2012 half year results presentation - amazon web …...1 26 july 2012 wolfhart hauser chief...
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www.intertek.com1
26 July 2012
Wolfhart HauserChief Executive Officer
Lloyd PitchfordChief Financial Officer
2012 Half YearResults Presentation
www.intertek.com2
Lloyd PitchfordChief Financial Officer
Financial Performance
2012 Half Year Results Presentation
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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
Cautionary statement regarding forward-looking statements
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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%
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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 fromoperations(1)
£118m + 29.6%
Financial Highlights
(1) Before separately disclosed items
(2) Growth excluding acquisitions at constant exchange rates
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+43.8%
+28.2%
Profit Before Tax & Separately Disclosed Items
£m @ actual exchange rates H1 2012 H1 2011
Adjusted operating profit (1) 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
(1) Before separately disclosed items
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763
991
71
1543
400
500
600
700
800
900
1,000
1,100H
1 20
11
Org
anic
Acq
uisi
tions FX
H1
2012
£m
763
991
16427 18 16 3
400
500
600
700
800
900
1,000
1,100
H1
2011 I&A
Com
mod
ities CG
C&
E
C&
P
H1
2012
£m
H1 Revenue Growth
+ 29.9%Actual rates
+ 9.9%Constant
rates
H1 2011 revenue of £763.1m is made up of £712.8m organic revenue, £53.9mfrom acquisitions made in H1 2011, less £3.6m for foreign exchange. Organicrevenue growth of £70.6m is 9.9% at constant exchange rates.
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15.6%15.4%
14.0
14.5
15.0
15.5
16.0
16.5
YTD June 11 FX Organic growth Moody YTD June 12
%
Constant Organic Margin Progression of 40bps
+ 20 bps
+ 40 bps - 80 bps
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• Adjusted cash generated from operations £118.1m; up 29.6%
• Net interest charge £12.2m
• Adjusted effective tax rate at 27.7%
• Capex £46m; 4.6% of revenue
• 3 acquisitions for £17m
Financing, Tax, Investment & Cash Flow
2013-1513%
2016+87%
Funding Maturity Profile
• £0.9bn facilities
• 50% Bond: 50% Bank
• Maturity profile strong
• Net debt:EBITDA of 1.6
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Five Year H1 History 2008 to 2012
H1 Revenue H1 Adjusted Operating Profit
200275350425500575650725800875950
1,0251,100
2008 2009 2010 2011 2012
£m
40
60
80
100
120
140
160
2008 2009 2010 2011 2012
£m21% CAGR 22% CAGR
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0
2
4
6
8
10
12
14
2008 2009 2010 2011 2012
Pence
Interim Dividend
• Interim dividend of 13.0p, up 21.5%
• Interim payout of £21m
• Strong and consistent record of dividend growth
Interim Dividend Per Share
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Summary
• Strong growth delivery
• Underlying margin progression
• Strong cash generation and financial position
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Wolfhart HauserChief Executive Officer
Operating Performance
2012 Half Year Results Presentation
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What
MarketDrivers
RegulationQuality, Safety and
Environmental standards
Supply Chain Changes
Shifting cycles, sourcing and complexity
New TechnologiesInnovation and product variety
Energy Growth & Diversity
Capex and Opex
End-User Quality Expectations & Diversity
Developed and emerging economies
Market Drivers in our Industries
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Market Drivers in Action: H1 2012
Electric vehicle technologies
Europe, North America & China lab network
EU Cosmetics
New regulation drivingwider testing & quality
assurance demand
Medical Devices‘3rd Edition’
Global standard rolling out greater performance,
risk & safetyrequirements
Unconventional fuel development
Supporting customers’ infrastructure &
operational developments
Shiftingsupply chains
Double-digit growth rates in new customersourcing markets
‘Total’ Quality Solutions
Delivering new tools &solutions, for better overall
supply chain qualityperformance
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Hewlett-Packard
Greener printers HP Indigo uses Intertek’s green leaf mark in verifying the sustainability of commercial printers
Market Drivers in Action: H1 2012
Sabic
Expanding Partnership Supporting product development with testing and measurement, extending into new markets.
UK ‘Big 4’ Supermarkets
Quality Assurance Testing and auditing programmes across food and hard-line supply chains.
BASF
Infrastructure integrity
Expanding support with integrity assessment of chemical plants
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Industry & Assurance 32% 22%
Commodities 28% 23%
Consumer Goods 17% 34%
Commercial & Electrical 16% 17%
Chemicals & Pharma 7% 4%
Divisional Mix
% of Group Revenue
% of Group Profit
Industry & Assurance
Commodities
Consumer Goods
Commercial & Electrical
Chemicals & Pharma
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£m @ constant exchange H1 12 Change
Organicchange
Revenue 318.5 106.8% 14.3%
Operating profit 33.6 124.0% 27.6%
Margin 10.5% 80bps 90bps
Industry & Assurance
• Strong demand for Technical Inspection for new build energy assets
• Exceptional growth from Moody
• Systems Certification and Food & Agrigood growth
H1 12 Performance Developments
Add chart
• Continuing high energy sector investment across all asset classes and geographies
• Further consolidation of global contracts
• Good acquisition opportunities
• Acquisition in US of Automation Technology Inc diversifying service offering to our clients
• Increased Food labs and linked into Agriand Systems Certification
Outlook
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• Strong performance in Minerals
• Government Services grew strongly on the back of increased Product Conformity Programmes
• Good demand for Oil Cargo Inspection and Analytical Assessment in Asia and Middle East balancing steady US market
Commodities
H1 12 Performance Developments
• Emerging economies continuing to drive demand for commodities and product quality
• Potential for growth in Minerals to moderate
• Opportunities in alternative energies eg Shale Oil
£m @ constant exchange H1 12 Change
Organicchange
Revenue 278.2 10.7% 10.5%
Operating profit 34.3 19.9% 19.9%
Margin 12.3% 90bps 100bps
Outlook
• Expanded capabilities in Asia and Middle East supporting client demand eg Additives, Bunker fuels
• Acquisition of Vigalab in Chile for Minerals exploration support
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£m @ constant exchange H1 12 Change
Organicchange
Revenue 163.9 10.1% 8.9%
Operating profit 51.6 6.8% 6.6%
Margin 31.5% (100)bps (70)bps
Consumer Goods
• Good growth in textiles, driven by chemical testing
• Strong growth in Social Compliance auditing
• Global leadership position maintained through continued investment in service delivery
H1 12 Performance
• More regulation to come
• Western retailers seeking more complete supply chain quality support
• Quality and safety demand in growth economies expanding
Outlook
Developments
• Continued network expansion
• Investment in new client tools
• Acquisition of 4th Strand in US providing new service offering to our clients
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£m @ constant exchange H1 12 Change
Organicchange
Revenue 157.9 9.8% 9.8%
Operating profit 26.1 10.6% 10.6%
Margin 16.5% 10bps 10bps
Commercial & Electrical
• Strong performance across all business lines and geographies
• New product launches, models, convergence of technologies and standards driving demand for expert advice and testing
• Leadership position in most of our markets has been strengthened
• Continued technological developments and new safety and environmental standards driving increased need for testing
• China producing more high-value, high-tech products
H1 12 Performance Developments
Outlook
• Continued network expansion and new marketing initiatives
• Unique market positioning driving revenue growth
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£m @ constant exchange H1 12 Change
Organicchange
Revenue 72.5 5.2% 3.6%
Operating profit 6.6 24.5% 16.7%
Margin 9.1% 140bps 100bps
Chemicals & Pharma
• Good growth in Chemicals & Materials including new areas eg paper and packaging
• Flat overall revenue in Pharma
• Margin enhancement programme taking effect
• Improvement in Pharma
• New outsourcing contracts
• Pick up in 2H for regulatory requirements
H1 12 Performance Developments
Outlook
• Diversified the Pharma offering
• Strengthening position in Emerging Economies
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Outlook
• Full year of Moody in 2012 (8 months 2011)
• Industry consolidation expected to continue
• High single digit organic growth
• Continuing successful delivery of quality to global customers
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Summary: Resilient Growth Platform
GLOBAL TRADE
MARKET DRIVERS
NETWORK & SERVICE
OUTSOURCING & CONSULTING
INDUSTRY CONSOLIDATION
QUALITY
COMMODITIES& MATERIALS
RETAIL & MANUFACTURED
PRODUCTS
INDUSTRY ASSETS
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2012 Half Year Results PresentationAppendix
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Taxation
£m @ actual exchange rates H1 2012 H1 2011
Profit before tax 122.1 85.3
Tax (33.1) (26.5)
Profit after tax 89.0 58.8
Reported tax rate 27.1% 31.1%
Effective tax rate on adjusted operating profit 27.7% 28.0%
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30%
Operating Cash Flow
£m @ actual exchange rates H1 2012 H1 2011
Operating Profit before changes in working capital and provisions 186.1 136.5
Changes in working capital:
Inventory (1.3) (2.7)
Debtors and prepayments (65.8) (33.0)
Creditors and accruals (5.9) (24.5)
Cash generated from operations 113.1 76.3
Separately disclosed items – cash flow 5.0 14.8
Adjusted cash generated from operations 118.1 91.1
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29%
Free Cash Flow
£m @ actual exchange rates H1 2012 H1 2011
Cash generated from operations 113.1 76.3
Net interest (10.6) (8.0)
Taxation (35.2) (19.7)
Net capital expenditure (44.9) (31.3)
Free cash flow 22.4 17.3
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Net Debt
£m @ actual exchange rates H1 2012 H1 2011
Borrowings 778.7 809.9
Cash (160.2) (171.8)
Net debt 618.5 638.1
Net debt to EBITDA (2011: Proforma 12mths Moody) 1.6x 1.9x
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Liquidity Position at 30 June 2012
£m @ actual exchange rates H1 2012 H1 2011
Debt facilities 925.0 925.0
Borrowings (778.7) (809.9)
Undrawn committed borrowing facilities 146.3 115.1
Cash 160.2 171.8
Liquid funds 306.5 286.9
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Revenue By Currency
USD, CNY & HKD~ 55%
GBP & EUR~ 19%
Other~ 26%
Currency Analysis
Local currency to GBP H1 2012 H1 2011 FY 2011
USD 2.0% 1.58 1.61 1.60
CNY 6.0% 9.96 10.55 10.35
EUR 5.0% 1.21 1.15 1.15
HKD 2.4% 12.26 12.55 12.47
AUD 2.1% 1.53 1.56 1.55
CAD 0.6% 1.59 1.58 1.59
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Divisional Performance Summary
£m @ constant exchange
Revenue Margin
H1 12 ChangeOrganic change H1 12 Change
Organic change
Industry & Assurance 318.5 106.8% 14.3% 10.5% 80bps 90bps
Commodities 278.2 10.7% 10.5% 12.3% 90bps 100bps
Consumer Goods 163.9 10.1% 8.9% 31.5% (100)bps (70)bps
Commercial & Electrical 157.9 9.8% 9.8% 16.5% 10bps 10bps
Chemicals & Pharma 72.5 5.2% 3.6% 9.1% 140bps 100bps
Group Total 991.0 29.3% 9.9% 15.4% (40)bps 40bps
H1 2012