Intertek Group plc · LSE:ITRK
Intertek — H1 2004 Earnings Presentation
23 slides from Intertek's earnings presentation, Sep 6, 2004
Slide 1: Interim Results Presentation
Interim Results Presentation 6 September 2004 Richard Nelson, Chief Executive Officer Bill Spencer, Chief Financial Officer 1
Slide 2: Financial Performance
Bill Spencer Chief Financial Officer Financial Performance Interim Results Presentation – 6 September 2004 2
Slide 3: Financial Highlights
Financial Highlights for the six months to 30 June 2004 Turnover £237.8m Up 3.7% at actual Up 12.4% at constant (organic 11.1%) Operating profit1 £40.1m Up 6.4% at actual Up 18.3% at constant (organic 16.7%) Operating margin1 16.9% Up from 16.4% Operating cash flow £39.4m Up 18.7% Profit before tax2
Slide 4: GBP/USD Exchange Rates
GBP/USD Exchange Rates £/$ 1.90 2004 Average = $1.82 1.85 1.80 1.75 1.70 1.65 2003 Average = $1.61 1.60 1.55 1.50 1.45 Jan Feb Mar Apr May June US$ Actual Rate 2003 US$ Actual Rate 2004 4
Slide 5: Profitability – Operating Profit
Profitability – Operating Profit Half Year - £m 2004 2003 Operating profit1 (EBITA) 40.1 37.7 Goodwill amortisation (0.7) (0.5) Exceptional items ─ 0.1 Operating profit 39.4 37.3 1 Before goodwill amortisation and exceptional items and including profits from associates 5
Slide 6: Profitability – Profit Before Tax
Profitability – Profit Before Tax Half Year - £m 2004 2003 Operating profit 39.4 37.3 Exceptional profit on disposal ─ 4.6 Net interest cost1 (2.2) (4.7) Profit before tax 37.2 37.2 Interest cover 17.9 7.9 1 Includes bank fees amortised of approximately £0.5m each half year period 6
Slide 7: Taxation
Taxation Half Year - £m 2004 2003 Profit before tax 37.2 37.2 Remove exceptional items ─ (4.7) Normalised profit before tax 37.2 32.5 Tax 9.9 9.6 Normalised effective tax rate 26.6% 29.5% The full year 2003 normalised effective rate was 27.8% 7
Slide 8: Earnings & Dividends
Earnings & Dividends Half Year – pence 2004 2003 Fully diluted EPS 16.6p 13.9p Up 19.4% Excluding amortisation & exceptionals Dividend 3.4p 2.9p Up 17.2% 8
Slide 9: Operating Cash Flow
Operating Cash Flow Half Year £m 2004 2003 Operating profit1 38.8 36.7 Depreciation 8.9 9.1 Goodwill 0.7 0.5 Change in working capital (9.0) (13.1) Operating cash flow 39.4 33.2 Operating working capital2 to LTM sales % 8.0% 7.5% 1 Operating profit after exceptional operating items and goodwill amor
Slide 10: Free Cash Flow
Free Cash Flow Half Year - £m 2004 2003 Operating cash flow 39.4 33.2 Interest (2.0) (4.2) Dividends to minorities (2.2) (1.4) Taxation (6.1) (6.1) Capital expenditure (8.1) (9.1) Free cash flow 21.0 12.4 Capital expenditure to LTM sales % 4.8% 5.4% 10
Slide 11: Net Debt
Net Debt 30 June 31 Dec £m 2004 2003 Borrowings 197.1 213.7 Cash (64.0) (81.5) Net Debt 133.1 132.2 Unutilised revolving credit facilities of £45m Improved S&P credit rating achieved in May 04, to BBB minus 11
Slide 12: Gearing
Gearing 30 June 31 Dec £m 2004 2003 Net debt 133.1 132.2 Shareholders equity1 216.4 201.0 Ratio 61% 66% Interest cover 17.9 10.6 1 Excludes goodwill written off to reserves prior to 1998 12
Slide 13: Operating Performance
Richard Nelson Chief Executive Officer Operating Performance at constant exchange rates Interim Results Presentation – 6 September 2004 13
Slide 14: Intertek Group plc
Intertek Group plc £m @ constant 2004 exchange rates Half Year June 2004 2003 % Turnover 237.8 211.6 12.4% Operating Profit * 40.1 33.9 18.3% Margin 16.9% 16.0% * Before goodwill amortisation and exceptional items 14
Slide 15: Labtest
Labtest (Consumer Goods) £m @ constant 2004 exchange rates Half Year June 2004 2003 % Turnover 64.0 57.0 12.3% Operating Profit 21.5 18.6 15.6% Margin 33.6% 32.6% Excluding acquisitions and disposals, turnover grew by 13.4% and operating profit by 14.8% 15
Slide 16: Labtest
Labtest (Consumer Goods) Drivers • Very strong market: Asia sourcing, need for testing & inspection, <1% of cost • Widening ranges of products • Increasing quality and safety requirements • Expansion in China (up from 14% to 18%) with lower prices and costs and higher margin • Removal of import quot
Slide 17: Caleb Brett
Caleb Brett (Oil & Chemical) £m @ constant 2004 exchange rates Half Year June 2004 2003 % Turnover 85.1 77.5 9.8% Operating Profit 7.7 5.5 40.0% Margin 9.0% 7.1% 17
Slide 18: Caleb Brett
Caleb Brett (Oil & Chemical) Drivers & Issues • Cargo inspection (72%) – Competitive, low growth – Improved trading conditions in USA – Management strengthened in Europe – Margin 7.7% • Outsourcing (28% up from 25% previous half year) – ASG in the UK in May 04 (£3.6m sales pa) – Less than 5% current
Slide 19: ETL SEMKO
ETL SEMKO (Electrical) £m @ constant 2004 exchange rates Half Year June 2004 2003 % Turnover 58.4 50.7 15.2% Operating Profit 9.1 6.8 33.8% Margin 15.6% 13.4% Organic growth rates were 8.9% in turnover and 27.9% in operating profit 19
Slide 20: ETL SEMKO
ETL SEMKO (Electrical) Drivers • Continued growth in Asia (27% up from 23%) • Reduced cost base in USA • Costco acceptance of ETL safety label • Acquisition of Entela in May 04 (£12.9m sales in 2003) • Organic growth in sales – Asia 19%, Americas 7%, Europe 2% • Margins – Asia 26%, Americas 12%, Eur
Slide 21: FTS
FTS (Foreign Trade Standards) £m @ constant 2004 exchange rates Half Year June 2004 2003 % Turnover 30.3 26.4 14.8% Operating Profit 5.1 5.9 (13.6)% Margin 16.8% 22.3% 21
Slide 22: FTS
FTS (Foreign Trade Standards) Drivers & Issues • Release of bad debt provisions in 2003 • Venezuela started in 2H, 2003 • Saudi Arabia, Nigeria and Venezuela currently performing well • Risks and prospects 22
Slide 23: Summary
Summary • Labtest: Growing in Asia in all areas of consumer goods. Strong market • Caleb Brett: Inspection market improving and costs reduced Outsourcing growing well • ETL SEMKO: Growing in Asia. Reduced cost base, retailer acceptance • FTS: Contracts performing well, risks and prospects 23