Intertek Group plc · LSE:ITRK
Intertek — H1 2012 Earnings Presentation
32 slides from Intertek's earnings presentation, Jul 26, 2012
Slide 1: 2012 Half Year Results Presentation
2012 Half Year Results Presentation 26 July 2012 Wolfhart Hauser Lloyd Pitchford Chief Executive Officer Chief Financial Officer 1 www.intertek.com
Slide 2: Financial Performance
Lloyd Pitchford Chief Financial Officer Financial Performance 2012 Half Year Results Presentation 2 www.intertek.com
Slide 3: 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 4: Results Overview
Results Overview • Strong growth in revenue, profit and earnings • Total revenue up 29.9%; Organic growth of 9.9% • Operating margin 15.4%; Organic margin up 40bps • EPS up 28.2% • Interim dividend increased by 21.5% 4 www.intertek.com
Slide 5: Financial Highlights
Financial Highlights For the six months to 30 June 2012 Revenue £991m + 29.9% at actual + 9.9% at constant organic(2) Operating profit(1) £152m + 28.2% at actual + 12.7% at constant organic(2) Operating profit margin(1) 15.4% – 20bps at actual + 40bps at constant organic(2) Profit before tax(1) £140
Slide 6: Profit Before Tax & Separately Disclosed Items
Profit Before Tax & Separately Disclosed Items £m @ actual exchange rates H1 2012 H1 2011 Adjusted operating profit (1) 152.2 118.7 +28.2% Separately disclosed items: Amortisation of acquisition intangibles (15.0) (9.5) Acquisition transaction and integration costs (1.1) (9.5) Restructuring costs –
Slide 7: H1 Revenue Growth
H1 Revenue Growth £m £m 1,100 + 29.9% Actual rates 1,100 1,000 16 3 1,000 18 3 27 164 900 154 900 800 71 800 700 + 9.9% 991 700 991 Constant rates 600 600 763 763 500 500 400 400 Organic Acquisitions H1 2011 H1 2012 FX H1 2011 I&A H1 2012 Commodities CG C&E C&P H1 2011 revenue of £763.1m is made up
Slide 8: Constant Organic Margin Progression of 40bps
Constant Organic Margin Progression of 40bps % 16.5 + 40 bps - 80 bps 16.0 + 20 bps 15.5 15.0 15.6% 15.4% 14.5 14.0 YTD June 11 FX Organic growth Moody YTD June 12 8 www.intertek.com
Slide 9: Financing, Tax, Investment & Cash Flow
Financing, Tax, Investment & Cash Flow Funding Maturity Profile • Adjusted cash generated from operations 2013-15 £118.1m; up 29.6% 13% • Net interest charge £12.2m • Adjusted effective tax rate at 27.7% 2016+ 87% • Capex £46m; 4.6% of revenue • 3 acquisitions for £17m • £0.9bn facilities • 50% Bond
Slide 10: Five Year H1 History 2008 to 2012
Five Year H1 History 2008 to 2012 H1 Revenue H1 Adjusted Operating Profit £m £m 21% CAGR 22% CAGR 1,100 160 1,025 950 140 875 800 120 725 650 100 575 500 80 425 350 60 275 200 40 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 10 www.intertek.com
Slide 11: Interim Dividend
Interim Dividend Interim Dividend Per Share • Interim dividend of 13.0p, up 21.5% Pence 14 • Interim payout of £21m 12 • Strong and consistent record of 10 dividend growth 8 6 4 2 0 2008 2009 2010 2011 2012 11 www.intertek.com
Slide 12: Summary
Summary • Strong growth delivery • Underlying margin progression • Strong cash generation and financial position 12 www.intertek.com
Slide 13: Operating Performance
Wolfhart Hauser Chief Executive Officer Operating Performance 2012 Half Year Results Presentation 13 www.intertek.com
Slide 14: Market Drivers in our Industries
Market Drivers in our Industries End-User Quality Expectations & Diversity Developed and emerging economies Supply Chain New Changes Technologies Shifting cycles, Innovation and Market sourcing and product variety Drivers complexity What Energy Growth & Regulation Diversity Quality, Safety and Capex
Slide 15: Market Drivers in Action: H1 2012
Market Drivers in Action: H1 2012 EU Cosmetics ‘Total’ Quality New regulation driving Solutions wider testing & quality Delivering new tools & assurance demand solutions, for better overall supply chain quality Unconventional performance fuel development Electric Supporting customers’ vehicle techno
Slide 16: Market Drivers in Action: H1 2012
Market Drivers in Action: H1 2012 BASF Hewlett-Packard Greener printers Infrastructure HP Indigo uses integrity Intertek’s green leaf mark in Expanding support verifying the with integrity sustainability of assessment of commercial chemical plants printers UK ‘Big 4’ Sabic Supermarkets Expanding Qua
Slide 17: Divisional Mix
Divisional Mix % of Group % of Group Revenue Profit Chemicals Industry & Assurance 32% 22% & Pharma Commercial Industry & Commodities 28% 23% & Electrical Assurance Consumer Goods 17% 34% Consumer Goods Commercial & 16% 17% Electrical Commodities Chemicals & Pharma 7% 4% 17 www.intertek.com
Slide 18: Industry & Assurance
Industry & Assurance H1 12 Performance Developments £m @ constant Organic exchange H1 12 Change change • Acquisition in US of Automation Technology Inc diversifying service Revenue 318.5 106.8% 14.3% offering to our clients Operating profit 33.6 124.0% 27.6% • Increased Food labs and linked into Agr
Slide 19: Commodities
Commodities H1 12 Performance Developments £m @ constant Organic exchange H1 12 Change change • Expanded capabilities in Asia and Middle East supporting client demand eg Revenue 278.2 10.7% 10.5% Additives, Bunker fuels Operating profit 34.3 19.9% 19.9% • Acquisition of Vigalab in Chile for Margin 1
Slide 20: Consumer Goods
Consumer Goods H1 12 Performance Developments £m @ constant Organic exchange H1 12 Change change • Continued network expansion Revenue 163.9 10.1% 8.9% • Investment in new client tools Operating profit 51.6 6.8% 6.6% • Acquisition of 4th Strand in US providing new service offering to our clients Mar
Slide 21: Commercial & Electrical
Commercial & Electrical H1 12 Performance Developments £m @ constant Organic exchange H1 12 Change change • Continued network expansion and new marketing initiatives Revenue 157.9 9.8% 9.8% • Unique market positioning driving Operating profit 26.1 10.6% 10.6% revenue growth Margin 16.5% 10bps 10bps
Slide 22: Chemicals & Pharma
Chemicals & Pharma H1 12 Performance Developments £m @ constant Organic exchange H1 12 Change change • Diversified the Pharma offering Revenue 72.5 5.2% 3.6% • Strengthening position in Emerging Economies Operating profit 6.6 24.5% 16.7% Margin 9.1% 140bps 100bps • Good growth in Chemicals & Materia
Slide 23: Outlook
Outlook • Full year of Moody in 2012 (8 months 2011) • Industry consolidation expected to continue • High single digit organic growth • Continuing successful delivery of quality to global customers 23 www.intertek.com
Slide 24: Summary: Resilient Growth Platform
Summary: Resilient Growth Platform RETAIL & COMMODITIES MANUFACTURED & MATERIALS PRODUCTS GLOBAL TRADE MARKET DRIVERS QUALITY NETWORK & SERVICE OUTSOURCING & CONSULTING INDUSTRY CONSOLIDATION INDUSTRY ASSETS 24 www.intertek.com
Slide 25: Appendix
Appendix 2012 Half Year Results Presentation 25 www.intertek.com
Slide 26: Taxation
Taxation £m @ actual exchange rates H1 2012 H1 2011 Profit before tax 122.1 85.3 Tax (33.1) (26.5) Profit after tax 89.0 58.8 Reported tax rate 27.1% 31.1% Effective tax rate 27.7% 28.0% on adjusted operating profit 26 www.intertek.com
Slide 27: Operating Cash Flow
Operating Cash Flow £m @ actual exchange rates H1 2012 H1 2011 Operating Profit before changes in working 186.1 136.5 capital and provisions Changes in working capital: Inventory (1.3) (2.7) Debtors and prepayments (65.8) (33.0) Creditors and accruals (5.9) (24.5) Cash generated from operations 113.
Slide 28: Free Cash Flow
Free Cash Flow £m @ actual exchange rates H1 2012 H1 2011 Cash generated from operations 113.1 76.3 Net interest (10.6) (8.0) Taxation (35.2) (19.7) Net capital expenditure (44.9) (31.3) Free cash flow 22.4 17.3 29% 28 www.intertek.com
Slide 29: Net Debt
Net Debt £m @ actual exchange rates H1 2012 H1 2011 Borrowings 778.7 809.9 Cash (160.2) (171.8) Net debt 618.5 638.1 Net debt to EBITDA (2011: Proforma 12mths 1.6x 1.9x Moody) 29 www.intertek.com
Slide 30: Liquidity Position at 30 June 2012
Liquidity Position at 30 June 2012 £m @ actual exchange rates H1 2012 H1 2011 Debt facilities 925.0 925.0 Borrowings (778.7) (809.9) Undrawn committed borrowing facilities 146.3 115.1 Cash 160.2 171.8 Liquid funds 306.5 286.9 30 www.intertek.com
Slide 31: Currency Analysis
Currency Analysis Revenue By Currency Local currency H1 2012 H1 2011 FY 2011 to GBP USD 2.0% 1.58 1.61 1.60 CNY 6.0% 9.96 10.55 10.35 Other ~ 26% EUR 5.0% 1.21 1.15 1.15 USD, CNY & GBP & HKD HKD 2.4% 12.26 12.55 12.47 EUR ~ 55% ~ 19% AUD 2.1% 1.53 1.56 1.55 CAD 0.6% 1.59 1.58 1.59 31 www.intertek.co
Slide 32: Divisional Performance Summary
Divisional Performance Summary H1 2012 Revenue Margin Organic Organic £m @ constant exchange H1 12 Change change H1 12 Change change Industry & Assurance 318.5 106.8% 14.3% 10.5% 80bps 90bps Commodities 278.2 10.7% 10.5% 12.3% 90bps 100bps Consumer Goods 163.9 10.1% 8.9% 31.5% (100)bps (70)bps Comme