2012 Half Year Results Presentation 26 July 2012 Wolfhart Hauser Lloyd Pitchford Chief Executive Officer Chief Financial Officer 1 www.intertek.com
Lloyd Pitchford Chief Financial Officer Financial Performance 2012 Half Year Results Presentation 2 www.intertek.com
Cautionary statement regarding forward-looking statements This presentation contains certain forward-looking statements with respect to the financial condition, results, operations and business of Intertek Group plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast. 26 July 2012 3 www.intertek.com
Results Overview • Strong growth in revenue, profit and earnings • Total revenue up 29.9%; Organic growth of 9.9% • Operating margin 15.4%; Organic margin up 40bps • EPS up 28.2% • Interim dividend increased by 21.5% 4 www.intertek.com
Financial Highlights For the six months to 30 June 2012 Revenue £991m + 29.9% at actual + 9.9% at constant organic (2) Operating profit (1) £152m + 28.2% at actual + 12.7% at constant organic (2) Operating profit margin (1) 15.4% – 20bps at actual + 40bps at constant organic (2) Profit before tax (1) £140m + 26.6% Diluted EPS (1) 58.2p + 28.2% Cash generated from £118m + 29.6% operations (1) (1) Before separately disclosed items (2) Growth excluding acquisitions at constant exchange rates 5 www.intertek.com
Profit Before Tax & Separately Disclosed Items H1 2012 H1 2011 £m @ actual exchange rates Adjusted operating profit (1) +28.2% 152.2 118.7 Separately disclosed items: Amortisation of acquisition intangibles (15.0) (9.5) Acquisition transaction and integration costs (1.1) (9.5) Restructuring costs – Business Process Outsourcing (1.8) (6.3) Statutory operating profit 134.3 93.4 +43.8% (1) Before separately disclosed items 6 www.intertek.com
H1 Revenue Growth £m £m + 29.9% 1,100 1,100 Actual rates 1,000 3 16 18 1,000 27 3 164 154 900 900 800 71 800 700 + 9.9% 991 700 991 Constant rates 600 600 763 763 500 500 400 400 H1 2011 Organic Acquisitions FX H1 2012 H1 2011 I&A Commodities CG C&E C&P H1 2012 H1 2011 revenue of £763.1m is made up of £712.8m organic revenue, £53.9m from acquisitions made in H1 2011, less £3.6m for foreign exchange. Organic revenue growth of £70.6m is 9.9% at constant exchange rates. 7 www.intertek.com
Constant Organic Margin Progression of 40bps % 16.5 + 40 bps - 80 bps 16.0 + 20 bps 15.5 15.0 15.6% 15.4% 14.5 14.0 YTD June 11 FX Organic growth Moody YTD June 12 8 www.intertek.com
Financing, Tax, Investment & Cash Flow Funding Maturity Profile • Adjusted cash generated from operations £118.1m; up 29.6% 2013-15 13% • Net interest charge £12.2m • Adjusted effective tax rate at 27.7% 2016+ • Capex £46m; 4.6% of revenue 87% • 3 acquisitions for £17m • £0.9bn facilities • 50% Bond: 50% Bank • Maturity profile strong • Net debt:EBITDA of 1.6 9 www.intertek.com
Five Year H1 History 2008 to 2012 H1 Revenue H1 Adjusted Operating Profit £m £m 21% CAGR 22% CAGR 1,100 160 1,025 950 140 875 800 120 725 650 100 575 500 80 425 350 60 275 200 40 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 10 www.intertek.com
Interim Dividend • Interim dividend of 13.0p, up 21.5% Interim Dividend Per Share Pence • Interim payout of £21m 14 • Strong and consistent record of 12 dividend growth 10 8 6 4 2 0 2008 2009 2010 2011 2012 11 www.intertek.com
Summary • Strong growth delivery • Underlying margin progression • Strong cash generation and financial position 12 www.intertek.com
Wolfhart Hauser Chief Executive Officer Operating Performance 2012 Half Year Results Presentation 13 www.intertek.com
Market Drivers in our Industries End-User Quality Expectations & Diversity Developed and emerging economies Supply Chain New Changes Technologies Shifting cycles, Market Innovation and sourcing and product variety Drivers complexity What Energy Growth & Regulation Diversity Quality, Safety and Capex and Opex Environmental standards 14 www.intertek.com
Market Drivers in Action: H1 2012 EU ‘ Total’ Quality Cosmetics Solutions New regulation driving Delivering new tools & wider testing & quality solutions, for better overall assurance demand supply chain quality Unconventional performance fuel development Electric vehicle technologies Supporting customers’ infrastructure & Europe, North America operational developments & China lab network Medical Devices ‘3 rd Edition’ Shifting Global standard rolling out supply chains greater performance, Double-digit growth rates risk & safety in new customer requirements sourcing markets 15 www.intertek.com
Market Drivers in Action: H1 2012 Hewlett-Packard BASF Greener printers Infrastructure HP Indigo uses integrity Intertek’s green leaf mark in Expanding support verifying the with integrity sustainability of assessment of commercial chemical plants printers UK ‘Big 4’ Sabic Supermarkets Expanding Partnership Quality Supporting product Assurance development with Testing and testing and auditing measurement, programmes extending into new across food and markets. hard-line supply chains. 16 www.intertek.com
Divisional Mix % of Group % of Group Revenue Profit Industry & Assurance Chemicals 32% 22% & Pharma Commodities 28% 23% Commercial Industry & & Electrical Assurance Consumer Goods 17% 34% Consumer Goods Commercial & 16% 17% Electrical Commodities Chemicals & Pharma 7% 4% 17 www.intertek.com
Industry & Assurance H1 12 Performance Developments £m @ constant Organic • Acquisition in US of Automation exchange H1 12 Change change Technology Inc diversifying service Revenue 318.5 106.8% 14.3% offering to our clients Operating profit 33.6 124.0% 27.6% • Increased Food labs and linked into Agri and Systems Certification Margin 10.5% 80bps 90bps Outlook • Strong demand for Technical Inspection for new build energy assets • Continuing high energy sector • Exceptional growth from Moody investment across all asset classes and geographies • Systems Certification and Food & Agri • Further consolidation of global contracts good growth • Good acquisition opportunities Add chart 18 www.intertek.com
Commodities H1 12 Performance Developments £m @ constant Organic • Expanded capabilities in Asia and exchange H1 12 Change change Middle East supporting client demand eg Revenue 278.2 10.7% 10.5% Additives, Bunker fuels Operating profit 34.3 19.9% 19.9% • Acquisition of Vigalab in Chile for Minerals exploration support Margin 12.3% 90bps 100bps Outlook • Strong performance in Minerals • Government Services grew strongly on • Emerging economies continuing to drive demand for commodities and product the back of increased Product quality Conformity Programmes • Good demand for Oil Cargo Inspection • Potential for growth in Minerals to moderate and Analytical Assessment in Asia and Middle East balancing steady US • Opportunities in alternative energies eg market Shale Oil 19 www.intertek.com
Consumer Goods H1 12 Performance Developments £m @ constant Organic • Continued network expansion exchange H1 12 Change change • Investment in new client tools Revenue 163.9 10.1% 8.9% • Acquisition of 4 th Strand in US providing Operating profit 51.6 6.8% 6.6% new service offering to our clients Margin 31.5% (100)bps (70)bps Outlook • Good growth in textiles, driven by chemical testing • More regulation to come • Strong growth in Social Compliance • Western retailers seeking more auditing complete supply chain quality support • Global leadership position maintained • Quality and safety demand in growth through continued investment in economies expanding service delivery 20 www.intertek.com
Commercial & Electrical H1 12 Performance Developments £m @ constant Organic • Continued network expansion and new exchange H1 12 Change change marketing initiatives Revenue 157.9 9.8% 9.8% • Unique market positioning driving Operating profit 26.1 10.6% 10.6% revenue growth Margin 16.5% 10bps 10bps Outlook • Strong performance across all business lines and geographies • Continued technological developments • New product launches, models, and new safety and environmental standards driving increased need for convergence of technologies and testing standards driving demand for expert advice and testing • China producing more high-value, high- • Leadership position in most of our tech products markets has been strengthened 21 www.intertek.com
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