FINANCIAL HIGHLIGHTS BUSINESS OVERVIEW CONTENT FINANCIAL HIGHLIGHTS 2013 Highlights Revenue Analysis Operating Income Analysis Cash Flows Currency Analysis Second half 2013 BUSINESS OVERVIEW 2
FINANCIAL HIGHLIGHTS 2013 HIGHLIGHTS Not updated 3
HIGHLIGHTS Revenue growth of 6.5% to CHF 5.8 billion (constant currency) 4.7% (historical rates) Organic revenue growth of 4.4% (constant currency) Adjusted Operating income (1) up 6.9% (constant currency) to CHF 977 million, resulting in a margin of 16.8% Restructuring costs net of tax of CHF 23 million Net Income for the year of CHF 600 million Basic EPS of CHF 78.43 per share, up 9.7% Free Cash Flow CHF 591 million, up 43.4% Proposed dividend to shareholders of CHF 65 per share 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 4
FINANCIAL HIGHLIGHTS CHF million 2013 December 2012 2012 December December Pro-forma (2) Restated (3) Revenue 5,830 5,473 5,569 Change in % 6.5 % 4.7 % Adjusted Operating Income (1) 977 913 931 Change in % 6.9 % 4.9 % Adjusted Operating Income Margin (1) 16.8 % 16.7 % 16.7 % Operating Income (EBIT) 912 816 834 Change in % 11.8 % 9.4 % Adjusted Net Income (1) 652 606 617 Change in % 7.6 % 5.7 % Net Income 600 533 545 Change in % 12.6 % 10.1 % Adjusted Basic EPS (1) (CHF) 85.27 79.51 81.06 Basic EPS (CHF) 78.43 69.95 71.52 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 2) Constant currency and restated for IAS 19 / IFRS 11 3) Restated for IAS 19 / IFRS 11 5
SERVICE PORTFOLIO REVENUE ENVI 5.6% AUTO 5.2% GIS 4.7% AGRI 6.5% MIN 13.6% ADJUSTED OPERATING INCOME (1) ENVI 3.5% AUTO 6.7% GIS 7.0% AGRI 6.7% MIN 12.6% IND 16.5% IND 11.0% SSC 6.9% CTS 17.9% LIFE 3.5% OGC 19.6% SSC 7.5% CTS 26.4% LIFE 2.8% OGC 15.8% REVENUE REGION ASIA PACIFIC 29.0% EUROPE / AFRICA / MIDDLE EAST 46.2% AMERICAS 24.8% 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 6
FINANCIAL HIGHLIGHTS REVENUE ANALYSIS Not updated 7
REVENUE GROWTH COMPOSITION 4.4% 2.1% 0.0% (1.8)% 4.7% 239 117 (95) Constant currency growth: 6.5% 5,830 5,569 Revenues 1 December 12 Organic Acquisitions Disposals Currency impact Revenues December 13 1) Restated for IFRS 11 8
LOCAL CURRENCY GROWTH BY BUSINESS AGRI 3.8% 1.7% 5.5% MIN (7.8)% 2.6% (5.2)% OGC 9.4% 0.9% 10.3% LIFE 0.1% 2.1% 2.2% CTS 11.2% 0.8% 12.0% SSC 3.9% 0.2% 4.1% IND 2.1% 6.2% 8.3% ENVI (0.3)% 3.3% 3.0% AUTO 10.4% 1.0% 11.4% GIS 11.1% 11.1% TOTAL 4.4% 2.1% 6.5% Organic Acquisition Disposal Prior year restated for IFRS 11 9
REVENUE GROWTH AND HEADCOUNT CHANGE BY REGION Δ in EOP headcount 2013 December 2012 December Δ Group Headcount 81,948 79,208 2,740 Europe / Africa & Middle East 1.3% 1.7% 3.0% Organic Business Growth 1,542 Acquisitions 1,198 Americas 6.0% 4.5% 10.5% Disposals - Increase in Group Headcount 2,740 Asia / Pacific 8.2% 0.8% 9.0% By Region Headcount Δ Headcount Δ% Revenues Δ% Europe / Africa / Middle East 292 0.9 % 3.0 % TOTAL GROUP 4.4% 2.1% 6.5% Americas 260 1.4 % 10.5 % Organic Acquisition Disposal Asia / Pacific 2,188 7.8 % 9.0 % TOTAL 2,740 3.5% 6.5% Prior year restated for IFRS 11 10
FINANCIAL HIGHLIGHTS OPERATING INCOME ANALYSIS Not updated 11
ADJUSTED OPERATING INCOME (1) GROWTH 4.8% 2.1% 0.0% (2.0)% 4.9% 20 44 (18) Constant currency growth: 6.9% 977 931 Op. Income 2 December 12 Organic Acquisitions Disposals Currency impact Op. Income December 13 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 2) Restated for IAS 19 / IFRS 11 12
HISTORICAL RESTATED MARGINS Adjusted EBITDA MARGIN (1) Adjusted OPERATING MARGIN (1) 25.0% DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 20.0% DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 20.0% 15.0% 15.0% 10.0% 10.0% 5.0% 5.0% 21.8% 22.2% 21.2% 21.2% 21.5% - 17.3% 17.6% 16.8% 16.7% 16.8% 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs and prior years restated for IAS 19 / IFRS 11 13
AGRI MIN OGC LIFE CTS SSC IND ENV AUTO GIS 16.5% 18.7% 13.1% 8.5% 24.8% 18.3% 11.2% 10.6% 22.0% 21.0% 13.5% 13.2% 11.2% 10.3% 17.1% 15.6% 18.3% 21.6% 24.8% 24.8% ADJUSTED OPERATING MARGIN (1) BY BUSINESS 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 2 December 12 December 13 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 2) Restated for IAS 19 / IFRS 11 14
RESTRUCTURING COSTS RESTRUCTURING BY BUSINESS ENVI 7.0% AUTO 0.6% AGRI 0.6% MIN 9.7% OGC 2.7% RESTRUCTURING 2013 BY REGION AMERICAS 4.8% ASIA PACIFIC 10.9% LIFE 18.7% IND 47.1% SSC 3.0% CTS 10.6% EUROPE / AFRICA / MIDDLE EAST 84.3% 15
CASH FLOW CHF million Dec 13 Dec 12 PROFIT FOR THE PERIOD 638 579 Depreciation, amortisation and impairment 298 280 Share based payments 5 14 Tax 236 214 Other 13 (7) Non-cash items 552 501 (Increase)/decrease in working capital (29) (73) Taxes paid (213) (209) OPERATING CASH FLOW 948 798 Net (purchase) / sale of fixed assets (333) (376) Acquisition of businesses (108) (182) Other from investing activities 16 1 CASH FLOW FROM INVESTING ACTIVITIES (425) (557) Dividend paid to equity holders of SGS SA (444) (497) Dividend paid to non-controlling interests (27) (24) Net cash received/(paid) on treasury shares 4 76 Interest paid (46) (46) Net flows on interest rate swaps 2 37 Increase/(decrease) in borrowings (5) (12) CASH FLOW FROM FINANCING ACTIVITIES (516) (466) Currency translations (13) (5) (DECREASE) IN CASH AND CASH EQUIVALENTS (6) (230) 1 1) Restated for IAS 19 / IFRS 11 16
CAPITAL EXPENDITURE CAPEX REGION ASIA PACIFIC 33.3% CAPEX BUSINESS ENVI 6.2% AUTO 7.0% GIS 6.4% AGRI 4.2% MIN 16.8% EUROPE / AFRICA / MIDDLE EAST 46.0% IND 9.0% SSC 1.4% OGC 19.0% AMERICAS 20.7% CTS 25.5% LIFE 4.5% ANNUAL CAPEX CHF million 2008 2009 2010 2011 2012 2013 500 400 300 200 100 Capital Expenditure Depreciation & amortisation 17
FOREIGN CURRENCY REVENUES 2013 CLP 2.7% Other 27.9% BRL 2.9% GBP 2.9% TWD 2.9% CAD 4.1% AUD 5.1% CNY 10.6% EUR 27.7% USD 13.2% AVERAGE RATES 2013 2012 Change EUR 1.2309 1.2055 2.1 % USD 0.9272 0.9380 (1.1)% CNY 0.1508 0.1487 1.4 % AUD 0.8985 0.9712 (7.5)% CAD 0.9009 0.9384 (4.0)% TWD 0.0312 0.0317 (1.5)% GBP 1.4501 1.4863 (2.4)% BRL 0.4320 0.4819 (10.4)% CLP 0.0019 0.0019 (2.7)% HKD 0.1195 0.1209 (1.1)% 18
FOREIGN CURRENCY SENSITIVITY ANALYSIS EURO 1.20 1.23 1.25 Revenues (41) 0 25 Income (4) 0 3 USD 0.89 0.93 0.96 Revenues (31) 0 27 Income (3) 0 2 CNY 0.14 0.15 0.16 Revenues (44) 0 38 Income (13) 0 11 19
SECOND HALF 2013 20
FINANCIAL HIGHLIGHTS (H2) CHF million 2013 H2 2012 2012 H2 H2 Pro-forma (2) Restated (3) Revenue 2,978 2,813 2,922 Change in % 5.9 % 1.9 % Adjusted Operating Income (1) 539 503 523 Change in % 7.2 % 3.1 % Adjusted Operating Income Margin (1) 18.1 % 17.9 % 17.9 % Operating Income (EBIT) 501 445 465 Change in % 12.6 % 7.7 % Adjusted Net Income (1) 365 334 347 Change in % 9.3 % 5.2 % Net income 335 292 306 Change in % 14.7 % 9.5 % 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 2) Constant currency and restated for IAS 19 / IFRS 11 3) Restated for IAS 19 / IFRS 11 21
REVENUE GROWTH COMPOSITION H2 3.8% 2.1% 0.0% (4.0)% 1.9% 107 58 (109) Constant currency growth: 5.9% 2,978 2,922 Revenues 1 H2 2012 Organic Acquisitions Disposals Currency impact Revenues H2 2013 1) Restated for IFRS 11 22
LOCAL CURRENCY GROWTH BY BUSINESS (H2) AGRI 6.5% 0.7% 7.2% MIN (10.6)% 3.2% (7.4)% OGC 8.7% 0.7% 9.4% LIFE (1.6)% (1.6)% CTS 10.9% 10.9% SSC 3.2% 0.5% 3.7% IND 0.9% 7.0% 7.9% ENVI (1.2)% 2.6% 1.4% AUTO 12.7% 1.2% 13.9% GIS 12.0% 12.0% TOTAL 3.8% 2.1% 5.9% Organic Acquisition Disposal Prior year restated for IFRS 11 23
AGRI MIN OGC LIFE CTS SSC IND ENV AUTO GIS 18.4% 19.1% 14.1% 9.3% 26.9% 19.9% 12.6% 12.9% 22.0% 19.7% 12.1% 12.3% 12.4% 15.8% 14.8% 20.3% 19.9% 21.6% 26.7% 26.6% ADJUSTED OPERATING MARGIN (1) BY BUSINESS (H2) 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 2 H2-2012 H2-2013 1) Before amortisation of acquisition intangibles, restructuring, transaction and integration-related costs 2) Restated for IAS 19 / IFRS 11 24
BUSINESS OVERVIEW BUSINESS OVERVIEW Not updated 25
AGRICULTURAL SERVICES (AGRI) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 381.3 361.3 369.5 Change in % 5.5 3.2 Adj. Operating Inc. (1) 65.3 59.4 60.9 Change in % 9.9 7.2 Margin % 1 17.1 16.4 16.5 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Organic growth of 3.8% despite difficult trading conditions in the Black Sea and Danube Corridor in H1 as well as in Asia Pacific in H2. Additional growth from acquisitions closed in 2012: Gravena (Brazil) and WareCare (Netherlands), both performing ahead of expectations. Seed and Crop and fumigation services continue to deliver double digit growth. Solid growth and margin improvement in North America due to deregulation of the Canadian Wheat Board and Canadian Grain Commission as well as successful cost saving initiatives. Outlook Positive H2 2013 trading trends in Eastern Europe and North America to continue into H1 2014, partially offset by challenging market conditions in Asia Pacific. Increased lab capabilities in Central & Eastern Europe expected to come online in H2. Solid growth in Seed and Crop to continue as expansion efforts in South America and Africa gain traction. 26
MINERALS SERVICES (MIN) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 791.9 835.1 868.0 Change in % (5.2) (8.8) Adj. Operating Inc. (1) 123.4 156.0 162.1 Change in % (20.9) (23.9) Margin % 1 15.6 18.7 18.7 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Challenging market conditions throughout the year resulted in a revenue decline and pressure on margins. Trade business delivered double-digit growth from geographic expansion and increased market share. Mining and exploration companies significantly reduced their expenditure on exploration impacting Geochem and Metallurgy. Sample load into the Commercial Geochem network declined significantly versus prior year. Restructuring activity undertaken in order to align the cost base. Outlook Market conditions not expected to improve in 2014. Trade inspections will continue to grow as producers maximise output from existing operations. Continued low volumes and price pressure in commercial Geochem as competitors seek to fill available capacity. Benefits from restructuring will improve margin. Additional revenues from 7 laboratories opened in 2013 and from 5 new laboratories starting in 2014. 27
OIL, GAS & CHEMICALS SERVICES (OGC) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 1,139.9 1,033.8 1,046.0 Change in % 10.3 9.0 Adj. Operating Inc. (1) 154.0 135.6 137.1 Change in % 13.6 12.3 Margin % 1 13.5 13.1 13.1 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Upstream Services delivered outstanding growth across whole portfolio (Australia and Middle East, Asia, Eastern Europe). Continued growth in Plant and Terminal Operations specifically in the USA and Canada. Growth in Oil Condition Monitoring from the Herguth acquisition in the USA and expansion into new geographies. Slowdown in trade-related activities in Europe and North America offsetting growth in other geographies. Outlook Upstream Services growth to remain strong capitalising on new contracts and pre-qualifications achieved as well as footprint expansion. Strong pipeline of laboratory commissioning and outsourcing projects. Trade related activities to deliver moderate growth despite reduced ethanol export volumes in Brazil. Better efficiency due to implementation of integrated execution platform and back office improvements. 28
LIFE SCIENCE SERVICES (LIFE) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 205.0 200.6 199.3 Change in % 2.2 2.9 Adj. Operating Inc. (1) 27.1 16.9 17.0 Change in % 60.4 59.4 Margin % 1 13.2 8.4 8.5 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Adjusted for the winding-down of the Paris clinical trial activities, revenue growth reached 11.1%. Strong performance in laboratory services: Europe supported by UK biologics capabilities. North America supported by investments in capacity expansion completed 2012 investments. Asia supported by global key accounts. Clinical Research delivered limited growth due to market difficulties and continued price pressures. Margin improvement due to winding-down of Paris clinical activities and profitable double-digit growth in laboratory activities. Outlook Laboratory growth and margin to continue improving thanks to investments in the network and global key account management activities. Biologics testing to remain a strong driver of top and bottom line improvement with highest margins. Execution excellence & higher quality service delivery remain top priority areas. Clinical Research to improve sales performance and drive operational efficiency. 29
CONSUMER TESTING SERVICES (CTS) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 1,041.9 930.6 936.2 Change in % 12.0 11.3 Adj. Operating Inc. (1) 258.3 231.7 232.4 Change in % 11.5 11.1 Margin % 1 24.8 24.9 24.8 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Double-digit organic revenue growth primarily driven by Eastern Asia, South America, Eastern Europe and Middle East across all business segments. Achieved market share gains thanks to targeted investments in E&E and Automotive parts testing Secured new strategic accounts in Softlines and Toys testing. Pressure on the margins remains, resulting from operational cost increases in Asia and the timing of new investments in capacity expansion in Asia and North America. Outlook Asia and South America will continue generating solid growth; Europe performance to improve. Network expansion in key geographies and increased capacity in high growth segments will contribute to continued growth. Further development of existing service portfolio into new geographies. Enhancement of IT systems to deliver more effective supply chain solutions. 30
SYSTEMS & SERVICES CERTIFICATION (SSC) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 401.6 385.7 394.9 Change in % 4.1 1.7 Adj. Operating Inc. (1) 73.3 70.1 72.2 Change in % 4.6 1.5 Margin % 1 18.3 18.2 18.3 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Revenue growth significantly impacted by the difficult economic environment in Europe and Japan throughout the year. Cost saving programs implemented in Europe and Japan, as well as operational efficiency initiatives protected margins. Hart Aviation acquisition expanded the service offering to the aviation industry. Strong demand for medical device certification and food safety schemes. Good performance of Training with SGS Academy gradually implemented in all regions. Outlook Margins expected to remain stable thanks to restructuring and further efficiency gains. Double-digit growth expected in Performance Assessment and Training. Food and Medical Devices will remain major growth drivers in certification. Further development of new services such as Access Control Solution, Health and Safety compliance and aviation safety certification. 31
INDUSTRIAL SERVICES (IND) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 960.3 886.5 898.6 Change in % 8.3 6.9 Adj. Operating Inc. (1) 107.3 99.0 100.2 Change in % 8.4 7.1 Margin % 1 11.2 11.2 11.2 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Organic revenue growth and margins impacted by soft market conditions in Europe. Double-digit organic growth in most regions outside Europe. Continued restructuring and repositioning to meet new market conditions across Europe and protect margins. Acquisition of four laboratories in line with the strategy to increase testing activities in the portfolio: Labmat in Brazil, MSi in USA, CQA in Australia and MIS Testing in the UK. Outlook Market conditions in Europe expected to stabilise. Gradual margin improvement anticipated in Europe following restructuring and repositioning plan. Growth to remain strong in other geographies. Increase focus on lab testing: green field development and acquisitions. Enhance key account management and sales structure in key sectors. Continue expansion in high growth markets. 32
ENVIRONMENTAL SERVICES (ENVI) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 328.0 318.5 322.7 Change in % 3.0 1.6 Adj. Operating Inc. (1) 33.8 33.5 34.2 Change in % 0.9 (1.2) Margin % 1 10.3 10.5 10.6 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Strong impact on performance from European operations due to overall economic situation. Results also affected by mining sector slow down in the Americas, Africa and Australia, partly offset by customer diversification and cost control plans. Weakness of carbon price resulted in a strong reduction of our CDM portfolio in China and India. Continued geographical and service diversification with market entry in some Asian and African countries, where we experienced strong growth. Expanded footprint in Germany and UK through acquisition of RUK and MIS Environmental. Outlook Continue diversification in Asia and the Americas to reduce dependency on Europe. Additional restructuring of European operations completed in 2013 will lift overall margin. Optimise European laboratory network through an improved regional sample distribution model. New revenues from global contracts signed in 2013 for Industrial Hygiene, Monitoring and Energy audits. 33
AUTOMOTIVE SERVICES (AUTO) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 305.1 273.8 277.4 Change in % 11.4 10.0 Adj. Operating Inc. (1) 65.8 60.8 60.9 Change in % 8.2 8.0 Margin % 1 21.6 22.2 22.0 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Statutory inspection business provided solid results in Europe, Africa, North America and South America. New road safety services rolled out in Kenya. New vehicle and boat tax collection contract being implemented in Ivory Coast. Contract for Identity Authentication Services as part of the driver s license program started in Ireland. Commercial inspection volumes picking up in the USA and remained stable in Europe. Acquisitions concluded in France and China. Outlook Concession for statutory vehicle inspections in the city of Guayaquil, Ecuador and in Mauritius will start generating revenues as of H2 2014. New York statutory program ended in December 2013 and Santiago concession in Chile to end in July 2014, negatively impacting organic growth. Acquisition strategy will focus on enhancing capabilities & footprint for engine & vehicle testing. 34
GOVERNMENTS AND INSTITUTIONS SERVICES (GIS) CHF million December 2013 December December 2012 2012 Pro-forma 2 Restated 3 Revenue 274.7 247.2 256.0 Change in % 11.1 7.3 Adj. Operating Inc. (1) 68.2 50.3 53.7 Change in % 35.6 27.0 Margin % 1 24.8 20.3 21.0 (1) Before amortisation of acquisition intangibles, restructuring, transaction and integration- related costs (2) Restated figures on a constant currency basis (3) Restated figures due to IAS 19, IFRS 11 Overview 2013 Good growth in Local Solutions with Product Conformity Assessment (PCA) programs as main driver. Unexpected extension of the Destination Inspection program in Nigeria until November 2013. Strong performance for TradeNet in Ghana and Madagascar as well as an excellent start in Mozambique. New full scale Telecom monitoring activities in Tanzania started operating in H2. PSI Angola and Bangladesh discontinued. Outlook Continued growth from PCA programs with new contracts. New forestry program in Liberia. Complete deployment of TradeNet in Mozambique. Complete implementation of new mandate in Ghana (Ghana Revenue Authority). New contracts for Cargo Tracking and Telecoms monitoring. 35
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