Hi, everyone, and welcome to the ISS trading update for Q1 2024. Today's call is being recorded. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there'll be a Q&A session. To ask a question, please press five star on your telephone keypad. I'm pleased to present Jacob Johansen, Head of Investor Relations. Jacob, please go ahead.
Ladies and gentlemen, good morning, and welcome to this conference call following the release of our Q1 trading update this morning. As said, my name is Jacob Johansen. I am Head of Investor Relations, and I'm here today at our global headquarter in Søborg, Copenhagen, with our Group CEO, Kasper Fangel, as well as Christian from IR. Before we start, I'll ask you to pay close attention to the disclaimer on slide 25. With this, I'll hand over the word to Kasper to go through the presentation and slide number 3, please.
Thank you, Jacob, and good morning, everyone. Let me start by saying that I'm pleased with the performance in the first quarter. There are no major news, but the business is progressing according to plan. We've had a good start to the year with 6% organic growth, and we confirm the outlook for the full year. Although a good part of the growth in the quarter was driven by price increases, it demonstrates the strong operating rigor we have around thoughtful value capture. Disciplined price management is a pillar to generating organic growth, and we have demonstrated consistently that we can do that with excellence. As a result, we've been able to pass on the inflationary burden associated with wage increases. Besides price increases, our growth is being driven by smaller, more local contracts, and our commercial pipeline remains attractive.
We've also retained a good list of existing customers, demonstrating that our rigor around retention continues to deliver results. On the M&A front, we had two important achievements this quarter. The divestment of ISS France was completed in April, and in Switzerland, we have acquired the company gammaRenax. Lastly, the arbitration process with Deutsche Telekom is progressing as expected, with no significant changes to the situation since we spoke in February. We remain confident in our case, and as mentioned in February, the impact on free cash flow is a matter of phasing between 2024 and 2025. Please turn to slide number five. On the strategic front, the execution of the One ISS strategy continued, and following last year's review and prioritization of the strategic initiatives, ISS has enhanced execution power. The focus on fewer initiatives are driving the expected outcomes and value creation.
I'm pleased to say that our focus on retention continues to be fruitful. Among the contracts we have extended in the quarter, I'm especially pleased with our progression within the banking segment. We are servicing 20 of the world's 30 largest banks, and our service delivery and value proposition resonates very well with them. From the banking industry in particular, I'm seeing a lot of interest in our social sustainability efforts and how we, with our more than 350,000 employees, can contribute to our banking customers' ESG journey as a significant supplier. Operationally, we are following the plan, and the margin development developed as expected in the quarter. At the beginning of April, we announced that we completed the divestment of ISS France, less than 12 months after we announced the intention to divest France.
Even though it was a tough decision and process, I firmly believe this was the right and necessary thing to do. Our French business is now with a more appropriate owner, and ISS is stronger and more focused as a result. Please go to the next slide, where we'll look at the acquisition we have made in Switzerland. M&A remain part of our strategy to grow our business if it makes sense from a strategic and financial point of view. We've been successful with acquiring smaller, bolt-on targets that adds value through scale or synergies or fulfills missing service lines or geographical area in a given country. But it's equally important that we remain strict and disciplined in our approach to M&A. It's a part of our capital allocation policy to make sure it's value accretive.
We have a market-leading position in Switzerland with a strong and experienced management team, and the team has also a proven track record with M&A. gammaRenax is well established in the Swiss market, and it adds scale to ISS within existing service lines, mainly cleaning and technical services in prioritized customer segments. With the countrywide exposure, it is a low-risk bolt-on acquisition case with a strong operational synergy potential. The transaction is already completed, and gammaRenax will be consolidated into our financials from May the first, adding around 0.6% to group annual revenue. In line with previous acquisitions, we will execute a strict and disciplined integration process, and we expect this to be concluded by the end of 2024. Please turn to slide 8. Our commercial pipeline remains attractive, and we continue to see good opportunities in the market.
As mentioned earlier, it's driven by smaller, more local contracts. Although we have not had a significant contract win here in 2024, we are seeing good win activity in local markets. As mentioned, we are still running at a good pace when it comes to renewal of existing contracts, and our customer retention rate was above 94% in the quarter, only slightly down compared to the previous quarters. For the rest of 2024, we have only 3% of our revenue up for renewal, and we are in close dialogue with all customers. So all in all, low risk for the rest of 2024 in terms of renewals. Please go to slide 10 for a look at the growth and the revenue development. When looking at the revenue development over the last couple of years, the trend is very clear.
We're constantly growing our revenue, and it's driven by our portfolio business. Organic growth rates have been more volatile, as they have been a function of return to office and recovery from COVID-19. With 6% organic growth here in the first quarter, we are adding DKK 1 billion to our portfolio revenue compared to the same quarter last year. Revenue from projects and above base work is slightly down in the quarter after the seasonally strong Q4. Most importantly, it's pleasing to see that projects and above base generally remains well above the pre-pandemic level. Please turn to the next slide for a look at the organic growth drivers in the quarter. With 6% organic growth in the first quarter, we've had a good start to the year.
It's mainly driven by price increases as we, in line with contract terms, have passed on the inflationary burden to customers. Across our countries, wages are typically adjusted through minimum wage regulation and collective agreements, taking effect in the first part of the year. As mentioned earlier, our pricing management demonstrates the strong rigor we have around thoughtful value capture. Disciplined price management is a pillar to generate organic growth. The result is that we have a positive effect on organic growth, and margin is generally unaffected. The organic growth contribution from price increases in Turkey and isolation contributed with around three percentage points. Volume growth was around 1.5% in the quarter. It was driven by expansion of scope with existing customers.
The contribution from net contract wins was negative, as the contracts we lost in 2023, including some deliberate exits, are weighing in on the quarter. We expect this to reverse over the course of the year. Remember, DEFRA started out with the first wave during February, and the second wave came in April. Together with the contract win with the Danish Building and Property Agency, they will have a positive effect going into Q2. Organic growth for projects and above-base work was also negative due to lower demand for deep cleaning and project work compared to last year, which was still impacted by the pandemic. Please turn to the next slide and the regions. When you look across the regions, there are some differences that I would like to explain.
The development in both Northern Europe and Asia Pacific was very robust, with 5% organic growth in both regions. Northern Europe also saw a slight increase in demand for projects and above-base work. The organic growth in Asia Pacific was driven by portfolio revenue. In Central and Southern Europe, Turkey was the main driver behind the organic growth. Price increases had a high contribution, but volumes did also grow in the quarter. Organic growth in Americas was -2%. During 2023, we had a number of contract exits and losses, including deliberate exits, and they have a negative effect here in the quarter. Growth for above-base services was also negatively affected by the contract exits. That leaves me with the outlook on slide 13. On the back of the development here in Q1, we confirm the outlook for the full year on all financial KPIs.
We still expect 4%-6% organic growth, driven by price increases and volume growth. The operating margin is still expected to be above 5%. The YoY improvement is coming from operational improvements and efficiencies across the group and cost savings from last year's One ISS review. The free cash flow guidance is also unchanged. We still expect an underlying cash conversion of above 60%, but the reported free cash flow is expected to be above DKK 1.8 billion. This is a result of negative timing effects of up to DKK 600 million from Deutsche Telekom withholding payments. Let me reemphasize that this is purely timing. It's not about of whether or not we get these payments, but rather a matter of when.
Please also remember that we will have seasonality in our cash flow, so you should expect the free cash flow to be negative in the same ballpark as in H1 2023. Please turn to the next slide for some closing remarks. We are off to a good start here in 2024, and as I just mentioned, we are confirming the outlook for the full year. We are moving in the right direction with disciplined execution, both strategically and operationally. We are a more focused and more reliable ISS, and our commitment to delivering exceptional service experiences to our customers remains unchanged. This would not have been possible without a tremendous and dedicated effort on a daily basis by our more than 350,000 Placemakers around the world....
I often describe ISS as an engine for elevating people, families, and communities, allowing them to achieve things they never thought possible. When our customers entrust us with their workplaces, they aren't just buying services, they're allowing people to fulfill their dreams through meaningful work. So a special thank you to our customers for the social impact they're enabling with and through ISS. Lastly, I'm also happy to inform you that our new Group CFO will start in ISS at the beginning of June. I'm personally looking forward to get Mads on board, and he's also very much looking forward to meeting you all. With this, I've concluded the presentation, and I will hand over the word to the moderator to take us through the Q&A session. Operator, please.
Thank you. We'll now start the question and answer session. If you do wish to ask a question, please press five star on your telephone keypad. If you wish to withdraw it, you may do so by pressing five star again. There will be a brief pause while questions are being registered. The first question will be from the line of Rémi Grenu from Morgan Stanley. Please go ahead. Your line will now be unmuted.
Morning, gentlemen, and thanks for taking my questions. I've got three, if I may. So, the first one is: Can you give us a little bit more flavor on the commercial pipeline? I'm referring to that in the context of the negative contribution of net contract wins in Q1, and your expectation is going to be positive throughout the year. And also on that specific question, if it is any concern on your side, and if it's ISS specific or the whole market, about the fact that you've not won any large contracts so far. So that would be the first question. The second one is on the top line guidance. I guess Q1 is quite important because this is when you're passing price increases, so you must have a little bit more visibility.
You were at the higher end of the range during the first quarter, and I think that the comparison may be easing as we go through the year. So do you have any confidence that you could be at the higher end of that 4%-6%? That's the second question. And the third one, I understand it, the focus of today is probably not on the profitability, but given the Q1 and what you've seen so far throughout the year, any strengthening in your confidence that you will exceed this kind of 5% plus guidance on operating margin? Thanks.
Thanks for these questions. Let me take them one by one, and good morning to you as well. So first of all, you asked about whether I'm concerned on top line. And let me just give you a bit of context here. I'm very pleased with the retention rate being above 94%. And I'm pleased with that because that means that we are keeping our customers, and that means that both from a pricing point of view, but also from a value proposition point of view, we're doing things here that are resonating with our customers.
And, a further data point on that is that you're seeing in Q1, consistently to what you've seen throughout the last year, that we are growing with our existing customers. So we are tapping into the available wallet that sits with the existing customers, and we are adding more business to our portfolio, which is good. And then I also think it's very important to highlight the fact that don't forget that we are starting up almost DKK 1 billion in April and May, where DEFRA, of course, is the biggest contract that we have mobilized in the U.K. And that also means, specifically on your question, that I do expect that net wins for the full year of 2024 is gonna be a positive number.
So it will turn in from a negative number, a negative contribution in Q1, and for the full year, this year, I expect it to be positive. Specifically on the pipeline, we do, as I said in my presentation, continue to see a lucrative pipeline. And I have to say that I think we're doing all the right things. Just to be concrete on that, we have a laser focus on our segment strategy. And that allows us to be better in targeting, in the targeting process and targeting customers that we're going all in with. And additionally, we are working actively on having an early engagement with our customers and starting to create the relationship long before the RFP starts.
The last thing, which I think we have seen good examples of, is working as a part of One ISS. We are leveraging the expertise that we have across the whole enterprise. So we're not targeting customers only with the local expertise. We're pulling the best together from everywhere in ISS and are putting that towards the key targets that we are targeting. So all in all, I think we're doing all the right things, and we gotta have some patience here, because I think it's only a matter of time before we will see that that is coming through in wins. In terms of top-line guidance on your second question, then I'll give you a little bit more color on that one.
Remember, as you could see in my bridge in Q1, the contribution on price increases is 6.5%, and that is going to reduce over the course of this year, because we had price increases that gradually kicked in over the course of last year. So that is going to reduce. I believe that, as I said, that new wins is going to have a positive contribution for the remaining three quarters of this year. And volume, there's no reason to believe that that will change significantly compared to what we've seen in the first quarter. And then there is above base work.
And, on project work and above base work, that is more uncertain by nature, so it's harder to predict. However, I will say that we can see that structurally on project work, that there is a bigger volume compared to what was the case before COVID-19. So I'm not concerned about that the reduction that we're seeing in above base work in Q1 is a sign of anything changing structurally. It is simply just because the comparison is more tough, because last year we had a significant volume uptick, as the last tail of COVID-19, with disinfection, in particular, that we benefited from in Q1 2023. Your last question on profitability, I mean, I'll keep that one relatively short. Q1, we've delivered according to plan.
We can see that the things are coming through, and I'm comfortable that we're going to land this year above 5% on our operating margin.
Great. Thank you very much.
Thank you, Rémi. The next question will be the line of Michael Rasmussen from Danske Bank. Please go ahead. You'll now be unmuted.
Yeah, thank you very much, and good morning, Kasper. So three questions from my side. First of all, any stories or anecdotal evidence or anything that you could add from the different startup? Are things moving as you'd hoped for? Are you seeing any mobilization costs, or are you seeing anything on the risk side, both positive and negatives, please? Secondly, if you could add a few words on the shared service center process. Could you just remind us on what kind of savings you're seeing here? And also, if you could also talk a little bit about the One ISS initiatives that you talked about last year. How is that coming through on an underlying basis, please?
My final question may be a bit on the technical side, but what kind of IAS 29 impact should we see in 2024 based on the levels of inflation that you're seeing right now? Just so we get the numbers right here in between the operating lines. Thank you.
Thank you, and good morning, Michael. Good questions, as always. So, on DEFRA, it's going according to plan. It's a significant volume that we are absorbing in the U.K. I think the U.K. team is doing a very good job on absorbing more than DKK 500 million. They have the transparency, they have the accountability, and we can see that things are coming through according to plan. It's a learning from the past that we're not holding back on spending what needs to be spent to get off to a good start with such a significant volume. We can see where we're getting the mobilization right, and spending some incremental cost on that.
That is a good investment, because that means that you get the profitability up quickly, you get the engaged customers, you get the engaged staff and engaged customers, and the whole thing is just off to a good start. And that's exactly what we're seeing in the U.K. So overall, in line with expectation, yes, there are some incremental costs that we are expensing, but I'm seeing that as a good investment. It's all included in the guidance of above 5%, so no concerns in that regards, and it's the right thing to do to make sure that we're getting off to a good start there. In terms of the shared service center, then, you're right.
I mentioned, I think it was in the last call, that that is a benefit that we will need to harvest in ISS. Because, given the legacy of this company, we have acquired a lot of companies decades ago, and never really gotten the synergies out of being one enterprise, and that's exactly what we're doing here. There's no point doing all sorts of admin and transactional stuff with fully fledged back office in the local markets, and that's why we have started a transactional shared service center in Gdansk. And we have volume that has started to transfer to Gdansk.
U.K. is actually one of them, and it's going according to plan, and we will see that we are ramping that up over the course of this year. But it's not only going to be this year, it's a longer journey than that, because we want to make sure that we get quality in this and we are not losing control. So, very pleased with that. And the last question on this beautiful standard, IAS 29, you should expect the impact on margin to be the same as you saw last year. So, immaterial.
I believe from memory last year it was four basis points, and it's similar that what we're looking at here in the first quarter from a margin perspective.
Great. Thank you very much, Kasper, and the best of luck for the next quarter. Thank you.
So much.
... Thank you. The next question will be from the line of Mats Andersson from DNB Markets. You'll now be unmuted.
Yeah, good morning, gentlemen. I have a couple of questions as well. If we could start on the M&A side of things, just on the acquisition you did during this quarter, is it—I mean, what, what are we, in terms of, of impact on cash flow here, what are we talking? It's DKK 300-DKK 350. Is that a fair sort of purchase price? Is that a fair assumption? And then, I think previously you've alluded to the fact that it was, it was a decent assumption to assume around DKK 500 million for acquisitions in 2024. Is that still the plan? Or is that are you taking a step up on that now, considering that you've done this so early in the year or during the year?
Secondly, I mean, I'm struggling a little bit with some of the comments around organic growth, Kasper. I know, I know it's gonna come down throughout the year, but as far as I can tell, you still have a very strong carryover in Q2, especially from Turkey, where I know it tapers off quite—I mean, it tapers off at least a bit in Q3 and Q4, but I think the main sort of moving parts on the pricing still seems very supportive in Q2. And I like to see you, you've said that we shouldn't expect underlying volumes with existing customers to change much. So I mean, I'm struggling a little bit with the fact that I guess right now, the client growth rate reached a low in just 3.4 based on the pricing and underlying volume growth.
I mean, either are you more concerned about... I mean, you say you're not concerned about variable volumes, but should we essentially expect variable volumes to deteriorate further or get even worse? Or what's the driver here? Are you just being conservative again on pricing? Because, I mean, last year you also increased the pricing contributing, contribution assumption, I think every quarter throughout the year. So that's the second one, please. And then thirdly, if I just can ask you about leverage.
Obviously, I don't assume you'll say anything about where we are now, but I mean, if I take the net debt from Q4 and adjust it for the dividend payments, buybacks, and obviously, your answer on M&A, I guess, DKK 400 million, something to the tune of that, and take a normalized EBIT margin, and add depreciation, then I'm, I mean, I think it's fair to assume that you are gonna be just around the high end of guidance on your target range for growth, or sorry, not for growth, for leverage.
I mean, is it fair to assume, given where the share is trading, but also the fact that you have started a buyback program, that we can see a step up at the H1 results, especially given your strong sort of cash flow seasonality in the second half, or will we have to wait further for Q3 or Q4? Or should we expect anything if you are in fact stepping up M&A? Thank you.
Okay. Thank you, and good morning, Mats. Let me help you not being confused on the organic growth guidance. Because, of course, when we are saying 4%-6% as a range, then it's because that the growth could end between 4% and 6%. Otherwise, we would have narrowed at this point in time. So, I'll just remind you that this is the first quarter, so 25% of the year that has gone. You're of course right. We're looking at Q1 of 6% growth, and that means mathematically that the growth for Q2 to Q4 then should be slightly higher than three percent to get to the 4% .
But there are a number of things here that you're pointing to yourself, where we still need more visibility and where we don't think it's the right thing to go in and narrow after Q1. And that is exactly on project work, as you mentioned. Again, I don't see anything structural there, but of course we need to see that that is also coming through in the numbers. Then on price increases, the key assumption that we have made on all of this is that there won't be any new significant increases to minimum wages in local markets over the course of this year.
So we don't—we have not assumed then that we will see a further contribution from price increases in Q2 and Q4. That we saw last year, and I don't think it will happen over the course of this year, but of course, we were surprised last year, the same thing could happen this year. And on the growth, both in terms of the volume and the new wins, I think I have provided color on that. I feel comfortable. I think we're doing all the right things, but I'm also acutely aware on new wins that I have entertained in many quarters, saying we're just around the corner to close a number of significant prospects, and it has been delayed.
That is a general trend that we are seeing, that a decision around which provider to go with for something that is now essential in the market across all industries is which partner to choose for facility management services. It takes time, and there are many stakeholders involved. In many instances, we are seeing that the decision-making is going all the way up to board level. It's a positive thing for us in the long term because it means that that it's not just a matter of price, it's value. Of course, it's value because what customers are striving for is to make sure that they're creating an appealing and exciting office environment where they can get their staff back in with huge excitement. But it just takes longer in the decision-making process.
In terms of of M&A and leverage, I think they are tied together. On the particular one in Switzerland. I mean, that one, strategically, it's, and the strategic rationale here is bull's eye. It's exactly the right thing to do. We have a strong country management team that has a proven track record, very strong leaders, and we are also comfortable that the synergies are coming through, and they're coming through quickly. So I don't wanna comment on the exact EV and purchase price. We've agreed that we will not do that with the seller. But it's fully in line with what we have communicated previously around M&A.
And so is the third question on your capital allocation. We believe we have the right policy on capital allocation, and we are evaluating that on an ongoing basis. I don't wanna give you, as you said, any exact numbers here in Q1. That will come when we have full disclosure in the first half. And then we will continue on an ongoing basis to assess, and if we have excess capital, then you know, as we have said before, then we are also committed to return that back to shareholders. And last question you alluded to yourself, which I think is an important one. Of course, at first half, remember the seasonality in the cash flow.
You should expect that the free cash flow in the first half is going to be broadly in the same level as you saw last year, which is slightly higher than -DKK 1 billion.
Thank you.
Thank you, Mats. The next question will be from the line of Peter Sehested from ABG. Your line will now be unmuted.
Thank you. I have a couple of questions. First one is in on the U.S., where you are reporting a negative organic growth of 1% in terms of total, and then I assume the other 1% comes from the above-base work. But the reason for this is, as you mentioned in the report, contract losses and also some deliberate contract exits. You maintain your... You say that operating guidance is developing according to plan. Were these things also on plan, i.e., assuming that you are cutting some contracts, it's because they are underperforming, so was there a plan to have positive impact in cutting loss-making contracts or low, which should have a positive impact on your margins? I'll start with that one.
Morning. Thanks, Peter. Yes, so first of all, in the Americas, let's just be clear on the data points here, because in Q1 last year, we delivered an organic growth of 22% in 2023. So the comparison is relatively tough for us here in the first quarter this year. And there's no surprises, Peter, to this growth in Q1. It is exactly as you were saying, it's exactly what we spoke about in February when we disclosed the results for last year. We have some contracts that we have decided to exit, simply because we are not compromising on not entering into unreasonable partnerships.
And what I mean with that is that accepting unreasonable terms. We've seen that previously, that that's one of the things we've struggled with in ISS, and we're keeping the discipline high on that. If a customer doesn't wanna award the risk and the whole business context that we are embarking in on, then we are not entertaining that. And that was what was causing the deliberate exits in the second half of last year. And then I would just say one other thing on the U.S., because and that is that U.S. is still the swing factor for us as an enterprise, and one quarter with slight negative organic growth doesn't change that.
There are massive opportunities in, in Americas and in particular in, in the U.S., and we intend to not only explore, but also to grasp that.
Yeah, because that was actually my second question, was on your keenness for the U.S., if that's still intact, and but I can just follow up with that. In terms of your keenness and what you just said, what are expectations for... What kind of expectations should we have for M&A in the U.S.? And then I have one more for the third question.
Yeah. So, so you should not expect any M&A in the short term in the U.S. You know that we're recruiting for a permanent country manager in the U.S. That process is, we're closing in on that, and we have a final shortlist, so we're going through the last wave, hopefully on that selection process. And then we are still building the key cornerstones in the business to make sure that we have the right foundation to look at an M&A. So over time, of course, it is something that we will look at, but in the short term, we're preparing ourselves, and we need to make ourselves comfortable. So that's where we are on that.
Cool. Final question pertains to the 600, up to DKK 600 million. You sound extremely confident that it's a matter of phasing, i.e., should materialize somewhere in 2025, sometime during 2025. As far as I can see, consensus does not really factor that in at all. So my question is: If you get those DKK 600 million in next year, would you then spend that, all of that, on share buybacks?... I guess that would be a reasonable thing for investors to expect.
First of all, I don't comment on consensus, Peter. I focus on doing the right things for ISS. My position has not changed on that. I said that in the presentation as well, on the up to DKK 600 million that DTEK is holding back, and that is, of course, a top priority for us to get that resolved. Whether, how that cash is going to be spent or how we spend our free cash flow in general, well, we go through the capital allocation policy that we have in place that I've mentioned to Matt, so I don't want to give any specific commitments that we are parking a certain amount to do a share buyback.
That, that's not how we work with that.
Fair enough. Thank you.
Thank you, Peter. The next question will be from the line of Jen from UBS. Your line will be unmuted.
Morning. Thanks for taking my questions. First question, please, on the positive volume contribution in the portfolio business. You obviously noted what looks like an increase in scope in some contracts. Can you maybe talk us through what a typical example of this look like through Q1? And are there any areas where you are seeing de-scoping or customers cutting back on volumes, particularly in light of the level of price pass-through at the moment? And then secondly, just to follow up on the above base, I know this has obviously been normalizing post-COVID and is still elevated compared to 2019, but that -7% organic decline is obviously a lot greater than what you saw in H2, when you were similarly lapping those tough comps. Is this just to do with those extra contract exits?
Is some of the kind of return to office type work fading or is it just something else? Thanks.
Yeah. So on the volume contribution and growing with our existing customers, it's a variety of things, to be honest. But the key thing here that I have a laser focus on is that our operators also have a commercial focus, so they are spotting opportunities with our existing customers, how we can help our existing customers. By providing additional services, by growing with them as they are growing their business, et cetera, et cetera. And it's a combination of all these things that is adding up to us growing with our existing customers. And it's not, you know, something that we're only seeing here in this quarter.
It has been a consistent theme, and one thing that we have certainly gotten right as a part of One ISS. So I'm very pleased with that. And it's also going to be super important going forward, because as we've spoken about several times before, especially in large cities where there is a big concentration, the hybrid model will kick in and continue to stay as it is at the moment. It's naive to believe that you will have the same people commuting in London five days a week, two hours in the morning and the same in the afternoon. And most likely, that will lead to a reduction in square meters.
And of course, it's important that as a part of that, we are helping our customers to drive that transition, and we have in mind that we need to be commercially around that, and we can tap in and do other service lines with smaller suppliers that they have today. We've seen some good examples of that recently, and that's something that I also expect will boost the volumes with existing customers going forward. Then on above-base work, I really don't have any much additional comments on that. I'm not concerned on that one. It is more uncertain by nature, as you know.
In Q4, we have the seasonality impact that we have seen over the last, I don't know, 10 years, that it is just higher in Q4 compared to the previous 3 quarters. And there's no reason to believe that that shouldn't be the case this year as well. But again, of course, it is more uncertain. Again, here, the key thing is the commercial understanding that our site managers have. So it needs to be a commercial discipline and culture, filtering all the way down to the lowest level in the organization, so that they are spotting the opportunities for when ISS can come in and help the customers to do certain events, to do outdoor window cleaning, all things that are not a part of scope.
We both have incentive programs and a good training program that I think is the reasons why we're seeing that the levels of above base is quite significantly higher than it was before COVID-19.
Great. Thank you.
Thank you, Jen. As no one else is lined up for questions in this call, I'll hand it back to the speakers for any closing remarks.
Thank you very much. Thanks for attending this call on what we all know is a busy day here in Denmark, with a lot of C25 companies releasing their quarterly results. Thanks for prioritizing this. Very much appreciated. As you know, our IR will be available throughout both today, but also the coming days, to make sure that if you have some follow-up questions, that you will get that clarified, and you will be able to be answered on those. With that, thank you very much indeed, and have a good rest of your day.