Slide 1: Strong Recovery in H2 with Record Margin and Excellent Cash Conversion
STRONG RECOVERY IN H2 WITH RECORD MARGIN AND EXCELLENT CASH CONVERSION 2020 FULL YEAR RESULTS PRESENTATION 2 March 2021
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 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
Slide 3: Agenda
01 02 03 04 05 Performance 2020 Financial Divisional Review Growth 2021 Outlook Highlights Results Opportunities
Slide 4: Laser Focused Operational Discipline
LASER FOCUSED OPERATIONAL DISCIPLINE
Slide 5: Intertek's Heroes Made a Big Difference in 2020
INTERTEK’S HEROES MADE A BIG DIFFERENCE IN 2020 Blood Donations Medical Beds Community Support Intertek Taiwan Chirag Parikh, Production Engineer, Azer Sanili, IT Manager 70 colleagues responded to the Taiwan Intertek Electrical Intertek Azerbaijan Blood Services Foundation’s ‘red alert’ Worked long
Slide 6: Global Innovations Supporting the Needs of Our Clients
GLOBAL INNOVATIONS SUPPORTING THE NEEDS OF OUR CLIENTS Insert Footer Here 6 1 0
Slide 7: Performance Ahead of Expectations in Earnings and Cash
PERFORMANCE AHEAD OF EXPECTATIONS IN EARNINGS AND CASH YoY YoY 2020 2019 (Actual rates) (Constant rates) Revenue £2,741.7m £2,987.0m (8.2%) (6.7%) Like-for-like revenue1 £2,735.9m £2,983.3m (8.3%) (6.8%) Operating Profit2 £427.7m £524.2m (18.4%) (17.0%) Adjusted Operating Margin2 15.6% 17.5% (19
Slide 8: Strong H2 Recovery with Record Margin
STRONG H2 RECOVERY WITH RECORD MARGIN Revenue Operating Profit1 +8% 1,411 +56% 260 1,331 168 H1 20 H2 20 H1 20 H2 20 Operating Profit Margin1 Diluted EPS1 +570 18.4% +73% 107.8p bps 12.6% 63.1p H1 20 H2 20 H1 20 H2 20 Note: Growth rates and bps movement at constant currency; (1) Adjusted 8
Slide 9: Broad Based Recovery in H2
BROAD BASED RECOVERY IN H2 Revenue (£m) Operating profit (£m) 1 Operating Profit Margin1 881 +760 +12% +61% 216 24.5% bps 800 16.9% Products 136 H1 20 H2 20 H1 20 H2 20 H1 20 H2 20 +240 +4% 298 +40% 27 bps 9.1% 295 6.8% 20 Trade H1 20 H2 20 H1 20 H2 20 H1 20 H2 20 +160 232 +28% 7.1% 236 16 bps 5.3%
Slide 10: Highly Cash Generative Earnings Model Delivers <0 WC
HIGHLY CASH GENERATIVE EARNINGS MODEL DELIVERS <0 WC Adjusted EBITDA1 Adjusted Cash Generated Adjusted Free Cash Flow1 from Operations1 £436m 15-20 CAGR: 7.0% £696m 15-20 CAGR: 8.6% 15-20 CAGR: 11.0% £395m £731m £705m £563m £571m £602m £359m £373m £565m £596m £603m £340m £499m £429m £466m £259m FY 1
Slide 11: Agenda: 2020 Financial Results
01 02 03 04 05 Performance 2020 Financial Divisional Review Growth 2021 Outlook Highlights Results Opportunities
Slide 12: Key P&L Financials
KEY P&L FINANCIALS YoY % 2020 Actual Rates Constant Rates Revenue £2,741.7m (8.2%) (6.7%) Like-for-like revenue1 £2,735.9m (8.3%) (6.8%) Operating profit2 £427.7m (18.4%) (17.0%) Operating profit margin2 15.6% (190bps) (190bps) Diluted earnings per share2 170.9p (19.6%) (18.1%) Notes: (1) Like-for-l
Slide 13: Operating Margin Bridge
OPERATING MARGIN BRIDGE 18.0% 17.5% (90bps) 17.0% (100bps) 16.0% 10bps 15.7% 0bps (10bps) 0bps 15.6% 15.0% (180bps) at constant rates 14.0% 13.0% Divisional mix FX Trade Resources FY 2019 FY 2020 Products Excluding FX and Acquisitions & Disposals Acquisitions & Disposals 13 Note: Like-for-like reven
Slide 14: Cash Flow & Net Debt
CASH FLOW & NET DEBT £m @ actual exchange rates 2020 2019 Adjusted operating profit1 427.7 524.2 Depreciation/amortisation 174.0 171.5 Change in working capital 88.6 15.9 Other2 14.8 19.0 Adjusted cash flow from operations 705.1 730.6 Net capex (72.2) (114.3) Other3 (197.3) (221.0) Adjusted free cas
Slide 15: Financial Guidance
FINANCIAL GUIDANCE FY 2021 Guidance Net finance cost (pre-fx) £29-33m Effective tax rate 26.5-27.0% Minority interest £17-19m Diluted shares (as at 31 December 2020) 162.3m Capex £110-120m Financial Net Debt £350-400m Note: Net debt guidance before any material change in FX rates and any additional
Slide 16: Agenda: Divisional Review
01 02 03 04 05 Performance 2020 Financial Divisional Review Growth 2021 Outlook Highlights Results Opportunities
Slide 17: Products Benefitted from a Strong Rebound in H2
PRODUCTS BENEFITTED FROM A STRONG REBOUND IN H2 Revenue (£m) Operating profit (£m)1 Operating Profit Margin1 FY20 FY19 Growth +12% 881 24.5% £m £m CCY 216 +760 800 +61% bps Revenue 1,681.6 1,796.7 (5.7%) 16.9% Like-for-like 1,676.2 1,794.5 (5.9%) 136 Revenue Adjusted Operating 351.6 405.4 (12.4%) P
Slide 18: Products Benefitted from a Strong Rebound in H2 (continued)
PRODUCTS BENEFITTED FROM A STRONG REBOUND IN H2 H1 20 Actuals H2 20 Actuals Growth Drivers FY20 Actuals Increased focus of ISO Increased consumer and High-single-digit Mid-single-digit Business Assurance Solid corporations on supply chain standards government focus on ethical negative negative and r
Slide 19: H2 Performance Improvement in Trade
H2 PERFORMANCE IMPROVEMENT IN TRADE Revenue (£m) Operating Profit (£m)1 Operating Margin1 FY20 FY19 Growth £m £m CCY +4% 295 298 +240 9.1% +40% 27 Revenue 592.6 679.4 (9.9%) bps 6.8% 20 Like for like 592.6 679.4 (9.9%) Revenue Adjusted 47.1 86.6 (42.6%) H1 20 H2 20 H1 20 H2 20 H1 20 H2 20 Operating
Slide 20: H2 Profit and Margin Progression in Resources
H2 PROFIT AND MARGIN PROGRESSION IN RESOURCES Revenue (£m) Operating Profit (£m)1 Operating Margin1 +160 7.1% FY20 FY19 Growth 236 232 +28% 16 5.3% bps £m £m CCY 13 Revenue 467.5 510.9 (6.3%) Like for like 467.1 509.4 (6.1%) Revenue Adjusted Operating H1 20 H2 20 H1 20 H2 20 H1 20 H2 20 29.0 32.2 (
Slide 21: Agenda: Growth Opportunities
01 02 03 04 05 Performance 2020 Financial Divisional Review Growth 2021 Outlook Highlights Results Opportunities
Slide 22: Intertek Is a Force for Good
INTERTEK IS A FORCE FOR GOOD OUR PURPOSE Bringing Quality, Safety and Sustainability to Life OUR VISION To be the world’s most trusted partner for Quality Assurance OUR VALUES • We are a global family that values diversity • We always do the right thing. With precision, pace and passion • We trust e
Slide 23: Covid-19 Has Made the Case for Total Quality Assurance Stronger
COVID-19 HAS MADE THE CASE FOR TOTAL QUALITY ASSURANCE STRONGER TESTING, INSPECTION & CERTIFICATION PROVIDES QUALITY & SAFETY CONTROLS SUPPLY PRODUCTION DISTRIBUTION RETAIL TIER 3 TIER 2 TIER 1 3RD PARTY OWNED TRANSPORTATION DISTRIBUTION CENTRES IN-STORE ONLINE CONSUMER ASSURANCE TESTING TESTING RIS
Slide 24: Increased Corporate Focus on Risk Post Covid-19
INCREASED CORPORATE FOCUS ON RISK POST COVID-19 SAFER SUPPLY LOW CARBON SOCIETY BETTER PERSONAL SAFETY • Increased supply resilience • Mandatory ESG disclosures • Higher health, safety, well-being • Faster access to critical supplies • Carbon emission reductions standards everywhere • Improved suppl
Slide 25: The ATIC Industry Will Grow Faster Post Covid-19
THE ATIC INDUSTRY WILL GROW FASTER POST COVID-19 GLOBAL ATIC MARKET GROWTH OPPORTUNITY 01 CUSTOMER RETENTION $50BN Currently 02 outsourced CUSTOMER PENETRATION 03 $200bn ATIC CROSS- SELLING Currently in-house 04 NEW CUSTOMER WINS Untapped 05 potential CUSTOMER OUTSOURCING 25
Slide 26: Well Positioned to Benefit from Faster ATIC Growth
WELL POSITIONED TO BENEFIT FROM FASTER ATIC GROWTH Systemic approach to Quality and Safety 43,800 EMPLOYEES GLOBAL MARKET ASSURANCE TESTING INSPECTION CERTIFICATION LEADER IN ASSURANCE 3,000 AUDITORS 90,000+ AUDITS 100+ COUNTRIES GLOBAL MARKET LEADER IN TIC 1,000+ LABS & OFFICES Our Sectors 80+ LANG
Slide 27: GDP+ Growth Outlook
GDP+ GROWTH OUTLOOK PRODUCTS ATIC TRADE ATIC RESOURCES ATIC 61% OFREVENUE 22% OFREVENUE 17% OFREVENUE 82% OFPROFIT 11% OFPROFIT 7% OFPROFIT GDP+ GDP GROWTH LONG-TERM GROWTH Growth in Brands, Faster Population Growth Population Growth Investment in E&P, GDP growth SKUs & e-Commerce innovationcycle &
Slide 28: Sustainable Value Creation for All Stakeholders
SUSTAINABLE VALUE CREATION FOR ALL STAKEHOLDERS Intertek high quality 2020 earnings model Revenue £2.7bn EBITDA margin 1 22% Cash Conversion 2 149% Capex £80m Dividend Payout 105.8p FCF £436m Financial net debt to 0.7x EBITDA 1 ROIC 1 21.6% Co2t / employee 4.3 Notes: (1) Adjusted; (2) Cash flow for
Slide 29: Supporting Our Clients Deliver Their Sustainability Agenda
SUPPORTING OUR CLIENTS DELIVER THEIR SUSTAINABILITY AGENDA Systemic End-to-End Sustainability Solutions INTERTEK OPERATIONAL SUSTAINABILITY INTERTEK CORPORATE SUSTAINABILITY Intertek ESG Audit SOLUTIONS CERTIFICATION Helping organizations Independent audit of achieve sustainability excellence sustai
Slide 30: Delivering Sustainability Excellence Across All Operations
DELIVERING SUSTAINABILITY EXCELLENCE ACROSS ALL OPERATIONS SUSTAINABILITY CENTRAL TO OUR 5X5 STRATEGY END-TO-END SYSTEMIC SUSTAINABILITY APPROACH 30
Slide 31: Agenda: 2021 Outlook
01 02 03 04 05 Performance 2020 Financial Divisional Review Growth 2021 Outlook Highlights Results Opportunities
Slide 32: Like-for-Like Revenue Trajectory
LIKE-FOR-LIKE REVENUE TRAJECTORY 2020 Group YoY % 2020 Products YoY % Jan-Apr Jan-Apr May-Jun May-Jun Jul-Oct Jul-Oct Nov-Dec Nov-Dec Jan-Apr Jan-Apr May-Jun May-Jun Jul-Oct Jul-Oct Nov-Dec Nov-Dec (1.4%) (4.9%) (4.6%) (4.0%) (6.3%) (6.6%) (13.4%) (12.4%) 2020 Resources YoY % 2020 Trade YoY % Jan-Ap
Slide 33: Global Mobility Slowed as a Third Wave Emerged
GLOBAL MOBILITY SLOWED AS A THIRD WAVE EMERGED Global Greater China Asia Pacific 0% - - - (3%) (2%) (20%) (20%) (10%) (6%) (9%) (7%) (4%) (8%) (12%) (12%) (20%) (13%) (12%) (11%) (15%) (13%) (17%) (17%) (14%) (14%) (16%) (17%) (21%) (21%) (19%) (19%) (18%) (16%) (19%) (21%) (21%) (19%) (25%) (24%) (
Slide 34: Group Outlook 2021
GROUP OUTLOOK 2021 • Good like-for-like revenue growth at constant currency • Margin progression year-on-year • Strong free cash flow performance • Capex: £110-120m • Financial net debt: £350-400m 34
Slide 35: Intertek Is a Force for Good Delivering Value for All
INTERTEK IS A FORCE FOR GOOD DELIVERING VALUE FOR ALL • The agility and energy of our customer centric organisation has made a huge difference to deliver a resilient 2020 performance with Earnings and Cash ahead of expectations. • We have benefited from a broad-based recovery in H2 with a record ope
Slide 36: Intertek: Total Quality. Assured.
intertek Total Quality. Assured.
Slide 37: Group Performance (2015 – 2020)
GROUP PERFORMANCE (2015 – 2020) Revenue (£m) Adjusted Operating Profit (£m) 1 Adjusted Operating Margin (%) 1 £2,987m £482m £524m 17.5% £2,769m £2,801m £468m 17.2% £2,742m £428m £2,567m £410m 16.9% £2,166m £343m 59% 60% 60% 77% 57% 61% 75% 77% 51% 73% 15.9% 16.0% 82% 68% 15.6% 25% 23% 23% 23% 23% 22
Slide 38: Adjusted EPS
ADJUSTED EPS £m @ actual exchange rates FY 20 FY 19 Adjusted operating profit 427.7 524.2 (18.4%) Net interest expense (34.9) (39.4) Profit before tax 392.8 484.8 Tax (100.2) (118.8) Profit after tax 292.6 366.0 Minority interest (15.3) (20.5) Net profit 277.3 345.5 Fully diluted shares (m) 162.3 16