Strategy Update Portfolio Focus on Attractive Growth and Margin Opportunities André Lacroix Chief Executive Officer 2 March 2016 www.intertek.com
Disclaimer 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. 2 March 2016 2
Agenda 01 Intertek 5 Fundamental Strengths 02 Attractive Growth Opportunities 03 Intertek Quality Assurance Proposition 04 Strategy for Sustainable Growth 05 Short Term Priorities in 2016 www.intertek.com
01 Intertek 5 Fundamental Strengths Video: Looking Back at Our History www.intertek.com
Track Record of Sustainable Growth 2015 Change 2002 Employees 11,192 41,434 +30,242 Revenue £461m £2,166m +£1,705m Operating Profit £77m £343m +£266m Market Cap £0.6bn ¹ £4.5bn +£3.9bn TSR 864%² 1 As at IPO 29 May 2002 ² TSR since IPO to 31 December 2015 5
5 Fundamental Strengths Global Network of State of the 01 Art Facilities Powerful Portfolio with Leadership 02 Positions Depth and Breadth of Quality 03 Assurance Solutions Passionate and 04 Entrepreneurial Culture High Margin and Strongly Cash 05 Generative Earnings Model 6
Powerful Portfolio with Leadership Positions 8 Global Business Lines (GBLs ) 8 Regional Business Lines (RBLs) • Softlines • Transportation Technologies • Hardlines • Building Products • Electrical and Wireless • Food • Business Assurance • Product Assurance • Government and Trade Services • Minerals • Cargo and Analytical Assessment • Health, Environmental and Regulatory Services • Agriculture • Chemicals and Pharma • Industry Services • Exploration and Production £1,670m 77% £496m 23% 2015 Revenue of Group Revenue 2015 Revenue of Group Revenue Global scale and Regional scale and strength leadership positions Attractive regional growth prospects Attractive global growth prospects 7
Scale Positions in Top 30 Countries Top 30 Countries 92% 80% 76% 91% of Intertek Revenue of Global GDP of Global Trade of Global Production EMEA Americas Asia Pacific (Europe, Middle East & Africa) Brazil Belgium Australia Bangladesh France China Canada Germany Hong Kong Italy India Mexico Netherlands Indonesia Norway Japan Korea South Africa USA Malaysia Sweden Philippines Switzerland Singapore Turkey Taiwan UAE Thailand Vietnam UK 8
Strong Portfolio at Local Business Unit Level 8 Global Business Lines 8 Regional Business Lines Softlines Hardlines Electrical & Business GTS Agriculture Industry Food Building Trans. Product Minerals HERS C&P E&P Wireless Assurance Services Products Tech Assurance Australia Bangladesh Belgium Brazil Canada China France Germany Hong Kong India Indonesia • In-depth portfolio review Italy Top 30 Countries Japan • C. 300 business units Korea Malaysia Mexico • High quality portfolio Netherlands Norway • Positioned strongly for growth Philippines Singapore South Africa Sweden Switzerland Taiwan Thailand Turkey UAE UK USA Vietnam 9
High Quality Earnings Model ¹ Revenue £2bn+ EBITDA Margin c. 20% Cash Conversion² 140% Capex 5% of Revenue Dividend Payout c. 40% FCF³ £150m Balance Sheet 1.7x Net Debt to EBITDA 1 Based on 2015 Actuals ² Cash from operations 10 ³ After Capex and Dividends
02 Attractive Growth Opportunities
Attractive Testing, Inspection and Certification Structural Growth Drivers Corporations investments in quality and innovation Higher regulatory standards Global and regional trade flow Increased demand for energy to support GDP and population growth 12
Attractive Assurance Structural Growth Drivers Assurance Structural Growth Drivers • Increasingly complex operations with decentralised supply chains • Greater customer focus on risk management to manage systemic operational risk • Customers require Quality Assurance solutions beyond TIC Customers Expect Total Quality Assurance • Quality and safety of physical components, products and assets • Reliability of operating processes and quality management systems Industry Evolution From “TIC” to “ATIC” Assurance Testing Inspection Certification Video: The Future of Our Industry 13
Global Intertek Network Strongly Positioned for ATIC Growth Global Market Leader in Global Market Assurance Leader in TIC 3,000 1,000+ auditors lab and offices 90,000+ 100+ audits countries Global ATIC Business with 41,434 Employees 14
Portfolio Geared for GDP+ Organic Growth Mid-Long Term Economic Sectors Structural Growth Drivers Profit Mix 1 Growth Quality solutions for end-products, their Products components, processes and R&D Product variety, brand and supply chain Continuing growth CG, C&E, C&P, Food & Business Assurance expansion, innovation and regulations from expanding 68% Increasing quality and sustainability investment in demands by developed and emerging quality & innovation economies Increased Corporate focus on risk 2 51% Revenue Trade Global and regional trade-driven, through GDP growth Trade-flow growth: Cargo & Analytical, 22% Increased customer focus on quality and Government Services global & regional quantity controls & Agri 2 25% Revenue Resources Capex & opex investment supporting world economic growth 10% Industry Services & Servicing oil & gas and other sectors of Long-term growth Minerals the economy 2 24% Revenue ‘Global GDP Plus’ Organic Revenue Growth (1) 2015 adjusted operating profit. (2) 2015 revenues 15
03 Intertek Quality Assurance Proposition
Our Purpose, Vision and Mission The world’s most Bringing Quality and trusted partner for Safety to Life. Quality Assurance Exceed our customers’ expectations with innovative and bespoke Assurance, Testing, Inspection and Certification solutions for their operations and supply chain. Globally. 24/7. 17
Strong Business Model to Seize Growth Opportunities Which Economic What We Do Everyday Where Sectors Assurance Products Testing Trade Inspection 100+ countries 1,000+ laboratories Resources Certification 41,434 people 18
Well diversified revenue streams across sectors, geographies and services Revenue Split¹ Service Sector Geographic 8% 10% 24% 29% 35% 30% 51% 52% 25% 36% Assurance Testing Inspection Certification Products Trade Resources Americas Asia Pacific EMEA Strength in Products Excellent exposure to fast Breadth and Depth of ATIC growing markets Solutions • Largest by Revenues • Asia Pacific largest • Testing largest service offering • Highest margin • Americas strong position • Assurance fastest • Fastest organic growth • Good exposure to fast growing growing markets 19 (1) Based on 2015
Depth and Breadth of ATIC Solutions Assurance Testing Inspection Certification • Management Systems • Softlines • Agriculture • Appliance & Electronic • Benchmarking in • Hardlines • Asset Integrity • Aerospace & Quality & Performance • Automotive Automotive • Building Product • Sustainability & • Building Products • Biofuels environment • Chemical & • Conformity by • Facility / Plant & • Building Product Petrochemical Country Equipment • Chemical & • Electrical • Eco-Textile • Legal & Regulatory Pharmaceutical • Food & Food Service • Exporter & importer • Product Development • Electrical • Hazardous Location • Field Labelling • Vendor Compliance • Food • HVACR 1 • Corporate Social • Industrial • Health & Beauty • Industrial Equipment Responsibility • Mineral • IT & Telecom • Mineral • Failure investigation • Life Safety & • Packaging • Oil & Gas • Laboratory Outsourcing Security • Pharmaceutical • Site Construction • Risk Management • Lightning • Oil & Gas • Supply Chain • Medical Device • Textile & Apparel Assessment (1) Heating Ventilation Air Conditioning and Refrigeration 20
Aligned Organisational Structure Intertek Organisational Structure Business Lines Geographic Areas Functional Areas Americas, Pacific and ATIC Operational Products North East Asia Excellence Softlines, Hardlines, Electrical & Wireless, Business Assurance, Building Products, Transportation China Corporate Development Technologies, Chemicals & Pharma and Food South and Trade HR South-East Asia Cargo & Analytical Assessment, Agriculture and Government & Trade Services Middle East and Africa Finance and IT Resources Europe Legal and Compliance Industry Services and Minerals 21
Intertek Total Quality Assurance Value Proposition Research and Development Consumer Raw Materials Management Sourcing Intertek Total Quality Assurance (Assurance, Testing, Inspection and Distribution Component Certification) and Retail Suppliers Channels Transportation Manufacturing Systemic Approach to Quality and Safety with ATIC Solutions 22
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