ISS Group, one of the world’s leading facility services companies, has just published its interim financial report for the first six months of 2015. The company posts an increased organic revenue growth of 4.0% in H1 and 4.8% in Q2 (Q1 2015: 3.1%) with an improved operating margin of 4.9% in H1 (H1 2014: 4.8%) and 5.3% in Q2 (Q2 2014: 5.2%).
There has been a strong cash conversion over the last twelve months of 99% (Q1 2015: 97%). Revenue generated from integrated facility services (IFS) increased by 10% in local currency in Q2 (Q1 2015: 9%) and represents 33% of overall Group revenue (Q1 2015: 32%).
Income derived from global corporate clients represented 10% of Group revenues in Q2 (Q1 2015: 10%). That’s an increase of 13% in local currencies across Q2 (Q1 2015: 6%).
The company’s strategic initiatives including customer segmentation, organisational structure and excellence projects such as the defined procurement programme are “progressing according to plan” and have been actively supporting margin improvement.
To further facilitate alignment and boost customer focus, in June the business announced a new and strengthened organisational structure which became effective on 1 September.
The outlook for organic revenue growth in 2015 has been changed to 3.5%-4.5% from the previous prediction of 2%-4%.
Expectations for operating margin (which sit above 5.6%) and cash conversion (above 90%) remain unchanged.
Strong second quarter for the business
Speaking about these financials, Jeff Gravenhorst (Group CEO at ISS) explained: “We delivered a strong second quarter thanks to good growth in IFS, improved performance in some developed markets and progress in our strategic initiatives. In what is presently a volatile macroeconomic environment, we’ve increased our organic growth rate and improved operating margin.”
Gravenhorst continued: “We have also won new integrated facility services contracts and extensions with a number of significant customers. These include Danske Bank in the Nordics and Eastern Europe, Huashan Hospital in China, a hospital re-tender in the UK and a major contract secured with the Danish State Railways. Following significant contract wins and strategic initiatives, we now expect to deliver an organic growth of 3.5%-4.5% for the full year.”
Richard Sykes, CEO for ISS in the UK and Ireland, commented: “We’ve been a public company since the IPO in March 2014 and, during the intervening period between then and now, we’ve been trading well and profitably across the globe. The UK and Ireland continues to be a significant element in this success. I’m delighted that we’ve developed major contracts, partnerships and relationships which have contributed to the ongoing global success of the organisation as a whole.”
Sykes added that the UK and Ireland business’ public sector work is “growing well”, enhanced by successful public sector tenders alongside private sector contracts gained with some leading financial sector organisations.