Slide 1: Strong 2023 performance: 2023 full year results presentation
STRONG 23 PERFORMANCE IN REVENUE, MARGIN, EPS, CASH AND ROIC 2023 FULL YEAR RESULTS PRESENTATION 5 March 2024 1
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: Key takeaways
KEY TAKEAWAYS Highest Strong Profit Excellent cash On track to Increase dividend Robust financial LFL revenue Conversion Conversion, deliver our 17.5%+ payout to c. 65% performance Growth in the with margin all-time high cash medium-term from 2024 expected in 2024 last 10 years +60bps1 from operatio
Slide 4: Performance Highlights agenda
01 02 03 04 05 Performance FY23 Financial Business Lines Significant Value 2024 Highlights Results Review Growth Outlook Opportunity 4
Slide 5: Strong financial performance in 23
STRONG FINANCIAL PERFORMANCE IN 23 YoY YoY FY23 FY22 (Actual rates) (Constant rates) Revenue £3,328.7m £3,192.9m 4.3% 7.1% Like-for-like revenue £3,300.9m £3,192.9m 3.4% 6.2% Operating Profit1 £551.1m £520.1m 6.0% 10.9% Operating Margin1 16.6% 16.3% 30bps 60bps EPS¹ 223.0p 211.1p 5.6% 11.0% ROIC 20
Slide 6: LFL revenue growth acceleration
LFL REVENUE GROWTH ACCELERATION LFL growth1 at constant currency 2023 LFL growth2 by division 2023 LFL growth2 by division 5.8% 6.2% 6.3% 4.9% 11.1% 3.4% 3.0% 9.0% 7.9% 8.7% 1.7% 7.0% 5.8% 5.0% 0.9% 0.5% 1.3% (0.5%) Consumer Corporate Health & Industry & World of Products Trade Resources Products As
Slide 7: Recent acquisitions performing well
RECENT ACQUISITIONS PERFORMING WELL Australia │ May 2021 Brazil │ July 2021 and April 2023 USA │ July 2022 USA │August 2023 Corporate Assurance Health & Safety World of Energy People Assurance Leading provider of assurance services Providers of food and environmental Provider of assurance serv
Slide 8: Broad-based revenue growth geographically
BROAD-BASED REVENUE GROWTH GEOGRAPHICALLY FY 23 revenue by region Revenue YoY Region (constant rates) 34.9% 38.7% Americas 7.6% EMEA 7.1% 26.4% APAC 6.4% Total 7.1% Americas EMEA APAC 8
Slide 9: Consistent mid-single digit LFL revenue growth in China
CONSISTENT MID-SINGLE DIGIT LFL REVENUE GROWTH IN CHINA INDUSTRY LEADER SINCE 1973 Since 1973, 100+ offices and laboratories, covering more than 40 cities and offering industry-leading technical expertise Shanghai INTERTEK REVENUE 15-22 2023 Taiwan Hong Kong Rev CAGR1 LFL2 Guangzhou Shenzhen 4.9% 4.
Slide 10: Total quality assurance advantage with unique ATIC offering
TOTAL QUALITY ASSURANCE ADVANTAGE WITH UNIQUE ATIC OFFERING ATIC REVENUE SPLIT (£M) 15-23 CAGR £3,329m 5.5% RESEARCH & DEVELOPMENT £3,193m 8% 6.1% £2,801m 9% RAW CONSUMER MATERIALS 9% 25% 3.0% MANAGEMENT SOURCING 25% £2,166m 22% 8% SYSTEMIC ATIC APPROACH TO QUALITY, SAFETY & 30% 46% 46% 3.8% SUSTAIN
Slide 11: Strong profit conversion with margin +60bps
STRONG PROFIT CONVERSION WITH MARGIN +60BPS2, + 160BPS2 excl. CONSUMER PRODUCTS Adjusted Operating Margin1 growth2 110bps 130bps 40bps 60bps 20bps 30bps 10bps (70bps) (190bps) 15 16 17 18 19 20 21 22 23 2023 Adjusted Operating Margin1 growth2 2023 Adjusted Operating Margin1 growth2 260bps 190bps 240
Slide 12: All time high cash from operations
ALL TIME HIGH CASH FROM OPERATIONS Adjusted EBITDA Working Capital as % of Revenue AdjustedAdjusted Cash Generated Cash Generated from 1 from Operations Operations1 £696m £701m£726m £643m 7.1% £731m £705m £696m £722m £749m £602m £563m£571m 5.0% £499m 3.9% 3.4% £565m£596m £603m (0.1%) (1.6%) (1.5%) (
Slide 13: Sustainability excellence in action
SUSTAINABILITY EXCELLENCE IN ACTION End-to-end systemic sustainability approach People & Culture Customers Environment Fully engaged Communities employees in safe Ensure our customers Decarbonise Create positive impacts can operate safely in our communities working by 2050 and sustainably environmen
Slide 14: FY23 Financial Results
01 02 03 04 05 Performance FY23 Financial Business Lines Significant Value 2024 Highlights Results Review Growth Outlook Opportunity 14
Slide 15: Key P&L financials
KEY P&L FINANCIALS YoY YoY FY 2023 (Actual rates) (Constant rates) Revenue £3,328.7m 4.3% 7.1% Like-for-like revenue £3,300.9m 3.4% 6.2% Operating Profit1 £551.1m 6.0% 10.9% Operating Margin1 16.6% 30bps 60bps EPS¹ 223.0p 5.6% 11.0% Note: (1) Before separately disclosed items 15
Slide 16: Cash flow & net debt
CASH FLOW & NET DEBT £m @ actual exchange rates FY 2023 FY 2022 Adjusted operating profit1 551.1 520.1 Depreciation/amortisation 175.3 180.5 Change in working capital 4.6 6.3 Other2 18.0 15.1 Adjusted cash flow from operations 749.0 722.0 Capex (116.9) (116.5) Income taxes paid (119.0) (106.7) Other
Slide 17: Financial guidance
FINANCIAL GUIDANCE FY 2024 Guidance Net finance cost1 £41-43m Effective tax rate 25-26% Minority interest £23-24m Diluted shares (as at 31 December 2023) 162.2m Capex £135-145m Financial Net Debt¹ £510-560m Note: (1) Guidance before any material change in FX rates and any M&A 17
Slide 18: Business Lines Review
01 02 03 04 05 Performance FY23 Financial Business Lines Significant Value 2024 Highlights Results Review Growth Outlook Opportunity 18
Slide 19: Low single digit LFL growth in Consumer Products
LOW SINGLE DIGIT LFL GROWTH IN CONSUMER PRODUCTS Revenue (£m) Like-for-like Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) 964.2 964.2 268.5 27.8 935.8 935.8 246.8 26.4 22 23 22 23 22 23 22 23 1.3% CCR 1.3% CCR (2.6%) CCR (100bps) CCR (2.9%) (2.9%) (8.1%) (140bps) FY 22 Actual LFL FY 23 A
Slide 20: High single digit LFL growth in Corporate Assurance
HIGH SINGLE DIGIT LFL GROWTH IN CORPORATE ASSURANCE Revenue (£m) Like-for-like Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) 450.0 477.5 450.0 475.5 109.4 22.9 95.5 21.2 22 23 22 23 22 23 22 23 9.5% CCR 9.0% CCR 19.2% CCR 190bps CCR 6.1% 5.7% 14.6% 170bps FY 22 Actual LFL FY 23 Actual LF
Slide 21: High single digit LFL growth in Health and Safety
HIGH SINGLE DIGIT LFL GROWTH IN HEALTH AND SAFETY Revenue (£m) Like-for-like Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) 302.3 326.3 302.3 319.9 40.7 43.2 13.5 13.2 22 23 22 23 22 23 22 23 9.1% CCR 7.0% CCR 9.4% CCR Flat CCR 7.9% 5.8% 6.1% (30bps) FY 22 Actual LFL FY 23 Actual LFL Grow
Slide 22: High single digit LFL growth in Industry and Infrastructure
HIGH SINGLE DIGIT LFL GROWTH IN INDUSTRY AND INFRASTRUCTURE Revenue (£m) Like-for-like Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) 860.5 10.0 814.4 814.4 860.5 86.1 71.9 8.8 22 23 22 23 22 23 22 23 7.9% CCR 7.9% CCR 22.0% CCR 110bps CCR 5.7% 5.7% 19.7% 120bps FY 22 Actual LFL FY 23 Act
Slide 23: High single digit LFL growth in World of Energy
HIGH SINGLE DIGIT LFL GROWTH IN WORLD OF ENERGY Revenue (£m) Like-for-like Revenue (£m) Operating Profit1 (£m) Operating Margin1 (%) 9.0 6.6 728.6 709.2 43.5 65.6 662.0 662.0 22 23 22 23 22 23 22 23 11.7% CCR 8.7% CCR 57.3% CCR 260bps CCR 10.1% 7.1% 50.8% 240bps FY 22 Actual LFL FY 23 Actual LFL Gro
Slide 24: Significant Value Growth Opportunity
01 02 03 04 05 Performance FY23 Financial Business Lines Significant Value 2024 Highlights Results Review Growth Outlook Opportunity 24
Slide 25: Significant value growth opportunity
SIGNIFICANT VALUE GROWTH OPPORTUNITY Faster growth Significant Proven for our margin accretion high quality ATIC solutions potential Earnings model 25
Slide 26: Attractive growth in risk based quality assurance
ATTRACTIVE GROWTH IN RISK BASED QUALITY ASSURANCE Industry and Consumer Products Corporate Assurance Health and Safety World of Energy Infrastructure Better, safer and more Sustainable businesses + Healthier, safer and Better, safer and greener Better and greener fuels and sustainable products more
Slide 27: Faster growth for Intertek ATIC solutions
FASTER GROWTH FOR INTERTEK ATIC SOLUTIONS HIGHER INVESTMENTS IN SAFER SUPPLY HIGHER INVESTMENTS IN INNOVATION STEP CHANGE IN SUSTAINABILITY HIGHER GROWTH IN THE WORLD OF ENERGY INCREASE IN NEW CLIENTS 27
Slide 28: Increased corporate investment in safer supply chains
INCREASED CORPORATE INVESTMENT IN SAFER SUPPLY CHAINS COVID 19 HAS MADE THE CASE FOR RISK BASED QUALITY ASSURANCE STRONGER LACK OF DATA, PROCESSES & SEVERE SUPPLY CHAIN DISRUPTIONS UNIDENTIFIED INTRINSIC RISKS INDEPENDENT ASSURANCE CYBER RISK IS AN IMPORTANT OPERATIONAL SUPPLY CHAIN CHALLENGE FOR MA
Slide 29: Innovation acceleration in products, services & technologies
INNOVATION ACCELERATION IN PRODUCTS, SERVICES & TECHNOLOGIES GLOBAL INNOVATION IS ACCELERATING THE SIGNIFICANT ADVANCEMENTS IN TECHNOLOGY OF THE PAST 20 YEARS & THE GENERATIONAL SHIFT IN ENERGY & SUSTAINABILITY IS CREATING A HISTORIC INFLECTION POINT FOR INNOVATION AND CAPITAL SPENDING 67% OF BUSINE
Slide 30: Positive regulatory momentum for sustainability
POSITIVE REGULATORY MOMENTUM FOR SUSTAINABILITY NORTH AMERICA EUROPE & UK GREATER CHINA Existing/Coming into Force Regulations: Existing/Coming into Force Regulations: Existing/Coming into Force Regulations: • SEC Climate-Related Disclosure Rule • EU Taxonomy Regulation and Delegated Acts • Measures
Slide 31: World of Energy growth opportunities
WORLD OF ENERGY GROWTH OPPORTUNITIES Under investment in O&G Technology and long-term Growth in O&G Increase in global energy Pathway to Net Zero Exploration & Production investments required to downstream and demand (GDP & requires significant and lack of build scale renewable infrastructure invest
Slide 32: Significant growth in the number of companies globally
SIGNIFICANT GROWTH IN THE NUMBER OF COMPANIES GLOBALLY UK 2023 NORTH AMERICA New Company Incorporations CHINA 2023 U.S. +10% YoY & record high 2023 New Private Enterprises +15% YoY New Business Applications +8% YoY & record high FRANCE Strong growth in WOE companies 2023 Business Creations +3% YoY &
Slide 33: Investments in quality assurance will continue to increase
INVESTMENTS IN QUALITY ASSURANCE WILL CONTINUE TO INCREASE Cyber breach government Airplane recall EV recall Baby formula contamination PPE quality issues Mining indigenous lands systems Accounting scandal Factory working conditions 5G Security Concerns Manipulation emissions tests Contaminated talc
Slide 34: High-quality portfolio to deliver faster growth
HIGH-QUALITY PORTFOLIO TO DELIVER FASTER GROWTH ATIC REGIONS 8% 21% Assurance 35% Americas 25% 39% Testing Europe, Middle East and Africa Inspection APAC, Greater China & Rest of World 46% Certification 26% GLOBAL BUSINESS LINES COUNTRY BUSINESS LINES Consumer Products 14% 10% 28% Health & Safety Fa
Slide 35: On track to deliver medium-term margin target of 17.5%+
ON TRACK TO DELIVER OUR MEDIUM-TERM MARGIN TARGET OF 17.5%+ SIGNIFICANT MARGIN ACCRETION POTENTIAL Portfolio/volume- Daily / weekly / monthly Margin Enablers price-mix management Margin Drivers performance management Fixed cost leverage linked to growth Best in class benchmarking Variable cost produ
Slide 36: 2023 margin accretive revenue growth at site level
2023 MARGIN ACCRETIVE REVENUE GROWTH IN ACTION AT SITE LEVEL Caleb Brett - Americas Business Assurance -APAC Softlines - APAC Margin Drivers 31bps 72bps 22bps 21bps Portfolio 47bps 53bps 9bps 35bps 13bps Fixed cost leverage 253bps 32bps 83bps linked to growth 42bps 43bps Fixed cost reduction +190bps
Slide 37: 2023 margin accretive revenue growth at business line level
2023 MARGIN ACCRETIVE REVENUE GROWTH IN ACTION AT BUSINESS LINE LEVEL Caleb Brett Minerals Moody Margin Drivers 10bps 23bps 40bps 28bps 45bps Portfolio 75bps 17bps 80bps 24bps 10bps 40bps Fixed cost leverage linked to growth 20bps 55bps 30bps Fixed cost reduction +160bps +150bps +190bps Variable cos
Slide 38: High quality earnings model
HIGH QUALITY EARNINGS MODEL Services Our Business Softlines, Hardlines, E&CW, Lines Corporate Caleb Brett, Government & Trade Industry and Consumer Products Business Assurance, B&C, Health and Safety World Industry Services, of Energy Minerals, E&P Assurance Services, AgriWorld Infrastructure Transp
Slide 39: Proven high quality earnings model
PROVEN HIGH QUALITY EARNINGS MODEL Financial performance metrics1 20142 2023 Change CAGR Intertek competitive advantage Revenue £2,093m £3,329m 59.0% 5.3% EBITDA £400.9m £726.4m 81.2% 6.8% Operating Profit £324.6m £551.1m 69.8% 6.1% Science-based Operating Margin 15.5% 16.6% 110bps 12bps Customer Ex
Slide 40: 2024 Outlook
01 02 03 04 05 Performance FY23 Financial Business Lines Significant Value 2024 Highlights Results Review Growth Outlook Opportunity 40
Slide 41: Robust 2024 outlook
ROBUST 2024 OUTLOOK MSD LFL Revenue growth at CCY Consumer Products: LSD to MSD Corporate Assurance: HSD Health and Safety: MSD Industry and Infrastructure: HSD World of Energy: MSD Margin progression year-on-year Strong free cash flow Capex: £135-145m Financial net debt: £510-560m 41 Note: (1) Net
Slide 42: Accretive disciplined capital allocation
ACCRETIVE DISCIPLINED CAPITAL ALLOCATION Capex and working capital investment to support organic growth 01 (target c.5% of revenue in capex) Sustainable shareholder returns through payment of progressive 02 dividends based on a target payout ratio of c.65% M&A focused on strong growth and margin pro
Slide 43: Significant value growth opportunity
SIGNIFICANT VALUE GROWTH OPPORTUNITY • Higher demand for our ATIC solutions powered by our Science-based Customer Excellence TQA advantage • Stronger Global and Local Portfolio poised for faster growth • On track to deliver our 17.5%+ medium- term margin target • Higher cash generation to support ou
Slide 44: Intertek: Total Quality. Assured.
ntertek Total Quality. Assured.