interim results presentation - intertek.se · this presentation contains certain forward-looking...

2007 Interim Results Presentation3 September 2007

Wolfhart Hauser, Chief Executive Officer

Bill Spencer, Chief Financial Officer

2

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 events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this presentation should be construed as a profit forecast.

3 September 2007

Bill SpencerChief Financial Officer

Financial Performance

2007 Interim Results Presentation

4

Revenue £360.8m Up 10.3% at actual

Up 18.6% at constant (organic 10.5%)

Operating profit1 £54.5m Up 7.5% at actual

Up 18.5% at constant (organic 10.1%)

Operating margin1 15.1% Down 40bp at actual

Unchanged at constant

Basic EPS 21.5p Up 7.0%

Operating cash flow £43.0m Down 9.1%

Profit before tax £48.4m Up 7.1%

Earnings per share2 22.5p Up 5.6%

Interim dividend per share 5.8p Up 26.1%

Financial highlightsFor the six months to 30 June 2007

1)Excluding amortisation of intangible assets arising on acquisitions

2)Diluted adjusted earnings per share based on profit before amortisation of intangible assets arising on acquisitions

5

Revenue growth bridge

10.3% 11.7%

8.1%(8.3)% (1.2)%

280290300310320330340350360370

Revenue H106

Currencytranslation

Acquisitions Contractcessation(Nigeria)

Organic Revenue H107

£m

£327.1m

£360.8m

6

CurrencyApproximately 80% earnings are USD, HKD,

RMB and other related currencies

Continued dollar weakness: adverse translation effect

Average GBP/USD rate

11% weaker than H1 2006

7% weaker than FY 2006

H12007

H12006

FY2006

1.97 1.78 1.84

7

Profit before tax

Half Year - £m 2007 2006

Adjusted operating profit 54.5 50.7

Interest cover 12.5 13.9

Amortisation1 (1.9) (2.0)

Statutory operating profit 52.6 48.7

Net interest cost (4.2) (3.5)

Profit before tax (up 7.1%) 48.4 45.2

1)Amortisation of intangible assets arising on acquisitions

8

Taxation

Half Year - £m 2007 2006

Profit before tax 48.4 45.2

Tax (up 9.8%) (12.3) (11.2)

Profit after tax (up 6.1%) 36.1 34.0

Reported tax rate 25.4% 24.8%

9

Earnings and dividends

Half Year – pence 2007 2006

Up 7.0%

Adjusted EPS1 22.5p 21.3p Up 5.6%

Up 26.1%

Basic EPS 21.5p 20.1p

Interim dividend per share 5.8p 4.6p

1) Adjusted earnings per share is fully diluted and based on profit before amortisation of intangible assets arising from acquisitions

10

Operating cash flow

Half Year - £m 2007 2006

Operating profit 52.6 48.7

Add back depreciation and other non cash items 17.7 16.3

Operating working capital to LTM sales 11.1% 9.6%

Debtor days 75 71

Change in working capital (27.3) (17.7)

Operating cash flow (down 9.1%) 43.0 47.3

11

Free cash flow

Half Year - £m 2007 2006

Operating cash flow 43.0 47.3

Net interest (4.0) (3.3)

Free cash flow 10.6 11.6

Capital expenditure to LTM sales % 5.8% 6.3%

Taxation (10.6) (12.2)

Capital expenditure (17.8) (20.2)

12

Acquisition investment is acceleratingIn 2005 and 2006 spent an average of £41m p.a.

6 acquisitions in H1 2007, consideration £58m (H1 2006, £9m), of which £14m is deferred payment. Including:Genalysis £28mUmitek £10mQTI £13mASTA BEAB £5m

Further 4 acquisitions in July and August, brings total ytdconsideration to £74m

Strong pipeline for remainder of year

13

Additional debt facilities

£300m 7 year facility, placed 2004, amortised to £265m

Added £100m in August 2007

050

100150200250

June 05 June 06 June 07

£m Gross Debt Drawn Down

14

Financial summary

Good half year

Double digit growth

Increasing investment in acquisitions

Increased debt capacity

Progressive dividend payout

Wolfhart HauserChief Executive OfficerOperating Performanceat constant exchange rates

2007 Interim Results Presentation

16

Quality and safety growth drivers strengthened

EXPANSIONDRIVING THE

INDUSTRYDRIVERS

Inter-regional

trade ~40%

GLOBALTRADE

EXTERNALGROWTH

6% plus

Quality, safetyQuality, safety, environmental

Increasing variety

Expansion of services, regions,

industriesGaining

market share

Outsourcing

Acquisitions

17

Group results

Half Year June 2007 Change Organic change

10.5%

10.1%

-10 bp

£m @ constant exchange rates

Revenue 360.8 18.6%

Operating profit1 54.5 18.5%

Margin 15.1% -

1) Operating profit excludes amortisation of intangible assets arising on acquisitions £1.9m (H1 06: £2.0m)

18

The three larger divisions which account for 93% of revenues grew by 21%

@ constant exchange rates % of revenues

Revenue growth

Organic revenue

growthOil, Chemical & Agri 47% 33.7%

Commercial & Electrical 24% 9.4%

15.2%

7.9%

12.7%

12.5%

(9.0)%

Sub total 93% 21.3%

10.5%100% 18.6%

Consumer Goods 22% 12.7%

Government Services 7% (9.0)%

19

Government Services

INDUSTRIES

Fiscal SupportStandardsCargo ScanningIndustrial Services

INDUSTRIES H1 2007 Revenue £25.2m

TESTING │ CERTIFICATION │ AUDITING │ SAFETY │ INSPECTION ENVIRONMENTAL │ QUALITY ASSURANCE │ ADVISORY │ ANALYTICAL

TRAINING │ OUTSOURCING │ CSR │SUPPLY CHAIN

SERVICES

H1 2007 Profit £3.4m

7% 6%

20

Government Services

£m @ constant exchange ratesHalf year

2007 Change Organic change

(9.0)%

(8.1)%

+10 bp

Revenue 25.2 (9.0)%

Operating profit 3.4 (8.1)%

Margin 13.5% +10 bp

21

Government Services

Continued growth excluding Nigeria, with improved business mix

Excluding Nigeria (H1 06 £3.8m), revenue up 5.4%

64% of business now non fiscal related

Container Scanning (Guinea & Sierra Leone) performing well, further prospects

22

Commercial & Electrical

MedicalBuildingIndustrialIT/TelecomAutomotiveHome AppliancesLightingElectronics




SERVICES

H1 2007 Profit £13.2m

24% 21%

23




7.9%

10.5%

+30 bp

Revenue 86.0 9.4%

Operating profit 13.2 11.9%

Margin 15.3% +30 bp

24


Portfolio of service lines performing wellGood performance in Electrical and Building Products

Prospects in Energy Efficiency and other Environmental testing

Automotive Systems Certification declined in USA but offset by growth in Automotive Components testing in China

Acquisitions Natlabs, Mar 07 £0.7mASTA BEAB, June 07 £4.6mQuality Partners, Aug 07 £4.1m

25

Oil, Chemical & Agri

Oil & GasChemicalsAgricultureMineralsPharmaceutical




SERVICES

H1 2007 Profit £20.1m

47% 33%

26




15.2%

33.3%

+150 bp

Revenue 168.1 33.7%


Margin 12.0% +220 bp

27


Strong growth and margin progression

Strong marketTrade in oil cargoes strong in USA and Asia

Analytical Services now half of divisionAlternative fuelsEnvironmental regulationsTwo new outsourcing wins (Aug 07) with ICI and Kodak

Increased utilisation of assets pushing margins up

28


Acquisitions widening the industry range

Analytical Services

Chemicals/Fuels

PARCAutomotive Research

PolychemICI

Free Standing Testing

Upstream

KelleyWestportUmitek

Geotech

Minerals

Genalysis

Pharmaceutical

ASGChalon

AltaQTI

Businesses added in the last few years

29

Consumer Goods

TextileToysHardlinesFootwearFoodRetail




SERVICES

H1 2007 Profit £24.9m

22%40%

30

Consumer Goods



12.7%

8.7%

Margin 30.6% -110 bp -110 bp

Revenue 81.5 12.7%


31

Consumer Goods

Continuing to lead the market, while developing new services

Strong growth in China - Textiles and Toys testing

Reduced revenue from RoHS due to lower volumes and prices

Increased public awareness of consumer product quality

Business mix changing: CSR, Consultancy, Food, Supply Chain Services

32

A successful half year

Good organic growth

Value adding acquisition strategy

Attractive valuations

Additional industries and services

Integration into global network

33

Quality and safety services

Intertek’s involvementBasic testing and inspection servicesPartner to retail brands, manufacturers, suppliersGlobal network for quality services in supply chain

Product recallsHigher quality and safety awarenessRoutine testing and inspection = short term liftIncreased supply chain services = long term benefit

34

Outlook

Strong H2 performance

Good acquisition pipeline

Quality and safety growth drivers strengthened

IntertekCreating value through expertise

interim results presentation - intertek.se · this presentation contains certain forward-looking...

Documents