Good morning to you all and thanks for joining us on our call. Ross McCluskey and Denis Moreau are both with me. There are essentially five key take-aways in our presentation today: OUR AGILITY TO MANAGE AN UNPRECEDENTED PANDEMIC • We have acted with Speed, Flexibility and Innovation to support our clients resolve a temporary disruption in their supply chains. OUR DISCIPLINED PERFORMANCE MANAGEMENT • In H1, we have delivered a resilient revenue performance, a robust margin and a strong cash flow. OUR SUPERIOR CUSTOMER SERVICE • We have provided uninterrupted customer service to our clients. OUR BALANCED APPROACH • We have focused both on defensive and offensive initiatives, continuing to innovate and invest in attractive growth segments. OUR GROWTH OPPORTUNITIES AHEAD • The need for risk-based quality assurance is greater and clearer for all stakeholders. • Intertek has been championing Total Quality Assurance for more than 5 years and we are strongly positioned for growth moving forward. Intertek Group plc. 2020 H1 Results, 31 July 2020 1
Intertek Group plc. 2020 H1 Results, 31 July 2020 2
Let s start with our performance highlights… Intertek Group plc. 2020 H1 Results, 31 July 2020 3
Covid-19 became a truly visible risk to the world on Jan 22 when the lockdown in Wuhan was put in place. Since then we have seen a rapid progression of the virus across all countries, changing the way we live and work. For our customers, Covid-19 has created challenging and temporary disruptions in their supply chains. Intertek Group plc. 2020 H1 Results, 31 July 2020 4
The GDP growth we have seen in the last few decades was partially driven by the increase in mobility, building a highly connected global economy. Within a few weeks, Covid-19 has quickly restricted global mobility, impacting the world economy and the operations of our clients. Intertek Group plc. 2020 H1 Results, 31 July 2020 5
Right from the start of the pandemic, being agile was paramount for all of us. We have adapted fast, enabling us to respond decisively to an unprecedented situation. We have essentially refocused the organisation on 5 priorities: -Employee Health and Safety -Customer Service -Margin Management -Cash -Engagement Every time, health and safety comes first. Our Covid-19 health & safety policy is very comprehensive and has been updated on a regular basis on our website, including last week, with our post lockdown HSE policy. Our second priority is Customer Service We are a passionate and customer-centric organisation, providing our customers with the best possible service. Intertek Group plc. 2020 H1 Results, 31 July 2020 6
What we do every day to make sure the supply chains of our clients operate safely in all countries is mission-critical. The lockdown measures have created huge operational challenges for all of our customers. Since day 1, we have increased the frequency of communication with our clients to make sure we understand their needs quickly. Maintaining our operations open 24/7 was therefore vital for our customers. Our employees have gone beyond their normal call of duty and here are a few examples of what they have done: • Across the world, from China, HK, India and Philippines to UK, Turkey and Netherlands, colleagues have produced hand sanitizer to keep customers and colleagues safe. • Intertek Indonesia has provided 200,000 face masks to countries greatly affected by the virus. • Our Food team in the UK worked 7 days a week to collect, register and process samples for clients in a safe way – supporting our customers ’ tight deadlines We have rapidly brought to market a range of innovations. • We have ensured supply chain continuity with our Remote Video Inspection and audit solutions • On 1st May we launched Protek – the world’s first health, safety and wellbeing Assurance programme for people, workplaces and public spaces. • These 2 major global innovations are in addition to the services we have developed rapidly: o Priority testing services for life-saving medical equipment like ventilators o End-to-End testing and certification capacity increase for PPE equipment o Increased testing capacity and express service for sanitisers and disinfectants o Support to the Pharma industry for Vaccine development o Cyber security audit related to home working conditions Our third overriding priority is margin management. Over the years, we have built a very disciplined approach. Intertek Group plc. 2020 H1 Results, 31 July 2020 7
Our strict controls on pricing and cost remain in place. We have also taken a number of additional steps to protect our margin. These include a pause on all recruitment, a delay of 6 months to the 2020 annual salary increase and participating in government support schemes. We believe that our clients have been facing temporary disruptions in their operations All of our margin initiatives ensure that we have the ability to service our clients fully when their operations are back to normal. Our fourth priority is cash management. Disciplined cash collection remains in place. We have also conducted a Capex review, reducing our planned expenditure this year by around one-third. We are running a voluntary salary-deferral scheme from March to October. We are also benefiting from local authorities ’ tax payment deferrals, where available. Our fifth priority is employee engagement. With 20% of our people working remotely, it has never been more important to stay connected every day. Our world-class digital communication platform has made it possible for us to reach out frequently to everyone in the organisation. Turning now t o our H1 performance… Intertek Group plc. 2020 H1 Results, 31 July 2020 8
We have delivered a resilient revenue performance, a robust margin and a strong cash generation. This demonstrates the strengths of our business model, its geographic and business line diversity, our disciplined approach to performance management and importantly, our strongly cash generative earnings model. In the first 6 months of the year: • Group revenue was £1,331m, down 7.8% YOY at constant currency • LfL revenue was down 8.0% YOY at constant currency • Operating profit was £168.2m, down 32.2% YOY at constant currency • Our Operating margin was robust at 12.6%, -460bps YoY at constant currency • FCF was strong at £141.9m, up YoY by 35.7% • Financial net debt was £650m, equivalent to net debt to EBITDA of 1.1x • We have announced an interim dividend of 34.2p …. in -line with the prior year …. reflecting the strength of our earnings model and our confidence in the future growth opportunities for the Group. Intertek Group plc. 2020 H1 Results, 31 July 2020 9
Let’s discuss our performance by division . Our high-quality Product portfolio with industry leading positions delivered a like-for-like revenue performance of -8.7% at constant currency and a margin of 16.9%, -470 BPS YoY. Our Trade businesses benefited from the defensive strengths of our Agri business and delivered a LFL revenue performance of -10.2% versus last year and a margin of 6.8%, -670BPS YoY at constant currency. Our Resources business delivered a commendable performance with a LFL revenue of -2.1% and a margin of 5.3%, -90BPS YoY at constant currency. Intertek Group plc. 2020 H1 Results, 31 July 2020 10
We entered 2020 with a strong trading momentum and we had budgeted our cost base expecting to deliver good organic growth. We have of course taken a disciplined approach to cost management using our disciplined margin performance processes and tools. However, we believe our clients are facing a temporary disruption of their supply chains. Our cost reduction activities have been very targeted, keeping our ATIC industry leading capability intact to make sure we can support our clients when they fully resume their operations and start increasing their Quality Assurance activities. Our Cost base in H1 was 6% below our budgeted costs for 2020 and 2.6% below last year. Intertek Group plc. 2020 H1 Results, 31 July 2020 11
Cash management remains a high priority for us and we have continued to make progress. Our Cash generated from Operation was £261m, £3m lower than LY. Our Adjusted Free cash flow was £142m, up 35.7% YoY. This excellent cash generation was driven by a reduction of £14.5m in net Capex and £87.8m in WC. We closed H1 with a financial net debt of £650m, and a net/debt to ebitda ratio of 1.1x. Before I hand over to Ross, I want to emphasise the speed at which the global pandemic has unfolded….the broad- based nature of the lockdown initiatives in every country….the lack of visibility on when the lockdown restrictions will be fully lifted around t he world….and the complexity faced by our clients to resume their operations fully with well-functioning supply chains. This makes it difficult to give any guidance and quantify the full impact of Covid-19 for 2020. Having said that, we expect the second half of the year to be better than the first half. Intertek Group plc. 2020 H1 Results, 31 July 2020 12
Thank you André and good morning everyone. Intertek Group plc. 2020 H1 Results, 31 July 2020 13
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