Slide 1: 2015 Full Year Results Presentation
2015 Full Year Results Presentation Solid Full Year Performance 2 March 2016 www.intertek.com
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
Agenda Performance 01 Highlights André Lacroix | Chief Executive 02 Financial results Edward Leigh | Finance Director 03 Business update André Lacroix | Chief Executive www.intertek.com
Slide 4: Performance Highlights
Performance Highlights 2015 Full Year Results Presentation André Lacroix Chief Executive
Slide 5: Improved revenue and profit performance
Improved revenue and profit performance Revenue1 Organic Revenue2 Operating Profit1 2,166 343.4 2,093 1.6% 324.4 (0.6)% '14 '15 '14 '15 +3.5% '14 '15 +5.9% +3.2% CCR +4.0% CCR Operating margin Adjusted EPS3 Dividend3 15.9% 52.3 140.7 49.1 15.5% 132.1 '14 '15 '14 '15 '14 '15 +40 bps +6.5% +6.5% +20 b
Slide 6: Broad based organic revenue growth improvement
Broad based organic revenue growth improvement Group Consumer Goods Commercial & Electrical 1.6% 4.5% 4.4% 4.4% 6.1% 5.4% (0.6)% '14 '15 '14 '15 '14 '15 Chems & Pharma Commodities Industry & Assurance 3.8% 5.5% 4.5% (0.3)% (7.8)% (5.8)% '14 '15 '14 '15 '14 '15 Note: Organic CCR 6
Slide 7: Robust margin performance in Product and Trade related businesses
Robust margin performance in Product and Trade related businesses Group Consumer Goods Commercial & Electrical 0 bps +50 bps +20 bps 33.7% 33.7% 14.2% 14.7% 15.7% 15.9% '14 '15 '14 '15 '14 '15 Chems & Pharma Commodities Industry & Assurance +130 bps 12.1% +220 bps (260) bps 10.8% 14.3% 10.0% 12.1% 7
Slide 8: Strong cash conversion and disciplined capital allocation
Strong cash conversion and disciplined capital allocation Cash Generated from Operations1 (£m) Cash Conversion1 (%) +15% +3% 125% 136% 466 115% 394 404 '13 '14 '15 '13 '14 '15 Investment & Growth (£m) Dividend (p) 343 52.3 49.1 46.0 248 231 35.3 31.0 33.1 108 149 40 M&A Final 140 112 Capex 17.0 Inte
Slide 9: Strategic expansion in US growth markets with PSI
Strategic expansion in US growth markets with PSI PSI as industry leader Exciting macro and sector growth opportunities US total construction starts non-residential / non-building1 2,400 people in 87 locations across 32 states US #1 economy in the world with attractive 15-17E Billions of Current Dol
Slide 10: Financial results
Financial results 2015 Full Year Results Presentation Edward Leigh Chief Financial Officer www.intertek.com 10
Slide 11: Key Financials
Key Financials YoY % Actual Constant Constant 2015 Rates Rates Organic2 Revenue £2,166m 3.5% 3.2% 1.6% Operating profit1 £343m 5.9% 4.0% Operating profit margin1 15.9% 40bps 20bps Adjusted Diluted EPS1 140.7p 6.5% 4.7% Adjusted cash generated from £466m 15% operations1 Free cash flow £235m 27% Net D
Slide 12: Operating Margin bridge
11% 12% 13% 14% 15% 16% 2014 Consumer Goods 15.5% 0bps Commercial & Electrical 10bps Operating Margin bridge Chems & Pharma 10bps Commodities 50bps 10bps at organic constant rates Industry & Assurance (80)bps Divisional mix 20bps Excluding FX and Acqns & Disposals 15.6% Acquisitions & Disposals 10bp
Slide 13: 2015 Performance Product-related divisions
2015 Performance Product-related divisions Organic Change at Change at change at £m FY 15 actual constant constant Consumer Goods Revenue 404.3 7.7% 4.4% 4.4% Operating Profit 136.1 9.1% 4.4% Margin 33.7% 40bps 0bps Organic Change at Change at change at £m FY 15 actual constant constant Commercial &
Slide 14: 2015 Performance Commodities and Industry & Assurance
2015 Performance Commodities and Industry & Assurance Organic Change at Change at change at £m FY 15 actual constant constant Commodities Revenue 554.8 2.3% 3.7% 3.8% Operating Profit 79.1 20.8% 21.7% Margin 14.3% 220bps 220bps Organic Change at Change at change at £m FY 15 actual constant constant
Slide 15: Industry Services impairment review
Industry Services impairment review • Industry Services down 25% across past 2 years (organic revenue at constant rates) • Year-end impairment review: £577m non-cash charge (Separately Disclosed Item) • Relates to past acquisitions: − 4 acquisitions (2007-2009) £46m − Moody (April 2011) £450m − Auto
Slide 16: Cash flow, tax and investment
Cash flow, tax and investment £m @ actual exchange rates FY 2015 FY 2014 Adjusted operating profit(1) 343.4 324.4 Depreciation/amortisation +3% 85.2 76.3 Working capital 26.8 (4.1) Other(2) 10.3 7.1 Adjusted cash flow from operations 465.7 403.7 • Adjusted cash flow up 15% Net capex (110.9) (108.5)
Slide 17: Financial guidance
Financial guidance 2016 Guidance Interest charge c.£30m Effective tax rate 25-26% Minority interest £14-15m Diluted shares (as at 31 December 2015) 162.2m Capex £100-110m Net Debt £650-700m Based on adjusted results, management estimates and FX rates as at 31 December 2015. 17
Slide 18: Business update
Business update 2015 Full Year Results Presentation André Lacroix Chief Executive 18
Slide 19: Structural organic growth drivers
Structural organic growth drivers Mid-Long Term Profit Mix1 Economic Sectors Structural Growth Drivers Growth Quality solutions for end-products, their Products components, processes and R&D CG, C&E, C&P, Food & Product variety, brand and supply chain Continuing growth Business Assurance expansi
Slide 20: Group Outlook in 2016
Group Outlook in 2016 • Solid organic growth momentum Continued good growth in product and trade related businesses Resource businesses will remain challenging • Integration of PSI in the USA 11 months revenue impact Execution of Year 1 synergies • Broadly stable margin • Capex £100-110m • N
Slide 21: Consumer Goods – Good growth with stable margin
Consumer Goods – Good growth with stable margin Trading in 2015 Outlook in 2016 Continued good growth expected 4.4% organic growth revenue 33.7% operating margin in 2016 Strong growth in Softlines Softlines focus • Increased business with existing accounts • Business development with existing and ne
Slide 22: Commercial & Electrical – Strong growth with improved margin
Commercial & Electrical Strong growth with improved margin Trading in 2015 Outlook in 2016 Good growth expected 6.1% organic growth revenue 14.7% operating margin in 2016 Good growth in Electrical & Wireless Electrical & Wireless focus • Increased standards in energy efficiency • EMC expansion in S.
Slide 23: Chemicals & Pharma – Strong growth with improved margin
Chemicals & Pharma Strong growth with improved margin Trading in 2015 Outlook in 2016 Good growth expected 5.5% organic growth revenue 12.1% operating margin in 2016 • Strong R&D increase in Health & Beauty Chemicals and Pharma focus • New brand entries facilitated by • Good pipeline of new pharma p
Slide 24: Commodities – Good growth with improved margin
Commodities Good growth with improved margin Trading in 2015 Outlook in 2016 Good growth expected 3.8% organic growth revenue 14.3% operating margin in 2016 Cargo/AA Cargo/AA focus • Solid global and regional trade growth • New lab openings in Australia, PNG, Texas • Expansion with LNG and shale oil
Slide 25: Industry & Assurance – Mixed performance
Industry & Assurance Mixed performance Trading in 2015 Outlook in 2016 Continuing strong growth (5.8)%organic growth revenue 7.4% operating margin in Food, Agri and Business Assurance Double digit growth in Food, Agri and Business • Agri will focus on business development with existing and Assurance
Slide 26: Summary
Summary • Solid full year results • Improved revenue and profit performance • Strong cash generation • Investment in growth • Attractive growth prospects 26
Slide 27: Appendix
Appendix 2015 Full Year Results Presentation www.intertek.com 27
Slide 28: Adjusted EPS
Adjusted EPS £m @ actual exchange rates FY 2015 FY 2014 Adjusted operating profit 343.4 324.4 5.9% Net interest expense (24.2) (24.2) Profit before tax 319.2 300.2 Tax 24.3% (24.0%) (77.5) (72.0) Profit after tax 241.7 228.2 Non-controlling interest (13.5) (14.1) Net Profit 228.2 214.1 Fully diluted
Slide 29: Divisional Performance Summary
Divisional Performance Summary 2015 Revenue Margin Organic Change change Change Change at at Change at FY 15 at actual constant constant at actual constant (£m) rates rates rates FY 15 rates rates Consumer Goods 404.3 7.7% 4.4% 4.4% 33.7% 40bps - Commercial & Electrical 411.7 14.5% 10.5% 6.1% 14.7%