2012 half year results presentation - amazon web …...1 26 july 2012 wolfhart hauser chief...

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www.intertek.com 1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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Page 1: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

www.intertek.com1

26 July 2012

Wolfhart HauserChief Executive Officer

Lloyd PitchfordChief Financial Officer

2012 Half YearResults Presentation

Page 2: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

www.intertek.com2

Lloyd PitchfordChief Financial Officer

Financial Performance

2012 Half Year Results Presentation

Page 3: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

www.intertek.com3

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

Page 4: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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%

Page 5: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 6: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 7: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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.

Page 8: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 9: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 10: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 11: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 12: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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Summary

• Strong growth delivery

• Underlying margin progression

• Strong cash generation and financial position

Page 13: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

www.intertek.com13

Wolfhart HauserChief Executive Officer

Operating Performance

2012 Half Year Results Presentation

Page 14: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 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

Page 15: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 16: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 17: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 18: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 19: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 20: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 21: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 22: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 23: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 24: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 25: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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2012 Half Year Results PresentationAppendix

Page 26: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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%

Page 27: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 28: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 29: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 30: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 31: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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

Page 32: 2012 Half Year Results Presentation - Amazon Web …...1 26 July 2012 Wolfhart Hauser Chief Executive Officer Lloyd Pitchford Chief Financial Officer 2012 Half Year Results Presentation

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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