Intertek Group plc · LSE:ITRK
Intertek — H1 2003 Earnings Presentation
24 slides from Intertek's earnings presentation, Sep 4, 2003
Slide 1: Interim Results Presentation
Interim Results Presentation 4 September 2003 Richard Nelson, Chief Executive Officer Bill Spencer, Chief Financial Officer 1
Slide 2: Financial Performance
Bill Spencer Chief Financial Officer Financial Performance Interim Results Presentation – 4 September 2003 2
Slide 3: Financial Highlights
Financial Highlights for the six months to 30 June 2003 Turnover £229.4m Unchanged at actual exchange rates Up 6.5% at constant exchange rates Operating profit1 £37.7m Unchanged at actual exchange rates Up 9.3% at constant exchange rates Operating margin1 16.4% Unchanged Operating cash flow2 £36.9m
Slide 4: GBP/USD Exchange Rates
GBP/USD Exchange Rates £/$ 1.70 1.65 2003 Average = $1.61 1.60 1.55 1.50 2002 Average = $1.44 1.45 1.40 1.35 1.30 1.25 Jan Feb Mar Apr May June US$ Actual Rate 2002 US$ Actual Rate 2003 4
Slide 5: Profitability – Operating Income
Profitability – Operating Income Half Year - £m 2003 2002 Operating profit1 (EBITA) 37.7 37.7 Goodwill amortisation (0.5) (0.5) Exceptional items2 0.1 6.7 Operating income 37.3 43.9 1 Before goodwill amortisation and exceptional items 2 Exceptional items in 2003: insurance £1.2m, FTS old Nigeria £1.
Slide 6: Profitability – Profit Before Tax
Profitability – Profit Before Tax Half Year - £m 2003 2002 Operating income 37.3 43.9 Profit on disposals 4.6 ─ Interest cost (4.2) (17.1) Bank fees (0.5) (3.5) Profit before tax 37.2 23.3 Interest cover 8.9 2.6 6
Slide 7: Taxation
Taxation Half Year - £m 2003 2002 Profit before tax 37.2 23.3 Remove exceptional items (4.7) (3.2) Normalised profit before tax 32.5 20.1 Tax 9.6 6.3 Normalised effective tax rate 29.5% 31.3% 7
Slide 8: Earnings & Dividends
Earnings & Dividends Half Year – pence 2003 2002 Fully diluted EPS 13.9p 12.4p +12% Excluding amortisation & exceptionals Dividend 2.9p ─ Final dividend 2002 = 5.2p 8
Slide 9: Operating Cash Flow
Operating Cash Flow Half Year - £m 2003 2002 Pre exceptional operating cash flow 36.9 35.9 Exceptional cash flow (3.7) (1.8) Operating cash flow 33.2 34.1 Operating cash flow to operating income % * 89% 78% * After operating exceptional items 9
Slide 10: Free Cash Flow
Free Cash Flow Half Year - £m 2003 2002 Operating cash flow 33.2 34.1 Interest (4.2) (14.3) Dividends to minorities (1.4) (2.5) Taxation (6.1) (6.1) Capital expenditure (9.1) (8.6) Acquisitions & disposals 6.6 (3.9) Free cash flow 19.0 (1.3) 10
Slide 11: Net Debt
Net Debt 30 June 31 Dec £m 2003 2002 Borrowings 224.5 237.5 Cash (72.5) (70.6) Net Debt 152.0 166.9 11
Slide 12: Gearing
Gearing 30 June 31 Dec £m 2003 2002 Net debt 152.0 166.9 Shareholders equity* 191.8 174.2 Ratio 79% 96% Interest cover 8.9 * Excludes goodwill written off to reserves prior to 1998 12
Slide 13: Operating Performance
Richard Nelson Chief Executive Officer Operating Performance at constant exchange rates Interim Results Presentation – 4 September 2003 13
Slide 14: Intertek Group plc
Intertek Group plc £m @ constant 2003 exchange rates Half Year June 2003 2002 % Turnover 229.4 215.5 6% Operating Profit * 37.7 34.5 9% Margin 16.4% 16.0% * Before goodwill amortisation and exceptional items 14
Slide 15: Labtest
Labtest (Consumer Goods) £m @ constant 2003 exchange rates Half Year June 2003 2002 % Turnover 66.5 55.2 20% Operating Profit 22.3 18.0 24% Margin 33.5% 32.6% 15
Slide 16: Labtest
Labtest (Consumer Goods) Drivers • Very strong market • Continuing efficiency gains • No adverse affect from SARS • Widening ranges of products • Increasing quality and safety requirements • Expansion in China with lower prices and costs (11% to 14%) 16
Slide 17: Caleb Brett
Caleb Brett (Oil & Chemical) £m @ constant 2003 exchange rates Half Year June 2003 2002 % Turnover 83.3 80.4 4% Operating Profit 6.2 7.5 (17)% Margin 7.4% 9.3% 17
Slide 18: Caleb Brett
Caleb Brett (Oil & Chemical) Drivers & Issues • Traditional cargo (75%) – Reduced activity, Iraq war – Competitive, low growth – Reduced costs – Market improved • Outsourcing (25% up from 23% previous half year) – New Global Management team, restructuring – Contract wins – eg Unilever, Port Sunlight
Slide 19: ETL SEMKO
ETL SEMKO (Electrical) £m @ constant 2003 exchange rates Half Year June 2003 2002 % Turnover 52.1 49.8 5% Operating Profit 6.0 6.8 (12)% Margin 11.5% 13.7% 19
Slide 20: ETL SEMKO
ETL SEMKO (Electrical) Drivers • Continued growth in Asia (23% up from 18%) • Weak USA (52%) safety testing, especially telecoms • Retail sales team strengthened • Growth in USA building products and HVAC (34% of USA) 20
Slide 21: FTS
FTS (Foreign Trade Standards) £m @ constant 2003 exchange rates Half Year June 2003 2002 % Turnover 27.5 30.1 (9)% Operating Profit 6.1 5.0 22% Margin 22.2% 16.6% 21
Slide 22: FTS
FTS (Foreign Trade Standards) Drivers & Issues • Lower shipments to Nigeria & Saudi Arabia • Improved payments & release of bad debt provisions • Customs in Nigeria lobbying strongly • Saudi Arabia expanding • New contracts: Rwanda, Kuwait & Venezuela • Further prospects 22
Slide 23: Summary
Summary • Labtest: Growing in Asia in all areas of consumer goods. Strong market. • ETL SEMKO: Growing in Asia, HVAC, retailer. Otherwise some areas weak in the West. • Caleb Brett: Traditional market improving and costs reduced. Outsourcing growing well. • FTS: Nigeria at risk. New contracts. 23
Slide 24: Going Forward…
Going Forward… • Business going well, meeting expectations • Infill acquisitions being pursued • Organic growth prospects 24