Intertek Group plc · LSE:ITRK
Intertek — FY2004 Earnings Presentation
26 slides from Intertek's earnings presentation, Mar 7, 2005
Slide 1: 2004 Results Presentation
A 2004 Results Presentation 7 March 2005 Richard Nelson, Chief Executive Officer Wolfhart Hauser, Chief Executive Officer Bill Spencer, Chief Financial Officer
Slide 2: Financial Performance
A Bill Spencer Chief Financial Officer Financial Performance 2004 Results Presentation – 7 March 2005 2
Slide 3: Financial Highlights
Financial Highlights for the twelve months to 31 December 2004 Turnover £499.6m Up 6.0% at actual exchange rates Up 14.5% at constant exchange rates1 Operating profit2 £85.2m Up 11.8% at actual exchange rates Up 23.5% at constant exchange rates1 Operating margin 17.1% Up from 15.8% Operating cash fl
Slide 4: Profitability – Operating Profit
Profitability – Operating Profit £m 2004 2003 Operating profit (EBITA) 85.2 76.2 Goodwill amortisation (1.5) (1.0) Exceptional items _ (1.1) Operating profit 83.7 74.1
Slide 5: Profitability – Profit Before Tax
Profitability – Profit Before Tax £m 2004 2003 Operating profit 83.7 74.1 Exceptional profit on disposal ─ 4.5 Interest cost (5.4) (7.9) Exceptional bank fees (2.7) ─ Pensions – FRS17 0.2 (0.1) Profit before tax 75.8 70.6 Interest cover 15.5 9.4
Slide 6: Taxation
Taxation £m 2004 2003 Profit before tax 75.8 70.6 Adjust for exceptional items 2.7 (3.4) Normalised profit before tax 78.5 67.2 Tax 20.8 18.7 Normalised effective tax rate 26.5% 27.8%
Slide 7: Earnings & Dividends
Earnings & Dividends Pence 2004 2003 Fully diluted EPS 36.3p 29.7p 22.2% Excluding amortisation & exceptionals Dividend per share 10.4p 8.8p 18.2% Dividend cover 3.5 times 3.4 times Proposed final dividend 2004 = 7.0p (up 18.6% from 5.9p in 2003) 7
Slide 8: Operating Cash Flow
Operating Cash Flow £m 2004 2003 EBITDA 102.4 92.5 Working capital (0.5) (12.5) Operating cash flow 101.9 80.0 Capital expenditure (28.0) (23.6) Cash flow 73.9 56.4 Cash flow after capex to operating profit 88% 76% Operating working capital to sales 7.0% 8.6% Trade debtors collection period 64 days
Slide 9: Free Cash Flow
Free Cash Flow £m 2004 2003 Cash flow after capex 73.9 56.4 Minorities and associates (3.3) (2.1) Interest paid and fees (5.3) (7.3) Tax paid (16.0) (13.7) Free cash flow 49.3 33.3
Slide 10: Refinancing
Refinancing £m 2004 2003 Net debt £112m £132m Weighted average interest rate 3.4% 4.6% % of debt at fixed rates 40% 30% Interest cover 15x 9x Cash & available undrawn £183m £127m committed facilities
Slide 11: Changes in Accounting & Share Incentives
Changes in Accounting & Share Incentives • International Financial Reporting Standards- 2005 – Share option cost – Reduced goodwill cost – Pensions, financial instruments • Long Term Incentive Plan – 2006 – Seek shareholder approval at AGM May 2005 – Deferred shares replace share options – Less dilu
Slide 12: Operating Performance
Richard Nelson Chief Executive Officer to 31 March 2005 Operating Performance at constant exchange rates 2004 Results Presentation – 7 March 2005
Slide 13: Intertek Group plc
Intertek Group plc £m @ constant 2004 exchange rates 2004 2003 % Turnover 499.6 436.2 14.5% Operating Profit 85.2 69.0 23.5% Margin 17.1% 15.8% Excluding the results of acquisitions and disposals, turnover increased by 11.6% and operating profit increased by 20.1%. 13
Slide 14: Labtest
Labtest (Consumer Goods) £m @ constant 2004 exchange rates 2004 2003 % Turnover 132.3 119.0 11.2% Operating Profit 45.0 38.5 16.9% Margin 34.0% 32.4% Excluding the results of acquisitions and disposals, turnover increased by 13.5% and operating profit increased by 16.6%. 14
Slide 15: Labtest (Consumer Goods) Drivers
Labtest (Consumer Goods) Drivers • Sourcing of products from Asia • Widening ranges of products, shorter product life cycles • Increasing quality and safety requirements • Expansion in China, 19.5% of division (16.3% in 2003) • Reduced trade restrictions on textiles from January 2005
Slide 16: Textiles
Textiles (45% of division) • Retailers and manufacturers expect strong growth in China (22% of textiles) and India (6% of textiles) • Retailers are focusing on fewer but larger suppliers • Manufacturers are investing in more facilities • Retailers/manufacturers are cautious to see what restrictions
Slide 17: Caleb Brett
Caleb Brett (Oil & Chemical) £m @ constant 2004 exchange rates 2004 2003 % Turnover 177.3 157.9 12.3% Operating Profit 15.5 11.9 30.3% Margin 8.7% 7.5%
Slide 18: Caleb Brett Drivers
Caleb Brett (Oil & Chemical) Drivers • Cargo Inspection (70%, 75% previous year) – Improved trading conditions in USA – Lower overheads – Margin 7.0% (6.1%) • Outsourcing (30%, 25% previous year) – New contracts with ChevronTexaco (£1m pa), Avecia (£4m pa) in 2004 and Rolls-Royce (£1m pa) in 2005 –
Slide 19: ETL SEMKO
ETL SEMKO (Electrical) £m @ constant 2004 exchange rates 2004 2003 % Turnover 122.4 102.5 19.4% Operating Profit 17.5 13.0 34.6% Margin 14.3% 12.7% Excluding the results of acquisitions, turnover increased by 8.0% and operating profit increased by 23.8% 19
Slide 20: ETL SEMKO Drivers
ETL SEMKO (Electrical) Drivers • Continued growth in China and Asia (24% of business) • Reduced overheads in USA • Acquisition of Entela May 04, automotive component testing: growth opportunity (turnover £16m pa) • Acceptance of ETL safety label in USA, leading to growth of home appliances in USA (m
Slide 21: FTS
FTS (Foreign Trade Standards) £m @ constant 2004 exchange rates 2004 2003 % Turnover 67.6 56.8 19.0% Operating Profit 14.0 11.4 22.8% Margin 20.7% 20.1% 21
Slide 22: FTS Drivers & Issues
FTS (Foreign Trade Standards) Drivers & Issues • Saudi Arabia, Nigeria and Venezuela – performing well • Container scanner project in Sierra Leone • New standards programmes in Nigeria and Ghana • Risks and propects
Slide 23: Summary
Summary • Labtest: Growing strongly in Asia in all areas of consumer goods • Caleb Brett: Traditional market improving and costs reduced, outsourcing growing well • ETL SEMKO: Growing well in Asia, reduced overheads in USA, retailer acceptance, automotive component testing • FTS: Contracts performin
Slide 24: Medium Term Strategy
A Wolfhart Hauser Chief Executive Officer from 1 March 2005 Medium Term Strategy 2004 Results Presentation – 7 March 2005 24
Slide 25: Excellent Resources
Excellent Resources • Management: Local, close to customers, drives growth • Network: Commonality of culture • Brand Names: Very well known in related industries • Knowledge Base: Added value through advisory services • Financial Resources: Funding of bolt on acquisitions
Slide 26: Excellent position Additional Growth Areas
Excellent position Additional Growth Areas Labtest • Textiles • Systems certification • Toys • Hardlines • Inspection • WEEE - RoHS • RAM Caleb Brett • Cargo inspection • Analytical services • Outsourcing ETL SEMKO • Industrial equipment • Home appliances (USA, Europe) • Building products • IT produ