2007 Interim Results Presentation 3 September 2007

Transcription

1 2007 Interim Results Presentation 3 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

3 Bill Spencer Chief Financial Officer Financial Performance 2007 Interim Results Presentation

4 Financial highlights For the six months to 30 June 2007 Revenue 360.8m Up 10.3% at actual Operating profit m Up 7.5% at actual Up 18.6% at constant (organic 10.5%) Up 18.5% at constant (organic 10.1%) Operating margin % Down 40bp at actual Operating cash flow 43.0m Down 9.1% Profit before tax 48.4m Up 7.1% Basic EPS 21.5p Up 7.0% Earnings per share p Up 5.6% Interim dividend per share 5.8p Up 26.1% Unchanged at constant 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 4

5 Revenue growth bridge m m (8.3)% 8.1% (1.2)% 11.7% 10.3% 360.8m 280 Revenue H1 06 Currency translation Acquisitions Contract cessation (Nigeria) Organic Revenue H1 07 5

6 Currency Approximately 80% earnings are USD, HKD, RMB and other related currencies Continued dollar weakness: adverse translation effect Average GBP/USD rate H H FY % weaker than H % weaker than FY

7 Profit before tax Half Year - m Adjusted operating profit Amortisation 1 (1.9) (2.0) Statutory operating profit Net interest cost (4.2) (3.5) Profit before tax (up 7.1%) Interest cover )Amortisation of intangible assets arising on acquisitions 7

8 Taxation Half Year - m Profit before tax Tax (up 9.8%) (12.3) (11.2) Profit after tax (up 6.1%) Reported tax rate 25.4% 24.8% 8

9 Earnings and dividends Half Year pence Basic EPS 21.5p 20.1p Up 7.0% Adjusted EPS p 21.3p Up 5.6% Interim dividend per share 5.8p 4.6p Up 26.1% 1) Adjusted earnings per share is fully diluted and based on profit before amortisation of intangible assets arising from acquisitions 9

10 Operating cash flow Half Year - m Operating profit Add back depreciation and other non cash items Change in working capital (27.3) (17.7) Operating cash flow (down 9.1%) Operating working capital to LTM sales 11.1% 9.6% Debtor days

11 Free cash flow Half Year - m Operating cash flow Net interest (4.0) (3.3) Taxation (10.6) (12.2) Capital expenditure (17.8) (20.2) Free cash flow Capital expenditure to LTM sales % 5.8% 6.3% 11

12 Acquisition investment is accelerating In 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 28m Umitek 10m QTI 13m ASTA BEAB 5m Further 4 acquisitions in July and August, brings total ytd consideration to 74m Strong pipeline for remainder of year 12

13 Additional debt facilities 300m 7 year facility, placed 2004, amortised to 265m Added 100m in August 2007 m Gross Debt Drawn Down June 05 June 06 June 07 13

14 Financial summary Good half year Double digit growth Increasing investment in acquisitions Increased debt capacity Progressive dividend payout 14

15 Wolfhart Hauser Chief Executive Officer Operating Performance at constant exchange rates 2007 Interim Results Presentation

16 Quality and safety growth drivers strengthened Quality, safety, environmental Increasing variety Expansion of services, regions, industries Gaining market share Outsourcing Acquisitions 6% plus Interregional trade ~40% GLOBAL TRADE DRIVERS EXPANSION DRIVING THE INDUSTRY EXTERNAL GROWTH 16

17 Group results Half Year June 2007 Change constant exchange rates Revenue % Operating profit % Margin 15.1% - Organic change 10.5% 10.1% -10 bp 1) Operating profit excludes amortisation of intangible assets arising on acquisitions 1.9m (H1 06: 2.0m) 17

18 The three larger divisions which account for 93% of revenues grew by constant exchange rates % of revenues Revenue growth Oil, Chemical & Agri 47% 33.7% Commercial & Electrical 24% 9.4% Consumer Goods 22% 12.7% Sub total 93% 21.3% Government Services 7% (9.0)% 100% 18.6% Organic revenue growth 15.2% 7.9% 12.7% 12.5% (9.0)% 10.5% 18

19 Government Services INDUSTRIES Fiscal H Support Revenue INDUSTRIES Standards 25.2m Cargo Scanning Industrial Services 7% 6% H Profit 3.4m SERVICES TESTING CERTIFICATION AUDITING SAFETY INSPECTION ENVIRONMENTAL QUALITY ASSURANCE ADVISORY ANALYTICAL TRAINING OUTSOURCING CSR SUPPLY CHAIN 19

20 Government Services constant exchange rates Half year 2007 Change Organic change Revenue 25.2 (9.0)% (9.0)% Operating profit 3.4 (8.1)% (8.1)% Margin 13.5% +10 bp +10 bp 20

21 Government Services Continued growth excluding Nigeria, with improved business mix Excluding Nigeria (H m), revenue up 5.4% 64% of business now non fiscal related Container Scanning (Guinea & Sierra Leone) performing well, further prospects 21

22 Commercial & Electrical INDUSTRIES Medical H Building Industrial IT/Telecom Automotive Home Appliances Lighting Electronics Revenue 86.0m H Profit 13.2m 24% 21% SERVICES TESTING CERTIFICATION AUDITING SAFETY INSPECTION ENVIRONMENTAL QUALITY ASSURANCE ADVISORY ANALYTICAL TRAINING OUTSOURCING CSR SUPPLY CHAIN 22

23 Commercial & Electrical constant exchange rates Half year 2007 Change Organic change Revenue % 7.9% Operating profit % 10.5% Margin 15.3% +30 bp +30 bp 23

24 Commercial & Electrical Portfolio of service lines performing well Good 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 m ASTA BEAB, June m Quality Partners, Aug m 24

25 Oil, Chemical & Agri INDUSTRIES Oil & Gas H Chemicals Agriculture Minerals Pharmaceutical Revenue 168.1m 47% H Profit 20.1m 33% SERVICES TESTING CERTIFICATION AUDITING SAFETY INSPECTION ENVIRONMENTAL QUALITY ASSURANCE ADVISORY ANALYTICAL TRAINING OUTSOURCING CSR SUPPLY CHAIN 25

26 Oil, Chemical & Agri constant exchange rates Half year 2007 Change Organic change Revenue % 15.2% Operating profit % 33.3% Margin 12.0% +220 bp +150 bp 26

27 Oil, Chemical & Agri Strong growth and margin progression Strong market Trade in oil cargoes strong in USA and Asia Analytical Services now half of division Alternative fuels Environmental regulations Two new outsourcing wins (Aug 07) with ICI and Kodak Increased utilisation of assets pushing margins up 27

28 Oil, Chemical & Agri Acquisitions widening the industry range Analytical Services Chemicals/Fuels PARC Automotive Research Polychem ICI Free Standing Testing Upstream Kelley Westport Umitek Geotech Minerals Genalysis Pharmaceutical ASG Chalon Alta QTI Businesses added in the last few years 28

29 Consumer Goods INDUSTRIES Textile H Toys Hardlines Footwear Food Retail Revenue 81.5m 22% 40% H Profit 24.9m SERVICES TESTING CERTIFICATION AUDITING SAFETY INSPECTION ENVIRONMENTAL QUALITY ASSURANCE ADVISORY ANALYTICAL TRAINING OUTSOURCING CSR SUPPLY CHAIN 29

30 Consumer Goods constant exchange rates Half year 2007 Change Organic change Revenue % 12.7% Operating profit % 8.7% Margin 30.6% -110 bp -110 bp 30

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 31

32 A successful half year Good organic growth Value adding acquisition strategy Attractive valuations Additional industries and services Integration into global network 32

33 Quality and safety services Intertek s involvement Basic testing and inspection services Partner to retail brands, manufacturers, suppliers Global network for quality services in supply chain Product recalls Higher quality and safety awareness Routine testing and inspection = short term lift Increased supply chain services = long term benefit 33

34 Outlook Strong H2 performance Good acquisition pipeline Quality and safety growth drivers strengthened 34

35 Intertek Creating value through expertise