annual report has been prepared in accord-
ance with International Financial Reporting Stand-
ards as adopted by the EU and additional require-
ments of the Danish Financial Statements Act.
It is our opinion that the consolidated financial
statements and the Parent company financial
statements give a true and fair view of the Group’s
and the Parent company’s financial position at 31
December 2022 and of the results of the Group’s
and the Parent company’s operations and cash
flows for the financial year 1 January – 31 Decem-
ber 2022.
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
conditions, the results for the year, cash flows and
financial 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 2022 identified as ISS-Global-
2022-12-31-en.zip has been prepared, in all mate-
rial respects, in compliance with the ESEF-regula-
tion.
We recommend that the annual report be ap-
proved 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 123
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 2022, pp. 32–121, which comprise
statement of profit or loss, statement of compre-
hensive income, statement of cash flows, statement
of financial 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 finan-
cial statements are prepared in accordance with In-
ternational Financial Reporting Standards as
adopted by the EU and additional requirements of
the Danish Financial Statements Act.
In our opinion, the consolidated financial state-
ments 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 Decem-
ber 2022 and of the results of the Group’s and the
Parent Company’s operations and cash flows for the
financial year 1 January – 31 December 2022 in ac-
cordance with International Financial Reporting
Standards as adopted by the EU and additional re-
quirements of the Danish Financial Statements Act.
Our opinion is consistent with our long-form audit
report 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
requirements applicable in Denmark. Our responsi-
bilities under those standards and requirements
are further described in the “Auditor’s responsibili-
ties for the audit of the consolidated financial state-
ments and the parent company financial state-
ments” (hereinafter collectively referred to as “the fi-
nancial statements”) section of our report. We be-
lieve that the audit evidence 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 Ac-
countants' International Code of Ethics for Profes-
sional Accountants (IESBA Code) and the additional
ethical requirements applicable in Denmark, and we
have fulfilled our other ethical responsibilities in ac-
cordance with these requirements and the IESBA
Code.
To the best of our knowledge, we have not provided
any prohibited non-audit services as described
in article 5(1) of Regulation (EU) no. 537/2014
Appointment of auditor
We were initially appointed as auditor of ISS Global
A/S on 1 April 2003. We have been reappointed an-
nually by resolution of the general meeting for a to-
tal consecutive period of nineteen years up until the
financial year 2022.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most signifi-
cance in our audit of the financial statements for
the financial year 2022. These matters were ad-
dressed during our audit of the financial state-
ments as a whole, and in forming our opinion
thereon. We do not provide a separate opinion
on these matters. For each matter below, our de-
scription 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, including in relation
to the key audit matters below. Accordingly, our
audit included 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 statements.
FINANCIAL STATEMENTS 124
Revenue from contracts with customers, including
cut-off and accrual of revenue and onerous con-
tracts
Revenue from contracts is recognised as the ser-
vices are rendered to the customers. Some con-
tracts require the Group to incur significant tran-
sition and mobilisation costs at contract inception
which are capitalised and amortised over a multi-
annual contract term. Accordingly, appropriate
cut-off and accrual of revenue and capitalisation
and amortisation of transition and mobilisation
costs is critical and involve management judge-
ment, especially in relation to the more inte-
grated and complex facility service contracts. Fur-
ther, the assessment of whether a contract may
be considered onerous involves management
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 profita-
bility, including the uncertainty relating to estimating
the impact from Covid-19, we considered the ac-
counting for revenue from contracts with customers,
including cut-off and accrual of revenue and oner-
ous 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, 2.1, 2.2 and 2.5 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 invoices 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 management’s assessment of costs meeting
the criteria to be recognised.
Evaluation of management’s process to identify
and quantify onerous contracts. Our evaluation
included inquiries to local management respon-
sible for carrying out the identification process
at country level, review of documentation of
management’s analysis as well as our own ana-
lytical procedures 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 esti-
mate of the future contract revenue and una-
voidable cost, assessment of the assumptions
applied by management to estimate the future
contract revenue including the expected Covid-
19 impact, contract term including termination
and extension options and unavoidable cost,
comparison of the revenue assumptions used to
the services and fees specified in the contract,
comparison of unavoidable cost assumptions
used to underlying cost projections and actual
costs incurred historically as well as testing the
completeness and accuracy of the underlying
cost projections.
Valuation of investments in and receivables from
subsidiaries
The carrying amounts of goodwill and customer
contracts related to prior years’ business combina-
tions comprise a significant part of the consolidated
statement of financial position. The cash-generating
units in which goodwill and customer contracts are
included are impairment 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 inherent uncertainty involved in deter-
mining the net present value of future cash flows,
including the uncertainty relating to estimating the
impact from Covid-19, we considered these impair-
ment tests to be a key audit matter.
For details on the impairment tests performed by
Management reference is made to notes 3.1 and
3.2 in the consolidated financial statements.
In response to the identified risks, our audit proce-
dures included, among others, testing the mathe-
matical accuracy of the discounted cash flow model
and comparing forecasted profitability to board ap-
proved financial forecasts. We evaluated the as-
sumptions and methodologies used in the dis-
counted cash flow model, in particular those relat-
ing to the forecasted revenue growth and operating
margin, including comparing with historical growth
FINANCIAL STATEMENTS 125
rates and assessed impact of Covid-19. We com-
pared the assumptions 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
procedures primarily focused on cash generating
units where likely changes in key assumptions could
result in impairment. We further evaluated the ade-
quacy of disclosures provided by Management in
the financial statements compared to applicable ac-
counting standards.
Income tax and deferred tax balances
The Group’s operations are subject to income taxes
in various jurisdictions having different tax legisla-
tion. Management makes judgements and esti-
mates in determining the recognition of income
taxes and deferred taxes. Given the inherent uncer-
tainty involved in assessing and estimating the in-
come tax and deferred tax balances, including tax
exposures and write-down of deferred tax assets
and given the uncertainty estimating the impact
from Covid-19 on future taxable income, we consid-
ered these balances as a key audit matter.
For details on the income tax and deferred tax bal-
ances reference is made to notes 5.1 and 5.2 in the
consolidated financial statements and notes 5 and 7
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 re-
spect of the deferred tax assets recognised in the
statement of financial position, we assessed Man-
agement’s assumptions as to the probability of re-
covering the assets through taxable income in fu-
ture years and available tax planning strategies. We
further evaluated the adequacy of disclosures pro-
vided by Management compared to applicable ac-
counting standards.
Statement on the Management’s review
Management is responsible for the Management’s
review, pp. 2-31.
Our opinion on the financial statements does not
cover the Management’s review, and we do not ex-
press 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 ob-
tained during the audit, or otherwise appears to be
materially misstated.
Moreover, it is our responsibility to consider
whether the Management’s review provides the in-
formation required under the Danish Financial
Statements Act.
Based on the work we have performed, we con-
clude that the Management’s review is in accord-
ance with the financial statements and has been
prepared in accordance with the requirements of
the Danish Financial Statements Act. We did not
identify any material misstatement of the Manage-
ment’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 prepa-
ration of financial statements that are free from ma-
terial misstatement, whether due to fraud or error.
In preparing the financial statements, Management
is responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern and using the going concern basis
of accounting in preparing the financial statements
unless Management either intends to liquidate the
Group or the Parent Company or to cease opera-
tions, 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 includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs
and additional requirements applicable in Denmark
FINANCIAL STATEMENTS 126
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to in-
fluence 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
maintain professional scepticism throughout the
audit. We also:
Identify and assess the risks of material mis-
statement of the financial statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks and obtain
audit evidence that is sufficient and appropriate
to provide basis for our opinion. The risk of not
detecting a material misstatement resulting
from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, in-
tentional omissions, misrepresentations or the
override of internal control.
Obtain an understanding of internal control rel-
evant to the audit in order to design audit pro-
cedures that are appropriate in the circum-
stances, 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 ac-
counting 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 continue as a going concern. If we con-
clude that a material uncertainty exists, we are
required to draw attention in our auditor’s re-
port to the related disclosures in the financial
statements or, if such disclosures are inade-
quate, 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
statements represent the underlying transac-
tions 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 ex-
press an opinion on the consolidated financial
statements. We are responsible for the direc-
tion, supervision and performance of the group
audit. We remain solely responsible for our au-
dit 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. 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, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with those
charged with governance, we determine those mat-
ters that were of most significance in the audit of
the consolidated financial statements and the par-
ent company financial statements of the current pe-
riod and are therefore the key audit matters. We
describe these matters in our auditor's report un-
less law or regulation precludes public disclosure
about the matter.
Report on compliance with the ESEF Regulation
As part of our audit of the Consolidated Financial
Statements and Parent Company Financial State-
ments of ISS Global A/S, we performed procedures
to express an opinion on whether the annual report
of ISS Global A/S for the financial year 1 January –
31 December 2022 with the file name ISS-Global-
2022-12-31-en.zip is prepared, in all material re-
spects, in compliance with the Commission Dele-
gated Regulation (EU) 2019/815 on the European
Single Electronic Format (ESEF Regulation) which in-
cludes requirements related to the preparation of
the annual report in XHTML format and iXBRL tag-
ging of the Consolidated Financial Statements in-
cluding notes.
FINANCIAL STATEMENTS 127
Management is responsible for preparing an annual
report that complies with the ESEF Regulation. This
responsibility includes:
The preparing of the annual report in XHTML
format;
The selection and application of appropriate
iXBRL tags, including extensions to the ESEF tax-
onomy and the anchoring thereof to elements
in the taxonomy, for all financial information re-
quired to be tagged using judgement where
necessary;
Ensuring consistency between iXBRL tagged
data and the Consolidated Financial Statements
presented in human readable format; and
For such internal control as Management deter-
mines necessary to enable the preparation of an
annual report that is compliant with the ESEF
Regulation.
Our responsibility is to obtain reasonable assurance
on whether the annual report is prepared, in all ma-
terial respects, in compliance with the ESEF Regula-
tion based on the evidence we have obtained, and
to issue a report that includes our opinion. The na-
ture, timing and extent of procedures selected de-
pend on the auditor’s judgement, including the as-
sessment of the risks of material departures from
the requirements set out in the ESEF Regulation,
whether due to fraud or error. The procedures in-
clude:
Testing whether the annual report is prepared
in XHTML format;
Obtaining an understanding of the company’s
iXBRL tagging process and of internal control
over the tagging process;
Evaluating the completeness of the iXBRL tag-
ging of the Consolidated Financial Statements,
including notes;
Evaluating the appropriateness of the com-
pany’s use of iXBRL elements selected from the
ESEF taxonomy and the creation of extension el-
ements where no suitable element in the ESEF
taxonomy has been identified;
Evaluating the use of anchoring of extension el-
ements to elements in the ESEF taxonomy; and
Reconciling the iXBRL tagged data with the au-
dited Consolidated Financial Statements.
In our opinion, the annual report of ISS Global A/S
for the financial year 1 January – 31 December 2022
with the file name ISS-Global-2022-12-31-en.zip is
prepared, in all material respects, in compliance
with the ESEF Regulation.
Copenhagen, 14 March 2023
EY Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Torben Bender Claus Kronbak
State Authorised
Public Accountant
State Authorised
Public Accountant
mne21332 mne28675
FINANCIAL STATEMENTS 128
Forward looking statement and ESEF
Forward-looking statements
This Annual Report contains forward-looking state-
ments, including, but not limited to, the guidance
and expectations provided in Outlook on p. 4.
Statements herein, other than statements of his-
torical fact, regarding future events or prospects,
are forward-looking statements.
The words may, will, should, expect, anticipate, be-
lieve, estimate, plan, predict, intend or variations of
such words, and other statements on matters that
are not historical fact or regarding future events or
prospects, are forward-looking statements. ISS has
based these statements on its current views with
respect to future events and financial perfor-
mance. These views involve risks and uncertainties
that may cause actual results to differ materially
from those predicted in the forward-looking state-
ments and from the past performance of ISS.
Although ISS believes that the estimates and pro-
jections reflected in the forward-looking state-
ments are reasonable, they may prove materially
incorrect. Actual results may differ materially. for
example as a result of risks related to the facility
service industry in general or to ISS in particular,
including those described in this report and other
information made available by ISS. As a result, you
should not rely on these forward-looking state-
ments.
ISS undertakes no obligation to update or revise
any forward-looking statements, whether as a re-
sult of new information, future events or other-
wise, except to the extent required by law.
Reporting under the ESEF Regulation
The Group is required to file the Annual Report in
the European Single Electronic Format (ESEF) using
a combination of the XHTML format and to tag the
primary consolidated financial statements using
iXBRL (Inline eXtensible Business Language). The
Group’s iXBRL tags comply with the ESEF taxon-
omy, which has been developed on the basis of
IFRS taxonomy published by the IFRS Foundation.
The line items in the consolidated financial state-
ments are tagged to elements in the ESEF taxon-
omy. For financial line items that are not directly
defined in the ESEF taxonomy, an extension to the
taxonomy has been created.
ISS has considered the accounting meaning of a
taxonomy element when selecting theappropriate
block tag for marking up such disclosure, particu-
larly where multiple block tags match a disclosure.
As a minimum, ISS has marked-up disclosures in-
cluded in the consolidated financial statements (in-
cluding headers) with the elements required (An-
nex II of the Regulatory Technical Standard on
ESEF). If disclosures or information corresponds to
more than one element of different levels of de-
tails, ISS has used each of them and multi-tagged
the disclosure to the extent that corresponds with
the underlying accounting meaning of the disclo-
sures.
The Annual Report submitted to the Danish Finan-
cial Supervisory Authority (the Officially Appointed
Mechanism) is included in the zip file ISS-Global-
2022-12-31-en.zip.
ESEF data
Name of reporting entity: ISS Global A/S
Domicile of entity: Denmark
Legal form of entity: A/S
Country of incorporation: Denmark
Address: Buddingevej 197, DK-2860 Søborg
Principal place of business: Global
Principal activities: Workplace and facility service
solutions
Name of the parent entity: ISS A/S
Name of ultimate parent og Group: ISS A/S
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